Why Gold Could Fall 50% from
its Highs
By Dr. Steve Sjuggerud
January 13, 2008
Who's bearish on gold?
I dare you... Name one analyst who thinks gold could crash now.
What, you don't know any? That's what scares me... Everyone I know is bullish on gold... Everyone but my friend Jack Crooks.
I've mentioned Jack once or twice in DailyWealth as a true, successful contrarian. Over the summer, Jack was the only man I knew who was bullish on the U.S. dollar. He essentially said everything keeps getting worse, but the dollar has stopped going down, so it's bottomed. He nailed it. The Dollar Index soared from 72 when he wrote that to a peak around 88 a few months later.He's at it again, this time on gold... with similar reasoning. Yesterday, he pointed out several circumstances that should cause gold to go up... but haven't lately:
How much more stimulus is possible to pump out and cheapen paper currency the world over? How much closer can we get to all out war in the Middle East? How much more dangerous can the Pakistan-India on-going quagmire become?
This is nasty stuff...Yet the supposed supreme safe haven – gold – continues to fade [fall] on all this stuff.Jack says gold investors have gotten the exact circumstances they want for higher gold prices... and yet gold keeps falling. This is not a good sign.
Here's another ominous sign: Gold is breaking down.
In worse news for gold prices, gold broke below its key long-term moving averages. Jack points out that the recent highs have been lower and lower – another bad sign.You may not put much faith in technical indicators like these. But some actually work...
I ran the numbers today. I use a 45-week moving average as a signal of general uptrends or downtrends (above the moving-average line is a bull market, below is a bear market).
Since late 1970, gold has risen at about 6% a year, compounded. But amazingly, when the price of gold is above its moving average, it compounds at a double-digit annualized rate. And when it is below the moving average, you lose money. That is a huge difference.
We at DailyWealth do believe gold is in a long-run bull market. But the near term could be difficult...
Gold jumped from $35 to $850 from January 1970 to January 1980. That sounds like a rip-roaring bear market. But did you know, from March 1974 to September 1975, the price of gold fell by half? We could see that again. We're already down about 20% from the highs... and nobody is even particularly worried yet.
Look, my friend Jack Crooks is good at what he does. Between Jack and the current downtrend, I wouldn't make big bets buying gold right at this moment.
In short... own gold for the long run. But don't take big risks speculating on it in the short run – it could cost you.
Good investing,
Steve
P.S. I've known Jack since we worked 15 feet away from each other at a firm specializing in international investing. That was more than a decade ago. I can tell you Jack is a smart, uncompromising currency trader who knows his financial history and knows the markets. You can click here to learn more about his work.Editor's note: Dr. Steve Sjuggerud writes True Wealth, one of the top five financial newsletters in the world. Steve's investment philosophy is simple: Buy assets of great value when no one else wants them, and sell them when others will pay any price.
Recently, Steve uncovered a "glitch" in his favorite gold investment¦ This anomaly allows investors to make up to 665% after gold prices rise. Click here to learn more.
Russetid på Kolbotn :)
Oslo, Norge
Wednesday, January 14, 2009
Why Gold Could Fall 50% from its Highs
Friday, January 9, 2009
I.O.U.S.A. on CNN; Downsize D.C. Has a Plan.
Categories: Wealth & Poverty, Downsizer-Dispatch
Quote of the Day: "The permanent income hypothesis (PIH) is a theory of consumption that was developed by the American economist Milton Friedman. In its simplest form, PIH states that the choices made by consumers regarding their consumption patterns are determined not by current income but by their longer-term income expectations." -- from Wikipedia
Subject: How to stimulate the economy
The President-elect wants the proposed stimulus bill to be 40% tax cuts. That's good. But he wants those cuts to be one-time reductions. That's bad.
The politicians want to prop up businesses by stimulating consumer spending. One-time tax cuts will not accomplish this.
Milton Friedman won the Nobel Prize for showing that consumers don't spend based on short terms gains, but only on expectations of what their long-term income will be. This fact was validated yet again by the fate of the recent "stimulus" checks the government mailed to everyone. Most people did not spend this money, they saved it or used it to pay down debt.
