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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (64607)	6/5/2005 5:30:46 AM
From: macavity	Read Replies (2) \| Respond to of 74559

The US is going to be Japan post 1989. A benign depression where every 'recovery' fails, with recession the norm. The big question in my book is does Gold rally up from here or not. Metal says perhaps-yes; stocks say perhaps-no. -macavity

To: TobagoJack who wrote (64607)	6/5/2005 3:35:18 PM
From: Taikun	Read Replies (1) \| Respond to of 74559

Jay, US rates at nominal zero is correct, for money should not 'cost' anything, unless you want to preserve it's value in terms of other goods. I have thought several times about unwinding housing puts, and did unwind a few recently. Financials and builders will continue to flourish as we move towards Japans zero rate. (In Japan, financials and homebuilders suffered after the burst but not up to it. Japan's burt occurred with high interest rates, what about America's?) :O This is the only outcome: But if once public opinion is convinced that the increase in the quantity of money will continue and never come to an end, and that consequently the prices of all commodities and services will not cease to rise, everybody becomes eager to buy as much as possible and to restrict his cash holding to a minimum size. For under these circumstances the regular costs incurred by holding cash are increased by the losses caused by the progressive fall in purchasing power. The advantages of holding cash must be paid for by sacrifices which are deemed unreasonably burdensome. This phenomenon was, in the great European inflations of the 'twenties, called flight into real goods (Flucht in die Sachwerte) or crack-up boom (Katastrophenhausse). I did read this piece: atimes.com Suppose that the current price of gold is $420. Let us calculate the discount on the dollar. At the time the US defaulted on its gold obligation to foreign creditors in 1971, $35 was the price of 1 ounce of gold . Therefore the gold value of the dollar was 1/35 oz. If the gold price is $420 per oz, then the current gold value of the dollar is 1/420 oz. So in terms of gold, dollar has lost: 1/35 - 1/420 Now, 1/420 = 1/(35 times 12) = (1/35)(1/12). Therefore the loss is 1/35 - 1/420 = 1/35 - (1/35)(1/12) = (1/35)(1 - 1/12) = (1/35)(12/12 - 1/12) = (1/35)(11/12) = (1/35)(0.9166) In percentage terms, the loss, also known as discount, is 91.66%. Not yet 100, but close enough. Small comfort, as the last 8.33% of the loss, coincident with the death-throes of the dollar, is likely to be most violent and painful Jay, the author used 420 to show the US has lost about 91% of its value. Well, in Nov gold was $450, and by these calculations gold must cost infinity because the USD already went valueless (value=zero) at the peak 1980 gold price of $850, reached on 24th January, 1980. Perhaps gold isn't a good benchmark. D