Inflation Is Going To Increase Very Substantially As A Result Of Money Printing
Thu, 28 May 2009 Martin Hennecke, associate director at Tyche Group, explains why he thinks inflation will become a major problem and recommends precious metals and commodities to hedge against such inflation. Two snippets from the interview: “The banking crisis, the subprime crisis, hasn’t been fixed at all, just simply transferred the problems from the banks to the books of the governments, especially in the Western countries. And now this is why the Federal Reserve has to raise, and the US government has to raise such insane amounts of money — 1.8 trillion dollars, is likely to be the deficit for this year. That’s just the lower estimate, even Obama’s government came out saying that [they] likely have to revise this due to the unemployment figures…” “Inflation is going to increase very substantially as a result of all this money printing as they can’t really raise all these funds that they need to raise for the bailouts and they will have to print substantial amounts of debt. Quantitative easing will get worse. As you have said, the Chinese are getting extremely nervous of this. We just had a projection from [the] Dallas Federal Reserve President, saying that the unfunded liabilities of the pension and healthcare in the US is trillion. So inflation is going to be a major issue going forward, so even for cautious investors, they need to invest just to protect their wealth. Gold definitely is one of the asset classes we like…”
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Tagged with: base • Consumer Price Index (CPI) • Deflation • depression • dollar • economics • economy • Federal • financial • Gold • Gross Domestic Product • Inflation • monetary • money • oil • PPI • Recession • Reserve • silver • Stagflation • stagnation • supply
Filed under: Inflation
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gold goes up, then what of silver?
silver will follow up right behind it my friend. Gold 2000 silver 60+ probably
My vote is on:
Gold 5,000
Silver 100
Buy Physical ONLY. No ETFs, Stocks or other proxies.
Don’t forget crude oil, guys.
Largo, why no ETFs or stocks? Gold/silver mines provide pretty good returns.
My belief is that for precious metals, you are hedging not only government incompetence (that is a pretty safe bet these days), but also counter-party risk.
Also, in the unlikely event of confiscation, think about what would be easier for the government to confiscate (via tax or otherwise).
Lastly, miners are affected by the lack of lenders and increased costs, unlike the metal itself (plus you have to worry about management etc. remember Bre-X?).
BTW: your clip is not front page of iTulip!
I meant: “now” not “not”
In sums for miners: during high-inflation periods, their margins as their input costs go up.
For Oil: agreed at 100%. Buy some on dips and do not forget about Natural Gas (especially now).
Producers, during a period of high-inflation see their margins squeezed by fast increasing input costs.
This in turn, put pressure on profit and the stock lags the metal.
Of course, this is in general, there will always be a few stocks which will be well ahead of the metal itself, but the challenge is to identify them.
For Oil: agreed at 100%. Buy some on dips and do not forget about Natural Gas (especially in the short-term; Long-term I prefer Oil).
Invest in the Canadian and Australian dollar.
Canada because of oil, Australia because of gold.
Among other reasons.
My vote, gold 2,000 by end of year.
5,000 by 2011 maybe 2012.
This guy is right on the money with his analysis!
largo2001:
Your thinking long term investing and I have to agree with you. I hold a lot of shares of GLD and SLV which I’ve owned for almost two years. When gold breaks out above $1200 I’ll take my profit. Luckily I bought a number of silver rounds when it was around $7 an oz.
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I just bought 6oz Gold today from Perth Mint.
It will be $5000 – $10,000 within 3 years.
Possibly $20,000 to infinity?
get rid of your toilet paper for gold/silver
all the ingredients for inflation are there
Keep in mind that GLD/SLV are only a “promise to pay” – so you’re not really holding anything
The USA is the greatest country in the world, and you will always be able to buy a six pack of Coke for 25 cents, just like Warren Buffett did in the 1930′s. (What do you mean it’s $4.99?)
if us dollar collapses and gold goes to $20,000 then the $20,000 you will get by selling your gold will probably be worthless – won’t it?
you are as likely to benefit from US dollar collapse by being in euros or any other currency – unless all FIAT currencies collapse – well if that happens then ammunition will be much better than gold
Not really,
anyone who has held Silver and Gold thru a currency crisis has always been able to survive and prosper…..some have been able to increase their wealth alot.
All things go up but lose value against Gold and Silver – eg. Homes instead of costing 80oz of Gold can end costing 12oz – so you decide to buy say 5 homes instead of 1.
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