Table On-Topic Summary - 08-Sep-2002

A compilation of this board's financial/economic posts From 41575 to 41598

Post  41575  by  Decomposed       OT: Table ON TOPIC SUMMARY Sep 7, 2002

Post  41576  by  clo       OT:Czechsinthemail, "United We Stand"...

Post  41577  by  clo       OT: Oh roof!

Post  41578  by  uponroof       Reply

clo... If some of us guys can't take a few good natured shots from time to time we should move to another planet. The banter here is wonderful. You keep us all honest. Thanks!

Post  41579  by  uponroof       Reply

Barron's interviews James Turk... The fear index: "...The index is calculated by taking the U.S. gold reserve, multiplying it by the gold price and dividing it by M3, the broadest measure of money supply, to quantify the percentage of gold relative to dollars in circulation and determine the level of confidence in the dollar and any possible cyclical patterns..." ******** Miner Keys Longtime gold booster says the metal is due for a rousing comeback An Interview With James Turk - Gold appears to have broken out of its longtime funk. But is the move just a flash in the pan or something more substantial? For an answer, we turned to one of the more obsessed gold authorities we know, James Turk , publisher of the Freemarket Gold & Money Report newsletter and founder and managing director of Goldmoney.com, a company striving to make the metal the currency of choice in global commerce, especially in cross-border transactions. An international banker and manager of the commodity department for the Abu Dhabi Investment Authority for much of the 'Eighties, Turk spent most of the 'Nineties providing strategic advice and forecasts to investment managers. To learn why he thinks gold is on the cusp of a new bull market and which stocks he's focused on, please read on. --Sandra Ward Barron's: Gold has had quite a run. What can we expect going forward? Turk: The move we had earlier in the year was so good, we were bound to see some consolidation in July and August, which is normally a quiet time of the year for gold, anyway, and that's what we got. Now, my expectation is we will test resistance at the $325-an-ounce threshold again in either September or October. I believe $325 will be crossed this year and that will mark the beginning of the bull market in gold. Turk believes his "fear index" now favors gold. Gold had been in a clear down trend through the 'Nineties until May 1999, when the Bank of England said it would sell half its gold reserves. That resulted in panic selling and gold bottomed in July 1999 at $252 an ounce. It worked its way higher, then tested that low in early 2000 before climbing the past few years to current levels. What we've seen is a huge base being formed and the price going higher as the metal has been accumulated. Once the $325 level is taken out, that will signal the beginning of a new bull market. Q: We've had a bear market in gold for 20 years. So how long will a bull market last? A: I have a long-term model I use to identify trends in the gold market that I call the "fear index." The index reflects the relative position of gold compared to the dollar. When fear about monetary problems is rising, people move to gold from dollars, and the fear index captures these moves. The index is calculated by taking the U.S. gold reserve, multiplying it by the gold price and dividing it by M3, the broadest measure of money supply, to quantify the percentage of gold relative to dollars in circulation and determine the level of confidence in the dollar and any possible cyclical patterns. The fear index shows four distinct bullish cycles for gold since 1971, when the gold standard was abandoned: inflation in the early and late 'Seventies, the savings-and-loan crisis in the 'Eighties and then the collapse of the exchange-rate mechanism in the early 'Nineties when George Soros broke the Bank of England. We just got the fifth buy signal at the end of May. At the least, these cycles tend to last a couple of years. We don't know how long this one is going to last, but my expectation is we're at the beginning of another bullish cycle that will last at least two years. Q: But if you're looking at gold reserves as a percentage of M3,doesn't flooding the system with liquidity skew the result? A: All I'm doing is taking the year-to-year growth in M3 at the end of each month and plotting it on a chart. Back in the 1970s, we had double-digit inflation rates because we had double-digit rates of growth in M3. Then, former Fed chairman Paul Volcker's mandate was to reduce inflation, and he did it by reducing the growth rate of M3. Fed Chairman Greenspan continued those disinflationary policies when he