dtblount

Inflation Concerns Are Premature

Excellent article...along the lines of what I've been telling people since the "great fear of inflation" came about.

Home prices have yet to find a bottom, unemployment continues to climb (albeit, at a slower pace, but climbing nonetheless...leading to lower wages), and a dropping capacity utilization figure...combined with anemic growth in nearly every other region of the world...makes the inflation argument quite weak. Granted, yes, the monetary base has increased drastically (and somewhat irresponsibly, in my view...), but the excess liquidity is mostly sitting idly at banks. The Fed can adjust rates to sop up much of the liquidity once lending resumes and money velocity ticks upwards again.

Simply announcing that inflation is upon us because oil prices are rising is ridiculous. While oil is dollar-denominated, many other factors play into spot crude prices...as goes with every other commodity.

Will China Dump the Dollar?

HaavBline, very true about eurozone trading more with China...also, the eurozone has a higher trade imbalance with China. ...however, the eurozone is still a group of sovereign nations that have obvious issues with collectivism. The US, on the other hand, has been a single sovereign unit for quite some time.

I think China will, of course, continue to buy Treasuries with their dollars because they have a positive yield and are basically as liquid as USD...and still risk free...but they will also continue to purchase a growing percentage of hard assets for reserve - and even future use - purposes. This just makes sense in terms of general portfolio and risk management practices.

Are We Headed for Hyperinflation?

Marc Faber is completely ridiculous. Saying the US will have Zim-style inflation is just a way to get a few more hits on his website and a few more books sold. There really is no other basis to this comment. I'm glad another one of these "academic investor/analysts" has made a comment like this...keeps the list of the credible ones smaller and easier to follow, haha.

U.S. Dollar - Worst Investment Ever?

History Buff 24/7, very well said!

How to Profit from Possible U.S. Credit Downgrade

The opening paragraph was enough for me to stop there...First off, UK debt was not downgraded last week...S&P revised the OUTLOOK from "stable" to "negative." This is very different from a credit downgrade. Also, saying that the US and UK have "similar policies" because you feel they are "spending too much money" is very shallow-minded.

Why These Currencies Will Benefit from China's Commodities Purchases

AUD still has room to climb vs USD and especially vs JPY. In terms of currency plays that benefit from China's demand of commodities, I like AUD, NZD, CAD, and NOK vs USD and JPY.

Peak Gold: The New Paradigm

The difference between Peak Oil affecting oil prices and Peak Gold affecting gold prices is that oil is consumed (essentially destroyed by usage) and not able to be replaced. On the other hand, g is merely transformed, not consumed. With 70% of refined gold in the form of jewelry, rather than bullion, that percentage could shift drastically if gold prices were to rise rapidly...i.e., everyone I know would be selling off their jewelry, the jewelry would be refined into bullion, and sold to investors for a profit.

With oil, it is pulled out of the earth, refined, and consumed/destroyed. Demand for oil, on a long-term basis, is rising, while supply is shrinking.

I prefer being long of oil over gold any day for speculative long-term price appreciation based on a simple supply/demand relationship.

That being said, I also do not believe that all market participants act rationally. It makes no sense for humans to dig gold out of the earth, refine it, shape it, and stash it away in vaults...but people still do...and the price of gold rises and falls. Despite my obvious preference for being long of oil right now, I still hold some gold as a sort of "armageddon hedge."

Looking to Buy BRIC? The 'ABC's Are Better (Part II)

Excellent article! I enjoyed Part 1 and have enjoyed Part 2 even more. Thanks for posting!

Fool Me Once... Bill Miller, Meredith Whitney Face Off Again

My view of Bill Miller is that, with all the money managers there are in the world, at least one had to get lucky. In 2008, his luck ran out and true skill came into play...and he lost miserably.

What Does Dr. Copper Think of the Economy?

