NortheastEasy
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Gold and silver prices are down
- Thread starter Rider
- Start date
But of course there's no telling how far it will slip amid the strengthening of the dollar, rising bond yields, and Trump euphoria. The S&P is over 6000 at this moment. Stock valuations are ridiculous now. Somebody's going to be left holding the bag, but I guess perception is reality until reality can no longer be denied.
steven grammont
NES Member
And as soon as the next incompetent a**h*** gets elected and tries to ruin the country , it'll sky rocket again.
Win
NES Member
I see as a potential postponement of higher prices and, to that extent, a buying opportunity for however long it lasts.
richc
NES Member
Trump drove up the US debt a lot in his last term. He'll likely do the same again.
And Trump taking office won't stop world central banks from accumulating more PM's.
This is simply a temporary disturbance in the force.
And Trump taking office won't stop world central banks from accumulating more PM's.
This is simply a temporary disturbance in the force.
Varmint
NES Member
Varmint
NES Member
I wouldn’t even call it a buying opportunity. Look at the chart. Gold needs some selling and consolidation. Miners are a buying opportunity. Unlike a lot of tech stocks their earnings are great.
richc
NES Member
Sure, maybe if Trump eliminates the deficit.
Chatted with a buddy today. Phd from MIT Sloan.
Asked him some direct questions:
Will Trump balance the budget:
No...
Will Trump reduce federal spending?
Maybe 5-8% per year, at best.
Will the US debt increase under Trump?
Yes, substantially.
What will happen to interest rates when he takes office?
Trump will use his influence to drive them down to stimulate the economy. Inflation will roar back.
Just a matter of time...
Individualist
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You lost me at Phd from MIT…
Why does a MIT phd know the answers to these questions better than anyone else? Not saying he doesn’t know answers others don’t. But being a MIT phd doesn’t give him any authority on these questions.
For what it’s worth I agree with all those thoughts.
Interest rates have nothing to do with inflation.
Varmint
NES Member
Yes, and the Fed still has to cut rates no matter what cause Washington can’t afford the current rates. They will also need to do massive QE cause rates aren’t going down despite their cutting.
Varmint
NES Member
If we say inflation is due to Washington’s massive fiscal stimulus, what enables that is low rates. So cutting rates will enable more inflationary fiscal spending.
richc
NES Member
Varmint
NES Member
At some point you become an academic who’s not living in the real world.
I’ll only disagree with Trump affecting the Fed, he screamed for negative rates last time and got ignored. He can’t fire Powell so I don’t think he cares. But they both want the same thing, lower rates.
We had many years of low inflation and low federal funds rates. Changing the rate has an effect, but it's not like there is a direct connection between this rate and inflation. The effect is entirely indirect by way of damaging the economy. It doesn't sound as good when you say "We're raising the overnight rate because, in a complicated indirect chain of causes and effects to the banking system, it will damage the economy. When it's damaged the economy enough that people don't have enough extra money to buy things, demand for goods and services will fall, and that should fix the inflation problem."
I think he's right about everything except I don't think he's right about the cause of inflation, if inflation does come back. Trump's tariffs could be inflationary because we simply won't succeed in manufacturing enough widgets here instead of importing them. The tariff cost will be borne by consumers. Hopefully the threatened tariffs will be traded away in exchange for other nations dropping tariffs on our goods. His ideas about tariffs funding the government aren't credible, IMHO. It's not a good idea.
I don't see dropping interest rates as a factor. Why? I think we're headed into a recession, and, Trump or no, the Fed will drop rates precipitously as soon as the labor market sends the clear signal. But dropping rates never works, partly because everything is on a delay. You can lower rates to stop causing more harm, but the economy still needs time to heal. I think it would be best if the Fed started dropping sooner, which would please Trump, but they'll never learn.
So why not stagflation? That way you can have inflation and a recession at the same time. But stagflation was caused by high energy prices. There's no reason to expect high energy prices, especially with Trump's plans for the energy sector.
richc
NES Member
Interesting story about this fella. He's started and sold multiple businesses in his career.