If the politicians really want to stimulate spending they should passpermanent tax reductions.
The politicians claim this would add too much to the deficit. They could solve this problem by cutting spending -- by Downsizing DC. But the politicians claim we need increased government spending to substitute for reduced consumer spending. Several recent studies indicate that there's little evidence to support this theory.
The politicians promise that this stimulus program will be different. They're going to focus on building productive new infrastructure that will aid economic growth. But how do politicians know what will be productive and what will not? And why should we believe that this massive spending won't be junked up with pork and corporate welfare?
Daniel J Mitchell of Cato Institute makes the following points . . .
* The jobs the stimulus package is supposed to create will cost about $280,000 each, assuming the jobs materialize (this is according to the calculations of Greg Mankiw at Harvard)
* The true cost of these jobs will be even higher because we must also include the "opportunity costs" of what could have been done with the money instead
* To the extent the new jobs are government jobs the cost could be even higher. The Bureau of Economic Analysis calculates that federal employees earn nearly twice as much as private sector workers.
In addition, the money for the stimulus package must be borrowed, which will add long-term interest costs.
All of these concerns disappear if the government doesn't spend the money, and instead leaves it in the private sector.
The politicians could stimulate businesses to use this money to create new goods and services, and consumers to feel confident about being able to afford these goods and services, by cutting regressive forms of taxation permanently. The politicians should immediately eliminate the . . .
* Capital gains tax (which discourages investment),
* Corporate tax (which is merely passed on to consumers),
* And reduce the regressive payroll tax, which does not need to be so high in order to pay for current entitlement expenses
Permanent tax reductions would . . .
* Make new investments and businesses profitable
* Convince consumers that their incomes will be higher for the long run
* Increase investment, job creation, and consumer confidence
Please send Congress the following messages . . .
Ask them to oppose so-called stimulus spending. Use your personal comments to point out the lack of evidence that government spending stimulates the economy.
Then, please also ask for permanent tax reductions. Use your personal comments to point out Milton Friedman's findings that only permanent changes in income stimulate consumer spending. Ask Congress to repeal the capital gains tax and the corporate tax in order to boost employment, and to reduce the payroll tax so as to increase consumer confidence.
After you've sent these messages please think of at least two people who would really like and agree with this message. Forward it to them, one at a time (instead of to your entire address book), with a personal note telling them why you thought of them when you read this message. Encourage each of them to join you in sending a message to their representatives in Congress. If everyone reading this list did that, we could wake up to find our Downsize DC army doubled in size!
Thank you for being a part of the growing Downsize DC Army.
Perry Willis
Communications Director
DownsizeDC.org, Inc.
P.S. Not all new office holders have Internet contact pages yet. We are updating our system as the new contact pages come on line. Your message will go through to any of your representatives that remain the same, or for which we've received new information. Don't let this transition slow you down. Your message will get through to someone. It will make a difference. Take action!
43 Things Personality Quiz Says Author of This Blog is Extremely Unique!
You are a Lifelong Learning Traveling Tree Hugger
0% of the 51594 people who have taken this quiz are like you.
| I took the 43 Things Personality Quiz and found out I'm a Lifelong Learning Traveling Tree Hugger   |
Friday, January 2, 2009
Newly Educated Fred Thompson?
I want to know, is Sen. Thompson newly educated, or is he just acting? If it's not just acting, I would love to see him join Ron Paul's Campaign for Liberty, or perhaps donate to Downsize D.C.
The Stupidity of Government Intervention
By Tom Dyson
The only other time I'd ever seen this was in my school history books, learning about the Great Depression...
In September 2007, Britain's most overleveraged mortgage bank – Northern Rock – asked the government for an emergency loan. When its customers heard the news, they rushed to the nearest branch of Northern Rock to withdraw their savings. They formed queues around the block.
