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Is it different this time?
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Thread: Is it different this time?

  1. #1
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    Default Is it different this time?

    I am a social scientist by profession, that means I am trained to think carefully about the way context affects human/social actions. With that in mind, here is my question;

    "Can we use the past PM bull markets as accurate guides to this one due to the fact that the larger world context is significantly different now?"

    What contextual differences am I talking about?
    - larger global participation (think Asia/India)
    - faster information flow (think Kitco charts that I check last time I was in a remote part of Central Asia.
    - metals having been demonetized for a generation
    - etc.

    I think you see my point. The larger world context is very different from the bull run in the late 1970s, so will this bull run play out differently? Most analysts I read assumes that they will be similar, but I am starting to wonder.

    I am looking for intelligent discussion on this subject.

  2. #2
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    "Can we use the past PM bull markets as accurate guides to this one due to the fact that the larger world context is significantly different now?"

    One enormous factor that many have been ignoring this time around is interest rates. An incredibly low interest rate environment, such as we are in the middle of at the moment, is anything but a bullish factor for metals prices, or the economy in general. Past bull markets in precious metals have generally occurred in medium to high interest rate environments. You of course have to key your interest rates to the currency that you are using to price your metals.

  3. #3
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    Quote Originally Posted by Matthew Shelley View Post
    "Can we use the past PM bull markets as accurate guides to this one due to the fact that the larger world context is significantly different now?"

    One enormous factor that many have been ignoring this time around is interest rates. An incredibly low interest rate environment, such as we are in the middle of at the moment, is anything but a bullish factor for metals prices, or the economy in general. Past bull markets in precious metals have generally occurred in medium to high interest rate environments. You of course have to key your interest rates to the currency that you are using to price your metals.
    GET REAL Matty. We have had the biggest run up I've seen since 1980 just months ago. Money was free months ago. What the hell Matty?

  4. #4
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    Feb 2011
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    Treasure Valley, Idaho
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    Default

    Quote Originally Posted by Matthew Shelley View Post
    "Can we use the past PM bull markets as accurate guides to this one due to the fact that the larger world context is significantly different now?"

    One enormous factor that many have been ignoring this time around is interest rates. An incredibly low interest rate environment, such as we are in the middle of at the moment, is anything but a bullish factor for metals prices, or the economy in general. Past bull markets in precious metals have generally occurred in medium to high interest rate environments. You of course have to key your interest rates to the currency that you are using to price your metals.
    This time around there is a fiat currency war and gold seems to be the safe haven. I have also been watching the yield on 10 year treasury bonds go from 1.83 to just under 2.4 today in a matter of weeks. That makes me wonder if this is cause for some concern for PM prices.......

  5. #5
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    Washington
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    Default

    Quote Originally Posted by Matthew Shelley View Post
    "Can we use the past PM bull markets as accurate guides to this one due to the fact that the larger world context is significantly different now?"

    One enormous factor that many have been ignoring this time around is interest rates. An incredibly low interest rate environment, such as we are in the middle of at the moment, is anything but a bullish factor for metals prices, or the economy in general. Past bull markets in precious metals have generally occurred in medium to high interest rate environments. You of course have to key your interest rates to the currency that you are using to price your metals.
    Real interest rates are determined by subtracting the real rate of inflation from the current nominal interest rates. So currently rates are negative in otherwards savings and bonds are yielding deeply negative returns in real terms because the real inflation rate exceeds 2-3% and is arguably 7-15% depending on income and expenditures. Precious metals over the longer term 3-5 years will continue to outperform treasuries, savings accounts, etc....

  6. #6
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    Well, if your talking overlaying charts, probably not. The forces can take down silver, unlike the force they had back in the 70-80's

    You heard that guy, 4 institutions took down silver in the recent 3 dollar drop.

    The path through the woods has changed, but we will reach our destiny as like before.

    The Dollar back then was a petro dollar like today. So the soil is the same. Now that we've got many more dollars then before, it reaches a point where selling will really take it down.

    Hyperinflation is still on the financial side of the house. When it get out to the public, then it will start hitting hard. Dominos. I thought the KO was gonna be in 2008. Smelling salt got us back up each time. The last blow is coming soon...

