The "Y-shaped" downturn - A Greater Depression?, A more severe crisis is already "Baked in the Cake" Options

[Methinkshe]

The "favorite two-D's" : Denial and Dreaming
Well, if you look only at those low interest rates, you might think they are right.

The UK Builders seem to be telling a different story. ... update : BDEV : PSN : RMV


Of course, as Bob Prechter said: the purpose of economists is to make technical traders look good.

EXCERPT / QUOTE:
"The increase will be taken as further evidence that despite the disappointment of last week's gross domestic product figures, which showed that Britain only squeaked out of recession in the final quarter of 2009 with 0.1pc growth, the UK is on track for a solid recovery. However, economists cautioned that the OECD figures fail to take into account the continued problems caused by the financial fallout from the crisis and the credit crunch.
. . .
The Office for National Statistics also reported a 3.8pc increase in producer prices in the year to January, up from 3.5pc a month earlier and a further sign that manufacturers are feeling increasingly able to increase their prices. Input prices, which measure the cost of raw materials, rose from 7.4pc to 8.4pc, in what economists took as a further sign of the threat posed by inflation in the coming months."
UNQUOTE

I think that manufacturers are simply trying to recover the increase in costs they suffered when Sterling lost value.
From the Nov.2008 peak of $2.11, Sterling has fallen xx% to $1.558, after being as low as $1.37 in March 2009.

Today's Asian WSJ talks about the "Bank of England mulls stimulus".
The BofE halted asset purchases last Thursday but is worried that "the recovery is likely to be gradual."

"While some economists believe the BOE may have to react to counter inflationary pressures as soon as next quarter, others say it could take no action for two years."

+ 12 of 17 economists polled saw the central bank tightening this year,
+ 3 in Q2, 4 in Q3, and 5 in Q4,
+ Data Friday showing that UK factory gate prices rose at their fastest pace for 13 months in January-
.. their 11th consecutive month of gains
+ Output producer prices rose 0.4% from Dec. and were 3.8% higher than in Jan. 2009

Sterling / FXB ... update

I must admit I was wondering which hat the OECD managed to magic that bunny from!

I think you're right - denial and dreaming. Or even an attempt at positive thinking - WYSIWYG.

[Manual labourer]

Thanks Bubb for the post loads of food for thought there, I have had this sort of senario in my head for sometime and now you have recorded things it is starting to make sense.There is just to much debt out there in the Western world to have a fresh momentum of growth,assest prices need to devalue before the green shoots can appear. Debt is real valuations are speculative?

Now to reduce it to a base level UK/US have run up huge debts with other various countries.

Whats to stop them either;

A. Defaulting ? as Iceland has done ie a sort of country IVA?

B. Printy printy, hyperinflating its debts away?

C. In the US case, protectionism close its doors to world trade to perhaps everybody other than a very select few?


Sorry in advance if this is basic stuff, it is I just can't see how the UK or the US can export it's way out of this?

I got a really bad feeling after Obama came back from China, then Google pulled out, that the terms of world trade are about to change?

[DrBubb]

B. Printy printy, hyperinflating its debts away?

I dont think that the Money printing is having the desired effect.
The money is getting stuck in the banks, and where it does go out (into mortgage loans),
it is just encouraging malinvestment

[chris ct]

I dont think that the Money printing is having the desired effect.
The money is getting stuck in the banks, and where it does go out (into mortgage loans),
it is just encouraging malinvestment

They could unstick it by charging interest on bank reserves instead of paying it; if that happens I think it would be akin to a money explosion.
But fr now, M3 is declining (shadowstats) and money velocity has gone below 1.

Trouble is, I don't think there's a credible mechanism for removing this extra M1 supply they created last year; at least not while the respective governments are running such huge deficits. If they try to sell the QE'd gilts back to the market for example (and destroy the cash they get in to sterilise the QE), I think it would choke.

[ecoface]

For the UK Housing Bears, the above chart could be very telling.
If people like, I shall explain it tomorrow, after I have a long sleep to catch up on my sleep.

Yes, please, I would like to see this.

[ecoface]

A "Y-shaped" downturn? (A Bear Feast)
A Greater Depression is already "Baked in the Cake"
===========================================

That is a brilliant article.

[langtonbrow]

So where to stash the cash? Don't tell me, it's yellow and rhymes with "physical mold"....

[DrBubb]

Thanks for that comment, ecoface.
I hope to finish the article tomorrow - I'm working on some charts now,
and also the final part about wealth destruction.