The next day, the government announced it was guaranteeing Northern Rock's deposits, and the panic went away. Then a funny thing happened...Suddenly, people started draining money from all the other banks in Britain and depositing it at Northern Rock!
The government intended to make the financial system stronger by shoring up Northern Rock. But it made the financial system weaker by undermining the financial strength of all other banks. In the end, the government ended up nationalizing the whole system.
The same thing happened in Ireland. It was the weakest financial system in the euro-zone. Then it guaranteed all its deposits. All the money in Europe started flowing into Ireland. This weakened the banking systems in the other European countries, and they had to guarantee their bank accounts, too.
In the United States, the government is doing everything it can to help homeowners stay in their houses. These people couldn't afford their houses in the first place, but the government wants to keep them happy. So it won't let the banks foreclose their properties, and it's making banks reduce the principal on the loans.
Would you lend money to a home buyer knowing the government won't let you take the house if he doesn't pay you... or that the borrower doesn't have to pay the whole loan back? No way. Not unless you could charge an astronomical interest rate. The government won't let you do that either. Government regulations cap the interest rates you can charge on a mortgage.
So the government thinks it's helping unfreeze the credit markets. But it's actually making them worse.
Here's the point: Government intervention makes the whole system weaker.
Intervention kidnaps money that would otherwise be available to businesspeople and entrepreneurs... and it invests it in places that businesspeople and entrepreneurs would never put their money... like uncompetitive car companies or failed banks. Then it creates unintended consequences that make everyone poorer.Government stimulus does not stimulate, it stifles. So when you look at the current levels of government intervention all around the world... India, Australia, China, Taiwan, Britain, Europe, and the biggest of all in America... you have to conclude it will lead to the biggest loss of productivity ever.
When the government controls an economy's financial decision-making, no one makes any money. This is why the government interventions haven't had any effect so far. It's also why stock prices will fall to valuations far lower than at normal bear-market bottoms of the past few decades.
So I'm not ready to call a bottom in the stock market. I'm only willing to buy a stock if it has a balance sheet with no debt, it generates tons of cash flow from selling a simple product, and it pays a dividend I know cannot be cut under any circumstance.
Besides that, I'm sticking to gold and cash.
Good investing,
Tom
Happy New Year Everybody!
From Bergen, Norge,
Christopher D. osborn
Saturday, December 6, 2008
Chris Weber predicts a return to the Gold Standard
Will the Government Confiscate
My Gold?
By Chris Weber
December 4, 2008
I get this question from time to time, and I suspect that it is something many people worry about.
After all, gold was confiscated back in the 1930s. Why couldn't it happen again? To answer this, we have to go back a few years to show how different things are now.
First, gold was money back then and had been money for thousands of years. In the U.S., that practice went back to the Constitution. The founders had lived through the ruinous paper money inflation of the American Revolution and were resolved that the printing of paper money unbacked by gold or silver would never happen again.
Now, fast forward to America's biggest economic crisis, the Great Depression. When it started, the U.S. was still on the gold standard. People could take their paper money to banks and convert it into gold coin or bars at the old price of $20.67 per ounce.
But this put a crimp on the government's ability to inflate. And the new president, Franklin Roosevelt, came into office believing that massive new paper money and credit creation was the way to get the country out of the depression.
So he believed that gold would have to be removed as money. On March 6, 1933, just two days after he came into office, he barred banks from paying gold to depositors. One month later, on April 5, he outlawed what he called "hoarding" of gold. All gold coins had to be taken to banks and exchanged for paper money, at the price of $20.67 per ounce, with two exceptions – each person was allowed to keep no more than $100 in gold coins, and rare coins were not included.
So now we come to the situation today. Gold is no longer regarded as money in any legal sense. Almost no one has even seen or held a gold coin, or certainly less than 5% of the population. Since 1933, money is whatever paper value either the market says it is or the government says it is. There is no more legal tie to gold.
This is a first in human history. Earlier suspensions of the link between gold and money were short and to be gotten over with as soon as possible. But when the world went off the gold standard in the 1930s, it never went back on. Needless to say, inflation has soared since then. The paper dollar has lost over 95% of its value.
