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Very mixed thoughts.
There are several billion people that want to live like we do. Keep in mind that the world sees us through TV and movies--therefore we have a lot of 30s style mobsters but also everyone leads a happy and tranquil life with no worries and has every gadget known. That is the fantasy land of entertainment.
However, they (Chindia) are coming off very small bases and the US market is till the 800 # gorilla. If we tank we take much of the world with us.
I believe the reason the foriegn markets dropped like a rock (one is down 58% and several have been closed recently at one time or another due to downdrafts) is they looked ahead and saw the US real estate ATM was out of money and couldn't support their companies for much longer.
Keep your eye on copper. It is a good indicator of future expectations. It is holding at a high level which is good for foriegn countries. In fact keep an eye on all of the base metals because they give some insight into the future of the world economy. Like you I believe they will go much higher over time.
The dollar is not only toast it is burned toast.
As for the US I believe in Jim Rogers. He said buy equities and get out of commodities when the DOW/gold ratio is 5-1. My own targets are gold to $1600 and the DOW to drop to about $7000 and then go to $8,000 as gold hits $1600.
However, there are a lot of ifs out there. We expected $60 B in treasuries to be bought and only $46.7 B were. Bernanke may have to raise rates much higher than anticipated. At some point we may have to go back to a modified gold standard to get people to buy our paper. If that happens all bets are off and gold could sky rocket. Of course the market could tank a lot worse than $7,000 if that happened.
The last if (this could go on forever) is dollar denominated oil. It is my belief that shortly you will see oil bought in several denominations meaning why own the dollar--more headaches for Bernanke. To those on the board I must sound like that creep saying for a thousand times don't buy calls as I've been talking about oil in other currencies since February. The leadership of Iran absolutely hates us and will attack us where we are vulnerable--not militarily but the $. Putin is still smarting over Reagan winning and he will do what he can to price in rubles. Oil accounts for 76% (approx) of world trade. That is why it is so important.
So if my thoughts have thoroughly confused you welcome to the club. I'm the president.
As for your main point of gold $2000 or higher I think it is quite possible but you will see the Feds worst nightmare in the coming 5 years--significant deflation in net worth. How gold reacts to that is the real wild card.
When DOW moves lower it will drag PM stocks with it IMO - short term anyways. I'm not worried about bullion since it should rebound before stocks but markets could be very dangerous thing to be in.
With respect to gold and silver stocks--
I think what happens is you get a PE contraction so initially the PM stocks do move lower. However with rising prices in the PMs the earnings will increase so over time even with PE contraction the PPS goes up.
With respect to bullion--I believe stocks rebound before bullion. However, it won't fall in value due to PE contraction as there is no PE.
Good reasons to own both which I don't today but might very soon.
So far the stox have outperformed the metals as of late. Usually the stox will rebound before the metals.
slide the timeframe from left to right till it reads 5 days. You will see SLW has rebounded quicker and first.
However, the hot money that took down the foreign markets was American money ... and they all ran for the exist at the same time.
Too much liquidity ... but everyone is seeing the same future.
Fear runs the markets, it is stronger than greed.
In a deflationary environment, gold and silver will hold their own ... and as far as real-estate is concerned ... if you own it outright you can't lose. It is always worth something, even the CA's can tell you that as it is the belief of the profession that you CANNOT permanently impair land. CICA handbook.
This issue is, what is the "buying" power of the number associated with the asset.
So it really comes down to what you owe (debt) not what you own.
And yes the rest of the world sees a distorted standard of living in the west ... is it real - No.
Hopefully they won't fall into the same trap as many of the players in America.
Simply put, if you owe more than what the asset is worth, i.e. market value, do you really control it, or is it an illusion?
"and as far as real-estate is concerned ... if you own it outright you can't lose."
If that were only true vil. The Govt. can continually raise the property values and reassess the tax bite. If you live on a fixed income of say $3k a month and all of a sudden you get hit with a new $750 a month property tax you could easily lose your home or be forced to sell. Prop 13 withstanding real estate taxes have been on the march and it is how many municipalities are digging their way out of the budget shortfalls of the last few years.
crd, I agree with most of what you said other than the false picture of Western lifestyles. I believe the to 80% of the people in the West live well above 80% of the people in the East. That will change and it will not be because they buy big screen tv's or SUV's it will be by having larger savings accounts and better homes and better infrastructure, hospitals, etc. All things of a less frivolous nature than the consuming mad US consumer.