End of the World As We Know It

[time]

By the time you read this, the first big stockmarket crash of the 21st century should be underway. This one's different; it's predicated by a loss of confidence in the future of the United States.

There will be subsequent gains and losses - indeed, this may not be the biggest fall - but I suspect we are finally approaching the cliff.

If I'm wrong, we can all have a good laugh and look forward to future prosperity. Thank you and good night.

 

[jtr1962]

The Roman Empire fell, the world went on. We're certainly approaching the end of the easy credit, living beyond your means way of life. People are going to have to do what I've been doing my whole life-paying my credit card bills in full each month. And actually only replacing things when they no longer function properly, not when they get tired of them.

I think there's tough times ahead, perhaps even a depression. We got through it once, we'll get through it again. Suffering builds character anyway. Too bad this didn't happen in the summer. The offices on Wall Street would have saved on AC. Just open the windows, and the breeze from falling stock brokers committing suicide will keep things cool.

 

[paugie]

Hello, Time,
Is this a guess? A hunch? Or is this really happening, going to happen? I mean, why the prediction?

 

[jtr1962]

Hello, Time,
Is this a guess? A hunch? Or is this really happening, going to happen? I mean, why the prediction?

The markets in the Far East and Austrailia tanked yesterday (that's early AM today US hours). The US markets open at 9 after being closed yesterday for Martin Luther King day. Look for a black Tuesday. Really black as in black hole black. The markets will lose over 10% before the day is out.

I can't speak for time, but in my world this already happened a long while ago. For all the rest of you it's in the future.

 

[Clocker]

According to CNBC, the Dow futures point to a 500+ point decine at the open. I guess we'll see...

 

[Tannin]

It's been on the cards for a long, long time. You can't go on living in a fool's paradise forever. (Shrug.) It's like the day your tax falls due: you may not like it, you may or may not be prepared for it, but it was always going to arrive, and there never was anything you could do about it. It's the beginning of the end of the USA as the sole global superpower - because ultimately, everything comes down to economics - and the beginning of the rise of the Asian monsters: China and India.

The king is dead, long live the king.

 

[Tannin]

PS: I will not be sorry to see the end of the United States World Empire, though I'll probably not live to see the entire story - these things take many decades to happen.

Taken as a whole, the USA has been a bad world ruler: the strong American traditions of individual liberty and free spech, and the weaker but still significant tradion of fair play for all, these have been on medication since the 1950s, and on the heart-lung machine since about the turn of the century.

The equally strong American traditions of meddling in places where it is neither wanted nor merited, of placing foreign policy in the unashamed service of naked commercial greed, and of comprehensively failing to work constructively with, let alone understand and respect, other parts of the world, however, remain as strong as they were in Peary's day - and both the decline of the former and the renewed strength of the latter sets of traditions have been accelerated by the triple impact of the rise of the loonie religious right, the phenomenal capacity of the American public to be whipped into a frenzy of paranoia (not that this is new - remember California in 1941 or the glittering 1950s career of Eugene McCarthy?), and perhaps most of all by the ever-increasing number of TV-addicted citizens who live lives of profound ignorance and unhappy consumerisim on incomes they do not have.

So much for the old king, what of the new?

The Asian giants have suffered from their own versions of most of the problems above for many years, and their record on (for example) human rights and respect for the individual is even worse than that of the United States. On the other hand, they have made some giant strides in positive directions these last few years; over the last decade or so, they have improved by around as much as the USA has got worse. Right now, despite a lower-than-50% score on the scale of international good and evil, the United States is still to be prefered to China, though by a much smaller margin than once was the case.

But given the apparently terminal decline of the USA as a champion of liberty, and the fairly consistent improvement of the Asian giants, it seems likely that the world as a whole will prefer to deal with China and India around about the time that the world as a whole has to deal with China and India because the USA is no longer a power to be reckoned with.

 

[Pradeep]

I think the mortgage foreclosure situation is going to get far worse before it gets any better. In the boom times of just a few years ago it was possible to go with a stated income loan for a few fractions of a percentage point premium.

