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InvisibleAsante
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The decline of the Dollar and the Euro as measured in Gold
    #7518514 - 10/15/07 06:52 AM (16 years, 3 months ago)

About a year ago there were some threads about buying gold and the decline of the dollar. In these threads some considered all this to be tinfoil hat talk :tinfoil:

Time to make up the balance so far between October 2006 and October 2007.


GOLD $600/oz --> $755/oz = +25.8%

and in euros:

GOLD E482 --> E532 = +10.4%


This means that our more adventurous Americans who had the means to invest some in Gold are laughing now, as they turned every $100 into $126, which is about the same gain in one year as their dollars would have made on a bank account in a decade.

Even the Euro goldbugs have seen a 10% increase, which is pretty damn decent.

But what you see in the discrepancy is downright appalling for our American friends and their Dollar.

If you were to compare the euro and the dollar in this triangle and consider gold to be the product one wishes to buy, purchasing power of the Dollar has dropped two and a half times as fast as that of the euro.

But the euro has declined too.

If you listen to the european central bank and take their word as Gospel, then inflation in the EU has been 2.5%, with 2% being a goal.

If you take this figure to the dollar, using gold as a reference, then one cannot escape the shocking conclusion that

Inflation in the USA is at least 6.25%

which happens to be well into the range the "tinfoil hat crew" says it really is.

If you listen it informal sources in the EU then they say the true inflation in the EU is closer to 4%. If you take this to the dollar then true inflation in the USA might be as high as 10% which is exactly as high as www.shadowstats.com calculates the US inflation to be:

Quote:

April 2007 Edition  - May. 7, 2007
.
April Payroll Contraction Appears to Have Been Masked / M3 Growth Surges to 9-11 Liquefaction Levels and Worse / Mounting Inflationary Recession Has Hobbled Fed / Intensifying Dollar Sell-Off and Gold Boom Loom / Knees would be knocking audibly in the credit markets, if the Fed still reported M3 growth. Annual growth (SGS Ongoing M3 series) accelerated sharply in April to 12.9%, from 11.7% in March. The last time annual M3 growth approached 13%, the Fed was liquefying the financial system in the wake of the 9-11 terrorist attacks. Before that, the year was 1981 and official annual CPI inflation was running about 10%. If 10% inflation sounds familiar, that is roughly the level of annual CPI inflation that would be reported today using the CPI methodologies of 1980. Exacerbating the financial catastrophe that slowly is unfolding for the U.S. markets, the economy is in a deepening recession and the U.S. dollar has begun suffering nascent selling pressures. In terms of monthly averages, gold already is at an all-time high, and the trade-weighted dollar is at an all-time low. Out of touch with reality, the Dow Jones Industrial Average keeps bouncing to new highs.





So I'm sorry to say we told you so, but we told you so.

If you are a musician and are considering to buy your dream guitar, do it now. If you are in the market for buying a house, do it now. If you have money lying around that won't be missed for a while, you might consider stocking up on gold and silver. If you live in the USA and your investment pays off less than 5-10% a year, it is actually losing you money.

The dollar may rise in relation to the euro, but only if the euro drops faster than the dollar. Because both currencies absolutely WILL go down as time goes by. Inflation stimulates the economy, and no sane government will ever let a deflation happen.

The US Dollar is going down the shitter so fast it simply takes your breath away.


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InvisibleMiddlemanM

Registered: 07/11/99
Posts: 8,399
Re: The decline of the Dollar and the Euro as measured in Gold [Re: Asante]
    #7518521 - 10/15/07 06:58 AM (16 years, 3 months ago)

Right on man, only 5 more years till the BIG we told you so... I doubt we'll even have Interweb access in the US then, as the Web will go down with Martial Law...


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Invisiblememes
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Registered: 01/11/05
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Re: The decline of the Dollar and the Euro as measured in Gold [Re: Asante]
    #7518536 - 10/15/07 07:08 AM (16 years, 3 months ago)

:tinfoil:

it's not as bad as your making it out to seem.  I'll go pull some statistics from the intraweb and see all the facts i can find.  I still believe that if the country were as doomed to shit as you make it out to be - that my economics and business forecasting professors would say somthing about it since 40% of our class periods are taken up discussing current events.

http://www.bls.gov/cpi/
wow - using their inflation calculator the $1000 i had last year has purchasing power of $1031.33 this year.  what's that?  a 3.1% increase?  sound's about right.

http://www.inflationdata.com/Inflation/Inflation_Rate/CurrentInflation.asp
"another example we see August 2003 and September with the Government saying the rates were 2.2% and 2.3% respectively. This would lead us to believe that inflation rose .1% during that period.  In actuality however,  it rose from 2.16% to 2.32% or a .16% increase, substantially more than .1%!  "
---Once again - i see no evidence of a ~10% inflation rate, let alone the 6.25% your post claims.

