Lepard opinion of financial crisis

[CUnknown]

I'd like to put in my 2 cents. Not disagreeing with you, llepard, but just sort of wanting a clarification. You say that stocks will plunge in value, but at the same time that we'll be seeing mega-inflation so much that the dollar nearly becomes worthless. Oil and gold will skyrocket.

I'm just trying to digest this. Will the end come in fire, or ice? Inflation, or deflation? Isn't inflation supposed to be "good" for the value of stocks? As in, at least their nominal value? If it's deflation we're worried about, then why is gold going to skyrocket? Shouldn't the (at least nominal) value of gold fall, at least a little, during deflationary times? It might gain real (deflation-adjusted) value, but fall nominally, slightly. Stocks would fall a lot, and would lose real value, and tons of nominal value.

Or is what we're going to see sort of a combination of inflation and deflation? Perhaps the money supply shrinks (deflation), but prices of gold, oil, and food rise (inflation)? This is pretty much what has been happening so far this year, to my understanding.

I've been reading everything I can possibly find about this topic, trying to understand it. I still don't quite get it.

I agree we are in for some hard times ahead. But, the combination of plunging stocks and skyrocketing gold/oil/food ... well ... it's just not easily understandable to me in terms of either inflation or deflation. I know that has been what has been going on, though.

My personal opinion -- as long as we don't see a massive deflationary wave (any more than we already have), I feel that the Fed can handle things, at least for now, by pumping massive cash into the markets (running the printing press). Of course, this will doom us long-term as governmental debt piles up and becomes unsustainable. But, we're not to that point yet. You said, this crisis would hit within weeks or months ... I agree with you about the crisis, but instead think it will take years (maybe 2-5 years).

If you really do think it will happen in a period of months, what do you think will precipitate this crisis? I am one of those "hopeful" people who actually believe the stock market is turning around, at least for the remainder of the year. Next year, who knows. The year after that, I'm with ya running for the hills.

 

[freelance]

I agree. Best would be to have no money in banks at all. My only point is that I am confident that insured depositors will be made whole by the Government. They have said repeatedly that they will protect them and protect the system. Where will the money come from? They will print it. What will that money be worth? Anyone's guess, but less than it is worth today, that is for sure. The problem is that printing money will destroy the purchasing power of the dollar. So, yes, your point is correct. No money in banks if possible. But for many that is impractical.

The FDIC knows there is a problem and is trying to get ahead of the curve.

Check out this website.

http://www4.fdic.gov/dip/index.asp

Presently only Indymac is on the drop down list. How much you wanna bet that that list grows quickly?

Another piece of interesting information. I was at my coin dealer yesterday buying gold coins. He is a big dealer in the Boston area. I asked him what his volume was this year compared to last. He said he had sold 4-5x more coins this year than last year (not sure if this year to date or 6 month v. 6 month data) but either he is up 4x or 8x. Boston area has a lot of intelligent wealth. What does that tell you about how people with money in Boston are voting on the value of the dollar versus gold. I sense a trend in motion. Remember the trend is your friend.

LWL

WHY do you think it's a dropdown list? LOL!

Thanks for an honest, sensible post, Llepord. Good to see you.

 

[ashura]

Here's a question...what would you advise poor people to do? My family is young, my husband is a grad student...we don't have thousands of dollars anywhere. Buy food and hope that enough people's ships will be sinking that the mortgage company won't be in a hurry to boot us?

+1?

 

[mconder]

The good news is a lot of very rich people will be made poor, and perhaps more humble.

The richest will be made richer. They will buy up U.S. assets with cheap dollars. We will be left slaves on the land our fathers conquered.

 

[torchbearer]

The good news is a lot of very rich people will be made poor, and perhaps more humble.

The richest will be made richer. They will buy up U.S. assets with cheap dollars. We will be left slaves on the land our fathers conquered.

Economic Conquest.
For more details: http://video.google.com/videoplay?docid=2618811931680926682

 

[libertarian4321]

If you have a 401K or IRA that holds stocks or bonds convert it into cash. ASAP

Buy gold and silver with the proceeds.

Or, if you can use the IRA or 401K to buy RYTPX. a fund that will go up 2x what the S&P 500 index does. eg: index down 10%, fund up 20%. OR SRS, an etf that is 2x the inverse of the reit index.

