Gyroscopic Investing

Posted: **Fri Mar 13, 2015 3:07 pm**

dragoncar wrote: Salt?

( sound of applause )

Posted: **Fri Mar 13, 2015 6:57 pm**

Seriously...read some economic history say about around the Great Depression. Too many people look at gold and the 70s and think what a great thing. It actually sucks and sucks big time as a currency during economic slowdowns and panic. Also...Nixon flushed it for very good reasons. Read about that as well.

If you think everything I posted is brainwashed crap from the Fed then read some Roman history. Focus on why they started debasing their currency to begin with (not what happened afterward which was in modern times predictable but not understood then)...surprise, surprise the same reason why the gold standard was flushed in the 20th century.

And yes, you are going to have to do some actual research to find out the answer.

Posted: **Sat Mar 14, 2015 12:29 pm**

The strong dollar seems to be killing gold, period. All other currencies suck. The winner is the US buck. As long as that is the case, gold will be sold for dollars. Not sure what can change that but something will. As a PP holder, you feel the pain of 25% gold being cut to ribbons.

Posted: **Sat Mar 14, 2015 12:58 pm**

Since we are citizens/ residents of USA, and living in USA to boot, does that not mean we are in for favorable times? Speaking narrowly, as we have USD in our wallets and not Euros.

Thanks.

Posted: **Sat Mar 14, 2015 1:27 pm**

Libertarian666 wrote:
Lowe wrote: Let us say the treasury issues a lot more debt. Enough that it isn't just a quarter or a third of the US debt market. It's half, or three quarters even. For the sake of safety and reducing the volatility of their cash, banks, corporations, and pension funds will still be vying to buy up those new bonds. Whether the Fed keeps buying up some of them doesn't matter. Someone is still going to buy and hold them, even when they are at 0%.

There is no beating the safety of bonds in developed countries with productive people. That's why German and US bonds are where they are now. The Fed doesn't have the power to change that. If they try they will fail.

It might be different if the world weren't filling up with unproductive people, trying their best to live off other people's efforts. But it is, and those growing populations aren't inflationary. They are deflationary, because they do not create much commercial value themselves, and cannot command competitive wages. The only way they live is by producers giving them things, which deflates prices.

The dollar, euro, or yen doesn't have to be strong against some abstract standard. It just has to be stronger than everything else. Nobody going to run out of those currencies in a hurry, because there are no trustworthy alternatives. What banker or businessperson would put his or his clients' money in the currency of South Africa, or Chile, or Egypt, or even China or Taiwan? That is crazy.
How about a "currency" that no one can issue arbitrarily, but has to be "mined" and is therefore fairly static in quantity? And what if it also had uses besides as money, like in industry, and had a multi-thousand year record of never becoming worthless? Of course there isn't anything like that, but suppose there was...

I agree that it is wise to hold some gold. I do it. If I were running a pension fund or managing the cash of a company, I would do it then. But I am definitely not keeping my funds in it by default. I can't pay taxes in gold, and I can't buy other assets with it either. I understand that is because of laws, and gold will outlive those laws. But not in my time frame.

Gold rises during run-ups in physical assets, like land, energy, and consumable items like food and clothing. These are caused by increases in the number and size of productive families, or the purchasing power of those families. This causes inflation in physical goods, which bites into the real return of fixed income assets (and equity to an extent). Gold is sought as an alternative.

I don't believe there is another way for gold to rise, than that. A currency crisis is not bound to happen, nor would it have to happen in your lifetime, if it were. People trust the promises of the US gov't. Confidence may be lost, but not at once, and not because of Fed speeches or bond purchases. It will dissolve with the gradual inflow of immigrants from low-trust societies.

Posted: **Sat Mar 14, 2015 4:09 pm**

Lowe wrote: Gold rises during run-ups in physical assets, like land, energy, and consumable items like food and clothing. These are caused by increases in the number and size of productive families, or the purchasing power of those families. This causes inflation in physical goods, which bites into the real return of fixed income assets (and equity to an extent). Gold is sought as an alternative.

I don't believe there is another way for gold to rise, than that....

Lowe,

Serious question... Do you think what you outlined above explains the massive rise in gold during the 2000s?

