Soros

[sweet guy]

Re: Too late

My question is if you think the $US will fall against the RMB, hence it would be a good idea to short the $US AGAINST the RMB?

Nope, that's a bad idea. RMB is a "bubble" currency and the rate is "unofficially" fixed around USD $1 to RMB $8.28 for superstituous reasons!

The only way the speculators can play the game is hoarding RMB whatever they can in open market, mostly via Hong Kong and wait Beijing to let the rate floated, maybe around 2007. Only then they could short the currencies like flood waves.

Again, the rules of the games are totally different and the bottom line is the currency is not freely traded.

 

[sweet guy]

I agree that RMB equities will fall if $US falls.

Depends on what Chinese equities you are talking about. Those ADRs should be ok since the mainland Chinese companies aren't audacious enough to set up and screw the "Ghost men and women" big time, especially the American ones.

Plus, these Chinese ADRs have another mission-a display to the new Chinese economy.

I can't say other Chinese equities with different numbers (ticket symbols) and listed in stock markets (A, B or H). Those in HK stock market should be on par with ADR but you should treat those as pure speculation.

Plus, the corporate governance and business ethics for many of those companies are farce. And stay away like plague from those majority owned by the party.

You have to wonder what does that mean to have Chinese Minmetals trying to buy Noranda. I don't think average Noranda shareholders have any clue what kind of "black box" companies they are dealing with, other than the Minmetals are financially supported by billions of Chinese taxpayers money.

Maybe the only good news would be the "premium" to buy Noranda isn't that high. If the premium is high, some executives within the Minmetals will probably pocket the differentials between the supposedly "fair value" to buy Noranda from Brascan and the "final offers" as "bonus/commissions" for themselves.

 

[Fortunato]

Your statement about Canada going into a recession when the US does is just not true - during the last US recession, Canada didn't go into recession and the last time Canada went into recession, the US didn't.

Not true. The last US recession, as defined by economists, was Q4 1990. The erratic, but slow US growth period between Q3 2000 and Q4 2001 also had Canada's GDP growth fall from between 4 and 6% to a range of -1 to 1.5% (which is the same range the US growth was varying in during this "recession", but neither had two consecutive quarters of negative growth).

For Canada, 2003 showed a bad quarter for growth (also not recession), but this corresponded directly to the currency movement.

To suggest that our economy is not as "tied" to the US as it ever was is simply not correct.

It's a bit of a myth that Canada's economy is tied a 110% to the US - that may have been so in the early 80's but since then Canada has grown it's economy on a global basis. Don't get me wrong, the US is a major contributor to the Canadian economy, but you are making an overly simplfied statement about Canada's economy.

Simplistic or not, with 1/3 of our GDP "dependant" on the US (42% of our GDP in exports... and 83% of our exports to the US...), and the dollar 25% more expensive than it was in the past, we are certainly no "less" tied to the US economy, and more than sufficiently tied to be impacted by their economic (mis)fortunes.

As for Gold - here is another economic misconception a lot of people have. Gold in the past has been used as hedge against inflation by Countries so that they could protect their currancies. But since 1994 - 1996 Countries have been selling most of their gold reserves and buying USD back securities since they at least pay interest while gold collects dust. So I wouldn't expect gold to move much if and when we get a signifcant rise inflation. There are two reasons price of gold has moved in the last two years,

... Gold is not only been useful in the past as a hedge against inflation but also it has acted as a hedge against deflation.

No, it doesn't. Gold acts as a hedge against inflation, period. In deflation, gold (like every other commodity) becomes LESS valuable. This is the DEFINITION of deflation.

With worries that the US might go into a deflationary period after it's recent period of disinflation, gold was rising as Countries purchased the metal to protect themselves. Greenspan recently said that the possibilty of deflation has been removed, so this as an upward pressure on the price of gold has been removed.

Your example is one of INFLATION, not of deflation. A currency experiencing DEFLATION is APPRECIATING... Foreign countries would be trying to protect their wealth in their local currency against devaluation (inflation), and as such could move from dollars to gold sensibly.

Note that AMERICANS would have NO incentive to buy gold in an deflationary environment (they would be incented to do the exact opposite).


F.

