patrick.net

dunnross says

They are talking about a gold-backed currency, or the gold standard.

Actually, today, most people don't even carry cash in their wallets when they go to Wallmart. They use credit cards. There is already a bank which offers gold credit cards, not the kind of gold visa card you get from most banks, but a credit card which counts your money based on ounces of gold instead of $US dollars. I bet if you had one of those, you would be able to buy that house you always wanted:

http://www.coinlink.com/News/commentary-and-opinion/gold-backed-credit-cards-really/

dunnross says

Gold is not immune to speculative frenzy. However, you know that gold has been around since the Babylonian war, and all the fiat currencies which ever existed had to succumb to it, in the end

You mean, except for all currencies that are currently in use. Right?

tatupu70 says

You mean, except for all currencies that are currently in use. Right?

Yes, and those will succumb too. There is nothing that is special about them, either.

dunnross says

tatupu70 says

You mean, except for all currencies that are currently in use. Right?

Yes, and those will succumb too. There is nothing that is special about them, either.

Just like there is nothing special about gold. It's a relatively inert, relatively scarce metal.

Oh yeah, and it's really shiny too.

dunnross says

Although this is a prediciton, it's a pretty certain one. Tell me this. If I tell you that the sun will be up tomorrow morning, is that a prediction? Gold has been going up for the last 10 years.

Right. Past performance is a great indicator of future results.

"Housing is has been going up for the last 10 years. They're not making any more land. Housing never goes down..."

I still think that Real Estate is in a slow bottoming process that will last years, but that may be hope more than reality. I wouldn't be surprised if it is at it's near it's low in terms of monthly payment on an 80% mortgage, but then that makes me think real estate could be lower a few years from now.

But with all that being said, if I had the capital, I would WAY rather have real estate than gold as a long term hedge.

And if I had to have a long term position in the real estate/ gold spread,
I would be short gold against long real estate, rather than the other way, in spite of the trend.

marcus says

But with all that being said, if I had the capital, I would WAY rather have real estate than gold as a long term hedge.

That only makes sense if you have rental income on that real-estate. Otherwise real-estate is paying you negative dividends in the form of property taxes, maintenance, and insurance.

Not that gold is much better. You have to pay someone to guard it, and hope they don't make off with it if "everything hits the fan."

dunnross says

Yes it did, because since 2000 we are living in a deflationary world (exactly like Peter predicted

Are you sure about this? In most of the Schiff videos he's warning about inflation. In that infamous 2002 video, he was predicting:

Dow would go down to below 4000, Nasdaq down to 500. He also predicted the dollar would fall, interest rates would skyrocket and we'd have high inflation.

tatupu70 says

Just like there is nothing special about gold. It's a relatively inert, relatively scarce metal.

Oh yeah, and it's really shiny too.

Chicks like it.

dunnross,

I can't figure you out. One one hand, you seem to be worried about inflation, and so you're long on gold. On the other hand, you're worried about deflation.

Which are we going to have? Inflation or deflation? How do you have inflation and deflation at the same time? Sure, some stuff might go up in value, and other stuff might go down. But usually when people talk about "inflation" and "deflation" they mean OVERALL, not particular goods.

bgamall4 says

We have some of both.

At the same time? That's ridiculous.

robertoaribas says

inflation and deflation are MONETARY conditions, they have nothing to do with specific asset prices, so stating that they both can occur at the same time demonstrates a spectacular lack of knowledge about economics...

Yeah that's what I was thinking. How can you have inflation or deflation at the same time (if you're talking about "overall" inflation or deflation)?

bgamall4 says

Speculation in futures is buying up contracts and making them scarce.

Scarcity in paper contracts doesn't hurt anyone. Scarcity in actual oil, coal, corn, soybeans, wheat, FCOJ, etc is what hurts people.

I admit, I don't really understand how the futures market works. I know it has something to with getting "firm" prices for things months (or even years) in advance of physical delivery.

I don't dispute that gold can keep rising. This will be the reaction if Bernake and the Europeans keep fooling around.
I only don't bother with it myself because I like stocks more. They may not have beaten gold in the last decade but I'm looking forward.
Also, I always remember my little old lady neighbor who is richer than god. She got that way with stocks but she's had them for over 60 years.
By definition, an asset with no intrinsic way to earn a profit or pay a dividend is more of a speculative investment than a stock.
Stocks we can judge based on direct information about how much profit it had, and of course guess what the future will be to arrive at a price of the stock. When it doesn't meet the consensus, it will fall. Over long time periods, those huge growing companies that pay dividends are just capturing their profits along with the general 4-5% worldwide average growth of GDP.
When I am rich, I will get some Swiss Francs.

robertoaribas says

inflation and deflation are MONETARY conditions, they have nothing to do with specific asset prices, so stating that they both can occur at the same time demonstrates a spectacular lack of knowledge about economics...

