“Definitely, I think we won’t see real loss of value of 50% in just a couple years (like for e.g. $1600 for gold, $200 for oil, $8 for milk, $6 for gas etc.,) unless we go through a Soviet style revolution – which I am not expecting.”
Okay B-man, if both of us are still on this board in September 2009, we’ll see where gold, oil and milk are. I’m not expecting $8 milk (I think the demand for cow juice will drop before we hit that price point), but $200 oil is not out of the question at all. Analysts in Asia and Europe were speculating this week (after the rate cut) that oil could easily be $180 by the end of next year. And if we take on Iran…you’d better hope you have a Huffy or a skateboard in your garage.
I actually think gold will be above $1600 in 3 years. In 1978 inflation-adjusted dollars, it should be about $1800/oz. I think the central banks have done a fine job of suppressing the price of gold to hide the deterioration of their fiat trash, uh…currency.
Here’s the bottom line: I don’t think that the Fed, Congress, the central banks or anyone esle at this point has the power to “slow the fall.” This beast has taken on a life of its own now. No one, least of all China, wants to see the US take a dirt nap. But the ugly truth is that the as soon as someone blinks, and the stampede begins, it’s over. It will happen so fast, there will be no time to think about safety nets.
And let’s face it: if they had any “real” safety nets, they would have used them by now. The only bullet they had was a rate cut. They fired and missed. In FACT, mortgage rates actually JUMPED after the rate cut, as they follow the bond rate: the average rate on a 30-year U.S. mortgage with no upfront points rose 1/8 of a percentage point on Thursday to 6-1/2 percent, according to BestInfo Inc. Doh!!!
We are in uncharted territory, my friend. “Safe” has no meaning anymore.
In a Depression (and make no mistake, that’s what we are about to enter)everyone does hurt. I guess that’s why they call it a Depression?
