Let the Currency Wars Begin

Currency wars are just one more piece to the ever-evolving puzzle called the global debt crisis. The rhetoric surrounding competitive currency devaluations- centered primarily in the U.S.-  has intensified in recent months. It appears  our leaders are coming to grips with the fact that there is only one way out of this crisis, and that is via devaluation. In the long run, I would be short U.S. government bonds in a big…

Record Highs in Gold Augur Crisis

As gold hits another high this morning, allow me to reiterate that you are witnessing something historic. This is the kind of move that most people will misplay and learn to regret. The hardest thing to do right now as a gold investor is to hold, so crudely, this is exactly what you should be doing. This may seem a little counter-intuitive, but the higher gold rises, the more likely…

Is a Correction Near?

Regular readers of this blog know that I have been bullish on stocks and gold for quite some time. I recently mentioned I opened up some shorts on the general market, which I covered  quickly because the markets were showing strength. I try not to get married to positions and just take what the market gives me. Since I closed my shorts, investor complacency has risen to a level that has…

Government Stupidity and Economic Crisis

“Governments never learn. Only people learn.” – Milton Friedman Our leaders have become so arrogant that they cannot see what’s coming.  Whenever I think about our current situation, I always come back to Argentina as a general model for America. Argentina is a country blessed with natural resources, yet cursed with corrupt leadership. Here is a country that for all intents and purposes is “Western” and “European.” When I study…

Kyle Bass: Hyperinflation in America?

Kyle Bass is back on CNBC with another interesting interview. 99% of people who come on CNBC say nothing of value and merely  regurgitate flawed conventional wisdom. Kyle Bass is not one of these people. Bass on Precious Metals Bass believes the Fed is starting to lose control of monetary policy and implies this may be hyperinflationary. When asked about his take on equities, he mentions that Zimbabwe has had…

Deteriorating Economic Fundamentals = Inflation

Every once in a while, it pays to take a step back and see the forest for the trees.  A lot of people think the fundamentals in our economy have improved due to the rise in the stock market and commodities. Our politicians are attempting to perpetuate this illusion by using counterfactual arguments such as: Had it not been for stimulus, the economy would have been worse. Geez, hard for…

Gold Rocket Launch, Chapter 2

Every day that goes by you see more and more that most people are clueless and better off investing in bonds. The moves in gold are truly beginning to boggle the mind, but too many people are influenced by mainstream media bs about a recovering economy to realize this move is 100% legit. Asinine debates that ignore the validity of the economic recovery and focus only on the magnitude of…

The Long-Term Perspective in Gold

Precious metals continue to exhibit impressive strength as corrections remain shallow. Now I am not a blind bull- there is no question that gold and silver are overbought. But  intermediate term moves in precious metals stay overbought for months at a time. As such, I still cannot justify unloading any of my core positions at current prices. $1500-$1600 appears to be a much more reasonable level to unload- but of course,…

Gold and Precious Metals

Gold: Hedge Funds Join the Party

From Bloomberg, Greenlight Holds Bullion, Buys Reinsurance Stocks: Greenlight Capital Inc., the $5 billion hedge-fund firm run by David Einhorn, told investors it switched all of its holdings in a gold exchange-traded fund into bullion during the second quarter. “At a minimum this will provide some savings as the costs of storing gold are less than the fees” for the SPDR Gold Trust, the New York-based firm said yesterday in…

Brief Word on Gold

Gold is currently sitting at about $936 an ounce. Just a week ago, gold was close to breaching $900 and the deflationists were calling for $700 gold. Too many people were jumping on that boat, which is why I felt buying precious metals related shares was a good trade. One of the shares I bought last week is up over 25%. Sudden and explosive moves in gold are the norm,…

Gold on the Rise

After correcting with the market to about 905, gold has made quite a comeback in the past couple of days. The move above 920 is constructive. I believe we are months away from something historic in gold. Follow

Implications of Rising Gold to Crude Oil Ratio

The Gold to Crude Oil ratio is a well-known relationship with key implications for investors. Historically hovering around 15, the ratio recently hit an extreme of 24 not seen in a decade. Looking at the chart below, we can see that the Gold to Crude Oil ratio can be used as a good proxy for investor sentiment. Notice how the ratio started trending strongly upward when Lehman collapsed along with…