came into office in 1987. In 1992 we had a short period of deflation when M3 declined from the previous year's level. This 1992 period is significant, because it marks the blowup in the exchange-rate mechanism. But the Volcker-Greenspan policies became so painful to European countries, Italy and Great Britain specifically, that they chose to break from the exchange-rate mechanism and pursue their own course. That was a message for reinflation in the 'Nineties and we've had massive growth in M3 since then. The early part of this reinflation led to the 1993-1994 bull market in gold and gold stocks. And the reinflation has continued. Now we're headed to the next stage, which isn't supply-driven, but rather a demand-driven issue. When you talk about inflation or deflation, you're talking about the quantity of dollars and therefore the supply of dollars. Yet we need to focus on demand for dollars rather than the supply of dollars, because we assume demand remains constant though it doesn't work that way in the real world. The demand for the Argentine peso disappeared overnight. I am not saying that's going to happen with the dollar, but the dollar nevertheless has fallen in the foreign-exchange markets, which suggests that the Fed isn't contracting the growth of M3 fast enough to maintain the dollar's strength relative to other currencies of the world. Q: So are we heading into a deflationary period? A: I don't think so. I wouldn't call it inflationary; I wouldn't call it deflationary. We will see rising prices, not because of the dramatic increase in supply of dollars, but because of dramatic decreases in demand for dollars. The supply of dollars may remain the same, but if demand declines, the dollar purchases less, which expressed in terms of prices means that prices will be rising. Q: Talk about China's role in the gold dynamic. A: The Chinese impact on gold will be extremely profound. The Chinese-language character for gold is the same as the one for money. As far as the Chinese are concerned, gold is money. The Chinese central bank reported an increase in their gold holdings to the International Monetary Fund last year. But the number is still small, about 500 tons compared with 395 previously reported. The general market view, though, is that the Chinese central bank has been accumulating gold and not reporting all their holdings to the IMF. Q: Somebody must be selling it to them. A: Now you are getting into the whole issue of who is selling the gold and who is shorting gold. There is a point of view that, in addition to some mining companies, banks and other financial institutions have been borrowing gold to fund dollar assets and earn a spread similar to that of the yen carry trade of a few years ago. People were borrowing yen at 0.5% to fund dollar assets and making 5% on the spread until the yen started to appreciate. Now, gold is being borrowed from the central banks and sold into the market in exchange for dollars. That's fine in a declining gold-price environment, but in a rising gold environment it can kill you. We know the central banks loan the gold, but it's unclear which ones are doing it and how much they are loaning out. There is evidence to suggest the Exchange Stabilization Fund, a quasi-government agency under the direct control of the U.S. Treasury secretary and the president, has been active in the gold market. If the gold price were to rise, the multinational banks who are the big shorts in the gold market wouldn't be able to cover their shorts and would take big hits. That's why the ESF is involved to help manage the price of gold. It isn't unprecedented that gold is loaned or flows into the market. What's unprecedented is the lack of disclosure. My sense of it is that there's more than 10,000 tons loaned into the market by central banks. If that's true, that's four times annual production. Can you imagine if people were short four times wheat production in one year? There is systemic risk here. Q: Are you recommending people buy gold bullion, or should they buy gold stocks? A: People make a mistake thinking bullion is an investment. Mining stocks fall into the investment category, but bullion is cash. It isn't an investment. You buy bullion for liquidity purposes. You buy bullion for safety purposes, because there is no return to bullion unless you lend it out. It's clear, though, that people see gold as an increasingly important component of their cash and liquidity holdings. According to Turk, "People make a mistake thinking bullion is an investment. Mining stocks fall into the stock category, but bullion is cash. It isn't an investment." Q: What about gold stocks? A: There are two models that I like to