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It
could be said that wise counsel never grows out-dated, and many of
the topics discussed in WCM's Bullion Market Insights are really
timeless in scope. Observations have been made on the
Macro-environment in many instances, a perspective that can only
change significantly over long periods of time.
September 27,
2003: The Planets Have Aligned for the Precious Metals.
Don't think twice
about the late week correction in the precious metals after gold hit
$392, silver hit $5.34, palladium hit $234, and platinum touched
$730 per ounce, because it is only the pause that refreshes in a
market steadily gaining momentum to the upside. This is when
more investors should be stepping up to the plate with new and
additional purchases, but the majority of investors still don't get
it. Watching the new bull market unfold in the precious metals
is like a father in the delivery room rejoicing at a new whipper-snapper
coming into the world. Many of us insiders in the bullion
industry have been forecasting this day for years now, as many as 5
to 6 years for some of us, and the feeling of self-satisfaction at
being right could not be greater. This is not a smugness that
comes from elevated ego, but comes from having done years and years
of research and analysis in a very Financial-Asset-Centric World and
from having come up with the correct likely outcome.
Investing, as in running a business, is all about
probabilities. The odds were historically against a
continuation of the Status Quo New Era of Speculative, Leveraged
Investing and toward a rebirth of demand and price gains for
Tangible Assets. And that new bubble of some 3 years now, the
Real Estate Bubble, is squarely in the former speculative, leveraged
category than in the latter. While tangible in form, real
estate price gains and excessive leveraging will prove as ethereal
as the Dot.com bubble of 2000. There are many signs of an unraveling
of this bubble as evidenced in the Affordability Index, months
supply in inventory, and firming mortgage rates. Not a
reversal yet, but setting up for one.
When we fail to
study history, we tend to repeat it.
That is, we tend to make the same mistakes over and over again
because we fail to see parallels between the here and now and the
there and hither. One
of my favorite comparisons with America Today is the Rise and Fall
of the Roman Empire.
While I am a modest scholar of this study of human events, I do see
several glaring comparisons of the Rome before the Fall with America
before the Fall. From my recollection, here are some salient
similarities:
1. Loss of
Integrity, Morality, and Civility throughout the populace.
2. Overt Efforts to Cheapen the Currency of the Realm.
3. Corruption and Self-Enrichment at all levels of Government.
4. Over-extension of the military on both a geographic and
financial basis without a consistent foreign policy.
5. Assumption of an air of superiority and omnipotence at the
very time the fundamental underpinnings of the country are
deteriorating as evident to all who cared to look carefully.
I am sure there are more parallels, like the concentration of
immense power in the hands of a few, but these are enough to make
the point. THE BARBARIAN IS
AT THE GATE, FELLOW AMERICANS, AND HE IS US. Our
Founding Fathers would be sickened by the America of Today for they
were men of the highest of ideals who put theory into practice in
the formation of this once great nation. The road to salvation
will not be an easy one. Many lives will be ruined from both
an emotional and financial standpoint. And the worst is yet to
come in the economy, the financial markets, and the governance of
this Romana Americana.
Okay, spare me the tomatoes. I will get off my High Horse or
Bloody Pulpit, but this entire environment we have so carelessly
created for ourselves is one in which the Precious Metals really
shine. Putting together an investment decision to purchase an
asset, especially a non-financial or non-paper one such as Gold,
Silver, Palladium, or Platinum, is like putting together the pieces
of a fundamental and technical puzzle. AND
WAITING FOR THE PLANETS TO ALIGN.
WELL SPORTS FANS,
THE PLANETS HAVE ALIGNED!!!
Once again, for
those of you who have had the immense pleasure and ultimate
edification at reading my missives for the last 3 years, I apologize
for being the proverbial broken record. But education is a
science of repetition until the tenets of knowledge sink into the
rather thick, stubborn, and prejudicial cranial region of Homo
Sapiens. Ah, to be right on most counts of prognostication.