If things get as bad as you say, won't ammunition be worth more than gold?

 

[torchbearer]

If things get as bad as you say, won't ammunition be worth more than gold?

if you own a gun. Yes.
though gold could be molded into bullets and even caissons. not the best metal for ammo, but it can be used in a pinch.

 

[Lord Xar]

Does anybody feel this is just a precursor to the Amero and the desire for a "stabalized" currency?

And will the American people have the will and foresight to oppose it?

************

So can I get a concensus here:

1. Remove any dollars from banks (if feasible) and what - store them in a safe at home?
2. Remove monies from 401k and buy gold/silver
3. Stock up on some foodstuffs.
4. Buy ammo.

Also, with the money removed from the bank - do we sit on that, or buy Hard GOLD and SILVER - that you actually have in hand? If so, any recommendations?

 

[JaylieWoW]

Does anybody feel this is just a precursor to the Amero and the desire for a "stabalized" currency?

And will the American people have the will and foresight to oppose it?

Provided the latest season of American Idol isn't underway...

 

[Acala]

Here too

We are currently trying to ready our community fo hard times. Most people don't want to hear he hard truth of future events but hopefully they will come around. Only thing we can do for sure is ready ourselves.

Yup. Our former Ron Paul meetup, now the Campaign for Liberty Meetup, is getting serious about building local community survival skills and contacts - rain harvesting, gardening, Community Supported Agriculture, etc. At my house I put up a PV system, got some chickens, planted a garden, and am installing a rain harvesting system myself. Next I hope to help others do the same.

 

[LibertyEagle]

Yup. Our former Ron Paul meetup, now the Campaign for Liberty Meetup, is getting serious about building local community survival skills and contacts - rain harvesting, gardening, Community Supported Agriculture, etc. At my house I put up a PV system, got some chickens, planted a garden, and am installing a rain harvesting system myself. Next I hope to help others do the same.

Neat. I wish you lived in Texas.

 

[llepard]

I'd like to put in my 2 cents. Not disagreeing with you, llepard, but just sort of wanting a clarification. You say that stocks will plunge in value, but at the same time that we'll be seeing mega-inflation so much that the dollar nearly becomes worthless. Oil and gold will skyrocket.

I'm just trying to digest this. Will the end come in fire, or ice? Inflation, or deflation? Isn't inflation supposed to be "good" for the value of stocks? As in, at least their nominal value? If it's deflation we're worried about, then why is gold going to skyrocket? Shouldn't the (at least nominal) value of gold fall, at least a little, during deflationary times? It might gain real (deflation-adjusted) value, but fall nominally, slightly. Stocks would fall a lot, and would lose real value, and tons of nominal value.

Or is what we're going to see sort of a combination of inflation and deflation? Perhaps the money supply shrinks (deflation), but prices of gold, oil, and food rise (inflation)? This is pretty much what has been happening so far this year, to my understanding.

I've been reading everything I can possibly find about this topic, trying to understand it. I still don't quite get it.

I agree we are in for some hard times ahead. But, the combination of plunging stocks and skyrocketing gold/oil/food ... well ... it's just not easily understandable to me in terms of either inflation or deflation. I know that has been what has been going on, though.

My personal opinion -- as long as we don't see a massive deflationary wave (any more than we already have), I feel that the Fed can handle things, at least for now, by pumping massive cash into the markets (running the printing press). Of course, this will doom us long-term as governmental debt piles up and becomes unsustainable. But, we're not to that point yet. You said, this crisis would hit within weeks or months ... I agree with you about the crisis, but instead think it will take years (maybe 2-5 years).

If you really do think it will happen in a period of months, what do you think will precipitate this crisis? I am one of those "hopeful" people who actually believe the stock market is turning around, at least for the remainder of the year. Next year, who knows. The year after that, I'm with ya running for the hills.

Your view may be correct. It may take years.

Here is my scenario and why I believe it will happen this way. This is just a wild ass guess based on 30 years experience in the markets. It is better than most forecasts but not perfect.

