by mannfm11 » Sun May 08, 2011 3:47 am
The only inflation we are getting is in speculation. The real markets for most commodities are pretty thin, which means speculators can drive up the prices, but they can't get out of the trades once the real sellers show up. I saw a write up about the structure of the oil markets. Oil has been in glut for over 2 years now and to drive the price up takes a lot of Wall Street collusion along with massive speculative action. The commercials showed up recently on the short side, which means it is put up or shut up time. When these markets turn, it is like a steam roller running over a mouse. Commercials in oil means they have the goods to deliver. There might be as much as an 8 day surplus above shortage in oil products in the US, an amount that used to crater the world market price. The refiners would just as soon let someone else store this stuff and buy it as they need it as to store it themselves and have their money tied up in it. To whom are they going to sell it to anyhow. Silver was even more absurd. It is total nonsense about it being much in the way of money. Anyone really stupid enough to believe that products like this go to the moon while the pay for the typical person stays about the same and that things like cars aren't going to go up as well? Who can carry enough silver to buy a car? Even at $50 an ounce, it would take 600 ounces to buy a $30,000 car. Real demand for silver isn't that high. It is a fabricated story. The other joke is the 16 to 1 silver/gold ratio to induce people to buy more of it. That was fiat, in that governments bought silver cheap and coined it at a profit. It was 75 cents an ounce or less when we went off the silver standard in the 1960's, despite the demand out there for coinage. Now the photo demand has disappeared and I wouldn't hold my breath to see governments making silver coins again for circulation. Gold, on the other hand, could come back as a means of settling international trade accounts. It would be realistic to tote 30 double eagles down to the car lot and buy a car. In the meantime, I wouldn't let government decree muddy the water of the commodity value of these metals.
Other commodities work the same way. Once the price gets high enough, the commercials just step up and find out how much of this stuff the hedge funds want dumped in their yards. Also, the farmers give up what they have as well. A farmer not selling out at these prices is flat stupid. I read they were holding out on wheat a few years ago in Oklahoma and got stuck with their crops at half the price. The guys that sold were looked at as geniuses. There is a hell of a lot of difference between speculation and business and business eventually takes control of these markets once the speculators have had their thrills. Generally the speculators end up selling what they bought back at half price and they end up selling twice what they bought. There were thousands totally wiped out.
One of the funnies I read over and over again was how JP Morgan was going to go broke being short silver. Morgan would most likely drop so much silver on the market that the longs couldn't get out. A herd of rabbits rarely ever pulls an elephant through a keyhole. If things got to tough on Morgan, I believe they would merely pull the credit lines from a couple of major hedge funds and trip the whole market. If you believe ADM and Cargill wouldn't let speculators have their entire storage at some price and start all over again, think again. These markets are going to be shot for some time. They imploded on themselves. Some will blame the exchanges for raising margins. Well, they probably saved some small guys from being crushed by a market that was sure to come down. There were thousands of tons of silverware and other scrap that came out of the closet when prices hit the ceiling.
Who has this money Bernanke supposedly printed? Someone who no longer has what they gave up for it. the actions of the Fed have probably stopped the money supply in the US from collapsing. I don't agree with what he has done because it is covering up the malfeasance of bankers and the insolvency in the system. But, it has restored reserves, as the system was operating almost totally on interbank credit, the credit between banks, as the reserves have been gone for years. The problem isn't reserves now, it is capital. That will show up next in the stock market, as the books of US corporations are contingent on continued debt expansion and accounting trickery. Where is the next dose going to come from, since housing is no longer capable of generating credit for the system? Are we going the path of China and build empty cities to keep it going?
The only inflation we are getting is in speculation. The real markets for most commodities are pretty thin, which means speculators can drive up the prices, but they can't get out of the trades once the real sellers show up. I saw a write up about the structure of the oil markets. Oil has been in glut for over 2 years now and to drive the price up takes a lot of Wall Street collusion along with massive speculative action. The commercials showed up recently on the short side, which means it is put up or shut up time. When these markets turn, it is like a steam roller running over a mouse. Commercials in oil means they have the goods to deliver. There might be as much as an 8 day surplus above shortage in oil products in the US, an amount that used to crater the world market price. The refiners would just as soon let someone else store this stuff and buy it as they need it as to store it themselves and have their money tied up in it. To whom are they going to sell it to anyhow. Silver was even more absurd. It is total nonsense about it being much in the way of money. Anyone really stupid enough to believe that products like this go to the moon while the pay for the typical person stays about the same and that things like cars aren't going to go up as well? Who can carry enough silver to buy a car? Even at $50 an ounce, it would take 600 ounces to buy a $30,000 car. Real demand for silver isn't that high. It is a fabricated story. The other joke is the 16 to 1 silver/gold ratio to induce people to buy more of it. That was fiat, in that governments bought silver cheap and coined it at a profit. It was 75 cents an ounce or less when we went off the silver standard in the 1960's, despite the demand out there for coinage. Now the photo demand has disappeared and I wouldn't hold my breath to see governments making silver coins again for circulation. Gold, on the other hand, could come back as a means of settling international trade accounts. It would be realistic to tote 30 double eagles down to the car lot and buy a car. In the meantime, I wouldn't let government decree muddy the water of the commodity value of these metals.
Other commodities work the same way. Once the price gets high enough, the commercials just step up and find out how much of this stuff the hedge funds want dumped in their yards. Also, the farmers give up what they have as well. A farmer not selling out at these prices is flat stupid. I read they were holding out on wheat a few years ago in Oklahoma and got stuck with their crops at half the price. The guys that sold were looked at as geniuses. There is a hell of a lot of difference between speculation and business and business eventually takes control of these markets once the speculators have had their thrills. Generally the speculators end up selling what they bought back at half price and they end up selling twice what they bought. There were thousands totally wiped out.
One of the funnies I read over and over again was how JP Morgan was going to go broke being short silver. Morgan would most likely drop so much silver on the market that the longs couldn't get out. A herd of rabbits rarely ever pulls an elephant through a keyhole. If things got to tough on Morgan, I believe they would merely pull the credit lines from a couple of major hedge funds and trip the whole market. If you believe ADM and Cargill wouldn't let speculators have their entire storage at some price and start all over again, think again. These markets are going to be shot for some time. They imploded on themselves. Some will blame the exchanges for raising margins. Well, they probably saved some small guys from being crushed by a market that was sure to come down. There were thousands of tons of silverware and other scrap that came out of the closet when prices hit the ceiling.
Who has this money Bernanke supposedly printed? Someone who no longer has what they gave up for it. the actions of the Fed have probably stopped the money supply in the US from collapsing. I don't agree with what he has done because it is covering up the malfeasance of bankers and the insolvency in the system. But, it has restored reserves, as the system was operating almost totally on interbank credit, the credit between banks, as the reserves have been gone for years. The problem isn't reserves now, it is capital. That will show up next in the stock market, as the books of US corporations are contingent on continued debt expansion and accounting trickery. Where is the next dose going to come from, since housing is no longer capable of generating credit for the system? Are we going the path of China and build empty cities to keep it going?