So joe6pack who wants the fancy house to keep up with the joneses and actually makes $30K per year simply tells the mortgage company that he makes $60K. No proof is required. Needless to say not a pretty picture once housing values hit the shitter and there is no option to sell for a gain and pay off the loan.

 

[Mercutio]

I think we're probably better off letting recession happen than trying to forestall the inevitable. We - the citizens of the US as well as our law- and policymakers have been collectively moronic about money. We spend what we don't have. We exaggerate to keep the good times going and we really do need a reality check.

 

[udaman]

By the time you read this, the first big stockmarket crash of the 21st century should be underway. This one's different; it's predicated by a loss of confidence in the future of the United States.

There will be subsequent gains and losses - indeed, this may not be the biggest fall - but I suspect we are finally approaching the cliff.

If I'm wrong, we can all have a good laugh and look forward to future prosperity. Thank you and good night.

small percentage of total market values is called a correction, it is normal, nothing to get your knickers or panties in a bunch over. The markets will rebound in the long term, have always done so. greedy investors trying to make money quick, they lose.

25% drop hasn't happened, and even when it did in 1987, the markets rebounded.

http://www.lope.ca/markets/1987crash/



Bit melodramatic maybe? If I want melodrama, I just have to watch my favorite Korean drams on the telly, or invest some fine time with similarly spastic, issues/needy demanding/damaged females, lol.

It's been on the cards for a long, long time. You can't go on living in a fool's paradise forever. (Shrug.) It's like the day your tax falls due: you may not like it, you may or may not be prepared for it, but it was always going to arrive, and there never was anything you could do about it. It's the beginning of the end of the USA as the sole global superpower - because ultimately, everything comes down to economics - and the beginning of the rise of the Asian monsters: China and India.

The king is dead, long live the king.

doom and gloom

PS: I will not be sorry to see the end of the United States World Empire, though I'll probably not live to see the entire story - these things take many decades to happen.

Taken as a whole, the USA has been a bad world ruler: the strong American traditions of individual liberty and free spech, and the weaker but still significant tradion of fair play for all, these have been on medication since the 1950s, and on the heart-lung machine since about the turn of the century.

The equally strong American traditions of meddling in places where it is neither wanted nor merited, of placing foreign policy in the unashamed service of naked commercial greed, and of comprehensively failing to work constructively with, let alone understand and respect, other parts of the world, however, remain as strong as they were in Peary's day - and both the decline of the former and the renewed strength of the latter sets of traditions have been accelerated by the triple impact of the rise of the loonie religious right, the phenomenal capacity of the American public to be whipped into a frenzy of paranoia (not that this is new - remember California in 1941 or the glittering 1950s career of Eugene McCarthy?), and perhaps most of all by the ever-increasing number of TV-addicted citizens who live lives of profound ignorance and unhappy consumerisim on incomes they do not have.

So much for the old king, what of the new?

The Asian giants have suffered from their own versions of most of the problems above for many years, and their record on (for example) human rights and respect for the individual is even worse than that of the United States. On the other hand, they have made some giant strides in positive directions these last few years; over the last decade or so, they have improved by around as much as the USA has got worse. Right now, despite a lower-than-50% score on the scale of international good and evil, the United States is still to be prefered to China, though by a much smaller margin than once was the case.

But given the apparently terminal decline of the USA as a champion of liberty, and the fairly consistent improvement of the Asian giants, it seems likely that the world as a whole will prefer to deal with China and India around about the time that the world as a whole has to deal with China and India because the USA is no longer a power to be reckoned with.

say tannin, did you ever see the movie Kelly's Hero's (1970?)??? As Donald Southerland's character would say... "always with the negative waves".

Apparently another nonsensical specious rant by Tannin in his usual USA bashing...yawn. Through rose colored glasses, you might want to see in about 10 years if the women of Afghanistan have progressed, had profound changes to their lives, no longer under the tyranny of that wonderful human rights org (terrorist sponsors), aka Taliban.