So where to stash the cash? Don't tell me, it's yellow and rhymes with "physical mold"....

Not necessarily.
Listen to the FBB Podcast with Prechter.
Gold is not a dead certainty.

I am holding a fair amount of Gold. But I am doing it through Call options on GLD.

I want to aim for something like: 1/3-Gold, 1/3-C$ or A$, 1/3-US$

Plus some Puts on stocks, and some Juniors

I shall discuss this in more detail later.

[Newbear]

That is a brilliant article.

I second that! Thanks for setting this out so coherently Bubb.

On gold, I find Bob Hoye's tracking of the 'real price' (nominal price divided by a version of the economist's all items index) helpful in understanding why in a deflation the nominal price might decline but the purchasing power increase.

[langtonbrow]

Well I'm sold out of the market as of last week, save for defensives (still hopeful) and global players. ETF Short Euro Long $ is coming good, but after that am running out of ideas. Stocks, Bonds a no-no. Short the market indices maybe, but cash under the mattress and physical anything (gold,ground,guns) seems to be the only real safety play when depression is in the air.

[romans holiday]

I second that! Thanks for setting this out so coherently Bubb.

On gold, I find Bob Hoye's tracking of the 'real price' (nominal price divided by a version of the economist's all items index) helpful in understanding why in a deflation the nominal price might decline but the purchasing power increase.

In the "transitional" stage this looks likely to be true. Of course, if the price of gold declines "nominally" then it woud be best to have some cash to buy gold with when it is nominally lower. I have thought for a while now that US dollars [and possibly Yen] may be the only denomination in which you would be able to take advantage of this. Other currencies are likely to depreciate against the dollar due to capital flow away from the periphery to the centre. At a later stage, and as gold comes to behave more like a reserve currency than a commodity currency, then this could well reverse, where the dollar also weakens against gold. Personally, I think this will eventually be formalized in a new standard by which the currency/ trade system will be stabilized.

[DrBubb]

Yes, please, I would like to see this.

Ultra-low Interest Rates - How can rates stay down when Inflation is rising again?


(It took many hours over the last 2 days to collect the data for these two charts- I think they are interesting.)

For many years, Central Banks kept their interest rates above the Inflation rate. Then, in 2001, in reaction to the panic caused by the 9/11 incident, Greenspan brought down US rates so that 3 months Libor was below the 12 months CPI. To prevent a recession, which would have had a healthy cleansing effect on the economy, he held rates down at zero real interest rates for about two years. That was the beginning of the big trouble for US property. Low rates touched off a speculative boom in property, which became a global phenomenom. As home prices rose, people thought they were getting more wealthy. Banks accommodated the expansive mood, by lending aggressively refi loans and home equity loans. Feeling flush, people began spending more aggressively, and reduced their savings to near zero. The spending and borrowing boom brought many years of high growth, but it was not healthy and sustainable growth, since it was predicated upon easy money. To return to a sensible balance between debt and income, debts will need to be reduced, and malinvestments written down and restructured. Essentially, the US and the UK spent more than 7 years of income in 6 years, and they will now need to spend less than 6 years of income over 7 years or more in order to unwind the excesses. (A simple calculation will show that a shift from 7/6 to 6/7 is a drop of 26.6% in spending.) Such a severe downshift in spending will mean many jobs in sectors like retailing and consumer finance will be lost as spending is cut back. And banks and other institutions that financed the inflated asset values will need to writedown their loans to what is collectible from reduced cash flows.

12 Months CPI is again on the rise in both the US and the UK...

Month : CPI-US : 3mos :12mos./ CPI-UK : 3mos :12mo
Sep09: 215.97 : 0.51%:-1.29% / 111.5 : 1.80%: 1.09%
Oct.09: 216.18 : 1.53%:-0.18% / 111.7 : 2.89%: 1.55%
Nov09: 216.33 : 0.92%: 1.84% / 112.0 : 2.15%: 1.91%
Dec09: 215.95 :-0.04%: 2.72% / 112.6 : 3.95%: 2.83%

Inflation in the UK is especially problematic, as the weak currency has spilled over into cost-push inflation from rising import prices. The 12 months CPI rate is likely to push up to 3% above in the first quarter of 2010. The exceeding of the 2% inflation maximum target will require the BofE governor to send a letter to the Chancellor, and this may require a rethink of Britain's ultra-low rate policy.

...more...

[DrBubb]

... What cannot last forever, may not last much longer ...

