I got deja vu to two months ago... If the Fed's done for now, inflation roars, the dollar weakens... well, time to relook at gold my friends.
Oh, click here to see Ben's next move
Ben Blinks - A surprise!
It is the stuff that moves prices most. Based on expectations, built by Mr. B and his minion, the FOMC blinked big time.
Tough to say without the crystal ball whether or not it was the right thing to do for the economy, but first blush it appears it hasn’t done much for the Fed’s reputation or the much vaunted idea of “transparency.”
The only thing apparent to the market is that Mr. Bernanke changes his mind a lot within a narrow span of time—and we know its all about perception. Perceived, as of yesterday, as Gentle Ben again, the speculative juices are ignited as players “know” the Bernanke blink was really a nod to the alchemy of asset bubble-ology in order to support the economy: buy stocks, buy bonds, buy metals, and sell the dollar.
Case closed! One day doesn’t make a trend, but it can launch one
9 comments:
Yes, the portfolio is looking good. :)
I don't understand why you think gold is such a great buy. If you bought when keith said to you'd still be in the hole. We bought gold back in the early 80s and it still (adjusted for inflation) hasn't reached what we paid. Also we looked online to see about selling some of our silver and gold we bought back in the 80s and you know what, it ain't worth selling. Why? We were told to sell our gold they'd buy at $350 an ounce, silver $5 an ounce. They are selling it for a couple hundreds more.
Everything in the world economy is based on consumption and profit. Everyone has a "get rich now" scheme wether it is Wall Street skimming the cream off everyone's pensions, investors talking a sweet line to have people buy their gold, their land, their houses, their collectables. People buy coins, stamps, you name it and in the end most never sell at a profit.
The only way to come out a head it so work your ass off, save, live with-in your means, pay off all debt, consume less than you earn, and buy only what you need. If you can't afford to live without the money, don't spend it. As a lawyer friend told me once, "It is only worth what you can get for it at a garage sell"
Thanks Foobeca I'll check out the link. I was on-line Saturday looking at some sites that buy gold and the prices I was quoted were way less than what gold is selling for currently. I sure get sick of all the dishonesty and fraud and ripoffs out there.
And to Zinger, what does being a "sucker born everyday mean?" Age means nothing but as you can assume if I bought the gold over 23 years ago I can't be 23 years old. The US dollar isn't fiat money....yet. It still has value because people still believe it has value even if it isn't worth much. All I was pointing out was that lots of people who bought gold back in the 80s are still top-heavy and haven't kept pace with inflation and those dollars we invested back then would have earned more in the stock market or interest bearing accounts. No matter what the investment, gold, stocks, homes, land, collectables, you have to determine which meets your financial interests best and how much liquidity you need and how long you plan on holding the asset. Also you have to watch for all BUBBLEs and back when silver had run up to $50+ an ounce (over $100 today adjusted for inflation) most of the silver I bought for $20 I sold (just kept a little cause in my 20s I thought holding ingots of silver was cool) and the only consolation I had was the silver I kept was paid for by the profit so holding it didn't mean anything. And the gold coins were bought more cause I thought they were pretty and because back then I was told to keep 10% of our savings in metals. My mom didn't follow my adise and kept all her silver even when I told her to sell as the price had risen in a "bubble fashion" ( she paid around $30 an ounce )then when the price collapsed she said, "I shouldn't have listened to you and bought" I reminded her that she listened when I said buy but didn't when I said sell.
Every asset has a base, intrinsic value, usually the cost to produce. I say you have to study the cost to mine gold and silver and that would establish a base cost and if the asset doubles over production costs then I'd say that indicates the value has been driven up by asset inlfation not value.
As in almost everything I purchase I always use a reverse inflation adjustor to compare prices from the sixties to today and if it is production related then I try to figure out the cost to produce the item and what the profit margin is on that item and if it is something I might want to sell (make liquid quick) I try to figure out what the selling price is for resale and figure out if HOW MUCH I'D LOOSE if I had to sell quick. So for those who bought gold by Keith's advice months ago when it was over $700 an ounce figure out how much they lost at the current price and then deduct the price to sell and see if you still think holding gold was any different than "fiat" money.
The US Dollar is most certainly a fiat currency. Just because it has not imploded like German Mark of the twenties doesn't make it any less so. The fact that our gubbermint borrows today and pays back tomorrow in devalued dollars is proof enough for me.
Hmmm. someone slamming Gold that doesn't know about Kitco. Brilliant.
Yes, first lets define fiat money for everyone.
"In economics, fiat currency or fiat money is money whose purchasing power derives from a declaratory fiat or an authoritative order of the government issuing it. It is often associated with paper money unbacked by fixed assets, issued without the promise of redemption in some other form, and accepted by tradition or social convention."
WikipediA
planning on buying euros and gold monday... anyone want to talk me out of it?
Keith,
I understand the gold purchase. I don't understand the Euros. Is that not a fiat currency also??? I though Europe had our problems and then some when it comes to socialist governments run amok.
Foxwood: "Every asset has a base, intrinsic value, usually the cost to produce. I say you have to study the cost to mine gold and silver and that would establish a base cost and if the asset doubles over production costs then I'd say that indicates the value has been driven up by asset inlfation not value."
Gold costs under $300/oz to produce. It is selling for over double that amount. The market thinks the price is higher than the production cost. That is because people think it is a universal store of value and prefer it to paper. The price has doubled over the $300 price because of this perception. The trick is to sell when the value starts dropping, like you told your Mother to do.
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