And don't forget that Cognac is one of my favorite beverages at
Christmas time.
Here are the
"PLANETS" lining up like glorious ducks in a row to put us
into one of the strongest bull markets in precious metals the world
has ever seen because the gravitation pull of the cumulative effects
of mass is overpowering:
I. Debasement of the Currency of the Realm: With
the conscious and excessive creation of Insta-Dollars throughout the
globe through Monetary Policy, Fiscal Policy, and Import Mania, the
die is cast for the Dollar to begin its next significant
downleg. Already in the span of two weeks, the Dollar has lost
4% of its value against a basket of competing currencies. The
metals become the only viable alternative when investors and
businessmen increasingly distrust the Full Faith & Credit
postulations of sovereign states. Especially in an environment
of Beggar Thy Neighbor Currency Debasement Wars and the resultant
Trade Wars that we are well into.
II. Historic Risk in the Global Financial System:
No one puts forth the argument in statistical and analytical verse
better than Doug Noland at www.prudentbear.com.
He is an astute student of the debt and credit markets and that my
friends is the Achilles Heel (can I mix Greek and Roman
mythologies?!!) of our entire U.S.-Centric and Dollar-Centric global
financial system. Get a strong cup of coffee cause the numbers
barrage will glass your eyes over, but the absolute magnitude and
uncontrolled growth of the credit/debt numbers is at historic
levels. We are headed for a massive repudiation of debt at the
private, business, and governmental levels in the U.S. and
abroad. There is no other way out of this morass.
III. Both Inflation and Deflation Causing Historic Price
INSTABILITY: I am sure you have all heard that markets
abhor uncertainty. Well, put consumers, businesses, and
governments in that category also. Do I buy today or do I wait
for tomorrow? What is the cost if I do one action over the
other? Should I sell immediately to convert one asset into
another to preserve total wealth? If I have a heavily
leveraged asset (shame on you, you haven't been listening!), then
how will I service its debt should my net income stream be eroded by
inflation in my cost of living or deflation in personal
assets? We are headed for price increases greater than 5% in
certain segments of our economy (energy, insurance, healthcare,
taxes, housing) and for price decreases greater than 5% in the
remainder (stocks, bonds, real estate, notes receivable, accounts
receivable, The Dollar, income, employment). A virtual squeeze
play from both ends of the Joe Sixpack Profit & Loss
Statement. Asset devaluations in a declining income
environment with a simultaneous and punitive increase in cost of
living. Inflation or Deflation ..... what does it
matter?!! They both have their deleterious effect on the
bottom line or net worth of our subject, US.
IV. Major Bear Markets in Traditional or Non-Tangible
Assets: Alan Greenspan and Secretary Snow must have been
personally making the trades to keep the stock market afloat this
long, but the fix is in. Despite unquestionable efforts to
keep confidence bubbling along, the stock market is undeniably
rolling over into another sickening death spiral. And the
overstretched bull market in bonds has died a not-so-quiet death and
the sinking U.S. Dollar makes higher interest rates in the U.S. and
abroad, sick economies or not, a forgone conclusion. Realtors
are telling me that potential buyers not only have sticker shock,
but are trying to time any commitment to a grossly overpriced home
to hit a dip in the mortgage rate back-up. Once it is clear to
all who know how to read that the economy will not get back off the
mat this time cause the punches of excess global capacity, lack of
business confidence & investment, and overextended/ leveraged
consumerism are just too potent, then the equity market will have
forecast the Recession of Spring, 2004 by Christmas, 2003.
George W., hate to say it due to the dearth of political
alternatives, but you is in for the race of your political life in
2004. Get that campaign money machine cranking to buy those
votes!
V.
