Inflation

Discussion in 'Markets & Economies' started by mmm....shiney!, Jan 16, 2021.

  1. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    Some charts I've dragged over from InvestAnswers https://www.youtube.com/channel/UClgJyzwGs-GyaNxUHcLZrkg

    Firstly, what would $1M today look like in a decade? Different outcomes for different rates of inflation:

    Screen Shot 2021-10-12 at 6.50.10 am.png

    Gold as an inflation hedge? :(

    Screen Shot 2021-10-12 at 6.48.28 am.png

    BTC as an inflation hedge (assuming its price remains the same)? :cool:

    Screen Shot 2021-09-08 at 7.56.31 am.png

    BTC as an inflation hedge historically? :)

    Screen Shot 2021-10-12 at 7.13.05 am.png

    Conclusion? Gold does not return interest, the purchasing power of gold has declined. Holding gold as an asset class in the hope that it will secure our financial freedom in the future relies on a much higher price than today's. BTC does not return interest, the purchasing power of BTC has surged since 2009 but there are no guarantees it will keep climbing so holding BTC as an asset class in the hope that it will secure our financial freedom in the future relies on a much higher price than today's.

    Solution? Seek assets that return an income over the inflation rate. Can we lend out gold and get a return of say 6-7%? I'm not aware of anything there. Can we lend BTC and get a return? Yes. Fiat can also be "lent" for a return either in the form of stocks or "borrowed" in the form of long term debt in RE.

    What would that look like?

    Screen Shot 2021-10-12 at 7.02.26 am.png

    It doesn't have to be crypto, it could be an ETF or some other form of income earning asset.
     

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    Last edited: Oct 12, 2021
  2. leo25

    leo25 Well-Known Member Silver Stacker

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    And much higher it will go, when everyone once again remembers what it has always been and will always be. It's like most people thinking coal was a bad investment, then they remembered what it is.

    gold buy.jpg
     
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  3. Polar.bear.Stacker

    Polar.bear.Stacker Active Member

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    That still validates my argument though of gold not being a hedge. It doesn't move in line with inflation. It's just some big payoff at some unknown point in the future...maybe. And now I'm thinking its a big maybe because people have been saying the same stuff for years
     
  4. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    In the meantime…..

    upload_2021-10-12_10-54-1.png

    Let’s say we’re 50% higher in 2021 as that chart stops in 2015. Even without correcting for inflation, we’re still way below the peak of 40 years ago. I don’t have 40 years to wait. :)
     
  5. PMCollector

    PMCollector Well-Known Member

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    Surely the moderator of a precious metals stacking site is buying the dips on gold and silver... :D
     
  6. leo25

    leo25 Well-Known Member Silver Stacker

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    No need to wait 40 years, just about 4 years. Gold is about to do a SHIBA INU :D
     
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  7. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    You may well be inadvertently setting me up for some not-so-pleasant exchanges from my detractors. ;)

    Let's just say that it's about opportunity cost. I'm of the opinion that there are other opportunities that may return a more favourable outcome. If I have added to my precious metals exposure over the past 2 years it's been via the stockmarket.
     
  8. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    Then boys and girls we'd better hold on!!! :p

    This number takes a few goes at working out, depending upon how good your eyesight is. SHIB return:

    Screen Shot 2021-10-12 at 12.36.43 pm.png
     
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  9. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    I'll just leave this here:

    Screen Shot 2021-10-13 at 3.31.02 pm.png
     
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  10. alor

    alor Well-Known Member Silver Stacker

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    even if prices are to double, not sure there will be items on the shelves for the next two months, talking about imported festives items
     
  11. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    People are hoarding, if willing to pay double, the stock will appear. In my opinion, the hoarders are taking a big risk, if the stock market collapses, demand will vaparise.
     
  12. alor

    alor Well-Known Member Silver Stacker

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    the products will not be made, even if they have already been produced, there is no point to not able to deliver them on time to reach the consumers
    due to shipping delay, you will get them on 29 Feb 2022 if you are LUCKY :D
     
  13. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    The world needs to learn how to stop buying crap. Everyone should be limited to only 2 pairs of shoes a year, 4 sets of new clothes, 1 computer every 4 years, 1 phone every 3 years, if the phone breaks before that, too bad for buying crappy phones. :D
     
  14. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    Well weve finally had our answer about inflation for any of those that are confused about how it all works.
    Pretty easy to understand really....
    Print trillions from thin air=higher prices
     
  15. alor

    alor Well-Known Member Silver Stacker

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    its price inflation, but we considering the coming empty shelves
    notes can be distributed, but there are not much items to be had, that is the real issue
     
  16. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    Part of the Great Reset is that all citizens of the Earth will need to learn to live with much much less than they have now. None of this is secret, it's been planned for a long time and is in action through whatever means necessary.
    Empty shelves should be expected although my area has been stocked fairly well so far, may not last much longer.
    Weve only just seen the beginnings of the push.
    Its already been proven that most can be controlled easily with fear and threats, the rest will follow orders when they get hungry.
    It's all due to the pandemic remember.
     
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  17. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    Pretty easy to understand really....
    Shut an entire economy down = quash demand
    Reopen an economy = surge in demand

    In related news, the hand-wringers have been quiet these past few months. The price of lumber (which was in nearly every news article over inflation concerns) had fallen back to about pre-C19 levels, now it's on the rise again. I'm expecting more "inflation you know, just look at lumber" stories for a while. Until it's not a story again.

    Screen Shot 2021-10-14 at 6.47.36 am.png

    Nations have been "printing" trillions for donkey's years and inflation has still been below market and central bank expectations.

    [​IMG]

    [​IMG]

    Consumer price inflation data needs to be read in the light of what it represents, ie the percentage of change over a period of time for goods/services compared to what those goods and services used to cost. If you drain a pool and then re-fill it, then of course your water usage is going to be higher than before.
     
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  18. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    Proponents of a gold standard and the MMTists would at least have some common ground:

    https://professorfekete.com/articles/AEFCritiqueQuantityTheoryOfMoney.pdf
     
  19. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    Seems like it's way above expectations and that's been said alot lately.
    The msm is starting to talk about price increases now everyday.
    Whether stagflation or whatever, prices climbing fast due to failing policy and printing. It always catches up eventually.
     
  20. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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