 

[Fortunato]

Once again Fortunado, knows absolutely nothing and spouts off more BS. Do a little book F and find most of your statements are BS.

Which ones? Everything I've said is true. You, on the other hand, seem to make things up as you go along.

And no - by any defination did Canada go into recession during the last recession.

There has been no US recession, technically, since the early 1990s. But when they slowed down, so did we... and pretty much just as bad. You claim otherwise, but can't back it up.

Read the post Fort - I said Canada is not as tied to the US economy as used to be 20 years ago. Whats so hard to understand that our economy has grown - it is no longer a certainty that if the US has a recession that we we would also - that my friend the Gov. of the Bank of Canada.

Yes, you SAY it; but, as always, that doesn't make it true. In fact, what evidence do you have in that regard? How are we "less tied"?

You seem to think you have some "innate credibility".

Gold my friend is a hedge for money because it is felt that it is a store of value. You are the only moron I know who argues that deflation is good (increased value of money) - just ask Germany of the 20's and 30's or most Western nations during the depression how they felt about deflation. In fact you can argue that deflation is a more serious threat than inflation.bbk

Deflation DOES increase the value of money, by DEFINITION. If a pound of sugar (or gold, or any REAL asset) costs $10 ... and then the currency deflates such that the pound of sugar now costs $5... you STILL have as many dollars as you did before, but now you can buy TWICE as much sugar (or any real asset) as before.

THAT IS WHAT DEFLATION IS! DE - FI - NI - TION.

Again, your stupidity lies in the fact that all of your examples (Japan, Germany, etc.) are dealing with monetary LIABILITIES and real ASSETS (the liabilities maintain their value, but the REAL assets depreciate). If they had SOLD their real assets for the currency... they would have been FINE.

I would try to explain it AGAIN to you, but you've shown a surprising resistance to learning of any kind....

As usual folks Forthead feels he has to best me - well Fort your a waste of time and I can't and will not be bothered trying to correct your stupidity.bbk

You can't. Because, as always... you are WRONG.


If you spent half as much time thinking before you post, as whining about when others point out your inaccuracies and inadequacies, you woul...

Well, maybe if you ask someone to think about your ideas for you.


F.

 

[Fortunato]

You know I really might take you seriously if you hadn't argued with a link I provided you on disinflation some time ago - at the time you argued that no such thing existed - so I provided you the article from one of the top think tanks on the subject and still you said that it didn't exist.

No, I have never argued that "disinflation" (inflation, but at a decreasing rate) isn't a term. I argued that "DISFLATION", the term YOU were promoting as if it said something about prices, does not exist.

Guess what? Still doesn't. (see... even YOU can't remember your made up word...)

You would think, for a genius and all, that you would remember better... or at least bother to look back and check your (always wrong) accusations.

I still can't believe that you think deflation is GOOD. unless of course your talking about benign deflation which I wasn't - just do a google and learn something will ya.

Deflation, like inflation, can be good or bad, depending on what YOU do... neither is INNATELY evil. In inflationary environments, it is better to own REAL property, because in monetary terms, it will appreciate. In deflationary environments, it is better to hold monetary instruments, because purchasing power increases. It isn't "think", it's FACT. I've SHOWN it to you, and you still cannot process it (not that this surprises me, though).

If your "grand point" is that deflation scares Greenspan, of course it does. Because everyone in America (including the government) is over their heads in debt. THE LEVERAGE IS A PROBLEM... not deflation itself. THAT IS WHY GREENSPAN IS BEGGING THE ADMINISTRATION TO STOP SPENDING. THAT IS WHY GREENSPAN IS BEGGING CONGRESS TO CAP SOCIAL PROGRAM LIABILITIES.

LEVERAGE IS NOT A PROBLEM WITH INFLATION... LEVERAGE IS A BIG PROBLEM WITH DEFLATION.

DEBT. DEBT. DEBT. DEBT. DEBT.

But if you aren't borrowing in the deflating currency.... SELL real assets (like gold) for monetary assets, and "deflation" would be just FINE. Gold is NOT a hedge for "deflation". (...intuitively, can't you even grasp that? How real assets like gold POSSIBLY be a hedge for BOTH inflation and DEFLATION, when they do exactly the opposite things? It's like saying, "to move up, press A", and "to move down, press A". Seriously, are you... "special situation"?)