David Prosser: Why your mortgage bill is going up
Thursday, 4 February 2010

Has your mortgage bill suddenly begun creeping up?
If so, you are not alone – although the Bank of England base rate has remained at the historically low level of 0.5 per cent for a year now, many mortgage lenders have begun raising their interest rates.

Yesterday alone saw two lenders make a move on lending costs. Norwich & Peterborough Building Society raised its standard variable rate by 0.5 percentage points, while Halifax Bank began warning customers that should they choose to move home, they would not be able to continue paying its SVR.

They follow lenders such as Skipton Building Society, which last week said it was breaking its pledge to keep its SVR within 3 percentage points of the Bank of England rate. And a number of small societies raised their rates before Christmas.

Mortgage borrowers caught out by these increases are the latest victims of the credit crunch. Britain's largest banks are still finding it difficult to raise funds on the wholesale market so they've turned to savers instead. While the savings rates on offer on the high street right now might not seem generous, they're attractive given the prevailing base rate.

Smaller savings providers have felt compelled to compete with what's on offer from their larger rivals. And that is forcing many to squeeze their mortgage customers a bit harder.

The problem for lenders is that their conventional business model has been turned on its head. Traditionally, mortgage providers foughtfor new business with cut-price fixed or discounted rate deals that ran for short periods, subsidising these offers with earnings from existing customers paying their standard variable rate, typically much higher.

However, with base rates so low, it is proving impossible to lure customers off SVRs. Unable to find cheaper deals elsewhere, borrowers are staying put.

/more: http://www.independent.co.uk/news/business...up-1888890.html

[DrBubb]

$30 Trillion Global wealth loss

/see: http://www.marketoracle.co.uk/Article7923.html

How was that $30 Trillion Loss in Wealth composed ?

Some hints:
Index SPX==== : FTSE== : UShomes : UKhomes
Top. : 1,576.09 . : 6,751.7 : $268,476 : 192,490
when: 10/11/07 : 10/15/07 : Jun.06 .. : Aug.07 :
Low.. : 0,666.79 : 3,460.71: $181,025: 153,477
When: 03/06/09 : 03/09/09 : Apr.09. : Feb.09 . :
%chg: - 57.7% . : -48.7% . : -32.6% : -20.3%
Lost.. : -$10.8 tr : -#1.1 tr . : -$11.0tr :-#1.2 tr.

'09yrE : 1,115.10 : 5,412.9 : $190,000: 164,681
Multiply x 11.9bn : 327 mn. : . 126 mn. : . 32 mn
MV'09e $13.3 tr. : #1.77 tr. : $23.9tr :-#5.30tr.
PeakV. $18.8 tr. : #2.21 tr. : $33.8 tr :-#6.16tr.
change: -$5.5 tr. :-#440 bn : -$ 9.6 tr :-#860bn

+ + + + +

World and Country Market Cap -
"From its peak in October 2007 to its low in early March, global equity markets fell $37 trillion from $62.5 trillion to $25.5 trillion..."

Shares of World Market Cap. (at May'09?)
World...... 100%... - - - - - : $35,000Bn
USA......... 30.64% SPX-0,900 : $10,724Bn / 11.9 bn "shares"
Japan........ 8.70%
China........ 7.64%
UK............. 6.38% UKX-4,400 : $ 2,233Bn at $1.55 = Pds.1,441Bn*
- - - - - - - - -note : UKX-4,400 Pds 1,441Bn / 327 mn "shares"
Hong Kong. 4.71% HS-17,000 : $ 1,648Bn / 097 mn "shares"
France........ 4.17%
Canada....... 3.26%
Germany..... 2.82%
India........... 2.60%
Brazil.......... 2.41%

/see: http://wallstreetblips.dailyradar.com/stor...try_market_cap/

+ + + + +

Based upon the idea that there are 56 Million homes in the USA...

56 million x Ave.Price at peak : assuming: 206.52 = $206,520 ??
56 mn x $206,520 = $11.565 Tr.
56 mn x $139,250 = $ 7.798 Tr. / chg. - $3.767Tr.

Check: what is the average value of an American home?

1/ $190,000 at Jan.2010, which 130% x1000 times the 146-ish CS index (nov'09:146.28)

Zillow is for the first time comparing what the “average” American home (3 bedrooms, 2 bathrooms, 1500 square feet)* is worth in 46 metropolitan areas. ( surveying the more than 70 million homes in Zillow’s U.S. database )
/see: http://www.ashireporter.org/articles/articles.aspx?id=1249

2/ Redoing the above figures...
Index US HPI : Multiply= Ave. Home : x126 mn (112mn +18mn -4mn)
Top. : 206.52 . : x1,300 = $268,476: $33.8 Tr.
when: Jun.06 . :
Low.. : 139.25. : x1,300 = $181,025: $22.8 Tr.
When: Apr.09. :
%chg: -32.6% :
Lost : = = = = : = = = = : = = = = : - $11.0 Tr.

