October 30, 2007

HYPERINFLATION!!!!!! The US dollar destruction is here as gold and oil hit new highs


Got commodities?

Remember when people mocked HP'ers for saying gold and oil would soar and the dollar would collapse? Bet they feel like fools today.

Ben Bernanke hates you, especially if you earn or save US dollars. So invest accordingly, especially if the idiot cuts rates again this week.


Dollar and oil hit new records

Oil hit a new record high of $93.80 and the dollar struck a new low yesterday as investors showed their growing certainty that the US Federal Reserve will cut interest rates on Wednesday.

The same conviction also saw gold approach $800 a troy ounce – its highest price for 28 years – while equities made gains. The move into gold reflects how investors fear rising inflation from the twin forces of higher oil prices and a weaker dollar

57 comments:

Anonymous said...

Drudge headlines this morning

OIL NEARS $94...

$3.24 a gallon in San Fran...

PRICE LIKELY TO HIT 1979 HIGH Gold price closes in on $800... Dollar Drops to New Low Against the Euro...

Canadian dollar hits 47-year high...

Coke adds life said...

Ah, but the stock market contiues to bounce so things are fine. Well, sort of fine. Well, perhaps a little fine.

OK, fine enough that Ben's buddies can finish cashing out before the bounce ends and the ball just falls.

But the good news is that he is not likely to cut more than 50 BP at a time so the pace of crash will be measured - irrational cuts would just make it melt faster.

See, you can put a positive spin on ANYTHING!

Sparty said...

Ahhh Good ol Grandma Weimar. Wonder what she's cooking up tonight. An old leather boot? Maybe just some broth?

She was a real sweety Grandma Weimar, just keep the firearms and booze away from her if the conversation turned to the german govt GRRRRRRRRR!!!

Anonymous said...

Be careful. We might have a sell on the news situation with respect to gold and oil timed with the "fed cut".

Homes are directly related to commodities.

Probably related more to debt than supply/demand.

Anonymous said...

>> Remember when people mocked HP'ers for saying gold and oil would soar and the dollar would collapse? Bet they feel like fools today.

No, not at all. I implore JUST ONE of you gold pushers to take one gold coin to the grocery store TODAY and see what you can buy.

That's right - nothing. The store will call the police, who will call the FBI, who will rush to the store to see what you're trying to pass off as funny money.

Folks, we're well on our way to a cashless society. ALL currency will be invalid, including your temporarily precious gold. We've all been gamed, and this crash is going to be unlike ANY in history, one in which even precious metals will become worthless.

Anonymous said...

Look for a short-term correction, but the long-term trend remains positive for commodities. Nothing like a weak economy on life support and massive trade and spending imbalances to increase confidence in the currency.

/sarcasm off

LauraVella said...

Gold is hitting new highs- however, both gold stocks and oil stocks are stagnant. What gives?

Anonymous said...

Hey guys you have it all wrong. Mr. Paulson supports a strong dollar.

Talk is Cheap.


http://housingdepression.blogspot.com/2007/10/home-prices-fell-44-in-august-paulson.html

Sandy

devestment said...

Fiat is total control and power. Inflation will separate the middle class from capital and absorb national debit. High interest will emerge to solve the crisis behind the curve and strengthen the dollar. Americans that can't get ahead are forced to work which perpetuates the power of the fiat and strengthens the country through production. This is the welfare slave state, courtesy of the illusion of freedom. You are powerless; media driven hot topics outside the scope of government business such as abortion and gay rights will keep your focus removed from the real issues of freedom while you waste your life in a housing cell filled with escapist crap while watching and believing what the television tells you. This is physiologically beyond the scope of your understanding because your consciousness is full of alcohol, caffeine, sugar, and preservatives. Work on slave laborer. Work on!

Budvar said...

"No, not at all. I implore JUST ONE of you gold pushers to take one gold coin to the grocery store TODAY and see what you can buy."

Is that a fact? You have tried it I take it? I had the same argument one night with one of my mates, and had a bet that if the takeaway would take silver rounds in payment, he pays for the meal, if not I do. Takeaway was more than happy to take silver at spot price.

