Calling the bottom with a Sharpie

[carlsbadworker]

[quote=peterb]I have no problem seeing 1997 prices in the next couple of years….and the reason will be that no one has money to buy a house. Careful what you wish for. I’ve said it before on this site many times….when prices get to where everyone wants them, it will be because the economy is on life support. Will you have a job and the desire to take on a big debt in this situation??
I think fear will rule the day, not greed.[/quote]

By the way, just want to emphasize that this is a much worse scenario than what is predicted by OP. Others are still predicting 1997 inflation-adjusted price but I think you are predicting 1997 nominal price. The economy is deteriorating fast from the beginning of this year, so I don’t want to rule out your scenario. I am just wondering what is the optimal plan to manage such risk?

[peterb]

From what I can tell, the only asset that has growth potential is gold and gold producing miners. Because it’s real money in a world of monetary confusion and deflation.Gold mining is now the most profitable business in the world. And gold now has the highest relative strength of any asset. People think gold is an inflation hedge, but the historical record shows it to behave very well during financial chaos. I think we’ll see financial chaos for at least a couple more years.

Wage deflation will come with unemployment. Credit is being repudiated. What will things cost on a cash basis compared to the rampant credit expansion we’ve seen over the last decade or so?
I think that certain life sustaining commodities will probably increase in cost as fiat currency is debased. But things that took massive credit to maintain their prices will come down. Without wage growth, how can credit based purchases increase or even hold their price? Loans would have to be almost interest free. But who wants to take on debt to purchase something that’s going down in price?

[peterb]

From what I can tell, the only asset that has growth potential is gold and gold producing miners. Because it’s real money in a world of monetary confusion and deflation.Gold mining is now the most profitable business in the world. And gold now has the highest relative strength of any asset. People think gold is an inflation hedge, but the historical record shows it to behave very well during financial chaos. I think we’ll see financial chaos for at least a couple more years.

Wage deflation will come with unemployment. Credit is being repudiated. What will things cost on a cash basis compared to the rampant credit expansion we’ve seen over the last decade or so?
I think that certain life sustaining commodities will probably increase in cost as fiat currency is debased. But things that took massive credit to maintain their prices will come down. Without wage growth, how can credit based purchases increase or even hold their price? Loans would have to be almost interest free. But who wants to take on debt to purchase something that’s going down in price?

[peterb]

From what I can tell, the only asset that has growth potential is gold and gold producing miners. Because it’s real money in a world of monetary confusion and deflation.Gold mining is now the most profitable business in the world. And gold now has the highest relative strength of any asset. People think gold is an inflation hedge, but the historical record shows it to behave very well during financial chaos. I think we’ll see financial chaos for at least a couple more years.

Wage deflation will come with unemployment. Credit is being repudiated. What will things cost on a cash basis compared to the rampant credit expansion we’ve seen over the last decade or so?
I think that certain life sustaining commodities will probably increase in cost as fiat currency is debased. But things that took massive credit to maintain their prices will come down. Without wage growth, how can credit based purchases increase or even hold their price? Loans would have to be almost interest free. But who wants to take on debt to purchase something that’s going down in price?

[peterb]

From what I can tell, the only asset that has growth potential is gold and gold producing miners. Because it’s real money in a world of monetary confusion and deflation.Gold mining is now the most profitable business in the world. And gold now has the highest relative strength of any asset. People think gold is an inflation hedge, but the historical record shows it to behave very well during financial chaos. I think we’ll see financial chaos for at least a couple more years.

Wage deflation will come with unemployment. Credit is being repudiated. What will things cost on a cash basis compared to the rampant credit expansion we’ve seen over the last decade or so?
I think that certain life sustaining commodities will probably increase in cost as fiat currency is debased. But things that took massive credit to maintain their prices will come down. Without wage growth, how can credit based purchases increase or even hold their price? Loans would have to be almost interest free. But who wants to take on debt to purchase something that’s going down in price?

[peterb]

From what I can tell, the only asset that has growth potential is gold and gold producing miners. Because it’s real money in a world of monetary confusion and deflation.Gold mining is now the most profitable business in the world. And gold now has the highest relative strength of any asset. People think gold is an inflation hedge, but the historical record shows it to behave very well during financial chaos. I think we’ll see financial chaos for at least a couple more years.

Wage deflation will come with unemployment. Credit is being repudiated. What will things cost on a cash basis compared to the rampant credit expansion we’ve seen over the last decade or so?
I think that certain life sustaining commodities will probably increase in cost as fiat currency is debased. But things that took massive credit to maintain their prices will come down. Without wage growth, how can credit based purchases increase or even hold their price? Loans would have to be almost interest free. But who wants to take on debt to purchase something that’s going down in price?

[carlsbadworker]

peterb, I find your viewpoint interesting. So far, the FED and the government are worrying that the lenders will not lend the money because the risk is too high. But you are instead implying that the general American public borrowers don’t want to borrow as well. Goldman Sachs is already predicting that the saving rate will go up to 10% this year. So in your scenario, the US will actually become a nation of savers in spite of government reported CPI (which doesn’t count housing costs, but does count rental cost) has started increasing?
So I guess, it will be in fact perfectly safe to take risks at that time when the others are in fear? Because the economy will have strong footing from then on because the saving glut will provide adequate support for the economy going forward?