use. The XAU, which is the Philadelphia Gold & Silver Index, is a basket of about nine different mining stocks, including the majors and some good quality second-tier stocks as well. Tracking the 12-month year-over-year change in the XAU provides a good sell signal if it registers 50% growth over the previous year, regardless of the price of the XAU. Conversely, when the XAU declines 25% to 30% from the previous year, it's typically a good buy signal in terms of relative appreciation. Another model I find useful is one that quantifies how many gold grams are needed to purchase one XAU share. For example, the XAU now trades at about 72. A gram of gold is about $10. By dividing the gram price into the XAU price, we see it takes about seven grams of gold to purchase one XAU. This is significant, because historically the gold-mining stocks have been relatively inexpensive and represented good buys at times when it takes about six grams to buy an XAU share. When it takes 10 or more grams to purchase one XAU, the mining stocks tend to be relatively expensive. Even though six months ago we had a breakout from the six-year downtrend in gold stocks, we've retraced and we're close to a buying opportunity where gold stocks look cheap compared with gold bullion. Q: But what about the fundamentals of gold stocks? Don't you have to look at hedging and what it costs to get the gold out of the ground, rather than just gold's price? A: There are a number of measures to use to evaluate gold stocks. The first one to consider is whether a company has hedged future production. That's the great divide. I recommend gold-mining stocks that don't hedge or have minimal hedged positions, because if the gold price rises, the stocks that are hedged are giving up potential cash flow by being forced to deliver into those hedges below the market price. There are a number of companies that have losses on their hedges simply because the gold price has risen beyond the price at which they sold forward. Q: What else do you consider before buying a gold-mining stock? A: The second consideration is the cost of production -- not just the operating cost, but the total cost basis to get the gold out of the ground. In this regard, there are two types of mines: underground mines, with deep shafts that enable the ore to be mined, and open-pit mines from which the gold is dug out. Generally speaking, the underground mines have a high capital cost, and the open-pit mines have a relatively lower capital cost but higher operating costs. Say a mine has a total production cost of $280 an ounce, and the price of gold is $300 an ounce. It makes $20 per ounce. Say another mine has a total production cost of $100, gold is at $300 and so it makes a profit of $200. If the gold price were to rise to $320 from $300, the mine that has a $280 total cost is doubling its profit from $20 to $40 per ounce, whereas the one that has a $100 cost is only increasing its profit by 10%. The company with the higher total production cost is operating on the margin, and any increase in the gold price has a much more immediate impact on the bottom line than it would for the low-cost operators. In a bull market, the marginal stocks will tend to outperform. There's more risk associated with them, but as the gold price rises there's more potential as well. It always comes back to risk versus return. The nonmarginal low-cost producers won't have as much appreciation, perhaps, but they will go up as well. Table: Turk's Picks Q: What are other factors to consider? A: No. 1 is management and the quality of the balance sheet, but you also have to look at the quality of the mine, the life of the mine and political risks. Q: So it wouldn't be wise to just buy a basket of gold stocks to play a rise in the price of gold? A: I wouldn't recommend it. I would recommend that you pick and choose very carefully companies that aren't hedged, whose managements have a demonstrated record of success and the potential for paying dividends down the road. As the gold price goes up, the mine has two options: It can take the excess cash flow and expand its business to other areas and buy more mines, or it can pay a dividend to their shareholders over the life of the mine. Some of these are very long-lived mines. Q: Which companies are you recommending? A: In South Africa, my favorite is Harmony Gold Mining. This is a company that changed the face of mining in South Africa. Under the old system, mining houses would operate a series of mines and they would collect a fee for doing that. That system broke down. Harmony emerged as a great management team with some very good properties, and they built up one of the world's biggest mining