Will safeways accept it as payment for a weeks shopping? No they wont, but if I walk into any jeweler they will pay me out at spot, no problem.

amused said...

We're a long way from hyperinflation. Actually, we should see a nice rally in the dollar at some point. It could start tomorrow if the Fed gets a backbone and says 'no cut' based on the fundamentals rather than the market hysteria. Oil is near or at a high right now, too. There should be a correction there, and also with gold, which could be fairly substantial.

As it has for the past few years, the collapse will take a while to play out in the months ahead.

One thing--when the dollar starts to rally, expect the stock markets to come down, and fast.

Continue on with merriment in progress...

Anonymous said...

This is one way the bailout is taking place right now:

U.S. Tosses Lifeline to Lenders Using Home Loan Banks
http://bloomberg.com/apps/news?pid=20601087&sid=a_l2_kTFSFGU&refer=home

http://tinyurl.com/2udaf3

Anonymous said...

I implore JUST ONE of you gold pushers to take one gold coin to the grocery store TODAY and see what you can buy.


I'd like to see you take a house to the grocery store and see if you can get a loaf of bread. Of course not, you idiot. Does that mean that gold, stocks, cars and houses are worthless? No, you idiot. Those are items that store value and you exchange them for currency when you need it.

When we get to the cashless society, let me know. For now, I'll stick with gold and stay away from real estate.

Anonymous said...

Keith,

Lets talk turkey. What is the Fed's plan and how can we $$$ on it? How far will gold go? How far down will the dollar be?

Anonymous said...

No, not at all. I implore JUST ONE of you gold pushers to take one gold coin to the grocery store TODAY and see what you can buy.
---------

You are a real dumb idiot. I would have no problem taking my gold to coin shop and cashing in my profits INTO ANY CURRENCY I WANT. Then I'll go buy you a clue!

Viva la Gringo said...

I can't wait for gas to get to $6 or even $7 a gallon.

Traffic will get better and there should be fewer illegal aliens and other poor uninsured drivers on the roads.

One can hope anyways...

MrCoffee said...

Barnanke has very much proven himself to be a fool. He is a tool of Wall Street, and will do what ever they tell him to. Again, expect a 50 basis point cut at least, followed by double digit increases in food and energy prices.

Anonymous said...

Hey guys you have it all wrong. Mr. Paulson supports a strong dollar.

He didn't specify "US Federal Reserve Notes" now did he?

The Aussie and Loonie dollars are on a tear. And soon enough Hong Kong and maybe Taiwan dollars will melt up when China loosens the peg more.

Anonymous said...


You are a real dumb idiot. I would have no problem taking my gold to coin shop and cashing in my profits INTO ANY CURRENCY I WANT. Then I'll go buy you a clue!


And what happens when they instill a friendly Customs/IRS/Secret Service officer from Homeland Security at every coin shop, to take their special 25% "Anti Terrorist Money Laundering Security Fee".

You'll get a 7-page form which you can submit to apply for a reimbursement.

Oh yeah, they have a bit of a backlog, and they don't seem to be accepting your documentation.

k.w. - southern ca. said...

Very true.

The basic daily necessities we need are paid for in US currency, and most US citizens are more concerned with this then even considering trading gold and oil stocks.

One thing is for sure, the price for gold and oil definitely tells us how worthless our paper money is becoming - and fast.

A rate cut has no effect on mortgage resets, all it will do is put this country into a deeper financial crisis.


Anonymous said...
>> Remember when people mocked HP'ers for saying gold and oil would soar and the dollar would collapse? Bet they feel like fools today.

No, not at all. I implore JUST ONE of you gold pushers to take one gold coin to the grocery store TODAY and see what you can buy.

That's right - nothing. The store will call the police, who will call the FBI, who will rush to the store to see what you're trying to pass off as funny money.

Folks, we're well on our way to a cashless society. ALL currency will be invalid, including your temporarily precious gold. We've all been gamed, and this crash is going to be unlike ANY in history, one in which even precious metals will become worthless.

