AUD goes past 90

[tornado33]

Wow hasnt the Aussie dollar had a meteroic rise of late
Its now past 90 US cents as of october 9!
http://www.rba.gov.au/statistics/exchange_rates.html

Now lets see the price drops for astronomy and PC gear :)

Ive heard predictions the AUD will go even higher in time

[DavidU]

Yes excellent ! At this rate we could purchase the US.
How much are they in debt?

[Enchilada]

Let's hope the price of Apple Mac's, etc. goes down too. I mean, the $US base price for an iMac is $1199, in $A1999! Not 10:9 in ratio, but nearly darn exactly 10:6 (10.7 with 10% GST)!! Worse, the iMac is made in Asia, being closer to Australia than the US !!

Parity here we come!!

[Enchilada]

:lol:

Give you $20 for Nebraska!!! :rofl:

[matt]

And it's over 56 UK pence....which is as high as I've seen it, I think?

Predictions are we'll reach parity with the Greenback by the middle of next year:eyepop:

Celestron gear will still be wildly overpriced, though:lol:

[Peter Ward]

So are you putting down $A50k to back up the "prediction" ?

Sadly the $A has a history of losing 30% in just a week or three.

[Omaroo]

Don't buy telescopes - buy gold! There are plenty of people predicting a second market crash soon... and even bigger than before. :question: It's called a C-wave (the C's the biggest drop in A-F sawtooth, long story), anyway it's imminent and it's across the whole market - just like last year. So this could be "it". Not so much Armageddon but maybe damn close. After the 1929/30 kaboom, the next crash happened in 1932 - and the economies didn't return to the same level until 1954. I think this is that 1932 crash coming now ... makes sense because we've sped everything up through stimulation.

This last 6 months of growth have just been mass-psychology at work. It's just been a sort of bounce-back because everyone believes politicians and media when they say things are on the up and up - problem is they really haven't got a clue. Weird how people just want to hear good news and then don't think any more about it. Sigh. Actually, it did look pretty good there for a while... just a fancy delusion sadly.

How to survive - well here's the problem, with inflation (I know it seems impossible but bear with me) comes devaluation of dollars - not an Aussie dollar problem perse but the absolute death of the US$. And believe it or not we're all connected really tightly (just look at last October). Still, at least, there is that: the A$ will rule unless the govt screws up by doing what the US tells them to do (that'd never happen!). Give me a gold or silver coin over paper money any day!

So - the only stocks/shares to own are: gold, rare earths, precious metal, uranium, natural gas and not oil. That's it.

Fun, eh?

These things, and only these things, will go up over the next 12 months, probably longer. Buy these things asap: $1 in a gold stock today will be triple this time next year, the rare-earths will quadruple as they're essential for batteries, generators, mostly DC-power stuff which, for some reason, everyone's betting the farm will save the planet. Gold's safer.

OK, granted all my predictions in this area are probably on the early-side ... but this is really looking bad ... way worse than it did this time last year and irreversible. At least the Aussie dollar will exceed the US$ probably before the year's out, but that's not really the good news it sounds like.

Hmm... maybe a nice PME before I can't afford one?

[tornado33]

Unfortunately we cannot do astronomical observations with gold bars, however, when gold is the coating on mirrors, its great for observing in the infra red :)

[matt]

It's not my prediction, mate;)

[matt]

Holy crap!!!!!!!!!!!!!

Everyone race out and buy golden uranium batteries...right now!!!!!:lol:

That's some fancy-pants predictin' their Tex. We'll revisit this post in 12 months' time and see who's the turkey;)

[norm]

I'm with Chris here with the death of the US$....its gonna be scary:(.

I just cannot fathom the amount of debt they're in.:shrug:

Norm

[matt]

Yeah...it's gotta be teetering on a knife edge.

I guess the question is how do we brace ourselves? In fact, how do we flourish? Because you can view these sorts of events as a disaster or an opportunity.

I guess we've got too much of our financial/economic threads tied up with the US to avoid significant damage?

It makes you appreciate the sense of forging greater ties with Asia and pointing more of our economic 'ships'in that direction.

[Omaroo]

I really hope that I "gobble gobble" all the way home because I'm wrong Matt. I really do. :sadeyes:

[matt]

Me too, mate. Me too

But there's more than a skerrick of truth in what you're saying.

[stephenb]

Chris, if I take on your "prediction" as a hyporthetical (you sound well versed in this topic than I am), from history of past major crashes, what is the trend for interest rates then? Because there is talk of them commencing an upward trend?

