The IMF is in the back pocket of the Central Banks and their governments. Since these guys don't want to sell any more of their precious gold to keep the price down (and therefore keep the fiat money game floating a bit longer) they implore the IMF to do so. Hey, the central banks have sold up to 50% of their gold so far and have still not been able to keep the POG from advancing. What a great way to put gold on the market yet claim it is for humanitarian purposes. Gordon Brown of England has is already responsible for selling 100% of the English gold cheap. Now he wants others to join him so England doesn't feel alone. Without continuing gold sales the price of gold will eventually break out.
My personal feelings on these metals at this point, and after watching decades of manipulation in the Gold market, is that other than numismatic Gold, it is better to buy Silver as an hedge against inflation. I have recently taken on a short term consulting job to take a small regional mortgage company public. As a hedge against depreciating losses in their Mortgage Banking division due to what appears to be a decade of inflation down the road, I am going to suggest that they buy silver bars rather than gold. I know that silver is a pain in the neck to store, but is seems to me that many of the manipulators will stay out of the silver market due to its duel use as an inflation hedge an a commodity. What do you think?
- Bill Bonner writes: "From barely 100 following the crash of '29, the Dow is now over 10,000. Who can doubt that the tendency is up? Yet, adjusted for consumer price inflation, the Dow is only about 500." So what is the real gain of 500% over 76 years? It comes to 2.14% a year! You think you are going to fund a retirement by growing your real, inflation-adjusted wealth by 2.14% a year?
That quote taken from Richard Daughty's recent article.
At least for the time being, PM's might be a reasonable alternative to paper asset manipulaton.
Fishcooker, you make a good point on the dividends, but then again how many companies went out of business or bankrupt in that 76 year period and were replaced with other companies to stabilize the Dow.
Would we have a Dow at 10,500 today if the Enron’s, Worldtron’s, etc. were added back in at 50 cents per share?
That being said, I am not sure how Mr. Bonner arrived at his figure, my inflation calculator would have the 1929 100 Dow at 1,000 today without any adjustments.
Oreville makes the best point, almost any early uncirculated coins would have been a much better investment.
Oddly enough, when the Nasdaq was topping out they reshuffled the Dow, adding Microsoft and Intel so it too would perform good like the Nasdaq. I have not seen any calculations as to how high the Dow would be had they not added those losers. Joining the Dow cratered HP/Compaq as well.
Chevron, dropped from the Dow for being one of those smokestack-old-economy stocks... is only 100% ahead of MSFT and INTC since then......
<< <i>My personal feelings on these metals at this point, and after watching decades of manipulation in the Gold market, is that other than numismatic Gold, it is better to buy Silver as an hedge against inflation. I have recently taken on a short term consulting job to take a small regional mortgage company public. As a hedge against depreciating losses in their Mortgage Banking division due to what appears to be a decade of inflation down the road, I am going to suggest that they buy silver bars rather than gold. I know that silver is a pain in the neck to store, but is seems to me that many of the manipulators will stay out of the silver market due to its duel use as an inflation hedge an a commodity. What do you think? >>
I bought tens of thousands of oz's of silver back in the heyday, from all the coin and jewelry dealers scrap in NJ to futures contracts of my own. It's a pain although those days were a lot of fun for us then young bucks.
I wouldn't even know where to buy a futures contract nowadays without getting ripped off although if I were to invest in silver, that's the way I'd be looking to do it.
NEW YORK (Reuters) - Oil prices surged to a record near $58 a barrel on Friday, powered by a forecast the market could spike above $100 due to robust global demand and tight spare capacity.
Prices have climbed around 30 percent this year, with big-money speculative funds buying heavily on signs that rapid demand growth in Asia's emerging economies and the United States would strain world supply.
U.S. light crude settled up $1.87 to $57.27 after peaking at $57.70 a barrel, breaking the previous record of $57.60 hit March 17. London's Brent crude climbed $2.22 to $56.51 a barrel.
U.S. gasoline futures for May hit a record $1.7360 a gallon on worries that a national stockpile surplus could dwindle ahead of driving season, while heating oil futures struck a peak of $1.6750 a gallon.
Top energy derivatives trader Goldman Sachs (NYSE:GS - news) said in a report on Thursday the oil markets might have entered a "super-spike" period, which could eventually drive prices toward $105.
"That was a pretty big call by them and the market is just assessing where supply and demand really sits," said David de Garis, senior economist at ANZ Investment Bank in Melbourne.
"In a very interesting report, Goldman talked about how we might see a longer cycle and a higher cycle than we have seen in a very long time," said Deborah White, senior economist at SG Commodities.
Goldman Sachs raised its 2005 and 2006 price forecasts for U.S. light crude to $50 and $55, respectively, from $41 and $40, citing resilient oil demand growth.
Prices rallied 2.6 percent on Thursday on the back of the report and also on concerns about the adequacy of U.S. gasoline stocks ahead of the peak summer demand season.
GASOLINE SUPPLY ANXIETY
Production problems over the past week have deepened concerns over whether refiners will be able to meet gasoline demand this summer.
A 485,000-barrel-per-day (bpd) refinery in Venezuela -- the world's fifth-biggest oil exporter and a top supplier of crude and oil products to the United States -- was shut down on Thursday by a power failure.
State oil company PDVSA said it aimed to resume full operations at the Amuay refinery in seven days at the latest and that supply to local and international markets was guaranteed.
A fatal explosion last week at BP Plc's (BP.L) Texas City refinery, the third-largest in the U.S., also unnerved the market, along with problems at several gasoline-producing units.
For the past month, U.S. gasoline demand has been 2 percent higher than the same time a year ago, despite record pump prices.
The U.S. Energy Information Administration (EIA) reported on Wednesday gasoline stocks fell 2.9 million barrels to 214.4 million barrels last week, the fourth decline in a row.
Some friends just got back from Europe and couldn't believe the prices. Tiny, inexpensive hotel rooms were 140E ($180+). Meals for two were generally over $50.
There are three things you can count on: higher gas prices, death, and taxes. Now that our oil companies have us paying over $2 a gallon, and our politicians refuse to end the price-fixing and manipulation (after all, politicians are getting rich off it), rest assured we'll never be paying less than $2 a gallon *ever* again.
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
<< <i>There are three things you can count on: higher gas prices, death, and taxes. Now that our oil companies have us paying over $2 a gallon, and our politicians refuse to end the price-fixing and manipulation (after all, politicians are getting rich off it), rest assured we'll never be paying less than $2 a gallon *ever* again. >>
With much of the world pumping oil full out it may not be long till we look back fondly at $5 gas.
Does the price of gasoline have anything to do with coins?
Actually, the price for gasoline is mostly dominated by a number of levels of taxation including Federal, State, and local taxes. Most of the taxes go to the design, maintenance, management, and other functions of the highway system. We have been living the good life for a number of years as far as paying less $U.S. per gallon than most of the rest of the world pays for theirs. The price of gasoline is a component of any forcasting system that deals with the measurement of our "cost of living" quotent.
An interesting thing that the populace doesn't seem to grasp is that the U.S. could import a lot more oil than it does. The only problem is that we have to store it, refine it, and distribute it and we don't have the capacity to do but so much at one time. OPEC and the Mideast could cover us up in fresh oil, we could be swimming in it. But we can only store and refine and distribute so much of it at one time and there is much more oil available than we have capacity for. There are huge areas of the mideast that haven't even been prospected for oil, the deserts of Saudi Arabia for example. Sure, the price of oil is rising. Partly because of international competition for oil but partly because the dollar is worth less in the international arena than it was 10 years ago. But, there is plenty of oil for now and plenty more to be found. Oil probably isn't going to get much cheaper than it is now.
Of note is the proposition considered by the Calif. legislature to raise the tax on eco-friendly cars because of the loss of state revenue from the taxes on the consumer price of unleaded gasoline. Thank our lucky stars that we are on unleaded gasoline with catylytic converters and pcv valves too because the air in many large cities around the world is more carcenogenic than it is a breath because they don't have these things.
"...rest assured we'll never be paying less than $2 a gallon *ever* again."
I wonder if this is translating or will translate into our hobby. On one side, we are not taxed so much on our coins (Federal, State, and local). On the other side, collecting U.S. coins seems to have international appeal, more so recently. The coin market appears to be expanding and that means more competition for U.S. coins. It seems that the cost of gasoline is rising, the cost of living is rising, and it would seem reasonable to deduct that the price of coins will also rise.
Take for example, that 20 coin box we sometimes talk about. Is it becoming more valuable, knowing that Year 1995 or year 2000 dollars have considerably more value than 2005 dollars. If we accumulated our 20 coins over this time and paid $1 for example for the coins. Today those coins might cost you $1.30 to replace today. I say that because my series has gone up 20% over just the last two years, similar to the rise in the price of gasoline. One could say that coins are more expensive in $U.S. now and therefore more valuable but have they really gained value, do they buy more? So, in the context of prognostication, it seems reasonable to accept that the cost of those 20 coins could be related or at the very least seem to be tracking with the price of gasoline and the value of the dollar. At least for now, the price of coins does indeed seem related to the price of gasoline.
Whether popular or not here is further news that favors stronger PM's and commodities:
While the +110,000 "net" new jobs added to our economy in March was about half the expected amount, the interesting part is that the Birth/Death net model was responsible for +179,000 of the total. Huh? Basically the model estimated 179,000 while the actual jobs reported by employers was -69,000. Net total of 110,000 "new" jobs. Thanks Bureau of Labor and Satistics (BLS.gov)
NEW YORK - Those looking for the market to make a substantial move higher will likely have a very frustrating week ahead. Chronic fears of inflation — spurred by record oil prices and reports of higher prices for consumer goods and services — have sent the major indexes to their lowest points of 2005.
And in the week ahead, there is only a handful of earnings reports and a dearth of economic data to give investors guidance.
A lack of news in a skittish market is never good. A best-case scenario would be a flat to slightly higher market as investors shift their portfolios or attempt to find sold-off bargain stocks. But with oil prices well above $57 per barrel, investors may continue last week's sell-off, abandoning stocks for the relative safety of bonds, or even just sitting on their cash.
With the bulk of earnings season just a week away, bad news may also come from corporate America as companies who don't expect to meet Wall Street's earnings expectations revise their forecasts lower to blunt the inevitable hit to their stock prices.
Last week, record oil prices and higher consumer prices in the service sector combined to heighten inflation fears and push stocks mostly lower. For the week, the Dow Jones industrial average lost 0.37 percent and the Nasdaq composite index fell 0.31 percent. The Standard & Poor's 500 index posted its first gain in the past four weeks, however, rising 0.13 percent.
ECONOMIC DATA:
With the Institute for Supply Management's bizarre mixup on Friday, the ISM services index, scheduled for release Tuesday, will merely be updated instead. Investors will look closely at a key component of the report, the prices paid for consumer services, to see whether it might be revised downward. Data showing a jump in consumer prices was responsible for Friday's sell-off.
Other than that, however, there is no notable in the week ahead, leaving investors to mull over their inflation fears for another week.
EARNINGS:
First quarter earnings season "officially" begins on Wednesday, with Alcoa Inc.'s earnings report due after the session on Wednesday. However, the bulk of earnings reports won't start coming out until the week of April 11, and only a handful are due in the week ahead.
Alcoa, which is traditionally the first Dow component to report its quarterly earnings, is expected to post a profit of 39 cents per share, down from 41 cents per share in the first quarter a year ago. Shares of Alcoa have fallen 17.3 percent from their 52-week high of $36.60 on April 6, 2004, closing Friday at $30.27.
Also on Wednesday, Monsanto Co. will release its earnings before the session. The agricultural supply company has doubled in value from its 52-week low of $31.36 on May 12, closing Friday at $64.66, just shy of its 52-week high. Monsanto is expected to earn $1.38 per share, up substantially from 70 cents per share a year ago.
Shove it in their faces by drilling your own well(s). Wells here are drilled at $12/foot of depth. That does not include the completion and frac job. If you really believe that "manipulation" BS then by all means, lease some acreage and drill away. It's a free country. Expect wellhead prices at 15% back of New York for light sweet crude. If you prefer a natural gas well, then I suggest drilling close, but not too close, to an actual gas pipeline. It is very difficult to truck natural gas.
You conspiracy guys crack me up! I know where a guy will pay you $5000 to take his oil wells. All you will have to do is assume all envinronmental liability, all plug-to-abandon liability, and buy several thousand dollars in annual permits from the state. Oh, you'll also need several thousand dollars in bonding insurance unless you have $50k in a CD to back yourself up.
Here is a very interesting story told by Richard Benson on his website yesterday. Could the guys in our government today be this SMART ?