Peter T said...

Keith, didn't you proclaim recently that cash is king? Now you seem to proclaim that cash is trash.

With the falling Fed rate, we don't get so much money anymore for our deposits. Looks like the Fed wants us to buy stocks. Wouldn't hyperinflation, however, show in the long treasuries? The 10-year is not going up, but rather stays where it is - what do bond investors know that inflationists don't?

Anonymous said...

anon said:
>> Remember when people mocked HP'ers for saying gold and oil would soar and the dollar would collapse? Bet they feel like fools today.

No, not at all. I implore JUST ONE of you gold pushers to take one gold coin to the grocery store TODAY and see what you can buy.

That's right - nothing. The store will call the police, who will call the FBI, who will rush to the store to see what you're trying to pass off as funny money.

Folks, we're well on our way to a cashless society. ALL currency will be invalid, including your temporarily precious gold. We've all been gamed, and this crash is going to be unlike ANY in history, one in which even precious metals will become worthless.

___________________________________

You are both ignorant and sad. It is true that you would be a fool to go to a grocery store and buy food with a gold coin. The reason for this is the American Eagle gold coin only has a face value of $50. It's just as stupid as if you used silver dollars and bought groceries that way.

However, what people like you seem to forget is there are places called coin shops and jewelry stores. You can take you gold coin into one of these stores and exchange it for it's full market value in fiat currency (less a small transaction fee like 2%).

The cashless society is certainly a possiblity, I rarely use cash anymore. But to say that the value of precious metals will fall to zero is preposterous. They will always have value and will be able to be exchanged for something else.

Please do some more research before you post again.

Jymkata.

corvinus said...

I'm still a broke college student. However, a few years ago I bought some gold and silver for $1,800.

It's now about $3,000.

Tick tick tick...

Anonymous said...

I can't wait for gas to get to $6 or even $7 a gallon.

Traffic will get better and there should be fewer illegal aliens and other poor uninsured drivers on the roads.


When gas becomes scarce/pricey it gets stolen. Locking gas caps, along with bell bottoms and leisure suits, were all the rage in the 1970s. Why? People would walk out of their house in the morning, go to their car in the driveway, start it, and see the gas needle at E. Gas tank had been siphoned and emptied during the night.

Anonymous said...

Commodities may be a safe way to hold on to your net worth.
However you are wrong to single out the Dollar from other paper currencies.
Anyone trading Dollars for, say the Euro.. is bound to loose their shirt.

Anonymous said...

You are powerless; media driven hot topics outside the scope of government business such as abortion and gay rights will keep your focus removed from the real issues of freedom while you waste your life in a housing cell filled with escapist crap while watching and believing what the television tells you. This is physiologically beyond the scope of your understanding because your consciousness is full of alcohol, caffeine, sugar, and preservatives.

Yes. Besides the obvious (turn off the brain cell destroying television), fasting during the day clears the mind and strengthens/heals the body. Think better. Function better. Energy put toward digestion of junk food (a battle for the body) is redirected to intelligent accomplishment. Eat at night (whatever you want!) when at rest. Body better equipped to handle digestion, which takes energy, (even junk) when doesn't have to do anything else. Please note this is the EXACT OPPOSITE the establishment tells us. They say to eat and hydrate all the time, every 4 hours or 2 hours like you're a growing infant or something. No wonder we're always tired, ill, brain fogged, and coming down with cancer.

Anonymous said...

>> I'd like to see you take a house to the grocery store and see if you can get a loaf of bread. Of course not, you idiot.

>> You are a real dumb idiot. I would have no problem taking my gold to coin shop and cashing in my profits INTO ANY CURRENCY I WANT. Then I'll go buy you a clue!

Were you guys born brain damaged, or did you become that way later in life? I said 'take a gold coin to the grocery store', not your house, or your gold to a coin shop.

