Friday, September 25, 2009

$1000 Gold: Our Ceiling, Asia's Floor

25 September 2009

Sometimes you just have to call it as it is.

The West is passing the flame of progress to Asia at this time in history. For reasons too numerous to detail in a short note, we in the West have become bound up in a tangle of bureaucratic baggage, internecine contest, small mindedness, second thought, political correctness, self neglect and financial manipulation.

Asia is simply moving ahead.

This is nowhere more evident than in the views of our respective cultures towards the price of gold.

To our minds, $1000 gold is toppy, risky, uncertain, overbought, and exhausted.

4 billion Asian savers, $1000 gold is simply another step along the way towards a brighter and better future - a small price to pay for financial security and nights of soothing and untroubled sleep.

Believe me, gold at $1000 today - or even less - is going to look like the last bargain of the decade in the very near future.

$1000 gold.

Think Asian. Stand on this floor for a better and more secure financial future.


Sunday, September 13, 2009

Seeking Alpha: My Comments

13 September 2009

Recently, I've begun to read "Seeking Alpha" for more timely coverage of news and opinion regarding the broad markets.

This site's strength seems to be in its ability to bring together in a single forum individuals with very diverse viewpoints on the investment markets. There are enough timely articles and sufficient intelligent commentary there to keep me interested. Therefore, I have been adding my comments as well.

If you'd like to keep up with some of my ongoing thoughts on market developments, click here.

And if you enjoy Seeking Alpha, you might wish to sign on yourself, as it's quite a simple and painless process.


P.S. If you're wondering why I haven't had much to say (in detail) about the gold market recently - well, I think I've said all that I have to say. This is a bull market, and it's going up in the intermediate and the long term. October 2008 was rough, and the crash in precious metal miners and explorers was unexpected on my part. But I'm glad to be positioned where I am, long gold and silver explorers and miners, right here, right now.

Buying and holding has worked even in the ugliest downturn in this market in 3 decades!

If you'd like more detail, look at Adam Hamilton's recent piece on the gold miners. He is using the same words that I am: "Gold Stocks Still Cheap."

Wednesday, September 09, 2009

What Happens When the US Loses Its Triple A Credit Rating?

9 September 2009

Here's one to think about.

Investment rating services generally mark down the quality of AAA rated debt once interest payments exceed 10% of revenue.

Well, it turns out that subprime borrowers are not the only ones painting themselves into this well-known corner. Uncle Sam could be in this predicament as soon as the year 2012. That is, in 3 years!

Here's how the vicious cycle works.

Once you lose your AAA rating, you have to pay higher interest charges on debt - sometimes much higher. Then interest payments become an even larger component of your monthly expenses - and, of course, your credit rating drops further still. Then your interest payments rise again. Then your credit rating drops again.

You get the idea!

In its 19th century heyday, the US was a net creditor to the world. American savers funded international capital investment around the globe. This continued into the mid-20th century. 

Now that situation is exactly reversed. American borrowers are paying ever higher interest payments on trillions of dollars of escalating debt and capital investment is withering.

Note: It is capital investment derived from savings that builds economic strength. Spending and borrowing breed economic weakness.

This is the road to ruin.

Mr Obama. Mr. Bernanke. Don't do it!

Our children and our grandchildren will pay for our mistakes - with devalued (or possibly non-existent) dollars!

Monday, September 07, 2009

$1300 Gold: Plan To Pay More (Soon)

7 & 8 September 2009

Perhaps I'm getting a little ahead of myself. But in the investment world, it is always necessary to think ahead. 

The gold analysts whom I respect are now almost universally suggesting that we will very soon be paying $1300 an ounce for gold, rather than the current $990 or so. 

Consider Clive Maund's recent analysis (click here):

Or have a look at Prieur du Plessis' recent article (click here):

As you know, the price of gold is volatile, so it may be possible for a while longer to keep buying it under $1000 per ounce. 

But it seems that it was only yesterday when our upside target was $400 per ounce. At that time, Richard Russell of beautiful La Jolla, California suggested that we would soon be viewing $400 gold as "dirt cheap."

How right Mr. Russell was! Production costs alone have now generally moved well beyond the $400 per ounce level (as inflation in the price of almost everything we need has been a persistent trend in the Greenspan and post-Greenspan eras, despite heavily massaged government statistics to the contrary).

I've been writing for a while that we will soon have to think of $1000 gold as "no longer available." So let's plan ahead - to get used to paying $1300 per ounce for gold, because that new price level is "coming soon."

Oh, and if you don't own gold at this time, you'd better buy some now - while it's still "cheap," at under $1000 per ounce!

8 September 2009:

Here are a couple of additional very informative articles on gold priced above $1000 per ounce:

Howard Katz: $1000 Gold

Thomas Tan: The Beginning of the Gold Era

$1300 gold - it's the new normal....

Thursday, September 03, 2009

$1000 Gold: No Longer Available (Coming Soon)

2 September 2009

OK. We're not there yet. Gold closed at $978.80 US today.

But gold has been pushing up against the $1000 level for 1-1/2 years now.

It's going to be looking at the other side of $1000 in the very near future.

Gold at $1000 per ounce is going to look like quite a bargain - and very soon.

Think about gold for less than $1000 per ounce - while you still can.