It's kind of sad, too. Because it looked like you actually had the POINT correct (with foreign countries moving into gold), you just had the wrong term. Now, it turns out you don't really understand (because you think a currency that is "deflating" reduces in value...).


...and, btw., if YOU are considered "learned", I'd rather stay ignorant, thank you.

Now for the BS regarding CDN and US recessions - we all know the US just came out of a recession, a recession Canada didn't share - if you don't believe me go to www.statscan.ca and look it up the last recession was 1990 - 1992 - no amount of typing definations will change that fact.

I did. And, if you go to www.bea.doc.gov, you will find that the last US recession was in Q4 1990. Did you do that? Do you have any other statistical source to say "US was in a recession?" No, I didn't think so... just a "we all know"....

Yes, the US economy slowed down between Q3 2000, and Q3 2001.... quarterly growth rates were -.5%, 2.1%, -.5%, 1.2%, and -1.4% sequentially. NOT A RECESSION. Better yet, with Canada's growth rate was also oscillating within this range for this EXACT SAME time period. Canada was also NOT in a recession, but to say that we were not closely tied (like we always are) to the American economy is simply NOT TRUE.

Despite of what you think "you know". (...because that always turns out to be "not much" in the end...).

Highschool economics with no real knowledge of what your talking about and contribute nothing of value on the subject.

Little tip... Economics doesn't change (from high school, to university, to the "real world"). If you bother to learn the theories once to begin with, you might be ok... and you might stop (or at least correct) all of your "contributions" on the subject.

Anyways you are on ignore because I suspect that all your doing is following me around to piss me off - If that's how you get jollys in your pathetic boring life I feel sorry for you but go bother someone else.

Why, thank you for your consideration - your posts irritate me to no end, for sure, and I admit I feel compelled to correct you. Don't worry, though - I will continue to do so when you are wrong. It's pretty easy to do, and considering how often you ARE wrong, it only gets easier with the practice....

F.

 

[Fortunato]

...you get jollys...

P.S. The plural of "jolly" would be "jollies".

 

[Fortunato]

Well finally some sense of truth - but really telling the whole truth are you? Your answer to my first post was that DEFLATION wasn't the big evil I said it was and when I challenged you on your description you come up with this post. Your original post described BENIGH INFLATION to discredit my post - as people see now your back peddling. Your dumb point about Deflation being caused by debt is simply not true.

No, no, no. Where did I say debt causes deflation?

Are you really that dumb, or are you just faking it now?


Once again... IF you can follow the bouncing ball... If you are leveraged with real assets ($100k house, with a $95k, $5k equity), deflation is a problem. The house will fall in value, but your loan will not. If the currency deflates such that the house (the only real asset mentioned) is now worth $80k, your "balance sheet" looks like $80k house, $95 k loan, and -$15 equity). So deflation is a problem. BECAUSE YOU WERE LEVERAGED. BUT THE DEBT DIDN'T "CAUSE" ANYTHING.

IF you are not leveraged, or even as long as your borrowing doesn't exceed your "real" property, deflation HELPS (i.e. $80k cash, no debt, $80k equity). See, this person can buy the house now without borrowing. Can't you see? Better! And NO, debt still didn't "cause" it.

While debt is a facture in the disasterous effects of Deflation, it is not part of the defination.

What the hell is a "facture"? Do you mean "factor"?

Never said it was part of the definition. I said deflation, like inflation, is not in itself a problem. Unless you have real assets highly levered with monetary obligations. You speak of it like it is the end of the universe ("deflation kills puppies!")... and that it is exactly like inflation (that can be "hedged" with gold... please...).

Deflation you tool, refers to the sustained fall in prices, where the annual change in CPI is negative year after year. What you mentioned "DEBT" is not the cause but part of the overall problem.

No, no, no. I never said DEBT caused anything. I said there is NO problem with deflation UNLESS you have real assets highly levered with monetary obligations.

You don't read very much, do you?

