Economy crash =/= stock market crash?

masonic

Type_45 said:

masonic said:

Type_45 said:

Don't let facts change your strategy either.

Which facts are those? If the strategy is to ride out the ups and downs on the basis that crashes are temporary, then no facts are being ignored. It's still your position that the crash will not be permanent, isn't it? Markets falling 80% from their peak on or before 31st December 2022 is a prediction, not a fact. If it happens, then it will become a fact, but it will then be too late to act. Likewise for the melt-up prior to the 80% crash.

Meanwhile, the Telegraph has published an article warning "We are on track for a currency crisis – and bankruptcy" due to the UK having the largest ever deficit, which again is just a prediction... one that puts cash under the same threat as equities, but not a temporary one. A rapid devaluation of the pound would give the appearance of a melt-up, as other assets hold their value rather better than your home currency. Assets won't have inflated in value, it's your cash that would be worth a lot less.

The facts we've already covered, such as this is the worst year ever so far for the NASDAQ, this is the worst year for the stock market since 1970, this is the worst year for bonds since (I can't remember, but many years).

We have policy errors such as Biden and the EU's energy policies, we have an ongoing war featuring a major oil, gas and wheat exporter, we have Biden weaponising the USD against Russia only for it to spectacularly backfire and hasten the demise of the USD as the global reserve currency, and we have the impending devaluation/destruction of the USD and GBP which I've mentioned many times and you've now informed me is now being written about in the MSM. Meanwhile the market is clearly in a downwards trend. Now is probably the time to short this market, not keep putting money into it.

Regarding the devaluation of the GBP and the appearance of assets rising in value: gold may (as happened in Weimar) rise in real terms at the same time as the GBP devalues thus compounding the upwards valuation of gold. Is there a story of how it was possible to purchase a house with a few ounces of gold at that time? (How would SGLN do if the GBP devalues?)

Those facts explain what has happened, but don't help much with what is going to happen (with the exception of your predictions (not yet facts) about currencies). Future news could help explain future market fluctuations. Trends can be useful, but are subject to change at any time (see previous comment about future news).

Regarding gold and SGLN, then it would hold its value as long as financial markets remained orderly and there was no breakdown in international relations. If either of those things happen, then the price could disconnect from the asset, or the asset could cease to back up the financial instrument, rendering it worthless.

Alistair31

Type_45 said:

Now is probably the time to short this market, not keep putting money into it.

Put your money where your mouth is then. 

InvesterJones

Type_45 said:

 we have Biden weaponising the USD against Russia only for it to spectacularly backfire and hasten the demise of the USD as the global reserve currency, and we have the impending devaluation/destruction of the USD

Isn't USD increasing in value, the opposite of what you're saying?

GazzaBloom

Type_45 said:

Commodities appear to have topped out now. 

What does that mean for inflation as a whole? 

With all his wisdom and future predictions it may be worth @Type_45 taking a minute to watch this and give the crystal ball a polish along with anyone else making future predictions:

https://www.youtube.com/watch?v=OAJ8Si9AuzU

Type_45

InvesterJones said:

Type_45 said:

 we have Biden weaponising the USD against Russia only for it to spectacularly backfire and hasten the demise of the USD as the global reserve currency, and we have the impending devaluation/destruction of the USD

Isn't USD increasing in value, the opposite of what you're saying?

Each of us must do our own research.  

InvesterJones

Type_45 said:

InvesterJones said:

Type_45 said:

 we have Biden weaponising the USD against Russia only for it to spectacularly backfire and hasten the demise of the USD as the global reserve currency, and we have the impending devaluation/destruction of the USD

Isn't USD increasing in value, the opposite of what you're saying?

Each of us must do our own research.  

That is true:

masonic

The US dollar index shows the value of the dollar relative to a basket of other currencies. It does not mean that the dollar is increasing in intrinsic value.

A good question to ask yourself is: "how could the dollar be said to be increasing in value if it has less spending power now than it did a few months ago?" You may counter with, "well things are just getting more expensive!", but it's all relative.

Type_45

masonic said:

The US dollar index shows the value of the dollar relative to a basket of other currencies. It does not mean that the dollar is increasing in intrinsic value.

A good question to ask yourself is: "how could the dollar be said to be increasing in value if it has less spending power now than it did a few months ago?" You may counter with, "well things are just getting more expensive!", but it's all relative.

The global supply chain problems may also have something to do with it.  There are international shortages, and the USD is the global reserve currency chasing a lot of the diminished supply of goods.

Type_45

This graph by Gold Switzerland is... interesting...

masonic

Type_45 said:

This graph by Gold Switzerland is... interesting...

I don't know who GoldSwitzerland is, but if you wanted to give them some feedback, you could tell them to plot that graph with a log scale on the y-axis and inflation adjust the price. You then end up with something like this:

The May 2000 "peak" is no longer a peak (it's at $469 in today's money), and the 2003 "bottom" is higher in real terms than the supposed "peak". However, the point that gold is relatively expensive at this time is evident from the fact that it is close to $1800 in today's money, whereas the 100 year geometric mean (just by eye) is somewhere around $500 in today's money.