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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 01/16/2008 : 18:57:22
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Updated: New York, Jan 16 19:58London, Jan 17 00:58Tokyo, Jan 17 09:58
Bloomberg Press
Gold, Silver Fall as Demand for Hedge Against Inflation Slows
By Halia Pavliva
Jan. 16 (Bloomberg) -- Gold futures tumbled the most in almost nine weeks after prospects for an emergency interest-rate cut by the Federal Reserve faded, reducing the appeal of the precious metal as hedge against inflation. Silver also declined.
Speculation about a rate cut, prompted by a 0.4 percent drop in U.S. retail sales last month, helped gold jump to a record yesterday. The Fed is now expected to cut borrowing costs at its meeting on Jan. 30. Energy prices dropped for a second day, and the dollar rebounded against the euro, pushing the metal lower today.
``The markets were expecting an emergency rate cut yesterday,'' said Ralph Preston, a senior market analyst at Heritage West Financial Inc. in San Diego. ``The reason for the reversal is that we didn't get that rate cut.''
Gold futures for February delivery fell $20.60, or 2.3 percent, to $882 an ounce on the Comex division of the New York Mercantile Exchange. The percentage decline was the biggest since Nov. 15. The price reached $916.10 yesterday, the highest ever for a most-active contract.
Silver futures for March delivery dropped 40.5 cents, or 2.5 percent, to $15.895 an ounce. The percentage drop was the most in a month. The metal gained 15 percent last year.
The dollar rose as much as 1.4 percent against the euro on speculation the European Central Bank will join the Fed in cutting interest rates this year. ECB council member Yves Mersch, who is also governor of Luxembourg's central bank, cited ``downside risks'' to the region's economic growth.
`Rate-Cut Mode'
``People are selling gold, because the dollar is strong as a result of the ECB saying they are not averse to cutting rates,'' said Walter Otstott, a senior broker at Dallas Commodity Co. in Dallas. ``If they bothered to think about it, they would realize that we have the Fed, ECB and Bank of England in the rate-cut mode. This can only be bullish for the metals.''
Otstott said he bought gold and silver today.
Crude-oil futures tumbled as much as 2.9 percent today after falling 2.4 percent yesterday. The price fell to a four- week low today after a U.S. Energy Department report showed that petroleum inventories last rose more than analysts forecast.
Gold gained 31 percent last year, while the dollar fell 9.5 percent against the euro and oil jumped 57 percent.
Gold futures fell 3.8 percent in 1976, the first year the metal began trading on the Comex. The price rose for the next four years, peaking at $873 in January 1980.
To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net .
Last Updated: January 16, 2008 15:20 EST
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86 Posts |
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/21/2008 : 12:00:52
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I might be wrong about this but I suspect we may end up with stagflation or a hybrid of flations, both inflation and deflation at the same time.
Expect Deflation for; houses, cars, retail merchandise in general
Expect Inflation for; oil, food, health insurance, precious metals (as defense against inflation)
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fiatboy
Administrator
912 Posts |
Posted - 01/21/2008 : 12:24:15
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quote:
I might be wrong about this but I suspect we may end up with stagflation or a hybrid of flations, both inflation and deflation at the same time.
I agree. |
"Bart, it's not about how many stocks you have, it's about how much copper wire you can get out of the building." --- Homer Simpson |
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 01/21/2008 : 13:29:52
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quote:
Originally posted by fiatboy
quote:
I might be wrong about this but I suspect we may end up with stagflation or a hybrid of flations, both inflation and deflation at the same time.
I agree.
Ditto. Long term, I place the higest odds on a 1929 type depression, but this time coupled with a dollar crash (since our currency is no longer backed by anything). This will play out as lower prices for some local goods, lower wages, and fewer jobs. While everything that has to imported or can be exported (anything with a global market) will inflate. So stagflation.
I have lower odds on deflation. A lot of the pieces for a deflation scenario are falling into place (example: massive destruction of money through bankruptcies, falling house prices, etc), but the odds of a fiat currency deflating has got to be close to nil.
But for the next couple of days, I think that anybody not in 100% cash is going to feel some pain...I know I am feeling it already. |
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HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 01/21/2008 : 13:42:32
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I concur with the stagflation projection. Of course one is never as fully prepared for the future as you would like to be.. even if you guess right.
You shouldn't be feeling too much pain, horgad.. I saw those pics of your stacks of cash. |
If your percentages are low.. just sort more. If your percentages are high.. just sort more.