[Enchilada]

Are you sure you guys aren't Ferengi ???

You know, worship the; "Blessed Exchequer", go to the "Divine Treasury" and try to avoid the "Vault of Eternal Destitution."

Next you'll be talking of gold-pressed latinum (http://memory-alpha.org/en/wiki/Latinum) !!!

I know. It's in the lobes... :lol:

Rules of Acquisition (http://memory-alpha.org/en/wiki/Rules_of_Acquisition)

No.9 "Opportunity plus instinct equals profit." or
No.22 "A wise man can hear profit in the wind. :thumbsup:

[matt]

Not the last time I checked...in the shower!:rofl:

[picklesrules]

1.4 trillion i believe on latest figures

[Omaroo]

I trust that modern politicians will heed the lesson that Hoover provided in 1929 when he didn't raise interest rates as he should have to curb borrowing. Debt in the upper classes spiralled out of control as they were the only ones who could afford it. Today we can all over-borrow and the banks are keen to please. To answer your question I reckon interest rares will have to rise substantially. Only my opinion, and a guess at best.

[matt]

And a fair guess. The brake's need to be applied before things start to overheat. It'd be too easy for the economy to start running away from us with the talk of things being already on the mend and the Fed Govt pumping more stimulus in.

[wavelandscott]

While not an expert at all I would say that there are some short term advantages to a weak USD$...among them that it makes US made goods "look" cheaper overseas. This increases sales at manufacturing companies like Caterpillar and John Deere, GE etc. which leads to more jobs created which in turn helps drag the US out of the "cycle"...

It also encourages overseas companies to make investments in the US which further stimulates the US economy...

While long term a weak USD$ may not be helpful, it is not necessarily a thing to get too worked up about.

A key factor in the AUD$ gaining is the much higher interest rates you have in Australia...

For what it is worth, one of the "best" investments I've got going at the moment is in the AUD$ sitting in an ANZ account that I haven't converted yet...most of that money went to Australia at an exchange rate of 0.48/0.49...in USD$ terms that ain't a bad gain!

[erick]

Who bought a batch of filters recently @0.82 thinking "Get in fast before it drops!" :sadeyes:



Now the main question - that pile of super I threw 100% into shares earlier in the year while they were still dropping but have since gone gang-busters - when do I pull it back into a more balanced portfolio :confused2:

[casstony]

My guess is sooner rather than later. Nothing has been fixed in the major world economies. The main change is that excessive private debt is now accompanied by excessive government debt, the purpose of which is to give the illusion of an improving economy.

Banking that large profit now is good risk management IMHO.

p.s. I'm probably wrong so don't take any notice of me :).

[Kal]

Going by wiki gross debt is close to 10 trillion link (http://en.wikipedia.org/wiki/United_States_public_debt)

The total has to be taken in context of the GDP though, so debt as a % of GDP is probably a better indicator, there are links to that in the wiki article.

[renormalised]

I agree with you , Chris. The best things to be in now are gold and such. Anyone who invested in gold a year or two ago will be making a killing now, and in the near to medium term it'll get even better for them. Looking at the way things have been going, and the behaviour of the money institutions of late, nothing has changed. It's only a matter of time before the stimuli that these governments have been using to prop up their economies (and those banking entities) starts to come back to bite them on the backside and/or runs out of steam. Once that happens, the economies are going to start to freefall and God knows where they'll stop. By then, it'll be best to steer well clear of paper monies and such. Government bonds won't be so great as they'll have nothing to back them up unless they use the gold standard again to underpin their currencies. Which in any case they're not going to do. They may be able to avoid it with a lot of sleight of hand and a lot of luck, but if the crash comes, be prepared for another 1929 crash. Best to get a little stash together now, then if and when it does happen, take advantage of the situation by investing in those things that will eventually recover well from the crisis. Generate your own chances for making do whilst the crisis continues.

[Rod66]

The economy is like fashion, trends come and go and peaks and troughs will always occur. Confidence is the only thing that we have to be wary of, lack of it causes nasty things to happen and if its fashionable to lack confidence, guess what...
Debts have always been here and always will be, its what fuels the economy. What I fear is the lenders becoming risk adverse, ie they don't lend money resulting in companies unable to invest in growth, causing another slowdown. Profit by the way is a silly by-product of accounting and doesn't mean a great deal. (just ask Alan Bond). Debt is the key - if the tap gets turned off or squeezed too tight, the economy starts slowing.
Of course if the lender is an idiot and lends to people that can't pay or for something that is way overvalued... well the lender should be caught, drawn and hung.. This is the reason we're still in the game folks, our banks and government did something right after the 1987 crash. Pity the USA didn't... now start lending you @!%$&%... or we really will have to go buy gold bars because they'll be the only thing worth a brass razoo.

