Doc 224899

Inflation Under Control, Despite the Rise in Gold

The rising price of gold is a numerical indication of how much less faith investors around the world have in the US government's handling of the economy, healthcare, national defense, and how it handles everything in general. This occurs in spite of benind-the-scenes efforts to depress the price of gold.

It may not be mere coincidence that last night gold spiked to an all-time high right after after the other side of the globe recognized that the US House of Representatives passed a healthcare reform bill in the dead of night, in the middle of a weekend, in a desperate demonstration of trying to hide what it was doing. At the same time, investors on the other side of the globe were digesting news that our national military and government response to an Islamist shooting spree in the middle of our largest Army base is to plan more extensive searches of little old ladies' handbags and renewed efforts to more vigorously confiscate nail-clippers, thus reinforcing the view that our government and military leaders are complete morons.

Gold is going up because we are so freakin' doomed!

What's Shaping Gold Price

Events that shape the price of gold? Like an attack on military and civilian personnel at Fort Hood by an Islamist physician holding the rank of Major in our army, shouting "Allahu akbar" before he opens fire? Like the fact that the army cannot discuss Nidal Malik Hasan’s active shooter event as an act of jihad by a self-appointed “shaheed” because political correctness prevents the generals from using the words “Islamist” or “jihad” or “shaheed” in a sentence that could be interpreted as critical of Islam, as evidence that pro-Muslim political correctness has a greater influence on army policy than the mandate of protecting our constitution or our nation?

Dr. Stephen Leeb on Commodities and Inflation - Is He a Genius or Alarmist?

The way I read Game Over, Leeb explains the deterioration of our systems of banking and finance as the consequence of the decline in real estate values, and the consequence the people designing mortgage and derivative instruments as having bet that a decline in real estate values would never occur.

The market crash was ultimately due to Peak Oil effects, but the proximate cause was the decline in real estate values.

Leeb is a genius, and he's relying on facts, though he isn't correct about every little detail that he discusses or about every element of timing that he discusses. Nobody could be. As for the broad strokes and the assessment of fundamentals, Leeb is strikingly accurate.

Leeb is also correct about a bunch of other notions that will help you beat the market, if you can understand them well enough to apply them consistently well in unique and unpredictable situations.


On Jun 22 07:23 PM semsem wrote:

> He did not predict the recent market crash. He said the market would
> crash because of $200 oil. Not because of leverage / housing.

Exploring Gold Miner Stocks: Mid-Year 2009 Analysis

Go to the Lihir Gold web site, and look at the maps and photos of the PNG Lihir Island mine. It looks like the ocean is going to pop through a thin barrier and flood into a huge open pit that is much lower than sea level. And that's on a day when the weather is calm......

South African miners aren't undervalued. They are appropriately valued, based on the inadequate power grid they rely upon that shows no hope for being improved.

NEM is so big, bulky, numb and stalled that it is unerringly boring to investors.

BVN is in Peru, and Peru is a difficult place to operate gold mines.

EGO is in Turkey (a ferocious Islamist government that may nationalize the mines any day to finance a military push into Kurdish Iraq) and China (whose government has no qualms about changing corporate operating conditions in a heartbeat to suit its self-serving agenda).

KGC has mines in Russia (you can't trust 'em), and three states in the USA (over-regulated, too many lawyers and lobbiests). Brazil is the one good place to mine they are set up in now. If they buy Yamana Gold they'll have a pipeline for future production with low costs of production.

Barrick may beat Kinross to the punch and scoop up Yamana first.

So it's shaping up to be a nice year or two if you're long AUY.

How Investors Can Trade the Dollar

Kristjan,

A good gold miner stock will leverage the gold market, and may be more predictable and more profitable than a double long gold ETF. It takes a little study, and it helps if one can hold one's breath for more than 60 seconds, but the miners are where leverage can be found outside the ETFs.

Having played this game for the last couple of years, I'd say it is useful to remember that gold swings in and out of being tied to the dollar, to global currencies, to oil, to treasuries, and to broad market indices. It also changes faces and one month it will be a safe haven in a crashing market, and next month it will be tied to strong commodities. It also wears three hats at once sometimes. Finally, it is also subject to behind-the-scenes manipulation, and to "legitimate" regulation by central banks and the commodities exchange(s).

Dr. Stephen Leeb on Commodities and Inflation - Is He a Genius or Alarmist?