[carlsbadworker]

peterb, I find your viewpoint interesting. So far, the FED and the government are worrying that the lenders will not lend the money because the risk is too high. But you are instead implying that the general American public borrowers don’t want to borrow as well. Goldman Sachs is already predicting that the saving rate will go up to 10% this year. So in your scenario, the US will actually become a nation of savers in spite of government reported CPI (which doesn’t count housing costs, but does count rental cost) has started increasing?
So I guess, it will be in fact perfectly safe to take risks at that time when the others are in fear? Because the economy will have strong footing from then on because the saving glut will provide adequate support for the economy going forward?

[carlsbadworker]

peterb, I find your viewpoint interesting. So far, the FED and the government are worrying that the lenders will not lend the money because the risk is too high. But you are instead implying that the general American public borrowers don’t want to borrow as well. Goldman Sachs is already predicting that the saving rate will go up to 10% this year. So in your scenario, the US will actually become a nation of savers in spite of government reported CPI (which doesn’t count housing costs, but does count rental cost) has started increasing?
So I guess, it will be in fact perfectly safe to take risks at that time when the others are in fear? Because the economy will have strong footing from then on because the saving glut will provide adequate support for the economy going forward?

[carlsbadworker]

peterb, I find your viewpoint interesting. So far, the FED and the government are worrying that the lenders will not lend the money because the risk is too high. But you are instead implying that the general American public borrowers don’t want to borrow as well. Goldman Sachs is already predicting that the saving rate will go up to 10% this year. So in your scenario, the US will actually become a nation of savers in spite of government reported CPI (which doesn’t count housing costs, but does count rental cost) has started increasing?
So I guess, it will be in fact perfectly safe to take risks at that time when the others are in fear? Because the economy will have strong footing from then on because the saving glut will provide adequate support for the economy going forward?

[carlsbadworker]

peterb, I find your viewpoint interesting. So far, the FED and the government are worrying that the lenders will not lend the money because the risk is too high. But you are instead implying that the general American public borrowers don’t want to borrow as well. Goldman Sachs is already predicting that the saving rate will go up to 10% this year. So in your scenario, the US will actually become a nation of savers in spite of government reported CPI (which doesn’t count housing costs, but does count rental cost) has started increasing?
So I guess, it will be in fact perfectly safe to take risks at that time when the others are in fear? Because the economy will have strong footing from then on because the saving glut will provide adequate support for the economy going forward?

[Chris Scoreboard Johnston]

My extensive research into the relationship between gold prices and financial crises shows no relationship but a very strong one between gold prices and inflation. I devoted a whole issue of my newsletter two years ago to this topic.

For those of you that read in here and do not do your own research, please be careful with these types of comments, they are inaccurate. It may happen by coincidence that they relate going forward, but there is no consistent historical basis for this assertion.

The gold and metals trade is very crowded right now, nary a person out there except me and a few much more accomplished traders than I am have been looking at the short side of gold. Markets top when everyone has already bought, and in my view, everyone has already bought metals. Even Joyce Brothers is on the radio hawking gold! Gold was free falling until the PPT showed up yesterday to reverse it and a few other things.

[Chris Scoreboard Johnston]

My extensive research into the relationship between gold prices and financial crises shows no relationship but a very strong one between gold prices and inflation. I devoted a whole issue of my newsletter two years ago to this topic.

For those of you that read in here and do not do your own research, please be careful with these types of comments, they are inaccurate. It may happen by coincidence that they relate going forward, but there is no consistent historical basis for this assertion.

The gold and metals trade is very crowded right now, nary a person out there except me and a few much more accomplished traders than I am have been looking at the short side of gold. Markets top when everyone has already bought, and in my view, everyone has already bought metals. Even Joyce Brothers is on the radio hawking gold! Gold was free falling until the PPT showed up yesterday to reverse it and a few other things.

[Chris Scoreboard Johnston]

My extensive research into the relationship between gold prices and financial crises shows no relationship but a very strong one between gold prices and inflation. I devoted a whole issue of my newsletter two years ago to this topic.

For those of you that read in here and do not do your own research, please be careful with these types of comments, they are inaccurate. It may happen by coincidence that they relate going forward, but there is no consistent historical basis for this assertion.

The gold and metals trade is very crowded right now, nary a person out there except me and a few much more accomplished traders than I am have been looking at the short side of gold. Markets top when everyone has already bought, and in my view, everyone has already bought metals. Even Joyce Brothers is on the radio hawking gold! Gold was free falling until the PPT showed up yesterday to reverse it and a few other things.

[Chris Scoreboard Johnston]

My extensive research into the relationship between gold prices and financial crises shows no relationship but a very strong one between gold prices and inflation. I devoted a whole issue of my newsletter two years ago to this topic.

For those of you that read in here and do not do your own research, please be careful with these types of comments, they are inaccurate. It may happen by coincidence that they relate going forward, but there is no consistent historical basis for this assertion.

The gold and metals trade is very crowded right now, nary a person out there except me and a few much more accomplished traders than I am have been looking at the short side of gold. Markets top when everyone has already bought, and in my view, everyone has already bought metals. Even Joyce Brothers is on the radio hawking gold! Gold was free falling until the PPT showed up yesterday to reverse it and a few other things.

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