Every single one of your points is totally valid and I'm pretty sure I agree with all of them. Part of the problem is that this is SO COMPLEX and all these factors and consequences are hopelessly intertwined that to discuss them as a whole is really beyond me to tell you the truth.
I do think that if we approach each point separately it would be a lot easier to wade through it all and eventually make sense of the whole picture.
There are maybe some things we can take off the table right away though in order to simplify this.
First, let's take off the "who's going to get screwed the most" argument since we both agree that the little guy always gets the short end of the stick. That's already baked into this cake in this as in all situations involving the stock market. Hopefully sometime that'll change but for now we just have to live with it.
A second point I think we can discount is that this unprecedented multi-national unified approach to inject liquidity until the cows come home HAS BUILT A SOLID DAM against a depression and I'm even thinking they may have staved off the worst or the recessionary possibilities as well. I'm now looking for the bottom to settle in with a range between 7500 and 9500 to begin with and to quickly narrow even further evntually going almost totally flat for a while.
What that leaves us with is the basic battle between inflation and deflation and what effects that will have on prices and jobs.
There's also something that's just now beginning to be discussed, and that's the coming defaults of NON-BANK entities such as retailers and probably many more coporate entities who also OVERLEVERAGED in their buyout transactions for instance. There are going to be A LOT OF DEAD CORPORATE BODIES laying around before this is all said and done BESIDES BANKS.
These will be like roadside bombs that are going to be detonating around us as we go down this road and our job is to AVOID STEPPING ON THEM and getting caught in the explosions. This is going to make things exceeding difficult for anybody wanting to invest in individual stocks for quite a while.
What I'd like to start with is something we both have an interest in and probably the best understanding of at the moment, and that's the INFLATION/DEFLATION question and also how that will affect SILVER/GOLD investment.
Let's start there and I think we may find the answers to some of these other questions in the process.
By the way...what I AGREE MOST WITH is that EVENTUALLY, CURRENCY INFLATION is going to be HUGE and WORLDWIDE and precious metals WILL HAVE THEIR DAY IN A BIG WAY at some point. Let's see if we can figure out when, how much and a strategy to best take advantage of it.
One interesting point about inflation and deflation. It's really the ultimate FLAT TAX or TAX BREAK in a sense that it affects EVERYBODY'S DOLLARS. Not just the poor guy or the rich guy.
The more money you have the money you lose in an inflationary scenario. I find some perverted solace in that. LOL
It also means that when inflation rears it's ugly head down the road that the biggest money will be VERY INTERESTED in hedging against it!
Hi Ho Silver Away!
For that reason alone, it's going to be a good idea to pick up as much silver as we can in the interim.
The first things that comes to mind in the silver investment strategy question are these...
***Will there be more hedgefund forced sales silver in order to raise capital? Or is that all washed out already? Or will they instead sell other things in anticipation of the rush to silver?
***When will the worldwide inflationary forces begin to kick in? And maybe even more importantly,...
When will everybody "figure it out" that inflation is going to be the problem, making them again run towards precious metals? I suspect it'll happen before all the liquidity is even in place. In fact, we are probably seeing the early move now. It's rising as the Dow is dropping rather than following it down like it did last week with forced selling.
And.....how much money will be chasing stocks before they get tired of getting blown up by roadside bombs or finally get it in their heads that we are going into recession.
I just heard a talking head on CNBC say it'll take about a year for "all this liquidity to get into the system".
This could end up being a slow motion rally in silver? It's all very confusing.
PS: I just noticed that as the Dow was sinking that SLV was rising, so...if I believe we're falling into the aforementioned trading range I spoke of I went ahead and bought another 125 oz of SLV.
PPS: I just heard some smart guys talking about jobs and the consumer as being the key to how deep this recession is going to be and that we need a larger stimulus package.
We could lose 2 million jobs and get a deep recession or less and a somewhat shallower recession. Let's keep an eye on the jobless claims and the stimulus talk.
Santelli isn't happy with the amount of "thaw" in the credit spreads even with all this liquidity, and I think he's hinting at something I've been saying.
Namely, that the banks KNOW HOW BAD THE CDS situation is and they're still scared as hell to lend.
I have a bad feeling in my gut that we have a BIG SKELETON still in the closet that's eventually going to get discovered.
We may be learning soon that the whole CDS thing is even worse than has so far been divulged by the crooks in the banks and hedgefunds. I'm just wondering if... now that the govt is involved in the banks... ESPECIALLY the banks that USED TO BE INVESTMENT BANKS that are now under the rules governing regular banks...that when auditing takes place all this could be revealed in full.
Might be a NUCLEAR ROADSIDE BOMB about to explode!
If it does, the liquidity required could rise EXPONENTIALLY. But also....the hedgefunds may need to DUMP EVEN HARDER than they already have to raise funds for redemptions, etc.
I think the market is beginning to wonder the same thing AS WE SPEAK.
The spread should have dropped back to normal IMMEDIATELY when the govt GUARANTEED all the lending. Something really smells about this situation!
PS: just read your last message. Sorry to bring yet another IF into this situation, but something REALLY ISN'T RIGHT with these credit spreads. My gut and my nose are both getting twitchy about this.
Try to imagine ANOTHER LEG DOWN in this mess. Cramer's 6000 may still be in the cards. God!
PS: See the VIX CHART below. It's RISING AGAIN! THIS IS NOT GOOD!
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