You heard it here first.

[Chris Mac]

HGUNHNTR - thanks for posting a little more detail.

My point of view is that we are at a financial crossroads we probably haven't seen since the great depression. The confluence of events we could see over the next few years is far too broad to predict whether or not we'lll see a deflationary or inflationary spiral. There is benefit to holding silver and gold in preparation for both environments. I hold the metals to preserve my money, plus I also have some stored that just won't be touched unless the economy really goes over the cliff. In that regard, I don't mind selling off the stuff set aside as an investment if I need to. In fact, I have sold some off recently to help fund business startup costs.

The "facts" that Prechter points out above are all very well known, and I belong to forums that would pick apart his selling points ad nauseum and also agree with a few. Good food for thought, though, and not necessarily wrong. I just disagree with the impact to precious metals pricing. At some point this will force a spike in PMs, and if we recognize the peak, it's a good time to sell and move into other assetts. For now, my short term expectations are a couple more dips throughout summer and early fall, followed by a sharp increase in those prices during 4th quarter. I'm not a professional analyst - we'll see.

 

[zesty]

I completely agree with the post above. No matter how much they print, gold and silver will be gold and silver. The loaf of bread analogy is absolutely perfect. Deflation cannot happen if the US is to service its debt, which it must or SS/China/et al tizzy up.

Honestly just trying to understand here...

The loaf of bread analogy wouldn't have worked 10 yrs ago though would it have? Silver was around $5/oz. Seems like it just happens to work right now but it doesn't seem like such a great 'storage' spot.

 

[NWSharpshooter]

Honestly just trying to understand here...

The loaf of bread analogy wouldn't have worked 10 yrs ago though would it have? Silver was around $5/oz. Seems like it just happens to work right now but it doesn't seem like such a great 'storage' spot.

I have this thought every time somebody tries to feed me that flawed loaf of bread analogy. In the end, precious metals are only precious because people with CASH are willing to pay for them.


Everytime I get a solicitation telling me what a good investment precious metals are, I ask myself, "if it is such a great investment, why are you trying to sell it to me?" Oh yeah, that's right, because the guys who sell that stuff make money every time you buy it and every time you sell it, no matter what the market price is.

 

[Laufen]

I have this thought every time somebody tries to feed me that flawed loaf of bread analogy. In the end, precious metals are only precious because people with CASH are willing to pay for them.


Everytime I get a solicitation telling me what a good investment precious metals are, I ask myself, "if it is such a great investment, why are you trying to sell it to me?" Oh yeah, that's right, because the guys who sell that stuff make money every time you buy it and every time you sell it, no matter what the market price is.

Yepper, almost never will people be beating your door down to help you make money.

 

[woodstock]

but wait, there's more!

 

[Laufen]

One of the most important things I've learned through trading is to hold your beliefs, methods, and convictions with a loose hand. Don't attach your ego to a position, and don't allow past paradigms to prevent you from making money.

 

[STONEWALL]

I have this thought every time somebody tries to feed me that flawed loaf of bread analogy. In the end, precious metals are only precious because people with CASH are willing to pay for them.


Everytime I get a solicitation telling me what a good investment precious metals are, I ask myself, "if it is such a great investment, why are you trying to sell it to me?" Oh yeah, that's right, because the guys who sell that stuff make money every time you buy it and every time you sell it, no matter what the market price is.

That^.

 

[Laufen]