1. We know the economy is not going up. There is no income growth, asset appreciation, or wealth being created.

2. If it is not going up it is flat or going down.

3. The governement is lying about the statistics. Unemployment is 12% v. 5% because they changed the measure. Google Shadow Government Statistics, John Williams. CPI is actually 12% not 2 core or 5 headline. Again see SGS.

4. We have deflation and inflation. The deflation is in assets, houses, cars, land etc. The inflation is in essentials. In part this inflation is just depreciation of the dollar. This trend will continue.

5. How did we get here? Fiat currency. Too much debt. Coins in the fuse box so no corrections.

6. Things are going down and they are going down at an increasing rate. Watch the news. The crisis are getting closer together.

7. The men who run the show and know the most are scared. Watch Bernacke and Paulson on TV, they look terrified. They know what is happening, but are lying about it. Not long ago they said the housing crisis was contained and there would be a second half recovery. How is that working out?

8. The scales are falling from the eyes of the people. They realize something is wrong. (85% say we are on the wrong course) The emperor (Federal Government) has no clothes. The response of the Government is, "hey the economy is fine" who are you going to believe me or your lying eyes. People are going to take actions to defend themselves economically and that means cutting back. This will increase unemployment, decrease purchases, depress house prices further and the cycle feeds on itself.

9. The stock market discounts the future. 30 year trend lines are being broken. We are at an Elliott Wave 3 of 3 scenario. Read Prechter's elliott wave book and or subscribe to Robert McHugh.

10. Things can and probably will spin rapidly out of control. But I hope not.

I hope your scenario takes place, that is a long slide over a period of time. Why? People will have more time to adjust to the pain.

Just my thoughts. Hope that clarifies the inflation deflation thing a bit.

To summarize. Deflation now. Government response, print money. Hyperinflation to follow. Think Weimar republic.

Good luck

LWL

To your direct questions:

More specifically gold will skyrocket in deflation because it is not someone elses liability and it is money good. Everyone will want it. In the 1930's the last period of deflation gold went up.

Stocks will go down at first because people will need money and will sell stocks. Yes they represent real productive assets with earnings power, but the earnings will be going down and the multiples will contract. In the middle of this depression there will be a once in a lifetime opportunity to buy stocks and get very wealthy.

 

[Lord Xar]

Your view may be correct. It may take years.

Here is my scenario and why I believe it will happen this way. This is just a wild ass guess based on 30 years experience in the markets. It is better than most forecasts but not perfect.

1. We know the economy is not going up. There is no income growth, asset appreciation, or wealth being created.

2. If it is not going up it is flat or going down.

3. The governement is lying about the statistics. Unemployment is 12% v. 5% because they changed the measure. Google Shadow Government Statistics, John Williams. CPI is actually 12% not 2 core or 5 headline. Again see SGS.

4. We have deflation and inflation. The deflation is in assets, houses, cars, land etc. The inflation is in essentials. In part this inflation is just depreciation of the dollar. This trend will continue.

5. How did we get here? Fiat currency. Too much debt. Coins in the fuse box so no corrections.

6. Things are going down and they are going down at an increasing rate. Watch the news. The crisis are getting closer together.

7. The men who run the show and know the most are scared. Watch Bernacke and Paulson on TV, they look terrified. They know what is happening, but are lying about it. Not long ago they said the housing crisis was contained and there would be a second half recovery. How is that working out?

8. The scales are falling from the eyes of the people. They realize something is wrong. The emperor (Federal Government) has no clothes. The response of the Government is, "hey the economy is fine" who are you going to believe me or your lying eyes.

9. The stock market discounts the future. 30 year trend lines are being broken. We are at an Elliott Wave 3 of 3 scenario. Read Prechter's elliott wave book and or subscribe to Robert McHugh.

10. Things can and probably will spin rapidly out of control. But I hope not.

I hope your scenario takes place, that is a long slide over a period of time. Why? People will have more time to adjust to the pain.

Just my thoughts. Hope that clarifies the inflation deflation thing a bit.

To summarize. Deflation now. Government response, print money. Hyperinflation to follow. Think Weimar republic.

Good luck

LWL

To your direct questions:

More specifically gold will skyrocket in deflation because it is not someone elses liability and it is money good. Everyone will want it. In the 1930's the last period of deflation gold went up.