companies. It's got a relatively high cost structure, so it's leveraged to the gold price. Durban Deep is a more speculative turnaround story that is also highly leveraged to the gold price. It was a marginal mine and there was a lot of uncertainty about its future. They put a good management team in place with Mark Wellesley-Wood, the new chief executive, but I wanted him to put together two good quarters before I recommended the stock. He did that in the second and third quarter last year. Q: Anything more recent? A: In the last couple of months, I recommended adding AngloGold. Anglo-Gold is the largest South African mining company and it's the second-largest gold producer in the world. It's been aggressively reducing its hedge book. And it's a good dividend payer. Plus, they have a lot of geographical diversification. Q: What are you looking at in North America? A: The premier stock is Goldcorp. It's a wonderful situation. They are mining the world's richest gold mine in Canada in an area that's been a major producing area for 70 years. Their existing mine has many years to go. They have a good management team and one of the best balance sheets and cash-flow positions in the mining industry. It has shown tremendous price appreciation over the past 10 years and it's outperformed the S&P 500. It has been a growth stock because they discovered a new deposit next to an old mine that is now the world's richest gold mine. They're raking it in. To put it into perspective, they're mining gold with a grade of more than two ounces per ton. Many mines can make money on gold with a grade of a fifth or less of an ounce per ton. It's a tremendous company, and even though it's done extremely well, there's still a significant opportunity. They pay a dividend and I expect the dividend will continue not only to be secure but will increase along with the price of gold. They just announced a dividend increase of 20% Wednesday. It's a real Cinderella story. Q: What else do you like? A: Newmont Mining I like. It's got a hedge position bigger than I would like to see. The hedge came from Normandy Mining in the three-way merger of Franco-Nevada, Normandy and Newmont. Management has indicated they wanted to reduce the hedge position. However, they've been very slow in going about it. For now I am willing to live with the situation because management owns a big chunk of shares and I like that commitment. Newmont is the world's biggest producer. They've got some great mines and good geographical diversification. The balance sheet is much improved after the merger and they have the tactical brilliance of President Pierre Lassonde on their side, which to my mind goes a long way. Q: Any other more recent buys? A: I've just added a few more to my buy list, one U.S. company and two Canadian companies. The U.S. company is Glamis Gold. They are very good operators. They're nonhedged and they've just acquired a couple of Central American properties. One of the two Canadian companies is Agnico-Eagle Mines, which trades on the New York Stock Exchange. They have no hedging policy on precious metals, though they hedge some base metals and run an underground mine in Canada. The other one is Iamgold. It jointly owns two mines in Mali with AngloGold, which is the operator. And both Mali properties are world-class. Iamgold gets a share of the revenue as an owner and Anglo gets a share for owning and operating. Iamgold is a cash cow, and because it's completely unhedged, it's a very, very attractive way to benefit from a rising gold-price environment. Q: What don't you like? A: I don't recommend any Australian stocks now, simply because their hedge positions are underwater. Newcrest Mining is one pan; its hedge book is negative US$440 million. But my top pan is Australia's Sons of Gwalia. It has a US$340 million unrealized loss on its hedge book and is relatively more hedged than Newcrest, and its properties aren't as good. Q: Are they at risk of bankruptcy? A: There are two points of view. Some will argue that they don't risk bankruptcy because eventually they're going to produce the gold. In theory, that's true, as long as there's no operating problems. But they may receive pressure from the banks because the banks don't want the companies to carry these huge unrealized loss positions in the event of a disruption in the production of the gold. In 1999, when gold rallied, we saw two mining companies -- Ashanti and Cambior -- go bankrupt in everything but name. Their hedged positions killed them. They were selling aggressively on the way down and got caught when gold rose to more than $300 an ounce. Now the question is: Who will be caught at $350 an ounce? Q: Thanks, James.

