Dec 2007
I am inflation
14/December/2007 04:04 PM Filed in: Precious
Metals
Good Friday metal bugs. Welcome back to the official
Carolina Bullion blog. Lets look at the state of the
financial markets.
Volatility is still the name of the game on all fronts. The equity markets were down today on the latest CPI numbers. The Consumer Price Index (CPI) jumped 0.8 percent in November. This was the biggest monthly jump in over two years. Add to this the fact that the previous day's PPI report showed a 3.2 percent increase in prices and you have inflation starting to show up on the radar. Not even the skewed government reports on the economy can hide this fact.
We ask ourselves, when will people understand that you cannot lower interest rates (create money out of thin air) and not expect prices to rise? The more money that is created the less each individual unit is worth. As each unit loses value prices have to rise to make up the difference. Nothing in this world is free, not even buckets of dollars dropped by helicopter Ben.
The CPI and PPI reports have lowered expectations that the Federal Reserve will continue aggressive rate cuts. This helped push the dollar up to a seven week high against a basket of currencies, which in turn pushed down spot Gold to a one week low. The price of gold fell as low as $787.60/ounce. Silver followed the decline in gold. Spot silver closed down at $13.86/ounce.
Earlier in the week the Federal Reserve disappointed Wall Street when it only lowered interest rates by 25 basis points, rather than the 50 they were hoping for. The next day they announced a plan in which they, in conjunction with other central banks in Canada, and Europe would conduct four auctions in the next month that would allow banks to bid for loans. Most of the pundits hailed this move an unique and creative. We believe the Federal Reserve is running out of ideas to repair the liquidity crisis in the credit markets.
We are not surprised at this. History tells us that central economic planning does not work. So we ponder, why do the masses think that
having a central bank that controls the price of money (interest rate) is any different? Its not. It does not matter how many advanced computer models they have at their disposal. The Federal Reserve always has been, and always will be behind the eight ball when it comes to setting the correct price of money. In the end they always do more harm than good. So protect the value of your assets while you can. Until next week. Trade safe.
Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Please do your own due diligence.
Volatility is still the name of the game on all fronts. The equity markets were down today on the latest CPI numbers. The Consumer Price Index (CPI) jumped 0.8 percent in November. This was the biggest monthly jump in over two years. Add to this the fact that the previous day's PPI report showed a 3.2 percent increase in prices and you have inflation starting to show up on the radar. Not even the skewed government reports on the economy can hide this fact.
We ask ourselves, when will people understand that you cannot lower interest rates (create money out of thin air) and not expect prices to rise? The more money that is created the less each individual unit is worth. As each unit loses value prices have to rise to make up the difference. Nothing in this world is free, not even buckets of dollars dropped by helicopter Ben.
The CPI and PPI reports have lowered expectations that the Federal Reserve will continue aggressive rate cuts. This helped push the dollar up to a seven week high against a basket of currencies, which in turn pushed down spot Gold to a one week low. The price of gold fell as low as $787.60/ounce. Silver followed the decline in gold. Spot silver closed down at $13.86/ounce.
Earlier in the week the Federal Reserve disappointed Wall Street when it only lowered interest rates by 25 basis points, rather than the 50 they were hoping for. The next day they announced a plan in which they, in conjunction with other central banks in Canada, and Europe would conduct four auctions in the next month that would allow banks to bid for loans. Most of the pundits hailed this move an unique and creative. We believe the Federal Reserve is running out of ideas to repair the liquidity crisis in the credit markets.
We are not surprised at this. History tells us that central economic planning does not work. So we ponder, why do the masses think that
having a central bank that controls the price of money (interest rate) is any different? Its not. It does not matter how many advanced computer models they have at their disposal. The Federal Reserve always has been, and always will be behind the eight ball when it comes to setting the correct price of money. In the end they always do more harm than good. So protect the value of your assets while you can. Until next week. Trade safe.
Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Please do your own due diligence.
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Round and round we go
07/December/2007 04:16 PM Filed in: Precious
Metals
Good Friday metal bugs. Lets jump right in
and see how the financial markets fared today.