By Richard Benson April 4, 2005
“The Asians remain shocked and in disbelief. Just when Japan, China, Taiwan and Hong Kong had accumulated enough dollars to buy oil to keep them warm for many winters, it's all over. In broad daylight, the Americans and OPEC cheered as the price of oil popped up from $30 a barrel to over $50 a barrel. Indeed, this jump in the price of oil increases the world's daily oil consumption bill of 84 million barrels a day to $4.2 billion, from $2.5 billion (or $1.5 Trillion a year from $900 billion). The world now has to shell out an additional $600 billion a year of "lucky bucks" to the oil producing countries just to stay in motion. That's quite a tribute to pay!
The bigger shock, however, is in the devaluation of dollar holdings of United States' Treasury debt. The rise in oil prices guarantees that the value of the dollar will be pushed down even further and stay down! Now that China is the number 2 oil importer and Japan is number 3 - with the rest of Asia very thirsty for oil as well - you can understand why the Asians must find a way to protect themselves.
The American strategy for using oil to finance our deficit is, of course, brilliant. Our elected officials knew that at some point those independent foreign central banks would start getting edgy about buying more dollars to pay for America's war and deficits. (The $650 Billion trade deficit is threatening the dollar.) So, which central banks can America continue to use as the fall guys to buy the dollar? Why not the Gulf Oil states, but where would they get the dollars to buy U.S. Treasuries? Well, with the Chinese piling up dollars and growing like crazy, at some point the oil market had to tighten. It was only a matter of time before the Chinese would start bidding up the price of oil. The Asians, therefore, are hung out to dry when the price of oil rises because they have to spend more of their dollars on oil.
As the price of oil goes up, extra money floods into the Gulf Oil Kingdoms. With our Secretary of Defense putting troops all over the ground in the Middle East, and those nimble aircraft carriers are near by and ready to deliver the "shock and awe of sudden democracy" to the Gulf Monarchs, it's a sure bet that America's OPEC buddies will stash their newly found Asian lucky bucks into good old American Treasury Notes.
With such a simple policy to fund our deficit for another year, it's no wonder America can get by without any brain power at the Treasury Department. In effect, America and our Gulf Arab allies just pulled off the biggest central bank heist in the history of the world. The price of oil just went up 60 percent or more, which really cuts down to size those $3.4 trillion of net foreign holdings of U.S. financial assets. As a loyal American, we would like to cheer our government's deft move to pick the pockets of our trading and financing partners. Moreover, America gets the Arabs to fund a large share of our deficit, subsidize our interest rates, and help keep our taxes low for another year! Surely, I can afford to buy another gas-guzzling Sport Ute, get a rifle, and wave a flag!
America is extracting Tribute on oil from the world. If the world wants Middle Eastern oil, they can pay for it through the Saudi branch of the United States Treasury. Why do the heads of Saudi Arabia, Kuwait, Abu Dhabi, Bahrain, Qatar, etc., hold dollars? Because they want to keep the money and the power! (The ruling family of Saudi Arabia controls 25 percent of the world oil reserves and is completely dependent on oil revenues for its survival. Tens of thousands of Saudi princes live off lavish royal stipends). Think of Arabia as a family firm. If the dollar goes down in value, the Saudi Royal Family still gets to personally keep hundreds of billions of dollars. But, if they don't buy dollars, why would America keep them in power? It would simply not be in our interests to do so. Remember when Saddam Hussein talked about pricing Iraq's oil in Euros? "Shock and Awe" quietly followed.
This program of oil for dollars and dollars for the U.S. Treasury deficit is the simple tribute that we, as the Super Power, can expect. America is well paid for keeping the world's supply of "black gold" safe and available to all. Unlike Vietnam - when America was trying to finance guns and butter - getting others to pay now for our guns, allows us to milk the oil out of the sand and turn it into butter!
The next question will be how the Asians respond to a 60 percent hike in the price of oil? “
Here is another interesting bit of news that barley made a wave with the media. FOX covered the story yesterday for a couple of minutes.
President Bush took the media on a tour of the Social Security Trust Fund yesterday. He walked into a large office with one lady at her desk and asks her where the Social Security Trust Fund was. She pointed to a 4-drawer file cabinet against the wall. The file cabinet had small combination locks on it, and when she opened it there were large notebooks inside.
The President asked her if this was the entire Social Security Trust Fund? The Lady replied it was, there were no bank accounts, or other investments, just what was in the 4 file drawers. The President asks her to please show him one of the notebooks and explain to the American Public, and the Press, what it contained. The Lady then answered the notebooks contained one Trillion four hundred Billions dollars worth of I.O.U.’S.
PARIS (Reuters) - Accumulation of dollar reserves by some Asian countries could spark a systemic foreign exchange crisis, the chief economist of the World Bank said in an interview to be published on Thursday.
Francois Bourguignon told the Les Echos newspaper it was too early to talk of a speculative bubble but that the United States had to cut its deficits to head off a crisis. The paper released the text of the interview ahead of publication.
"For the moment I would not speak of a speculative bubble but of the danger of a systemic crisis linked to the accumulation of foreign exchange reserves," Bourguignon told the paper.
"Some countries, particularly Asian ones, have no interest in the parities of major currencies being modified. As a result, they are financing the enormous American current account deficit.
"Today, the danger is that some dealers are starting to think they must change the rules of the game, play dollar depreciation and move toward the yen and the euro. That would confront us with a real systemic risk."
Cutting the U.S. deficit was key, Bourguignon said. The World Bank foresaw an orderly adjustment with the United States announcing a progressive reduction in its budget deficit accompanied by interest rate rises.
"Too drastic a program would plunge the United States into recession," he said.
Recent pronouncements by Alan Greenspan, chairman of the U.S. Federal Reserve, suggested things were changing, he said, but "we are at the mercy of the nervousness of market dealers.
"Today, no catastrophe is anticipated in the coming six to nine months. So I am not yet totally pessimistic," Bourguignon added.
A fall in the dollar, even in tandem with an appreciation of the yuan, would not by itself correct the US current account deficit and other global imbalances, World Bank chief economist Francois Bourguignon said.(AFP/File/Tim Sloan)
Almost sounds like it's really Bill Bonner talking
Hummmm, I guess it would be in our best interests to have some kind of influence within the world bank organization. Ah yes...
"The World Bank's 24 executive directors, representing its 184 member nations, said they unanimously selected Wolfowitz as the successor to James Wolfensohn, who steps down on May 31 after a decade in the job."
I prefer to analyze silver on supply and demand fundamentals rather than currency changes or chart configurations. I try to be a long-term value investor and analyst. I would never sell an undervalued asset (or buy an overvalued asset) just because the charts looked good or bad. Nor would I make a move just because I thought the dollar would go up or down.
Currently the metals world seems to be engrossed in currency and chart signal obsessions, particularly concerning gold. As you know, I write almost exclusively on silver, but it’s hard not to comment on gold, given their long-time shared history. I have written several articles, over the years, describing how the age-old relationship between these two precious metals had taken different paths in the past hundred years or so. Silver has become a vital industrial metal, needed in thousands of industrial applications, while gold remained true to its historical jewelry, investment and hedging roles.
This changing new dual-role for silver – both as a precious metal and one that’s an industrial necessity – resulted in a phenomenon unprecedented in the annals of history. This new demand for a universally known and revered commodity has almost evaporated the cumulative production of 5000 years of world mining. Who could have ever imagined that the silver being plundered and shipped from the Americas to Europe 400 years ago, would be consumed in cell phones, TVs and water purifiers? Silver became mandatory in all sorts of modern things designed to make life better. It also created the investment opportunity of a lifetime. That’s because there is unquestioned documentation that not enough of this good news metal exists to go around.
If silver has become the good news metal, based upon a growing world economy, then gold seems to be developing into the bad news metal, at least in some promoters’ writings. Wherever I look, I feel inundated with stories promoting gold as some sort of end-of-the-world cure-all. The reasons for promoting gold all seem to be apocalyptic - the destruction of the dollar, a slide into world depression, a breakdown of world trade, soaring oil prices, Islamic terrorists, runaway inflation or deflation. It’s downright depressing.
I also find it offensive how gold is increasingly portrayed as some type of anti-American barometer or tool, almost as if the higher gold goes in price shows how bad America is. That a few who enjoy the benefits of living in the US promulgate this feeling is particularly offensive. I don’t know where this "gold is good America is bad" sentiment came from, but I think it stinks. I’m not anti-gold, I just disagree with the anti-American overtones of some gold bugs. Not only is America the best country in the world; it is the best country in the history of the world.
Gold going up in price will only help, not hurt silver investors. Since most of the factors favoring gold (currencies, asset diversification, no one’s liability, etc.) are present and turbo-charged in silver, higher gold prices can only bring favorable results for silver. My gripe is that those most vocal in gold appear to be also dissing America. I don’t see the connection. I’m just glad that the negativism that seems to envelop some true believers in gold seems to bypass silver. I’d hate to see silver promoted in such negative terms.
Like any asset class, gold can become overvalued. Especially when the tech funds who significantly influence price become heavily invested for reasons unrelated to gold itself. They often buy because of factors as simple as the price going up. Such buying can be notoriously fickle. Buying strictly because of price signals on the way up invariably leads, at some point, to selling strictly because of price signals on the way down. It has nothing to do with gold itself, and as such, can and does artificially distort the price. This is the essence of my study of the COTs. (By the way, the current COTs still indicate an epic extreme that must be resolved with either a short squeeze or a sell-off.)
I am neither a true gold believer, nor basher. I am a gold agnostic. Be sure that I have many friends in the gold world and the last thing I would want to do is insult them. I recognize that if enough people put their money in it, gold, like any asset, can climb to any price imaginable. I recognize there are forces working both for and against the price, some free market oriented, some not. Being a gold agnostic did not prevent me from being the first to write about the fraud and manipulation of metal leasing and forward selling, and from explaining why gold was so undervalued $200 lower. But I just don’t see gold (or silver) as the panacea in a doomsday scenario. And life is too short, in my opinion, to dwell on such a negative endgame. Buy for capital appreciation, not to survive in a "Mad Max" world.
Being a gold agnostic, I look at things differently than do most true gold believers. I think that’s good, because differences are what make life and analyses interesting. For instance, I see very little, if any, future role for gold (or silver) as money. I just don’t see paper money being replaced by gold or silver. Money is a medium of exchange. Gold (and silver) is less of a medium of exchange in everyday world life than at any point in history. I know many hold gold (and silver) to be true money, as it had been for thousands of years. Well, the horse was basic transportation for thousands of years, and will, in my opinion, return as basic transportation about as soon as gold and silver return as basic money. Gold and silver are assets that are bought and sold as any other asset, not money or currency. If and when that changes, namely, we start using gold or silver in everyday commerce as money, then, I would agree, that they are money. Until then, they must be considered tangible assets.
The funny thing is that paper money is dying, as its share of commerce is hitting record low percentages. But that is due to growth in credit and debit card and e-commerce transactions, not due to a metal money resurgence. In the unlikely event fiat money becomes thoroughly worthless any time soon (it will, of course, in the very long run), it will undoubtedly be replaced with another form of fiat, not metal. It should be obvious that there is probably not enough gold (and certainly not enough silver) in existence to provide a free circulation as money. And talk of a coming gold dinar (or silver dirham) is just plain silly and unworkable, in my opinion. Besides, even if fiat money were replaced with metal backing, the same government institutions that messed up the worthless fiat experiment would be in charge of the metal-backed currency, and you could count on the same old tricks.
I feel I can afford to be a gold agnostic because of the existence of silver. If silver didn’t exist, I might not be so quick to be a gold infidel. But silver, most assuredly, does exist, although in smaller and smaller total quantities daily. And that gives me, and should give you, the confidence to choose between the two. If gold soars in price due to macro-economic forces, silver will exceed percentage wise, by a wide margin, any long-term gold advance. And percentage return is what matters most to a comparison shopper. If gold falters long term, silver’s fundamentals will kick in and it will divorce itself from gold. It’s a win-win for silver.
The reason silver is a win-win, no matter what happens to the price of gold, is at the core of the difference between the two metals. Gold needs continued new investment buying to buoy the price. Silver doesn’t. Now, gold just may get that continued new investment buying and the price may continue to rise indefinitely. In that case, silver will get its share of that buying and will accentuate the move to the upside, given the small size of the silver market, and the resultant extreme price sensitivity of silver to investment buying.
But if continued new investment buying does not materialize in gold, it’s no big deal for silver. Because of the structural industrial deficit in silver, the law of supply and demand dictates we will run out of silver at some point and overwhelm the ongoing manipulation. Then silver prices will explode, regardless of what gold or any other commodity may be doing. In fact, when this event occurs, it is likely that we will then see specific investment buying targeted to silver, as the world discovers the real silver story.
