The GOLD scream room

[Pointedstick]

Even used RVs and boats can cost you an astonishing amount of money. There's a lot more than just depreciation to consider. Consider the additional costs of taxes, registration, training costs for new licenses or endorsements, extra gas consumption, maintenance, storage, purchasing hardware for your vehicle, purchasing a new vehicle capable of doing the job, taxes and registration for that vehicle... etc etc etc.

[MediumTex]

Even used RVs and boats can cost you an astonishing amount of money. There's a lot more than just depreciation to consider. Consider the additional costs of taxes, registration, training costs for new licenses or endorsements, extra gas consumption, maintenance, storage, purchasing hardware for your vehicle, purchasing a new vehicle capable of doing the job, taxes and registration for that vehicle... etc etc etc.

Yes.

[Libertarian666]

To get back on topic, apparently gold is lifting the PP again a bit today, during a "taper tantrum". Who would have guessed that?

[Bob]

Boats and RVs:

Rent. Don't. Buy. Rent. Don't Buy.

LOL... yes, I generally agree.  Or at the very least, buy used.  The depreciation hit for new boats appears to be even larger than that of cars.  There seem to be plenty of good used boats on the market to choose from.

BOAT --
B = Break
O = Out
A = Another
T = Thousand

[flyingpylon]

Even used RVs and boats can cost you an astonishing amount of money. There's a lot more than just depreciation to consider. Consider the additional costs of taxes, registration, training costs for new licenses or endorsements, extra gas consumption, maintenance, storage, purchasing hardware for your vehicle, purchasing a new vehicle capable of doing the job, taxes and registration for that vehicle... etc etc etc.

Not to mention the potential of an "unfortunate boating incident"...  (this is a thread about gold after all)

Every activity (recreational or otherwise) requires its own cost/benefit analysis.  Different people will come to different conclusions about whether it's "worth it".

[buddtholomew]

I don't know if this is acceptable, but fuck yeah!!

[annieB]

Budd:

Are you saying you bought a new boat?

[buddtholomew]

Budd:

Are you saying you bought a new boat?

No, I'm pleased to see that gold has responded to the decline in the equity and treasury markets. Especially after reading that Soros has dumped a substantial portion of his GLD and GDX holdings. I hold both investments.

[MediumTex]

I don't know if this is acceptable, but fuck yeah!!

What happened today?

Gold was up, but the whole portfolio looks like it's just cruising along at about -3% for the year so far.

It's nice to see you feeling chipper though.

[buddtholomew]

I don't know if this is acceptable, but fuck yeah!!

What happened today?

Gold was up, but the whole portfolio looks like it's just cruising along at about -3% for the year so far.

It's nice to see you feeling chipper though.

If I invest like a contrarian, then I hope to reap the rewards when the equity markets decline. The PP will most likely sustain a loss on the day, but its performance is superior to an equity heavy portfolio.

[MediumTex]

I don't know if this is acceptable, but fuck yeah!!

What happened today?

Gold was up, but the whole portfolio looks like it's just cruising along at about -3% for the year so far.

It's nice to see you feeling chipper though.

If I invest like a contrarian, then I hope to reap the rewards when the equity markets decline. The PP will most likely sustain a loss on the day, but its performance is superior to an equity heavy portfolio.

Well, to give you a sense of where my head is at, I bought some GDXJ September $51 calls today.

Very speculative, but it should make it more fun to watch what the miners do over the next few weeks.

[buddtholomew]

With today's ~6% gain in GDX, I am finally positive YTD in the miners. What are your thoughts on rising interest rates when equities decline? A 1.5% decline in the S&P and a similar loss in TLT.

[dragoncar]

I'm not sure I would put it quite that way. How much of the performance over the past 10 years is from the gold component?

I don't care about the last 10 years any more than I care that the sinking ship I'm on previously made years of successful voyages

If there is an investment strategy that works better than the PP for you, I recommend you adopt it.

And if you don't like the president, I recommend you leave the country.  And if you don't like this sinking ship, I recommend you get on a different ship that floats better.

I can't predict the future, but that doesn't mean I have to like the present.  To really get back on topic, this is the gold scream room so: ahhhhjhh!

[Libertarian666]

I don't care about the last 10 years any more than I care that the sinking ship I'm on previously made years of successful voyages

If there is an investment strategy that works better than the PP for you, I recommend you adopt it.

And if you don't like the president, I recommend you leave the country.  And if you don't like this sinking ship, I recommend you get on a different ship that floats better.

I can't predict the future, but that doesn't mean I have to like the present.  To really get back on topic, this is the gold scream room so: ahhhhjhh!

How do you pronounce that?

[MediumTex]

With today's ~6% gain in GDX, I am finally positive YTD in the miners. What are your thoughts on rising interest rates when equities decline? A 1.5% decline in the S&P and a similar loss in TLT.

I don't know.  I guess my question would be if money is leaving the stock market and NOT going into the bond market, where would it be going?  Maybe into gold.  That's what happened the last time stocks were falling and interest rates were rising.

[buddtholomew]

With today's ~6% gain in GDX, I am finally positive YTD in the miners. What are your thoughts on rising interest rates when equities decline? A 1.5% decline in the S&P and a similar loss in TLT.

I don't know.  I guess my question would be if money is leaving the stock market and NOT going into the bond market, where would it be going?  Maybe into gold.  That's what happened the last time stocks were falling and interest rates were rising.

7000 club, nice! Didn't we have rising inflation under that scenario?

[AdamA]

Well, to give you a sense of where my head is at, I bought some GDXJ September $51 calls today.