  7. #7
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    Default

    Quote Originally Posted by Matthew Shelley View Post
    "Can we use the past PM bull markets as accurate guides to this one due to the fact that the larger world context is significantly different now?"

    One enormous factor that many have been ignoring this time around is interest rates. An incredibly low interest rate environment, such as we are in the middle of at the moment, is anything but a bullish factor for metals prices, or the economy in general. Past bull markets in precious metals have generally occurred in medium to high interest rate environments. You of course have to key your interest rates to the currency that you are using to price your metals.
    Come on in! We'll take, I mean, ah, invest your money in PM's for ya!

    No, the markets not rigged. It can't be. We have rules and regulations in place. And our company motto is the customer first in profits.

    (First in the barrel, with the hole in the side.)

    Playing Futures and Options in PM's is worse than russian roullette.

    Not good PR for your line of work, Matty, but it took me many years to realize that in a round about way I was aiding the millitary machine through my line of work. I changed that, and now I'm more people service orientated.

    It's not too late Matt, to change careers. Get a job you can feel good about when you get home, knowing you've been a positive influence on society.

  8. #8
    Join Date
    Sep 2011
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    I still haven't worked out why the Dow is on such a run other than vested interests and cheap money make comfortable bed fellows
    For the rest of us, we want something that at least has a chance of being worth something after the next downturn
    The last time I trusted the stock market and failsafe investments I ended up with a 400k loss and paper that wasn't even soft enough for a good ass-wipe.
    There's plenty of people like me around now with money to invest who wouldn't touch equities with a barge pole
    I don't have the time for my investments to revalue again while some fraud drives back to Connecticut in his Bentley with a new fat Bernanke bonus and a Government bailout.
    Precious metals and farmland are my priority investments from now on.
    So yes, things have changed, but I think they are changing back.
    Less leverage, fewer retail share investors, more looking for something solid to measure your wealth by .

  9. #9
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    Default

    Quote Originally Posted by SilverHawk View Post
    Come on in! We'll take, I mean, ah, invest your money in PM's for ya!

    No, the markets not rigged. It can't be. We have rules and regulations in place. And our company motto is the customer first in profits.

    (First in the barrel, with the hole in the side.)

    Playing Futures and Options in PM's is worse than russian roullette.

    Not good PR for your line of work, Matty, but it took me many years to realize that in a round about way I was aiding the millitary machine through my line of work. I changed that, and now I'm more people service orientated.

    It's not too late Matt, to change careers. Get a job you can feel good about when you get home, knowing you've been a positive influence on society.

    Great post Hawk. Love it. Mr. Prag has a great point as well.
    Last edited by wdwexe; 21st March 2012 at 16:49.

  10. #10
    Join Date
    Mar 2008
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    Default

    Quote Originally Posted by Matthew Shelley View Post
    "Can we use the past PM bull markets as accurate guides to this one due to the fact that the larger world context is significantly different now?"

    One enormous factor that many have been ignoring this time around is interest rates. An incredibly low interest rate environment, such as we are in the middle of at the moment, is anything but a bullish factor for metals prices, or the economy in general. Past bull markets in precious metals have generally occurred in medium to high interest rate environments. You of course have to key your interest rates to the currency that you are using to price your metals.
    Matt brings up the interest rate issue - this is something that has been intriguing me for some time. In the last PM bull run, it was higher interest rates that abruptly ended it. But the gov cannot tolerate higher rates this time around, even a few points would push the US over the cliff. So, does that mean that the fed will keep interest rates artificially low, using any and every mechanism, for a LONG time? I mean longer than they have already stated?

    If so, that means this bull run will not go vertical then suddenly drop back 50%, it could mean that it at some point goes parabolic and then plateaus. This is based on my understanding that one of the main fuels for a PM bull market are low/negative real interest rates. I know it is more complicated than that, but I've read that the big players key on this issue. And let's face it, it is the big players who drive this market, not minnows like us buying a few 100oz at a time.

    What do you guys think?
    Last edited by Gene Daniels; 23rd March 2012 at 07:40. Reason: wanted to add more

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