Let’s say we gave the following lesson to a group of children. There are two metals of the same category (precious). The only outward physical difference is color; one is white and one yellow. They felt and weighed the same. They had each been used for the same purposes for thousands of years, but in the last hundred years or so, the white one was discovered to have many unique properties, better than any other material, that made possible many of the modern devices and inventions that made life better. Because of all the necessary uses on this white metal, all the accumulated amount produced over 5000 years was almost completely depleted because we couldn’t produce it as fast as we consumed it. The yellow metal was basically used as it always had been and all of it was still around in a form that could be retrieved. Because the white one was used up so much, there was a lot less of it left in the world than the yellow one. And even though the world produced more of the white one than the yellow one, it used up even more. So, even though there is less of the white metal in the world, meaning it’s rarer than the yellow one, there is less of the white one every day, while there is more of the yellow metal every day. Additionally, the governments of many countries in the world own a lot of the yellow metal, which they keep selling, while very little of the white metal is still owned by governments, meaning not much can be sold. If the yellow one disappeared completely from the face of the earth overnight, it would have little or no impact on the life of the average world inhabitant. But if the white metal disappeared, modern life as we know it would be disrupted beyond belief.
Now, the children are told that one metal cost 60 times as much as the other, and are asked to guess which metal is the most expensive. How do you think they would answer? It’s that answer that permits me to be a gold agnostic.
I did not mention that most newly mined silver comes as a byproduct to the mining of other metals, so I did not discuss the differences of cost of production between the yellow and white. Nor did I point out that the white metal had a much larger short position than the yellow one. And I did not raise the issue that if all investors in silver switched and put their entire proceeds in gold, it would hardly cause a ripple in the price of gold. While if 1% of the amount invested in gold were to migrate to silver, the silver price would immediately explode by many times the current price.
It is when you step back and try to keep things simple, that the basic merits of silver clearly emerge, especially in a comparison with gold. This is what creates the lifetime investment opportunity in silver. It’s not intended as a knock on gold, but as a valid comparison, which just happens to reflect very favorably on silver. I’m amazed more gold investors (and there are many, many times the number of investors in gold than silver) haven’t made the silver connection yet. I think more will, if they study the merits objectively.
Perhaps the biggest merit emerging is that when you invest in the good news metal, you don’t have to root for bad things to happen, you just root for more world citizens to lead better lives.
There are several other very good essays by thisauthor.
<< <i>Here is another interesting bit of news that barley made a wave with the media. FOX covered the story yesterday for a couple of minutes.
President Bush took the media on a tour of the Social Security Trust Fund yesterday. He walked into a large office with one lady at her desk and asks her where the Social Security Trust Fund was. She pointed to a 4-drawer file cabinet against the wall. The file cabinet had small combination locks on it, and when she opened it there were large notebooks inside.
The President asked her if this was the entire Social Security Trust Fund? The Lady replied it was, there were no bank accounts, or other investments, just what was in the 4 file drawers. The President asks her to please show him one of the notebooks and explain to the American Public, and the Press, what it contained. The Lady then answered the notebooks contained one Trillion four hundred Billions dollars worth of I.O.U.’S. >>
i couldn't believe this either. A sitting US president was questioning the security of US treasury bonds, which is what those IOUs are. If investors ever believe that they will not be paid out, the costs of borrowing will increase, and our taxes will have to increase accordingly. We as a nation are currently issuing those very "IOUs" to finance the federal deficit at a record rate under his administration, with his party in control of both houses of congress.
“then gold seems to be developing into the bad news metal, at least in some promoters’ writings. Wherever I look, I feel inundated with stories promoting gold as some sort of end-of-the-world cure-all.”
“I am neither a true gold believer, nor basher. I am a gold agnostic.”
Cladking, Great post, and my feelings exactly.
I personally will not buy anymore gold unless it is numismatic. Large silver bars are a pain in the neck to store but my feeling here is that over the last several years Gold has had its shot to move up in times of war, oil problems, inflation, etc. I think it tries, but gets slammed down. Gold is just too easy to manipulate with all the trillions of printed dollars out there. In addition I also agree that those that believe the World can ever go on a Gold standard just have not crunched the numbers, there is not even close to the amount of Gold on the planet to support daily use of this metal.
As I said in an earlier post silver has a much better chance of moving up in the near and long term.
SFD It really makes no difference who is in the White house, or controls the congress these days, the fact is the mold is set, and there will be a time that the size of governments, and the entitlements crash the paper money system. The best any of us can do is try to protect our small family units and wait for a restructuring.
"It's the entitlements” “World War I increased the Debt by $25 Billion. The Great Depression increased the Debt by $33 Billion and World War II increased the Debt by $222 Billion. The Clinton "peace time" years increased the Debt by $1,200 Billion. I expect that the Geo. W. Bush years will be just as bad, except that Bush has the "War on Terrorism" to fund.”
Tom, I am sure I speak for all of us here, we are very happy your surgery turned out well, and you are back with us, Terry
Tom, I am sure I speak for all of us here, we are very happy your surgery turned out well, and you are back with us, Terry >>
Thank you Terry and everyone. Wedsnday will mark 3 weeks since the surgery and let me tell ya, I can't wait to REALLY be back. I believe the next couple of years is going to see a continuence of this out of control government spending and those of us in the coin and "things" business will have a real opportunity to add to our retirement portfolios.
(The American Prospect) This column from The American Prospect was written by Terence Samuel. -------------------------------------------------------------------------------- This week, President George W. Bush went to the Bureau of Public Debt, in Parkersburg, West Virginia, to make the point that there is no Social Security trust fund -- nothing there that can be really counted on. All it is, he said, was a bunch of IOUs. Parkersburg is a river town near the Ohio border, where the Ohio and Little Kanawha Rivers meet, and it is something of an irony that the one presiding over the largest explosion in federal budget deficits would use the Bureau of Public Debt as a backdrop for his plea for solvency in Social Security.
But the bureau may indeed serve as a confluence of many of the serious problems confronting the country over the long term: booming deficits fueled by wildly out-of-balance federal budgets and reckless, sometimes dishonest federal fiscal policy. This week in Washington, the GOP leadership in Congress is continuing its efforts to come up with a budget resolution for the next fiscal year, a blueprint of priorities that will also look out at the next five years. There is some question about whether they can come up with a deal that they can sell to the disparate and increasingly rowdy elements of their party.
The Senate and House plans reveal sharp ideological disagreements, and both plans differ in important ways from the president's budget blueprint. In two of the last three years, Congress was unable to produce a budget resolution, the basic framework of how the federal government will spend and raise money. This year, the GOP has a lot of incentive to pull it off. A budget resolution will give them the opportunity to pass a lot of controversial initiatives [drilling in the Arctic National Wildlife Refuge and making tax cuts permanent] by a simple majority, since budget bills can't be filibustered.
Without the budget resolution, those proposals face Democratic filibuster and will likely die. Regardless of how it is sliced and diced, we are looking at an annual deficit of $368 billion this year and a 10-year projected deficit on $1.35 trillion, according to the Congressional Budget Office. And none of these numbers include the cost of the continuing military operations in Iraq and Afghanistan.
The president's suggestion in Parkersburg, that the $1.7 trillion in Treasury bonds held by the Social Security Administration is "not a pot on money to be drawn on," is a scary proposition. It not only threatens the future of Social Security, but it also goes to the heart of the debate over the long-term health and viability of the national economy. Debt and deficits, colliding with the spiraling costs of entitlements -- Social Security, Medicare, Medicaid, farm subsidies, student loan programs -- may mean we are headed for desolate economic shoals.
Newsweek's Robert Samuelson envisions it as an "and economic and political death spiral."
And when one considers how deficit concerns dominated the politics of the 1990s, it is remarkable how sanguine we are faced with the current situation. Remember that giant sucking sound? It has fallen quiet. The first President Bush agreed to a $500 billion deficit reduction plan that required him to raise taxes, breaking a no-tax pledge that may have cost him his presidency. But he may have made it easier for Bill Clinton to go down the same road two years later, in 1993, when he negotiated another $500 billion deal to reduce the deficit over five years. That solidified Clinton's reputation as a good economic steward and may have saved his presidency later.
And in 1994, it was largely over concern about the size of the federal government that allowed the Republicans to take control of Congress. Deficits politics turned to surplus politics, making it easier for George W. Bush to get his record-level tax cuts.
These days, there is nothing on the table worthy of the name "deficit reduction," but there is growing concern. Conservative GOP budget hawks in the House -- embarrassed by the tarnish that the deficits puts on their reputation as the party of smaller, cheaper, more responsible government -- have been challenging their leadership to more aggressively address the deficit problem. The comptroller general of the General Accounting Office, David Walker, has been saying the solvency problem in Social Security is essentially a small stream headed for a much bigger river.
"First, [Social Security's] financial challenge is a subset of our nation's financial and fiscal challenge," Walker told a House tax panel recently. "Social Security has an estimated unfunded commitment in current dollar terms for the next 75 years of $3.7 trillion. ...That compares with a roughly $43 trillion problem for our country."
So the problem is not just that Social Security may not be able to mail out monthly checks someday in the distant future but that, more perilously, the federal government may find itself so mired in debt that the whole economy just slowly grinds to a halt.
Walker says that without significant reforms we could end up with a federal budget almost entirely committed to interest payments. "[W]e could be doing nothing more than paying interest on federal debt in 2040 if we don't end up engaging in some fundamental reforms of entitlement programs, mandatory spending, discretionary spending and tax policy," he says.
If we assume the Treasury issues are the same as a trust fund, because they are backed by the U.S. government, then the real problem with Social Security is almost a half-century away.
If there is a question about the reliability of those bonds down the road, then you are talking about a larger set of problems: There may come a time when the federal government might not be good for its IOUs.
"Four years ago, the Bush administration inherited a projected 10-year budget surplus of $5.6 trillion," says House Minority Whip Steny Hoyer. "Since then, we have run record deficits of more than $400 billion a year, and Congress has been forced to increase the national debt limit three times. Even worse, the administration and Congress have no real plan to rein in deficits and debt. This threatens our investments in issues important to our communities -- on everything from health care to our national security."
Walker made an interesting point when he recently appeared before the House Ways and Means Committee: The Social Security Trust Fund has IOUs because the Federal government spends, every year, hundreds of million of surplus payroll taxes collected for Social Security. These days, that means the federal deficit looks smaller that it actually is. In 2008, those surpluses begin to dwindle.
"And since Congress has, for a number of years, spent every dime of the surplus on other operating expenses," said Walker, "that means it will increasingly put additional pressure on the balance of the federal budget starting in 2008."
That's about the time an almost-62-year-old George W. Bush heads back to Texas to begin his retirement and, sooner or later, to start cashing those Social Security checks.
The day Bush was sworn into office in 2001, the national debt was $5.7 trillion, and there was a surplus. On the day he showed up in Parkersburg, it had climbed to $7,782,816,546,352.29. That is seven trillion, seven hundred and eighty-two billion, eight hundred and sixteen million, five hundred and forty-six thousand, three hundred and fifty-two dollars, and twenty-nine cents.
But it's just an IOU. Terence Samuel is the chief congressional correspondent for U.S. News & World Report. His column about politics appears each week in the Prospect's online edition.
Hi: I'm new to this thread, and to the message boards. But I believe that I have useful info for everyone. I have followed Don Hays for 20 years and find him to be the most accurate in forecasting. His expertise is in the stock market, but he has keen insights on all economic issues. I wish I knew how to add links and pics, but the bottom line is he believes we are in a long term narrow range for commodities, including gold and silver. His website is free for 5 days with a wealth of info. He is the main rudder on my ship forever. If interested, go to www.haysmarketfocus.com
Hey Kaytsok, Welcome to the thread! I think its great that we have someone who is a paper asset guy join our discussion. I went to your website but am a little reluctant to join since they want all my personal info. In addition It appears this gentleman is tied in with a major brokerage firm pushing stocks if you look at his quote below. Since you have been a long term, 20 year follower, please tell us where you and Mr. Hays think things are headed in the economy.
“This subscription is provided as a courtesy of Morgan Keegan & Company for use by its financial consultants. If you are a financial consultant of Morgan Keegan, please contact your firm for information about this subscription.”
