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Post US Election anti investment pussyfootingChris Laird I am worried. That is not just about the status quo of US trade deficits exceeding $700 billion, or just about US fiscal deficits that are nominally $500 billion, but in actuality more like several trillion a year. This is not just about the fact that the US housing bubble that pumped about $10 or $15 trillion into the US economy and financial structure in the last 4 years- that is going to collapse/is collapsing. This is not just about the fact that I believe the US is about to attack Iran and set them back into the stone ages, - and try to completely rewrite the map of the Middle East, that was created in the 1920's when the British pulled out of there and did things like making Iraq an unmanageable country of three sects who hate each other- that the Kurds are half in Turkey and Half in Iraq, and the whole Middle Asia/East is a map quagmire... and not just about this, and that, and this and that. Or the derivatives time bomb of a Quadrillion dollars size - that is out of control, even the US Fed and many world central bankers are struggling to comprehend it, and get some kind of handle on it -but turned away wagging their heads that- it is by nature unmanageable, and that it grows out of control every year in a logarithmic growth spiral that can only lead to total world financial disaster- Or not just about the fact that all world stock, bond, and financial markets are at the peak of an unprecedented credit boom of a scope not even imaginable 50 years ago, or 5000 years ago...that is going to collapse terribly at some point in the next few years...or tomorrow. Not only about the fact that the nation that has the world's reserve currency, the USD, has unfunded liabilities exceeding $50 trillion due within 30 years either. Do you remember 30 years ago? Do you remember 10 year ago? I do, quite well. Not only about the fact that all fiat currencies have collapsed. That the USD is worth about 1/3 what it was in real terms in 1983. (a high estimate), and is worth literally one cent on the dollar since the 1870's. Much of that debasement coming in only 30 years since the 1970's. Do you remember the 1970's? a good car cost about 5k. A good house about 25 to 40k. But to get more to the point, I'm worried about all this, and the fact that the world central bankers are continuing to mew how the USD is a problem, that they don't want any more- China, That Asia needs to get out of the USD somehow- Australia, that the world needs to get out of the USD- Russia... And so on. Alternatively, I just wrote for my subscribers about the fact that the world central bankers have been willing to keep the USD above 80 on the USDX. They will pay for it. China does it by buying USD bonds and such, and monetizes their 1 trillion dollar USD foreign reserve horde, Japan does it by keeping their interest rates ultra low, enabling a nice supportive yes carry trade that allows foreigners to use cheap Yen to buy a USD with a 3% yield advantage over the world - on average. And Keeps the USD strong. Other nations all doing some kind of apparatus to keep the USD stronger than it would be, given the fiscal situation of the US. Greenspan makes one comment last week that central banks don't really want the USD much anymore and the USD drops 1.5 points on the USDX. A world of jugglers of trillions of USD balls. One juggler misses one, and the whole jig is up. That is going to happen soon. Just a matter of time, now. As long as they can continue to juggle the USD it will stay stronger than you may think, and anyway, until the USD debases significantly gold will not reach $1000 like many thought was coming this year in the spike over 700... one thing I have said before is that knowledgeable gold bugs are about 5 years ahead of themselves (they see that far ahead but don't actually realize this, but I see this) but I am not saying the USD crisis is not always now a definite crisis risk henceforth. And, In/After the November elections, the US republicans will get creamed. The US stock market won't like that, as if the US stock market needs another reason to crash. Then Bush will set about creaming Iran at some point after, making haste to finish whatever he thinks he is doing. Then, there will be a good possibility of a world war in the Middle East. Then oil will skyrocket well over $100 a barrel, and if things don't get under control in the Middle East soon after the US attack, the world stock markets will collapse... as will their economies - for lack of cheap energy, then all the big guys will panic and fight it out in the Middle East...? Such a war is not a certainty, but, the prospects are very scary. I mean very very scary. China, the US, Russia, Israel, Iran, the EU, Japan, ...at war? This is not all a certainty. But I am very much worried. And there is only one asset that I know of that historically offered some financial safety to all these scenarios simultaneously. Gold or silver bullion. (I mean actual bullion coins or bars, I say that because I have had people write me thinking that, when I say 'bullion' that includes paper gold like stocks or ETFs or Options or whatever that are not good real gold analogs.) SO who cares if the 'gold bull' is alive or not? Or if gold went to 600 and fell to 580? Or gold went to 610, everyone is all excited, then drops back to 600 and so on? Or if gold will soon hit 640, like it needs to, to reaffirm the latest gold bull? This is all trivial! What matters is if people have some gold or silver before anyone of all the just abouts I listed above happens! If any of the above disasters happen, I predict that gold and silver bullion will be off market. That is right, not for sale at any price, till things calm down, if they ever do before half the world is dead. You don't think you little lemmings (don't be offended, I'm a lemming too) with a mere net worth of a million dollars or less can compete with billionaires for the remaining gold available for sale in an emerging mega crisis, now, do you? OR are you all ensconced in paper gold, mistakenly thinking that will actually protect your financial health? I wrote 4 special reports for subscribers about how ETFs are not the real asset that people think they are. Eventually, I'm going to make those available for sale as a set at PrudentSquirrel. I should probably do the same for gold stocks too. The only hope a lemming has is to look ahead and act ahead of things. Foresight is your only hope. Course, I am not saying a lemming should take everything and buy gold bullion, but, for your sake, have some of it at least! I have stated many times that I view a real USD crisis as the far greater concern than all this 'investment' pussyfooting. So, take advantage of these low gold prices and go buy some more. I bought recently at 635 and then 604 a month or two ago, all the while knowing gold was going lower. That is because of all my just abouts listed above. I had a reader tell me he can't understand why I would buy gold bullion while expecting it to go down. Well, think about it. I do not view the present gold prices up or down a hundred or two hundred dollars as much of an issue. What would be a problem is if it went to $5k or $50k in a week or two. Now, we are talking remorse of not having got it at $600, $400, or even $800! Investment pussyfooters miss the big picture I just laid out above. Unfortunately, there is a lot of investment pussyfooting around these days. So, of course they do not have the big picture, and never will have it, and will enter one of these crises naked. Prudent Squirrel is very anti investment pussyfooting. Was from the beginning. Also, having done that, I could not care much less about what the price of gold is at that point, having X ounces that will not, like, evaporate on me over time, or in a moment, like the USD could, or like a war could do to the world economy. So, this missive was more of a thoughtful view on our dire times, and not really an analysis, or an explanation, other than to say everything looks like shit. But, there is something you can do about it, at least, for whatever that is worth. I keep thinking about the fact that many of the world's financial disasters and ultra-killer wars happened without any warning. Well, we certainly have the ingredients for these disasters - in spades - right now. The PrudentSquirrel Newsletter is Chris Laird's macroeconomic newsletter. It is named PrudentSquirrel for the reasons listed above - a focus on squirreling away nuts for a bleak winter. Stop by and have a look. Chris Laird 321gold Inc |