I think copper is still a great indicator of the global economy; however, recent Chinese SRB buying has obfuscated this a bit. The SRB announced they will buy roughly 600kt - 1mt of copper over the next three years, which, if spread across the three years evenly, accounts for about 2% of annual global copper demand. The SRB made heavy purchases in Q1 2009 (at least, according to bank info, they are 30% "ahead of schedule" on purchases for the year) and it looks like the SRB could either be selling some copper (according to some reports from sources I don't really trust...Xinhua, etc.) or pausing with further purchases.

Either way, SRB buying has slowed the momentum of copper's climb, so I am expecting a shorter term pullback over the next two months or so...then a continued climb as 1) global economy begins to recover, 2) SRB begins to buy again, and 3) bottleneck with mining firms having less access to credit and less cash on hand due to 2008 collapse in commodity prices leading to scaled-back mining operations, less exploration, and fewer mine openings.

That aside, diversifying from USD and UST holdings is an excellent idea for China for several reasons: 1) diversification, when you are essentially a massive pension fund, is ALWAYS a good idea, no matter the risk, 2) raw materials priced in USD are a direct use of China's USD reserves, so fewer political issues, and 3) China needs/will need raw materials of all kinds, so stockpiling the basics makes sense for a growing economy.

I like copper and have been in JJC since late February.

Claymore Introduces Three Actively Managed Commodity ETFs

They look like some excellent ETFs worth looking into...thanks for posting.

Will Market Vectors' Africa ETF Continue to Outperform?

I'm a big fan of AFK too. I got in it in Feb and have seen about a 30% gain. Without going too deeply (as I could write a book on it), I am very bullish on Africa in general...and specific markets are definitely worth the risk in the long run.

Swine Flu and the Mexican Narco State: No Time to Be Long

A failed state?!?! Are you serious??? Yes, the cartels have caused terrible problems and violence in border towns and in DF, but the vast majority of the country is as safe and stable as ever. Mexico is still a huge trade partner in NAFTA with massive potential from its natural resources (ags and metals too, not just oil) and human capital (one of the youngest populations by avg age in the world).

I would also categorize Mexico as being more risky in the short run...all of these problems (cartel violence, swine flu, reduced remittance inflows, etc) are more short-term. In the long run, I am very bullish of Mexico. Communications, infrastructure, and basic services are not "compromised." I'm not sure what you are focusing these comments on, but electricity, water, transportation services, etc. are still up and running fine.

While the recent swine flu has caused a hiccup in DF, only about 100 people have died in Mexico so far. While this is still terrible, it is hardly the type of outbreak that would lead to the level of political instability you are assuming.

Why You Should Hold Aussie / New Zealand Dollars and Gold

Another great AUD piece. I like AUD and NZD based, not on inflation/deflation, but on Chinese demand for raw materials.

Invest in BIC, Not BRIC

I agree with everyone's criticism on your views regarding Russia.

While the RUB has taken a beating and the government has closed trading several times lately, it still provides amazing opportunity. With respect to your own argument, how is it any better than China??? China's currency is pegged/manipulated (depending on who is analyzing it), and the gov't has an even tighter grip on the economy and market than does Russia's. Granted, the Chinese have not exhibited such control lately, but the risk is still very much there. You could argue that Brazil is the weakest because Lula doesn't really have a formal education...or that India is the weakest because they suffer from a plethora of red tape from the British Colonial era. Your one line argument seeking to discount Russia is hardly sufficient. I am incredibly bullish of China...as well as India, Brazil, Russia, and a host of other EMs and FMs.

A country as rich in natural resources as Russia (crude, natty, platinum, palladium, gold, fresh water, grains, etc, etc) - not to mention a pretty decent military with regional diplomatic influence and FX reserves should absolutely be considered for investment. They could be self-sufficient if need be - plus, they have an energy stranglehold on Europe. Yes, there are risks...but I feel the rewards far outweigh these.

Instead of removing any one of the BRICs, I'd focus my time and efforts on figuring out who should be added.