Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I'm inclined to believe that gold and silver will go up, but I am getting contradictory information.
Here are some points I would like to address.
1) Peak Oil. I've heard this discussed, but I do not believe this to be the case. The reason is because the oil fields in central Asia are 5 to 7 times larger than those in the middle east, and it is full of light oil, just waiting for a pipeline to be completed where it can begin production, in roughly 10 years.
I realize there are many competing developing nations for that resource, but Eastern Russia has 2 times more oil than Central Asia. The point being, there is plenty of oil.
The problem is, when the pipeline is completed, the oil will likely not be sold in US dollars, but in another currency such as Euros, Yuan or Ruples...etc.
This will lower the demand for the dollar because it will not be necessary to hold dollars to exchange for oil. It is likely that countries around the world holding the dollar, will slowly being to drop it.
2) Social Security. US workforce participation rate is not high enough, nor will it be high enough, nor will GDP growth be high enough to sustain this program. The most accurate looking analysis seem to predict these accounts will default in roughly 2023.
This will happen around the time the pipeline is in full production capacity, and that will likely result in hyperinflation.
But until that point, I don't believe the dollar will go into a state of hyperinflation.
I've seen arguments about the P/E ratio, saying the stock market is overvalued, and according to the CAPE ratio, that is indeed the case, with the market trading at roughly 25 times earnings.
However, with bonds having such a low interest rate, they are not an attractive investment. Additionally, guys like Cramer and others keep telling people not to invest in gold and silver.
My question is, what would prompt people to invest in gold and silver, and what would raise the price?
I assume that when the market has a correction or even crashes, people will buy silver and gold as a hedge against the market, thus driving prices upward, especially considering real estate doesn't seem to be a viable investment option either.
It seems that QE has caused the stock market to be overvalued and the housing market to be overvalued, but what else can people invest in?
Gold and silver, sure, but when? I mean, at what point will we see the bottom of gold and silver? What will trigger a market correction?
A panic?
Considering they've changed the formula that calculates GDP, I don't foresee a recession in the near future, since they've added research and development into the Investment part of the equation.
So, how do we know when to buy?
Also, what else besides a bunch of panicking Americans drive the price of silver and gold?
i only use bullion etf's. gold stocks are stocks first and a play on gold second. i don't want my gold position dependant on corporate management,profits, strikes and political issues .
we had a period of time where south african gold mine strikes caused the shares of the mining stocks to plunge while the metal itself was soaring.
even 2008-2009 saw gold break new highs while the gold stocks plunged with the rest of the equity market.
What will drive the price of gold? I agree with you that I think it is a viable investment, especially with all the evidence you have presented to support your case, but I've also seen you talk about peak oil.
Do you still hold the same thoughts regarding oil?
Don't get me wrong, supply of oil will be limited until the Black Sea Pipeline is in production capacity, but when that happens, it will signficantly raise the supply.
I am just a guy with an opinion. I obviously don't have all my money in gold and silver investments. I have a good amount of stocks, been raising cash, and gold/silver with some miners.
peak oil will occur, the question is when. We produce let's say 90 million barrels. If we want 3% more than that, we need to produce 8.1 million barrels of oil to get to 92.7 million barrels of oil. the next year if we want 3% more we will need to find 8.4 million barrels of oil. It's because the oil oil is declining at 6% rate or so. Can we find oil in quantities of 40 million barrels of production per day in the next 5 years for 3% growth? I think you can see what I am looking at. Obviously the figures are aggressive in this example, but perhaps 5 million barrels are needed. Can we find an Iran + worth of production in this world every single year?
Debt around the world is rising for every country at record levels. Why are they doing this?
They are trying to stop the free market from correcting the wrong prices in the housing market, stock market, and bond market. They are doing this buy trying to force interest rates as low as possible, buying up crap mortgages, and forcing people into risk assets because there is no yield anywhere in the banks. I think the markets are still trying to clear the crap. It's rare that bonds and stocks are poor investments at the same time. When this does happen, where is the money going to go? Gold does well under inflation and deflation, horrible under disinflation. I think the fed will succeed in getting inflation at some point but the jury is still out. They need inflation in order to inflate their debts away, but perhaps deflation will win out. Demographics aren't in there favor either.
Again, everything over time when priced against each other in a ratio shows that item vrs. item goes from undervalued to overvalued against each other. in order to gain purchasing power increases you need to be in those assets that gain against other assets to buy more of those other assets. You cannot gain purchasing power by buying a house in 2000 and have it go down with respect to oil/gold/most commodities/stocks.
The ratio's favor gold and the trend favors gold, and interest rates/P/E/Dividend yields all show stocks are expensive, bonds are expensive and gold is cheap. I don't fight history, I just put my money where it is cheap. If we have a massive deflated blow out somehow (and I am sure the fed will fight it), that is why I have some cash so I can load back up on stocks if they become "undervalued" against other assets. They were heading to a very good undervalued spot but the fed/government pushed them higher with policies. The money in stocks are going to find a new home when this bubbles pops, I am guessing in commodities.