What an absolutely marvellous thread this is as there is so much information and so many diverse opinions presented. One of the best here in recent history IMHO
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Don Hays was a NASA engineer in the 60's, putting people on the moon. He got into the investment business in 1970 or so. Thinking like an engineer, it was difficult for him to forecast the stock market. He built a model which he still uses today with a tremendous history of success. He is a regular on CNBC and the like. His model says that there are three variables effect the stock market. Not 4, not 2. Monetary conditions, psychology, and valuation. Since he retired and started his own money management firm, the S AND P 500 is at a loss, while HIS long term growth portfolio has doubled. Not too shabby. His outlook: the stock market will double by 2008. I am a CFP/MBA and I've been in the investment business for 25 years. At this time, NOBODY has such an optimistic outlook. Yet, I believe he'll be right, only based on my 20 years of following his advice. His website looks at many things, including gold/euro comparision, etc. He believes that gold and silver will be in a narrow trading range for a long time. I gotta go. I'm at work and I have a client coming in momentarily. I'll try to get back later in the week. Anyone that wants on my mailing list for him, send your email address to: kaytsok@yahoo.com
Well Sir come on back when you have a chance. We would all like answers to the following:
“His model says that there are three variables effect the stock market. Not 4, not 2. Monetary conditions, psychology, and valuation.”
1. Monetary conditions seem to be that the Fed, and the guys in Washington, turn the printing presses on at full tilt and never turn them off. 2. Psychology seems that most Americans have lost money in their stock programs over the last five years while insiders have cleaned up. 3. Valuations looks like overall PE’S are at historic highs
Perhaps Mr. Hays made all this money for his clients going short?
“He is a regular on CNBC”
I am sorry but this won’t impress to many of us here since the majority of these guys never even saw the Nasdaq crash coming, and have been telling Americans for 5 years that the market was headed back to new highs.
“HIS long term growth portfolio has doubled.”
This may be correct, but on the other hand there are 100,000 guys out there selling their stock secrets, and trying to pick the one in a thousand that was right is like try to win the lottery. In addition to that , “past performance is no guarantee of future success”
“His outlook: the stock market will double by 2008.”
If he thinks the Dow will go to 20,000 in the next three years, or any of the other major markets will double in that time, I can hardly wait to hear his reasoning.
Well Sir come on back when you have a chance. We would all like answers to the following:
“His model says that there are three variables effect the stock market. Not 4, not 2. Monetary conditions, psychology, and valuation.”
1. Monetary conditions seem to be that the Fed, and the guys in Washington, turn the printing presses on at full tilt and never turn them off. 2. Psychology seems that most Americans have lost money in their stock programs over the last five years while insiders have cleaned up. 3. Valuations looks like overall PE’S are at historic highs
Perhaps Mr. Hays made all this money for his clients going short?
“He is a regular on CNBC”
I am sorry but this won’t impress to many of us here since the majority of these guys never even saw the Nasdaq crash coming, and have been telling Americans for 5 years that the market was headed back to new highs.
“HIS long term growth portfolio has doubled.”
This may be correct, but on the other hand there are 100,000 guys out there selling their stock secrets, and trying to pick the one in a thousand that was right is like try to win the lottery. In addition to that , “past performance is no guarantee of future success”
“His outlook: the stock market will double by 2008.”
If he thinks the Dow will go to 20,000 in the next three years, or any of the other major markets will double in that time, I can hardly wait to hear his reasoning. >>
I wish I had the ability to elaborate more. Due to time constraints, I will say that I cannot devote too much time on these boards. The people are obviously very knowledgble and there is a great deal to lear. But my bias to Mr. Hays runs deep and I have learned not to trust my emotions, but listen to his model. It has kept me out of many minefields in 20 years.
But, on valuation. There are many different valuation models telling us is the market is overvalued or undervalued. Most are earnings driven. He uses the IBES Valuation model. (Institutional Broker Estimate Survey). It takes earnings estimates of the biggest and best institutions, takes an average, (12 months looking forward). The denominator is the inverse of the 10 year bond yield. So unlike many models that simply look at earnings, interest rates are in the equation. In 2000, the model suggested that the stock market was 60% overvalued. Today, it is suggesting that the stock market is 34% undervalued. He suggests that this model has NEVER given an incorrect signal and that stocks are deeply undervalued today.
Monatary conditions: liquidity is critical in this variable. It is measured many different ways, but there is still a ton of cash on the sidelines; plenty of fuel and ammunition to go into the stock market over the next few years. This variable is strongly bullish.
Psychology: historically, the market's best performance started when fear, panic and pessimism are high. So when measuring the psychology variable, the more fear, panic and pessimism, the better. It is measured many different ways, but psychology today is bullish, as oil, inflation, terrorism, Social Security, etc., all are causing everyone heartburn.
His never short the market. He is a pure top-down money manager. That is, if you are bullish, you increase your weighting in the stock market. If he is bearish, he will lower his weighting in the stock market, increasing cash and bonds. In 2000, when the NASDAQ was 5000, he said it will go back to 1500. Six months before 9/11, he suggested that terrorism was the number one problem in the world today. He believes that capitialism and democracy are enveloping the earth and nothing can stop it. With the techonolgy revolution in motion for the past 10 years, this will drive productivity in the decades ahead, similar to what the industrial revolution did for decades.
His model is a 4 legged stool: valuation, psychology, monatary conditions, and a 4th leg: the long term upward bias to the stock market. This 4th leg is always on the ground. If any 3 of the 4 legs are on the ground, the stock market will be fine for the next 6-30 months. When 4 legs are on the ground, conditions are great for stocks. If only 2 legs are on the ground, lighten up positions in the stock market. The models changes on average once per year, so it is not a market timing model. It is an asset allocation model.
I could go on and on. I'm simply suggesting that this works. I wish I knew how to add links, graphs, etc. But I don't. Sorry. He manages approximate $300 million dollars and is bringing in $10 million per months. I manage $120 million for my clients, utilizing his model.
On 9/11, he convinced me to do two things: if you in the stock market, stay in. If you are out, get in. Think of the model. Fear went through the roof. That leg became indestructible. Valuation: with the big drop, it was 35% undervalued when it reopened. Rock solid on the ground. And the fed opened the spigots and liquidity was at record levels; again rock solid. His model said stocks were the place to be. And he was right.
As for the stock market doubling, it was purely a guess based on some technical analysis, looking at the S AND P earnings over decades. It the stock market gets back to fairly valued, and earnings continue to expand, a double is a reasonable expectation.
I am sorry in advance for not defending any of this work in the future, as I just don't have the time to devote to this thread. I wish I did. I encourage anyone who wants to get the Don Hays Morning Market Comments from me, sent once per week, to do let me know at kaytsok@yahoo.com
Thanks for the opportunity to tell the Hays story. While my company buys other very expensive research (such as Merrill Lynch, Bank Credit Analyst, etc.) my primary focus (not exclusive, but predominant) is to use the Don Hays work. It takes fear and greed out of the equation, which is the key, and uses a time-tested model that has a high degree of reliability. So: buy stocks and enjoy the next four years.
Kaytsok; This is a very interesting model and your description does seem to answer some questions about why it has worked for twenty years. It should be noted though that there was a massive psychology change in 1982 that set this up to work and that the interest rates which make the market appear to be undervalued will be raised every time the market starts to go up. Indeed they may go up even if the market does not recover.
It's not that I disagree that the market is undervalued, I just don't believe it will become fully valued or overvalued until some of the structural problems in the economy and society are addressed. Interest rates are the divisor in the model and are strongly correlated to these problems.
WASHINGTON (AFP) - International Monetary Fund chief Rodrigo Rato warned that global markets could stage an "abrupt correction" if governments do not address serious imbalances in the world economy.
Rato said the global financial system was out of kilter because of the huge US current account deficit, weak growth in Europe and Japan, the low savings rate of US consumers and inflexible currency regimes in Asia.
"If policies do not adapt, do not change to react to these imbalances, we run the risk of an abrupt correction of the markets ... (when) confidence for different reasons could evaporate or could be reduced," he told reporters.
Rato was speaking after a twice-yearly meeting of the International Monetary and Financial Committee, the IMF's policy-setting body, which followed talks among the finance ministers of the powerful Group of Seven nations.
"In these meetings we have clearly stressed that those risks are increasing," Rato said.
"Although the central scenario of the world economy is extremely positive and we see a clear good opportunity for growth to continue, we are certainly not only advising countries but calling on countries to take action on those issues of global imbalances," the IMF chief said.
"Implementation is the responsibility of governments. I take this chance to insist once more that important economies in the world face a special responsibility regarding world imbalances," he said.
Rato cited in addition the "need for Asian countries to have more flexible exchange rates," after the G7 implicitly called on China to relax its yuan-dollar currency peg.
The IMF managing director's comments came after a week of turmoil on global stock markets with Wall Street plumbing five-month lows on fears of a US economic slowdown.
British finance minister Gordon Brown, who chaired the meeting grouping the IMF's shareholder nations, said the committee felt particular concern about high oil prices.
"I think we recognize that the volatility of oil prices and particularly the higher levels of recent months could have a damaging effect on growth," he said.
"We do believe that there are measures that can be taken ... to make for a more efficient oil market," he added, citing the need for greater investment in production and refining capacity.
In its concluding statement, the committee called for global vigilance in the face of threats to economic growth such as the high oil prices, currency volatility and a potential spike in interest rates.
"While returning to a more sustainable pace, global growth will likely remain robust in 2005," its statement said.
"The committee notes, however, that widening imbalances across regions and the continued rise in oil prices and oil market volatility have increased risks.
"The potential for a sharper-than-expected rise in long-term interest rates from their very low levels and for increased exchange rate volatility also calls for vigilance," the statement added.
In their earlier talks, the G7 finance ministers also warned of the impact of high oil prices on growth.
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Thanks for your opinion. I think you did a great job explaining Mr. Hay’s theory.
As I said several days ago I have been hired by a small company as a consultant to develop them a plan for growth in this weird economic climate we are living in.
This is a small mortgage company with offices in 5 states. They are taking the company public, and trading should begin in about 3 weeks. The major stockholder is a 25-year friend.
I have been hired to develop them a new growth business model that will hopefully keep them out of trouble. I have been working on the report for weeks and it is already 150 pages long.
Here are a few high lights, I invite all of you to pick it apart since we are having a meeting in Phoenix this next week and after that the plan goes into effect. Below are some thing I am going to tell them. Let me also say that a mortgage business is not an area that I would be looking at as a startup at this time, but this is what they have.
1. I am going to tell them not to count on millions of baby boomers all moving south from the rust belt, as many are now afraid to up root.
2. I am going to tell them that in my opinion the majority of well healed American investors are tied of gambling in the stock markets, and even though there is lots of money on the side lines that money is going to be looking for a home in investments that make sense.
3. I am going to tell them that investors the next decade “ are going to be more concerned about the return of their investment than the return on their investment”
4. I am going to tell them we are headed for some serious inflation, and if they want a strong stock price they need to build assets in the company as well as earnings.
5. I will advice them that because they are going to be dealing in paper that will most likely depreciate, that they need to build an internal inflation hedge in the company. I picked silver for the reasons I stated earlier.
6. My advice to them on offerings will be NOT to do common stock offerings, but to do units that have some shares as well as part of a mortgage pool that pays immediate interest dividends higher than the average of most NYSE companies.
7. I am going to tell them to rate every loan that comes in and not to buy for their mortgage banking division ,or their investors, any subprime loans that are ARMS, INTEREST only loans, 120% of VALUE loans, or any loans in one of a dozen cites that currently have bubbles waiting to pop i.e. most of CA. and others. They can broker these loans but not buy them.
These are just a few highlights what do you think?
I know ONE thing. The older I get the less I know.
Goldsaint, it is about time to take some of the chips off the table in CA RE. Orange county is OVER for a while. I have watched 4 runups in CA RE, investment type in the Bay Area in 77-78, Residential in the Bay Area in 89-90, residential in the Bay Area in 98-00, and Residential in OC the last 3 years. What follows each of these 'bursts' is a mild recession.
I would not what to hold weak paper in any of those markets for 3-5 years after the run up.
RE; baby boomers flocking to the sun belt. Has a lot in common with cracking out OGH. Most of it has been done.
A smart company might consider investment in Indiana. Ungodly cheap, straight up people, good business environment. So cheap in my eyes that it almost looks "free for the pickins". I'll be there in August, September and hope to close escrow on some dirt.
A smart company might consider investment in Indiana. Ungodly cheap, straight up people, good business environment. So cheap in my eyes that it almost looks "free for the pickins". I'll be there in August, September and hope to close escrow on some dirt. >>
Indiana does have a lot going for it. Laws, taxes, and the business climate are all favorable to business. There is solid infrastructure yet lots of room for growth. Many major industries are already here and there is a solid core of trained and educated workers who frequently have a strong work ethic.