The problem is YOU idiots think your gold will never be confiscated. What a bunch of douchebags - when the shit finally hits the fan, THAT'S the 2nd thing that's going to happen, the first being the catastrophe that brings on our mutual doom, be it an American city getting nuked or the stock market actually crashing.

Yeah, it really WILL be different this time - *everything* will be worthless - except for guns, food and water.

Anonymous said...

Never in human history has gold been worthless and it won't be worthless in a cashless society. We're probably around half cashless now. People should trust bits in a computer even less than wood pulp printed green with dead presidents.

Anonymous said...

Dear HPers,
Hello, my name is Ben Bernanke i am the work with the Federal reserve.
I've been informed that you all are the brightest and most knowledgeable economist alive today, some even argue
that never in history has there been a group of such savvy financial wizards as HPers, and there probably will never again be
such a unique collection of currencies experts like you HPers.
I'm coming to you to seek your expertise.
Given that you all own tons of Gold and Silver i was thinking of lowering the interest rates which may lower the value of the Dollar,
hence increase the value of your precious metal investments.
so, my question is, should i pretend to listen to Wall St and only lower by 25 - 50 basis points
which will likely have some impact on your metal holdings
or should i listen to you guys and lower interest rates by a whopping 4%?
Now this will make you rich!
You all will be able to afford a house 'finally'! or possibly tiny flat in smelly old Europe.

Damn, Damn, Damn, If only i listened to HPers all along.

borkafatty said...

2 off topic comment, but great reads non the less

The Recessionary Macro Effect of the Worst U.S. Housing Bust Ever
http://www.rgemonitor.com/blog/roubini/


Closing the 'Collapse Gap': the USSR was better prepared for collapse than the US
http://www.energybulletin.net/23259.html

Anonymous said...

HI Keith,


I put some $70 puts on USO oil fund. To high to fast....Sold my gold stocks, and put some puts on all the biggies...

keith said...

The Manias, Panics and Crashes mantra is "cash is king". HP'ers know my take - cash will be king, but DEFINITELY not US dollars

Gold is cash
Euros are cash
Pounds are cash

The key in a crash is liquidity.

However, after Ben panicked and cut 1/2, go back that day and you'll see I recommended joining in the party - foreign funds, gold, anything benefiting from inflation and the dollar downfall.

During this crash, you'll have to keep up with events and don't fight the Fed.

Right now I believe in commodities, oil, gold, foreign funds, multi-nationals and cash (euros and pounds).

After Wednesday's decision, I'll adjust based on what Ben does.

Above all, if you make or save US dollars, you're in a heap of trouble right now. Even if the Dow goes to 500,000 and houses skyrocked 1000%, they key is what is the US dollar worth, what is its buying power.

I think the Fed and Bush administration are trying to hide the housing crash from the stupid public by destroying the dollar and using bogus inflation numbers, and making people think their houses haven't fallen much in value.

Budvar said...

"And what happens when they instill a friendly Customs/IRS/Secret Service officer from Homeland Security at every coin shop, to take their special 25% "Anti Terrorist Money Laundering Security Fee".

Another American that thinks the USA is the rest of the world!!
If this becomes the case, take a little walk north or south of the border and sell it there whilst giving uncle sam the middle finger salute to his 25% tax. Alternatively take a $200 flight to London, Paris, or Frankfurt and sell it for Euros/sterling.

Budvar said...

"The problem is YOU idiots think your gold will never be confiscated."



I can guarantee 110% that no gold or silver of mine will ever get confiscated, they have to find it first!!

Anonymous said...

Only people who make very little money give a fuck about the cost of gas or milk. Gas could double, hell triple overnight and I'd barely notice. Same with milk and bread.

Only people who are affected are the trailer trash working for $8 an hour.

Oh and save your bullshit about how you are all gazillionaires. If you were $5 gas wouldn't worry you.

Anonymous said...

Are you kidding me? All of this talk about "doom and gloom" is NONSENSE. Look at the facts below.

America is the wealthiest nation of the face of this earth. The world needs America more than America needs the rest of the world. We attract a lot of foreign capital and this trend won't reverse. Why? Where else are they going to dump their excess savings?