After the real estate bubble burst, gold continued to rise for another three years or so.

My own thought is that there was a general loss of confidence in the US$ during that ten-year period. Seemed like everyone was talking about the Euro, Renminbi or whatever... that the US$ was going to get bumped from its place at the top of the mountain.

Posted: **Sat Mar 14, 2015 4:18 pm**

portart wrote: The strong dollar seems to be killing gold, period. All other currencies suck. The winner is the US buck. As long as that is the case, gold will be sold for dollars. Not sure what can change that but something will. As a PP holder, you feel the pain of 25% gold being cut to ribbons.

bedraggled wrote: Since we are citizens/ residents of USA, and living in USA to boot, does that not mean we are in for favorable times? Speaking narrowly, as we have USD in our wallets and not Euros.

Yeah, it helps if we want to travel to Europe. Or you can say that we have immediately become wealthier relative to people in other parts of the world even though we may not feel it. This was a favorite point of Kshartle's when he was still around. If an American works abroad and negotiates contracts in local currencies, the stronger dollar is bad. It's also bad for those trying to peddle American goods abroad. I guess much depends on on your vantage point.

Posted: **Sat Mar 14, 2015 6:33 pm**

A stronger currency is always bad. It's deflationary.

Posted: **Sat Mar 14, 2015 7:21 pm**

MG,

Could it be that our Dollar is stronger because we are in deflation?

CRB, CU, OIL and DXY suggest deflation.

Negative interest rates, here we come?

Thanks.

Posted: **Sat Mar 14, 2015 7:26 pm**

I, for one, welcome deflation. What with my goddamn fuck ton of cash and bonds.

Posted: **Sat Mar 14, 2015 7:56 pm**

Peter schiff in his last book or so asked "What's wrong with deflation?"

Posted: **Sat Mar 14, 2015 8:03 pm**

bedraggled wrote: Could it be that our Dollar is stronger because we are in deflation?

CRB, CU, OIL and DXY suggest deflation.

Negative interest rates, here we come?

I don't see any evidence that the US is yet, but the rest of the world certainly is... so they're gonna make an already bad situation much worse by sending capital flows here pushing up the dollar, stocks and bonds even more. What's their alternative? Structural reforms? HAHAHAHA. Just you wait until all their sovereign debt valued in USD starts imploding.

Posted: **Sat Mar 14, 2015 8:09 pm**

MG,

Good point and it all may happen anyway. Does the cyclical nature of things demand deflation?

Bummer if deflation is required. We may need to accommodate. As I suggested, negative interest rates in USA? Is the party on for TLT?

Cheers,all and thanks, MG!

Posted: **Sat Mar 14, 2015 9:01 pm**

bedraggled wrote: Good point and it all may happen anyway. Does the cyclical nature of things demand deflation?

Well, if government wasn't staffed by the dumbest people on planet Earth, they could coordinate an effective counter-deflation policy right at the very beginning of it, but I'm not holding even an iota of breath. And bailing out the banking system with QEternity is hardly what I mean.

Posted: **Sat Mar 14, 2015 9:32 pm**

Desert wrote:
Kriegsspiel wrote: I, for one, welcome deflation. What with my goddamn fuck ton of cash and bonds.
That was beautiful.

Indeed. How many bushels is that equal to?

Posted: **Wed Mar 18, 2015 2:34 pm**

I guess the Fed's hinting about raising interest rates didn't produce exactly the effects some people thought.
ETA: On a bit more reading, apparently their latest plan is going to produce fried ice. Yee-haw!

Posted: **Wed Mar 18, 2015 3:30 pm**

It's the dot plots you see...

What the hell just happened...FED removes "patience" from their commentary and reinforces they will not raise interest rates in April. June is still a possibility.

Stocks, Gold and Treasuries rally on the news and the USD is crushed against the EUR. It's as if up is down and down is up. Go figure. Glad I hold all 3 leveraged assets @ approximately 25% on days like today. Really nice to see gold move up as well.

Posted: **Wed Mar 18, 2015 3:55 pm**

buddtholomew wrote: It's the dot plots you see...

What the hell just happened...FED removes "patience" from their commentary and reinforces they will not raise interest rates in April. June is still a possibility.