There are also some major problems especially in the Il and Oh border towns; lots of new growth and population increases. The laws in this state governing the actions of business are right out of the middle ages and shouldn't be expected to last. Of course we also have all the other modern problems even if they are largely confined to a couple of population centers.
Indianapolis is underrated as a city and the north central and western north central parts of the state are underrated for potential growth.
His outlook: the stock market will double by 2008. I am a CFP/MBA and I've been in the investment business for 25 years. At this time, NOBODY has such an optimistic outlook. Yet, I believe he'll be right, only based on my 20 years of following his advice. His website looks at many things, including gold/euro comparision, etc.
Interesting projection but like the majority I see the stock market as over-valued by 50%. But then again, the heard is usually wrong, or so they say. The past 20 years have all had the same philosophy: pro stocks, pro real estate, pro -easy credit, and anti-commodities. I should say that this model worked great for 20 years as everything was geared toward that end result (central bank gold sales, printing money, easy bank loans, etc.). Now to say that someone's track record has been great for 20 years using the same model doesn't really apply if the model breaks and doesn't apply to a new set of conditions. But yes, if easy credit, lower inflation, foreign investiment in the US, baby boomers continuing to flock to stocks, and manipulation of gold downwards continues to 2008, then Mr. Hay wil be correct once again. This will be most interesting as the expansion from 1982 will then be 26 years in the making and the longest bull in recent American history.
Comments
Hey, the central banks have sold up to 50% of their gold so far and have still not been able to keep the POG from advancing.
What a great way to put gold on the market yet claim it is for humanitarian purposes. Gordon Brown of England has is already responsible for selling 100% of the English gold cheap. Now he wants others to join him so England doesn't feel alone. Without continuing gold sales the price of gold will eventually break out.
roadrunner
That quote taken from Richard Daughty's recent article.
At least for the time being, PM's might be a reasonable alternative to paper asset manipulaton.
roadrunner
So to have beaten the DOW each 1931-S cent would only have to be worth at more than $1 each which is still only worth 5c in real dollars.
Hmmm, anyone have a time machine?
So copper was the best way to store assets even though a trifle bulky. Heck 173.2 $50 US Mint bags could have stored all of those cents!
RR, it would appear that Dividends are ignored in making that case against the Dow. Not wise, IMO.
Would we have a Dow at 10,500 today if the Enron’s, Worldtron’s, etc. were added back in at 50 cents per share?
That being said, I am not sure how Mr. Bonner arrived at his figure, my inflation calculator would have the 1929 100 Dow at 1,000 today without any adjustments.
Oreville makes the best point, almost any early uncirculated coins would have been a much better investment.
Chevron, dropped from the Dow for being one of those smokestack-old-economy stocks... is only 100% ahead of MSFT and INTC since then......
<< <i>My personal feelings on these metals at this point, and after watching decades of manipulation in the Gold market, is that other than numismatic Gold, it is better to buy Silver as an hedge against inflation. I have recently taken on a short term consulting job to take a small regional mortgage company public. As a hedge against depreciating losses in their Mortgage Banking division due to what appears to be a decade of inflation down the road, I am going to suggest that they buy silver bars rather than gold. I know that silver is a pain in the neck to store, but is seems to me that many of the manipulators will stay out of the silver market due to its duel use as an inflation hedge an a commodity. What do you think? >>
I bought tens of thousands of oz's of silver back in the heyday, from all the coin and jewelry dealers scrap in NJ to futures contracts of my own. It's a pain although those days were a lot of fun for us then young bucks.
I wouldn't even know where to buy a futures contract nowadays without getting ripped off although if I were to invest in silver, that's the way I'd be looking to do it.
Rgrds
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
1 hour, 9 minutes ago Business - Reuters
By Richard Valdmanis
NEW YORK (Reuters) - Oil prices surged to a record near $58 a barrel on Friday, powered by a forecast the market could spike above $100 due to robust global demand and tight spare capacity.
Prices have climbed around 30 percent this year, with big-money speculative funds buying heavily on signs that rapid demand growth in Asia's emerging economies and the United States would strain world supply.
U.S. light crude settled up $1.87 to $57.27 after peaking at $57.70 a barrel, breaking the previous record of $57.60 hit March 17. London's Brent crude climbed $2.22 to $56.51 a barrel.
U.S. gasoline futures for May hit a record $1.7360 a gallon on worries that a national stockpile surplus could dwindle ahead of driving season, while heating oil futures struck a peak of $1.6750 a gallon.
Top energy derivatives trader Goldman Sachs (NYSE:GS - news) said in a report on Thursday the oil markets might have entered a "super-spike" period, which could eventually drive prices toward $105.
"That was a pretty big call by them and the market is just assessing where supply and demand really sits," said David de Garis, senior economist at ANZ Investment Bank in Melbourne.
"In a very interesting report, Goldman talked about how we might see a longer cycle and a higher cycle than we have seen in a very long time," said Deborah White, senior economist at SG Commodities.
Goldman Sachs raised its 2005 and 2006 price forecasts for U.S. light crude to $50 and $55, respectively, from $41 and $40, citing resilient oil demand growth.
Prices rallied 2.6 percent on Thursday on the back of the report and also on concerns about the adequacy of U.S. gasoline stocks ahead of the peak summer demand season.
GASOLINE SUPPLY ANXIETY
Production problems over the past week have deepened concerns over whether refiners will be able to meet gasoline demand this summer.
A 485,000-barrel-per-day (bpd) refinery in Venezuela -- the world's fifth-biggest oil exporter and a top supplier of crude and oil products to the United States -- was shut down on Thursday by a power failure.
State oil company PDVSA said it aimed to resume full operations at the Amuay refinery in seven days at the latest and that supply to local and international markets was guaranteed.
A fatal explosion last week at BP Plc's (BP.L) Texas City refinery, the third-largest in the U.S., also unnerved the market, along with problems at several gasoline-producing units.
For the past month, U.S. gasoline demand has been 2 percent higher than the same time a year ago, despite record pump prices.
The U.S. Energy Information Administration (EIA) reported on Wednesday gasoline stocks fell 2.9 million barrels to 214.4 million barrels last week, the fourth decline in a row.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
inexpensive hotel rooms were 140E ($180+). Meals for two were generally
over $50.
Look for more people to drive this year.
<< <i>There are three things you can count on: higher gas prices, death, and taxes. Now that our oil companies have us paying over $2 a gallon, and our politicians refuse to end the price-fixing and manipulation (after all, politicians are getting rich off it), rest assured we'll never be paying less than $2 a gallon *ever* again. >>
With much of the world pumping oil full out it may not be long till we look back fondly at $5 gas.
Actually, the price for gasoline is mostly dominated by a number of levels of taxation including Federal, State, and local taxes. Most of the taxes go to the design, maintenance, management, and other functions of the highway system. We have been living the good life for a number of years as far as paying less $U.S. per gallon than most of the rest of the world pays for theirs. The price of gasoline is a component of any forcasting system that deals with the measurement of our "cost of living" quotent.
An interesting thing that the populace doesn't seem to grasp is that the U.S. could import a lot more oil than it does. The only problem is that we have to store it, refine it, and distribute it and we don't have the capacity to do but so much at one time. OPEC and the Mideast could cover us up in fresh oil, we could be swimming in it. But we can only store and refine and distribute so much of it at one time and there is much more oil available than we have capacity for. There are huge areas of the mideast that haven't even been prospected for oil, the deserts of Saudi Arabia for example. Sure, the price of oil is rising. Partly because of international competition for oil but partly because the dollar is worth less in the international arena than it was 10 years ago. But, there is plenty of oil for now and plenty more to be found. Oil probably isn't going to get much cheaper than it is now.
Of note is the proposition considered by the Calif. legislature to raise the tax on eco-friendly cars because of the loss of state revenue from the taxes on the consumer price of unleaded gasoline. Thank our lucky stars that we are on unleaded gasoline with catylytic converters and pcv valves too because the air in many large cities around the world is more carcenogenic than it is a breath because they don't have these things.
"...rest assured we'll never be paying less than $2 a gallon *ever* again."
I wonder if this is translating or will translate into our hobby. On one side, we are not taxed so much on our coins (Federal, State, and local). On the other side, collecting U.S. coins seems to have international appeal, more so recently. The coin market appears to be expanding and that means more competition for U.S. coins. It seems that the cost of gasoline is rising, the cost of living is rising, and it would seem reasonable to deduct that the price of coins will also rise.
Take for example, that 20 coin box we sometimes talk about. Is it becoming more valuable, knowing that Year 1995 or year 2000 dollars have considerably more value than 2005 dollars. If we accumulated our 20 coins over this time and paid $1 for example for the coins. Today those coins might cost you $1.30 to replace today. I say that because my series has gone up 20% over just the last two years, similar to the rise in the price of gasoline. One could say that coins are more expensive in $U.S. now and therefore more valuable but have they really gained value, do they buy more? So, in the context of prognostication, it seems reasonable to accept that the cost of those 20 coins could be related or at the very least seem to be tracking with the price of gasoline and the value of the dollar. At least for now, the price of coins does indeed seem related to the price of gasoline.
Enjoy
While the +110,000 "net" new jobs added to our economy in March was about half the expected amount, the interesting part is that the Birth/Death net model was responsible for +179,000 of the total. Huh? Basically the model estimated 179,000 while the actual jobs reported by employers was -69,000. Net total of 110,000 "new" jobs. Thanks Bureau of Labor and Satistics (BLS.gov)
roadrunner
Sun Apr 3, 5:41 PM ET Business - AP
By MICHAEL J. MARTINEZ, AP Business Writer
NEW YORK - Those looking for the market to make a substantial move higher will likely have a very frustrating week ahead. Chronic fears of inflation — spurred by record oil prices and reports of higher prices for consumer goods and services — have sent the major indexes to their lowest points of 2005.
And in the week ahead, there is only a handful of earnings reports and a dearth of economic data to give investors guidance.
A lack of news in a skittish market is never good. A best-case scenario would be a flat to slightly higher market as investors shift their portfolios or attempt to find sold-off bargain stocks. But with oil prices well above $57 per barrel, investors may continue last week's sell-off, abandoning stocks for the relative safety of bonds, or even just sitting on their cash.
With the bulk of earnings season just a week away, bad news may also come from corporate America as companies who don't expect to meet Wall Street's earnings expectations revise their forecasts lower to blunt the inevitable hit to their stock prices.
Last week, record oil prices and higher consumer prices in the service sector combined to heighten inflation fears and push stocks mostly lower. For the week, the Dow Jones industrial average lost 0.37 percent and the Nasdaq composite index fell 0.31 percent. The Standard & Poor's 500 index posted its first gain in the past four weeks, however, rising 0.13 percent.
ECONOMIC DATA:
With the Institute for Supply Management's bizarre mixup on Friday, the ISM services index, scheduled for release Tuesday, will merely be updated instead. Investors will look closely at a key component of the report, the prices paid for consumer services, to see whether it might be revised downward. Data showing a jump in consumer prices was responsible for Friday's sell-off.
Other than that, however, there is no notable in the week ahead, leaving investors to mull over their inflation fears for another week.
EARNINGS:
First quarter earnings season "officially" begins on Wednesday, with Alcoa Inc.'s earnings report due after the session on Wednesday. However, the bulk of earnings reports won't start coming out until the week of April 11, and only a handful are due in the week ahead.
Alcoa, which is traditionally the first Dow component to report its quarterly earnings, is expected to post a profit of 39 cents per share, down from 41 cents per share in the first quarter a year ago. Shares of Alcoa have fallen 17.3 percent from their 52-week high of $36.60 on April 6, 2004, closing Friday at $30.27.
Also on Wednesday, Monsanto Co. will release its earnings before the session. The agricultural supply company has doubled in value from its 52-week low of $31.36 on May 12, closing Friday at $64.66, just shy of its 52-week high. Monsanto is expected to earn $1.38 per share, up substantially from 70 cents per share a year ago.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Shove it in their faces by drilling your own well(s). Wells here are drilled at $12/foot of depth. That does not include the completion and frac job. If you really believe that "manipulation" BS then by all means, lease some acreage and drill away. It's a free country. Expect wellhead prices at 15% back of New York for light sweet crude. If you prefer a natural gas well, then I suggest drilling close, but not too close, to an actual gas pipeline. It is very difficult to truck natural gas.
You conspiracy guys crack me up! I know where a guy will pay you $5000 to take his oil wells. All you will have to do is assume all envinronmental liability, all plug-to-abandon liability, and buy several thousand dollars in annual permits from the state. Oh, you'll also need several thousand dollars in bonding insurance unless you have $50k in a CD to back yourself up.