"Right now, despite a lower-than-50% score on the scale of international good and evil, the United States is still to be prefered to China, though by a much smaller margin than once was the case." (in a recent poll by Prof. Wiz collaborators it was found these USA haters...). No rational, informed mind makes such comparisons between the USA and China, there is a world of difference between the two...but you'd actually have to invest in some time to figure that out, which lol, some people don't seem to be capable of . Xenophobia, 'monsters' China/India...I'm sure your average hard working Indian or Chinese citizen appreciates that comment?

I think the mortgage foreclosure situation is going to get far worse before it gets any better. In the boom times of just a few years ago it was possible to go with a stated income loan for a few fractions of a percentage point premium.

So joe6pack who wants the fancy house to keep up with the joneses and actually makes $30K per year simply tells the mortgage company that he makes $60K. No proof is required. Needless to say not a pretty picture once housing values hit the shitter and there is no option to sell for a gain and pay off the loan.

about the only part that isn't silly/cynical...yeah it will get worse, but eventually sound lending practices will correct the market, and then things will get back to normal. Will be a boring historical story in about 5 years, I predict. Put the blame on dumb consumers, but more so the large mortgage lenders for their greedy, risky lending practices. So the practices, which are more harmful to the general economy than the dot.com speculation, have gotten the lenders into big trouble, as well as those foolish browers, who will now take a big hit/loss. Those on fixed rate mortgages shouldn't be affected.

I think we're probably better off letting recession happen than trying to forestall the inevitable. We - the citizens of the US as well as our law- and policymakers have been collectively moronic about money. We spend what we don't have. We exaggerate to keep the good times going and we really do need a reality check.

In a socialist/democratic utopia (aka Kerry for pres ), government screws up bigger than private enterprise.

In other news, Apple announces their quarterly results right after the close of the NYSE, expected to beat the predictions...bargain hunters? Analysts are still bullish on Apple stock hitting perhaps 600 in 18 months.

http://www.macnn.com/articles/08/01/22/apples.q1.2008.results/

 

[time]

Well, the Federal Reserve appears to have staved off the day with an emergency rate cut. Therefore, I wuz wrong. Or, I suppose, I was potentially right, which is why they did it.

Looks like the damage is going to be spread over a longer period now. Of particular interest are the losses in the Chinese market; China's supposed to save the world by riding this out ...

Udaman, the real story is surely what happens when the US dollar reaches tipping point and the central banks can no longer support it?

Make no mistake, the conditions underlying all this have no precedent.

 

[ddrueding]

I think the word "potential" has the most significance in your post, Time.

All this has done is increase the potential in the upcoming fall. By "saving the day" before the common American even knew what happened, no corrective actions are being taken by the people. All this does is allow them to continue as before, letting the guillotine crank up a bit higher.

 

[Gilbo]

Looks like the damage is going to be spread over a longer period now. Of particular interest are the losses in the Chinese market; China's supposed to save the world by riding this out ...

The adjustment we're seeing in the U.S. and internationally has two distinct characters.

On the one hand you have investments that are part of the economic adjustment --like when Canadians or Europeans buy up American equity because their dollars are strong; this is simply the market at work--, and on the other you have investments designed to prevent economic adjustment --like when government-controlled, non-transparent government banks and investment corporations like those in China and the Middle East knowingly buy up massive amounts of bad equity in the states; this is not the market at work; it's something very different, and quite sinister.

China has increased its exposure to the credit crisis in the U.S. in the last several weeks dramatically. Why? Because these investments aren't about Chinese (government-controlled) banks making money. They are about solidifying China's ownership of you the United States' economy as a colony for the next 100 years (or whatever fraction of that it lasts). They want the status quo to continue and maybe even expand, rather than collapse. These institutions are controlled by their governments; they are strategic assets for these nations and a lot of the decisions they make are about a lot more than return on investment --at least in a financial sense; the nation as a whole will certainly reap a return. China's exposure to this market corruption is a systemic effort to impede economic adjustment. China has more to gain by propping up these corrupt, greedy Wall Street institutions than by seeing them suffer or die.

