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Ben Bernanke just took QE Infinity to a new level of stupid

Submitted by the clover helix on Wed, 12/12/2012 - 14:19

Markets

The FED just announced that they will start buying $45 billion in treasuries per month in addition to the $40 billion in mortgage backed securities the FED was already buying. That's $85 billion per month now. As expected, gold, silver, and stocks have rallied today on the news. We're now officially following in Japan's footsteps.

From Bloomberg:

"The Federal Reserve said it will buy $45 billion a month of Treasury securities starting in January, expanding its asset-purchase program, and for the first time linked the outlook for its main interest rate to unemployment and inflation.

The committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor-market conditions,” the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington.

The Fed said interest rates will stay low “at least as long” as the unemployment rate remains above 6.5 percent and if inflation “between one and two years ahead” is projected to be no more than 2.5 percent. The committee “views these thresholds as consistent with its earlier date-based guidance.”

The rest can be found at the following link:

http://www.bloomberg.com/news/2012-12-12/fed-boosts-qe-with-...

Farm land

Submitted by Weirami on Wed, 12/12/2012 - 16:16. Permalink

like all residential real estate is in a bubble, but even more so. A problem with real estate is it is taxed. I think in some states there are ways to avoid that by committing to certain activities like keeping bees. If you have lots of money to protect, find out about the local farm regulations before committing it. Precious metals are not taxed and are portable.
As long as interest rates are held down and banks are not lending, land prices will not increase in value.
I don't believe hyper inflation is a near-term threat because the FED is not really increasing the money supply right now. It is only replacing money that is getting destroyed.
http://www.garynorth.com/public/10294.cfm

—

[F]orce can only settle questions of power, not of right. - Clyde N. Wilson

land is good too

Submitted by brent.larsen on Wed, 12/12/2012 - 16:04. Permalink

anything that isn't fixed to the dollar wont diminish as the dollar inflates.

land, precious stones, precious metals, useful store-able goods, ... anything you can buy for a dollar today so you wont have to pay more than that tomorrow.

even stocks are "protected" from the dollar (not as well as gold or land) because, so long as the business stays alive, the value of the business will inflate along with the dollar itself.

UPDATE: Actually, land is a wonderful idea, if you buy $250k in property today with a fixed loan, and the value of the dollar drops drastically, in a few years you might be able to pay off the entire mortgage with a single paycheck. In which case you now own the house outright, at whatever inflated value it would get if you sold it.

Land has the advantage over gold or silver in that sense, because people dont generally finance gold and silver over time like the can property.

don't count on that. I'll

Submitted by John C on Wed, 12/12/2012 - 16:40. Permalink

don't count on that. I'll almost guarantee that when hyperinflation hits, the criminal government and their bankster buddies will require loans to be paid off in hyperinflation adjusted dollars.

—

“Let it not be said that no one cared, that no one objected once it’s realized that our liberties and wealth are in jeopardy.”
― Ron Paul

http://www.youtube.com/watch?v=meFjza6BpEA

Here's my strategy...

Submitted by the clover helix on Wed, 12/12/2012 - 15:19. Permalink

I own some physical precious metals but the majority of my money is in energy (specifically oil and oil services) and mining stocks. Both are inflation resistant and both have been very profitable over the last 10 years. You can cheaply gain access to both markets through Vanguard's VGENX and VGPMX funds. I also own some small cap international stocks with a heavy weighting in emerging markets. Vanguard also has a fund for that.

Real Estate is in a strange situation at present. New inventory via repos coming onto the market alongside the continuing contraction in residential credit is causing disinflation (a lowering of prices due to a credit collapse despite an overall inflationary environment) in the residential market, however commercial real estate has held up fairly well because they are funded in a different way. It seems that the rate of disinflation has slowed greatly and we may be nearing a leveling off in prices in some regions of the county. Good deals can be had, but be careful. Stay away from REITs which are in a bubble due to ultra-low interest rates (yield-hunters have driven the prices to insane levels).

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Cuimhnigh orm, a Dhia, le haghaidh maith.

I like TGLDX over VGPMX

Submitted by matt_ on Wed, 12/12/2012 - 19:05. Permalink

Like you, I also own VGENX for exposure to the energy sector. However, I think Tocqueville Gold Fund is a better choice than the Vanguard fund. The Tocqueville fund TGLDX actually owns gold in addition to gold mining stocks, and has performed much better than VGPMX over the long run. VGPMX has underperformed the mining sector for a long time.

All of my savings are in energy stocks, gold mining stocks, gold, and foreign value stocks. I only have 2% of my net worth in cash, which is just enough to pay my bills and buy necessities. I also have 0% of my money in bonds. My investment strategy has performed awful over the past year because mining stocks have ironically been hurt by inflation. I'm hopeful that things will turn around, and I keep buying as much as I can.

You're right about VGPMX...

Submitted by the clover helix on Thu, 12/13/2012 - 03:30. Permalink

...underperforming the overall gold mining sector and the principle reason is that they also have heavy weightings in the platinum, diamond, and zircon businesses. These precious mineral companies have underperformed gold, especially platinum, but I think we'll see a big jump in all of these businesses when the inflation genie really gets out of the bag. I like the diversity of VGPMX and feel that it will do well when the foreign demand for these minerals picks up again, but I also have nothing bad to say about the Tocqueville fund either as it is clearly a thoroughbred gold fund. You seem to also have a solid financial strategy in my book. Right now, I'm buying physical silver bullion rather than gold mining shares though both seem to be good values to me today.

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Cuimhnigh orm, a Dhia, le haghaidh maith.