PS I believe the worst is over and I want to see Omaroo cluck like a turkey.

[Robh]

The biggest problem with the share (financial) markets are the unseen factors the "experts" didn't see coming. Whichever way the Dow swings, the rest of the world follows. Investors, including fund managers, tend to be swept up in the euphoria of the investment herds. The smart ones make money when markets are going down. Most of the current problems were caused by greed, ignorance and poor investment decisions.

The share market indices were at their highest around October-November 2007; Dow was 14164 and All Ords was 6873. In March 2009, the indices dropped to Dow 6547 and All Ords 3111. The Dow was 46% and the All Ords 45% of their maximum highs. The current values are Dow 9786 and All Ords 4756; 69% and 69% of their max highs (funny that!). If anyone says the share market has overheated, on what are you comparing the figures?

Truth be told, any investment is a gamble and pretty much every sector is cyclical in its fortunes. Gold fever is on and the herds are on the move!

Regards, Rob.

[Nesti]

US$12 Trillion in immediate debt, US$56 Trillion over the next 1-2 decades (all aspects of the US economy).

US$2 Trillion P/A cash increase and slowly being pulled back.

[Nesti]

I don't think China will allow your Armagedon to happen. And since every country is trying their best to avoid recession, were in for a long haul inflatory period (Japan's only now climbing out of a 20 year recession). Give inflation 2-3 years to build up.

I believe what we're seeing is related to China backing off on bonds and greenback buying now, as well as another surge of wealth into the Aisan markets. This trend of China gobbling up as much primary assets that come available has the markets, as always, focusing on the money trail. They are most definately at the helm.

The US, on the other hand, are scrambling to create yet another bubble...carbon trading...and are applying the screws.

As there doesn't seem to be a safe, sure bet in sight to place your money. Prescious metals should climb progressively.

And for those who don't believe China's at the helm, well, this is the first time I have EVER seen Chinese diplomats shaking hands and smiling. What does that say?!

[renormalised]

They got a pay rise off the chairman:P:D:D

[Nesti]

If interest rates climb substantially, it will cause hyperinflation and another great depression, but not in the US, it can happen right here.

Back in the 80's interest rates hit what? 19-20%. If interest rates today hit even 13%, you can strike out most of the middle class. There will be a huge fire sale on properties and loan defaults alone will kill us and all but the biggest banks too. We have too much debt and not enough income to go back to the 80's.

The lessons learned (and forgotten) are almost not applicable. We have never seen this situation before.

Also, don’t expect this to be a short sharp deleveraging period, where people will pay off their debt in a few years and move on, this is gonna go on for decades. If we hit 6% inflation, and it lasts 10 years, say goodbye to 50% of your net worth. If Boom Bust cycles are tidal waves, then inflation is a Tsunami, longer and much more destructive. Ergo Keating’s words “the recession we HAVE to have”.

Money talks and BS walks. I just offloaded 1.6M of debt simply because the risk is so present now. I feel it is better to make a poor decision in a buoyant period, than to be frozen in fear of doing anything and hitting the wall in the fire sale period.

I only know that now is the time to play ultra safe, and I’ve absolutely no idea where to put money safely, not a clue.

[Nesti]

LOL, nothing like a bit of that Mao-Money!!!

[Dennis79]

Try to cover a few posts in this one.

Remember investing in gold also adds in the exchange rate risk. Lately the gold pice has gone up but as it is priced in US dollars and the AUD/US rate has gone up even further, the gold price has barely risen at all in OZ.

I would be looking to convert to cash when the ASX 200 is close to 5,000.

Confidence is great but it doesn't achieve much, reality is still king.
e.g. I can be super confident that I could play cricket for Australia next year but it will never happen.

As for interest rates, I think the RBA will raise them a couple more times until the next crash when it will have to lower them again, maybe even lower than 3%.

US government debt is about 12 trillion, go to usdebtclock.org

Energy and food stocks are my bet.

[renormalised]

Look at things like this....if we're heading for a catastrophic downturn at some stage, we go into depression for awhile, a world war starts and (providing there's no major nuclear exchange) then we get spectacular recovery and major technical advances:P:P:D:D

[Nesti]

Agreed. 12 trillion as it stands, but US gov forecasts 56 trillion in the long run. Of course that includes healthcare, social security issues, baby boomer retirement benefits etc etc.