Post  41580  by  pdowd       OT: pacemakernj !!!!

Post  41581  by  pdowd       Reply

Thank you maldinero for that post. I feel like I was in the twilight zone debating this topic with pacemakernj. It is really insulting to imply that I am that stupid to blame GW or any president for this problem , although alot of the blame can be SQUARELY PLACED on the shoulders of the oil companies and also the crooked politicians that accepted the suitcases of cash to let oil run roughshod over Louisiana's envoirnment for years. Some blame can be placed on the federal levee system on the Mississippi River. The levees in escence "starve" the marshes of vital sediment and fresh water to replenish the eroded land masses naturally. Alot of debate has taken place lately about the federal flood insurance program. While I agree that flood insurance should not be subsidized to insure millionaires 2nd or even 3rd summer homes and play camps , the majority of Louisiana's flood insurance coverage goes to fisherman and trappers who have lived for generations on family property that is gradually being inundated by increasingly more severe floods year after year through no fault of their own. This WILL be an expensive problem to straighten out and I promise you that Mr.& Mrs. US. Taxpayer will be footing the bill. Again thanks for the post maldinero !!! Regards, Pdowd.

Post  41582  by  pmcw       OT: Name That Speaker.

Post  41583  by  abveldeh       Reply

pmcw, Total Debt is an estimated 30 trillion or 4 times GDP so your post seems absurd. Quote: "I don't know if you missed a post by me the other day, but I took some time to address some of the hype over "massive liquidity" and other myths. I'm sorry, but they're simply not true. None of the major financial metrics is out of whack and the debt bubble we've all been aware of for quite some time is in fact working its way through the system. Sure, we'll continue to hear some belches (bankruptcies) as the bad debt gas passes, but that's certainly not a surprise." http://csf.colorado.edu/roper/defl-waves/intro.html http://csf.colorado.edu/longwaves/feb00/gif00051.gif The Debt To the Penny Current Amount 09/05/2002 $6,203,621,876,964.50 Current Month 09/04/2002 $6,201,449,286,859.25 09/03/2002 $6,194,089,703,019.91 Prior Months 08/30/2002 $6,210,481,675,956.26 07/31/2002 $6,159,740,790,009.39 06/28/2002 $6,126,468,760,400.48 05/31/2002 $6,019,332,312,247.55 04/30/2002 $5,984,677,357,213.86 03/29/2002 $6,006,031,606,265.38 02/28/2002 $6,003,453,016,583.85 01/31/2002 $5,937,228,743,476.27 12/31/2001 $5,943,438,563,436.13 11/30/2001 $5,888,896,887,571.34 10/31/2001 $5,815,983,290,402.24 Prior Fiscal Years 09/28/2001 $5,807,463,412,200.06 09/29/2000 $5,674,178,209,886.86 09/30/1999 $5,656,270,901,615.43 09/30/1998 $5,526,193,008,897.62 09/30/1997 $5,413,146,011,397.34 09/30/1996 $5,224,810,939,135.73 09/29/1995 $4,973,982,900,709.39 09/30/1994 $4,692,749,910,013.32 09/30/1993 $4,411,488,883,139.38 09/30/1992 $4,064,620,655,521.66 09/30/1991 $3,665,303,351,697.03 09/28/1990 $3,233,313,451,777.25 09/29/1989 $2,857,430,960,187.32 09/30/1988 $2,602,337,712,041.16 09/30/1987 $2,350,276,890,953.00

Post  41584  by  Decomposed       ot: Louisiana

Post  41585  by  oldCADuser       OT: Decomp, I was going to first E-mail you the an

Post  41586  by  pmcw       Reply

ab, The sad thing of today is that there is more optimism in the streets of Kabul than there is in some pockets of America. I just completed reading an article written by an American who immigrated from Afghanistan many years ago and returned to examine what the country has endured during the last year. The stories were both horrific and uplifting. One of the many emotions I walked away with was that many of us are most certainly spoiled. We let the littlest things deter our convictions, our hopes and our optimism. In a city destroyed by over a decade of war, people can't stop talking about their prospects for tomorrow. In a country that sits at the economic pinnacle of the world, we see considerable dialog about our certain ruin. Ironic, not really - just very sad. Now, back to your post. 1) Please define, quantify and substantiate total debt at $30T as you have claimed. 2) GDP has been over $10T for some time so, unless you're using a new form of division, even $30T is hardly, as you say, four times the GDP. Where did you read this? Before you want to say what I've posted is "absurd" please take the time to read the original post referenced and gain an understanding of the issues. As I said, anyone, even Don Roper, can take this data out of context and build a case to support any thesis. Many go several steps beyond and either distort or clearly lie to support their conclusions. My central point is that there clearly isn't enough data for either side to build a sound case that we will move from our current path. Of course, this doesn't make for a very exciting headline so it is therefore not news-worthy. If you go back a couple of years you'll find many posts by me that dissect the total public debt (including links to the site where you got your data), the money supply, the debt markets (both marketable and non-marketable), GDP and how these fundamental measures relate (this latter point is the key issue here). You can also read recent comments where I took a fairly unpopular position of saying the Fed was prudent in not dropping rates farther at the last meeting. I detail exactly why I feel this way and state clearly what has changed to stimulate "real" lower rates (notice that long term rates have continued to drop even after the Fed left the discount alone). I also posted extensively about what I feel needs to be done to get cap/ex into the game, create an atmosphere where our assets (debt) can be more efficiently leveraged and illustrated the natural movement of the durable to non-durable goods spending ratio. So please, take some time to understand these posts before you place a label upon me I doubt you can defend. Regards, pmcw

Post  41587  by  pdowd       OT: Decomposed !!!!!!!