The equity markets ended mixed today after a mid-week rally. Wall Street bet (hoped and prayed) that the easy money from a rate cut next week and government intervention (bailout) via the Bush mortgage plan, would prevent the economy from slipping into recession. Too bad eliminating moral hazard and inflating the currency hurts more than helps in the long run. Oil is trading below $90/barrel due to uncertainty with OPEC, and overall demand. Spot gold is down trading below $800/ounce due to the dollar bounce and the tumble of crude oil prices. Spot silver followed gold by closing down at $14.39/ounce. As the precious metals continue to consolidate in preparation of their next run up NOW is the time to protect your assets from devaluation and hedge yourself against the turmoil that is upon us.
The real estate market continues to deteriorate as national home prices showed the biggest quarterly drop in 25 years during the third quarter.
According to mortgage lenders' trade group, the rate of homeowners going into foreclosure hit a record high in the third quarter, while those late with their payments rose to the highest level since 1986.
U.S. retail sales fell 4.4% last week, the most since March. The biggest driver of our DEBTOR nation, consumption, is slowly evaporating. Our guess is that as Americans continue to lose their homes, Christmas shopping becomes less of a priority.
The non-farm payrolls report for November showed strong job growth, higher than analysts estimates. That is, of course if you believe the numbers. Our opinion is that government economic reporting is just as reliable/accurate as anything else the government is involved with. If you want a thorough analysis and understanding on how the government reports on the state of the economy we highly recommend subscribing to John Williams' monthly newsletter, "Shadow Government Statistics". John also provides alternate data sources to assist you in making more accurate financial decisions with relation to the economic outlook. You can find more information at his website, http://www.shadowstats.com .
As we approach next week the big question on everyone's mind is how much of a rate cut is helicopter Ben going to provide to his friends on Wall Street. We believe the financial markets (including the metals) have priced in a 25 basis point rate cut. If Bernanke decides to provide his friends with an early Christmas present, and cut by 50 basis points then look for the dollar to weaken and Gold to take off again.
Until next week. Trade safe.
Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Please do your own due diligence.
The equity markets ended mixed today after a mid-week rally. Wall Street bet (hoped and prayed) that the easy money from a rate cut next week and government intervention (bailout) via the Bush mortgage plan, would prevent the economy from slipping into recession. Too bad eliminating moral hazard and inflating the currency hurts more than helps in the long run. Oil is trading below $90/barrel due to uncertainty with OPEC, and overall demand. Spot gold is down trading below $800/ounce due to the dollar bounce and the tumble of crude oil prices. Spot silver followed gold by closing down at $14.39/ounce. As the precious metals continue to consolidate in preparation of their next run up NOW is the time to protect your assets from devaluation and hedge yourself against the turmoil that is upon us.
The real estate market continues to deteriorate as national home prices showed the biggest quarterly drop in 25 years during the third quarter.
According to mortgage lenders' trade group, the rate of homeowners going into foreclosure hit a record high in the third quarter, while those late with their payments rose to the highest level since 1986.
U.S. retail sales fell 4.4% last week, the most since March. The biggest driver of our DEBTOR nation, consumption, is slowly evaporating. Our guess is that as Americans continue to lose their homes, Christmas shopping becomes less of a priority.
The non-farm payrolls report for November showed strong job growth, higher than analysts estimates. That is, of course if you believe the numbers. Our opinion is that government economic reporting is just as reliable/accurate as anything else the government is involved with. If you want a thorough analysis and understanding on how the government reports on the state of the economy we highly recommend subscribing to John Williams' monthly newsletter, "Shadow Government Statistics". John also provides alternate data sources to assist you in making more accurate financial decisions with relation to the economic outlook. You can find more information at his website, http://www.shadowstats.com .
As we approach next week the big question on everyone's mind is how much of a rate cut is helicopter Ben going to provide to his friends on Wall Street. We believe the financial markets (including the metals) have priced in a 25 basis point rate cut. If Bernanke decides to provide his friends with an early Christmas present, and cut by 50 basis points then look for the dollar to weaken and Gold to take off again.
Until next week. Trade safe.
Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Please do your own due diligence.