Very speculative, but it should make it more fun to watch what the miners do over the next few weeks.

What's your break even price?

I'll keep my fingers crossed for you.

[MediumTex]

With today's ~6% gain in GDX, I am finally positive YTD in the miners. What are your thoughts on rising interest rates when equities decline? A 1.5% decline in the S&P and a similar loss in TLT.

I don't know.  I guess my question would be if money is leaving the stock market and NOT going into the bond market, where would it be going?  Maybe into gold.  That's what happened the last time stocks were falling and interest rates were rising.

7000 club, nice! Didn't we have rising inflation under that scenario?

I don't know.  Maybe.

The thing that we always, always, always have to remember when talking about inflation, though, is that real inflation will be accompanied by wage increases.  The wage increases will almost certainly not keep up with inflation, but they will be rising in tandem with inflation.  Thus, if inflation begins running at 8-10% per year, I would expect to see wages rising at 4-6% per year.  Think about what other things would have to happen for U.S. wages to be rising like that.

[Libertarian666]

I don't know.  I guess my question would be if money is leaving the stock market and NOT going into the bond market, where would it be going?  Maybe into gold.  That's what happened the last time stocks were falling and interest rates were rising.

7000 club, nice! Didn't we have rising inflation under that scenario?

I don't know.  Maybe.

The thing that we always, always, always have to remember when talking about inflation, though, is that real inflation will be accompanied by wage increases.  The wage increases will almost certainly not keep up with inflation, but they will be rising in tandem with inflation.  Thus, if inflation begins running at 8-10% per year, I would expect to see wages rising at 4-6% per year.  Think about what other things would have to happen for U.S. wages to be rising like that.

Why is that always true? What economic law requires it?

[MediumTex]

Well, to give you a sense of where my head is at, I bought some GDXJ September $51 calls today.

Very speculative, but it should make it more fun to watch what the miners do over the next few weeks.

What's your break even price?

I'll keep my fingers crossed for you.

I guess that would depend on whether I held it to the exercise date, right?

If I held it to the exercise date, the share price would need to be $53.50 or so.

When you had your GDXJ trade idea a couple of weeks ago, that's when I should have done this.  The trade looked right to me then.  It still looks right to me now, but a lot of profit was lost while I sat around thinking.

I assume your trade is looking good right now.

[Pointedstick]

Why is that always true? What economic law requires it?

If the merchants who are charging higher prices can't get anyone to pay because their wages are flat or falling, they aren't going to be able to keep on charging those prices if they expect to eat.

[MediumTex]

7000 club, nice! Didn't we have rising inflation under that scenario?

I don't know.  Maybe.

The thing that we always, always, always have to remember when talking about inflation, though, is that real inflation will be accompanied by wage increases.  The wage increases will almost certainly not keep up with inflation, but they will be rising in tandem with inflation.  Thus, if inflation begins running at 8-10% per year, I would expect to see wages rising at 4-6% per year.  Think about what other things would have to happen for U.S. wages to be rising like that.

Why is that always true? What economic law requires it?

The economic law that says if prices rise too much against a backdrop of static wages, people simply run out of money to pay higher prices and the economy tips into recession, which puts downward pressure on prices.

I'm always surprised at how confidently some people talk about the inevitability of high inflation, but then when you ask them when they think they will be able to start raising prices in their own business they say that such a step would be impossible because their customers simply wouldn't pay them.

Remember, I'm not saying that wages will rise at the same rate as inflation, I'm just saying that if inflation is increasing at a sustained and serious rate, you've got to have rising wages as well or there simply isn't any money in people's pockets to pay for that more expensive stuff.

[Libertarian666]

Why is that always true? What economic law requires it?

If the merchants who are charging higher prices can't get anyone to pay because their wages are flat or falling, they aren't going to be able to keep on charging those prices if they expect to eat.

There is no economic law that says that people can afford to buy anything.
If not enough people can afford to pay merchants the amount they need to stay in business, then they will go out of business. Either way, if people can't afford to buy food, they will starve (for example).

[Pointedstick]

Why is that always true? What economic law requires it?

If the merchants who are charging higher prices can't get anyone to pay because their wages are flat or falling, they aren't going to be able to keep on charging those prices if they expect to eat.

There is no economic law that says that people can afford to buy anything.
If not enough people can afford to pay merchants the amount they need to stay in business, then they will go out of business. Either way, if people can't afford to buy food, they will starve (for example).

Right, all of which is deflationary. If businesses start failing because people can't pay the prices high enough for them to stay in business, that's a huge downward pressure on prices that will stall the inflation.

[Libertarian666]

If the merchants who are charging higher prices can't get anyone to pay because their wages are flat or falling, they aren't going to be able to keep on charging those prices if they expect to eat.

There is no economic law that says that people can afford to buy anything.
If not enough people can afford to pay merchants the amount they need to stay in business, then they will go out of business. Either way, if people can't afford to buy food, they will starve (for example).

Right, all of which is deflationary. If businesses start failing because people can't pay the prices high enough for them to stay in business, that's a huge downward pressure on prices that will stall the inflation.

No, it won't, if the businesses cannot stay in business at lower prices. They will go out of business, reducing supply of whatever they used to sell.

I don't know what's complicated about this: if the money supply in circulation goes up a lot, prices will go up too. It doesn't matter if one person gets all the new money, as long as he spends it. Others will suffer from the higher prices, but that won't stop prices from going up.

See Weimar Germany, post-WWII Hungary, or hundreds of other examples. Wages will probably go up with a lag, due to the new money being spent, but they don't have to go up before prices do.