What crowd are we talking about exactly?
Are your friends and neighbors and coworkers trying to quickly rid themselves of FRNs? Maybe I’m the oddball, but the only people I know who consider that as a strategy are the ones on this site who still have jobs.
Even with all the attention this site and Chris’ book has gotten lately, I still think we are a minority.
Hi Mark_BC,You may want to consider New Zealand. They do have a fairly strict immigration process but it is one that my wife and I jumped through. We both now have residency permits. I am here and have been since early November and my wife is leaving tomorrow to be here on Sunday (yeah!!). The issues discussed on this site are only part of the reason we decided to move here, a lot of other factors are involved for us but, in hindsight, it is clear that our paths have been preparing us for whatever we are supposed to do over here for years. I am one of those people who do not really believe in coincidence, at least for life changing and profound events that have different threads from all kinds of directions all merging with one clear path to choose. So we are taking that path wherever it leads.
Anyway, NZ is a great place, I live in Wellington.
As far as being far away from anywhere and with a mch greater ability to support itself without totally plummeting back into third world status, I don’t think NZ can be beat.
Excelsior,
Septimus
[quote=Ready][quote=nickbert]
Sometimes, sometimes, the crowd actually knows what it’s doing
[/quote]
What crowd are we talking about exactly?
Are your friends and neighbors and coworkers trying to quickly rid themselves of FRNs? Maybe I’m the oddball, but the only people I know who consider that as a strategy are the ones on this site who still have jobs.
Even with all the attention this site and Chris’ book has gotten lately, I still think we are a minority.
[/quote]
This is exactly correct. If you can walk into any random sample of 100 people and find more than 2 that now hold physical gold for investment purposes, you are in rare company.
Bubbles cannot be described by percent increases in price alone, there is a psychology at work as well, there has to be by definition. Gold and silver are not even remotely close to that psychological territory yet. They are miles away.
If we are to describe bubble by price movements alone then the S&P being up ~100% in the past year has to qualify I suppose.
Here are some other things that are up heftily over the past year. Again, ask yourself how many people you know who are in for the ride on these items:
Cotton +145%
Silver +126%
Coffee +114%
Corn + 110%
Oats +79%
Wheat +56%
Heating oil +52%
Pork bellies +32%
Either that’s a lot of bubbles or something else is going on here.
[quote=Ready][quote=nickbert]
Sometimes, sometimes, the crowd actually knows what it’s doing
[/quote]
What crowd are we talking about exactly?
Are your friends and neighbors and coworkers trying to quickly rid themselves of FRNs? Maybe I’m the oddball, but the only people I know who consider that as a strategy are the ones on this site who still have jobs.
Even with all the attention this site and Chris’ book has gotten lately, I still think we are a minority.
[/quote]
I wasn’t being specific about any one thing or buying trend, just that sometimes (even if it’s a minority percentage of the time) the crowd isn’t wrong. But since you bring it up, no I don’t know anyone who is going whole hog into buying things with the primary motive of getting out of FRN’s. I myself am actually sitting on a fair amount of liquid cash for reasons of emergency preparedness and buying opportunities. I’m long term negative on the prospects of the dollar, but it hasn’t lost its usefulness yet.
I think you bring up a great point, though, in asking which crowd are we looking at. If we were just looking at our community here, one would get the impression that everyone is piling into gold & silver. But looking at the larger ‘crowd’ and the population as a whole, it is much the opposite… only a relatively small percentage are pursuing these things. That gap is shrinking (especially with silver) and I see huge bubble potential in gold & silver, but as of this time there’s still a huge difference in buying trends between the two ‘crowds’. As for which ‘crowds’ I pay attention to, I think it makes sense to look at the largest crowd that has the most potential influence (not necessarily current influence) over the market or asset I am thinking about. And I think you’re right, our ‘crowd’ here is not a representative sampling of that larger crowd, and making assumptions of overall market sentiment using our patterns of behavior here at this point would work against us in some cases.
- Nickbert
Chris has often pointed out that when it is apparent that the ship is not going to right itself, the rush
to move from paper moniey to tangible items eill be very sudden.
People who are activley prepping now, are tryng to be ahead of that curve.
Because we wont be able to compete against the big money when that moment comes.
