wndysrf Posted January 2, 2004 Author Report Share Posted January 2, 2004 Do you have any silver Eagles?"We're so sorry but we've sold out of all silver Eagles" When do you expect more in? "We've ordered more but that order is already sold out" oh "We've placed a second order but were told that there were a lot of orders in front of us" These guys seem to have a good stock of everything.... http://www.golddealer.com/bullionpage.html Link to comment Share on other sites More sharing options...
Hiding Bear Posted January 2, 2004 Report Share Posted January 2, 2004 Today?s ISM, which some say points to a GDP growth of over 8%, and what the broad money supply measures are telling us can not be more opposite. Money supply measures plunged last week. M-2 money supply dropped by $20 billion and M-3 dropped $30. Per the Fed, they have dropped at a seasonally adjusted annual rate of -4.7% and -4.2% respectively over the last three months. Inflation adjusted money supply is an official component of the leading indicators because of its correlation to economic activity. Even using the heavily manipulated and deflating CPI, the inflation-adjusted money supply shows an alarming drop. The Fed previously said it was not worried about the continued stagnation in the money supply, but I think they?ll change their tune soon. The dynamics of credit bubble implosion are now operative. Whether or not you completely agree with Hypertiger, yobob1, SEH, it seems quite apparent that the economy is not generating enough credit growth to maintain (fiat-debt backed) money supply levels. The problem the Fed has is that by itself, it is no longer is able to promote credit growth along the hyperbolic curve needed to offset the mounting interest and principal repayments, plus credit losses from the debtors (i.e Scamalot and money losing companies). Authorities continue to encourage credit expansion where ever possible ? mostly through new home purchases, the stock market and even newer areas of speculation like commodities. Central bank purchases of the US dollar were up about $67 billion the last seven weeks, or about an annualized rate near $500 billion. The massive $ purchases have not influenced the overall trade weighted value of the US$. Apparently these foreign central banks, but mostly Japan, are willing to swallow the entire US balance of payments deficit - while not worrying about the possible inflationary consequences to their economy or the world. Well actually, despite their pronouncements to buy a trillion more US$ if necessary, they are a little more worried lately because they know that they alone can not stop a major dollar crisis if one develops. Continuous heavy intervention on behalf of the US$ (from Japan) expands the world money supply pool outside the US - and has seeped back into US markets directly (in bonds) and indirectly (stocks). This temporarily offsets the impact of the steadily falling domestic money supply. However Japan is planning to become more active in the process of sterilization, which is the process of offsetting the huge increases in the supply of yen sold by purchasing them back through ? for instance ? special yen bill/bond sales. When Japanese interest rates start rising again, which they have not done lately, it may be a signal to look for less liquidity in financial markets. On the bright side for gold bulls, the falling US$ and increasing supply of world money has continued to support gold ? as well as other internationally traded commodities (excluding some tainted farm goods). The sliding MoGauge (see Capital Stool?s Feed report) shows us that stable interest rates will do almost nothing for the housing market now. Some "bear" sites are telling us the money supply is fine since the money velocity will pick up because of the activities of the GSEs. With credit/debt growth slowing down percentage wise, and as kind of a leading indicator for money supply growth, look for a continued stagnation in traditional money supply measures. Link to comment Share on other sites More sharing options...
anotherone Posted January 2, 2004 Report Share Posted January 2, 2004 These guys seem to have a good stock of everything.... http://www.golddealer.com/bullionpage.html MONEX Link to comment Share on other sites More sharing options...
wndysrf Posted January 2, 2004 Author Report Share Posted January 2, 2004 Soup: Ch. 4 of Fleck's Mania Chronicles are now posted... Link to comment Share on other sites More sharing options...
machinehead Posted January 2, 2004 Report Share Posted January 2, 2004 During the deflation scare of 2001 and 2002, the market craved any indication of economic strength. Stocks and bond yields would rise together. The pattern persisted as late as this autumn, when the market cheered the 7.1% 3rd quarter GDP blowout, subsequently revised to 8.2% growth. Even this morning, the blowout ISM number announced at 10:00 a.m. started to provoke the usual Boner Run. But something went wrong ... bonds got croaked, and the stock market actually fell together with those rising yields. That's the old inflationary pattern, which ruled the intermarket relationship from the early Fifties until Oct. 1998. Since then it has often 'flown upside down' on deflation fears. But today was like old times again. Have we crossed a watershed? If the prevailing fear shifts from deflation to inflation, the stock market will be crushed. The S&P can offer a paltry earnings yield of 3% only because safe Treasury yields are low across the yield curve. Rising Treasury yields will pull the plug on the Washington/Wall Street Ponzi scheme with brutal efficacy. The top-grossing horror film of 2004 may turn out to be "Revenge of the Bond Vigilantes." They are not known to be advocates of 'humane slaughter,' either. Link to comment Share on other sites More sharing options...
Guest Posted January 2, 2004 Report Share Posted January 2, 2004 Anyone follow CHN? Closed end play on China that has been on a tear. '05 is going to be THE year of the China play. Link to comment Share on other sites More sharing options...
