Hugh

Fed Tightening and the Gold Market

The Fed will most likely cut. Any good news on the economy will be flash in the pan. The Fed sees a weak dollar as a way to inflate out of the huge debt overload. They are praying for wage inflation. Getting the average household income to $200,000 would make milk $40 a gallon, but look how easy is would be for Mr. Smith to make his house payments if flipping hamburgers paid $50 per hour...

My Ten Predictions for 2008

One feature of free markets is the tendency of commodity prices to average over entire markets. In free markets, gold will not be $900 in one area and $700 in another, freedom of movement will dictate a price of $800.

On thing Tan doesn't mention is that labor is a commodity, and American's labor will further merge with the world's price for labor. A low-skilled American can no longer count on selling his labor-commodity at $25,000 per year when those in India demand $5,000, and billions of people in other countries demand even less.

Expect prices for many goods to inflate, except for real estate and American labor. It doesn't look good for millions of Americans.