If things get really bad, then our Federal government will bail out the housing industry.

Everything is fine. This is just a temporary correction. The doom sayers have been wrong in the past and they will be wrong this time also.

Anonymous said...

Lower rates now, so that by the election next year new borrowing will be equated with recovery. After the election, the shit hits the fan and its time to raise rates. In recent memeory, the only time the Fed did NOT cut the funds rate before a Pres election was for Jimmy Carter. The lag effect of a Fed Funds increase or decrease is 6 months to 1 year. Only a fool would own No gold and silver. On some of my old US Gold coins, the face value is $20. One thing is certain, $20 will never buy an ounce of Gold again. Slowly but surely, all printed paper money leads to INFLATION.

Peter T said...

Keith, you wrote:
> cash will be king, but DEFINITELY not US dollars

Do you know Mish (Shedlock) over at trend analysis? He was an early housing bear and still is. Mish is bullish on the dollar, because, as soon as the dead weight Iraq is thrown off, the dollar would rise. Cash would be king, and the dollar more than the euro. One reason Mish gives: They have their own housing bubble in the UK and Euroland (except Germany) and will feel deflationary forces as much or even more than the US does now. I don't know which prediction will come true: better to diversify the cash.

long termer said...

Keefer said:

‘Euros are cash
Pounds are cash’

Oh man you are gonna bite these words,
hope you wont choke on em.

Indeed they seem voluble for a fleeing second in history.

There is absolutely nothing underneath the European currencies its nothing more then a short lived anti dollar play.

Being that you are soo smart when it comes to understanding the fundamental P/E of housing, how is it that you don’t see it when it comes to money.

Plus: Euros and Pounds are like Housing in 05.

Anonymous said...

I dumped my Euros on the day the European antitrust commission prevailed on the Microsoft case. (Not that I think Microsoft is correct).
Europe seems to be on an eternal self-destructive path, they are inherently over regulated, bent on limiting free enterprise, there comes a point when a business weighs the options of expanding and attracting the European clientele VS getting undressed and bending over to the multitude of EU regulating commissions, at some point it simply does not make economic sense to do business in Europe.

Princess Mononoke said...

Anonymous said...
"Are you kidding me? All of this talk about "doom and gloom" is NONSENSE. Look at the facts below." October 30, 2007 9:32 PM

You leave me speechless and that's a first!

Alpha_Bear said...

"Anyone trading Dollars for, say the Euro.. is bound to loose their shirt."

You've got it backwards. Anyone who doesn't trade their US Dollars for Euros (or most any other currency) will lose their shirt.

beta bear said...

Alpha Bear said:
‘You've got it backwards. Anyone who doesn't trade their US Dollars for Euros (or most any other currency) will lose their shirt.’

People who make financial decisions with their emotions always lose.
Dumping the greenback, the currency of the most stable political and economical country on this planet, just cause you hate America will end up costing you your very own made in China shirt.

Are you nuts?
Please explain the fundamentals of any other paper money: the logical conclusion is that of all the fiat currencies on this globe, the USA Dollar is the only one that is backed by
A hunger, drive and ambition to success.
All the others (every single one of them) are backed by nationalism, which can NOT in the end outgrow the dollar.

Anonymous said...

And what happens when they instill a friendly Customs/IRS/Secret Service officer from Homeland Security at every coin shop, to take their special 25% "Anti Terrorist Money Laundering Security Fee".

If things get that bad you can be assured there will be a black market in just about everything. It is not different this time.

Trailer Trash said...

Only people who are affected are the trailer trash working for $8 an hour.

YOU will be affected when the "trailer trash" break into your McMansion(tm) and line up to take their turn with your trophy wife after drinking all your liquor and cleaning out your fridge. But dont worry... you won't be alive to watch the action.

borkafatty said...

Only people who make very little money give a fuck about the cost of gas or milk. Gas could double, hell triple overnight and I'd barely notice. Same with milk and bread.

Only people who are affected are the trailer trash working for $8 an hour.

