Dollars Hit The Hyperinflationary

Dow down slightly yesterday. Oil falling further below $100. And gold still going up. What is most interesting is the movement in the price of gold. It seems to be heading up again — almost no matter what else is happening. So, let’s look at what might be going on… If investors sensed a recovery…they would expect banks to lend more freely…people to shop more freely…and prices to rise. This would raise consumer prices; the price of gold should go up. But if the market sees growth and inflation ahead, why is oil slipping? And why is the Baltic Dry Index — which measures shipping prices — at a 25-year low? And how come last month’s employment figures were disappointing? And why aren’t stock market prices going up? Most important, if the economy is really recovering, why is the 10-year ...

“I’d feel a little stupid buying these things,” a dear friend of your editor’s recently remarked. “But that’s probably not, in and of itself, a bad thing. After all, I felt pretty stupid buying gold back when it was still $250 per ounce.” Our friend was referring to a peer-to-peer (P2P) cybercrypto currency called bitcoin. What is bitcoin? How is it used? What are the risks? Let’s begin where all good non-Tarantino stories begin…at the beginning. The demand for a totally free market currency arose, naturally, out of the dismal state of the current monetary environment, in which governments around the world systematically debase the value of their printed monies in order to pay for the various welfare-warfare states they promised but can’t possibly afford. The resulting inflation is ...

Speculation is not the same as gambling. As our good friend Doug Casey, a perennial favorite at the Agora Financial Investment Symposium, likes to say, speculation is the act (some might say “art”) of “capitalizing on politically caused distortions in the marketplace.” Consider, for example, the recent housing bubble…and its subsequent bust. We touched on this in Wednesday’s issue, “Debunking the Myth of a Free Market Run Wild“. Superficially, the mortgage meltdown looked like, and was so labeled, a “crisis of confidence,” leading to a convenient excuse for greater intervention by the Feds. Of course, and as usual, the exact opposite was true: the bubble was in fact a crisis of overconfidence, nurtured by the very same pinheads who pumped, via the Federal Reserve, more credit into the ...

Would you like to litter in a national park or blow up a Homeland Security office? This may be your big chance… The government might have to shut down on May 16th. Is that bad news? A lot of people don’t think so…more below… Meanwhile… Worried about inflation? Don’t be. That was Ben Bernanke’s message yesterday. Bloomberg was on the case: Federal Reserve Chairman Ben S. Bernanke said he expects an increase in commodity prices to create a “transitory” boost in US inflation and that the central bank would act if he’s proven incorrect. “So long as inflation expectations remain stable and well anchored” and commodity-price increases slow, as he’s forecasting, then “the increase in inflation will be transitory,” Bernanke said today in response to audience questions after a speech in Stone ...

It’s time to buy gold stocks. Top-down “macro” analysis indicates that the bull market in gold stocks still has a long way to go. And bottom-up analysis tells me that gold stocks are cheap. Buying opportunities in this asset class will be rare, simply because so many institutional investor portfolios remain hugely underweight gold. These investors will keep looking to add exposure to gold because of the dismal state of the private credit markets, government debts and central banks. Western central banks are trashing their own currencies at unprecedented rates, while Eastern central banks are slowly tightening policy and accumulating gold bullion. If current trends in government spending and central banking continue, gold could soar to multiples of its current price. If, under these ...