About 9 years ago I was buying silver and gold for long term investment... if we want to compare credentials... my averaged core position in gold is at $273 and silver it is at $4.34.
That guy is still talking tripe...
That's fantastic investing Mr Z. I wish I could have picked the PMs up at those prices myself.
With regard to the youtube video. I do find it interesting that the guy alluded to shorting US Bonds. Also, I noted that Jim Rogers recently said he was short US Bonds and Schiff has said the 10 and 30 year notes are a bad deal. I suppose it all depends
on whether one considers the US Dollar/treasuries as 'safe havens' compared to say the euro or shares.
I watched an interesting program called Addicted to Money on Australia Network recently. There was one segment where a Chinese factory worker was interviewed and asked about the purchase of US Tbonds. Which he associated with a delayed form of printing money.... He works for roughly $7 a day and saves most of his income.
I also came across a great interview with an American Professor based in China by the name of Dr. Patrick Chovanec.
November 8, 2010
http://siciliandefence.wordpress.com/2010/11/08/chinas-dangerous-addiction/
China’s economy is dangerously addicted to cheap money’
What will the second round of Quantitative Easing in the US (QE 2) achieve? Is it a case of throwing good money after bad?
This is an experiment based on a theory that (Fed Chairman) Ben Bernanke developed when he was a scholar of the Great Depression: his conclusion was that the Fed had not been aggressive enough in injecting liquidity into the economy to fight deflation. He vowed that if he became Fed Chairman he would take “extraordinary measures”. That’s in the realm of theory. The critical aspect is that if he overshoots or gets his timing wrong, he will – instead of fighting deflation – end up creating inflation. That’s one challenge.
The other danger is of asset bubbles. The policy is intended to lower interest rates on Treasuries and direct investments elsewhere. If those are productive investments, they’ll achieve the goal. But the danger is that it creates asset bubbles. Alan Greenspan was criticised for doing precisely that after the dot-com bubble crash; by being too aggressive in reflating, he helped create the housing bubble. Instead of correcting the underlying problems in the economy, the money just went from one bubble to another.
When there is a credit meltdown in the economy, one of the immediate problems it faces is of liquidity; everybody hoards money. Injecting more money into the economy might address the liquidity crunch. But if there are other issues that need to be addressed – like excess debt or finding new sources of competitiveness – it won’t do that.
As we move into recovery, maybe some of the scepticism is that the problem isn’t necessarily of liquidity but deeper than that, and injecting more liquidity just creates inflation without addressing the underlying problems.
So are there risks on both sides of QE 2: that it could underperform or overshoot?
If the diagnosis is right, the theory is sound, and this is the right prescription. But it’s not clear that that’s all that’s wrong – or even primarily what’s wrong – with the patient. And even if it’s the right kind of medicine, there’s a danger of overdosing.
It’s not just about risks to the US economy. QE 2 creates complications around the world, which other countries aren’t too happy about. The most direct and obvious – and the most immediate – is that the bubbles it creates won’t be just in the US. Money taken out of Treasuries might go into emerging markets, and in that case, you have hot money fuelling growth or potentially feeding bubbles in other countries. And if the Fed decides at some point later to raise interest rates, you cut the legs out from under the flow of capital into that other country.
We’re getting to a point where the US dollar may – because of QE 2 – become the focus of a ‘carry trade’. It won’t necessarily help the US recovery, and it will fuel very fragile growth abroad. I say ‘fragile’ because it could be a bubble – and even if it isn’t, it’s vulnerable to monetary shock from the US. US monetary policy doesn’t just affect the US; it affects the rest of the world and that’s why developing countries, in particular, are concerned.
India, China and other developing countries are at a stage where they are more concerned about inflation than deflation. China effectively had a huge QE over the past year: it had a big monetary expansion, and is trying to deal with the consequences of that and rein in inflation by raising its rates and tightening. That creates incentives for money to flow from the US to China. It’s also true of India and any other country that’s raising interest rates.
There’s of course a very easy answer to this: allow your exchange rate to adjust, and allow your currency to appreciate. If you keep the exchange rate fixed, you’re going to import inflation from the US.
That’s the real bind: you either import inflation from the US or you appreciate your currency and make your export orders less competitive. It’s not just China; a lot of developing countries don’t like being put in that bind by the Fed. That’s why they are upset.
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One of the new catch words of 2011 will be chinflation. IMO
DYOR