A contraction in spending causes prices to lower - lower prices mean lower earnings

Not necessarily. Output is a combination of price x quantity. Price can fall, and output can still rise if quantity increases outpace it.

and the decline in economic activity begins to feed on itself - people and business earned less income to pay debts

...oooh, this is good. See - you admit the PROBLEM is the existing debts, not the deflation!

and this forced prices still lower in a process called the DEFLATION/DEBT spiral

If you weren't highly leveraged, can't exactly HAVE a deflation/debt spiral now, can you?

As a result interest rate spreads between Government and Corp. Bonds widen and credit becomes harder to obtain. This spiral then intensfies the fall in real estate, commodity and other prices. So I was right - Deflation is harmful

Only if you are HIGHLY LEVERAGED, HOLDING REAL ASSETS and MONETARY OBLIGATIONS.

If you are sitting on a bag of cash, you're very, very happy to see deflation.

How many times 'til you understand??? No, no… rhetorical question…

 

[Fortunato]

and considering what went on in the last recession in the US - avg income dropping for the middle class and a decline in Corp. earnings you can see Greenspans legitimate concerns about deflation.

No. He's TERRIFIED of it... BECAUSE the country (government included) is awash with debt. But it's not just because of DEFLATION... every chance he has, he's BEGGING government to stop borrowing, get spending under control, limit future social program liability, etc. His JOB is to ensure price stability... his FEAR is that this mountain of DEBT will become unsustainable. Could "deflation" be a trigger for the US to make this happen? Currently status... absolutely! Does it HAVE to be so? No!

A country that is not so highly levered would not be impacted the same way by a bout of deflation. And if the US weren't so levered, he couldn't care less about deflation either (beyond his primary goal of trying to ensure price stability, of course… concerns about deflation would be no different than concerns about inflation…).

One last indicator was that the spread between Corp and Government debt widened. But being the mildly informed jerk you are - you had to attack my first post with something completely unrelated and that was BENIGN DEFLATION What you are talking about comes about with advances in productivity rather than declines in spending.

Not unrelated. Something is only "benign" or "malignant" by it's severity. Price declines from productivity are NO different than any other price declines, because prices are a function of supply and demand (as are quantities, with very few exceptions). You won't know "benign" from "malignant" until it's over.

I "attacked" your post because you suggested gold is a hedge against deflation. It is not. If you understood what deflation was, you would know that. Which is actually funny, because you even properly defined it in your "death spiral" spiel above.

I "attacked" your post because you suggested we are not as strongly tied to US economic fortunes anymore. We are.

Lastly DISINFLATION is the decline in the rate of increase in average prices.

Exactly. Inflation, at a decreasing rate. Technically, where the function is positive, but it's first derivative is negative. (...that's cal-cu-lus, by the way).

But you never spoke of "disinflation". You were talking about "disflation", some magical combination of up and down prices, and growth, that you couldn't really define outside of saying "PIMCO used it!".

I think my post sometime ago was about causes

Nope. OTB and I were arguing about whether or not CPI truly reflected the deterioration of purchasing power experienced by the population.

You decided we were both wrong, because we all had (unbeknown to us) a serious case of "disflation". It was one of your better (out of many) inconsequential tangents.

- the definition remains the same and I believe the Bank of Canada agrees with me - they do have a very good commatary regarding this subject, look it up and maybe learn something.

Always has. For "disinflation". You'll have a hard time finding your "disflation" there, though.

On highschool economics - this is more a comment on the depth of your knowledge not economic theory.

Right. My atrocious spelling and grammar... my "forgetfulness" of the stupid things I post... my poor comprehension skills, and "reading things" into others' words that were never there... my obviously posting on topics I know nothing about... they say a lot about me an' all my fancy "book learnin'..."

No, wait... that sounds more like you. Yeah, I'm pretty sure that's you.

So once again you walk into one of my posts just to argue - later posts contridict your original post. So what's next?

Can you point out one contradiction? Maybe post a link? I'd love to see it. In fact, I'd happily reciprocate with a few links to your advanced dissertation on "disflation".

Please?

So what's next?bbk

That's entirely up to you. I can't WAIT to see what new stupidity comes out of your keyboard. Maybe the explanation of how gold can "hedge" you against deflation? I'd like that....

F.

 

[Fortunato]

I really have no clue what your talking about, but according to the Bank of Canada our last recession was 1990-1992 and since we can all agree the US was in recession between 2001-2003,

I see you added this.