Interested?
Could the guys in our government today be this SMART ?
By Richard Benson
April 4, 2005
“The Asians remain shocked and in disbelief. Just when Japan, China, Taiwan and Hong Kong had accumulated enough dollars to buy oil to keep them warm for many winters, it's all over. In broad daylight, the Americans and OPEC cheered as the price of oil popped up from $30 a barrel to over $50 a barrel. Indeed, this jump in the price of oil increases the world's daily oil consumption bill of 84 million barrels a day to $4.2 billion, from $2.5 billion (or $1.5 Trillion a year from $900 billion). The world now has to shell out an additional $600 billion a year of "lucky bucks" to the oil producing countries just to stay in motion. That's quite a tribute to pay!
The bigger shock, however, is in the devaluation of dollar holdings of United States' Treasury debt. The rise in oil prices guarantees that the value of the dollar will be pushed down even further and stay down! Now that China is the number 2 oil importer and Japan is number 3 - with the rest of Asia very thirsty for oil as well - you can understand why the Asians must find a way to protect themselves.
The American strategy for using oil to finance our deficit is, of course, brilliant. Our elected officials knew that at some point those independent foreign central banks would start getting edgy about buying more dollars to pay for America's war and deficits. (The $650 Billion trade deficit is threatening the dollar.) So, which central banks can America continue to use as the fall guys to buy the dollar? Why not the Gulf Oil states, but where would they get the dollars to buy U.S. Treasuries? Well, with the Chinese piling up dollars and growing like crazy, at some point the oil market had to tighten. It was only a matter of time before the Chinese would start bidding up the price of oil. The Asians, therefore, are hung out to dry when the price of oil rises because they have to spend more of their dollars on oil.
As the price of oil goes up, extra money floods into the Gulf Oil Kingdoms. With our Secretary of Defense putting troops all over the ground in the Middle East, and those nimble aircraft carriers are near by and ready to deliver the "shock and awe of sudden democracy" to the Gulf Monarchs, it's a sure bet that America's OPEC buddies will stash their newly found Asian lucky bucks into good old American Treasury Notes.
With such a simple policy to fund our deficit for another year, it's no wonder America can get by without any brain power at the Treasury Department. In effect, America and our Gulf Arab allies just pulled off the biggest central bank heist in the history of the world. The price of oil just went up 60 percent or more, which really cuts down to size those $3.4 trillion of net foreign holdings of U.S. financial assets. As a loyal American, we would like to cheer our government's deft move to pick the pockets of our trading and financing partners. Moreover, America gets the Arabs to fund a large share of our deficit, subsidize our interest rates, and help keep our taxes low for another year! Surely, I can afford to buy another gas-guzzling Sport Ute, get a rifle, and wave a flag!
America is extracting Tribute on oil from the world. If the world wants Middle Eastern oil, they can pay for it through the Saudi branch of the United States Treasury. Why do the heads of Saudi Arabia, Kuwait, Abu Dhabi, Bahrain, Qatar, etc., hold dollars? Because they want to keep the money and the power! (The ruling family of Saudi Arabia controls 25 percent of the world oil reserves and is completely dependent on oil revenues for its survival. Tens of thousands of Saudi princes live off lavish royal stipends). Think of Arabia as a family firm. If the dollar goes down in value, the Saudi Royal Family still gets to personally keep hundreds of billions of dollars. But, if they don't buy dollars, why would America keep them in power? It would simply not be in our interests to do so. Remember when Saddam Hussein talked about pricing Iraq's oil in Euros? "Shock and Awe" quietly followed.
This program of oil for dollars and dollars for the U.S. Treasury deficit is the simple tribute that we, as the Super Power, can expect. America is well paid for keeping the world's supply of "black gold" safe and available to all. Unlike Vietnam - when America was trying to finance guns and butter - getting others to pay now for our guns, allows us to milk the oil out of the sand and turn it into butter!
The next question will be how the Asians respond to a 60 percent hike in the price of oil? “
President Bush took the media on a tour of the Social Security Trust Fund yesterday.
He walked into a large office with one lady at her desk and asks her where the Social Security Trust Fund was. She pointed to a 4-drawer file cabinet against the wall. The file cabinet had small combination locks on it, and when she opened it there were large notebooks inside.
The President asked her if this was the entire Social Security Trust Fund? The Lady replied it was, there were no bank accounts, or other investments, just what was in the 4 file drawers. The President asks her to please show him one of the notebooks and explain to the American Public, and the Press, what it contained. The Lady then answered the notebooks contained one Trillion four hundred Billions dollars worth of I.O.U.’S.
World Bank Warns U.S. to Cut Deficits
1 hour, 47 minutes ago Business - Reuters
PARIS (Reuters) - Accumulation of dollar reserves by some Asian countries could spark a systemic foreign exchange crisis, the chief economist of the World Bank said in an interview to be published on Thursday.
Francois Bourguignon told the Les Echos newspaper it was too early to talk of a speculative bubble but that the United States had to cut its deficits to head off a crisis. The paper released the text of the interview ahead of publication.
"For the moment I would not speak of a speculative bubble but of the danger of a systemic crisis linked to the accumulation of foreign exchange reserves," Bourguignon told the paper.
"Some countries, particularly Asian ones, have no interest in the parities of major currencies being modified. As a result, they are financing the enormous American current account deficit.
"Today, the danger is that some dealers are starting to think they must change the rules of the game, play dollar depreciation and move toward the yen and the euro. That would confront us with a real systemic risk."
Cutting the U.S. deficit was key, Bourguignon said. The World Bank foresaw an orderly adjustment with the United States announcing a progressive reduction in its budget deficit accompanied by interest rate rises.
"Too drastic a program would plunge the United States into recession," he said.
Recent pronouncements by Alan Greenspan, chairman of the U.S. Federal Reserve, suggested things were changing, he said, but "we are at the mercy of the nervousness of market dealers.
"Today, no catastrophe is anticipated in the coming six to nine months. So I am not yet totally pessimistic," Bourguignon added.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
A fall in the dollar, even in tandem with an appreciation of the yuan, would not by itself correct the US current account deficit and other global imbalances, World Bank chief economist Francois Bourguignon said.(AFP/File/Tim Sloan)
Almost sounds like it's really Bill Bonner talking
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
roadrunner
"The World Bank's 24 executive directors, representing its 184 member nations, said they unanimously selected Wolfowitz as the successor to James Wolfensohn, who steps down on May 31 after a decade in the job."
No problem.
<< <i>Tom, welcome back. Seems you're back to swinging for the fences again.
roadrunner >>
Hey Roadrunner,
Thanks! In between pain pills I am
Jeepers
Rgrds
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
It's really been something! Today marks 2 weeks since the surgery!
Rgrds
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
By Theodore Butler
I prefer to analyze silver on supply and demand fundamentals rather than currency changes or chart configurations. I try to be a long-term value investor and analyst. I would never sell an undervalued asset (or buy an overvalued asset) just because the charts looked good or bad. Nor would I make a move just because I thought the dollar would go up or down.
Currently the metals world seems to be engrossed in currency and chart signal obsessions, particularly concerning gold. As you know, I write almost exclusively on silver, but it’s hard not to comment on gold, given their long-time shared history. I have written several articles, over the years, describing how the age-old relationship between these two precious metals had taken different paths in the past hundred years or so. Silver has become a vital industrial metal, needed in thousands of industrial applications, while gold remained true to its historical jewelry, investment and hedging roles.
This changing new dual-role for silver – both as a precious metal and one that’s an industrial necessity – resulted in a phenomenon unprecedented in the annals of history. This new demand for a universally known and revered commodity has almost evaporated the cumulative production of 5000 years of world mining. Who could have ever imagined that the silver being plundered and shipped from the Americas to Europe 400 years ago, would be consumed in cell phones, TVs and water purifiers? Silver became mandatory in all sorts of modern things designed to make life better. It also created the investment opportunity of a lifetime. That’s because there is unquestioned documentation that not enough of this good news metal exists to go around.
If silver has become the good news metal, based upon a growing world economy, then gold seems to be developing into the bad news metal, at least in some promoters’ writings. Wherever I look, I feel inundated with stories promoting gold as some sort of end-of-the-world cure-all. The reasons for promoting gold all seem to be apocalyptic - the destruction of the dollar, a slide into world depression, a breakdown of world trade, soaring oil prices, Islamic terrorists, runaway inflation or deflation. It’s downright depressing.
I also find it offensive how gold is increasingly portrayed as some type of anti-American barometer or tool, almost as if the higher gold goes in price shows how bad America is. That a few who enjoy the benefits of living in the US promulgate this feeling is particularly offensive. I don’t know where this "gold is good America is bad" sentiment came from, but I think it stinks. I’m not anti-gold, I just disagree with the anti-American overtones of some gold bugs. Not only is America the best country in the world; it is the best country in the history of the world.
Gold going up in price will only help, not hurt silver investors. Since most of the factors favoring gold (currencies, asset diversification, no one’s liability, etc.) are present and turbo-charged in silver, higher gold prices can only bring favorable results for silver. My gripe is that those most vocal in gold appear to be also dissing America. I don’t see the connection. I’m just glad that the negativism that seems to envelop some true believers in gold seems to bypass silver. I’d hate to see silver promoted in such negative terms.
Like any asset class, gold can become overvalued. Especially when the tech funds who significantly influence price become heavily invested for reasons unrelated to gold itself. They often buy because of factors as simple as the price going up. Such buying can be notoriously fickle. Buying strictly because of price signals on the way up invariably leads, at some point, to selling strictly because of price signals on the way down. It has nothing to do with gold itself, and as such, can and does artificially distort the price. This is the essence of my study of the COTs. (By the way, the current COTs still indicate an epic extreme that must be resolved with either a short squeeze or a sell-off.)
I am neither a true gold believer, nor basher. I am a gold agnostic. Be sure that I have many friends in the gold world and the last thing I would want to do is insult them. I recognize that if enough people put their money in it, gold, like any asset, can climb to any price imaginable. I recognize there are forces working both for and against the price, some free market oriented, some not. Being a gold agnostic did not prevent me from being the first to write about the fraud and manipulation of metal leasing and forward selling, and from explaining why gold was so undervalued $200 lower. But I just don’t see gold (or silver) as the panacea in a doomsday scenario. And life is too short, in my opinion, to dwell on such a negative endgame. Buy for capital appreciation, not to survive in a "Mad Max" world.
Being a gold agnostic, I look at things differently than do most true gold believers. I think that’s good, because differences are what make life and analyses interesting. For instance, I see very little, if any, future role for gold (or silver) as money. I just don’t see paper money being replaced by gold or silver. Money is a medium of exchange. Gold (and silver) is less of a medium of exchange in everyday world life than at any point in history. I know many hold gold (and silver) to be true money, as it had been for thousands of years. Well, the horse was basic transportation for thousands of years, and will, in my opinion, return as basic transportation about as soon as gold and silver return as basic money. Gold and silver are assets that are bought and sold as any other asset, not money or currency. If and when that changes, namely, we start using gold or silver in everyday commerce as money, then, I would agree, that they are money. Until then, they must be considered tangible assets.
The funny thing is that paper money is dying, as its share of commerce is hitting record low percentages. But that is due to growth in credit and debit card and e-commerce transactions, not due to a metal money resurgence. In the unlikely event fiat money becomes thoroughly worthless any time soon (it will, of course, in the very long run), it will undoubtedly be replaced with another form of fiat, not metal. It should be obvious that there is probably not enough gold (and certainly not enough silver) in existence to provide a free circulation as money. And talk of a coming gold dinar (or silver dirham) is just plain silly and unworkable, in my opinion. Besides, even if fiat money were replaced with metal backing, the same government institutions that messed up the worthless fiat experiment would be in charge of the metal-backed currency, and you could count on the same old tricks.
I feel I can afford to be a gold agnostic because of the existence of silver. If silver didn’t exist, I might not be so quick to be a gold infidel. But silver, most assuredly, does exist, although in smaller and smaller total quantities daily. And that gives me, and should give you, the confidence to choose between the two. If gold soars in price due to macro-economic forces, silver will exceed percentage wise, by a wide margin, any long-term gold advance. And percentage return is what matters most to a comparison shopper. If gold falters long term, silver’s fundamentals will kick in and it will divorce itself from gold. It’s a win-win for silver.
The reason silver is a win-win, no matter what happens to the price of gold, is at the core of the difference between the two metals. Gold needs continued new investment buying to buoy the price. Silver doesn’t. Now, gold just may get that continued new investment buying and the price may continue to rise indefinitely. In that case, silver will get its share of that buying and will accentuate the move to the upside, given the small size of the silver market, and the resultant extreme price sensitivity of silver to investment buying.