I have been advised on energy and food before, but they only seem to pay off nearing the end of...whatever happens...not during the period.

Hell, just buy a farm!

[Nesti]

LOL, yeah, and to finance the war the US gov borrows money from the wall street banks...the same banks and the same money from the bailout. Our gov just takes it from our super...if there is any left that is.

To recover the economy, interest rates are lowered, we borrow big, have another party, buy more TVs and go bust again.

Sounds like a plan to me.

[renormalised]

Which means we go through the same shebang over and over again... unless we decide to change our entire system.

[multiweb]

Some tough and scary times ahead I reckon. :sadeyes:

[mick pinner]

the reserve bank raises interest rates with more to come in the short term, now we are told that unemployment is expected to rise by a min of 150,000 in the short term, does anyone really believe that the people that control the monetary issues in this country know what they are doing.

[Nesti]

Of course, the banks know EXACTLY what they are doing. :rofl:

[multiweb]

:lol: Too true. Down to +/-0.00001c precision to be exact ;)
I wish my guiding was that good ... :)

[Dennis79]

Nope, no one does. The basis for most economists reasoning is based on unproven economic theory. Most mainstream economists that you see on TV and the ones in most governments are using an economic theory called neo classical economic theory, which has large portions that has been proven incorrect.

[Gargoyle_Steve]

Aussie dollar passed 92c US today, that's up a full cent in the last 24 hours again. So I took the opportunity and ordered a 2" NPB filter to go with the 1.25" version I already own.

The AUD may keep rising, but I'm happy to buy at this level and lock it in as such, just in case it does back off again.

[Davros]

Good to see you on here again Steve

[Rod66]

Well since neoclassical economic theory encompasses such a broad range of theories, many of them conflicting, you're probably right that most economists subscribe to at least something coming under the broad banner of neoclassical economics.
No economic theory has yet been proven to be infallible so it doesn't matter which theory you pick, they kind of all come undone.

I think we just said the same thing - no one really knows whats going to happen next :):D

[Phil]

I was told it could go as high as $1.05 by next year.
Phil

[mithrandir]

You win some you lose some. 82 was better than the ~50 we got when we were in the US in '99. Then there was no point in buying anything that could be bought at home. Home was cheaper, even for US made goods.

I'm asking Bintel for some prices at $US0.92 and 0.61 Euro. ;)

[wasyoungonce]

http://forecasts.org/ausd.htm

http://au.finance.yahoo.com/currency/convert?amt=1&to=USD&from=AUD

Maybe...that would nice for us punters!

[Kal]

I have a feeling that the AUD will go above parity, and it will do so with ease.

Looking at the data found at http://www.tradingeconomics.com/ you can see how much harder the US was hit by this current economic crises than Australia was. In the last 18 months their unemployment rate has gone up from 4.8% to 9.8%, and it is still climbing from September to October this year (source (http://www.tradingeconomics.com/Economics/Unemployment-Rate.aspx?Symbol=USD)). Compare that to Australia which only went from 3.9% to 5.7% unemployment over the same period (source (http://www.tradingeconomics.com/Economics/Unemployment-Rate.aspx?Symbol=AUD)). The US is in a hole, and the demand for Australian resources is strong again, so I don't see why we can't push well past parity (my personal prediction, based on pure speculation with a small sprinkling of salt, is US$1 = AU$1.10 next year ;):P

[Omaroo]

Do you not mean US$1.10 = AU$1.00?

[Nesti]

Funny enough, I was having this exact conversation with the owner of one of the largest micro-lenders in Aust over coffee this morning. He believes the Aussie dollar will make it to AU$0.91 against the greenback by mid Feb. The real wealth out there is gravitating toward the real buyers, the Asian markets, especially China.

Clouds are forming though; NAB are reeling in as many commercial loans as they can. I posted about 4-5mths ago that there will be a commercial property bubble burst. NAB may be positioning themselves against that rising risk.

[Nesti]

Sorry Kal, those are official US Government figures, as such, they do not include certain demographics which our bureau of statistics do trap and factor in. The REAL approximation is 14-15% unemployment.
http://wallstreetpit.com/10873-real-us-unemployment-reaches-14-percent-our-system-is-broken

"If one considers the people who would like a job but have stopped looking -- so-called discouraged workers -- and those who are working fewer hours than they want, the unemployment rate would move from the official 9.4 percent to 16 percent, said Atlanta Fed chief Dennis Lockhart. (http://topics.breitbart.com/Dennis+Lockhart/)"
http://www.breitbart.com/article.php?id=CNG.4452bed82adf3124 e5884678e236d7fb.361&show_article=1

To put that into more realistic and scarier terms; for every 75 US citizens who are working full-time, there is 1 US citizen in Gaol (Jail).