Now selling Copper pennies. 1.6x plus shipping. Limited amounts available. |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 01/21/2008 : 15:50:54
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| The stagflation that I remember had high interest rates and low employment. We don't appear to be moving towards the high interest rates yet, but they could come down the road. |
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Think positive. |
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fiatboy
Administrator
912 Posts |
Posted - 01/21/2008 : 15:55:56
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| I don't think the upcoming staglation will be the same as '70's stagflation. Similar in appearance, but different causes. High interest rates seem very unlikely. Infact, I loathe the use of the term "stagflation" because it's too reminiscent of the 1970's. We're in uncharted territory, is my 2 cents. |
"Bart, it's not about how many stocks you have, it's about how much copper wire you can get out of the building." --- Homer Simpson |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/21/2008 : 16:52:40
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Maybe the term we are looking for is "Zimflation",
as in Zimbabwe's runaway inflation in the money supply, high prices and shortages of everything, few jobs due to few companies able to pay all of the taxes and wages owed, etc.
High unemployment declining standard of living, falling values of some things (factories, businesses due to high taxes) these should spell deflation in Zimbabwe but inflation is what is going on there.
Anyone have a better definition than Zimflation? |
Edited by - pencilvanian on 01/21/2008 16:54:56 |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 01/21/2008 : 17:20:38
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| I don't know if its any better than "Zinflation" but we sure have a 'debtflation' going on. |
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All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
Think positive. |
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n/a
deleted
85 Posts |
Posted - 01/21/2008 : 19:25:03
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quote:
Originally posted by fiatboy
I don't think the upcoming staglation will be the same as '70's stagflation. Similar in appearance, but different causes. High interest rates seem very unlikely. Infact, I loathe the use of the term "stagflation" because it's too reminiscent of the 1970's. We're in uncharted territory, is my 2 cents.
"But Bernanke is setting the stage for an even bigger recession down the road. Just as the ultra-low rates of the early 2000s created many of the problems we're experiencing today, pumping money into the system would probably stoke inflation, forcing the Fed to hike rates sharply in the near future. "It's better to take a small recession and kill inflation immediately instead of facing high inflation and a really big recession later," says Carnegie Mellon economist Allan Meltzer" |
"The key to building wealth is to not lose money." - Warren Buffet |
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HoardCopperByTheTon
Administrator
USA
6807 Posts |
Posted - 01/21/2008 : 19:32:27
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| Ah, but you have to remember.. this is an election year <G> |
If your percentages are low.. just sort more. If your percentages are high.. just sort more.
Now selling Copper pennies. 1.6x plus shipping. Limited amounts available. |
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fiatboy
Administrator
912 Posts |
Posted - 01/21/2008 : 19:48:36
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quote:
"But Bernanke is setting the stage for an even bigger recession down the road. Just as the ultra-low rates of the early 2000s created many of the problems we're experiencing today, pumping money into the system would probably stoke inflation, forcing the Fed to hike rates sharply in the near future. "It's better to take a small recession and kill inflation immediately instead of facing high inflation and a really big recession later," says Carnegie Mellon economist Allan Meltzer"
Hey CopperBar, I thought I was the only one that read Meltzer! hahaha. He has a point, which very well may be correct, but I think he's giving Bernanke and Co. way too much credit. Interest rates can't stay low forever, so I think this scenario is likely, but when it happens is beyond the control of the Fed---later rather than sooner. It's the time frame that I take issue with. The Fed seems too reactionary, IMHO. I love the contrapuntal quote, though!!  What a zinger!!
In the big picture, though, I see the stock markets and interest rates as a distraction. The keys to the kingdom are hidden in the land of Monetary Stability. |
"Bart, it's not about how many stocks you have, it's about how much copper wire you can get out of the building." --- Homer Simpson |
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 01/22/2008 : 08:49:42
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Fed slashes rates to 3.5%
Citing weakening economic outlook, Federal Reserve makes biggest cut in nearly 24 years - three quarters of a point.
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See all CNNMoney.com RSS FEEDS (close) January 22 2008: 9:11 AM EST
NEW YORK (CNNMoney.com) -- The Federal Reserve slashed two key interest rates by three-quarters of a percentage point Tuesday following an unscheduled meeting, citing continued concerns about a weakening economy and turmoil in the financial markets.