The Trend is Your Friend in Gold, Silver, Palladium, and
Platinum: Any way you cut it, the precious metals are in a
strong bull market. From April, 2001, gold has advanced from a
suppressed $260 per ounce to today's modest $380 per ounce price for
a ........... DRUM ROLL PLEASE .......... 46% GAIN. Silver
from around $4.50 per ounce to $5.10 for a 13% gain is still beating
money markets that may go poof in the night and, silver is just
winding up for some real fireworks based on decades of supply
deficit and Asian/Middle Eastern accumulation. Palladium in
2003 alone, after an $1,100 peak over two years ago, has moved
strongly from $160 per ounce to $210 in the last 5 months for a
interim gain of some 31%. Platinum seems to be on steroids
with a price movement from $380 in October, 1999 to a demand driven
level of $700 per ounce today. Hummm, an 84% gain!!!
Mama Mea! Take all of the squiggles in between along with
over-analyzing the entrails of the chicken, weigh them with the hard
facts of outright price appreciation in a short period of time, and
you are faced with the stark reality that: THE
PRECIOUS METALS ARE IN A BONAFIDE BULL MARKET!
I can't say it any plainer than that.
I will stop at
FIVE planets since my astrological knowledge is limited, your have
only 5 fingers and toes on your left or right at one time, and I
have to go mow the lawn. Whether you like or hate the metals,
that don't mean nuthin'. Go
where the prices are still relatively cheap, the party has just
begun, and the fundamentals and technicals are improving daily.
WHERE ELSE CAN
YOU GET THIS MUCH BANG FOR THE BUCK? WHERE ELSE CAN YOU OBTAIN AN
ASSET WHOSE VALUE YOU ARE NOT MISLEAD ABOUT
DAILY?
.........
then The Sage of Wexford dons his Australian Bush Hat, straps on his
non-Chinese made work boots, and heads off to mow the ever greener
pasture of his 1/3 acre suburban lot, CONFIDENT HE HAS DONE A GOOD
DEED IN TRYING TO STEER THE MASSES IN THE RIGHT DIRECTION AWAY FROM
THE CLIFFS OF THE FINANCIAL ABYSS ........... AND
TOWARD THE MOST PRECIOUS OF METALS.
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$DOLLARINFLATION$$$$$$$$$$$$$$
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October 6 ,
2003: Straw Hats Just Went On Sale.
Friday was a very
busy day for us bullion dealers as many investors who had missed the
bull market in gold and silver came to the realization that MR.
BULLION MARKET was giving them another opportunity to take an
initial physical position at cheaper prices. Frankly, $370
gold and $4.85 silver look like bargains to many after they had just
visited the $390 and $5.32 per ounce levels, respectively.
Commodities are volatile. Realize it, and act accordingly by
going easy on the caffeine. They are not for the faint of
heart, but how could a stock market be either when it surges on a
piddling 57,000 addition to employee headcount, if you are gullible
enough to believe any government statistic in the first place, in an
economy that has lost some 2,000,000 jobs in the last several
years. A blip on the radar screen. And in the long-term
horizon that stretches to 2010 in the Bullion Investment Timeline,
any 5% pullbacks should be viewed as a hiccup to much higher
prices. AND AN OPPORTUNITY
TO ADD TO POSITIONS OR TAKE NEW POSITIONS AS SOME OF THE FROTH IS
TAKEN OUT OF THE MARKET. NOW SAY AFTER ME, "NO MARKET
GOES UP IN A STRAIGHT LINE".
One should also note that Platinum set new 20-year highs this week
and Palladium held as fast as a politician covering his or her butt
in an election year, so this independent subset of the Precious
Metals Family should be viewed as a tangible asset diversification
play in itself. Certified fancy colored diamonds, which are
flying off our shelves at WCM, are also another diversification play
that you can put in your pocket and board a steamer for New Zealand
without creating a bulge in your pant's pocket.