Post  41588  by  abveldeh       Reply

pmcw, the first two figures have come to me from the Daily Reckoning's editor, Bill Bonner. So if correct or not, for the moment I am unable to substantiate. However, I have noticed many of his statements over the last year to be correct dispite confusing and sometimes misleading official numbers. I suppose his numbers comprise trade deficit and equities and bonds owned by foreigners I ought to replace the word absurd by strange, not wanting to put a negative nor personal tone towards your person "None of the major financial metrics is out of whack and the debt bubble we've all been aware of for quite some time is in fact working its way through the system. Sure, we'll continue to hear some belches (bankruptcies) as the bad debt gas passes, but that's certainly not a surprise." The USA tradedeficitis adding to total debt at the pace of 35-40 billion a month. Householdbankrupcies are rising to extreme levels Household Credit market debt as percentage of personal diposable income is at 95% and rising. http://csf.colorado.edu/longwaves/feb00/gif00051.gif There will be some more major bankruptcies if the bear continues and that will be the likes of C and JPM, the derivatives market as a whole being a still inflated bubble. The housing bubble still has to unwind. The unemploymentfigures are distorted. Current growt solely depends on the sale af cars on 0%credit Another contributing factor is the construction sector. Construction is falling as well in the private as in the commercial sector. Again according to Bonner growt was not positive but negative. In the end you write: " As it stands today, the general economy is moving very slowly towards the good side. The only real wild card in international acts of violence (this includes wars declared or not). These acts are absolutely inevitable and will be clearly unsettling to the financial markets. The unknown is by how much and for how long and if they might derail the current fragile direction of the economy. From my perspective, there isn't enough certain today to cast a big bet in any one direction. Of course, you've heard me say that for many months. Well, nothing has changed. " As far as I am concerned the 9-11 event and the actual war threat have no influence whatsoever on the course of an economic trend and that is downwards.Nor did the rate cuts. I argue the contrary I have no solution other than to say people in the USA have to start saving, spend on durable and sustainable goods and economical goals. Spend/ overconsume less. Taxes on high incomes should be raised to fund those goals. There is no point in having an other ratecut to provoce more spending. Nex quarter GM and F will have lower figures and so they will next year.Tech will only rebound in certain niches The US cityzen is debtloaden on the contrary to the European or Asian consumer. But they do not spend and have tradesurplus The US owes trillions to Japan and China and Europe and they are not buying US goods just selling their own and China instead of buying more US bonds is moving to other investments. Q: So are we heading into a deflationary period? A: I don't think so. I wouldn't call it inflationary; I wouldn't call it deflationary. We will see rising prices, not because of the dramatic increase in supply of dollars, but because of dramatic decreases in demand for dollars. The supply of dollars may remain the same, but if demand declines, the dollar purchases less, which expressed in terms of prices means that prices will be rising. Q: Talk about China's role in the gold dynamic. A: The Chinese impact on gold will be extremely profound. The Chinese-language character for gold is the same as the one for money. As far as the Chinese are concerned, gold is money. The Chinese central bank reported an increase in their gold holdings to the International Monetary Fund last year. But the number is still small, about 500 tons compared with 395 previously reported. The general market view, though, is that the Chinese central bank has been accumulating gold and not reporting all their holdings to the IMF. Q: Somebody must be selling it to them. A: Now you are getting into the whole issue of who is selling the gold and who is shorting gold. There is a point of view that, in addition to some mining companies, banks and other financial institutions have been borrowing gold to fund dollar assets and earn a spread similar to that of the yen carry trade of a few years ago. People were borrowing yen at 0.5% to fund dollar assets and making 5% on the spread until the yen started to appreciate. Now, gold is being borrowed from the central banks and sold into the market in exchange for dollars. That's fine in a declining gold-price environment, but in a rising gold environment it can kill you. We know the central banks loan the gold, but it's unclear which ones are doing it and how much they are loaning out. There is evidence to suggest the Exchange Stabilization Fund, a quasi-government agency under the direct control of the U.S. Treasury secretary and the president, has been active in the gold market. If the gold price were to rise, the multinational banks who are the big shorts in the gold market wouldn't be able to cover their shorts and would take big hits. That's why the ESF is involved to help manage the price of gold. It isn't unprecedented that gold is loaned or flows into the market. What's unprecedented is the lack of disclosure. My sense of it is that there's more than 10,000 tons loaned into the market by central banks. If that's true, that's four times annual production. Can you imagine if people were short four times wheat production in one year? There is systemic risk here. In the end you write: " As it stands today, the general economy is moving very slowly towards the good side. I am not an economist but I very much doubt it as you do yourself the way you phrase the rest of the sentence. I think all the above has to unwind and the more the Fed intervenes in the derivatives market the longer it takes but The big banks will go down like in Japan and makets will drop to the straightline you should draw from 1900-2000 on the DOW chart completely ignoring the bubble. http://moneycentral.msn.com/investor/charts/charting.asp?Symbol=%24INDU I could argue DOW at 2-3000 and NAZ at 2-300 Now where does that leave the banks, the insurance companies and the pension funds. Eagon already made a dive to 10 EURO's whilst Dutch pensionfunds lost 57 billion this year alone I believe. Hope you are right but think you are wrong. I am 100% invested in Gold in this moment. G.L.