But if continued new investment buying does not materialize in gold, it’s no big deal for silver. Because of the structural industrial deficit in silver, the law of supply and demand dictates we will run out of silver at some point and overwhelm the ongoing manipulation. Then silver prices will explode, regardless of what gold or any other commodity may be doing. In fact, when this event occurs, it is likely that we will then see specific investment buying targeted to silver, as the world discovers the real silver story.
Let’s say we gave the following lesson to a group of children. There are two metals of the same category (precious). The only outward physical difference is color; one is white and one yellow. They felt and weighed the same. They had each been used for the same purposes for thousands of years, but in the last hundred years or so, the white one was discovered to have many unique properties, better than any other material, that made possible many of the modern devices and inventions that made life better. Because of all the necessary uses on this white metal, all the accumulated amount produced over 5000 years was almost completely depleted because we couldn’t produce it as fast as we consumed it. The yellow metal was basically used as it always had been and all of it was still around in a form that could be retrieved. Because the white one was used up so much, there was a lot less of it left in the world than the yellow one. And even though the world produced more of the white one than the yellow one, it used up even more. So, even though there is less of the white metal in the world, meaning it’s rarer than the yellow one, there is less of the white one every day, while there is more of the yellow metal every day. Additionally, the governments of many countries in the world own a lot of the yellow metal, which they keep selling, while very little of the white metal is still owned by governments, meaning not much can be sold. If the yellow one disappeared completely from the face of the earth overnight, it would have little or no impact on the life of the average world inhabitant. But if the white metal disappeared, modern life as we know it would be disrupted beyond belief.
Now, the children are told that one metal cost 60 times as much as the other, and are asked to guess which metal is the most expensive. How do you think they would answer? It’s that answer that permits me to be a gold agnostic.
I did not mention that most newly mined silver comes as a byproduct to the mining of other metals, so I did not discuss the differences of cost of production between the yellow and white. Nor did I point out that the white metal had a much larger short position than the yellow one. And I did not raise the issue that if all investors in silver switched and put their entire proceeds in gold, it would hardly cause a ripple in the price of gold. While if 1% of the amount invested in gold were to migrate to silver, the silver price would immediately explode by many times the current price.
It is when you step back and try to keep things simple, that the basic merits of silver clearly emerge, especially in a comparison with gold. This is what creates the lifetime investment opportunity in silver. It’s not intended as a knock on gold, but as a valid comparison, which just happens to reflect very favorably on silver. I’m amazed more gold investors (and there are many, many times the number of investors in gold than silver) haven’t made the silver connection yet. I think more will, if they study the merits objectively.
Perhaps the biggest merit emerging is that when you invest in the good news metal, you don’t have to root for bad things to happen, you just root for more world citizens to lead better lives.
There are several other very good essays by thisauthor.
<< <i>Here is another interesting bit of news that barley made a wave with the media. FOX covered the story yesterday for a couple of minutes.
President Bush took the media on a tour of the Social Security Trust Fund yesterday.
He walked into a large office with one lady at her desk and asks her where the Social Security Trust Fund was. She pointed to a 4-drawer file cabinet against the wall. The file cabinet had small combination locks on it, and when she opened it there were large notebooks inside.
The President asked her if this was the entire Social Security Trust Fund? The Lady replied it was, there were no bank accounts, or other investments, just what was in the 4 file drawers. The President asks her to please show him one of the notebooks and explain to the American Public, and the Press, what it contained. The Lady then answered the notebooks contained one Trillion four hundred Billions dollars worth of I.O.U.’S. >>
i couldn't believe this either. A sitting US president was questioning the security of US treasury bonds, which is what those IOUs are. If investors ever believe that they will not be paid out, the costs of borrowing will increase, and our taxes will have to increase accordingly. We as a nation are currently issuing those very "IOUs" to finance the federal deficit at a record rate under his administration, with his party in control of both houses of congress.
“I am neither a true gold believer, nor basher. I am a gold agnostic.”
Cladking, Great post, and my feelings exactly.
I personally will not buy anymore gold unless it is numismatic. Large silver bars are a pain in the neck to store but my feeling here is that over the last several years Gold has had its shot to move up in times of war, oil problems, inflation, etc. I think it tries, but gets slammed down. Gold is just too easy to manipulate with all the trillions of printed dollars out there. In addition I also agree that those that believe the World can ever go on a Gold standard just have not crunched the numbers, there is not even close to the amount of Gold on the planet to support daily use of this metal.
As I said in an earlier post silver has a much better chance of moving up in the near and long term.
SFD
It really makes no difference who is in the White house, or controls the congress these days, the fact is the mold is set, and there will be a time that the size of governments, and the entitlements crash the paper money system. The best any of us can do is try to protect our small family units and wait for a restructuring.
"It's the entitlements”
“World War I increased the Debt by $25 Billion. The Great Depression increased the Debt by $33 Billion and World War II increased the Debt by $222 Billion. The Clinton "peace time" years increased the Debt by $1,200 Billion. I expect that the Geo. W. Bush years will be just as bad, except that Bush has the "War on Terrorism" to fund.”
Tom, I am sure I speak for all of us here, we are very happy your surgery turned out well, and you are back with us,
Terry
Not a very good statistic.
roadrunner
Terry >>
Thank you Terry and everyone. Wedsnday will mark 3 weeks since the surgery and let me tell ya, I can't wait to REALLY be back. I believe the next couple of years is going to see a continuence of this out of control government spending and those of us in the coin and "things" business will have a real opportunity to add to our retirement portfolios.
Plus make a lot of new friends along the way!
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
WASHINGTON, April 10, 2005
(The American Prospect) This column from The American Prospect was written by Terence Samuel.
--------------------------------------------------------------------------------
This week, President George W. Bush went to the Bureau of Public Debt, in Parkersburg, West Virginia, to make the point that there is no Social Security trust fund -- nothing there that can be really counted on. All it is, he said, was a bunch of IOUs. Parkersburg is a river town near the Ohio border, where the Ohio and Little Kanawha Rivers meet, and it is something of an irony that the one presiding over the largest explosion in federal budget deficits would use the Bureau of Public Debt as a backdrop for his plea for solvency in Social Security.
But the bureau may indeed serve as a confluence of many of the serious problems confronting the country over the long term: booming deficits fueled by wildly out-of-balance federal budgets and reckless, sometimes dishonest federal fiscal policy. This week in Washington, the GOP leadership in Congress is continuing its efforts to come up with a budget resolution for the next fiscal year, a blueprint of priorities that will also look out at the next five years. There is some question about whether they can come up with a deal that they can sell to the disparate and increasingly rowdy elements of their party.
The Senate and House plans reveal sharp ideological disagreements, and both plans differ in important ways from the president's budget blueprint. In two of the last three years, Congress was unable to produce a budget resolution, the basic framework of how the federal government will spend and raise money. This year, the GOP has a lot of incentive to pull it off. A budget resolution will give them the opportunity to pass a lot of controversial initiatives [drilling in the Arctic National Wildlife Refuge and making tax cuts permanent] by a simple majority, since budget bills can't be filibustered.
Without the budget resolution, those proposals face Democratic filibuster and will likely die. Regardless of how it is sliced and diced, we are looking at an annual deficit of $368 billion this year and a 10-year projected deficit on $1.35 trillion, according to the Congressional Budget Office. And none of these numbers include the cost of the continuing military operations in Iraq and Afghanistan.
The president's suggestion in Parkersburg, that the $1.7 trillion in Treasury bonds held by the Social Security Administration is "not a pot on money to be drawn on," is a scary proposition. It not only threatens the future of Social Security, but it also goes to the heart of the debate over the long-term health and viability of the national economy. Debt and deficits, colliding with the spiraling costs of entitlements -- Social Security, Medicare, Medicaid, farm subsidies, student loan programs -- may mean we are headed for desolate economic shoals.
Newsweek's Robert Samuelson envisions it as an "and economic and political death spiral."
And when one considers how deficit concerns dominated the politics of the 1990s, it is remarkable how sanguine we are faced with the current situation. Remember that giant sucking sound? It has fallen quiet. The first President Bush agreed to a $500 billion deficit reduction plan that required him to raise taxes, breaking a no-tax pledge that may have cost him his presidency. But he may have made it easier for Bill Clinton to go down the same road two years later, in 1993, when he negotiated another $500 billion deal to reduce the deficit over five years. That solidified Clinton's reputation as a good economic steward and may have saved his presidency later.
And in 1994, it was largely over concern about the size of the federal government that allowed the Republicans to take control of Congress. Deficits politics turned to surplus politics, making it easier for George W. Bush to get his record-level tax cuts.
These days, there is nothing on the table worthy of the name "deficit reduction," but there is growing concern. Conservative GOP budget hawks in the House -- embarrassed by the tarnish that the deficits puts on their reputation as the party of smaller, cheaper, more responsible government -- have been challenging their leadership to more aggressively address the deficit problem. The comptroller general of the General Accounting Office, David Walker, has been saying the solvency problem in Social Security is essentially a small stream headed for a much bigger river.
"First, [Social Security's] financial challenge is a subset of our nation's financial and fiscal challenge," Walker told a House tax panel recently. "Social Security has an estimated unfunded commitment in current dollar terms for the next 75 years of $3.7 trillion. ...That compares with a roughly $43 trillion problem for our country."
So the problem is not just that Social Security may not be able to mail out monthly checks someday in the distant future but that, more perilously, the federal government may find itself so mired in debt that the whole economy just slowly grinds to a halt.
Walker says that without significant reforms we could end up with a federal budget almost entirely committed to interest payments. "[W]e could be doing nothing more than paying interest on federal debt in 2040 if we don't end up engaging in some fundamental reforms of entitlement programs, mandatory spending, discretionary spending and tax policy," he says.
If we assume the Treasury issues are the same as a trust fund, because they are backed by the U.S. government, then the real problem with Social Security is almost a half-century away.
If there is a question about the reliability of those bonds down the road, then you are talking about a larger set of problems: There may come a time when the federal government might not be good for its IOUs.
"Four years ago, the Bush administration inherited a projected 10-year budget surplus of $5.6 trillion," says House Minority Whip Steny Hoyer. "Since then, we have run record deficits of more than $400 billion a year, and Congress has been forced to increase the national debt limit three times. Even worse, the administration and Congress have no real plan to rein in deficits and debt. This threatens our investments in issues important to our communities -- on everything from health care to our national security."
Walker made an interesting point when he recently appeared before the House Ways and Means Committee: The Social Security Trust Fund has IOUs because the Federal government spends, every year, hundreds of million of surplus payroll taxes collected for Social Security. These days, that means the federal deficit looks smaller that it actually is. In 2008, those surpluses begin to dwindle.
"And since Congress has, for a number of years, spent every dime of the surplus on other operating expenses," said Walker, "that means it will increasingly put additional pressure on the balance of the federal budget starting in 2008."
That's about the time an almost-62-year-old George W. Bush heads back to Texas to begin his retirement and, sooner or later, to start cashing those Social Security checks.
The day Bush was sworn into office in 2001, the national debt was $5.7 trillion, and there was a surplus. On the day he showed up in Parkersburg, it had climbed to $7,782,816,546,352.29. That is seven trillion, seven hundred and eighty-two billion, eight hundred and sixteen million, five hundred and forty-six thousand, three hundred and fifty-two dollars, and twenty-nine cents.
But it's just an IOU.
Terence Samuel is the chief congressional correspondent for U.S. News & World Report. His column about politics appears each week in the Prospect's online edition.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
FREE MARKET NEWS NETWORK
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
This is a great site that pulls news from all over the net!
Welcome to the thread! I think its great that we have someone who is a paper asset guy join our discussion. I went to your website but am a little reluctant to join since they want all my personal info. In addition It appears this gentleman is tied in with a major brokerage firm pushing stocks if you look at his quote below. Since you have been a long term, 20 year follower, please tell us where you and Mr. Hays think things are headed in the economy.
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Paul
<< <i>What just hit me on the head? Oh, that's right--the sky is falling again! >>
Kaystok,
Well Sir come on back when you have a chance. We would all like answers to the following:
“His model says that there are three variables effect the stock market. Not 4, not 2. Monetary conditions, psychology, and valuation.”
1. Monetary conditions seem to be that the Fed, and the guys in Washington, turn the printing presses on at full tilt and never turn them off.
2. Psychology seems that most Americans have lost money in their stock programs over the last five years while insiders have cleaned up.
3. Valuations looks like overall PE’S are at historic highs
Perhaps Mr. Hays made all this money for his clients going short?
