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tsusiat,
do you have historical CAD exchange rate dating back further than the 1990? Thanks.
I know CPI is cooked. But 8% sounds too high to me. I believe 5-6% is a more reasonable number.
I understand that many have complained about the government fudging of statistics. But, conspiracy theories are just conspiracy theories. Someone raised a good point: Most beauracrats at BLS were appointed during the Clinton Adminstration; they don't have a strong incentive to help the Bush & Co, especially by doing so they would expose themselves to future prosecution.
OO & Tsusiat
I still think CDs in euros are a stong, conservative approach for my HAHAs. If oil moves to euros, they will rise against the USD.
Now I've never looked deeply into these markets. Perhaps theres something I missing in my thinking.
Since I sold my house, I don't want to gamble with my cash...but I don't want it devalued over the next few years either. At some point I will invest in real estate again....for that is where my interest lies. Until then...euros?
I've put a call into Everbank.
SQT, I emphatically agree. I expect to make money from speculation in these bubbles, on both the long and the short sides, for now I suddenly found a few good causes to make money.
GC,
all we are saying is just personal assessment. We can check back in a few months or a few years to see how right or wrong we are, and why. I'd like to do that.
Linda,
do whatever you feel comfortable, after all, you need to sleep tight at night, that is what counts.
He’s going to keep raising the rates and bust gold.
It all depends whether people believe in gold psychologically.
* If he pauses dollar will fall and people will rush to gold.
* If he continues to hike people will see that as a sign of higher inflation risk and they will rush to gold.
See, it is all psychological.
NOT INVESTMENT ADVICE
I sense that quite a few people on this board are on the long side of Au. Correct?
I'm not going long on gold, but I do see the possibility of a tremendous run up and going in now will have relatively little downside.
I won't be so optimistic. But then again, I espouse strange theories.
GC,
Alas, we're social creatures. Fortunately or unfortunately, what we say can be held against us.
OO--
Stats Canada are annoying as all get out, they want to SELL all their stats. It is a lot easier to get info on the US economy, but I will see what I can find...
I’m not going long on gold, but I do see the possibility of a tremendous run up and going in now will have relatively little downside.
Downside is limited because it cannot fall below $0. :)
Gold can be very risky. One can still lose money going long in a major bull market if the timing is bad.
NOT INVESTMENT ADVICE
In the end, it is all about wealth transfer. I missed on boat. I won't miss the new ones coming ashore.
In real dollars, gold is still pretty low priced. It is merely getting expensive relative to the dollar, because the dollar has devalued so much.
Of course, gold could fall to $20/oz, but I highly doubt that because of the psychological support for gold. It'll take a big bubble to burst that perception.
OO--
This site will let you do daily rates for Bank of Canada all the way back to 1996:
Here's a good summary of the situation vis a vis the dollars from the CBC:
OO--
this site will let you retrieve the historical exchange rates back to 1971:
http://fx.sauder.ubc.ca/data.html
And cool enough, it is at UBC in Vancouver...
stupid world bank! seems to have every asinine stat except for exchange rate
Interesting, the loony was basically at parity during the last energy crisis.
Thanks astrid, tsusiat,
here is a brief graph on wiki (gees, they have everything).
http://en.wikipedia.org/wiki/Canadian_dollar
Disregard anything prior to 1970 because it was not floated. So throughout the 1970-1976, it was a more valuable currency than USD, then fell in 1976 against USD. However, oil, the prime index of commodity, didn't start it meteoric rise until late 1970s and peaked in 1980.
We are already at 0.9 right now, how much more can CAD rise against USD?
let me know if you guys want any country facts OTHER than exchange rates :)
astrid,
if you can still get access to your school library, what will really interesting to find is the historical rate of "synthetic Euros". Since Euro came into being in 1999, so prior rates were computed by the economists as a derivative of a basket of primarily DM, FF, and even a bit of Sterling prior to 1992. It is also called XEU.
Going bcak to the last commodity run of around 1970-1980 may also give us some kind of idea how Euro will likely do in this commodity bull period.
I originally wanted to use AUD as an proxy, since Australia is the world's largest quarry and soon-to-be largest gold mine. Unfortunately, their currency was not floated until 1983, which happened to be past the prime.
http://en.wikipedia.org/wiki/XEU
It looks like I won't be able to find the XEU for the period, but I'll see what I can dig up individually. I'll search the academic papers first and see if someone's done work in this area.
http://www.eia.doe.gov/oiaf/ieo/pdf/tbl8.pdf
Russia and Iran has the top two shares of the world's reserve of natural gas, accounting for 27.8% and 15.6% respectively. US has only 3.1%.
Owner Occupier -
the commodities are running again, but the difference this time is not just the US, Europe and Japan are buying. Since the american economy is in a shambles if you consider the trade deficit and 8 trillion dollar debt, things might be considered much worse comparative to anything that was happening back in the 70s 80s.
Regardles of what investment bankers are pulling down as compensation these days ;>
Look for commodities to weaken as the US dollar takes a hit
tsusiat,
I agree with you on all your points, but, as far as CAD is concerned, US accounts for 85% of Canadian trade. Now how much of that is inelastic demand (like oil sands), and how much of that is elastic demand (like Blackberry) I don't know. But I do expect all trading parties of the US to be adversely affected to a certain extent if the American consumers go on strike.