That took about 3minutes of searching.  I'll check out www.worldvaluesurvey.com later on and see if they have any information on it.

edit:  i have a pretty packed day from this point on - so if i dont revisit the thread, ill read it later on for anything you might have to say in response to my post.


Edited by memes (10/15/07 07:19 AM)


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InvisibleAsante
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Re: The decline of the Dollar and the Euro as measured in Gold [Re: memes]
    #7518579 - 10/15/07 07:43 AM (16 years, 3 months ago)

Quote:

That took about 3minutes of searching.





Theres your problem right there. You only took 3 minutes looking into it. You've only scratched the surface here, and then by visiting such sites as BS.gov

Quote:

using their inflation calculator the $1000 i had last year has purchasing power of $1031.33 this year. what's that? a 3.1% increase? sound's about right.





Theres no deflation going on, that would be downright silly. What is happening is that Titanic is sinking and the band is playing on.


Quote:

"another example we see August 2003 and September with the Government saying the rates were 2.2% and 2.3% respectively. This would lead us to believe that inflation rose .1% during that period. In actuality however, it rose from 2.16% to 2.32% or a .16% increase, substantially more than .1%! "




These people see what they want to see. Fraud is being committed on the figures fed to them.

Explain gold to me. Go ahead! Gold is gold anywhere in the world, it is the same stuff and fetches the same value at the same time throughout the world. Gold can go up or it can go down, but if it goes up faster in one currency, that means nothing less than that that currency has gone down.

The dollar has gone DOWN relative to gold and it has gone DOWN relative to the euro. That only means the dollar has lost value. And we KNOW that the Euro has gone down. That would mean the Dollar has gone down faster, and in my calculation triangled with gold it has gone down 2.5x as fast as the euro did. And this, regardless of what gold did in an absolute sense. Gold hasn't become cheaper in Europe, the real price of gold is the same everywhere in the world at a given point in time.

Why doesn't the USA publish the M1 money supply statistic any more? It is one of the most vital statistic in economics. I'll tell you: to cover up how much surplus money they are printing, to cover up the true decline of the dollar.

What you will probably see in the next year is that the dollar will gain some on the euro. This won't be an absolute increase in value, but will be caused by the euro being lowered at a slightly faster rate because this has benefits to parts of the european economy.


MONEY isn't VALUE.

This is a big error in thinking many people make. Your goat isn't worth $200 or a quarter ounce of gold. The worth of the goat you take to the market is paid for with dollars or gold.

It just so happens that gold is much more stable than dollars.
In a hundred years the old dollar is worth $0.04 today, but a quarter-ounce coin of gold still buys you a good set of clothes. As it did in medieval times. As it did in ancient Rome.


Quote:

I still believe that if the country were as doomed to shit as you make it out to be - that my economics and business forecasting professors would say somthing about it since 40% of our class periods are taken up discussing current events.




They are blinded by false statistics and don't want to see.


Quote:

October 2006 and October 2007.
.
GOLD $600/oz --> $755/oz = +25.8%
GOLD 482 euro --> 532 euro = +10.4%






Take this to your class and let them explain that one. I'll tell you: gold may be going up or down, but the Dollar is plummeting compared to  Euros AND Gold. If you had bought gold or euros a year ago you would get a lot more dollars for it today. What would that mean :ooo:


"A president who believes in a strong dollar" means that the decline of the dollar will be less rapid. At no point will next years dollar be worth more than this years dollar. That would hurt the economy.


If gold were cheaper in Europe we could set up a legit scheme where you send me money, I buy teh cheap gold in Europe and mail it to you, you sell it expensive in the US, send me even more money, I buy even more gold and mail it, and we both would be millionaires before the year is out :grin:

But no, it doesn't work like that. The value of gold is the same anywhere on the world. The euro is declining, and that means the dollar is declining at an even faster pace. Sorry, it's like that :frown:


--------------------
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higher knowledge starts here


Edited by Asante (10/15/07 08:15 AM)


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Invisiblebadchad
Mad Scientist

Registered: 03/02/05
Posts: 13,372
Re: The decline of the Dollar and the Euro as measured in Gold [Re: Asante]
    #7518658 - 10/15/07 08:23 AM (16 years, 3 months ago)

A retrospective analysis of any financial market will make you look like a genius.


--------------------
...the whole experience is (and is as) a profound piece of knowledge.  It is an indellible experience; it is forever known.  I have known myself in a way I doubt I would have ever occurred except as it did.

Smith, P.  Bull. Menninger Clinic (1959) 23:20-27; p. 27.

...most subjects find the experience valuable, some find it frightening, and many say that is it uniquely lovely.

Osmond, H.  Annals, NY Acad Science (1957) 66:418-434; p.436


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InvisibleAsante
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Re: The decline of the Dollar and the Euro as measured in Gold [Re: badchad]
    #7518674 - 10/15/07 08:33 AM (16 years, 3 months ago)

Quote:

A retrospective analysis of any financial market will make you look like a genius.