The most commonly accepted definition of inflation is simply--rising prices.

That's why the government uses the famous "basket of goods" to measure it.

Inflation can certainly be caused by monetary conditions, but it is NOT the (only or even most common) defintion.

Maybe dial back the insults a bit Roberto...

tatupu70 says

The most commonly accepted definition of inflation is simply--rising prices.

So that means when we finally run out of fossil energy to power our machines, we will have "massive inflation." Even if it's really just a reflection of the fact that we won't be able to produce 1% of what we did before.

wthrfrk80 says

tatupu70 says

The most commonly accepted definition of inflation is simply--rising prices.

So that means when we finally run out of fossil energy to power our machines, we will have "massive inflation." Even if it's really just a reflection of the fact that we won't be able to produce 1% of what we did before.

Yep. If you look back at the stagflation in the late 70s--much of it was attributable to oil prices...

robertoaribas says

We have seen computers and many other items get much cheaper due to technological innovation, but that has nothing to do with deflation...

Agree.

But some commodities, like energy, are so critical that any shortages can have a "ripple effect" throughout the whole economy. Which sector of our economy doesn't require energy to run?

When we start running out of fossil fuels, we are completely f*cked. We won't even care about Global Warming at that point.

robertoaribas says

TRUE inflation, when there is more money supply then there should be, goes on and on. Prices rise, salaries rise, prices rise more, and on and on.

I guess it does depend on the exact definition of "inflation."

Yes, an increase in the money supply causes a rise in prices. So does a decrease in crucial energy supplies.

Is the former the "true" definition of inflation? I'm not an economist, so who am I to say one way or the other?

robertoaribas says

Inflation or deflation are changes in the amount of MONEY chasing all commodities and assets...

I KNOW what inflation is--you THINK you know...

In truth, like I said, there is no true cut and dry defintion of inflation

Here are a couple:

http://www.investorwords.com/2452/inflation.html

http://www.businessdictionary.com/definition/inflation.html

Again--best to make sure you know what you're talking about before you start flinging insults.

I just did. They don't agree with you.

See my post above.

robertoaribas says

actually they do agree with me...
they both mentioned SUSTAINED increases in prices, which your oil example is not, and both mention the money supply...
it's okay tapatootie, you've been here for years, I'm used to this from you...

Roberto, Roberto, Roberto... I've come to expect this from you as well.

So, you claim that this agrees with you? Really?

"A sustained, rapid increase in prices, as measured by some broad index (such as Consumer Price Index) over months or years, and mirrored in the correspondingly decreasing purchasing power of the currency. It has its worst effect on the fixed-wage earners, and is a disincentive to save.

There is no one single, universally accepted cause of inflation, and the modern economic theory describes three types of inflation: (1) Cost-push inflation is due to wage increases that cause businesses to raise prices to cover higher labor costs, which leads to demand for still higher wages (the wage-price spiral), (2) Demand-pull inflation results from increasing consumer demand financed by easier availability of credit; (3) Monetary inflation caused by the expansion in money supply (due to printing of more money by a government to cover its deficits). See also deflation and hyperinflation."

Read more: http://www.businessdictionary.com/definition/inflation.html#ixzz208vB1034

zesta says

When you watch his videos and read his quotes, what year do you think he was predicting that housing would crash?

That's the problem with your viewpoint, you think Schiff is treating the economy like a bookie, when he's treating it like an analyst.

Analyst aren't fortune tellers. We are supposed to comment on future trends based on current economic fundamentals. If the average american would have listened to Schiff in 2002, maybe $14 Trillion Dollars in U.S wealth might not have been "created" then subsequently wiped out, to the misery of millions of people, and to the detriment of the entire U.S economy.

If you want to know when the world is going to end, visit a Madam Fortune Teller. If you want to know what makes sense in the current economy based on fundamental economic indicators, talk to an analyst.