I.M.F. Warns of ‘Sizable Risk’ of Deflation in Euro Zone
By JACK EWING
Published: July 18, 2012 http://www.nytimes.com/2012/07/19/b...-sizeable-risk-of-deflation-in-euro-zone.html
FRANKFURT - The International Monetary Fund, warning Wednesday of “a sizable risk” that some euro zone countries could suffer a debilitating decline in prices, called on the European Central Bank to pump money into the region’s economy by buying huge volumes of government bonds.
Such bond buying, which the U.S. Federal Reserve has undertaken in recent years to stimulate the U.S. economy, is a move the E.C.B. has been reluctant to take, one that would probably stir outrage among the fiscal disciplinarians of Germany.
And it is unclear whether the I.M.F.’s public push for big spending by the E.C.B. would make it more or less likely for the bank’s president, Mario Draghi, to take action. He, like any central banker, wants to appear immune to outside pressure.
But the I.M.F. is a respected international organization, and the warning Wednesday of a destructive plunge in prices - known as deflation - could help give the E.C.B. the economic rationale to use the stimulus of buying billions of euros worth government bonds.
In a report highly critical of euro zone policy, the I.M.F. said there was a 25 percent risk of consumer price deflation before 2014, and that the danger was greatest in countries like Italy where growth is slow and the government is counting on tax increases to help pay down its staggering debt.
“A deeper euro area crisis would have substantial global implications,” the I.M.F. said in its report, which also warned of other possible shocks to the euro currency bloc, like the failure of a big bank.
The E.C.B. did not comment on the fund’s report.
Deflation is typically a feature of severe economic decline and soaring unemployment that far outweighs any benefit to consumers from falling prices. A downward spiral in prices would make it even harder for countries like Greece, Italy and Spain to get government debt under control, the I.M.F. said, because falling prices and wages would further depress tax receipts.
The Italian prime minister, Mario Monti, has been a leading euro zone proponent of government bond buying by the E.C.B. And Spanish leaders have been pleading with the E.C.B. to buy their bonds and hold down borrowing costs.
The E.C.B. has spent €212 billion, or $260 billion at the current exchange rate, buying government bonds since 2010 but has so far resisted calls for it to mimic the much larger purchases made by the U.S. Federal Reserve and the Bank of England in their respective countries.
The Fed has conducted two rounds of such purchases, totaling hundreds of billions of dollars, since the financial crisis of 2008. And many economists say this quantitative easing, as it is known, is a reason the U.S. economy recovered more quickly from the crisis than most European ones have.
Richard Barwell, an economist at Royal Bank of Scotland, said he thought it unlikely that the E.C.B. would follow the I.M.F.’s advice unless there was evidence of deflation throughout the euro zone, not just in a few troubled countries.
“I think they would view it as being counterproductive,” Mr. Barwell said. “It would be alleviating all pressure on policy makers to solve the underlying cause of the problem.”
But I.M.F. officials framed their call for big bond purchases as a way for the E.C.B. to maintain its control over interest rates and hold down borrowing costs for troubled countries.
“It is an essential part of the E.C.B. fulfilling its mandate,” Helge Berger, an adviser in the I.M.F. European Department, said during a conference call Wednesday with reporters.
Quantitative easing is the tool that central banks use to stimulate the economy when they have already pushed interest rates as low as they can go. This month, the E.C.B. cut its benchmark interest rate below 1 percent for the first time, to 0.75 percent. But quantitative easing is opposed by Germany, the biggest contributor to the E.C.B., since it would amount to use of the central bank to finance governments. And German sentiment carries weight with the E.C.B., which is reluctant to cause further divisiveness in the euro zone.
Mr. Draghi has not given any clear signals that the bank is seriously considering quantitative easing or other radical measures. But on Tuesday, in a meeting in Frankfurt with Ireland’s finance minister, Mr. Draghi tentatively addressed a widespread concern that E.C.B. bond buying hurts more than it helps. For instance, it could make the central bank a senior creditor over other bond buyers, who would then be at greater risk if a government defaulted on its bonds.
This year, when the central bank, I.M.F. and European Union agreed to another rescue of Greece, the E.C.B. refused to share in the losses that private investors were required to take on their holdings of Greek bonds. That position inadvertently increased the perceived risk of other governments’ bonds, by signaling that private investors would be last in line to collect in case of any future losses.
But Mr. Draghi, in his meeting Tuesday with the Irish minister, Michael Noonan, apparently indicated that the central bank is reconsidering the E.C.B.’s insistence that it rank above private investors when it holds a government’s bonds. “Mr. Draghi noted that the question of burden sharing with senior bond holders is evolving at the European level,” the E.C.B. said in a statement following the meeting with Mr. Noonan.
The I.M.F.’s warning about deflation came as part of a report on euro zone policies in which the fund again criticized European leaders for the way they have handled the euro crisis. “The deepening of the crisis suggests that its root causes remain unaddressed,” the I.M.F. said. It faulted what it said was a lack of “ambitious policies to restore strong and balanced growth across the euro area.”
“The viability of the monetary union itself” is in doubt, the I.M.F. said.
The I.M.F. praised progress made by European leaders in recent weeks to create a banking union with a central regulator - based at the E.C.B. - which it said would help prevent national regulators from pursuing policies designed to protect their banks at the expense of those of other countries. Common bank supervision “allows banks to be guided by European or euro area considerations,” Mahmood Pradhan, deputy director of the European Department at the I.M.F., said during the conference call.
But the I.M.F. said that euro zone countries needed to go further, eventually issuing common debt and ceding some authority over their national finances. Germany and some other countries remain firmly opposed to common debt - so-called euro bonds - unless they have more control over spending by other euro zone countries. France and other countries are in favor of euro bonds but have not been willing to give up control over their own budgets.
The I.M.F. acknowledged that it would take time to build a more durable currency union, and said that E.C.B. action was needed in the meantime.
“Monetary policy can play a role in easing the transition until structural reforms become effective,” the I.M.F. report said. “Because inflation is low and falling, the E.C.B. has room for lowering rates, and deploying additional unconventional measures would relieve severe stress in some markets.”
In a response to the report on behalf of E.U. institutions, Ambroise Fayolle, a member of the executive board of the I.M.F. who represents France, said that officials are “in broad agreement” with the fund’s conclusions. He highlighted the progress that European leaders have taken to impose more spending discipline on each other and strengthen the banking system. “The authorities reiterate their resolve to take all the necessary actions to preserve the integrity and stability of the euro area,” Mr. Fayolle said in a statement.

 

[Laufen]

I hate to be an "I told you so" type of guy, but..........

 

[titan2k10]

I hate to be an "I told you so" type of guy, but..........

Good thing I was out of it back when it peaked at 1900 an ounce.