Silver below $16

[moneymaker]

Time to buy. With Feds no longer buying bonds inflation is just around the corner, unless we go into depression, either way silver/gold seem like a smart buy right now.

[The-Shoveler]

Yep nearing 5 year low.

Think I will buy a little silver.

Gold still looks expensive to me however.

[Leorocky]

Why would the end of easing mean inflation is aorund the corner? The narrative the past several years is that the Feds actions would cause inflation and now they are stopping. Inflation has been very mild the entire time. Higher rates, if in the cards, certainly isn’t going to cause inflation.

[poorgradstudent]

I noticed that dip yesterday. Gold has fallen quite a bit this year too.

I’d wait for a true bottom (don’t try to catch a falling knife), but on the first sign of life it’s probably a good time to buy.

[spdrun]

If anything, the end of Fed money-printing might cause “good deflation”. i.e. deflation in speculative commodities (food, energy, housing) that will actually help the average American get by.

If some specuvestors get burned (a) good (b) f’em.

This might raise core inflation, since the average sheep will have more money to spend on things like consumer goods.

[moneymaker]

I’m not sure the government is printing money (in excess of current inflation). If they wanted to balance the budget then they could, but I don’t see that happening anytime soon. The government doesn’t want inflation any more than the average American, because then their servicing on the debt would go up. In my mind it’s inevitable, it’s just a question of when, sorta like the big quake that’s coming to CA. Why not prepare now for it.

[spdrun]

Fed =/= the government.

Fed is a semi-private organization that mostly serves its own interests.

As far as the gov’t wanting inflation, if you can push up wages in absolute terms, collect more taxes, then you can pay the debt earlier. Ideal scenario would be high inflation with low rates.

[The-Shoveler]

Two things I believe
1)I believe the Fed has absolute control over interest rates (if it wants to).

2)Congress has absolute control over Fed minimum wage.

Japan saw deflation because it’s pension earning population wanted it that way.

The real masters of the universe in controlling wages and inflation however are the Chinese

[spdrun]

1) Only if there are other willing buyers of gov’t debt at the prices the Fed pays
2) Sure, but there isn’t a prayer of a GOP House raising min wage significantly. At this point, it’s a state matter, practically speaking.

[poorgradstudent]

[quote=spdrun]1) Only if there are other willing buyers of gov’t debt at the prices the Fed pays
2) Sure, but there isn’t a prayer of a GOP House raising min wage significantly. At this point, it’s a state matter, practically speaking.[/quote]

We’re actually in the process of running an incredibly interesting minimum wage experiment in this country, as some states and cities are jacking up their wages while others are sticking with the low Fed minimum. In a few years we’ll have some nice data that either shows the higher wages do in fact cause inflation and don’t help the little guy at all, or a higher minimum wage reduces the poverty level.

… (or the truth will lie somewhere in between, which will keep the waters nice and muddy).

[pencilneck]

Speaking of experiments, I’ll quote Leo.

“Inflation has been very mild the entire time. Higher rates, if in the cards, certainly isn’t going to cause inflation.”

I think that our entire outlook on interest rates is pre-global. As Japan and the US have demonstrated in recent years, in global environments low interest rates encourage investment outflow. Not all, but a lot of money goes to work in the areas (countries, in this example) with the best risk/reward, so money flows to countries with perceived low risk and higher interest rates.

Over the past few years we’ve had massive monetary inflation. This hasn’t yet translated into price inflation as capital has largely flowed elsewhere.

Our low interest rates have in effect acted to export a large portion of our monetary inflation to become price inflation in other countries. When interest rates rise, capital previously directed elsewhere will return. I believe we will see price inflation coincident with rising interest rates.

Of course, this belief is contrary to common opinion and 100 years of Fed policy. And comes from a certifiable idiot to boot. So take of it what you will.

To loop this back to the topic, if my theory holds true, the time to invest in silver (and other metals) will be when interest rates start rising. When that will be I have no idea.

[FlyerInHi]

You’re definitely on to something, pencilneck. There’s a huge amount of carry trade going on.

A global system is how it should work. That’s how developing countries with younger populations, higher growth potential get investments to improve living standards. We get the returns on investments.

[moneymaker]

I think it is interesting how people want to buy American goods, but when it comes to silver/gold bullion no one cares where it was mined.

[scaredyclassic]

Given the environmental degradation mining it might be a net loser for a country.

[CA renter]

[quote=pencilneck]Speaking of experiments, I’ll quote Leo.

“Inflation has been very mild the entire time. Higher rates, if in the cards, certainly isn’t going to cause inflation.”

I think that our entire outlook on interest rates is pre-global. As Japan and the US have demonstrated in recent years, in global environments low interest rates encourage investment outflow. Not all, but a lot of money goes to work in the areas (countries, in this example) with the best risk/reward, so money flows to countries with perceived low risk and higher interest rates.

Over the past few years we’ve had massive monetary inflation. This hasn’t yet translated into price inflation as capital has largely flowed elsewhere.

Our low interest rates have in effect acted to export a large portion of our monetary inflation to become price inflation in other countries. When interest rates rise, capital previously directed elsewhere will return. I believe we will see price inflation coincident with rising interest rates.

Of course, this belief is contrary to common opinion and 100 years of Fed policy. And comes from a certifiable idiot to boot. So take of it what you will.

To loop this back to the topic, if my theory holds true, the time to invest in silver (and other metals) will be when interest rates start rising. When that will be I have no idea.[/quote]

Interesting perspective, pencilneck.

We’ve had *plenty* of inflation here, IMHO, but it’s mostly been in speculative assets, including housing. Look at most commodities and they are still up from 2008-2010 levels. While many would claim that those prices were artificially low, I believe that prices at that time were correcting to where they should have been after being pushed to artificial highs via the manipulations of the Fed and Wall Street.

But there is no doubt that money has been sloshing around the globe in search of yield. If we get higher interest rates while still maintaining the same faith in our currency, it’s reasonable to expect that money will flow back here, but then interest rates would go down again if money flows to bonds.

[Author]

Posts