Stocks, Gold and Treasuries rally on the news and the USD is crushed against the EUR. It's as if up is down and down is up. Go figure. Glad I hold all 3 leveraged assets @ approximately 25% on days like today. Really nice to see gold move up as well.

You are leveraging now? Meaning the 8.3% in 3x fund approach?

Posted: **Wed Mar 18, 2015 4:25 pm**

dragoncar wrote:
buddtholomew wrote: It's the dot plots you see...

What the hell just happened...FED removes "patience" from their commentary and reinforces they will not raise interest rates in April. June is still a possibility.

Stocks, Gold and Treasuries rally on the news and the USD is crushed against the EUR. It's as if up is down and down is up. Go figure. Glad I hold all 3 leveraged assets @ approximately 25% on days like today. Really nice to see gold move up as well.
You are leveraging now? Meaning the 8.3% in 3x fund approach?

No. Apologize for the confusion as I was using "leveraged" to refer to SPY, GLD and TLT with Cash being un-leveraged.

Posted: **Wed Mar 18, 2015 5:54 pm**

buddtholomew wrote: What the hell just happened...FED removes "patience" from their commentary and reinforces they will not raise interest rates in April. June is still a possibility.

Stocks, Gold and Treasuries rally on the news and the USD is crushed against the EUR. It's as if up is down and down is up. Go figure. Glad I hold all 3 leveraged assets @ approximately 25% on days like today. Really nice to see gold move up as well.

It's called short covering.

Posted: **Wed Mar 18, 2015 6:25 pm**

MachineGhost wrote:
buddtholomew wrote: What the hell just happened...FED removes "patience" from their commentary and reinforces they will not raise interest rates in April. June is still a possibility.

Stocks, Gold and Treasuries rally on the news and the USD is crushed against the EUR. It's as if up is down and down is up. Go figure. Glad I hold all 3 leveraged assets @ approximately 25% on days like today. Really nice to see gold move up as well.
It's called short covering.

That was my guess, so we will have to see which assets have follow through tomorrow.

Posted: **Mon Mar 23, 2015 2:01 pm**

barrett wrote:
Lowe wrote: Gold rises during run-ups in physical assets, like land, energy, and consumable items like food and clothing. These are caused by increases in the number and size of productive families, or the purchasing power of those families. This causes inflation in physical goods, which bites into the real return of fixed income assets (and equity to an extent). Gold is sought as an alternative.

I don't believe there is another way for gold to rise, than that....
Lowe,

Serious question... Do you think what you outlined above explains the massive rise in gold during the 2000s?

After the real estate bubble burst, gold continued to rise for another three years or so.

My own thought is that there was a general loss of confidence in the US$ during that ten-year period. Seemed like everyone was talking about the Euro, Renminbi or whatever... that the US$ was going to get bumped from its place at the top of the mountain.

That might have helped somewhat, but yes I do think it was driven mostly by demographics. There was a small bulge in the US demographic pyramid passing through late adolescence and early adulthood at that time. I also think the policies of the Bush administration encouraged a lot of illegal immigration, which helped with the run up in physical goods.

Yes, the timing of the busts in housing and gold casts some doubt. I still leaning this way though. Housing is not the only physical good there is. Beyond that you also need to account for the Fed began lowering rates, or at least discussing it openly, around the time the price of housing fell. Decreasing nominal rates support gold price, since gold is the alternative to fixed income, for money managers and institutional investors. This postponed gold's eventual decline.

Posted: **Tue Apr 28, 2015 11:56 am**

1212.80 today! +0.08% that's promising. I guess it goes up, let's hope the best.

Posted: **Tue Apr 28, 2015 1:33 pm**

I wouldn't get overly excited. My guess is that gold plummets and treasuries rise after the FED speaks this week - basically the opposite of what we have witnessed in the last couple of days. Perhaps it's the pessimist in me, but I've seen this act before...over and over and over...again.

Posted: **Tue Apr 28, 2015 3:38 pm**

buddtholomew wrote: I wouldn't get overly excited. My guess is that gold plummets and treasuries rise after the FED speaks this week - basically the opposite of what we have witnessed in the last couple of days. Perhaps it's the pessimist in me, but I've seen this act before...over and over and over...again.

+1

Gyroscopic Investing

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