So I am not sure if I can expect a 2x return on CAD if one gets in now. But I think the worst thing is of course staying in USD, just my opinion.
astrid,
just in case that you ever need to call your grandmothers telling them to buy gold, don't buy in the gold stores in Shanghai, you pay through your nose for the craftsmanship which doesn't keep its value. You can get gold bullion or small gold bars at Bank of China in Hong Kong for a smaller markup than we pay here. It is about HKD 150-200 ($20-30) per bullion or gold bar.
O.O., that is incorrect. In 2004, I asked a friend to check out coin prices in Shanghai when he went back to visit. According to him, there was almost zero markup when one bought official gold coins (Panda) from the banks. I was thinking of opening an on-line coin store. Then I found better things to do.
GC,
the markup is in the price itself already. Why do you think so many Chinese go to Hong Kong for shopping, especially at the jewlery stores?
The gold bars at Bank of China in Hong Kong is sold at spot price * ounce + HKD 150 (or 200, I can't remember) processing fee.
Also, at that time there was a limit as to how many coins an individual could buy. But you could get around the system, of course. I gave up because the insurance and shipping cost from Shanghai to my US customers will be high enough to eat up 1/2-3/4 of my margin.
Real coin dealers get their coins way below spot prices. Many got their coins from widows who, under grievance, unwittingly sold the deceased men's boxes of coins for obscenely low-ball prices. Someone once commented that the coin dealers are in the undertaker's business.
This european central bank paper isn't on quite point, but it might be interesting for you hardcore econ guys
http://www.ecb.int/pub/pdf/scpwps/ecbwp365.pdf
This ECB paper may be on point
http://www.ecb.int/pub/pdf/scpwps/ecbwp452.pdf
Here's CEPR's dataset page. I'm not educated enough to know if there's anything useful. The CEPR appears to have produced several quite on point papers, but they're not free.
"The Euro and the International Financial System" is quite promising based on description.
Here's another one, named "China and the Relationship Between the Oil Price and the Dollar"
http://www.cepii.fr/anglaisgraph/workpap/summaries/2005/wp05-16.htm
I'm still digging.
One of my simple joys in life is to go back and read the posts from the previous day that are way past my bed time. People are off work, at home and relaxed and are free to get "out of character". As I reviewed (and snickered) I thought this was indicative of "last call". Then I noticed it started right after my last post at 3:04PM! Damn! Whahappen? Me no know!
Anyway, Rich Toscano did a great piece on why we were NOT WRONG in 2003, 2004 and 2005. Just b/c housing prices continued to escalate doesn't mean it was right. He drew a great NASDAQ analogy which meant even us stock jocks/traders can understand.
Very funny and very sad piece (Another Mortgage Firm in Trouble) about former jock Scott Greenlaw and his Kirkland, WA based Merit Financial going from 12 employees and 50 mil in loan volume to 430 emp. and 2 BIL in just 4 years! 2 days after Ameriquest lets 3,800 go Merit is considering BK. I have worked for guys just like this. It's incredible. Don't you just wish you could have been there for all the rah, rah pep talks and great sports/sales analogies? Don't you wish you could have been there when they had the company party and Scott told all the brokers about the time they were 4th and goal with only 3 seconds left on the clock? Previously Scott had been with 3 RE firms in 3 years. Yeah, we all know this guy. EVERYONE is DISPOSABLE in this guys equation. The mortgage brokers (and their lives and livelihoods) certainly the back office support people and last but not least "his" clients. To guys like this, everything is "his".
Conor,
"I'd gladly take that loss"
Here, here! I have a few S+P 500 short positions as a hedge that obviously haven't panned out. Gold is at like a 2 decade high, oil at uncomfortable levels, the HB is burtsing before our very eyes and by all rights the S+P 500 is over valued. I, like you am only too happy to field a few "disgruntled" calls. No big. If George is right and this is "The Summer of It" we'll break even. If "It" never materializes this summer we'll have dodged not a bullet but a cannonball and I'll go into Labor Day feeling pretty good about myself. Happy Cinco De Mayo to all!
Just a note on the mission of the Fed:
It's not the Fed's mission to intervene in the dollar, either weak or strong. At least not explicitly. We have maintained a free-floating dollar exchange rate policy for many decades, and it has served the US incredibly well. Except for a very few exceptions, any nation that has endeavored to fix or peg their rates has suffered terrible consequences, eventually.
Some things the Fed does affect exchange rates indirectly. But, to be fair, fiscal policy traditionally has a much bigger effect than monetary policy on immediate FXR. The fiscal policy is controlled by Congress and the President, not by the Fed at all.
This will all become moot soon anyway as the Fed is moving towards an inflation target policy. All the Fed watching mysticism will be a thing of the past as the Fed's intentions will be directly interpretable from inflation data. And I may be in the minority, but I don't really think the M3 thing is a big deal at all. A lot of people are making a huge stink without really knowing the relevance of the M1, M2, M3 distinctions.
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Gold is now at $675/oz and silver at $13.88/oz. Do you think their prices will go up, down, or sideways (into government intervention)? Do you think there IS a bubble in gold? Do you think there WILL be a bubble in gold?
Also, please share your thoughts about any other bubble you see on the horizon.
This is a troll and postmodernism free zone. Trolls and postmodernists will be posting at their own peril. Haikus will be most welcomed.
PS - all comments posted here should not be considered investment advice. Always do your own research before making investment decisions.
#bubbles