Today, however, unlike 1933, there is no reason for the government to confiscate gold. Indeed, the government is even minting it and selling it. It can't sell gold fast enough, and there are shortages.
(If, for some crazy reason, the government decided to confiscate gold, I doubt many people would comply. The gold would go into hiding and trade in an underground economy, the way illegal drugs do today.)
Gold was confiscated in 1933 because everyone thought of it as money. They used gold as money, and this situation made it impossible for the government to inflate, because you can't print gold.
Now, nothing stands in the way of the government's ability to inflate. The central banks have been doing it at record rates during the last few weeks in order to avoid deflation.
But I think future inflation will so ravage the value of the U.S. dollar, as it did during the American Revolution and the Civil War, people will demand that once again the dollar be backed by gold.
In the world economy I see emerging today, income and cash are going to continue to be sought after. Short-term interest rates will eventually rise, giving your cash a better return. But particularly, you'll be happy to have your gold and precious metals.
Good investing,
Chris Weber
Wednesday, November 26, 2008
Thanksgiving Message from Downsize D.C.
From: Downsizer Dispatch <downsizer-dispatch@downsizedc.org>
Date: Tue, Nov 25, 2008 at 5:39 PM
Subject: We're About to Go Dark
To: mvfipher@gmail.com
Subject: We're about to go dark . . .
. . . for the Thanksgiving holiday. But before we go we'd like to ask you to conduct a thought experiment.
Remember, this is a thought experiment -- we're not asking you to actually do this. Quite the contrary. Here it is . . .
If you had the time and energy to go door to door in your neighborhood, explaining to your neighbors the benefits of the "Read the Bills Act" and the "One Subject at a Time Act," how many of them do you think would say . . .
"Hey, I like that."
And of those who responded positively, how many do you think would be willing to support RTBA and OSTA by signing up for a FREE membership with DownsizeDC.org, and a FREE subscription to the Downsizer Dispatch?
* The number who would like RTBA and OSTA would probably be huge
* The number who would want to join Downsize DC would be a subset that
But how much of a subset? More importantly, how many would have to say yes for you to feel good about asking?
More important still, how many would have to say yes in order to be significant to your Congressperson?
If all of your neighbors, and all of the people in the other neighborhoods in your district, had heard about RTBA and OSTA, how much support would RTBA and OSTA garner in polls?
What impact on the thinking and actions of your Congressperson do you think these poll results would have? And what impact would such polling numbers have on potential Challengers for your Congressperson's seat?
At what point does your Congressperson see his or her failure to introduce or co-sponsor RTBA and OSTA as a threat to his or her re-election?
At what point does your Congressperson see widespread local support for RTBA and OSTA as an opportunity to secure his or her job by introducing or co-sponsoring RTBA and OSTA?
If you think RTBA and OSTA are something most people would support, then the challenge becomes to let everyone in your district know about RTBA and OSTA.
If you think a relatively small portion of RTBA and OSTA supporters could supply enough pressure on your Congressperson to make these proposals issues of concern to him or her, then the challenge becomes to recruit a sufficient number of people in your district to apply the required pressure.
Do you want to do this by going door-to-door in your neighborhood? Do your neighbors really want to stand at their doors listening to you explain RTBA and OSTA? The answer to both of these questions should be no. It takes too much time to walk door-to-door, and it's too invasive to solicit support in this way. It's also too hard. We want something EASY.
END OF THOUGHT EXPERIMENT
So what is the easiest way to reach the point where everyone in your district knows about RTBA and OSTA, and where there are Downsize DC members all around you? Email is the cheapest way, but it isn't the fastest. What we need is something with high response rates. What we need is to . . .
Hire your mailman to do the work for us. He's already going door-to-door anyway, so his mailbags might as well contain a letter introducing people to RTBA and OSTA. Here's what will happen if we do this . . .