3/ Oct. 2008 Post : 112mn households
According to the National Association of Realtors, the median price of all existing (used) homes sold in Aug 2008 was $202K, and the average price was $244,700. These are down 9-10% from last year at this time, so it sound similar to your situation.
Read more: http://www.city-data.com/forum/real-estate...l#ixzz0f1DfiRUW

4/ Number of American homes :
Let's just say that there are approximately 112 million households in the US (based on census data for 2008). If we assume that the home ownership rate in this country is 75% (the historical average over the last decade is much lower), then there should be about 84,000,000 people who own their home. According to a 2001 study by the Census Bureau and the Department of Housing and Urban Development (HUD), "nearly 40 percent of all residential properties in the United States, owner-occupied and rental units, are not mortgaged but are owned free and clear." This has most likely gone up over the last few years, but if this is anywhere close it leaves approximately 50,400,000 homes with some form of a mortgage on their home.

Lets assume that banks typically recover around 75% of a defaulted mortgage (remember that mortgages still have an asset backing them up, even if its value is declining). Now lets also assume that the average mortgage is $200,000 (also an aggressive number). That would mean that the $700 billion bailout proposed would allow for $50,000 per home on 14 MILLION homes.
/see: http://answers.yahoo.com/question/index?qi...22171135AAc4rXW

5/ Vacant homes : 18.6 mn?
There Are 18.6 Million Empty Homes In America
by Frank Gormlie on April 28, 2008
... Reuters article, by Joanne Morrison, casually dropped a bomb: “the total number of vacant U.S. properties hit 18.6 million, which was a record,” quoting a U.S. Census Bureau official.

18.6 MILLION vacant homes! Now, that’s alotta vacancies. Incredible. According to the National Law Center on Homelessness and Poverty there are 3.5 million homeless people in this country. So, roughly, that’s 5 1/3 empty homes for every homeless person. This system sure is working, isn’t it?
The percentage of owner-occupied homes now sitting empty rose to 2.9 percent in the January-to-March period, the third quarter in a row in which the vacancy rate increased, according to data released by the U.S. Census Bureau.
. .

HOME OWNERSHIP RISES
At the same time, the U.S. homeownership rate moved up to a seasonally adjusted 67.9 percent from a near seven-year-low of 67.7 percent in the fourth quarter and 68.5 percent in the first quarter of 2007, according to the Census data.
/see: http://obrag.org/?p=690

+ + + + +

British home values rise £39 billion in 2009 after huge drop in 2008
15th December 2009

■Average British home value up £1,517 in 2009, after dropping £31,355 in 2008
■Average property value up £4 per day in 2009, after losing £86 per day in 2008
■England & Scotland property values rise but Wales continues decline in 2009
■Biggest rebound in Gloucestershire, up 3.8% this year after 14.1% drop in 2008
As 2009 draws to a close, British homeowners can breathe a sigh of relief compared to this time last year as home values across the nation have risen by £39.1 billion in 2009. Whilst the increase is modest, it is a massive improvement over 2008 when British property values fell £811.3 billion, according to property website Zoopla.co.uk, which provides free online valuations for every home in the country.

However, with the total value of the British residential housing stock now standing at £5.3 trillion, up marginally on one year ago, it still remains over three quarters of a trillion pounds below its peak of £6.1 trillion in late 2007. The average home in Britain is now worth £205,591 according to Zoopla.co.uk, up £1,517 (0.7%) from one year ago, a daily gain of £4 for the average property. This is in stark contrast to 2008 when property values fell by £31,355 (13.3%) on average, equivalent to a daily loss of £86 per home.

/see: http://www.zoopla.co.uk/press/releases/062...e-drop-in-2008/

[Pixel8r]

I fail to see why the central banks will allow deflation to take hold when all they need to do is print more money and monetize more debt, there is nothing stopping them with their fiat currencies.

I think the bigger picture is currency devaluation and gold appreciation, which will feed through to the stock market and stop it from dropping.

If more deflation is allowed to happen who will buy the increasing government debt, the FED are currently buying most of it. If they allow the dollar to gain too much strength their debts become even harder to pay, they won't allow that to happen as they are in control of the printing presses and the value of the dollar. Sure they will not let the dollar go straight down, they want to trick investors as much as possible, so will create situations like the current one.