I hope this information helps you form more informed opinions in the future.

robertoaribas says

they both mentioned SUSTAINED increases in prices, which your oil example is not

Are you suggesting that oil, natgas, and coal prices cannot continue to increase as they become scarcer?

robertoaribas says

When half the cacao freezes, chocolate gets more expensive for a while, if there is a bumper crop, it gets cheaper... That is neither inflation or deflation... that is a single commodity price change.

True. But wouldn't continuously-rising energy prices cause inflation? I'm not saying I know where energy prices will go in the short term. But fossil fuels (especially oil) are being depleted.

robertoaribas says

You cannot have inflation and deflation at the same time, as they are the opposite of each other; everything together can't be both getting more expensive, and cheaper...

True.

bgamall4 says

With housing in a deep freeze, you could have a growth in the money supply and slow turnover of the money. So you could have inflation in commodities, as the elite have more of the money for speculation, and deflation in housing at the same time.

But, like Roberto has pointed out, you can't have true inflation and deflation at the same time. Inflation and deflation traditionally refer to prices OVERALL.

bgamall4 says

No, you can have inflation in commodities, as all the money congregates at the top of the food chain, for speculative futures buying, while you have a deflation in the real society with no velocity of money in housing.
You can have both and we have had both. At the same time too.

Sure, you can have rising prices in commodities. But that's not the same as an OVERALL rise in prices. You have to look at a "basket of goods." If housing prcies are going down that will tend to offset the rising costs of commodities, for example.

Goran_K says

That's the problem with your viewpoint, you think Schiff is treating the economy like a bookie, when he's treating it like an analyst.

Analyst aren't fortune tellers. We are supposed to comment on future trends based on current economic fundamentals. If the average american would have listened to Schiff in 2002, maybe $14 Trillion Dollars in U.S wealth might not have been "created" then subsequently wiped out, to the misery of millions of people, and to the detriment of the entire U.S economy.

If you want to know when the world is going to end, visit a Madam Fortune Teller. If you want to know what makes sense in the current economy based on fundamental economic indicators, talk to an analyst.

I hope this information helps you form more informed opinions in the future.

Oh, I'm sorry, I thought we were talking about the Peter Schiff that is an investment broker.

This is why Peter Schiff can get away with getting so many things wrong. He can call that the Dow will go down to 2k and him and his apologists will say he was early in his predictions or that he meant the DOW when indexed to gold.

Can you really look at his track record and say that he's on target more than half the time? I get it, you agree with his view of what economic fundamentals SHOULD be. But are you really so blind you can't say that he's been wrong (a lot)

Read this:
http://money.usnews.com/money/personal-finance/articles/2008/05/30/permabear-peter-schiffs-worst-case-scenario?page=2

How many of his predictions came any where close to being accurate? When he finally did get a timetable for his predictions (does that make him a bookie?) he was wrong.

Peter Schiff on May 30th 2008:
• I think the stock market is headed lower. Gold is going to be $1,200 to $1,500 by the end of the year. That puts the Dow at a less-than-10-to-1 price ratio to gold. Right now, it's about 13 to 1. That's another 30 percent drop in the real value of stocks by the end of the year if you price them in gold. The Dow was worth 43 ounces of gold in 2000. It'll get to 10 by the end of the year and continue to fall from there.

• Oil prices had a pretty big run and might not make more headway by the end of the year. But we could see $150 to $200 next year. I don't think oil will hit $250 because there will be enough destruction of demand in the United States to keep it from doubling. The big problem for us is if the Chinese substantially allow their currency to rise. It could increase at least fivefold against the dollar over the span of a year or two. That reduces the price of oil by 80 percent for 1.3 billion Chinese. Consumption would go through the roof, and that will drive prices through the roof for us.

• At a minimum, the dollar will lose another 40 to 50 percent of its value. I'm confident that by next year we'll see more aggressive movements to abandon the dollar by the [Persian] Gulf region and by the Asian bloc. That's where the stuff really hits the fan."

Like any Guru, Peter Schiff was right once and so he (and his followers) think he will be right in the future.

"Past performance is no indication of future results." Or at least that's the disclaimer used in most investment commercials I hear.

Savings rate is going higher. Tax is going higher. Debt payments are all time high. There won't be much disposable income left to spend. Borrowing is down. Credit is deflating. Deflationary crash is coming. Japan had it for 20 years. Do not think we are immune!

http://www.kondratieffwavecycle.com/economy/deflationary-crash/

Schiff has been wrong more often than right. Late 07 he was decrying the looming crash of the dollar, urging people to buy EUR, and caterwauling about hyperinflation and bread lines. I remember seeing him on CNBC together with Roubini and even Roubini was disgusted by Schiff.

zesta says

How many of his predictions came any where close to being accurate? When he finally did get a timetable for his predictions (does that make him a bookie?) he was wrong.