The Fed lowered its federal funds rate, which impacts how much consumers pay on credit card debt, home equity lines of credit and auto loans, from 4.25 percent to 3.5 percent. The Fed also lowered its discount rate, which is what it costs banks to borrow directly from the central bank, by three-quarters of a point, to 4 percent.
This was the biggest rate cut by the Fed since October 1984.
"Broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets," the Fed said in a statement.
Read the Fed statement
Treasury Secretary Henry Paulson, speaking at the U.S. Chamber of Commerce in Washington Tuesday morning, said that he hoped the rate cut would restore some confidence in the financial markets and U.S. economy.
"I think it's very constructive and what I think it shows to this country and to the rest of the world [is] that our central bank is nimble and able to move quickly to respond to market conditions and that should be a confidence builder," he said.
Stock futures, which have been pointing to a gloomy start on Wall Street after market sell-offs abroad Monday, moved off their lows following the rate cut but were still sharply lower.
Wall Street had been betting that the central bank would need to initiate an emergency rate cut before its next scheduled meeting, which concludes on Jan. 30, in an attempt to help keep the economy from tipping into a recession.
Since September, the Fed has cut the fed funds rate from 5.25 percent to 4.25 percent. Investors have been clamoring for more, and bigger, rate cuts in the hopes that it will kick start a moribund economy and encourage businesses and consumers to spend.
The Fed has also loaned $70 billion to banks through a series of three auctions since December to help mitigate the effects of the credit crunch on Wall Street. That appears to be working as the Fed said Tuesday that "strains in short-term funding markets have eased somewhat."
President Bush and Congress are also working on an economic stimulus package in order to help beleaguered consumers. Federal Reserve chairman Ben Bernanke endorsed this plan during a speech to the House Budget Committee last week and urged Congress to act "quickly."
But markets have plunged so far in 2008 despite this as investors continue to fret that the Fed may be doing too little too late to keep the economy from recession.
Still, others think the Fed needs to proceed cautiously, especially since it's fair to argue that aggressive rate cuts during 2001 may be the reason why banks are in the subprime mortgage mess they are in now.
To that end, William Poole, president of the Federal Reserve Bank of St. Louis, voted against a rate cut. According to the Fed's statement, Poole did "not believe that current conditions justified policy action before the regularly scheduled meeting next week."
Fed board member Frederic Mishkin did not participate in the emergency meeting.
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No big moves for the PMs yet as I write this. |
Realcent.forumco.com disclosure. Please read.
All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
Think positive. |
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 01/24/2008 : 08:22:36
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quote:
Originally posted by horgad
Fed cuts 3/4...says NO to deflation and YES to more inflation.
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Looks like the cut and the new inflation is starting to hit home today.
Gold up 2%
Silver up 3%
Copper up 3% |
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 01/24/2008 : 12:39:48
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quote:
Originally posted by pencilvanian
Maybe the term we are looking for is "Zimflation",
as in Zimbabwe's runaway inflation in the money supply, high prices and shortages of everything, few jobs due to few companies able to pay all of the taxes and wages owed, etc.
High unemployment declining standard of living, falling values of some things (factories, businesses due to high taxes) these should spell deflation in Zimbabwe but inflation is what is going on there.
Anyone have a better definition than Zimflation?
Is your real name Steve Forbes? If so, can I get a loan? 
Forbes Says U.S. Dollar Policy Amounts to `Zimbabwe Economics'
By Simon Kennedy
Jan. 24 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke and U.S. Treasury Secretary Henry Paulson are guilty of ``Zimbabwe economics'' by failing to step in to support the dollar, said Forbes Inc.'s Chief Executive Officer Steve Forbes.
<Snip>
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Edited by - horgad on 01/24/2008 12:40:35 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/24/2008 : 15:32:21
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quote:
Originally posted by horgad
quote:
Originally posted by pencilvanian
Maybe the term we are looking for is "Zimflation",
as in Zimbabwe's runaway inflation in the money supply, high prices and shortages of everything, few jobs due to few companies able to pay all of the taxes and wages owed, etc.
High unemployment declining standard of living, falling values of some things (factories, businesses due to high taxes) these should spell deflation in Zimbabwe but inflation is what is going on there.
Anyone have a better definition than Zimflation?
Is your real name Steve Forbes? If so, can I get a loan?
Sorry I am not Mr. Forbes. If I were I wouldn't be hoarding copper pennies, copper mines on the other hand... |
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86 Posts |
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Gold, Silver Falls as Demand for ..............
Forum Locked
Posted - 01/21/2008 : 09:52:41