The doubling of the money supply, to bail out the banks, is in the hands of the banks, who IMO are investing it in assets such as the stock market, as they know what is coming. Which is why they are currently doing "god's work" and are short dollars to such as massive extent.

Look at this graph which shows the S&P performance and the amount of debt being monetized by the FED. The stock market has not really increased since the crash of 08, in relation to the amount of dollars in existence, really it is treading water.

I expect more QE and bailouts to be soon be announced, starting with the states which are about the go bankrupt like California. Printy, printy...

IMO in the current environment it is very dangerous to be using leverage to try and guess what the market will do, you can see your profits wiped out very quickly. Preservation of buying power is the name of the game, as certain assets will be depreciating (ones bought with credit like property). The 5000 year time tested method of preserving your buying power is through holding gold. Attempting to trade anything in this manipulated market can lead to losing everything as can holding dollars IMO.

Buy physical gold relax and watch the show, knowing that you have 5000 years of history behind you. Sorry I can't find a more up to date version of this graph, but it hasn't changed much.

[aliveandkicking]

Finnish pm urges councils to cut spending

http://newsroom.finland.fi/public/default....mp;newsid=23849

Finnish exports down 16% imports down 15%

http://newsroom.finland.fi/public/default....mp;newsid=23849

US small buisiness is not short of credit - just short of customers

http://www.calculatedriskblog.com/2010/02/...ers-report.html




But here is perhaps the antidote that is apparently rapidly building from what i can see following these blogs and it is happening across many different areas of the bubble states.

http://lansner.freedomblogging.com/2010/02...-5-years/55161/

[Jake]

I fail to see why the central banks will allow deflation to take hold when all they need to do is print more money and monetize more debt, there is nothing stopping them with their fiat currencies.

I think the bigger picture is currency devaluation and gold appreciation, which will feed through to the stock market and stop it from dropping.

If more deflation is allowed to happen who will buy the increasing government debt, the FED are currently buying most of it. If they allow the dollar to gain too much strength their debts become even harder to pay, they won't allow that to happen as they are in control of the printing presses and the value of the dollar. Sure they will not let the dollar go straight down, they want to trick investors as much as possible, so will create situations like the current one.

The doubling of the money supply, to bail out the banks, is in the hands of the banks, who IMO are investing it in assets such as the stock market, as they know what is coming. Which is why they are currently doing "god's work" and are short dollars to such as massive extent.

Look at this graph which shows the S&P performance and the amount of debt being monetized by the FED. The stock market has not really increased since the crash of 08, in relation to the amount of dollars in existence, really it is treading water.

I expect more QE and bailouts to be soon be announced, starting with the states which are about the go bankrupt like California. Printy, printy...

IMO in the current environment it is very dangerous to be using leverage to try and guess what the market will do, you can see your profits wiped out very quickly. Preservation of buying power is the name of the game, as certain assets will be depreciating (ones bought with credit like property). The 5000 year time tested method of preserving your buying power is through holding gold. Attempting to trade anything in this manipulated market can lead to losing everything as can holding dollars IMO.

Buy physical gold relax and watch the show, knowing that you have 5000 years of history behind you. Sorry I can't find a more up to date version of this graph, but it hasn't changed much.

''I fail to see why the central banks will allow deflation to take hold when all they need to do is print more money and monetize more debt, there is nothing stopping them with their fiat currencies.''

Perhaps they don't see the point. Or they have given up trying to print out of it, and where it will lead.


''Buy physical gold relax and watch the show, knowing that you have 5000 years of history behind you''

Sure, but there are bound to be ups and downs in those 5000 years a long the way, no? Perhaps a down is on the cards at the moment.


''the banks, who IMO are investing it in assets such as the stock market, as they know what is coming.''

Maybe they know what is coming so they don't want to lose it all in the stock market?


''Preservation of buying power is the name of the game,''

And the dollar is rallying at the moment and gold is going down at the moment. How best to preserve ones buying power, at the moment?

[Pixel8r]

''I fail to see why the central banks will allow deflation to take hold when all they need to do is print more money and monetize more debt, there is nothing stopping them with their fiat currencies.''

Perhaps they don't see the point. Or they have given up trying to print out of it, and where it will lead.

The point is to make their debts become more manageable, not printing just makes them more difficult to deal with.

