Dan Schmeidler

Canary in the Gold Mine

The weaker dollar and the near-record high gold prices might be indicative of looming run-away inflation. However, we could very well be at the top/near-end of that cycle (even though Gold could very well shoot up another couple hundred points once it breaks resistance). But I still don't see how inflation can be rampant when banks (the main provider of capital and liquidity) are still facing massive write-downs on loan losses. That sort of asset destruction (on balance sheets) is offset by massive government intervention (a la printing press). But the propped-up banks are now largely government controlled, and if it's not their equity, than it's certainly the executives that are now forced to play largely to the tune of the Feds ( -now more than ever). In other words, they are not lending like they used to. In addition, continued mass-layoffs along with an expectation of prolonged high unemployment should also send the markets some clear signals with respect to wage increases.

So my concern is mainly where all the liquidity (monetary issues) and economic activity is going to come from to drive up inflation to the extent of run-away or hyper-inflation.

Gold as an Investment? Think Again

I just wanted to comment on the scarcity aspect of gold. Read this posting:

www.howstuffworks.com/...

Turning Bullish on Gold and Gold Stocks

Babak, thanks for the article. If I understand you correctly, you basically present a bearish case for Gold and then adopt a contrarian view to the analysis. That is one heck of a confusing way for being bullish on gold. Neverthless, thanks for the data.

Gold’s 'Grand' Illusion

This article is written from a US economic perspective and its impact on gold. Just like price movement for ag and oil, we are no longer in a world where the world's biggest economy alone can move the price of gold. I can't see how gold can be considered an illusion when the global supply/demand side from future (and even present) economic powerhouses such as India, China, Brazil and Russia is not even remotely addressed (in this argument). I have noticed that a lot of the gold bears out there will argue their point of gold being worthless by setting a stage of an imminent apocalypse/doomsday, where the leaders are savages and the national currency is pigs (see above article). At this point I am begging for a bearish article on gold that just deals with facts and figures. Those are far and few in between and this just makes you wanna buy more gold, or look at gold under $900 as a great opportunity. Imagine gold under $850. That just screams for a doble down. How about under $750. If I was to triple down on anything in this environment ...

Systemic Financial Crisis and Its Implications for Gold

Market update 4/8/08: Financials are mixed. Gold down. Gold miners down. Not as ugly as yesterday, though, when Financials were up and Gold was down. This market is just setting itself up for trouble.