Gold and Treasuries

Stocks suck, especially at these levels. I'd love to see the data about gold in deflation. I bought some on the basis of the chart, and that I beleive the basic premise that fiat money is suspect.

"As Noah and others have speculated for some time, it appears that Gold may now be ready to breakthrough $1000. While I own some GDX, my bias has been toward SLV which, in the event of a breakout, will continue to go up as well."

It's interesting reading Noah and his thoughts. If Gold & Silver (SLV) is a hedge on inflation, then why was he screaming about the upcoming deflationary collapse to linger for years? You think this is burger king...have it your way?

it will linger for years. anyone expecting a return to prebubble credit flow will be disappointed. Are you saying its great out there now because stocks are up? Look at the labor market. The deflationary forces will have effects that last years, not quarters

No, i'm just wondering why you would recommend Gold which is an 'inflation' hedge as a holding if you believe that deflation will linger for years?

whoa, Im not buyng gold as an inflation hedge, that kicks in later, I originally bought gold as a fear hedge and as an anti-fiat currency trade when vast amounts of money has been printed to offset deflationary forces. I never said I worried about inflation or hyperinflation, yet gold rose. clearly something else is at play.

inflation worries may power gold from 1200 to 1500 in years to come. but today, inflation is not a concern yet gold is rising to $1000 again. so I ask you, why?

...and the Silver ETF (SLV) which is an industrial metal.

And this is where i lose you.
In order for fiat currency to collapse, hyperinflation MUST be in play. No?

Just to be clear. You know which camp i'm in. I'm also a big believer in Gold and precious metals.

"inflation worries may power gold from 1200 to 1500 in years to come. but today, inflation is not a concern yet gold is rising to $1000 again. so I ask you, why?"

The truth is, inflation is still in play. It stalled for now.

I will further add, like I did many times here an on UD, that in my opinion inflation will first show up in the form of higher food, energy, taxes, rates, health care, commodities, etc..the stuff that we need to live and the side effects of actions taken to stem this crisis. It will squeeze consumers and profit margins for businesses.

We will not see runaway housing prices as a result of inflation. Sure we may see stabilization of prices after unsustainable destruction and perhaps even a natural bounce off the hardest hit markets as market forces rebound from uber distressed levels, but not runaway price gains that hyperinflationists say is inevitable.

When the fed starts to combat perceived inflationary pressures down the road and rates are raised and they start draining liquidity from system, we will have to see if banks rush to take hoarded money in excess reserves and lend that out. Watch the M1 multiplier that is now muddling after a plunge. Our system simply is not multiplying money the way our fractional reserve banking system was designed to do, and rightfully so in times of deflation. CRedit is still contracting and losses still need to be absorbed by banks.

But I can see it already, prices plunge 35% from peak and then rise 5% and inflationists will say, 'see, I was right, inflation is here and prices are rising, yay'....its all relative and many choose not to look where we came from.

Right now, your dollars can buy way more house and way more stocks than only 2-3 years ago as credit contracts. Does that sound inflationary?

have to run for appt, will resume this in hour or so

"Right now, your dollars can buy way more house and way more stocks than only 2-3 years ago as credit contracts. Does that sound inflationary?" I agree, it doesn't sound inflationary but.....you are using 2-3 years as a measuring stick.

How bout 6-7 years ago? Does that sound inflationary?

"form of higher food, energy, taxes, rates, health care, commodities, etc"

Everything is higher since 2000 except for rates. Strange?

Gold and most commodities are still above historical averages. If it isn't inflation, then what can it be?

i am referring to after the bursting of the credit bubble, like I should be. Inflation needs credit to be expanding and velocity of money to be rising to really be of concern. Since the credit bubble burst, the opposite is happening. I dont have time to do into details on this, and if I did, you probably would still think the same. Which is fine. You are saying we have inflation now, because asset prices are still a bit higher than they were in 2002. I dont dig that logic

You can have the dollar falling and gold rising.

Commodities are in a long term bull trend. Everyone one of them made a higher low, unlike this POS stock market.

you can also have the dollar rising, and gold rising, as it did in early 2009.

My only point was you don't need all this velocity business for commodities, gold et al, to rise relative to the dollar.

i agree

From AUG 2008 to Feb 2009 the US dollar index rose from a level of around 74 to about 89. During this same period, gold rose from about 720 to just under 1,000. Food for thought.

Relationships are spurious. Stay tuned as stocks rise over the next two years and Manhattan RE falls.

One of the common statements that I have been hearing regarding the recent move in Gold is that it is a reflection of inflationary fears. I disagree...Like UD says, we will see inflation when it manifests itself in higher food, fuel, rents etc. Until then, we are in a period of deflation. The reason for the move up in Gold is partially a reflection of dissatisfaction with the dollar, coupled with a belief that the rally is losing steam. When inflation does kick in, we will see yet another leg up with Gold.