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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: benwood who wrote (58573)	12/3/2009 12:12:28 AM
From: elmatador	Read Replies (1) \| Respond to of 217749

Debasing would only keep making physical assets to get more expensive. Result: Prices increase by speculation Debasing will make artificially priced assets collapse. Result: Iceland, Dubai crash.

To: benwood who wrote (58573)	12/3/2009 11:59:00 AM
From: energyplay	1 Recommendation Read Replies (1) \| Respond to of 217749

Slow motion reset ? I think it is possible that world is seeing a slow motion, managed reset and devaluation. Just because something happens over five years instead of one week doesn't mean it is not happening. A slow motion reset/devaluation could also be easier to trade, the timing might be less critical. The price response of commodities might also be different - let's compare oil and gold. If the value of the USD is cut 50%, the oil price should double. But note that oil is a consumption item. If this devaluation takes 5 years, there is time to adjust, conserve, and develop new sources to some degree - all this will tend to REDUCE the price response of OIL. For gold, the situation is far different, as the current value of gold sales is less than 1% of the oil sales (that's a guess). More time means almost everybody in the world will at some time have some spare cash to buy gold, and for the most part, they will not be compelled to sell, or at least not to sell all of their gold. This means the price of gold can go much higher. Since gold is an investment, it can also be a momentum play. The gold supply from mining is less elastic than oil. As we saw in the late 70's processing gold from jewelry and scrap takes a long time, because of the large number of small transactions which require assay or evaluation and refining. So while the price of gold might go to 2000 or 6000 dollars during an overnight devaluation, the the price could be run up to some large multiple of those values over a period of years - maybe 5000, 10 000, maybe 15 000 dollars. The prices would be far above projected mining cost, even with oil twice as expensive. Note also that an increase in the price of oil makes many people, from Gulf Arabs to Texans rich, and requires a large redistribution of wealth an income, the gold industry is much much smaller, and would require much less disruption of everyday activities, and is thus more sustainable. **** Someone pointed out that the stock prices of many of the very small gold mining companies had enormous gains (>> 1000 %) during the gold run in the 1970s, and we have not seen this yet. Commodities win - and some commodities might have enormous wins.