I am just a guy with an opinion. I obviously don't have all my money in gold and silver investments. I have a good amount of stocks, been raising cash, and gold/silver with some miners.
peak oil will occur, the question is when. We produce let's say 90 million barrels. If we want 3% more than that, we need to produce 8.1 million barrels of oil to get to 92.7 million barrels of oil. the next year if we want 3% more we will need to find 8.4 million barrels of oil. It's because the oil oil is declining at 6% rate or so. Can we find oil in quantities of 40 million barrels of production per day in the next 5 years for 3% growth? I think you can see what I am looking at. Obviously the figures are aggressive in this example, but perhaps 5 million barrels are needed. Can we find an Iran + worth of production in this world every single year?
Debt around the world is rising for every country at record levels. Why are they doing this?
They are trying to stop the free market from correcting the wrong prices in the housing market, stock market, and bond market. They are doing this buy trying to force interest rates as low as possible, buying up crap mortgages, and forcing people into risk assets because there is no yield anywhere in the banks. I think the markets are still trying to clear the crap. It's rare that bonds and stocks are poor investments at the same time. When this does happen, where is the money going to go? Gold does well under inflation and deflation, horrible under disinflation. I think the fed will succeed in getting inflation at some point but the jury is still out. They need inflation in order to inflate their debts away, but perhaps deflation will win out. Demographics aren't in there favor either.
Again, everything over time when priced against each other in a ratio shows that item vrs. item goes from undervalued to overvalued against each other. in order to gain purchasing power increases you need to be in those assets that gain against other assets to buy more of those other assets. You cannot gain purchasing power by buying a house in 2000 and have it go down with respect to oil/gold/most commodities/stocks.
The ratio's favor gold and the trend favors gold, and interest rates/P/E/Dividend yields all show stocks are expensive, bonds are expensive and gold is cheap. I don't fight history, I just put my money where it is cheap. If we have a massive deflated blow out somehow (and I am sure the fed will fight it), that is why I have some cash so I can load back up on stocks if they become "undervalued" against other assets. They were heading to a very good undervalued spot but the fed/government pushed them higher with policies. The money in stocks are going to find a new home when this bubbles pops, I am guessing in commodities.
I understand your perspective; however, compared to 1980 when gold was at a previous high, if you adjust the price/oz for inflation, you get a number just over $1,700/oz. Compared to that particular year, Gold is still undervalued at $1,200/oz; however, many believe it was overpriced in 1980.
While they can't produce 10 million barrels of oil per day now, when the black see pipeline is completed, they will be producing 10 million barrels per day, but not sold in USD. It will likely be in production capacity in 7-12 years.
Granted, in the market will probably crash in the mean time, but on paper, it looks like everything is overvalued. It seems like the stock market is overvalued, the housing market is definitely overvalued, bonds are worthless, and gold and silver is overvalued.
So what the hell is there to invest in? I guess, I see your point in Gold, but it will be Americans that push the price up because I don't see that global demand will rise. It will mostly be frantic Americans.
Or perhaps, the market will just enter a stage of stability where it just stagnates. Couldn't this persist for years? I mean, something would have to propel people to take their money out of the market, but considering they are doing things to cover people's eyes, like reformating their calculation for GDP to make it inflated, what will trigger panic?
I understand your perspective; however, compared to 1980 when gold was at a previous high, if you adjust the price/oz for inflation, you get a number just over $1,700/oz. Compared to that particular year, Gold is still undervalued at $1,200/oz; however, many believe it was overpriced in 1980.
While they can't produce 10 million barrels of oil per day now, when the black see pipeline is completed, they will be producing 10 million barrels per day, but not sold in USD. It will likely be in production capacity in 7-12 years.
Granted, in the market will probably crash in the mean time, but on paper, it looks like everything is overvalued. It seems like the stock market is overvalued, the housing market is definitely overvalued, bonds are worthless, and gold and silver is overvalued.
So what the hell is there to invest in? I guess, I see your point in Gold, but it will be Americans that push the price up because I don't see that global demand will rise. It will mostly be frantic Americans.
Or perhaps, the market will just enter a stage of stability where it just stagnates. Couldn't this persist for years? I mean, something would have to propel people to take their money out of the market, but considering they are doing things to cover people's eyes, like reformating their calculation for GDP to make it inflated, what will trigger panic?
I appreciate your insight.
If that oil comes online in 7-12 yrs, we need oil quantities of 35-60 million barrels a day of production because of the decline rates on the existing fields. Also look at the decline of exportable oil around the world. Mexico was a few millions barrels a day exporter to now an importer of oil. same with UK. The new find you are taking about will slow the decline we will have in oil in the future, but it won't increase production.
Gold in relation to the money supply is DRASTICALLY underpriced. Back in 1980 the price of gold covered the money supply 100%, and also covered M2 credit. Today the price of gold and ounces held by US government are a fraction of the money supply. Gold would need to be $44,000/ounce to do what it did in 1980. Inflation is the increase in the money supply, NOT CPI government manipulated garbage.
Gold is more undervalued today than it was in 2000 because of the money supply growth. M3 credit is being destroyed and M0 money is being created. The eastern countries are accumulating gold because they are most likely going to start a solid currency over there. The dollar and US government in terms of "financial freedom" are dropping like a rock against other countries. We were #3 in the world and I think we are #16 now and moved this quick over only a few years.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
