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Gold n' Silver???

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NewYorkBuck said:
bear - I respectfully disagree. The government claims inflation is in check. To this I ask - name something that you can buy now that is about the same as it was 3 years ago? How about the big items that really drain the ol' wallet - housing? Energy? Of course, these costs are through the roof. The reason the govt reports lower inflation is because they have an incentive to to keep COLA and TIPs payments lower. As Hoover alluded to - dont trust the govt - trust the markets. The price of gold is a pretty good indicator of where inflation has been.

Further - also do not buy into raising rates to control inflation bs. I have thought about this much and have concluded the following - inflation is nothing more than the govt increasing the money supply faster than the GDP is increasing. In business school, I even brought this idea to one of my professors who was at one time on the Fed under Greenspan. He did not have a good answer for me, and in fact blew me off and tried to rush me out of his office. It really is simple - just think of a simple economy - one consisting of ten pencils and ten pennies. How much do you think each pencil will cost? Of course, a penny each. Now say we arbitrarliy add ten more pennies without increasing the number of pencils. What do you think will happen to the cost of pencils then? Of course, pencils will now be two pennies each - ergo the essence of inflation. Conversely, if we added ten pencils ALONG with the ten pennies (ie - increased money supply only in proportion with the increase in GDP), inflation would be zero. It is that simple - economics is not rocket science.

Of course, if you are a huge borrower of funds (see the US Govt) you have enourmous incentive to create inflation, as you are able to pay back debt with less valuable dollars. Naturally, this screws the lenders, but I am sure they are not concerned with that.
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Sure housing and energy are up... what about the cost of a computer? How about the cost of a new car (with incentives it isn't off by much). What about major appliances? Food is up... not double like gold though.

I agree gold is a good indication of where inflation is... I also beleive it can sway higher or lower than inflation... if the markets are indicating that inflation is rabid and really running, why hasn't the fixed income markets reacted?
 
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Minimum wage is regulated by the government.
Inflation is not. I was in gold for awhile. I bought it through ETF and mutual funds back when it was $220 an once, 2000-2001. I sold long before the peak leaving profits on the table. I can sleep at night. I mentioned before I get a few investments newsletters and the gold bugs were pushing it higher. Adjusted for inflation shouldn't the price be near $1000 an ounce?

The majority of us live in our homes. Gold is for speculators. Where it ends up depends on factors that make little sense to me. Just like the tech bubble and the housing boom, when average joe investor starts posting on message boards the ride may be over.

This was not meant in a derogatory way to posters here. I have seen gold mentioned even on some tech boards I frequent. Geeks & Gold?
 
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north shore (you'll need to remind me why you aren't nola any more :wink2: ),

commodity prices in general have gone through the roof... look at copper for crying out loud... great place to be the last few years... I left profits on the table as well. better to realize the gains then let them slip away... with that said, prices could continue to rise...
 
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gbear

Katrina changed the city and my name. I do not mind the folks that remember me calling me NOLA. :wink2:

I agree commodities are up but is it scarcity, speculation or as NYB is doing an alternative to other investments? We have a Chinese worker who we sponsored for a green card and he came in Monday asking about the performance of some of our 401K options. I went into inflation, commodities and speculation as to the reason for some of the performance. I also cautioned him that is not a good investment policy to chase the hot fund or sector as by the time it is hot it may be too late. I may be wrong, it won't be the first time!
 
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Yes i am joe investor, but it isnt for the sake of investing in a hot topic. i posted my reasons to be in ALL metals earlier. I also feel that with rumors spreading to the hopeless that we are using all resources of the earth to exhaustion will drive prices later, when that happens, then i will jump of the boat with my oversized life jacket and see if everyone else still floats.

all good things come to end, but the society is becoming more and more material. thats why mossianite (the first "true" synthectic diamond) is becoming more popular. i got into it when it wsa 7 dollars a share, hit 30 and split 5:3 and i was outie. Americas "hollywood" materialism drives alot of other contries on the band wagonso i believe these metals will also become something of a status (with holding bars themselves.) LOOK AT PLATINUM ONCE THE RAP COMMUNITY SAID THAT PLAT> WAS COOL>
 
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Yea, I'm still in school at UF, but I have my brokers license for commodities, and already have done and internship and have a job lined up for after college. I graduate at the end of fall.

I trade Gold and silver for both of my roomates and my mom part time while I'm at school.

I mostly trade crude, I know the most about that, and did quite well for my mom since last year. Made 35% in a month of her opening her account, and am still growing on that.

I mostly don't trade straight futures. I like selling out of the money calls in gold.

My most recent was to sell 6 - 720 gold for 330 each. I never felt pressured, so I just collected the premium at the end of the month.

Some people in my office got burned on silver. Circumstances went wrong when a brokers palm pilot went out, and was in business meetings all over Manhattan. He came back to see that silver tanked, and he never got out of his futures in his spread. Horrible situation, lost a bunch of money that he had made last year with me on the crude.

