Hmm, inflation, deflation, which one is it now?

TurdlingSterling crashing as well. Surely this means demand will drop, imports will drop, and prices will go down?

Hooray - time to start slashing interest rates then

Central bank liquidity is now going straight into the commodities market.

Only a small fraction needs to leak into it becuase of the relative size of the market.

The mature economies are going to be wrecked as a result - all becuase of previous short term policies and debt based growth. All they have done is destroy the value of earnings and savings (both corporate and personal).

Wreckers.

Add Corn at 11 year high due to China imposing an export tax...

deflation will happen... of cash relative to gold.

Imagine this: house prices crash 40-50% AND the interest rates go down to 0-1%. Sounds like a FTB's wet dream.

Spot on. If you were an investment bank and had to invest billions, what would you choose now?

Other than Goldmans, I'm not sure of many investment banks with billions sloshing around at the moment. They're all shit scared of what other toxic waste they're holding.

They still have proprietary trading, I would think. Also, there is a lot of rich individuals out there who have clever financial advisors (who read this webpage ).

http://www.bloomberg.com/apps/news?pid=206...&refer=home


Oooops. Even the big money managers expect more inflation. Hence they will create more inflation by investing accordingly.

Darn it. Thought we were in for the mother of all deflations.

I would buy a donkeys and bicycles.

I think transport systems should have emergency fallback redundancy.

You wouldn't say that if you'd had a vets bill for maintaining one of these nutters

Never mind when the cute creatures get the hump & clear off

w/e

This is why I keep a bicycle hedge.

"hump & clear"? what sort of Donkey paraphanalia is that?

You can have monetary deflation and price rises in some commodities at the same time.

Theres an entire website devoted to that.

It features the sex life of a Serbian porno pole vaulter, Georgio.

I wouldn't recommend subscribing.

linky winky to wonky donky poly porn pls

Why?

(that should kill the thread)

Anyone got a durex ?

which? Serbian Donkey Porn, or the house price crash? you are not clear

Too much Fosbury Flopping.

I know. But some people here seem not to.

I've lost track of what people think. I suspect (at least to begin with, and depending on commodity) we will see deflation (in M4 at least) and rises in energy and food due to the fact that these items will be in short supply. Also gold will likely go up for a bit as things scare the horses. If this trend continues, though, there will be a reduction in excess liquidity for things like gold, apart from from sovereign wealth funds, so where gold goes depends on what they do, or can do. Ultimately if there is big deflation then commodity prices fall (although in terms of your income flow, they might still be an increasing percentage) but a big deflation will mean a depression, so let's hope that that doesn't happen. A stalling of money supply growth is probably the softest landing that I can see - you still get remaining liquidity heading towards non-essential commodities (e.g. gold) and the potential for price rises in essentials (energy, food) due to other factors.

Oil hovering close to $100, central bankers fear inflation pressures, China having 18% food inflation PER MONTH, gold hit $897.50 yesterday night.

Man, deflation truly scares the $h1t out of me.*


*NOT!

I see you found the thread then.

Gold Finger, I understand that you have done very well in gold but historically it has always peaked and dropped (catastrophically) within a relatively short time frame. Are you planning to get out before the next drop, and when do you think it will be?

I wouldn't recommend anyone getting into gold now, it may still have some percentage left but I think it's a risky bet. Why buy something when it's peaking? There are lots of cheap shares around, both in the UK and globally.

I almost cr@p my pants here because of deflation-angst.


http://www.fxstreet.com/news/forex-news/ar...4a-6383ae0217be

Ok, this is what happened to gold in the last HPC, why will it be any different this time?

Could be pretty similar. Higher peak possibly, since the mess is so much bigger, and there are some new kids on the block like China. Could also be it stays high when China, Russia or some arab country introduces a gold-backed currency. Going to be interesting.

Seems the G**d bugs talk about deflation even more than me these days.

There is so much deflation in the system, it is shocking. I am cr@pping my pants over it.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

There is actually so much deflation, that:

http://www.jsmineset.com/

Yeah, deflation. Riiiight....

Donkeys and bicycles? I much prefer the Monty Python choice of diesel powered nuns.

What's your exit strategy GF?

http://goldismoney.info/forums/showthread.php?t=195370

Had a look at your submissions. Very good. And you are undoubtedly right at the mo'.

Have you read the following....food for thought anyway.


http://www.marketoracle.co.uk/Article3333.html

I've read it and the most important piece is possibly:


A weak Dollar will propel gold.

I'm perhaps more uncertain than you. Just beware not to pick out bits that support your existing views...it could bite you in the end.