Well, we don't all agree that US was in recession between 2001 and 2003 (2002 - 2003 had average quarterly growth of 3.3%, ranging from 0.7 to 7.4% with NO contraction... not many people would call that "recession", even when they make up their own definition...). Mostly, the economists don't. And, wanna know what? The statistics back them.

Seriously... go show us where the US economy went through two consecutive quarters of negative growth.

Besides, the point was that the erratic (but slow) period was only between 2000 and 2001. And that Canada, as ALWAYS, experienced similar economic performance to the US.

 

[Fortunato]

Well guess what Fort - I don't care if I make typing errors/spelling errors - I quess I'm spoiled by modern advances such as spell

More to the point that learning and/or thinking aren't exactly your forte, but we pretty much already knew that, didn't we....

 

[Fortunato]

You really need to check the Bank of Canada reports on this - or do I assume you know better than the Bank?


bbk

Why? The Bank of Canada statistics are different than the American economic statistics? I've checked both.... have you? Can you SHOW me where I'm wrong? I've given you the numbers (even broken them down by quarter), and given you the links that support them.... I can't see what else I can do...

...but it wouldn't matter anyways. Like I said... "slow on the uptake".

 

[Fortunato]

Now you talk here as if a hedge is a 100% protection of an asset, it's not - Gold in both inflation and deflation has been viewed as safe haven for value.

For inflation, yes. Because the REAL asset appreciates, and currency depreciates.

For DEFLATION, the REAL asset depreciates, and the currency APPRECIATES. That's what DEFLATION is. How ON EARTH would a real asset like GOLD "protect" you from an APPRECIATING currency. And, more to the point... WHY WOULD YOU WANT IT TO? You want a "safe haven" from... APPRECIATION?

Math example:

Period 1, Gold is at $400.

Then we get DEFLATION, meaning that PRICES DROP. And, as such, gold price DROPS to $300.

Period 2, Gold is at $300.

Those lucky buggers who "hedged" themselves were able to "luck into" a return of -25%. Another great investment recommendation. Tout.


Deflation means your currency gets more valuable, genius. People tend to NOT WANT to hedge against that kind of thing.

Can we consider Gold in this day and age to be a hedge that can be debated, but was it in the past yes.

NEVER against deflation. Genius.

Again asshat - Deflation is much worse than Inflation

To certain people in certain situations, yes. But not universally. Personally, I'd LOVE to see a good bout of it. But then again, I UNDERSTAND what it is... and it doesn't kill puppies.

 

[ice_dog]

Thank for your post. I agree on gold, and have done well, from when it was $250 a few years ago. I was wondering if it would be possible to buy RMB denominated bonds against $US loans. I agree that RMB equities will fall if $US falls.

In another thread last year, I said 'buy USD by year-end(2003)'. It was really based on gut feeling. As it turned out, CAD was trading around 77.8 cents in Dec 2003. By May 2004 , it was below 72 cents. Not a bad move, if anyone had actually followed my advice....lol The point is that you have to know to to catch the peak and valley if you want to be a trader. It is a matter of timing.

http://ca.finance.yahoo.com/q?s=CADUSD=X&d=c&t=1y


The main reason gold was so low(5-6 years ago) was because all the central banks around the world were selling gold. No more, When the centrel banks start buying, you sell.

On the subject of RMB, I cannot help you. I am not knowledgeable about the chinese economy. I did read an article in Economist late last year. It was mentioned that the Central Bank(in China) was trying to bail out the big four chinese banks because of bad loans

 

[Fortunato]

That was the last straw - if your going to argue with the Bank over their interpetation of the data - Canada didn't go into a recession recently the US did

Then why oh why oh why CAN'T you show us WHERE? I'VE GIVEN YOU BOTH THE NUMBERS AND THE LINKS.

Let me try again:

US GDP GROWTH RATE, by quarter

Q1 '00 1.0%
Q2 '00 6.4%
Q3 '00 -0.5%
Q4 '00 2.1%
Q1 '01 -0.5%
Q2 '01 1.2%
Q3 '01 -1.4%
Q4 '01 1.6%
Q1 '02 3.4%
Q2 '02 2.4%
Q3 '02 2.6%
Q4 '02 0.7%
Q1 '03 1.9%
Q2 '03 4.1%
Q3 '03 7.4%
Q4 '03 4.2%


...so where a recession is two consecutive quarters of negative GDP growth, please show me (your feigned indignation aside) where the "US recession" is. Or, if you find better data (this is from the BEA, link in prior post), please show where the BEA is WRONG.


