Chile Forum

eeuunikkeiexpat wrote:2003
Dollar price of cheapest can of jurel - 0.45¢ mas o menos
Peso price - 335ish CLP

2008 pre April
Dollar price of cheapest can of jurel - $1.07 man o menos
Peso price - 469 CLP

2008 Now
Dollar price of cheapest can of jurel $1.42
Peso price - 699 CLP

Chile doesn't revolve around jurel. And, the price increases match (roughly) energy prices.

Mark

TO ALL ALLCHILE.NET'ers

Many astute individuals have been telling people for many years to protect themselves with gold and silver and those who did instead of playing the currencies game not only handily protected their USA buying power but also their outside of the USA buying power as well. Some people seem to miss the BIG PICTURE or maybe they are pissed that they didn't heed the advice a couple years ago or got hurt trying to be a trader. Not my problem as all need to DYODD and accept that this is NIA and YMMV depending on how you implement the concepts.

REMEMBER FOLKS - BIG PICTURE!! ACT, DON"T WAFFLE OR BE BITTER. ACCEPT MISTAKES AND MOVE ON.

NOCHES.

eeuunikkeiexpat wrote:TO ALL ALLCHILE.NET'ers, Many astute individuals have been telling people for many years to protect themselves with gold and silver

EEUU turning to the microphone....

Or, just invest in oil futures. It's not really gold and silver. They just happen to correlate to oil. And, as seen in the 15% drop in silver, not exactly. But, none of this has to do with economic or monitory policy, which takes into account broader interests, such as foreign trade (which is easily ignored by an expat who doesn't work at a job involved in exports).

Mark

On the topic of investing in silver/gold (and all other stuff denominated in USD) note that if you measure your returns from a non-USD perspective a falling USD will reduce the return. For example if gold goes up 5% and the USD goes down 5% (vs your home currency such as CLP for example) you have gained nada. Of course this is only so if you do not buy on margin (in which case you effectively borrow USD).

Magnyz,

I will have to disagree with you on this one. Being in the PMs have been much more advantageous for me than having speculated the same original USD denominated amounts in CLP or EUR. My time frames extend to a year + + + as I am not a trader as conventionally imagined. And then when those other non-USD Central Banks pull doozies, real assets surge even more. Unless there is something wrong with the 4 year chart, it mirrors my experience to a tee. I do respect your opinions as a fellow trader but the analysis does not strike a reality chord in me or the long-term chart I've presented. Yes I do use leverage, but I don't know a contract that would have allowed leverage for USD/CLP and I certainly wouldn't want to have played games against the ECB. With the second intervention in 9 years by the Chile CB, I could have been screwed somewhat if I didn't just say to hell with it and stick with precious metals from the beginning. Like I've said before, I've been spanked too many times by THE BOYZ and /or MR. MARKET to place faith in fiat currencies or their direct derivatives. The model is leverage over time > make more than you had before after inflation > convert to more direct real assets > rinse and repeat. Will not work for everyone that's why DYODD, NIA, YMMV, TINSTAAFL are common acronyms amongst us.

Maybe you misunderstand me here EEUU. I am not speaking about what has been a good or bad investment strategy historically but merely pointing out a mathematical fact. I was investing in the gold ETF (GLD) a while back without hedging away my USD exposure and only to see my return in SEK flat after some time of gold rally. Now I hedge away all my USD exposure via CFD's (not CLP however). If you invest via futures this is not an issue since you buy on margin but whenever you have the same exposure in USD as the value of the commodity (such as buying the ETF, bullion, stocks without margin) this is something to pay attention to.

OK, like my "twin" (according to admin) I was yapping off in a different direction.

Sorry about that.

ALLCHILE.NET'ers, Magnyz speaks from experience and truth, disregard my off topic nitpicking yapping.

eeuunikkeiexpat wrote:Magnyz,

I will have to disagree with you on this one. Being in the PMs have been much more advantageous for me than having speculated the same original USD denominated amounts in CLP or EUR.

I understand what he means. Real rate of return compared to advertised. For example, if I put half my money in a CD paying 4% interest, and if inflation is 2%, my actual rate of return (on all my money) is 0%.

I agree with you that gold has been a good investment recently. (So was oil.). However, it wasn't so good for a period of years ending 3-4 years ago. Even losing value despite the fact that we had inflation.

That's the problem I have with the idea gold is "real money." It's just a commodity who's value correlates strongly to oil, not inflation generally. Over long periods it appears to. But, so would loaves of bread (if you bought truckloads and could hold them 50 years).

Mark

I understand what he means. Real rate of return compared to advertised. For example, if I put half my money in a CD paying 4% interest, and if inflation is 2%, my actual rate of return (on all my money) is 0%.

I don't think this is what EEUU means and certainly not what I am saying.

That's the problem I have with the idea gold is "real money." It's just a commodity who's value correlates strongly to oil, not inflation generally. Over long periods it appears to. But, so would loaves of bread (if you bought truckloads and could hold them 50 years).

So what commodity would you suggest then to use as a store of value and medium of exchange (and unit of measurement of value)? I would think both barrels of oil and bread would be slightly problematic to use for this purpose …

Probably the most successful commodity used for money to date has been gold.

Magnyz wrote:Probably the most successful commodity used for money to date has been gold.

Apparently not, when countries are unable to remain on that commodity. To me, that's the primary fatal flaw in advocacy of gold as a money system. The basis of their argument is: government can't be trusted to exercise proper monetary policy. But, the corollary is: if you won't trust government to manage fiat currency, why would anyone trust them to remain on a gold standard? Especially when that's been the history of gold standards?