That is trading though, I love it. Lived in NYC all last summer, and can't wait to get back and start getting some more clients.

Love to hear some other strats that people use. Its always interesting to see what people have going on.

Oh also, our money is held by MAN Futures in Chicago. We have an INSANE clearing policy. Really cheap trades cause we've had an account for a long time, and my CEO used to work for MAN in Chicago.

We are now starting to be introducing brokers, introducing brokers. We can get brokers out there better rates by going through us then by going through MAN. Its crazy. So if anyone has a company and is paying huge amounts per round turn, PM me, I'll help you out. :)
 
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SparkyOSU said:
Why is minimum wage $5.15 like it has benn for ungodly amount of years?
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In my economic opinion, minimum wage is the worst idea ever.

Simple example: Florida made 5.45 minimum wage last year. What did Burger King, McDonalds and the others do in response? They automatically raised prices. They aren't going to take a cut in profits to help pay, it comes out of the consumers, and guess who eats at fast food restaurants? Those same people who get paid 5.45 an hour.

Idiotic.
 
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Sure housing and energy are up... what about the cost of a computer? How about the cost of a new car (with incentives it isn't off by much). What about major appliances? Food is up... not double like gold though.

I agree gold is a good indication of where inflation is... I also beleive it can sway higher or lower than inflation... if the markets are indicating that inflation is rabid and really running, why hasn't the fixed income markets reacted?
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Bear - my apologies for taking so long to answer.

To your first point, yes, maybe a computer is the one thing you can buy cheaper now than you could three years ago. However, that has been the case w computers for 20 years - its simply the nature of the technology. More importantly - what percentage of monthly household income goes to purchasing computers? Maybe 1/4 of one percent? Now how much goes to just housing? It is not uncommon today for people to be putting 50% of their take home to P&I on a house, where just ten years ago the norm was 28%. Add energy, and you have huge price increases for the average Joe.

To your second point, you make a very good objection in citing the fixed income markets. If everything was equal, I would not have much to say to you on this topic. What you have to realize though, is all fixed income markets basically trade at a spread to the risk free rate, which is currently considered to be US Treasuries. As I stated above, the govt intentionally keeps inflation numbers low as it lowers their cost of funds. Hence, the rate in which the govt offers debt is artificially low, and most other fixed income products trade at a premium to these rates. However, at the end of the day, your argument does win. Ultimately, the govt does need buyers for its debt, and investors do required higher rates to offset high inflation. Once all of the inflationary forces from flooding the world w dollars works its way through the economy (there are always lags), you will see higher rates as the govt looks for new buyers for its debt. In fact, I believe this is exactly what we have been seeing for the last few years with constant Fed tightenings.
 
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NewYorkBuck said:
...More importantly - what percentage of monthly household income goes to purchasing computers? Maybe 1/4 of one percent? Now how much goes to just housing? It is not uncommon today for people to be putting 50% of their take home to P&I on a house, where just ten years ago the norm was 28%. Add energy, and you have huge price increases for the average Joe.
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I understand your point (and agree with it to an extent), that's why I included other large purchases such as major appliances as well as auto prices (another large chunk of folks expense).

You know the housing market (more specifically the mortgage market) better than anybody else on this board... if folks are really putting 50% of take home pay to P&I that is scary. I've read more and more folks are using "lower priced" variable rate structures to finance their housing costs. If that is the case it tells me prices are too high and a reversion to the mean is inevitable (could be a down turn, or could be a flat growth rate over an extended period of time... either way would effectively "lower" the price of housing). I look at housing as overvalued, and thus discount the price appreciation when talking inflation.


NewYorkBuck said:
...Ultimately, the govt does need buyers for its debt, and investors do required higher rates to offset high inflation. Once all of the inflationary forces from flooding the world w dollars works its way through the economy (there are always lags), you will see higher rates as the govt looks for new buyers for its debt. In fact, I believe this is exactly what we have been seeing for the last few years with constant Fed tightenings.
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As you know short term rates are established by bids, thus the market controls short rates. Yes, rates on other instruments are set via a spread above the long Treasury. I'm of the mindset that the market is forward looking, and will price current expected inflation into the pricing of fixed instruments. The market certainly isn't correct all the time... it frankly shocks me how slow the fixed income markets have reacted.

I also agree on your tightening comment. There are only so many folks the gov. can sell to. At some point rates will need to go up to entice more buyers (this of course assumes the monetary policy will continue to be a tightening policy).

I think it's safe to say inflation is increasing (funny how this is the discussion with today’s announcement... bad day to be a bank:tongue2: )...

Is the gov. the one behind the increase :sneaky: ? I understand your point (admittedly the first I've heard of such a hypothesis), I'll need to think about it more to really make a good decision. My first reaction is that all hell would break out if this were found to be true. I don't know if the gov. would want the mess on it's hands that would unquestionably occur due to the fallout if found to be true (I know, weak counter of the hypothesis)...
 
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