Great article. I'm on page 132 of "Game Over", and have been reading and re-reading Leeb's "The Coming Economic Collapse" for the last 2 1/2 years. I also read "The Limits to Growth" by MIT and the Club of Rome in 1972, which Leeb quotes in "Game Over".

One distinction Leeb makes is between integrated oil companies, which he discourages people from investing in, and oil services companies, which he recommends.

Gold Correction Now More Likely than Not

Right now we are in a situation where a massive gold rally is imminent and so is a massive correction. When gold corrects (everything corrects eventually) the probability of a massive rally that offsets the correction will increase as global investors on several continents look for bargains in the gold market.

The day of buy-and-hold investing is over. There are ways to make money on gold during a correction, and I intend to use them. There are also ways to make money in a gold rally, and I intend to use them. Every time gold swings there is a profit opportunity for the astute investor.

Having said that, I thought Kim didn't review all the factors exerting up-pressure on the price of gold, not did he address the issues of timing.

Gold is Overbought: Time to Short Barrick?

"Normal trading range"?

What's "normal" about the price of gold being connected to the major indices when the major indices are in crisis, at precisely the time gold should be appreciating as a safe haven? In fact, international gold buyers are grabbing the stuff like mad, and central banks are holding onto what they've got, while we piddle around with a spot price based on futures options rather than the "real" price in the market.

What's "normal" about gold miner stocks losing value when rising oil prices and rising steel prices drive up the costs of production, but failing to re-gain value when falling oil prices and falling steel prices lower the costs of production?

It is, in fact, "normal" for gold miners stocks to trade above the established "trading range" when the trading range was established during a period of over-corrected share price erosion and over-corrected gold price erosion.

This is not a time to make trading decisions based solely on chart analysis. It is particularly not a time to base trading decisions on one-dimensional chart analysis from material covered in the second lecture of Chartology 101.

Jeffrey Christian: Foreseeing Bright Days for Metals

Apex Silver (SIL)was recently described (Christopher Amberger, October 17, 2008, Seeking Alpha) as likely to file for bankruptcy because it's only realistic source of cash was San Cristobal Mine, and it looked like Apex was going to have to settle obligations by granting or selling San Cristobal to Sumitomo (which would leave Apex with no cash and no chances for obtaining credit). Since then, Apex shares have been diving. It would seem that Jeffrey Christian either knows of some reasons for confidence in Apex Silver that haven't been discussed, or isn't aware of the San Cristobal Mine situation.

Countdown of Manipulated Gold Price Running Out

GOLD PRODUCERS LIKE BARRICK AND KINROSS COULD SELL THEIR GOLD DIRECTLY to buyers who want physical gold, not paper. If that were done, Joe Blow would be bidding against central banks and options traders for real gold, and the market for physical gold would overwhelm the paper market. THIS WOULD RESULT IN GOLD BEING TRADED AT THE REAL PRICE FOR PHYSICAL GOLD RELATED TO SUPPLY AND DEMAND.

Rather than buying CREDIT SUISSE or ENGLEHARD bars of gold or silver, the gold producers could refine and "package" their gold, and you could then buy BARRICK 0.9999 PURE GOLD BULLION bars with a Barrick stamp on them. Kinross and Gammon and Yamana could do the same thing.

If this were done, the profits and share prices of gold miners would skyrocket, and gold would be trading at $2500 to $5000 an ounce during this market crisis. It would also make paper option trading in precious metals obsolete, to the advantage of the entire world economy. Eventually, a similar end to paper trades influencing the value of of other commodities, like agricultural products and housing products that we all have a real need for, to everyone's benefit.

The safe haven in precious metals would be a real safe haven, and the ultimate result would be that corporations that actually did or made somethig with intrinsic value would survive while "money-for-nothing corporations" would be weeded out.

The ultimate end that this market crisis must eventually wind up with is a contracted US economy and a contracted world economy that assigns value to resources and commodities that satisfy basic needs, and devalues things that people don't actually need. The US economy has, since the 1970's, been based on consumers spending money on shoddy foreign-produced products that satisfy no basic needs, at the same time that excessive regulations and ridiculous liability exposure chased most corporations trying to do or make anything with intinsic value overseas to escape the impossible challenges of operating in a country with too many trial lawyers and too many elected lawyer politicians. The direct sale of gold from gold producers to gold buyers would start the process of correcting the misguided path we've been on for 40 years.