The question is : Is the Commodity inflation just another bubble, or is this run up different because people are losing confidence in the currency.
John
Hey Nick,
That was more meant for the Captain than yourself. Your quote was just handy, and you were responding to Jag’s comment, so I grabbed it.
Sorry to put you on the spot.
Actually 77% of the population follows this strategy. it’s called living paycheck to paycheck:
http://www.selectsmart.com/DISCUSS/read.php?16,786455,786455#msg-786455
My working definition of a gold bubble is historical from 1980. When folks are lined up around the block to buy gold at the Bank of Nova Scotia in Toronto again then I’ll know we’re pretty well at the peak.
No doubt.
I don’t think even most folks who DO NOT live paycheck to paycheck give any thought to buying ahead on things like food or wood or invenstment in PMs. The ones who do, couldn’t even if they wanted to.
We are not unique, but clearly in the minority.
tanner, do you have any specific sources for these hand pumps? I was looking into this a while ago but didn’t turn anything up. Thanks.
Both of these companies offer pumps. You might want to do a little research and consult a plumber. With the right set up, you may even be able to pump directly into your pressure tank, which will allow you to continue to use your faucets, shower, toilets, etc.
Speaking of toilets, you might want to stock up on t.p. You can always use old newspaper or mullen leaves in a pinch, but t.p. would be worth it’s weight in gold if it became scarce. Of course, if inflation gets bad enough, you can always use $10 bills.
Ready-
Hey, not a problem. You actually kick-started my brain regarding the differences in sentiment between the ‘crowd’ here and the larger crowd, something I’d meant to mention earlier but forgot, so it was a good thing.
- Nickbert
[quote=cmartenson]Bubbles cannot be described by percent increases in price alone, there is a psychology at work as well, there has to be by definition. Gold and silver are not even remotely close to that psychological territory yet. They are miles away.
[/quote]
Hi Dr. M,
To begin, I think we need to define the word “bubble”. I will borrow from Hussman:
What exactly is a "bubble?" Informally, we can think of a bubble as an advance in an asset's price to levels that are "detached from fundamentals" - essentially, the primary motive for investing ceases to be the expectation of future cash flows or consumption, and instead centers on the expectation of further increases in price.Thus, it is the speculative component of price that creates the bubble dynamic; i.e. people invest in an asset because they believe the price will rise. While I agree with you that stocks and commodities are in bubble-land, I can't understand how you think gold and silver are "miles away" from bubble-land. No asset has more speculation enveloping it than gold, and it's difficult for me to accept that this speculation is not a major component of its price action. Also, I think it's a mistake to assume that everyone must participate in a market in order for a bubble behavior to occur. During gold's previous bubble in the 70's, your statement "If you can walk into any random sample of 100 people and find more than 2 that now hold physical gold for investment purposes, you are in rare company." would have been just as valid as it is now, but that didn't stop investors from losing money on gold when it crashed. You have frequently referred to the price action in commodities as a warning of imminent high-inflation, but historically such a move in commodities precedes a crash in price. (link) With Wall Street's history of profiting from the creation and bursting of asset bubbles, it seems more probable to me that this is just more of the same. With respect....Jeff
I get most of my news from the radio (KPFK Los Angeles a Pacifica station), then the internet, a little bit from TV, hardly any from newspapers any more. From most all the stories about “discretionary” budget talks I keep hearing, “Everything is on the table” But that is not true. Hardly anywhere or anyone or in any story content (except KPFK) mentions that the death and destruction industry needs to be cut dramatically, AKA military industrial complex.
Please check out this article
http://www.berkeleydailyplanet.com/issue/2011-03-30/article/37580?headline=Cost-of-Iraq-Afghanistan-and-Libyan-Wars-and-the-California-Tradeoffs
Cost of Iraq, Afghanistan, and Libyan Wars and the California Tradeoffs
By Ralph E. Stone
Sunday March 27, 2011
<!-- - if @article.priority
The United States national debt exceeds $14 trillion and is climbing. Nearly 14 million Americans are unemployed, about 2.2 million in California. Americans continue to lose homes to foreclosure. Public health, education, social services, and police and fire departments are facing cutbacks. Yet, we can spend more than $1 trillion dollars in wars in Iraq, Afghanistan, and Libya. Yes, if we bomb and strafe Libya, we are at war with that country. Greed, uncontrolled corporate power, and our addiction to foreign oil have led us to perpetual war, and economic and moral decline.