Your government deficit has grown massively the last several years. Now your private & public equity deficit is growing massively --of course when your government is bankrupt and everyone knows it, you have to finance your economy in another way, by selling it off piece by piece --it's a terrible position to be in.

What boggles my mind as how fast its been happening.

EDIT: Superficially contradictory to some of my statements might be the recent claim that the American Dollars share of the Global Reserve fell. This is a simplification. They're trying to keep you alive because no one wants to fuck a corpse (excuse my metaphor, but it seemed apt).

 

[sechs]

It seems to me that China is hurting itself by sinking along with us. In the long term, our economy is a mess. That makes China's economy, in the long term, a mess. They need to distance themselves from our sinking currency.

 

[jtr1962]

Regarding China, they're doing their own version of selling the family jewels for a night on the town. The price for their recent shift to being the world's workshop is enormous environmental damage and a looming public health crisis. Already cancer rates are on the rise due to the horrible pollution. The so-called Chinese economic miracle is as much a farce as the so-called prosperity was in the US. Neither are sustainable long term. I don't personally know anyone who has done that great since about the time I finished college in 1985. A few stock brokers or lawyers make money and the media acted as if everyone and his brother was making $200,000 a year. My sister barely broke $40,000 when she was working in Manhattan. She makes less now. My brother may have broken that for the first time in his life last year, but that was with OT. I never made over $26,000 (that was in 1990), and haven't broken $10,000 in ages. My dad topped out at a little over $30,000 before he retired in 1994. Like I said, nobody in our family, or extended family, really did that great despite the so-called prosperity. It was all a sham, fueled by people taking equity out of their homes. Homes prices rising to ludicrous levels fueled by speculators allowed them to do this.

Now the deck of cards of crashing down. Home prices are falling. There's no more equity to be taken out. That means living on whatever meager salary you're getting, that is if you're lucky enough to even still have a job when this all shakes out. Those who didn't borrow against their homes will be in better shape. Those lucky enough to own their homes outright, like my mom, will be in great shape. And there are those who took every dime in equity out of their homes, and now owe more than their home is worth. The best word for their situation is 'fucked'.

Well, I had a great aunt who became a millionaire buying foreclosures during the Great Depression. Maybe my mom and I can pool our resources now and do the same. For every black cloud there's a silver lining.

 

[jtr1962]

small percentage of total market values is called a correction, it is normal, nothing to get your knickers or panties in a bunch over. The markets will rebound in the long term, have always done so. greedy investors trying to make money quick, they lose.

25% drop hasn't happened, and even when it did in 1987, the markets rebounded.

http://www.lope.ca/markets/1987crash/

This really isn't about the stock market. In fact, the focus on the DJIA is really what hurt us. So long as the market was rising, which it was for a long time, people assumed the economy was hunky dory when it wasn't. The stock market can be made to rise or fall by the actions of a few large speculators, same as the housing market. The current still high stock market doesn't mean we're doing well. It just means lots of people overpaid for stocks, same as lots of people overpaid for homes in recent years.

The fundamentals in the economy are what's lousy. We supposedly had all this prosperity in recent years (another myth but that's an entirely different story) and what did we do with it? Did we do sensible things like invest in the decaying infrastructure, bolster our electrical grid, develop alternative energy, build more sorely needed public transit, or anything else which might have helped us long term? Noooo. Instead we spent the prosperity on stupid consumer crap, or literally burned it taking a gazillion pointless trips. We didn't save one dime, or invest one penny for the future. That is what will kill us. It may not be sexy, but spending money to provide power, or transportation, or manufacturing capability is what would have put the US on solid footing. The US was a power to be reckoned with when we actually produced tangible goods for the rest of the world. Now we're a joke. All we do is import consumer crap, and to paraphrase Tannin, lead profoundly ignorant lives watching inane reality shows and worrying about the latest celebrity gossip. The coming hard times will fall on the blissfully unaware typical American like a ton of bricks.