For over a month now, bullion analysts have been warning of the
potential for a sharp pullback in gold in particular due to historic
levels of Speculative Longs on the Comex. Just as in the
currency markets, these are the hot-money players who head for the
exits the minute (or nanosecond) that it appears that an asset is
stalling near a key resistance level. When gold could not
convincingly take out the prior high of $392 and the Dollar saw some
very short-term short-covering, all of the lemmings headed for
the exits at the same time, as expected. This short horizon
bunch of hedge funds, investment banks, and just dyed-in-the-wool
speculators are more interested in taking short-term gains than in
playing the overwhelmingly bullish long-term trend in both gold and
silver. THEY MAKE THE BULLION MARKETS MORE VOLATILE FOR YOU
AND I, BUT THEY ALSO GIVE US GREAT BUYING OPPORTUNITIES. Most
successful investors put their chips on the table when their knees
are still knocking after doing so.
This is hardly a reversal in trend. We are in a topping action
in the global equity markets, global bond markets, global real
estate markets, and not in the precious metals markets. I
expect to do bullion sales on Saturday more and more as we head
toward the end of the year, because increasingly investors are
waking up to the glaring fact that Something is Rotten in
Denmark. We will blame Shakespeare for that phrase, since I
personally like Denmark as a respite from the excesses of the U.S.,
but we are ending our 3rd year of Historic Magnitude Market
Intervention (HMMI or Hummmmmeye) by the Fed, Treasury, and Uncle
Sam, in general, to keep the inevitable reversion to mean of massive
Debt Repudiation from occurring. Shame on them. History
will not be kind to those who should have known better, were well
paid to be on top of their game, and who even lied to U.S. investors
and consumers repeated for many years as to the True State of
Affairs (TSA).
Here is my advise
to you: Sell
assets such as stocks, bonds, and real estate, even successful
businesses that are recession prone, that you have a profit in today
because you will not have a profit in them a year from now.
This rubber band
we call an economy, financial system, and financial markets is
stretched to the limit, because even the most respected credit and
market analysts such as Bill Gross, Doug Noland, and Richard Russell
are totally shocked that we have not had a systemic collapse as of
yet. Just because we have dodged the bullet to date does not
mean that that bullet is not just around the corner. And if
you have seen the Matrix, you know that bullets can do 90 degree
turns around a corner. That .25 caliber missile from Year 2000
is now a .306 in Year 2003! And could be a Scud Missile in
2004!!!
BUY STRAW HATS IN
WINTER WHEN EVERYONE ELSE IS BUYING THE LINE THAT THE GOOD TIMES
WILL BE RIGHT BACK IN THE FINANCIAL MARKETS AND ECONOMY.
USE THIS OPPORTUNITY TO BUY ADDITIONAL OR INITIAL POSITIONS IN GOLD
AND SILVER. CONSIDER DIVERSIFYING INTO PALLADIUM AND PLATINUM
AS WELL SINCE THEY ARE ECONOMICALLY SENSITIVE, AND IF YOU BUY WALL
STREET'S FORECAST FOR A STRONGER ECONOMY, THEN THESE TWO METALS ARE
TOTALLY CONSISTENT WITH YOUR ASSUMPTIONS.
Global demand for
physical gold and silver and palladium and platinum are growing,
despite the efforts by financial and governmental insiders to have
you believe otherwise. And as the Currency of the Realm sinks
lower and lower in value, buying less and less of global goods and
services, you will be glad you have an asset or assets that have
true tangible, intrinsic value that can be traded easily any place
in the world almost 24 hours a day. In essence, Assets Without
Borders.
Have a
relaxing weekend after you do your homework.
MEMO:
OCTOBER 10, 2003/ DOLLAR COLLAPSE WELL UNDERWAY.
From a global
purchasing power basis, like you versus the Asian Block, for
example, what is happening to the net value of your assets
denominated in U.S. Dollars and, hence, your net worth? You
are losing out versus the rest of the world as the Dollar enters a
multi-year collapse.
Global assets like precious metals and colored diamonds are not
dependent on finding a U.S. buyer who will pay you in increasingly
worthless Dollars as established or market value.
