Forum Replies Created
1. What is Chris Martenson’s economic background, or is he more self taught and read?
Here is his bio:
So, mostly self taught but has an MBA in finance. For what it’s worth (not much IMO) I have an undergrad degree in Finance, and MBA in Finance, have studied some at Harvard University and completed the Executive Education course on Value Investing at Columbia University. It is all good to know but they teach the a twisted version of Keynesian economics that has led us to the problems we face today, and unfortunately continue to perpetuate the status quo. It is certainly worth studying conventional economics, but self study is far more valuable. Always ask questions and seek answers for yourself. Chris has done that. So has Michael Burry…and Kyle Bass…and Jim Rogers…and on and on.
I guess my point is that, in and of itself, having a formal background in economics doesn’t mean much. Look at some of the garbage spewed by Paul Krugman, Ben Bernanke, or Alan Greenspan if you want to rely on “the experts”.
He is not confusing correlation with causation, and does a good job of explaining both facets. But your friend is absolutely correct that it “needs to be approached and examined with caution to ensure correct conclusions are being drawn.” Self study is the solution. Ultimately nobody should be able to convince you of anything until you’ve searched for the answer yourself.
This is a timely article for this thread. Some good thoughts and worth a read:
The problem with hoarding nickels and pennies due to their metal content value exceeding their face value is that it is now illegal to melt them down:
This is what I find so baffling about Kyle Bass’s big nickel purchases. Jim Rogers was recently asked about this in an interview (can’t remember which one off the top of my head) and he couldn’t figure out why someone would hoard nickels either since it’s not legal to melt them down.
In other words, the difference between the metal content and the face value of the coin is “stranded value”.
joesxm2011, Tycer, and Aaron,
Thank for your input guys. Seriously helpful. I will continue learning and researching this issue but it sounds like it is worth it to pay up for quality (as well as take care of it, practice, and obviously learn safety).
Would be interested in neutrino’s thoughts on this as well.
Higher interest rates and deflation here? Amazing, but clearly possible, if not possible given we live in bizarro world where interest rates do NOT largely reflect inflation expectations. But if we have European level of interest rates, wouldn’t that bury us in debt service as maturing issuances are rolled over into higher and higher rates? Back of the envelop calculation to me indicates a 5% increase, from roughly 2% to 7% equates to $700 BILLION per year, bringing total debt service to over $1 trillion! Bottom line, won’t the fed buy bonds to keep rates low if only to keep debt service from consuming tax revenues? We surely don’t have the Volcker bullet in the gun this time, even if rates rise in a deflationary envirnonment and not an inflationary environment like the 70s/80s.
I believe you’re on the right track here. The Fed will — out of necessity — buy bonds (read: print money) to keep debt service from consuming tax revenues. It will be QE2 but on steroids. But the question remains: will it be inflationary or deflationary….or some of both. I think Jim Rickards has it right when he says the Fed will remove dollar limits and time limits on printing and will call it something like “nominal GDP targeting” where they basically say they’ll print until GDP growth hits X%. This removes the obtacle of having to constantly justify new rounds of money printing.
On value difference between physical and paper, my question is whether spot price is determined by physical or paper? I can get a 1 oz. coin at $50 or so over spot, which is far lower than a 30% premium. So not so much a premium of physical versus spot price, but absolutely a big premium between physical and paper funds that are suspected NOT to be fully backed by the metal.
Spot price is currently determined in the paper markets. I believe that will change someday when a big contract holder decides to “take delivery” and there isn’t enough physical PM to fulfill the contract (similar to what Warren Buffett did in silver back int he late ’90s). Once the intergrity of the paper markets is undermined by a perception change that recalibrates investors toward the real physical market instead of the fantasy paper market set up by the banks. On some days more ounces are traded in one day in the paper market than are physically produced in an entire year! If all those dollars we directed out of the ETFs and futures markets and were instead chasing the actual physical precious metals, the price would explode IMO. And this is not even taking into account the historically low level of retail ownership and global fiat currency system in a debt crisis! The 30% premium on the Sprott funds are in my opionion due to the masses who want some PM exposure but don’t understand the benefits of holding physical. Also, the Sprott funds offer a little more liquidity than holding physical. I view them as a “bridge” vehicle for investors who know enough that they want their PM investments to be backed by physical but who are not yet concerned enough with the banking system to liquidate their brokerage accounts and buy physical. Truth be told, I own some of the Sprott Silver and Gold funds in addition to mining stocks and actual physical, but I’m contemplating going all physical.
Let me begin by saying thank you all for this fantastic, balanced thread. Some very good information here. Prior to last week, I never owned any guns. A couple of years ago, after drawing the conclusion that society — not just in the United States, but in all Western economies and probably well beyond that — is facing number of unsustainable and disruptive problems, I began to ease into the idea of purchasing some guns and ammunition for a SHTF scenario. I hope I never have to use them but I want to be ready should the need arise.
After reading the first several pages of this thread, and after discussions with a knowledgable friend of mine, I decided to go ahead and purchase a G19 with a SureFire light last week. I’ve got a concealed carry class next week and plan to take some safety and training courses afterwards.