Another interesting trend is that the experiment in suburbanization has failed. We're eventually going to have to abandon the part of the economy in which the most money was invested since the 1950s. I already wrote lots about that in a similar thread of CPF. See here. Yeah, suburbia was another collosal mistake and misappropriation of resources. Actually, this post (not mine, either) in the thread is what bought the topic up. To quote the original poster: "None of the candidates for president has begun to articulate an understanding of what we face: the suburban living arrangement is an experiment that has entered failure mode."

 

[sechs]

At best, the DJIA is a lagging indicator on the economy.

 

[mubs]

I find it interesting that there are no comments re. my posts in the Fair tax thread.

 

[Tannin]

Hmmm .. if you are posting in the fair tax thread, Mubs, maybe I should read it after all. I did glance at it once or twice, and probably tried to drag it off-topic early on (as is my habit) but most of it seemed to be far-right ranting of the predictable kind, with pretty-much equally predictable responses in-between. That may be an entirely unfair view of the thread - as I said, I only glanced at it briefly.

 

[mubs]

I would have posted in this thread if it existed then. I put it there rather than start a new thread.

In a nutshell, the Feds themselves are saying the USA is headed for bankruptcy. Not that we didn't know it, but it is now being acknowledged at the higher levels.

 

[ddrueding]

I didn't reply to your posts because I agreed with them and didn't have much to add.

 

[timwhit]

I find it interesting that there are no comments re. my posts in the Fair tax thread.

I read both of the articles that you linked to. Interested stuff.

I have a question that I maybe someone can answer.

I own shares in a mutual fund that invests in a foreign market like India. If US currency inflates by 10% and the currency of the country that the fund invests in stays the same would the price of the fund then increase in value by the same 10%? This makes sense to me, but maybe I am deluding myself somehow.

 

[ddrueding]

That does make sense, Tim. Of course, the fund managers might find a way to keep it...

 

[mubs]

Hypothetical example:

Invest $100 in India. Assume $1 = Rs. 40 (Indian Rupee). Value = Rs. 4,000

$ appreciates by 10%. $1 = Rs. 44. If you liquidate your holdings, Rs. 4,000 / Rs. 44 = $90.91, assuming the value of your investment did not appreciate or depreciate.

This would not be a disadvantage if you spent that money outside of the U.S., because the $ appreciation will work for you (assuming the $ rose against all currencies). If you spend it in the U.S., you lose, unless the purchasing power of the $ rose inside the U.S. as well.

In reality many countries tightly control the exchange rate. The exchange rate was $1 = Rs. 45 for a long time. Then around Sep. 2007, it became $1 = Rs. 40. It is hovering in the Rs. 39.50 range now. Speculation has it that if the Indian govt. was not controlling it, it would become Rs. 35 in a matter of days (reflecting the true value of the two currencies), and would stabilize at Rs. 15 within a year!

The IT companies (and all other exporters) in India are howling, because it materially affects their profits since their overseas profits translate to fewer rupees.

 

[ddrueding]

I'd heard that China was controlling their currency, but I didn't know India was doing it as well.

 

[mubs]

Not to the extent China does. Most countries do.

 

[jtr1962]

I didn't reply to your posts because I agreed with them and didn't have much to add.

Same here. The coming bankruptcy of the federal government has been a topic of conversation for me for quite some time. After all, we owe ten trillion dollars. We just added an expensive prescription drug benefit to Medicare. We'll spend over a trillion dollars on the Iraq fiasco before all is said and done. We're talking about funding national health care with money we just don't have. And on top of that a bunch of Baby Boomers are starting to enter retirement. They're healthier than any previous generation of retirees, which means they'll be drawing Social Security checks longer. The ratio of workers paying into the system versus those collecting is going down. 2.1 people with McJobs can't afford to pay for one retired Baby Boomer. What usually happens to an individual when they have more debts than assets is what will happen to the US government. Nobody should be surprised.