Post  41589  by  pacemakernj       OT:Decomp/PDowd, you're right! I lost my focus. I

Post  41590  by  pdowd       OT: OCD.

Post  41591  by  pmcw       Reply

ab, I'm a bit short on time, but I'll hit a few of the high points. If they said that total debt is $30T and that is equal to four times the GDP, the Daily Reckoning is out of their mind and the data is totally false! You are more than welcome to link my post to their publisher. If you care to, look up the real data at the St. Louis Federal Reserve. One of my pet peeves is when those who don't have a clue start using broad terms to define what they can't quantify. If you can't quantify it how can you justify calling is "massive, extreme, distorted, unwind, etc." Take a few minutes to read my very short and simple post on the money supplies and spending. Non-durable goods spending is way way down and durable goods spending is way way up. And, btw, personal saving is up. What we need is some cap/ex stimulus. That would help avoid the need to write down more debt that is owed on assets that are unable to perform at their current debt burden. Here's a link to one of the posts on the topic: http://ragingbull.lycos.com/mboard/boards.cgi?board=TABLE&read=41392 Sure bankruptcies are running wild. This is how a debt bubble works out of the system. Add to this the new personal bankruptcy law and I think this is such an obvious issue it's fully discounted. Now, here's one that will surprise you. Commercial banking ROA and ROE are at near record levels. Hmmmmm. This is a benefit the Fed can throw into the system for banks through a low discount rate. The chart showing 95% of disposable income going to serve household credit is unadulterated BS. The last report of this metric showed it to be 14.05% which is down for Q4 2000. http://www.federalreserve.gov/releases/housedebt/default.htm Please substantiate the following statement: "The US owes trillions to Japan and China and Europe and they are not buying US goods just selling their own and China instead of buying more US bonds is moving to other investments." Hint: It ain't true! You say that GM and F will have lower figures to report next quarter and next year. Wanna bet? I follow the car industry pretty close and have very reliable sources that say otherwise. The housing bubble is regionalized just like all the past housing bubbles. It is not a national issue. Prove the unemployment figures are distorted. Sure, construction is down. Companies quit building when the don't need the space. However, construction in the non-commercial sector is running at record levels. This is not an issue, but what one should expect. Personally, I would double check anything Bonner said. However, if you look back, I was one of the first to clearly say right here that Q1 2001 GDP numbers were BS. However, Q2 2002 looks pretty clean (as they are currently presented). Explain, in detail, the derivatives bubble. And, if you think it will "unwind" dangerously, explain exactly how. You say you could argue DOW 2-3K and NASDAQ 200-300 - please do. Now, here's two trivia questions for you. 1) What has been the inflation adjusted return on gold over the last two hundred years? 2) The Chinese (you know those are the guys hording gold) were one of the first civilizations to develop currency. What was their first currency? Basically, ap you're reading some people who like to distort the truth, add a few lies and then twist is all to where it supports their position. I've read no one who can make any compelling argument without the use of these tactics. The fact is there simply isn't enough data or certainty in the variabilities we face to make a sure call. At the end of the day, someone who is certain today will be proven correct, but it could just as easily be a monkey with a dart board as any of the pundits you've mentioned. Regards, pmcw

Post  41592  by  srudek       Reply

Recommended reading: Full Faith & Credit subtitled "A Novel About Financial Collapse" by Jim Cook, (c) 1999 ISBN 1-886768-49-8 This book does an awesome job of weaving and integrating an education on various arcane aspects of our economy in with a real thriller of a plot. That's, perhaps, the biggest compliment of all: since page one, I have scarcely been able to put it down. Along the way, you will gain a fundamental understanding of commodity trading, futures, currency arbitrage, hedge funds, derivatives, inflation, deflation, the relationship between the stock markets, the housing markets, the credit markets, the GDP, and long and short term interest rates. You'll learn about the mechanism by which fiat money is created and you'll learn how debt can be monetized. You'll also learn about the distinction between the Fed and the Treasury; how they can have very different agendas. As a first work of fiction by an author who, presumably, had a message, I was expecting the writing to be really poor and the ideas all hackneyed retreads of what I've been reading for the last two years on various websites. Instead, the writing quality is quite good and the plot is really captivating and believable with lots of twists and turns. Character development isn't comparable to, say, Hemmingway, but it's at least as good, imo, as what I've seen in books by authors such as John Grisham. The first several chapters don't read so much like fiction, as we begin with the stock market and the dollar at historic highs and the social mood ebullient. Then the market begins to decline, the dollar begins to decline, gold begins to creep up, and we're off to the races. Keeping in mind that this book was written BEFORE there was even an acknowledged bubble and published, apparently, in early 2000, let's all hope that this guy's ability to describe almost EXACTLY how the last few years have gone is merely fluke and in no way an indication that the rest of the book could ever be anything more than fiction. Highly recommended.