“He is a regular on CNBC”
I am sorry but this won’t impress to many of us here since the majority of these guys never even saw the Nasdaq crash coming, and have been telling Americans for 5 years that the market was headed back to new highs.
“HIS long term growth portfolio has doubled.”
This may be correct, but on the other hand there are 100,000 guys out there selling their stock secrets, and trying to pick the one in a thousand that was right is like try to win the lottery. In addition to that , “past performance is no guarantee of future success”
“His outlook: the stock market will double by 2008.”
If he thinks the Dow will go to 20,000 in the next three years, or any of the other major markets will double in that time, I can hardly wait to hear his reasoning.
Don’t pay any attention to ddink he thinks this is a weather thread.
<< <i>Kaystok,
Well Sir come on back when you have a chance. We would all like answers to the following:
“His model says that there are three variables effect the stock market. Not 4, not 2. Monetary conditions, psychology, and valuation.”
1. Monetary conditions seem to be that the Fed, and the guys in Washington, turn the printing presses on at full tilt and never turn them off.
2. Psychology seems that most Americans have lost money in their stock programs over the last five years while insiders have cleaned up.
3. Valuations looks like overall PE’S are at historic highs
Perhaps Mr. Hays made all this money for his clients going short?
“He is a regular on CNBC”
I am sorry but this won’t impress to many of us here since the majority of these guys never even saw the Nasdaq crash coming, and have been telling Americans for 5 years that the market was headed back to new highs.
“HIS long term growth portfolio has doubled.”
This may be correct, but on the other hand there are 100,000 guys out there selling their stock secrets, and trying to pick the one in a thousand that was right is like try to win the lottery. In addition to that , “past performance is no guarantee of future success”
“His outlook: the stock market will double by 2008.”
If he thinks the Dow will go to 20,000 in the next three years, or any of the other major markets will double in that time, I can hardly wait to hear his reasoning. >>
I wish I had the ability to elaborate more. Due to time constraints, I will say that I cannot devote too much time on these boards. The people are obviously very knowledgble and there is a great deal to lear. But my bias to Mr. Hays runs deep and I have learned not to trust my emotions, but listen to his model. It has kept me out of many minefields in 20 years.
But, on valuation. There are many different valuation models telling us is the market is overvalued or undervalued. Most are earnings driven. He uses the IBES Valuation model. (Institutional Broker Estimate Survey). It takes earnings estimates of the biggest and best institutions, takes an average, (12 months looking forward). The denominator is the inverse of the 10 year bond yield. So unlike many models that simply look at earnings, interest rates are in the equation. In 2000, the model suggested that the stock market was 60% overvalued. Today, it is suggesting that the stock market is 34% undervalued. He suggests that this model has NEVER given an incorrect signal and that stocks are deeply undervalued today.
Monatary conditions: liquidity is critical in this variable. It is measured many different ways, but there is still a ton of cash on the sidelines; plenty of fuel and ammunition to go into the stock market over the next few years. This variable is strongly bullish.
Psychology: historically, the market's best performance started when fear, panic and pessimism are high. So when measuring the psychology variable, the more fear, panic and pessimism, the better. It is measured many different ways, but psychology today is bullish, as oil, inflation, terrorism, Social Security, etc., all are causing everyone heartburn.
His never short the market. He is a pure top-down money manager. That is, if you are bullish, you increase your weighting in the stock market. If he is bearish, he will lower his weighting in the stock market, increasing cash and bonds. In 2000, when the NASDAQ was 5000, he said it will go back to 1500. Six months before 9/11, he suggested that terrorism was the number one problem in the world today. He believes that capitialism and democracy are enveloping the earth and nothing can stop it. With the techonolgy revolution in motion for the past 10 years, this will drive productivity in the decades ahead, similar to what the industrial revolution did for decades.
His model is a 4 legged stool: valuation, psychology, monatary conditions, and a 4th leg: the long term upward bias to the stock market. This 4th leg is always on the ground. If any 3 of the 4 legs are on the ground, the stock market will be fine for the next 6-30 months. When 4 legs are on the ground, conditions are great for stocks. If only 2 legs are on the ground, lighten up positions in the stock market. The models changes on average once per year, so it is not a market timing model. It is an asset allocation model.
I could go on and on. I'm simply suggesting that this works. I wish I knew how to add links, graphs, etc. But I don't. Sorry. He manages approximate $300 million dollars and is bringing in $10 million per months. I manage $120 million for my clients, utilizing his model.
On 9/11, he convinced me to do two things: if you in the stock market, stay in. If you are out, get in. Think of the model. Fear went through the roof. That leg became indestructible. Valuation: with the big drop, it was 35% undervalued when it reopened. Rock solid on the ground. And the fed opened the spigots and liquidity was at record levels; again rock solid. His model said stocks were the place to be. And he was right.
As for the stock market doubling, it was purely a guess based on some technical analysis, looking at the S AND P earnings over decades. It the stock market gets back to fairly valued, and earnings continue to expand, a double is a reasonable expectation.
I am sorry in advance for not defending any of this work in the future, as I just don't have the time to devote to this thread. I wish I did. I encourage anyone who wants to get the Don Hays Morning Market Comments from me, sent once per week, to do let me know at kaytsok@yahoo.com
Thanks for the opportunity to tell the Hays story. While my company buys other very expensive research (such as Merrill Lynch, Bank Credit Analyst, etc.) my primary focus (not exclusive, but predominant) is to use the Don Hays work. It takes fear and greed out of the equation, which is the key, and uses a time-tested model that has a high degree of reliability. So: buy stocks and enjoy the next four years.
Thanks again.
answer some questions about why it has worked for twenty years. It should
be noted though that there was a massive psychology change in 1982 that set
this up to work and that the interest rates which make the market appear to be
undervalued will be raised every time the market starts to go up. Indeed they
may go up even if the market does not recover.
It's not that I disagree that the market is undervalued, I just don't believe it
will become fully valued or overvalued until some of the structural problems in
the economy and society are addressed. Interest rates are the divisor in the
model and are strongly correlated to these problems.
Risk of 'abrupt correction' by markets: IMF chief
Sat Apr 16, 7:08 PM ET Business - AFP
WASHINGTON (AFP) - International Monetary Fund chief Rodrigo Rato warned that global markets could stage an "abrupt correction" if governments do not address serious imbalances in the world economy.
Rato said the global financial system was out of kilter because of the huge US current account deficit, weak growth in Europe and Japan, the low savings rate of US consumers and inflexible currency regimes in Asia.
"If policies do not adapt, do not change to react to these imbalances, we run the risk of an abrupt correction of the markets ... (when) confidence for different reasons could evaporate or could be reduced," he told reporters.
Rato was speaking after a twice-yearly meeting of the International Monetary and Financial Committee, the IMF's policy-setting body, which followed talks among the finance ministers of the powerful Group of Seven nations.
"In these meetings we have clearly stressed that those risks are increasing," Rato said.
"Although the central scenario of the world economy is extremely positive and we see a clear good opportunity for growth to continue, we are certainly not only advising countries but calling on countries to take action on those issues of global imbalances," the IMF chief said.
"Implementation is the responsibility of governments. I take this chance to insist once more that important economies in the world face a special responsibility regarding world imbalances," he said.
Rato cited in addition the "need for Asian countries to have more flexible exchange rates," after the G7 implicitly called on China to relax its yuan-dollar currency peg.
The IMF managing director's comments came after a week of turmoil on global stock markets with Wall Street plumbing five-month lows on fears of a US economic slowdown.
British finance minister Gordon Brown, who chaired the meeting grouping the IMF's shareholder nations, said the committee felt particular concern about high oil prices.
"I think we recognize that the volatility of oil prices and particularly the higher levels of recent months could have a damaging effect on growth," he said.
"We do believe that there are measures that can be taken ... to make for a more efficient oil market," he added, citing the need for greater investment in production and refining capacity.
In its concluding statement, the committee called for global vigilance in the face of threats to economic growth such as the high oil prices, currency volatility and a potential spike in interest rates.
"While returning to a more sustainable pace, global growth will likely remain robust in 2005," its statement said.
"The committee notes, however, that widening imbalances across regions and the continued rise in oil prices and oil market volatility have increased risks.
"The potential for a sharper-than-expected rise in long-term interest rates from their very low levels and for increased exchange rate volatility also calls for vigilance," the statement added.
In their earlier talks, the G7 finance ministers also warned of the impact of high oil prices on growth.
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<< <i>CU
Don’t pay any attention to ddink he thinks this is a weather thread. >>
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Kaytsok
Thanks for your opinion. I think you did a great job explaining Mr. Hay’s theory.
As I said several days ago I have been hired by a small company as a consultant to develop them a plan for growth in this weird economic climate we are living in.
This is a small mortgage company with offices in 5 states. They are taking the company public, and trading should begin in about 3 weeks. The major stockholder is a 25-year friend.
I have been hired to develop them a new growth business model that will hopefully keep them out of trouble. I have been working on the report for weeks and it is already 150 pages long.
Here are a few high lights, I invite all of you to pick it apart since we are having a meeting in Phoenix this next week and after that the plan goes into effect. Below are some thing I am going to tell them. Let me also say that a mortgage business is not an area that I would be looking at as a startup at this time, but this is what they have.
1. I am going to tell them not to count on millions of baby boomers all moving south from the rust belt, as many are now afraid to up root.
2. I am going to tell them that in my opinion the majority of well healed American investors are tied of gambling in the stock markets, and even though there is lots of money on the side lines that money is going to be looking for a home in investments that make sense.
3. I am going to tell them that investors the next decade “ are going to be more concerned about the return of their investment than the return on their investment”
4. I am going to tell them we are headed for some serious inflation, and if they want a strong stock price they need to build assets in the company as well as earnings.
5. I will advice them that because they are going to be dealing in paper that will most likely depreciate, that they need to build an internal inflation hedge in the company. I picked silver for the reasons I stated earlier.
6. My advice to them on offerings will be NOT to do common stock offerings, but to do units that have some shares as well as part of a mortgage pool that pays immediate interest dividends higher than the average of most NYSE companies.
7. I am going to tell them to rate every loan that comes in and not to buy for their mortgage banking division ,or their investors, any subprime loans that are ARMS, INTEREST only loans, 120% of VALUE loans, or any loans in one of a dozen cites that currently have bubbles waiting to pop i.e. most of CA. and others. They can broker these loans but not buy them.
These are just a few highlights what do you think?
Goldsaint, it is about time to take some of the chips off the table in CA RE. Orange county is OVER for a while. I have watched 4 runups in CA RE, investment type in the Bay Area in 77-78, Residential in the Bay Area in 89-90, residential in the Bay Area in 98-00, and Residential in OC the last 3 years. What follows each of these 'bursts' is a mild recession.
I would not what to hold weak paper in any of those markets for 3-5 years after the run up.
RE; baby boomers flocking to the sun belt. Has a lot in common with cracking out OGH. Most of it has been done.
A smart company might consider investment in Indiana. Ungodly cheap, straight up people, good business environment. So cheap in my eyes that it almost looks "free for the pickins". I'll be there in August, September and hope to close escrow on some dirt.
<< <i>
A smart company might consider investment in Indiana. Ungodly cheap, straight up people, good business environment. So cheap in my eyes that it almost looks "free for the pickins". I'll be there in August, September and hope to close escrow on some dirt. >>
Indiana does have a lot going for it. Laws, taxes, and the business climate are all favorable
to business. There is solid infrastructure yet lots of room for growth. Many major industries
are already here and there is a solid core of trained and educated workers who frequently
have a strong work ethic.
There are also some major problems especially in the Il and Oh border towns; lots of new
growth and population increases. The laws in this state governing the actions of business
are right out of the middle ages and shouldn't be expected to last. Of course we also have
all the other modern problems even if they are largely confined to a couple of population
centers.
Indianapolis is underrated as a city and the north central and western north central parts of
the state are underrated for potential growth.
Interesting projection but like the majority I see the stock market as over-valued by 50%. But then again, the heard is usually wrong, or so they say. The past 20 years have all had the same philosophy:
pro stocks, pro real estate, pro -easy credit, and anti-commodities.
I should say that this model worked great for 20 years as everything was geared toward that end result (central bank gold sales, printing money, easy bank loans, etc.). Now to say that someone's track record has been great for 20 years using the same model doesn't really apply if the model breaks and doesn't apply to a new set of conditions. But yes, if easy credit, lower inflation,
foreign investiment in the US, baby boomers continuing to flock to stocks, and manipulation of gold downwards continues to 2008, then Mr. Hay wil be correct once again. This will be most interesting as the expansion from 1982 will then be 26 years in the making and the longest bull in recent American history.
roadrunner