What is the cost of the Iraq and Afghanistan war so far and what are the tradeoffs? As of March 2011, 4,441 Americans have died in Iraq as have as many as 150,000 civilians, and another 4.5 million civilians have been displaced. In Afghanistan, 1,513 Americans have died and, although accurate counts are hard to come by, as many as 8,000 Afghan civilians have been killed and another 3.7 million refugees are internally displaced or living in neighboring countries.
The cost of those who died in these wars is immeasurable, but the dollar tradeoffs can be calculated.
The total dollar cost of the wars in Iraq and Afghanistan so far exceeds $1.171 trillion. The taxpayers in California will pay $21.8 billion for proposed total Iraq and Afghanistan war spending for FY2011. To place this figure in perspective, this money could have provided 7.5 million low-income people with healthcare for one year or 14.7 million low-income children with healthcare for one year or 7.8 million homes with renewable electricity – solar photovoltaic for one year or 2.5 million Head Start places for children for one year or 283,672 elementary school teachers for one year or 234,012 police or sheriff’s patrol officers for one year or 2.6 million scholarships for university students for one year.
There are also societal costs not included in the $1.171 trillion figure mentioned above. A 2008, RAND Corporation study found that one-in-five Iraq and Afghanistan veterans suffer from post-traumatic stress disorder (PTSD) or major depression. The RAND study estimates the societal costs of PTSD and major depression for two years after deployment range from about $6,000 to more than $25,000 per case. The RAND study estimates the total society costs for two years range from $4 billion to $6.2 billion. If PTSD and depression go untreated or are under treated, there is the likelihood of drug use, suicide, marital problems, unemployment, and homelessness. There are an estimated 107,000 homeless veterans nationwide on any given night and another 1.5 million at risk of becoming homeless.
Obviously we need to exit Iraq and Afghanistan so monies can be spent on desperately needed domestic programs and to prevent further expenses for veterans’ assistance. We have an exit strategy for Iraq. President Obama has ordered the 138,000 U.S. troops in Iraq withdrawn in three phases. They’ll leave major cities - including Baghdad, Mosul and Baquoba - by the end of June 2011. Combat operations will end by August of 2010 - leaving a force of up to 50,000 Americans, primarily to train Iraq’s military. Supposedly, all U.S. troops will be out by the end of 2011.
President Obama “hopes” that U.S. troops will start leaving Afghanistan in the summer of 2011. “Winning” in Afghanistan depends largely on Pakistan, our unreliable ally. Since 2001, the U.S. has given Pakistan about $22 billion in aid and then Pakistan refused to allow an audit on how the money was spent. That amount of money would almost erase California’s budget deficit. Most of the money lined the pockets of Pakistani political and military leaders or was spent to fight an unlikely war with India, not as it was intended, to train and equip Pakistanis to fight al Qaeda.
Remember, however, these exit strategies for Iraq and Afghanistan are targets only. Given the instability and corruption of both governments, these target dates are unlikely to be met.
And in Afghanistan, President Hamid Karzai admitted that Afghanistan cannot win the war and was reportedly – although he denied this – seeking to broker a truce with the Taliban. The estimated $1 trillion in Afghanistan’s reserves of iron, copper, cobalt, gold, and lithium makes the war more important and complicated. Will the Taliban give up so easily knowing it is worth the fight to control the country’s immense potential wealth?
In Libya, defense analysts estimate that the U.S. is spending $100 million per day. Just imposing a no-flight zone over the northern part of Libya could cost $400 million to $800 million for the initial strikes. It had also projected costs of $30 million to $100 million a week to patrol the area. Just one Tomahawk missile costs $1.4 million. More than 178 Tomahawk missiles were filed worth $250 million.
We cannot continue these enormous war expenditures ad infinitum, especially with our faltering economy. The U.S. has lost its way. End of article
This is Broadspectrum again. I get the impression that I am one of the few posters on this site that is pro peace because this aspect of the “discretionary” budget talks is not brought up in discussions on this web site either, just like MSM.
If only “our” crowd was interested in buying gold, gold wouldn’t be in the $1400’s. Don’t look now, but the paper market is capsizing our boat.