Post  41593  by  uponroof       Reply

pace...KRY I have been monitoring various KRY sites and the consensus seems to be much more money per share in a few months. Most think tommorrow will be very nice (+50-100%?) but not nearly the full move ($10-20US in a few months). From what I read there are 1.3 million short who will be covering immediately. The specs will be out in force also, as will the funds who presently have them on their watch list. Tommorrow will be fun to watch but I will not be taking profits unless we breach 5.50US. Then I will be selling into temporary overbought conditions, only to buy back my position as soon as possible during next few days correction (hopefully!). BUT!...I'm not a day trader and don't like to flirt with missing the impact of 'a second announcement'... Unhedged ounces are going for $100+- per out there as the majors look to unwind as quickly as possible. This site has had the pre lim done by PDG who spent 116 Mil on drill results, exploration, etc. That is 'found money' for KRY. The site is one of the few giants in the world, untapped and ready to quickly develope after the long bear market. The fact that KRY has undisputed title removes the risk from persuing majors who were in fact sniffing around earlier this year. I get the feeling there is another shoe to drop (JV) which would cover financing in a heartbeat. VZ would retain the KRY management team, and we shareholders would get the 10-20US per share once a major (ABX?) moved in to a joint venture with KRY and VZ (a share for a share?). This would not only blow KRY shareholders away but look how nice ABX would look with 12 mil clean to balance against their hedge book...ABX shares would benefit also. It's either some sort of variation of the above or KRY resorts to selling forward (to banks) at fixed prices to supplement financing...and we all know that is not wise given todays rising gold market. Holding on for a great ride the next several weeks my friend. The best kind of ride...up and up and up. Good Luck and Cheers! BTW-All shareholders...I suggest you apply for access to 'KRY Winner Circle' forum as there is much insightful info there which may allow you to stay ahead of the action! http://www.arborwood.com/awforums/show-toparea-1.php?fid=2177&taid=1

Post  41594  by  PhiltLstnr       Reply

PMCW: What do you think of this? And also, do you think RapidChip looks to be as promising as it sounds? Thanks, PhilT http://ragingbull.lycos.com/mboard/boards.cgi?board=LSI&read=6573 (Voluntary Disclosure: Position- Long; ST Rating- Strong Buy; LT Rating- Strong Buy)

Post  41595  by  oldCADuser       OT: It's interesting that you bring this up as we

Post  41596  by  pmcw       Reply

Phil, I think the semi industry that is not captive to wireline telecom is going to do much better than most people think over the next 18 months. I think LSI is a pretty big ship to turn, but I like them at the current price. However, I still plan to stick with my focus three for now. RapidChip is not an altogether new concept. However, as they state, it is a huge market and it narrow the gap between gate arrays (ASIC's) and programmable solutions. However, I still feel programmable solutions will gain ground towards the middle. Regards, pmcw

Post  41597  by  Warstud       Reply

Re:Semiconductor Growth Seen at 7-9 Percent.. All I'm going to say is that most of the semi's have between 25-35% more to go on the downside. And as I said a while back, there was a big divergence between price and value within the semiconductor industry. And now the reality sets in and most will fall to there true value. The latest downward revisions made to NSM look downright ugly. This is still a traders market!

Post  41598  by  Warstud       Reply

Auto Industry Figures Up? Yes higher sales figures mostly due in part to 0% financing and rebates. But profits will be down and also do not overlook pension payouts. Speaking of pension funds,there are supposedly 13 corporations which owe their pension funds more than 1 billion each. And alot are drastically overstating their earnings through manipulations of their employee pension.