"Why do you think many of us converse here?" Stock pumping. Same as the reason the Cramer conducts his show to the mass audience. Since he has more potential liquidity in the few million that watch his show he has a chance to move higher volume markets.
Low audience means that message board poster need to pump less liquid markets. That is why IHub has such a huge following of sub $2 stocks.
"the US could very well lose 15 billion dollars each month that has been financing our debt." Nice fearmongering. So which Chinese central banks gave you a timeline as to the rate that they would sell off off their treasuries? Hmmm?
"Buffet has been warning about the Federal Deficit spiriling out of control" And a lot of good it is doing him. One of the greatest value investments was readily available through the better part of 2001 to 2002 and he sat on his hands in cash because he things that everything is going lower. In lieu of buying gold he rather shorts the dollar by entering the currency markets. Another missed boat. He had a very nice winnign streak in his lifetime but like mutual fund managers the luck of 3 to 5 years of double digit gains ends at some point.
People have warned about the deficit spiraling out of contorl for how many decades already? Were you around when the bears came out of the woods in the 70s? When Nixon went off the gold standard and started printing US dollars. The economy wa supposed to be bankrupt before 1980. The run up on Oil and Gold was another proof positive that the US dollar was going to implode. I'm glad I listened to them. It won't be long now. Pretty soon I might even turn a profit at holding gold all these 30 years (sarcasm intended). Everyone was talking an economic crash through most of the last 3 decades. So why is it that this time it is different?
Oh China this and China that. What a tumble when China started suggesting the free float of the Yuan. And what about Japan? Who will reign in Japan's holdings? China is an easy target. Frankly its blowing up more that really is there. If China free floats the Yuan is means that they are making their country dependant on its own economic cycles as opposed to those in the US. China's economy is not stable enough to support itself. While there is public trust in the government, the people as intelligent enough to realize that they have little control over even the simplest things like their own investments. Does the average Chinese worker have a 401k plan? Do you think they ever will? Remember that their people are still 2nd and 3rd world. Their mentality is that of a 19th century American. Few in China invest their money. They still behave with the concept that a retirement plan is the birthing of children. When they become old and decrepit it is up to the children to support them. They world to support the nation and their family. And of course gold is a form of stored value.
I’m saying that inflation as it pertains the devaluing of a currency is more of a benefit in the long run than the harm it causes to a single generation. Sure in the recent term you get some asset inflation, but people dump it into companies which funds their growth. They are able to accelerate the development of new technologies, and innovations. They invest it by providing capital investment in depressed economies which as a result turn them into emerging markets. That generated demand for basic commodities not only form the companies building growth but also from the demand of the newly wealthy people in those markets. That causes growth in demand for basic materials and food stuffs. When prices rise from that demand it will hurt the core markets.
So what you see as fear in the destabilization of the US economy is a crock feed to Americans to justify the rising price of gold. To the Chinese and other emerging markets the rise in gold price is due to new found wealth form all those call center positions. Of course they will spend that wealth.
You see devaluation of a currency forces people to not horde, but instead invest their money into an economy. Someone who buys gold is buying a stored value. But does that money go anywhere? Does anyone benefit? A gold mine does, but all they do is invest in the production of more gold. A country needs to shift the mentality of a people from hording to spending. Because when they buy an HDTV or invests in the company that produces it, it invests in producing more televisions making the technology cheaper, or investing in newer more powerful technologies. Currency devaluation or inflation forces people to use their currency, not horde it. That is why the savings rate it so low. People are consuming and investing in growth.
The reality of it is that if the US dollar implodes it will be replaced. The asset value of the US infrastructure far outweighs that of any other country, China included. If China wants to bankrupt the US economy then they were too stupid to realize that an economic wave like that will ripple throughout the world' economy and will do as much damage to their own as it will to the US. Currency fluctuations are much political posturing, and chest beating. And to me gold is a trade not an investment. It is simply a signal that the economic expansion cycle is reaching a peak and a slow down is going to occur. I’m not so much interested in opening a new position on gold as I am in buying the bottoms on the next market. After all these cycles always occur in similar ways. Energy -> Metal -> ______.
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