We are no longer in the minority.
I don’t think the typical definition of bubble applies to gold because it isn’t an asset that returns a profit. It isn’t real estate or bonds or stocks, whose inherent value depends on their rate of return. These asset classes can be rationally analyzed to determine whether they are in a bubble (in essence, the P/E ratios or similar things). But gold returns no profit, its only “return” is in future appreciation of price. From this, it can be seen that gold can never be in an official “bubble”, since there is no metric with which to measure this bubble. Its price can indeed go up and down though.
Gold’s price then is reflective of peoples’ beliefs about how high the price of gold will go in the future, and that’s it. Then you have to analyze what are the underlying economic fundamentals which would drive those expectations. In the face of a dollar which must go down in the medium to long term, then gold must go up. In a hyperinflation scenario gold could go up infinitely.
This could turn into a frenzy. This is why the Fed must continue to suppress gold and silver for the system to remain solvent. Once the precious metals get out of control the whole game is onver. Once the sentiment in the general populace clues in to the fact that dollars are worthless and the only reasonable way for the typical person to keep their money is to buy gold, the sky is the limit.
[quote=JAG][quote=Ready]
What crowd are we talking about exactly?
Are your friends and neighbors and coworkers trying to quickly rid themselves of FRNs? Maybe I’m the oddball, but the only people I know who consider that as a strategy are the ones on this site who still have jobs.
Even with all the attention this site and Chris’ book has gotten lately, I still think we are a minority.
[/quote]
If only “our” crowd was interested in buying gold, gold wouldn’t be in the $1400’s. Don’t look now, but the paper market is capsizing our boat.
We are no longer in the minority.
[/quote]
JAG,
With respect, you turn every conversation into an opportunity to call gold in a bubble. What was actually discussed was
Snow rakes
Wood
guns and ammo
Nail clippers
Antibiotics
etc. etc. etc.
To which you respond
I think what us sheeple are trying to say is that we don’t see a buying frenzy. People are hunkering down to ride things out, and folks with access to cash seem to be holding it.
This, while prices for stuff we need goes up:
http://www.clevelandfed.org/Research/data/US-Inflation/mcpi.cfm
and money velocity goes down
http://research.stlouisfed.org/publications/mt/page12.pdf
To me, this isn’t a gold in a bubble argument. If gold is in a bubble, everything else is too.
Thanks for a good article Chris.
Re: gold bubble ? I once heard a definition of a bubble. “Something is in a bubble when you don’t hold a position in it, and it is in a bull market when you own it.” Forgot who said that.
I am buying a few things… but I am NOT trying to get rid of my Federal Reserve notes. Nicole Foss over at Automatic Earth says that there are still many inflated claims to underlying wealth that have yet to deflate. It is perhaps the governments excessive printing that is trying to offset all assets from their future deflation. Maybe inflation will win out in the end.??
tangible wealth will win out over paper wealth in the end. Unless inflation eats it away through the slow burn. Catherine Austin Fitts says the slow burn will continue for quite a while. Slow and steady wins the race.
Just my 3 cents worth of thought (adjusted from 2 cents for inflation !)
Jeff,Gold is simply money, pull out some monetary history and read it. It’s far from perfect, but a much finer choice than fiat dollars and the bubble treasury market. You have been consistently wrong about your deflationist stand for as long as I can remember. As I recall, you were even bragging about being out of PM’s within the last few months. Have you ever read American Patriot’s posts on gold over at Marketwatch? They look similiar to yours on occasion. With respect, dont you wish you would have had some silver over the last few months? Calling a white sheep black over and over does not make it black. We are certainly a minority in our views about spending dollars today and investing in precious metals…period. When yahoo news changes their front page stories from saving and paying down your debt to burning cheap money and buying gold we can team up. Chris described you as gnashing your teeth concerning real inflation way back when, sheeple need their teeth, so dont grind them down too far.On a side note does anyone have any good info on the percentage of our debt rolling short term now? The fact that we are basically running the country on an ARM loan makes me particularly nervous.Cheers, TJ
Ahhhh Rog, good point; sorry about that everyone.
I really didn’t intend this to be a debate about gold. All I was saying is that I disagree with buying something out of fear that the price will rise. I should have left it at that.
Best…Jeff