Primarily, I was speaking to the notion that gold is somehow stable or tracks inflation. It doesn't. Look at the period ending 3-4 years ago. Gold lost value even though we had inflation. Conversely, in the last 2-3 years gold has gone up far more than inflation.

For example, a quaint slogan of gold bugs goes like this: "100 years ago, a $20 gold coin would have bought a fine meal and a wool suit. Today, that same coin will buy the same thing. But, $20 won't even buy you a mediocre meal."

However, that's not saying much. If a person put $20 into the stock market 100 years ago, they'd have $50,000 today (using the stock market's average 8% growth rate).

The point being, anything can be a store of value. The stock market is a better store. Anything can be a unit of exchange (or standard of value). Some would argue that gold isn't better due to the kind of fluctuations already mentioned. And, if for no other reason: it has a history of not lasting as a standard for a variety of reasons, often valid to the generation choosing to depart from it. For example, the British empire in 1914 to fund its war. When faced with the choice between ideological purity and self-preservation, it's clear which will be sacrificed. So, as a store of value, gold hasn't fared well at all (when it doesn't last as a standard).

Mark

A conversion experience

I had a powerful dream last night. One where governments and central banks looked after my every need and did everything because it was good for everyone. Where there was little difference in the powerful effects from the constant revolving door between high level corporate execs and high level HSA government positions as that was a good thing to have these benevolent, selfless, experienced, smooth-talking folks looking after my needs in both the public and private realms. I no longer even need to wipe my ass due to mandatory robots that do this all in the name of hygiene and health and safety of course.

Tomorrow I am dumping all my gold and silver putting everything in USD and a little in CLP (but only after the Central Bank intervenes again), move back to the States, take my job back (after I selfishly gave it to someone else) and stand side by side with my comrades in debt and fear participating in bread and circuses media events to kill the pain for an hour or two. I will join my local spy on your neighbor program and report any suspicious persons and events and join the special cyberubercointelpro brigade and monitor, infiltrate and disrupt websites not in tune to my benevolent leaders.

Your moderator signing off for good and moving back to the Homeland.























YAHHHHHHHHWWWWWWWWWWWWWWWWWWWW

Now that was funny. I think that dream is called Norman Rockwell world. It's where my family lives, unfortunately.

We think alike.

Comes down to this in IMO: Should we trust politicians and the creations of (dishonest and immoral) men? It seems, looking at the big picture that this would be a bad idea. 6,000 years or more of human history tells us that. Am I gonna bet against human nature and human history? That would be a bad bet. People, if you're 'all in' on the fiat money game you might want to hedge that bet a little bit. Fiat currency ALWAYS returns (eventually) to its actual value, which is zero. Because it's a scam. Do you think it's going to be different somehow this time?

http://www.financialsense.com/fsu/editorials/dollardaze/2008/0721.html
http://www.geocities.com/Vienna/5373/notgeld.htm
http://img.photobucket.com/albums/v622/chas2004/10million-772687.jpg

Even the scamsters like Bernanke, Paulson, and Cox et. al. are telling you it's coming to an end. I hope they can keep the emergency landing on track but things are rapidly getting out of their control.



It's an old boxing maxim: "Protect yourself at all times"

Chuck J 3.0 wrote:http://www.geocities.com/Vienna/5373/notgeld.htm

That's a good example of the non-durability of a gold standard. Germany was among the first to employ a gold standard in the 19th century. It was forced off the standard when it was forced to pay reparations after WWI. The result was hyper inflation as described in the article you linked to. Britain was forced off the gold standard entering into WWI. It tried to reenter a the gold standard after WWI (presumably using the gold it acquired from Germany in the form of reparations, driving Germany off the standard). It didn't last long.

Just as non-gold currency has a history of being abused, so does the gold standard. It's much more volatile to enter and abandon the gold standard than to maintain reasonable non-gold monetary practices. And, as I mentioned in a prior post, if you don't trust the government to exercise sensible monetary policy, why would you trust it to remain on a gold standard?

That's really the bottom line. If you don't trust the government to maintain responsible monetary policy, there's no reason to believe they'd maintain a gold standard. Thousands of years of history show that to be true. And, it's *much* more volatile switching back and forth among standards than the constant dilution of non-commodity currency.

Mark

Which is why I advocate the government not be in the money business at all. Something that important should only be decided by the market place.

Government is the problem. Not the answer.

Chuck J 3.0 wrote:Which is why I advocate the government not be in the money business at all. Something that important should only be decided by the market place. Government is the problem. Not the answer.

I don't know how that would work in practice. First, it's a grant of power in the US Constitution to print currency and set the value thereof. So, you'd have to amend the Constitution. We did have alternative currencies in the 19th century when banks printed their own currencies, often not recognized by other banks (or, even the bank that printed it). So, I'm not sure why a modern people would want to go back to that "laissez faire" experiment.

The gold standard seems like a lot to do about nothing. Anyone can buy gold with their illiquid cash. They can invest in the stock market for even greater long-term growth. The only thing at risk of dilution (with non-commodity currency) is their liquid cash. I often get the impression gold bugs want their cake and eat it too. They want currency to be everything, flexible, static, short-term and long-term. That seems unreasonable to me when, with simple money management, you can get *all* that with vehicles specific to the task.

As for government being the problem, that's easy to say as you benefit from building codes, zoning laws, social-creation of corporate entities, food and drug quality laws, regulation of the stock market, and banks. Usually when someone makes the bald statement that "government is the problem" they do so while firmly attached to one or more teats. They're just not happy with the other teats that they don't personally benefit from.

Mark