The article summarises as follows:

"What the upcoming recession “will look like” has been the topic of a fierce debate on the Internet. Everyone seems to agree that this is not a typical economic downturn resulting from overproduction, under-consumption or malinvestment. Rather, it is the crashing of humongous equity bubbles that were generated by the Fed's abusive expansion of credit and the unprecedented proliferation of opaque structured-debt instruments. Many believe that the unwinding of these bubbles will trigger a round of hyper-inflation which is already evident in soaring food, energy and health care costs. These prices are bound to increase substantially as the Fed continues to cut rates and further undermine the dollar.

But the real issue (it seems to me) is the unfathomable loss of market capitalization, the growing insolvency of maxed-out consumers, and the inability of the banks to freely extend credit to responsible loan applicants. These three things are likely to drag down all asset-classes, slow business activity to a crawl, and compel consumers to hoard rather than spend. The dollar will strengthen in an deflationary environment. (if that is any consolation?)"

So what he and others is saying - not that there won't be an upspike in inflation and increases in commodity prices as we are seeing now....but that the looming problem is deflation. And from my reading of what they say between the lines, that appears to be the BoE's view too.

So you are possibly calling a little early. But who knows eh?

A huge revamp of the financial system into gold is a tall order to hope for - the central banks make too much money from fiat based currency and fractional banking to let that happen. The biggest threat to gold is the dollar in my opinion. Any sign of the dollar regaining strength will cause gold to drop its pants. Those of us who bought late (me) had best hope it doesn't.

China/India future demand for gold is also a weak arguement i believe. Though gold's attraction is its wealth its 4x overpriced from its long term. The price will severley numb the demand.

EDIT: spelling

I agree, the looming problem IS deflation (and you would need real bankruptcies of banks with lost deposits for that (not just takeovers, writedowns etc.)). But that's why we have central banks. They will avoid that. They will avoid money supply deflation, and most likely cause even more inflation on a massive scale. Read Bernanke. He has his Weimar-style actions all explained in previous papers. It's gonna be fun.

There is too much money in the system and under matresses in Asia. Now that there is the risk of systemic failure and high inflation, this money will be spent on real things, and safe haven assets.

Creditor nations tend to have a dollar peg...so the prices they export at are less volatile in local currency. Dollar inflation is causing big problems in these countries and still means that the value of the currency you receive for your goods falls. To remove the dollar peg would cause massive appreciation and thereby increase prices of your products and would result in reduced demand.

I think the approach by the two types of creditor nations would be different.

Producers such as China would still want to maintain their competitiveness and therefore would not want to institute a new currency that would do that.

But if I were a commodity exporter, I certainly would look at a new currency that my trading partners could not debase. That currency could be 'gold' if its supply (inflation) is managed carefully (and we all know the Russians have found limitless amounts of the stuff under the Siberian tundra)...or even an imaginary digitised currency that doesn't need to be mined. I would choose the latter personally...after all we are only talking about trust here whatever it is.

Then you should be in gold. The US banking system is entering meltdown mode, and the trade gap is widening. No more questions.


As I wrote yesterday (with attached article!), jewellerey demand turns into investment demand. 4x overpriced? Did you make the mistake of not taking inflation into account?

Sounds like rubbish. There is also limitless gold in the world's oceans. Problem is, it's not economic to get it out.

Please don't start the whole RB-StarTrek-creation-of -gold-out -of-nothing nonsense again. Creation of gold out of nothing happens all the time. It's called a short of gold on the COMEX.

Hey Goldfinger,

Since people buy gold (or any other commodity) in the hope that it's price will rise & they can sell it on before the price falls (to somebody who will no doubt lose money from the transaction) isn't the whole thing inherently dishonest?

Aren't people who wish to profit in this way inherently dishonest, regardless of whatever justifications they have brainwashed themselves with to dull their conscience from intervening.

Would such a person spread the word about gold out of benevolence or would it be out of greed?

What type of person are you goldfinger?

Are you spreading the message out of the kindness of your heart or are you ramping gold for your own ends?

Will you inform everyone on hpc.co.uk when you have decided to sell, or will you wait till after?

Will you shoot yourself in the foot or will you stab hpc.co.uk members in the back?

Hey bearORbull$h1t....

I guess you've figured out I post on more than one thread.

heheh

Gold over $900, "Factory gate inflation hits a 16-year high in December but the Bank of England is still expected to cut borrowing costs".
http://business.timesonline.co.uk/tol/busi...icle3184703.ece

I am really cr@pping my deflation pants here.

Only having a bit of fun. And I think your fuller answer is a much more thoughtful position. And I can agree the central banks will try to avoid deflation. But any range of outcomes could result. May depend on whether demand collapses even in the face of monetary and fiscal stimuli.