Some of those predictions you posted as wrong are only half wrong, for instance the value of the dollar (there was a significant drop in value, but not 40%), also the price of Gold was right at the $1,100 mark in 2009, so he was off by slightly on the timing.

I've also never claimed he was never wrong, I even stated he's been wrong a lot (dollar valuation, hyper inflation in U.S, etc), so don't be dishonest and claim that I've ever said that.

So yes, he's not going to pinpoint exactly where prices will be to the day to day, but his predictions for a lot of things have been very accurate.

Here's a short list I can ring up off the top of my head:

- US economy is not strong and housing market will crash and we will have high unemployment (2002-2006)

- US Equity Markets Will Crash (2006)

- Buy commodities (2004)

- Buy Gold (2002)

- Foreign stock, gold and commodities to outperform US stocks (2010)

But people here are trying to discredit him on the one thing he has always gotten right, which is housing/stocks/equity markets/commodities. The funny thing is, Roubini has been saying the same things recently: http://www.bloomberg.com/video/roubini-says-2013-storm-may-surpass-2008-crisis-HCAjTp9VTD~gm6Ux8jnQvQ.html?source=Patrick.net

It's funny because the prediction that Schiff is making in the article is a common one being predicted by many economist about another crash coming.

With the amount of privately held debt in the country still extremely high, job growth stagnant, and wages stagnant, a lot of the weakness that brought on the crash still exist in the economy today.

robertoaribas says

As tapapatootie keeps confusing himself, it is the general change that is referred to as inflation, in all the definitions he cites, but he doesn't seem to quite grasp that fact.

When you resort to name calling, I'm pretty sure you've given up. You really don't understand the concept at all.

Do you realize that the generally accepted definition is rising prices at least?

Ok, so what is the true inflation rate right now, smart people? Can I use the CPI or is that part of a gummint conspiracy? Just like 911?

Goran_K says

Some of those predictions you posted as wrong are only half wrong, for instance the value of the dollar (there was a significant drop in value, but not 40%), also the price of Gold was right at the $1,100 mark in 2009, so he was off by slightly on the timing.

I've also never claimed he was never wrong, I even stated he's been wrong a lot (dollar valuation, hyper inflation in U.S, etc), so don't be dishonest and claim that I've ever said that.

So yes, he's not going to pinpoint exactly where prices will be to the day to day, but his predictions for a lot of things have been very accurate.

Half-wrong, timing wrong, nobody could have predicted ZIRP. etc.. I'd say he's wrong more often than he's right. For what it's worth, I don't remember you ever stating "he's been wrong a lot" The one thing you admitted him being wrong about in this thread was interest rates and even then you made excuses for him.

My point is, he's far from an oracle and claims he's right even when it's plainly obvious he's wrong. He's turned a open-ended prediction into a youtube investment broker. The fact that he can turn even a former GS employees into believers despite his horrendous track record is probably his best talent.

If you're going to call anybody an "oracle" maybe take a look at Med Jones.. THAT guy has a better track record than Roubini or Schiff

zesta says

For what it's worth, I don't remember

Then don't assume.
zesta says

He's turned a open-ended prediction into a youtube investment broker.

That's simply unfair, and not giving him credit. Peter Schiff is far more than some "youtube" investment broker. You actually rob your own argument of credibility with comments like this.

Med Jones is a smart guy, but it's hard to take anyone seriously who thinks they can present a valid metric for "happiness".

zesta says

For what it's worth, I don't remember you ever stating "he's been wrong a lot"

Unless Goran_K went back and edited one of his earlier posts, he's not lying this time. He did say Schiff was wrong a lot.

bgamall4 says

dunnross says

No I am not. Oil was $145 back in 2006. It's only $84, today.

But gas at the pump has not decreased by the same amount.

Gary Anderson strategicdefaultbooks.com

+1 Nailed it

Bill Gross predicted ZIRP, as did at least 3 of the Patrick.net regular authors at the time ~2008.

Randy H says

Bill Gross predicted ZIRP, as did at least 3 of the Patrick.net regular authors at the time ~2008.

Gotta make the Big Bankz happy. They're the ones with the power.