Nobody is stroking their ego here. I intended this thread to wake people (especially Americans) up to the possibility that dire times may well be ahead and also to invite them to find their own facts and let them thoroughly consider their financial strategy for the next decade or so.

We all occupy our own little corner of the web, and its only prudent to inform the others if all hell is breaking loose in some faraway corner.

Well, all hell is breaking loose in some economics corners of the web and Shroomerites, especially Americans, might be seriously affected by it.

And this isn't retrospective analysis either. Several of us were right on the ball a year ago and the Americans among them have raked in a 26% profit since then.
This isn't about the past, its especially about the immediate future.

There may come a day where people have to exchange their Dollars for Ameros just like the Europeans did with the Euro. What will the exchange rate be? Will you get wallet-raped as hard as the Europeans were?


--------------------
Omnicyclion.org
higher knowledge starts here


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InvisibleAsante
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Re: The decline of the Dollar and the Euro as measured in Gold [Re: Asante]
    #7519662 - 10/15/07 02:18 PM (16 years, 3 months ago)

Here's a table I made with some websearching that shows the price of gold in US dollars and Euros per troy ounce, as they were at the PM fix of this 15 October for the past five years. I also included the conversion factor that on that day existed between dollars and euros, and finally the alleged Euro-zone inflation of January of each of those years. Please note that the REAL inflation in the Euro zone is probably much higher.

Quote:

PM London Fix, October 15 2002-2007

Year - $/oz -- E/oz - $/E ----------Eurozone Inflation
2002 - $316 - E322 - 1.01937 EUR --- 2.7%
2003 - $374 - $321 - 0.858222 EUR -- 2.2%
2004 - $421 - E337 - 0.80141 EUR --- 1.6%
2005 - $469 - E388 - 0.828295 EUR -- 1.9%
2006 - $592 - E473 - 0.79885 EUR --- 2.4%
2007 - $758 - E533 - 0.703433 EUR -- 1.8%





It is immediately apparent that gold is going up for the past 5 years, but also that the dollar is going down relative to gold and the euro.

The Dollar used to be worth more than the 2002 Euro, but now it is 70% of what is LEFT of the Euro. (which according to one of my sources is a five-year decline of about 57% for the dollar and 40% for the euro, but thats from the :tinfoil: squad)

If you believe the boys at Eurostat then in those five years the Euro declined a mere 15%, which would make the dollar's decline over the same time period about 40%, as the 2007 dollar today is worth 70% of 85% of the 2002 Euro.


--------------------
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higher knowledge starts here


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Invisiblebadchad
Mad Scientist

Registered: 03/02/05
Posts: 13,372
Re: The decline of the Dollar and the Euro as measured in Gold [Re: Asante]
    #7519749 - 10/15/07 02:38 PM (16 years, 3 months ago)

And around 2002, gold was at a (nearly) all-time low. It had nowhere to go but up. It doesn't take a professional broker to search for a five year-low on an investment, wait till it reaches a five year high, then start a thread and say:

"I'm sorry to say we told you so, but we told you so."

Before 2002, gold had nearly 20 years of decline and/or no growth. I would be hesitant to invest in anything that has done squat for 20 years, but then suddenly got hot.


--------------------
...the whole experience is (and is as) a profound piece of knowledge.  It is an indellible experience; it is forever known.  I have known myself in a way I doubt I would have ever occurred except as it did.

Smith, P.  Bull. Menninger Clinic (1959) 23:20-27; p. 27.

...most subjects find the experience valuable, some find it frightening, and many say that is it uniquely lovely.

Osmond, H.  Annals, NY Acad Science (1957) 66:418-434; p.436


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InvisibleAsante
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Posts: 86,795
Re: The decline of the Dollar and the Euro as measured in Gold [Re: badchad]
    #7519895 - 10/15/07 03:13 PM (16 years, 3 months ago)

Thats a bit oversimplified, but have it your way :smile: The original thread did start over a year ago and since then there's been an extra 26% increase relative to the dollar though.

Quote:

Before 2002, gold had nearly 20 years of decline and/or no growth.




The high in the 1980s was an anomaly that lasted a few months.

Quote:

I would be hesitant to invest in anything that has done squat for 20 years, but then suddenly got hot.




It's also a matter of why gold has been stagnant for so long. Those 20 years were the halcyon days of the oil based economy. Later on the price of gold was artificially depressed. ( www.gata.org )

Now those wonderful times are over. We've got $80 oil. China and India are emerging and their hunger for materials drives prices of commodities sky high. For America, all this war-mongering has racked up a pretty serious tab. Not just in the US but worldwide inflation is on the rise. The tide is turning. Money is being printed like there's no tomorrow and being brought in circulation to try save the economy, and as a result cost of living is going up at a frightening rate.

And the band plays on.


--------------------
Omnicyclion.org
higher knowledge starts here


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