He was one of the founders of "The Computer Store" many decades ago. Subsequently he started a sales and distribution company for certain brands of computer hardware and software.
A lot of his revenue came from on popular vendor back in those days. Said vendor started offering customer trade-ins for old equipment with lucrative discounts for customers to trade in old and upgrade to new. IIRC they offered 40% off list for trade-ins. My buddy would earn a small margin for facilitating the upgrades.
He was less than impressed that the vendor had cut his margins so much, so he began looking for ways to make some extra margin.
He figured out that the vendor must have warehouses full of old equipment and he wondered where that was going. He did some digging and found out where they kept it, so he got on an airplane to did a little investigating.
He learned that said company was selling these old computers to a recycler, so he hung around the storage facility until he saw the recycler's truck show up. He got their name and address and visited them.
He got the owner who was obviously a little put off by my buddy's questions. My buddy asked how much money they earned from recycling? The guy said it was about $25/computer. So my buddy offered him $50 to buy them outright. No recycling required. The recylcer checked his legal agreements and learned he was not prohibited from this. So for $50 per computer plus shipping my buddy tried a test, wondering if he'd get caught. Nope, the vendor did not keep track of the traded in serial numbers and the same computer could be traded-in multiple times.
So he started buying all these computers for $50 plus shipping back here. Then he would take these computers that had previously been traded in and, well, buy new equipment at 40% off list. And he'd sell them for much higher margins than he normally earned. Over and over again.
Oh, and he would get these computers back from the recycler and strip out all the memory, interface and upgrade cards in them and sell them really cheap on the open market. Far less than available anywhere else, and they were pure profit.
He made many millions doing this. Until one day the chief legal officer of said computer supplier showed up at his front door.
At first the company was patting him on the back because of the big numbers he was turning in. That turned to suspicion and rose to the level of the legal department. And their head legal guy knew something was up and wanted to find out what was going on.
My buddy told the lawyer the truth, and the lawyer was dutifully impressed. Big time, actually, noting that the company would soon be changing the terms and conditions on both resellers and the recycler.
But there was more. The company realized the margins they were offering were not enough, and offered much larger margins to my buddy if he'd consult with the execs at the company of future plans and marketing and sales approaches.
He got his Phd at MIT after this was done. He did it just because. He didn't need it. But why not.
He's made many millions in the hardware and software world, often multiplying his margins by creative thinking.
He spends his winters in Florida. Every Tuesday he plays poker with the boys. Field of about 50 players every Tuesday, and he generally comes in top 3. He never really played poker before, but he's like a human calculator with numbers and figures things out very quickly.
A brilliant mind who also had amazing business instincts.
Varmint
NES Member
Gold retest of $2500 on the way. This is a good thing, we can’t really get to $3000 without a decent correction. Gold hadn’t corrected 5% since starting the breakout.
I'm starting to feel itchy about holding on to my paper gold through this correction. Usually my instinct to sell comes at exactly the wrong time, so if my history is any guide the next upturn probably isn't that far away. It is looking ugly tonight, though.
I sold my paper gold election day and now waiting for the correction to finish up. I’m thinking $2475 could be the bounce back but maybe not if this lasts through New Year. With a recess coming for congress there will be some continued volatility and precious metals needs some decisive daily or weekly closes for confirmation of the next move up. Watching closely.
Win
NES Member
While silver was increasing in demand investors bought less ![[thumbsup]](/xen/styles/default/xenforo/smilies.vb/044.gif "Thumbs Up [thumbsup]")
I think that’s the takeaway here?
I think that’s the takeaway here?
Varmint
NES Member
2015 was when gold tanked to $1050 though, I forget how low silver got but it was a really bad year.
True. That year was by far the most bearish.
Varmint
NES Member
and gold is $2700 again. 
errr, $2712.
errr, $2712.
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richc
NES Member
As Warren Buffet says, buy when everyone else is selling.
yogi
NES Member
I stayed the course in 2015 and have to humbly brag it paid off
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