 

[Handruin]

With the scare of the US dollar becoming worth nothing, literally...is the dramatic approach to buy actual gold (or some other valuable resource) with whatever value is currently remaining in said dollar? I know it may seem dramatic, but if it actually gets to that point, this is the only approach I can see to keeping some value in the money I currently have. It feels not so far away from what a "silver certificate" used to be for years ago, except I'd be buying the actual rare metal without having to rely on the government.

 

[jtr1962]

Believe me Doug, I'm seriously considering buying either gold eagles, or even the genuine $20 gold pieces minted before 1933. I tried to talk my Dad into doing it when gold was $300 an ounce but he wasn't one to spend a lot of money at one time. I wish now I had bought some gold back then.

Also, as strange as it sounds, hoarding nickels and pennies, especially pre-1982 copper pennies, might not be a bad thing. Both are worth more then face value now, even the zinc pennies.

 

[Handruin]

I'm far out of the loop on gold prices and how to buy it. I started googling and found the price to be about $890 per ounce...is that right? http://goldprice.org/gold-price.html

An ounce of gold seems so little when I think of it shaped into a small coin. A larger problem becomes protecting the investment. I'd need a safe of sorts to feel comfortable converting paper cash into gold coins. I've never really thought of gold as an investment, but if 401K and stocks drop to nothing, I guess it still seems like a better option?

 

[Handruin]

Now I'm going to be obsessed with researching gold-buying options. I'm just watching the video on this page about buying gold bullions. I need to learn more about how one can be certain it's industry-grade in purity, how people (may) certify them and how that certification translates globally if it needs to be sold. Is it better to buy bullion vs. eagle coins...etc.

 

[jtr1962]

~$900 an ounce is what gold has been doing lately. Yes, a safe of sorts wouldn't be a bad idea. Even better is to somehow hide the safe by building it into a wall or crawlway. You can also get into gold buying gold funds, although I don't know how that compares to actually buying the metal itself. Bullion coins can be had for ~$10 to $20 over gold value. Some old common date US gold coins can also be had for marginally over gold value. Common date US silver coins (i.e. dimes, quarters, half dollars minted before 1965) represent another way to invest in precious metals for marginally over bullion value. It's probably better to buy coins than bullion because you can buy and sell in smaller increments. It might be harder finding a buyer for that 100 ounce gold bar than a one ounce gold eagle.

Gold strictly speaking isn't an investment, but a hedge against inflation. It's something you invest in at times when there is likely to be steep inflation, or a devaluing of the dollar (actually a good portion of the gold price increase is because of that). Remember the stagflation of the Carter adminstration? Even with the 14% CDs the banks were offering you still weren't keeping up with inflation. Add in taxes, and you were doing way worse. That's why everyone turned to precious metals, and silver coins were suddenly worth about 40 times face (now they're only worth about 12-13 times face). We might be in a similar situation now where the only way to preserve wealth is to put it in precious metals.

 

[Handruin]

I'd rather not consider funds if non-tangible money might become worthless. I wasn't actually looking at rare metals as an investment like one might for stocks. I was looking at it as a tangible item in hand that had value even if not represented by some form of paper currency... I guess this is what I meant by being dramatic. Dramatic in the sense of a complete crash in dollar value anywhere and everywhere, having a physical, tangible item in hand that could be used for trade. That assumes people consider a rare earth metal to be worth some value in trade if all paper money becomes useless.

Slighty shocking to me was a claim on website related to platinum. They claim:

Far rarer than gold, it is estimated that all of the platinum ever mined throughout history would fit into a cube less than 25 feet on each side. The vast majority of platinum mined today comes from just two parts of the world: The Bushveld Complex north of Pretoria, South Africa and the Noril'sk-Talnakh region of Siberia in Russia, which produce, respectively, about two-thirds and one-quarter of the world's platinum supply each year.

That figure seems like such a small amount given how long it has been mined.

Also, they sell a one-ounce platinum coin with a face-value of $100. So, if Platinum is currently worth $1550+ USD per ounce, either someone is on crack, or the entire one-ounce in that coin is not platinum. I know they are never 100% pure, but most claim 4 or 5, 9's or purity. I have no idea what deal they're doing with this platinum coins. What am I missing with this other than they might sell a $100 face-value coin for market value?

