[threadbear]

Anarky, Your reasoning is really good, but the variable of diminishing natural resource base enters into the picture. What we are trying to model here is very difficult, even for skilled economists with advanced computer modelling systems, during times of geologically abundant oil. I guess it boils down to which will contract faster and deeper, the economy or supply of oil.

[anarky321]

alot of it is going to be guesswork, because we are in uncharted waters gentlemen, make no mistake about it, the current conjuncture has no precedent in history, none at all, similarities exist to past events but this is a whole new ballgame

i am also unsubscribing from the thread as i barely have enough time to argue in the "population" and "reproduction" threads, and lets be honest those are much more contentious issues than commodity prices

cheers

[patience]

So, what do us old guys do with savings?

1) Stocks and muni bonds are out. Too shaky.
2) Short term Treasuries yield approximately nothing. Why bother?
Not much different than dollars, on yield and risk.
3) Long term Treasuries are worse than dollars from my risk POV.
4) CD's, bank accounts look shaky. Who knows who will survive?
5) Commodities just took a dump, and nobody can convince me to
get into PM's due to obvious volatility.
6) Don't know how to trade currencies, and have no confidence in
what will happen to them anyway.
7) I could buy steel stock for our business, but I have no
confidence in selling it this year before it grows rust.
Have all the food, fuel, solar, durable goods, etc., that I want.
9) Home is paid for, and in good shape. No debt.
10) Consumer goods depreciate as fast as week old banana's.

Some years ago, I'd have bought Muni's or Treasuries, and about half in conservative stocks. Not now, of course.

So. Do I sit here and watch my $$ melt? I have zero appetite for risk, or paper investments of ANY kind with ANYBODY'S name on it.

(Don't know how to get rid of the smiley. Doesn't belong there. Fat-fingered mistake; not being a smart ass.)

[Heineken]

I agree the list is getting short, but I'd still buy PMs, Patience.

The point is to convert your potentially worthless paper money into something that will always have value. That's not a bad trade at any price.

Silver actually looks fairly attractive to me at this point.

Or, invest in your house. Make it more bullet-proof. A house is like a boat; it always needs some maintenance.

Or buy some land, for the same reasons you should be buying PMs.

[DantesPeak]

I suppose if I had no family, I would get a farm that has a water source or sufficient rain.

But since I have a lot of family obligations, I won't be moving.

I recommend PMs. The volitility isn't that great in perspective of how fast it is climbing.

I stated on new year's eve that gold would reach $1000 and silver $20 by April 1, which tunred out to be correct.

Now I am saying if you can stand a little volitility, the rapid depreciation in the US dollar's intrinsic value will result in the dollar becoming eventually worthless - as compared to its current value.

Do you think anyone who bought gold/silver in 2002 and held is unhapppy now? The rise in the future will be even more rapid than what we saw in the last six years.

[dohboi]

Of course the government can "reclaim" PMs, as they have in the past. And land ownership depends on a functioning legal system, and of course land has been "redistributed" many times in many countries.

Nothing is certain, but it may be time to expand our notion of "investment" and "security." Investing in entities that may help communities continue to function at some level may ultimately give the greatest "payback." I am blessed to live (well, it was also by choice) in an area with lots of folks that are aware of future risks. There are a lot of alternative food distribution systems (coops, farmers markets, community sponsored ag...). I encourage these and other such structures as much as I can.

Not that these are guarantees, of course. The people NOT involved in these alternatives in the area still vastly outnumbers those in them. And any of these can fall apart for any number of reasons.

But most systems become more resilient the more variety of structures there are within them. I'm guessing communities with a rich variety of distribution systems will be more robust than places with one Walmart and one Cub. But who the hell knows.

Very few will be able to survive as an "island." We will need community. And we will need the good will of those around us.

Having said that, I think I'll head down to the pawn shop and see what kinds of silver and gold baubles they have, and I'm considering again buying up some of the properties going into foreclosure nearby.

Happy bunny day.

[smallpoxgirl]

[web]http://quotes.ino.com/chart/history.gif?s=NYBOT_DX&t=l&w=15&a=50&v=d12[/web]

Volatility or not, it doesn't seem complex to me that you want to be invested in one of the top three graphs and not the fourth one.

[seldom_seen]

$this->bbcode_second_pass_quote('anarky321', 'f')ood and oil and gold going up is NOT inflation its supply and demand

[smallpoxgirl]

$this->bbcode_second_pass_quote('anarky321', 'f')ood and oil and gold going up is NOT inflation its supply and demand

[patience]

SPG,
I think the definition is the problem with understanding here. Seen the ame problem for months on Ticker Forum, where a majority of posters there call inflation strictly an expansion of money supply, without regard to any price movement whatsoever. Others call inflation an increase in prices. The first group says an increase inprice is a possible EFFECT of inflation, but the price of a given article could also go down with an increased money supply, providing the supply of that article increased faster than the money.

Once terms are defined on a common basis, I don't think there is much disagreement here. JMHO.