Seriously, when you can do this while STARING at the facts... you might actually have something WRONG with you. I mean, worse than we all can tell.

 

[Malibook]

Personally, I'd LOVE to see a good bout of it. But then again, I UNDERSTAND what it is... and it doesn't kill puppies.

I wouldn't mind seeing some deflation and a bursting of the housing bubble myself but the problem is that too many people would be devastated by these events.

Deflation will lead people to hoard cash.
Why buy something today when it will be much cheaper tomorrow?
If everybody hoards cash, it will have a snowball effect devastating numerous businesses and could eventually lead to a depression.
There are those who can prosper in a depression environment but that is small consolation for the starving masses and even the rich will not be secure living in social anarchy.

 

[Fortunato]

Are you saying the US didn't go into recession?

Yes. They didn't.

Then when is Bush running around the country saying it did. You would think he would like to argue your point wouldn't you.

He has said both. In the first debate he said there was no recession (true). In the second debate, he said he inherited 6 months of the recession from Clinton (partially true... the "erratic slow period" began Q3 2000).

But of couse... GWB wouldn't actually... LIE? For political gains? About WMD, or Hussein in kahoots with Al Quaeda? About his military service?

But about recessions? Why that would be sacrosanct.

No, see... rather than taking the opinions of others as "gospel", I like to see the facts and/or evidence, and come to my own conclusions. You are probably better served to let others do your thinking for you, though.

...and feel free to drink the Kool-aide. I'm sure it's delicious.

Give up. The info I said was about Canada - for you argue that Canada is as tied to the US as it was in 1980 is just idiotic.

No, it isn't. And you have yet to show that it is less tied. You tried by saying "they had a recession and we didn't", but that isn't true. You haven't shown that we rely less on our exports to them, or that they are a smaller portion of our trade... nothing. You just SAY it. And you are wrong.

To say we are LESS tied, when over 1/3 of our GDP is made up of exports to them is what is IDIOTIC.

Now Gold as a hedge against inflation and deflation I'm going to give you a link - try to read it this time not like the time you passed on disflation/disinflation. While I don't agree with a lot of this guys ideas go to page 10 Gold/Currency - the author in a taking for granted that everyone knows this tone - states "But it is important to remember that gold jumps as much in reaction to an inflationary crisis as to a deflationary crisis" Well Fort if most feel this way I would think Gold would be as effective a hedge for deflation as it would for inflation.

http://www.ipdj.net/pdf/21052003.pdf

You would do well to read this - it has many interesting points that won't fit your current understanding of economics. You know where you take your knowledge to spit out the garbage you managed to remember and into the area of thinking and applying it to new ideas. Like I said I don't 100% agree with this person but I think it's worth reading.

Grow the F up


bbk

Sigh.

I don't even need to read it to know you already misunderstood it.... Don't worry... I will read it. And you will still be wrong.

You always are.

 

[Fortunato]

...by these events.

Deflation will lead people to hoard cash. Why buy something today when it will be much cheaper tomorrow?If everybody hoards cash, it will have a snowball effect devastating numerous businesses and could eventually lead to a depression.

Possibly, but not necessarily so. This kind of assumption is equivalent to suggesting that inflation is good because it will cause people to run out and spend (before the dollar is worth less). Savings (and investment) will die out. And, prices will increase so dramatically (as more dollars chase fewer real goods) that you'll need a wheelbarrow full of currency to buy a loaf of bread. And then, like Germany (and Argentina, etc. etc.) we will lead to depression.

Truth is, not everything is that reactionary (despite what Mr. bbk would like you to believe).

There are those who can prosper in a depression environment but that is small consolation for the starving masses and even the rich will not be secure living in social anarchy.

