Saturday, April 08, 2006
'How Will Metals Fare In Coming Recession'
A reader suggested the prospects for precious metals in a recession for a weekend topic. "This needs to be a weekend topic; it keeps coming up."
"Specifically, 'How will precious metals fare in the coming recession / depression?' with the sub-topic 'What other safe-havens are there and how would they rank?.'"
Another shared this, "Its not clear to me that metals would ashed value along with everything else in a post housing recession. I could just as easily see capital flight out of equities and *in* to precious metals."
'I think the big question is: where is the safe haven? A mixed currency basket? 'Recession proof' equities? Oil?"
Another had a quote, "What's that quote I always see at PrudentBear? Oh yes...'Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.'"
One reader took a quote from an article posted yesterday. "I love this quote: 'Some economists think the blow would be tolerable because most people could stay in their homes and wait for price recovery.'"
"ASSuming they could, you can be assured they won't be spending a thin dime on SUVs, plasma screens and stainless steel appliances!"
"Specifically, 'How will precious metals fare in the coming recession / depression?' with the sub-topic 'What other safe-havens are there and how would they rank?.'"
Another shared this, "Its not clear to me that metals would ashed value along with everything else in a post housing recession. I could just as easily see capital flight out of equities and *in* to precious metals."
'I think the big question is: where is the safe haven? A mixed currency basket? 'Recession proof' equities? Oil?"
Another had a quote, "What's that quote I always see at PrudentBear? Oh yes...'Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.'"
One reader took a quote from an article posted yesterday. "I love this quote: 'Some economists think the blow would be tolerable because most people could stay in their homes and wait for price recovery.'"
"ASSuming they could, you can be assured they won't be spending a thin dime on SUVs, plasma screens and stainless steel appliances!"
# posted by Ben Jones @ 9:51 AM 
Comments:
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Here's an article about a mutual fund.
'The Van Eck Global Hard Assets Fund is outperforming all but one natural-resources mutual fund by investing in oil drillers, zinc producers and gold miners.'
'The Van Eck Global Hard Assets Fund is outperforming all but one natural-resources mutual fund by investing in oil drillers, zinc producers and gold miners.'
"[The Van Eck Global Hard Assets Fund] placed about half of its $395 million in energy and 26 percent in metals. The remainder is in real estate, paper and agriculture."
So it has up to 24% exposure to RE and RE notes. Since most of us on Ben's blogs believe RE will decline for years, this fund does not seem well suited for those beliefs.
So it has up to 24% exposure to RE and RE notes. Since most of us on Ben's blogs believe RE will decline for years, this fund does not seem well suited for those beliefs.
la fiatwoman,
An under-considered safe haven is mobility. When the oil/RE bust hit Texas, there were still jobs. But one had to move; sometimes out of state. And people locked into a home loan were in a squeeze, because nothing was selling and prices had fallen.
An under-considered safe haven is mobility. When the oil/RE bust hit Texas, there were still jobs. But one had to move; sometimes out of state. And people locked into a home loan were in a squeeze, because nothing was selling and prices had fallen.
any recession is going to be because of, in part, the huge deficits we have. so the dollar has to adjust, that should mean gold/silver and commodities should adjust. I see deflation in US stocks, bonds and housing.
you never know, past downturns have brought down everything.
you never know, past downturns have brought down everything.
Ben, that Financial Sense article is very good. It has facts in it that will make for good conversation with two of my buddies.
The mobility factor is a good point. I got my home loan off my back, but now I'm stuck with a rental lease. However, 12 months of rent on this house is less than what my old house value has dropped by already.
John, with your scenario, it sounds like all investments should be in foreign currency and bear funds/shorts. Is this what you are doing?
The mobility factor is a good point. I got my home loan off my back, but now I'm stuck with a rental lease. However, 12 months of rent on this house is less than what my old house value has dropped by already.
John, with your scenario, it sounds like all investments should be in foreign currency and bear funds/shorts. Is this what you are doing?
IMHO Currencies are looking especially dicey right now. We're seeing some wobbles in NZ and Iceland -- and who knows what that spells for everything else. Euroland has big problems moving forward, and of course, the dollar looks positively terrifying. Betting on the Yuan? I don't know enough yet. Anyone?
But most importantly -- the right answer will be the answer that the crowd runs to. And IMHO that's gold. Gold isn't just a safe haven, its a "user friendly" safe haven. People get it.
But most importantly -- the right answer will be the answer that the crowd runs to. And IMHO that's gold. Gold isn't just a safe haven, its a "user friendly" safe haven. People get it.
I have a hard time believing PMs will drop significantly.
These days there's simply way too much "money" in the world vs. a fairly limited supply of bullion. Plus, all the major economies are inextricably intertwined, so no one currency is immune to a downturn.
These days there's simply way too much "money" in the world vs. a fairly limited supply of bullion. Plus, all the major economies are inextricably intertwined, so no one currency is immune to a downturn.
Mike,
Don't you consider it a little chilling (no pun intended) that such a little country's currency can have such a big impact?
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Don't you consider it a little chilling (no pun intended) that such a little country's currency can have such a big impact?
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