Oh and save your bullshit about how you are all gazillionaires. If you were $5 gas wouldn't worry you.

---------

Hey Anonymous..could you do me a favor..and go f@ck yourself.

Signed

the poor people.

Anonymous said...

TROLLHUNTER


Lets do an experiment, if people really hate gold so much.

Buy $3200 (4 coins) and put $3200 in a savings account.

In one year see which performs better.



I can exchange my Gold Coins anywhere in the world in exchange for currencies. Gold can be exchanged for this monopoly money at any time.

Anonymous said...

The US Dollar is backed by $9 trillion of government debt and a few trillion more of unsecured consumer debt.

metal detector said...

Sorry folks the door was closed last May when Bush signed the "Small Business and Work Opportunity Act" (HR2206). So what you say, what the hell does that have to do with me and my money?

Here's the deal, tucked away in this innocent sounding law are provisions that severely restrict transfer of assets by U.S. citizens who plan to emigrate. It even imposes an exit tax on unrealized gains in the retirement accounts and portfolios of emigrees!

DHS and TSA bureaucrats will have a field day with this one as they nab people who dare try and flee the land of the free and the home of the brave.

P-W-N-E-D suckas!

TM said...

The Manias, Panics and Crashes mantra is "cash is king". HP'ers know my take - cash will be king, but DEFINITELY not US dollars

Gold is cash
Euros are cash
Pounds are cash

The key in a crash is liquidity.


If liquidity is key, then US dollars would trump all three of your examples for someone living in the US, for it is far more liquid than gold or foreign currencies.

All you really need to know about gold is that it is being hawked on radio and cable tv ads as a sure investment, which means even the hoopleheads are buying gold now, a screaming "sell" signal if there ever was one.

The Euro and Pound? Mish is right. They're no better than the dollar, actually arguably worse.

How is it that you caught the Housing Panic so early and accurately, yet are missing this currency panic?

Budvar said...

"All you really need to know about gold is that it is being hawked on radio and cable tv ads as a sure investment, which means even the hoopleheads are buying gold now, a screaming "sell" signal if there ever was one."


I'm calling Bullshit on this one, complete and utter bullshit!!

The only ads for gold and silver pushing investment, are shit like collectables from the Franklin mint, (you know the ones who do the crappy printed commemorative plates that will be worth a fortune in years to come as they're a limited edition of 250million worldwide?) As for these radio ads you speak of, does the ad go something like this?

"No more helocs? Credit cards maxed out the wazzoo? Finding it hard to make those increasing monthly payments? We can help, with gold at nearly all time highs, we will buy all your unwanted gold at top prices at Clink and Cleatus cash converters (We dont like the word pawnshop any more)? Somehow I suspect it is.

Budvar said...

Why invest in gold & silver? This pretty much explains it all.


http://uk.youtube.com/watch?v=1w0LOtWmy_o

Roccman said...

I told you so!

And know what else is rolling this way...

U got it!

The great dieoff.

www.dieoff.com

Cheers.

autistic hooplehead said...

"All you really need to know about gold is that it is being hawked on radio and cable tv ads as a sure investment, which means even the hoopleheads are buying gold now, a screaming "sell" signal if there ever was one."

No, when gold bars appear on the cover of Time magazine, that will be the sell signal.

devestment said...

Anonymous said...
The US Dollar is backed by $9 trillion of government debt and a few trillion more of unsecured consumer debt.

No, $9 trillion of government debt and a few trillion more of unsecured consumer debt are backed by future taxes, treasury securities, and slave labor. The dollar is backed by nuclear weapons, your local police, media brainwashing, and people who accept it as payment.

Anonymous said...

GOLD TO DA MOON ALICE!!!!!

Cow_tipping said...

I think $4 gas across the country is a great thing.
Why ??? how ???
OK companies will start allowing (rather making) people work from home 1-2+ days a week.
Better yet, my 10 motorcycles with their ability to run 50+ mpg in the car pool lanes will double in $$$.
Cool.
Cow_tipping.