It doesn't matter
what color our paper money is, it is printed with vanishing ink when
it comes to Purchasing Power. TRICK OR TREAT?!!!
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October 30 ,
2003: More Daily B.S. (Blatant Subterfuge).
If I remember my
early Anglican biblical teachings, one of the Ten Commandments, cast
in eternal granite not just in Alabama, is: "Thou Shalt
Not Lie". Now I am not climbing up on my bully pulpit
once again, but what is ambiguous or difficult to grasp about this
timeless Life Guideline? Certainly, we all tell the Little
White Lie on occasion to spare someone's feelings, but the constant
propagation of knowingly false information by any person or entity
can only be labeled as, "Lies, Lies, and More Lies".
Just as a combat soldier eventually becomes shell-shocked after
being under constant artillery fire, an investing public becomes
increasingly distrustful of information generators once they
discover repeated instances of inaccuracies, perceived as
intentional or unwitting (we will leave discussions of nit-wits out
of this for now). Over a sufficient span of time and with a
sufficient history of transgressions, the public not only becomes
distrustful of the guilty parties, but generally cynical and
distrustful of non-offenders as well. This cynicism in itself
tears at the increasingly fragile fabric of a society built on
mutual trust such that general harmony becomes much more difficult
to maintain in most other aspects of societal life. An
elevated level of distrust has been reached, and citizens adopt
unconventional avenues to avoid being further victimized, like
discounting all official pronouncements as being politically
motivated and self-serving.
I can only think that those among us who take for Absolute Certainty
even 70% of the periodic government releases of economic data,
corporate "earnings" (or should we say,
"yearnings"!) data, and revelations of renewed economic
stability from officialdom must possibly just be too lazy to delve
more deeply into available research on the "facts".
There is no dearth of contrary opinions to the Blatant Subterfuge or
B.S. passing as actionable investment information from the primary
media streams today, but herd psychology goes a long way toward
explaining why more investors do not seek these sources out.
The wildebeest safety in numbers scenario. Furthermore, as Freud's
understudy, I feel that this is not atypical behavior on another
plane for a populace struggling to meet all of the time demands of
their harried lives. These lives, the American Way, i.e.,
self-inflicted, where we attempt to accumulate the maximum material
possessions on a per capita basis the world has never known AND
experience the maximum number of life-nurturing events, a.k.a.,
social events. As a populace and nation, we have set goals and
possibly standards for ourselves that are not only impossible to
achieve under the best of conditions, but actually serve to ruin the
overall quality of our lives by causing us to NEVER BE TOTALLY HAPPY
FOR OVER 3 NANOSECONDS. It seems that once our constantly
self-challenged beings overcome one problem or issue, we immediately
switch gears onto the next, seldom adequately reveling in the
success of the moment. This tendency to seldom be completely
relaxed and to always feel that we must be doing something
constructive at all times (Puritan Work Ethic?) leads to
self-imposed stress that could be avoided with greater perspective
into the relative importance of "things". Don't get
me wrong. I like things as much as the next guy, but runaway
consumption and acquisition of non-productive assets using debt to
do so will prove one of the major undoings of our once great nation.
This 5-minute psycho-analysis will cost you $165 sans couch, but
please only send Swiss Francs or New Zealand Dollars.
So a generally stressed existence leads us to do cursory analysis of
the constant stream of data this is spewing our way, and we tend to
take the easy way out by accepting most "official"
economic and financial information as accurate enough to base
investment decisions upon. We take this easier way out to save
precious time and hopefully reduce some of the stress we have heaped
upon ourselves to attain the often elusive "American
Dream". This is my best explanation why the majority of
investors have fallen for the 2003 Super Bear Trap Rally
in stocks and flung
every last cent available, both cash and borrowed
dollars. No analysis performed; just go with the flow and what
worked so well from August, 1982 to March, 2000 has just got to work
after two decades of runaway stock prices. At least initially,
it is less stressful to invest with the crowd, but all indications
are that this is very hot money this stock mania time-around, and
when the ticker starts going negative probably about 5% from the
recent top, these now skittish "investors" (who lost their
shirts in 2000, 2001, and 2002!) will sell with both hands creating
the true Waterfall Decline.
