The Golden Truth: Two Great (Quick) Reads For Your Weekend Pleasure

Friday, December 10, 2010

Two Great (Quick) Reads For Your Weekend Pleasure

The first one is sourced from the King World News Blog. The author makes the argument that, on a relative basis, Europe will begin to appear "stable" relative to the U.S. What's interesting about this that I was meeting with prospective client who was relating a presentation he heard from some fancy economist who talked about a stronger dollar vs. all the problems in Europe. My response was, "huh?" California alone is a bigger problem for the U.S. than Greece, Ireland, Spain, Italy and Portugal combined. Then layer in Califorinia, New York, New Jersery, The Rust Belt..."

Anyway, this commentary alludes to all of that:

In no way do we see the Build America Bonds program as a panacea for what ills Municipals, rather we see it as the duct tape holding states together until growth in whatever guise comes its way. With no growth and no duct tape, we see the problems of state and local governments coming to the fore. Given California, New York, and Illinois comprise 25 percent of the US GDP, we believe headlines regarding their budget deficits will soon overtake those regarding Ireland, a country that makes up only 1.8 percent of Euro-Zone GDP.

More interestingly, he makes the argument that the best way for China to revalue its yuan vs. the U.S. dollar is to continue buying a lot more euros, which they are doing anyway in order to diversify out its increasingly worthless dollar position. It's the first time I had thought of this issue this way and I believe he's dead right. Here's the link and it's definitely worth reading: Buy Euros On Dips

The second article is about silver from Sprott. Like most of us who understand the how/what/why of the precious metals market, Sprott as an institution - and the principals of the firm individually - have overweighted silver in their investment portfolio. I know both Eric Sprott and John Embry have 90% of their net worth in the precious metals sector because they have stated that on several occassions. It made me feel a lot better about having 90% of my net worth in the sector as well. At any rate, if you want to read an excellent summary on why silver is poised to provide breathtaking investment returns just click HERE.

As an aside, I was out to dinner last night with a good friend going back to 1st grade. At one point in his career he was a Federal prosecutor at the Justice Dept who prosecuted RICO cases. I told him about the RICO lawsuit filed against JP Morgan for manipulating the silver market. His only response is that JPM is likely in a lot of trouble at this point...

5 comments:

AnonymousFriday, 10 December, 2010
That doesn't make sense at all.
The US government can bail out munis using freshly printed money. Short- to medium-term impact: buy, buy, buy!
In the EU they can't even bail out Spain, let alone Italy.

>More interestingly, he makes the argument that the best way for China to revalue its yuan vs. the U.S. dollar is to continue buying a lot more euros, which they are doing anyway in order to diversify out its increasingly worthless dollar position.

This doesn't make sense to me either. Right now they can sell US T's to buy EUR. If they revalued they'd be able to buy more EUR, but they'd lose on US T's.

IMHO the EU will be the first to crash, then maybe China (I used to think the US, but I'm not so sure), and the US only after that.
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Dave in DenverFriday, 10 December, 2010
It makes perfect sense. They buy euros and cheapen their currency vs. the euro and stimulate exports to Europe. That will enable them to shift export volumn from the U.S. to Europe AND de facto devalue the yuan vs. dollar. It's brilliant. The U.S. economy is toast anyway. The citizens are so overleveraged it's absurd. The "deleveraging" charts that all these deflationists keep jerking off over are retarded. All that's going on is shifting debt from the banks to the Govt. Great, the consumer "deleverages" because his mortgage and credit card debt is partially written off by the banks but the debt is shifted to the Treasury.

IF the U.S, keeps the States alive by printing - which they will, it devalues the dollar anyway and China loses export volumn to the U.S. The method outlined in the article enables them to shift the volumn from here to Europe.

Quello articolo é molto bravo!
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AnonymousSunday, 12 December, 2010
It's all so confusing! I'll be interested to see how silver works out. Bob Hoye has looked back through 300 years of stock market history and sees silver correcting more than gold in the next crash, which he reckons will happen in the next five weeks. He was right about this happening with the last big crash, but past performance is no guarantee of future performance.
I don't have much silver myself, but if it does crash like last time then I'll buy some silver stocks on the dip, if it doesn't crash then it means we are in a new paradigm.
Next year promises to be volatile!
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UnknownMonday, 13 December, 2010
SDRG getting killed today. Down 3 cents (18%) as I write. No news or PR release. What's up with that?
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Dave in DenverMonday, 13 December, 2010
stay tuned. i bot more this morning.
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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.