''Buy physical gold relax and watch the show, knowing that you have 5000 years of history behind you''

Sure, but there are bound to be ups and downs in those 5000 years a long the way, no? Perhaps a down is on the cards at the moment.

That is what they want you to see, as I was explaining they don't want to allow gold to go up while the public is in it.

''the banks, who IMO are investing it in assets such as the stock market, as they know what is coming.''

Maybe they know what is coming so they don't want to lose it all in the stock market?

So what has been making the market gain so much over the last year? The dow is currently up 1.12% today.

''Preservation of buying power is the name of the game,''

And the dollar is rallying at the moment and gold is going down at the moment. How best to preserve ones buying power, at the moment?

Again that is what they want you to believe at the moment, smoke and mirrors. Gold maintains it buying power over time, the dollar loses purchasing power period. Trying to stay ahead of the market swings in an extremely volatile manipulated market is only for the insiders IMO.

Thanks for your reply

[DrBubb]

I fail to see why the central banks will allow deflation to take hold when all they need to do is print more money and monetize more debt, there is nothing stopping them with their fiat currencies.

I think the bigger picture is currency devaluation and gold appreciation, which will feed through to the stock market and stop it from dropping.

Their actions are destroying private wealth and shrinking the private sector while the public sector grows.
The results were not what was promised, and so "borrow and spend" is becoming increasingly unpopular.

Wait until rates rise again, companies and private individuals with debts will get squeezed very hard, and the current policies will become even more unpopular.

Articles like mine will be increasingly carried by the independent and thinking press, and the Tea Party protests will florish.

+ + + + +

Meantime, Real Estate agents are spinning as hard as they can:

Best start for O.C. home market in 5 years
February 8th, 2010, 12:07 am · 28 Comments · posted by Jon Lansner

Steve Thomas at Altera Real Estate’s latest Orange County home inventory report says that demand for local homes is starting off a year at its highest level in 5 years. Thomas remarks:
“There is a lot of confusion about the housing market because there are really three markets: less than $750,000, $750,000 to $1.5 million, and $1.5 million plus.

For all homes less than $750,000, the market is ON FIRE with multiple offers and sales prices above the list prices. When the expected market time drops below two months, the market is crazy with a lot of competition. The $750,000 to $1.5 million range is getting hotter and many are experiencing multiple offers. There are more jumbo loan products available with much more attractive rates. For homes above $1.5 million, the market is as cold as ice, the higher the range, the colder the market.”

/see: http://lansner.freedomblogging.com/2010/02...-5-years/55161/

"For homes above $1.5 million, the market is as cold as ice, the higher the range, the colder the market"
Right. Who wants to take on such massive debts, or worse ye, invest such massive amounts of equity.
People simply haven't the money any more.

The ramping of the lower end should not surprise anyone. These guys have to survive somehow, if they can.

[Jake]

Perhaps they don't see the point. Or they have given up trying to print out of it, and where it will lead.
The point is to make their debts become more manageable, not printing just makes them more difficult to deal with.



Sure, but there are bound to be ups and downs in those 5000 years a long the way, no? Perhaps a down is on the cards at the moment.
That is what they want you to see, as I was explaining they don't want to allow gold to go up while the public is in it.



Maybe they know what is coming so they don't want to lose it all in the stock market?
So what has been making the market gain so much over the last year? The dow is currently up 1.12% today.



And the dollar is rallying at the moment and gold is going down at the moment. How best to preserve ones buying power, at the moment?

Again that is what they want you to believe at the moment, smoke and mirrors. Gold maintains it buying power over time, the dollar loses purchasing power period. Trying to stay ahead of the market swings in an extremely volatile manipulated market is only for the insiders IMO.

Thanks for your reply

You know my position Pix. I am pro gold and silver and will not be a seller. In fact I will be a quiet buyer up or down because I see the trith in what you say in the long run. But I am also wary of ' Buying and relaxing' right now.

I believe in deflation will have its way. I am tainted after a long spell in Japan. I see deflation whichever way I look. We may well see inflation, high or hyper AFTER deflation has run its course. Or the banks may well see that to inflate will kill them too so lets be having that deflation/depression.

Either way I am sure I will be glad of my gold and silver. Its a gut thing. And a sensible thing.

I think the dollar will continue for the time being UP. Prechter is right there. I hope he is wrong on gold but cannot be certain. I hope Ian Gordon has called it right.ie deflation and gold up. Fiat will destroy itself, it has to. Gold will become important in our lifetime, once again. Ditto silver.
So Peace brother. Time will tell us everything. Tyring to be hedged alittle here and there harms no one.