They're claiming:

The one-ounce platinum American Eagle has a diameter of 32.7mm, a thickness of 2.39mm, and contains one troy ounce of pure .9995 fine platinum. The coin has a face value of $100, the highest face value of any American coin ever produced. One-ounce platinum American Eagles are sold in units of 10 one-ounce coins.

I know, it's my first udaman-style post, sorry.

 

[ddrueding]

What are peoples thoughts on having bank accounts tied to the Euro instead of the Dollar? IIRC, a number of institutions offer such things. Sure, it wouldn't do much if the entire system fell apart.

 

[jtr1962]

Also, they sell a one-ounce platinum coin with a face-value of $100. So, if Platinum is currently worth $1550+ USD per ounce, either someone is on crack, or the entire one-ounce in that coin is not platinum. I know they are never 100% pure, but most claim 4 or 5, 9's or purity. I have no idea what deal they're doing with this platinum coins. What am I missing with this other than they might sell a $100 face-value coin for market value?

The US bullion coins always have a face value way less than metal value. I suppose it's a way to keep from having to pay more for the coin than the metal in it is worth. I would guess a bunch of economists sat down and said the likelihood of platinum every falling under $100 an ounce was probably close to nil, so they choose that for the face value of the coin. Note that the one ounce gold eagle is $50, probably since more gold exists in the world.

That figure for all the platinum ever mined is probably not an exaggeration. Don't forget that platinum is one of the densest metals known at 21.45 gm/cm³. Only osmium and iridium are denser. A 25 foot cube of the stuff would weigh about 10,450 tons, more than 5 fully-fueled space shuttles.

 

[Handruin]

The difference in price between the platinum and gold makes sense because of availability of the raw material. Does the $50 gold coin or $100 platinum coin cost face value? Are they recognized as currency? If so, it sounds like one hell of a deal if true...

Even with the density of platinum being so high, I'm still surprised at the quantity extracted from the ground. Sure, 10K tons is heavy, but far from an enormous weight at least in my eyes. In perspective I'd be curious how much iron or copper has been extracted to give a comparison.

 

[jtr1962]

The difference in price between the platinum and gold makes sense because of availability of the raw material. Does the $50 gold coin or $100 platinum coin cost face value? Are they recognized as currency? If so, it sounds like one hell of a deal if true...

No, they're sold for somewhat over bullion value or I'd be all over them.

Even with the density of platinum being so high, I'm still surprised at the quantity extracted from the ground. Sure, 10K tons is heavy, but far from an enormous weight at least in my eyes. In perspective I'd be curious how much iron or copper has been extracted to give a comparison.

I pulled these figures off Google:

iron: no idea of the amount of refined metal in existence but ~1 billion tons are produced annually

copper: 338 million metric tons (amount produced since 1950)

gold: 145,000 metric tons

silver: 700,000 metric tons (this is silver bullion in existance, a lot of mined silver is used up in industry)

If anything it seems like silver is severely undervalued relative to gold but that's because a lot is consumed by industry, whereas most gold ends up as coins, or jewelry, or bullion.

 

[jtr1962]

This book has some additional info on the subject.

 

[jtr1962]

Before you go ahead and invest in gold you might want to have a look at this post. The recent run on gold looks quite similar to what happened in 1976-1980. It was followed by a drop, and then 20 years where the price did absolutely nothing. We might be in for a repeat.

 

[Will Rickards]

Do you all really think the economy is that bad?
I just see a housing market correction and a government in the long tail of a war and some uneasiness over the impending US elections. The housing market correction was long overdue. And the uneasiness over the elections is to be expected. The debt level is to be expected when you are involved in a war that spans years and you intend to win.

I'm not saying I agree with the war or Bush in general.
It just seems hard to see it as really this bad when I don't see it in my daily life. The only way I see anything is my 401K is taking a beating. I basically threw away about 2% of my 401K investments last quarter.