There was a report out today about the price of food in China. It was pretty shocking. Over the past ten days, prices n a number of foods throughout china have gone up by double digit percentages.
The oval average increase was 4.6% over the past 10 days. In case that sounds small, let me emphasize that this is a HUGE increase over such a small period of time. Now it is true that this was just an isolated sample, and the rate of price increase will probably revert to its mean, but that’s not what matters for gold and silver.
What does matter for gold and silver prices is that when price shocks like this start occurring, people lose confidence in the government run money. They turn to gold and silver as commodity money that holds its value instead.
What happens when the largest precious metals consumers get spooked and want to hold on to their wealth? They buy gold and silver. Silver especially since it is so much cheaper than gold.
Chalk up another point for the bull case for commodities, especially gold and silver.
As to why Chinese inflation is going so fast, it has to do with the trade relationship the Chinese government establishes with the exporters in China. The Chinese government prints enough money to keep the yuan weak versus the dollar. That way Chinese goods remain cheap for Americans (and everyone else too) to buy. Great for the chinese exporter, lousy for the other Chinese people. This is now backfiring because the US (and everyone else too) are printing more and more money, so the Chinese government is following suit.
–from the iPad
I spent a bit of time yesterday morning attending the monthly Atlanta coin show in Marietta. Here a few observations:
First, the coin collecting crowd is an older crowd. I would estimate that the average age of the people there was north of 55.
Second, the VAST majority of coins on offer were nice specimens of what we call “junk” silver. These include most of the American change minted before 1965. There were lots of quarters, dimes, halves, and silver dollars. I was surprised that even numismatic American bullion coins like the eagle were underrepresented.
Third, and this is really the converse of the first, world coins were few and far between. I counted exactly 4 Chinese panda coins, and the prices were all ore than you could get them for on eBay. I hear this is different at the west coast coin shows. Perhaps there is more importation going on through those western ports.
Fourth, most importantly for Honest Silver, many of the dealers were buying junk silver. This may be a good market to sell into.
Overall, i have to say I wasn’t terribly impressed.
–from the iPad
Since you are here, you can see that Honest Silver and Gold, LP now has a website. To be sure, it isn’t very pretty yet, but I’m working on it.
I just wanted to take a minute and explain what it is you should expect to find here at http://honestsilver.com in the future. I’ll be updating this site with news about the silver and gold markets, including the differences between physical metal and paper metal. I will post details about how you can participate in turning cash into silver and turning silver into cash flow.
Overall, Honest Silver and Gold will be your place to find out not just what is going on the silver and gold world, but how to profit from it.