I was right about
gold and silver bouncing back quickly from their recent precipitous
pullbacks. Let's see how I fare with this Stock Market Bubble,
Act II call.
I purposely try to minimize the amount of statistical data that I
utilize in this bullion ezine because, for one reason, I don't have
a clue if what I am going to present to my valued readers is truly
accurate within 5% of reality. In the world of accounting, a
realm sadly misused today to the benefit of corporate executives and
at the expensive of trusting shareholders, the 5% Rule has been the
old standard for whether a revenue or expense item is material for
reporting purposes within financial statements. Along these
lines, I think the best approach for a seafaring investor cast upon
the boiling seas of New Millennium Information is to look at
RELATIVITY much like Einstein did. "It Is All
Relative" is a famous catchphrase in our vernacular, and I
implore more and more investors to deal in the "relatives"
versus vainly in the "absolutes". It is the
"absolutes" such as S&P 500 Operating Earnings,
Year-to-Year Earnings Changes, GDP Growth, and the Unemployment Rate
for starters that are going to get you into investing trouble going
forward. We all need to do more macro-analysis, viewing the
financial and economic world from the Big Picture perspective.
Micro-analysis is highly dependent upon having accurate and
consistently reliable data as input to our efforts, and I fear more
and more data has fallen under the hands of manipulation to further
the issuers' agendas. And the Macro-World or Big Picture is
not a pretty picture, I don't care what numbers you care to use.
As evidence, I
present these irrefutable facts, of sufficient magnitude by
historical standards, to avoid misinterpretation by any measure and
virtually any conscious observer:
o We have
record debt at all levels of our society, Consumer, Corporate, and
Government. As to our ability to repay this debt, it is less
of a question of potential net income streams, but our current
propensity AND ABILITY IN A GLOBAL ENVIRONMENT AS THE WORLD'S
CURRENT RESERVE CURRENCY to re-liquefy these mounting obligations
through cheap and readily available credit and money creation/Dollar
expansion.
o We have a jobless "economic recovery" as
traditionally defined having started in November, 2001, that has
managed 3% to 4% GDP growth with a net loss in total
employment. The Unemployment Rate has only managed to stay
level, not improve, due to discouraged job seekers falling out of
the statistical ranks. The ranks of the Underemployed have
surged.
I
guess the above graph is accurate, but even if it is off by 20%, YOU
GET THE PICTURE. CORPORATIONS HAVE NO INTENTION OF HIRING NEW
EMPLOYEES BECAUSE THEY HAVE NO CONFIDENCE WE HAVE STARTED A LASTING
RECOVERY. Also, why are insider stock sales at record
levels??!!
o The economic recovery we are currently experiencing has been
supported primarily by recent tax refunds and stimulus packages, not
to mention record low interest rates from the Fed, and does not have
the necessary ingredients of planned business capital expenditures
and rebuilt consumer balance sheets so essential for sustained
growth. A significant portion of 3rd Quarter GDP growth is
attributed to inventory building, especially in the semiconductor
and technology areas where recent demand forecasting failures have
been catastrophic in causing wide production swings.
o We have valuations in stocks, marginally creditworthy debt
to include high-yield and emerging market debt, and residential real
estate that can be safely deemed overvalued and at historic extremes
by any traditional measure. Whether one is capable of labeling
any of these asset areas as potential bubbles is a moot point given
the recent history of crashing prices of stocks and sub-prime debt;
real estate's past bubble was back in the late 1980's versus recent
bubbles within the last decade for the former two asset areas.
o We have a mindset from information providers that national
security (as well as self-interest) can be used as a rationale to
distort financial and economic data in such as manner that users of
this data are mislead as to trends in key statistics.