Now that I’ve given you a little background, I have a question that I hope some of the knowledgable and generous lurkers of this board will give me some feedback on. In order to provide a little balance to my firearm “collection” as well as to give me the ability to hunt wildlife and better defend my home and family in a SHTF scenario, I am looking to purchase a rifle. Right now I am leaning heavily toward an AR15 with the following specs:
.223 (5.56x45mm) ammo
16″ chrome non-fluted barrel with flash hider
1/7 or 1/9 twist rate
minimum 3 position telescoping stock
Carry handle upper receiver
I doubt I’ll get really heavy use out of the rifle, but I want it to be reliable and last many many years. So, my question to the board is if you had to rank the top 3 AR15 manufacturers, what would those be? I know Colt is widely viewed as the pinnacle of AR15 manufacturing, but I have also looked at Smith & Wesson and Lewis Machine & Tool and each of those look impressive. Given my amateur status and the limited scope of my intended use, would I be happy with just about any of the manufacturers? Do any of them stand out as a clear winner? I might also add that I am willing to pay for quality but I also want to get the best value, so if that means I should go with a Bushmaster instead of a Colt then that’s fine. Just wondering if there’s something in between.
My apologies if this has previously been hashed out on this thread, but I got through the first 50 pages and didnt have time to get through the entire history. Thanks in advance for your thoughts.
Have you looked at Goldgroup, Impact Silver, Yukon Nevada Gold, or Aurcana? These junior miners are unbelievably cheap save for a deflationary outcome. Some of these junior miners have near term production fully funded, no debt on their balance sheets, very much cash flow positive, and trading at multiples of 3, 2, and even 1x 2013 or 2014 expected free case flows. Crazy cheap and an interesting way to lever precious metals prices. Just have to be careful to watch for the all-too-common stupid management decision out of left field that destroys shareholder value…one of the advantages of investing in physical metals.
Also, if you’re concerned about a collapse of the financial/banking system, you’ll be better off in physical than in the stock market during a bank holiday.
Having said that, I am long junior miners for part of my portfolio.
Harry Dent is extreme in his thinking. Doesn’t mean he’s wrong about the outcomes he’s predicting, but he is extreme. What’s nice about CM is that he is realistic…he acknowledges that this is a game of probabilities, not predictions. He has said that his portfolio is weigthed 30% for a deflationary outcome and 70% for an inflationary outcome, and that these weightings are based on his own personal views of the liklihood of each occurring. Even though assigning probabilities to the unknown is more art than science, it is imperative not to place all eggs in the same basket if the outcomes of the alternate scenario are too devastating to ignore. And these (inflation and deflation) are very much binary outcomes with consequences on opposite ends of the spectrum. In other words, CM is almost certainly going to have substantial paper — and probably permanent — loss of some capital (either 30% or 70% depending on which way things go), but given how severe the consequences of each scenario will be, he will likely make far more in terms of purchasing power on his profitable bets than he will lose on his losses.
Harry Dent sounds like he’s 100% prepped for deflation, which is fine. But if he’s wrong he’s going to be very very sorry that he didn’t look at this probabilistically instead of putting so much emphasis on predicting the future with such precision and trying to look like a genius. Right now the central banks are trying to navigate a very fine line between deflation and inflation. Each is a slippery slope and, once it has begun to manifest itself, each is almost impossible to stop. History is littered with examples of high/hyperinflation that quickly and permanently escaped the control of the government until such point that the currency was destroyed. And deflation, which is less talked about but in my opinion even nastier than inflation, is almost impossible to overcome if the government doesn’t “manage expectations” and print enough to prevent credit contraction. The M3 money supply — conveniently no longer reported by the government but still tracked at shadowstats.com — is in fact seriously contracting and the Fed is rapidly printing money in an effort to compensate for the deflationary contraction. Some day they will miss a beat on one side or the other…and when they do it will not be pretty.
By the way I agree with Harry that precious metals and everything except the US dollar and certain other currencies will get creamed by unmitigated deflation. Ultimately, however, the finite supply of critical commodities will win out and prices will soar. For example, with a 10-15 year time horizon something like silver appears to be close to a no-brainer to me. Deflation or not, above ground supplies are nearing zero, diminishing at a rapid rate, production is shy of consumption by a wide margin annually, ore grades are falling, and mining is heavily influenced by base metal prices (primarily lead and zinc) for which silver is mined simultaneously in such small quantities that it is viewed almost as a byproduct. Silver is a monetary metal like gold, but it also has over 10,000 applications — second only to oil — and is in alarmingly short supply. If we have deflation and silver prices crash, I will be buying what little I can afford to.
Also, I think that the public will get so desperate in a deflationary environment that they will beg the Fed to print their way out of it by nationalizing the few remaining banks, improving the velocity of money, etc. It would be just the cover the Fed needs to inflate the currency to the point that the dollar turns into confetti.
Society loses either way.
safewrite, thank for this information! Good to know. Can you educate on what exactly the soil tests will tell you? Are they able to give you practical recommendations on how to improve your soil quality? Thanks.