Grand Poopercycle Posted January 2, 2004 Report Share Posted January 2, 2004 Correct me if wrong, but ISM is only directional, with no quantification or magnitude in final output or in survey res- ponses; i.e., WidgetCo responds "orders increased", could be 1 new order or 50, "deliveries slower" could be 'cause suppliers/delivery firm busier or 'cause they've laid off so many people they can't service existing level as well(or perhaps December weather hurt delivery time-was allow- ed as retailers alibi),etc. Link to comment Share on other sites More sharing options...
The End Posted January 2, 2004 Report Share Posted January 2, 2004 It seems we are at a crossroads. Link to comment Share on other sites More sharing options...
Calculus Posted January 2, 2004 Report Share Posted January 2, 2004 Regarding the Patronizing act:Basically, they cannot give cash for gold or silver - has to be a check. When they trade scrap gold and silver with jewelers and pawn shops, both buy and sell transactions must be with check - no cash. Also, a affidavit has to be prepared. Like I said last night, America for me is becoming a really scary place. 'Freedom' is about the last thing that country is about these days. Link to comment Share on other sites More sharing options...
Grand Poopercycle Posted January 2, 2004 Report Share Posted January 2, 2004 Awww, TE, thought you were gonna put up Cream's "Wheels of Fire" version of Robert Johnson's "Crossroads" "Went down to the crossroads/fell down on my knees" MH-good point, how 'strong economy' and sub-4.25% 10-year UST yields can cohabitate(hell, sub-5.5%) is something I've been nagging about for weeks. Although it might be that the 'strong economy' part is what was suddenly recognized as royally marching down the boul- evard, sans shirt, shoes and trousers. Link to comment Share on other sites More sharing options...
Guest Posted January 2, 2004 Report Share Posted January 2, 2004 Just wanted to thank everyone here at the Stool for participating in the forums in 2003. This has got to be one of the most educational places of its kind on the web. Link to comment Share on other sites More sharing options...
Brisbane Bear Posted January 2, 2004 Report Share Posted January 2, 2004 in response to Windys & SEH talking about March last year,the one difference this time round is that most stocks are twice as expensive to buy and far more risky.Back in March,bulls with brass balls did very well buying "cheap" stocks . And with the benefit of hindsight,lots of stocks were cheap,but not now,on any measure most all stocks are expensive,so the Fed or whoever keeps buying, needs much more money to get a decent bang for their buck. Hope i am not saying this again next year.. Link to comment Share on other sites More sharing options...
machinehead Posted January 2, 2004 Report Share Posted January 2, 2004 Per the Fed, [M2 and M3] have dropped at a seasonally adjusted annual rate of -4.7% and -4.2% respectively over the last three months.? Inflation adjusted money supply is an official component of the leading indicators because of its correlation to economic activity.? Even using the heavily manipulated and deflating CPI, the inflation-adjusted money supply shows an alarming drop. In Timothy Hayes's book The Research Driven investor, he presents a system developed by Ned Davis Research. Y/Y changes in (Real M3 - Industrial Production) are used as a proxy for excess liquidity available to bull stocks. When real M3 growth is high and Y/Y industrial production is falling (as was the case during much of 2001 to mid-2003), plenty of excess liquidity is available to fuel stocks. Now we have the opposite picture: real M3 growth is collapsing (roughly +2.8% Y/Y now, down from double digits) while Y/Y industrial production is up, around +1.8% and rising. The shrinking difference, which may go negative if production keeps booming, is like a vise clamping down on excess liquidity. The same pattern -- of a decline in this measure after a high peak -- was seen prior to the 1987 and 2000 stock market declines. Without excess liquidity, the Bubble II fantasy is doomed. Link to comment Share on other sites More sharing options...
machinehead Posted January 2, 2004 Report Share Posted January 2, 2004 Correct me if wrong, but ISM is only directional, with no quantification or magnitude in final output or in survey res- ponses; i.e., WidgetCo responds "orders increased", could be 1 new order or 50, "deliveries slower" could be 'cause suppliers/delivery firm busier or 'cause they've laid off so many people they can't service existing level as well(or perhaps December weather hurt delivery time-was allow- ed as retailers alibi),etc. "The past relationship between the PMI and the overall economy indicates that the average PMI for January through December (53.5 percent) corresponds to a 3.9 percent increase in real gross domestic product (GDP). However, if the PMI for December (66.2 percent) is annualized, this corresponds to an 8.6 percent increase in GDP." http://www.ism.ws/ISMReport/ROB012004.cfm Link to comment Share on other sites More sharing options...
soylentgreen Posted January 2, 2004 Report Share Posted January 2, 2004 MH, bond vigilantes could still have their moment of glory. But big gorillas are walking around (Asian Central Banks) basically performing the "unconventional measures" (buying debt, and keeping its price high). Soon, the ECB will join forces, when euro reaches 1,35 or so. What is today evident is that bond yields are anormally low. There is a pool of CBs worldwide determined to be the buyers of last resort, smoothing the transition to higher rates. So any surprise will be agressively bought, thus giving a floor to asset (sm and real state) markets. They are saying KEEP THE PRICE OF DEBT HIGH OR WE WILL BUY (MONETIZE) IT. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.