Investors in key markets are convinced to stay invested while
valuations and fundamentals actually deteriorate, while the picture
painted is one of significant AND SUSTAINABLE IMPROVEMENT. For
the "Good of the Nation", a misleading picture is
presented in sound bites, news releases, and official reports to
propagate an impression of All Is Well.
o We have entered a new bear market for the U.S. Dollar
defined as a 20% decline in value that appears destined to continue
for years and years based upon Excessively Lax Monetary & Credit
Policy, our massive Trade and Current Account Deficits, American
consumers' appetites for imported goods, record Federal Deficits,
military campaigns around the globe, Nation Building, and
depression-era interest rates vis a vis competing currencies.
A Dollar Collapse or loss of reserve currency status cannot be ruled
out due to the historic extremes to which all of the above elements
of Devaluation currently exist. No numbers necessary, because
those published show a trend reaching historic levels.
o A commodity boom brought on by recycled Dollars in exporting
nations that are experiencing growth well above trend and well above
the marginal growth rates of developed countries that consume their
goods and services. The shift in global engines of growth from
the U.S., Europe, and Southeast Asia to heavily populated India and
China is causing commodity prices to rally in such a manner that
economic recoveries in developed nations are adversely affected
while "localized" inflation cannot be ignored indefinitely
by monetary authorities determined to Beggar Thy Neighbor with
currency devaluation.
o We live in a world of re-emerging nationalism,
protectionism, and regionalism (must be a word cause the spell
checker didn't flag it) with opposing internal goals and politics
that keep global frictions constantly at the forefront.
Failures at fiscal discipline, socialism, and full employment are
masked over by diversions toward perceived economic enemies and
adversaries to an extent that global trade and travel are greatly
affected. The Global Economy is coming unglued due to lack of
cooperation on many levels.
o We as a nation have new priorities and diversions such as
the War on Terrorism and the stabilization of Afghanistan and Iraq
that are siphoning off scarce resources at a time when deficit
spending has already reached historic levels. Competition for
Federal and State dollars for health and human services versus the
ballooning requirements for Homeland Security are causing rifts
within political parties and adding to an atmosphere of unrest and
constant bickering & backstabbing. Reform of Medicare and
Medicaid will eventually become a political hot potato as the aging
population uses its political clout to shift priorities, a looming
drain on future resources.
o Gold, silver, palladium, and platinum are firmly in bull
markets with all of the precious metals hitting multi-year highs
($390, $5.18, $214, & $761 as I type!). Other alternative,
tangible or hard-assets investment classes outside of real estate
are receiving new media coverage as investment dollars shift with
increasing magnitude from traditional financial assets. Rare
coin dealers and colored diamond brokers are experiencing one of
their strongest sales years in over a decade. These
observations are not from published data, of which there is also a
dearth of reliable centralized information, but from many
conversations with recognized leaders in the trade.
**********************************************************
I could continue
in this vein, but you get the Big Picture. Regardless of any
specific number, percentage, or statistic that one assigns to the
overall economic and financial landscape today, it is one of many
negative influences and resultant deteriorating trends. It is
not an environment of stability or solid financial or economic
health. Just as bear market rallies can be very spectacular
and put most of the skeptics at awe, economies can fluctuate in a
manner that suggests full recovery is imminent. It is during
these counter-trend moves that many investors bet badly, getting
caught up in the flow, and end up deeper in the hole than
before. The rapidity of price movements, as seen recently in
both gold and silver, seem to increase at major turning points, and
I will not be surprised if we see the S&P 500 at 750 by April of
2004. I will also not be surprised to see gold at $425 and
silver at $5.75 before then. I underestimated the strength and
longevity of this current Bear Rally in stocks, but I doubt if I am
overestimating the end result. Prices in the precious metals,
except for maybe platinum, are still at levels deemed as bargains by
historical standards. There are few assets can can share this
distinction. There are few assets that have no Blatant
Subterfuge or B.S. attached to them.
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