If you understand the term 'monetization of debt', then the next video is even scarier, but it IS real;
http://www.youtube.com/watch?v=0-ZZFmKFk1s
If you can't visualise what US$60 Trillion is, it's roughly 1/4 of US$1M ($250,000) for every man, woman and child in the US...how do you pay for that?????

monetization means;
http://en.wikipedia.org/wiki/Monetization

[Kal]

err, yeah :thanx:

[Kal]

The figures aren't wrong, just the method used to interpret the data and acquire a figure is different. The figures which I linked state how they are gathered, so there is no smoke and mirrors "Unemployment rate is defined as the level of unemployment divided by the labour force. The labour force is defined as the number of people employed plus the number unemployed but seeking work." If you want to compare unemployment rate to that of the 1970's however, then you can't directly correlate it because of the change in the way the date is gathered and interpreted between the two times, and I agree, it will become much larger because you have to add the number of people not employed and not looking for work to the total.



Fascinating video, the guy really seems to know what he is talking about. 60 trillion dollars, how do you pay for that? The guy explains it in the video :) You have 4% inflation for the next 14 years which devalues the US $ to about half of the current value, turning that $60 trillion into a $30 trillion.

I'd never even heard of SDR's before watching that video, I have some research to do

[Nesti]

Which in turn devalues all US bonds and US cash reserves held by other countries...would you buy US debt again?...that becomes a suicide option for the US economy which is primarily based upon debt.

[Nesti]

Do some snooping around, you'll find out.

In the words of Peter Schiff, "The United States exports to the world BS statistics so that Wall Street may leverage whatever it needs to".

Heck, the US Fed isn't even a government agency, it's a private entity, but they spin market it to look all the world like one.

[Nesti]

I might need to clarify my previous statement.

Let me explain just how bad an idea of 4% inflation is over 17 years without a strong economy.

If you type into a calculator 100 x 0.96, then, x 0.96, and do it 17 times, you end up with 49.95868.

This means that if you put US$100 under the bed today, in 17 years time it will be worth US$50.

So what they aim to do, is to TAX (yes, inflation is a tax) everyone in the US 50% of what they have earned in their lives.

Since very few, if any, people have their entire net worth in a 6.3% term deposit, it's fairly safe to say that half of what someone owns, will evaporate.

This includes most people's greatest asset, their home. Expect not only inflation to depreciate property, but massive increases in numbers of properties for sale will lower property value even more.

You might say that we've averaged 2.8% over the last 10 years just fine. But we have strong exports. Also, we don't have 15% unemployment, or debts equal to our yearly GDP.

Expect the cost of your hobby equipment to drop...a lot!

[wasyoungonce]

I've been thinking about this.

US mostly imports from China (for Astro gear) so if their dollar drops wrt CH dollar then there may be no great gains...except in current stock.

If any equipment you want is made in the good old USA then "yummy yummy yum yum" as the Goodies would say!

I am sitting on the edge of my seat waiting for my "yummy" moment..."soon my precious soon"! I'm waiting for .95c rate then...that'll do for me.:thumbsup:

[mswhin63]

Heard report could head to $1.10, but wait and see. Unfortunately interest rates could soar as a result. The danger of importing.

[Nesti]

Yes, it sounds like that's what will happen. Interest rates going up is a GOOD thing, not BAD, and the sooner we do it, the better off we will be later. If we delay, it will only make matters worse in the long run. So long as we start early, that rates remain affordable to the middle class, and the economy ($) and trade remain strong, will pull through handsomely.

The recession we should have had, but didn't (so that’s two now really), will manifest as inflation. If we tackle the issue now, raise the interest rates gradually (cut until we bleed) to remain buoyant - I'm certain of this now - then we will emerge with a currency that climbs during an inflatory period, much the same as physical precious metals.

Remember, we are the first country in the world which can afford to, and is physically able to, lift interest rates. NZ should follow shortly.

So while the major players 10 year ago are wondering what to do, we will be working on growth. And where does real wealth gravitate toward? To where the money is being spent.

[sjastro]

Quite correct. In fact one point I find quite amusing is the the status of the underemployed or the "involuntary part time worker." Somehow working two hours a week constitutes as a form of employment.:)

Steven