[roccman]

$this->bbcode_second_pass_quote('patience', ' ')Seen the ame problem for months on Ticker Forum, where a majority of posters there call inflation strictly an expansion of money supply, without regard to any price movement whatsoever.

[MC2]

well, Anarky is right, and Karl Denninger is right. The destruction of credit and wealth in this imploding real estate/derivative bubble should be pretty obvious to folks, but gold bugs seem to have a form of gilt-induced insanity that blinds them to reality. Gold will be heading towards 500/oz, which is close to its "real value" when you strip away the premium that's become associated to it by the speculative mania. (Oh, and oil is headed back to 60/bbl in the next year.)

If you want to risk losing close to 50 per cent of your investment, go ahead and by PMs. They'll be worth "something" for sure, just not as much as the cash you spent on them.

In deflationary contractions, cash is king. All you need to know.

Just look at the bond market:

http://market-ticker.denninger.net/2008 ... raise.html

[roccman]

$this->bbcode_second_pass_quote('MC2', 'w')ell, Anarky is right, and Karl Denninger is right. The destruction of credit and wealth in this imploding real estate/derivative bubble should be pretty obvious to folks, but gold bugs seem to have a form of gilt-induced insanity that blinds them to reality. Gold will be heading towards 500/oz, which is close to its "real value" when you strip away the premium that's become associated to it by the speculative mania. (Oh, and oil is headed back to 60/bbl in the next year.)

If you want to risk losing close to 50 per cent of your investment, go ahead and by PMs. They'll be worth "something" for sure, just not as much as the cash you spent on them.

In deflationary contractions, cash is king. All you need to know.

Just look at the bond market:

http://market-ticker.denninger.net/2008 ... raise.html

[MC2]

Rocc, Karl is not a Peak-Oiler. He may eventually wake up to its realities.

What Karl is, though, is one hell of a market and technical analyst, and he has nailed the problem we are facing in the markets, equities, as well as credit. Ignore his writings at your own peril.

I repeat, and for the record, you will see gold at 500/oz before you see it at 1500. Hell, you might see it before the elections.

Oil is heading for 60 within 12 months. And, it will stay there, as demand destruction from the recession/depression takes hold.

[smallpoxgirl]

$this->bbcode_second_pass_quote('MC2', 'w')ell, Anarky is right, and Karl Denninger is right. The destruction of credit and wealth in this imploding real estate/derivative bubble should be pretty obvious to folks,

[MC2]

Small, did you read the linked blog from Denninger? It lays it out better than I can.

Prime mortgages are nowhere near 2 per cent, and won't be. The interest rate on short term treasuries has collapsed because of the flight to quality, which means people are putting it there because it's the ONLY place they are assured of rerturn OF principal, nevermind return on principal.

Take a half hour and read some the "Tickers" Karl has put up at the site I linked to. Should explain it all better than I can.

Bottom line, we are royally fucked. Gold and silver are commodoties and should be treated as such. Commodoties, including oil, go DOWN in deflationary contractions. We are in one. It's getting worse.

Anarky has already laid out the discussion on inflation versus price fluctuation based on supply/demand and other factors.

[seldom_seen]

$this->bbcode_second_pass_quote('smallpoxgirl', 'r')ising prices is the definition of inflation.

[DantesPeak]

What's the true value of gold? of oil? I don't claim to know, but I'm not betting on the price of either to fall.

So we might not have what is called cost-push inflation. That doesn't mean the price of gasoline and diesel won't be selling at $10/gallon while your income is still the same as now.

Unless someone can tell me why a US dollar backed by some second level mortgage derivative is going to increase in value versus common basic commodities of depleting quantity, all these other points about deflation are seem superfluous to me.

Inflation is usually about the quantity of money, but it could also be about the quality of money. This was easier to see in the gold backed system, when for example, the dollar was devalued from $20 to $35 in the 1930s depression.

[patience]

I made a similiar enquiry in the Housing Collapse Thread, as to should I buy extra steel supply for resale. Shortonoil answered that it takes (if I remember right) 94,000 BTU's to make a pound of steel, and those BTU's aren't getting any cheaper! Excellent point, that the energy content of products will make them relatively more dear, no matter what the currencies do.

It seems to me that energy content causing price increases makes it much more difficult to find clear indications of what is happening to the US dollar. The dollar index number is relative to a basket of other currencies, and oil price is rising in dollars. Anybody know what oil prices are doing relative to gold? My point is, where do we look for a benchmark for values? Some things are clear enough, such as my relative spending power has gone down, but finding all the reasons why is more difficult.

The only general concensus I've seen about the financial world is that we are in uncharted territory in some ways. Many things from the past are comparable in some ways, but none fit perfectly? If so , I guess we have to wait and see, at least I can't see through it.

Thanks to all for your thoughts! This is a great bunch of folks.

[steam_cannon]

$this->bbcode_second_pass_quote('patience', '7')) I could buy steel stock for our business, but I have no
confidence in selling it this year before it grows rust.
Have all the food, fuel, solar, durable goods, etc., that I want.
9)

Don't know how to get rid of the smiley.