Yes, there is no argument that price stability is best. That's why achieving it is the ONLY objective a central banker should have. But to pretend that deflation is the end of the world as we know it (as opposed to simply being the opposite of inflation, that helps/harms in a slightly different profile... inflation punishes the savers and financial investors... deflation punishes the spenders and the real property investors), or that it is inherently more dangerous than inflation, is more than a little reactionary.

And to think you can "hedge" against deflation by buying real assets is just silly.


Best regards,

F.

 

[Fortunato]

Now Gold as a hedge against inflation and deflation I'm going to give you a link - try to read it this time not like the time you passed on disflation/disinflation. While I don't agree with a lot of this guys ideas go to page 10 Gold/Currency - the author in a taking for granted that everyone knows this tone - states "But it is important to remember that gold jumps as much in reaction to an inflationary crisis as to a deflationary crisis" Well Fort if most feel this way I would think Gold would be as effective a hedge for deflation as it would for inflation.

http://www.ipdj.net/pdf/21052003.pdf

Well, you are right. Your author does say "But it is important to remember that gold jumps as much in reaction to an inflationary crisis as to a deflationary crisis". That’s all he says about it. And, just like you, he doesn’t offer any logic or support for the assertion. And, if you look at what else he does say, it pretty much contradicts that statement.

If gold were to be a good hedge, we would expect the price of gold to rise during inflationary times. 1920s? No. Early 1930s? No. Stable, both times. (But we would have expected that, with Bretton Woods). What about more recently… surely, early 1990s, when Japan saw deflation? Nope. Price was falling from near $500 in the early 1980s.

Moreover, this particular slide, he’s using the spike in gold price to PREDICT deflationary pressures… even though, just a few pages earlier, he went through the trouble of explaining why there were INFLATIONARY pressures on the US economy (the war, etc.).

Nope, still no credible argument to use gold as a deflation “hedge� (or, as to why you would want to hedge a deflating currency).


Now, your turn. The following link explains deflation, and the impact on the investment process. It’s taken from “Canadian Investment Review� (I know, a rag, when you can compare it to a 20 page slide presentation some nobody in Quebec with a science – not economics - background threw together for a 15 minute presentation). Note how (page two, upper right column) he explains that the best “hedge� for deflation is monetary assets (bonds), and investing in real assets (like gold) is BAD? Sound familiar?

http://www.investmentreview.com/archives/2002/spring/field_notes.pdf

Then again, us investment professionals have not been “blessed� with the “common knowledge� that you (uniquely) seem to possess.


Good bye.

F.

 

[Fortunato]

Your are without a doubt a class A fool - See this is typical of your bull - you have changed my comment from Gold as hedge for deflation - to Real Assets. I didn't say real assets and you know it.

Again this is a typical Fort. post - distort when your wrong so that you might look right.

Can you get anymore pathitic.


bbk

Gold, like every other commodity, is a "real" asset. So are houses. And cars. You know... "things you can touch". Things that AREN'T dollars, but are valued in them?

I don't know how that is a "distortion", but if you're offended by it... I'm sorry. Go back to thinking that it's NOT a real asset.

It's not like "truth" or "reality" have ever had much sway on your thought process, anyways....

F.

 

[WoodPeckr]

- What Bush does say is that the economy was slowing during the last 6 months of the Clinton Admin and for evidence he said the stock market started to decline during that period - foretelling the trouble to come - that's what he said in the debate -

Bush said this twice last friday and I wish Kerry had called him on this BUSH BLUNDER! People forget that going back to that point in time Alan Greenspan of the Fed, at the behest of GOP operatives had been raising interest rates every chance they could to SLOW DOWN Clinton's rip-roaring economy under the pretext of that 'bogeyman Inflation' Alan and the GOP were so worried about may re-appear! Remember Alan was so fearful an 'overheated' economy would lead to inflation........or so he claimed quite often after every interest rate increase.

Also saying the stock market was in decline back then is TOTALLY WRONG. Checking the Dow & Nasdaq charts back then you will find ALL was still rising during Clinton's last 6 months and continued on to their peaks in Feb-Mar 2000, after Bush was in the White House! It was after this peak in Feb-Mar 2000 that the stock market dropped like a rock, probably due to all those rate increases of Greenspan at the Fed, which finally kicked in and stalled the economy, but on Dubya's watch NOT Clinton's watch, as the GOP had hoped for!