Monday, November 8, 2010

Gold and Silver Continue to Soar

Just a few tidbits today.  I have another crazy week business wise so I will get on and post when I can.

Gold and silver continue to soar as the world continues to lose faith in currencies.  When you look at the chart below why wouldn't they?:


As you can see above, our financing needs vs. GDP are now worse than Greece.  If it wasn't for the Fed buying treasuries we probably would be seeing near double digit interest rates over here. 

Japan's debt issues are startling to say the least.  What's crazy is their currency continues to soar despite their awful balance sheet.  Sometimes things just don't make any sense.  There is a lot of hedge fund action that's driving the JPY/USD currency trades according to what I have read.

However, with $4 trillion a day in volume, the FX markets are not easily manipulated so there are other forces at work here other than the hedgies. 

I wanted to throw up a chart on silver:


Quite an amazing run isn't it?  Glad I have had the opportunity to enjoy this.  I have sold some on the way up but I gotta be honest:  I have a hard time getting away from metals right now given the money printing.

I think if stocks begin to wallow around like they are today it's only going to increase the money flows into gold and other commodities.

Owning something hard is increasingly looking like the best thing to do as we all continue to drownin trillions of dollars of debt.

The Bottom Line

I don't know what to tell you here folks.  I am holding onto metals, a few shorts, and cash(including bonds) and praying the financial system can stay in one piece.

With every passing day I lose more and more hope that we can actually find away out of this. 

IMO, there is 1 data point everyone needs to watch this week. There is a 30 year bond auction on Wednesday.  Pay CLOSE attention to this.  The Fed is going to avoid buying 30 years like the plague because they realize they could take a bath on them as they attempt to create inflation.

The Fed is helpless when it comes to protecting the 30 year auctions.  With all of the money printing going on it's going to be fascinating to see how this auction goes.  The last 30 year sale was awful.

This could definately be a huge market mover.  Other than that it's a fairly quiet week relative to last week's insanity.

I am anxiously waiting to buy a huge chunk of TBT which shorts the long end of the treasury curve.  I wan't see how Wednesday's 30 year  auction goes before I make this trade. 

This is the one trade I continue to drool over, but I need to see what effect last weeks QE announcement has on treasuries before I pull the trigger.

Bonds still might have one more move higher thanks to the Fed.

Until next time!

16 comments:

manhands said...

"Owning something hard is increasingly looking like the best thing to do as we all continue to drownin trillions of dollars of debt."

Agreed, but why so down on real estate vs the metals? Seems to make more sense investing in RE which is near multi year lows versus the metals which are at multi year highs, IMO.

Thoughts?

Jeff said...

Man

Higher rates, tougher lending standards, and shrinking pool of qualified buyers due to unemployment = a perfect storm for housing.

Housing already saw hyperinflation when there zero lending standards. Like all other bubbles it will never come back to where it was. It will bottom but appreciation will be zilch as rates rise

getyourselfconnected said...

I am buying silver embedded underwear and not real estate.
Kidding, kind of.

Anonymous said...

I'm sure you've seen this from the other blogs, but just in case.....

Thank god I'm moving out of the US.

http://www.youtube.com/watch?v=Q-37qUrgFXQ&feature=player_embedded

FA in CA

Herb said...

After looking at Ireland on that graph, I think I am going to have to start stocking up on Guinness

Jeff said...

Lol herb

FA

I many are starting to contemplate leaving the USA. Others may decide to just leave fiscally and send their capital out of the country.



Did everyone see china's response to US DOLLARS heading into china. They are going to start restricting capital flight. This is a good old fashion currency war. Its also highly inflationary because the dollars are forced to stay here which will drive up prices. This is fugly. What a mess.

manhands said...

good point about housing Jeff.

I dont know - i guess im just not that sold on the metals because they are at multi year highs. Alot of people say they are in a bubble and I have heard that twice before, once with stocks in 2001 and another time with houses in 2005.

I guess time will tell.

Anonymous said...

@ manhands....

The problem with real estate, especially here in the usa, you don't even know who holds the "actual" title anymore.

You really want to throw say $50k-100k as a down payment towards something that maybe caught in litigation for the next 5 years???

FA in CA (soon to be moving to SE Asia)

Anonymous said...

Jeff,

That's what has exactly been happening with several of my family members that are doctors and have the money to play with - they've all been taking what's left of their salaries / savings to buy up rental properties and ag land in asia.


FA

Anonymous said...

"The problem with real estate, especially here in the usa, you don't even know who holds the "actual" title anymore.

You really want to throw say $50k-100k as a down payment towards something that maybe caught in litigation for the next 5 years???

FA in CA (soon to be moving to SE Asia)"


If you want to be sure, get a confirmatory deed from the seller. Also, get your title insurer to do a "bring to date" and pay the extra $25 to be listed as an additional insured.

If you do that, whats the problem?

Jeff said...

Man

Yeah gold could be bubbly here. The fed is creating bubbles everywhere with all of this easy/QE helicopter money. The bond market shoved it up bens rectum today.

I suspect they are nervous about tomorrows 30 year auction.

Ben must be nervous as hell. Treasuries are moving in the wrong direction on him.

Scary shit.

Jeff said...

Great thoughts all

No post tonight. Away on biz.

FA

Rentals in Asia...hmmm interesting idea.


Watch the 30 year auction tomorrow all! This is a big time event.

Keep the comments coming also. Love all of your ideas!

Anonymous said...

"If you want to be sure, get a confirmatory deed from the seller. Also, get your title insurer to do a "bring to date" and pay the extra $25 to be listed as an additional insured.

If you do that, whats the problem?"

Do it. Let me know how it works out. I don't plan on sticking around seeing where taxes are heading to find out.

FA

Anonymous said...

"Do it. Let me know how it works out."

Well lets see - I did this about 30-35 times for various clients who wanted to buy land with questionable claims of title over the past 10 years. 95% of them were able to purchase and never had a problem. The other 5% which the insurer would not write over the top, I advised them not to buy. Sure, this ticked the real estate agent off real good, but I saved my clients a boatload of problems.

So basically, in every case where I got a confirmatory deed & other safeguards I noted, it has worked out perfectly - just as it has for the last 600 years under the English covenants of title regime. Just get an attorney who knows how to deal with those things and you will be fine.

Jeff said...

Treasuries are getting hammered again. QE is blowing up on Ben's face. Scary shit!

Anonymous said...

"So basically, in every case where I got a confirmatory deed & other safeguards I noted, it has worked out perfectly - just as it has for the last 600 years under the English covenants of title regime. Just get an attorney who knows how to deal with those things and you will be fine."

Rome is burning. Who in their right mind would want to pick up real estate now in a burning empire?

But hey if you have no issues helping clients jump into the fire, then that's not something I can relate with.

Matt Taibbi's latest:
http://www.rollingstone.com/politics/news/17390/232611?RS_show_page=0

FA