Stocks will go down at first because people will need money and will sell stocks. Yes they represent real productive assets with earnings power, but the earnings will be going down and the multiples will contract. In the middle of this depression there will be a once in a lifetime opportunity to buy stocks and get very wealthy.

Hey - thanks for the advice. So, would you suggest allocating how much into gold?

I KNOW you are not giving money advice and you are only speculating on opinion for yourself. But I am curious, if you had - lets say 100k in cash, sitting in a bank. What would be your steps for financial stability and reducing the hit that you say might happen?

 

[llepard]

Hey - thanks for the advice. So, would you suggest allocating how much into gold?

I KNOW you are not giving money advice and you are only speculating on opinion for yourself. But I am curious, if you had - lets say 100k in cash, sitting in a bank. What would be your steps for financial stability and reducing the hit that you say might happen?

I would have at least 20% of liquid long term cash assets in gold coins. I do.

Recognizing that they can go down with zero intent to sell them if they do. They have been money for 5,000 years. They will be money when the dollar is the equivalent of the Confederate currency.

I would take another 20% and buy a 2x reverse index stock fund. RYTPX is one. S&P goes down 10% RYTPX goes up 20%. (and vice versa). I would keep balance in cash. I would have a year of food in my house.

If you are more aggressive you can increase these percentages and keep less cash. BTW, in cash i mean in a foreign currency. The dollar is going to go down. Cash dollars will be a disaster. Cash in a stable foreign currency will hold value. My favorites are the Chinese RMB and the Swiss Franc.

 

[sunshine05]

Thank you for the information. I have a question on buying gold and silver. Would you recommend buying ETF or the actual coins? Any advice would be much appreciated.

 

[raystone]

bump

 

[Vali]

I have been thinking along the same lines as I watch the market. Thanks L.!

 

[Indy Vidual]

...In the middle of this depression there will be a once in a lifetime opportunity to buy stocks and get very wealthy.

1) Timing will be difficult
2) Will stocks be trading in Dollars or Ameros?

 

[CUnknown]

Thanks for the insight, llepard. I'm pretty new to investment, and it's good to have the benefit of your experience. You're definitely right that it's pretty clear to everyone that things aren't quite right right now. Something just doesn't feel right. I was born in '75 ... was this the way things felt back then, or is this worse? You say that 30 year trend lines are being broken? That is pretty bad..

I don't know who to be scared for more, me or my parents. Before, I assumed that my generation would take the brunt of things ... but, my parent's generation is going to be hit hard. They trust the government way too much, I think. If they are counting on social security, a pension, or medicare or something like that.. I really feel that in a few years, all of those things could be gone or basically worthless even if they're still there. My parent's aren't poor, but I just don't think they're going to get the retirement they have planned for all these years and that they deserve.

As far as my generation, it's gonna be tough, too. But at least by the time we're older, you gotta hope that things have settled down by then. If we can weather the storm for a decade or two, we'll be okay, I imagine.

The more things go, the more it seems that things are happening quicker than anyone thought. I'm pretty damn scared, to be honest.

 

[axiomata]

I would have at least 20% of liquid long term cash assets in gold coins. I do.

Recognizing that they can go down with zero intent to sell them if they do. They have been money for 5,000 years. They will be money when the dollar is the equivalent of the Confederate currency.

I would take another 20% and buy a 2x reverse index stock fund. RYTPX is one. S&P goes down 10% RYTPX goes up 20%. (and vice versa). I would keep balance in cash. I would have a year of food in my house.

If you are more aggressive you can increase these percentages and keep less cash. BTW, in cash i mean in a foreign currency. The dollar is going to go down. Cash dollars will be a disaster. Cash in a stable foreign currency will hold value. My favorites are the Chinese RMB and the Swiss Franc.

I have been 90% convinced of this philosophy for half a year but haven't acted because of that other 10% and more importantly, because I don't actually know how. I've just graduated and started a full time job. My savings is minimal so options that require high minimums prevent me from diversifying satisfactorily. Also, my questions of "how" are a matter of technique as well. How do I get the cash in my checking/savings into commodities, foreign currencies, and reverse funds with the lowest fees and easiest procedure for an amateur?