* Everyone will see the words Downsize DC, "Read the Bills Act," and "One Subject a Time Act" on the envelope -- think of it as a micro form of billboard advertising
* Those who read the letter will learn about RTBA and OSTA
* Some of them will decide to send us their email address and become members of Downsize DC
* A few will enclose a few dollars so we can send more letters to more people
* Some will get really excited and send larger contributions
* As our membership grows, we'll be able to hit non-responders more than once -- repetition does work
* As we make further progress, we'll have enough members to use other tactics too, like radio and TV ads in targeted districts, picking off members of Congress one by one
Eventually, the benefits to you will be . . .
* Everyone around you will know about RTBA and OSTA
* Fellow DC Downsizers will be all around you too
All we need to do to begin this plan is raise our very modest 2009 budget of $186,000. Two DC Downsizers have committed $50,000 to make this happen. Monthly pledges presently account for $97,000 of our annual budget. In the past couple of weeks other DC Downsizers have joined them with commitments and monthly pledges totalling $12,457.
That means we only need $26,543 more to get started on our ambitious yet realistic outreach program.
To discover how you can help reach the goal . . .
* From the top down with a larger pledge that you'll fulfill when the goal is met
* Or from the bottom-up with a monthly credit card pledge
* And how you can get your own, bold, "I Am Not Afraid" T-shirt with which to silently evangelize at your local grocery or hardware store . . .
GO HERE and learn more about our Close the Gap campaign!
Have a happy Thanksgiving!
Jim Babka
President
DownsizeDC.org, Inc.
P.S. T-shirts begin shipping next week, right after the Thanksgiving holiday. You really should check them out.
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Best regards to you and yours,
Christopher D. Osborn
fipher.blogspot.com
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Friday, November 21, 2008
I.O.U.S.A. on Oscar Shortlist, National Debt on Twitter, and more
From: Peter G. Peterson Foundation <info@pgpf.org>
Date: Thu, Nov 20, 2008 at 11:15 PM
Subject: I.O.U.S.A. on Oscar Shortlist, National Debt on Twitter, and more
 In This Newsletter I.O.U.S.A. Makes Oscars Short List |
 | What is Twitter? Twitter is one of the newest social networking services through which each user answers the question "What are you doing?" using 140 characters or less. |
The answer to that question is known as a "tweet," and it's visible by those who "follow" you. By "following" others, you'll get their latest updates. It's free, easy to use, and by "following" the national debt on Twitter, you'll receive a daily "tweet" of the national debt as reported by the Treasury Department. Although this official number is the most commonly-cited national debt, it doesn't scratch the surface of the actual federal fiscal burden. Click here to learn more.
Visit http://www.twitter.com/nationaldebt to start following the national debt today, and whether or not you're on Twitter please help spread the word!
Congress, New President Must
Put Our Fiscal House in Order
By David Walker, Special to Roll Call
Great challenges can bring great opportunities, and the current economic crisis is no different. As President-elect Barack Obama considers how best to turn the economy around, he needs to focus not only on today, but also on how to return the country to a more fiscally responsible and sustainable path over time.
Our nation's short-term budget deficits will unavoidably get worse before they get better, due in large part to the current recession, recent and future "bailout packages," and a likely dose of additional economic stimulus that hopefully will be targeted, temporary, and reasonably sized and structured.
As a result, Obama will need to juggle competing demands in a much tougher budget environment than he and his economic team anticipated during the campaign.
David Walker is the President and CEO of the Peter G. Peterson Foundation, and served as the United States Comptroller General and head of the General Accountability Office (GAO) from 1998 to 2008. You can read David's bio here.
The Government We Deserve
By Gene Steuerle
At last the election is over. Yet there is no rest for the weary. Not two hours passed before President-elect Obama was being called upon to act. Many demand that he immediately propose reforms to their favorite programs, especially those he supported during the campaign. Yet the most dangerous thing he can do at this point is to jump into making individual, one-off policy decisions, especially before he's got a full budget picture of how everything adds together - not just for this year, but for the eight years he hopes to be President.
Gene Steuerle writes The Government We Deserve column regularly, and serves as the Vice President of the Peter G. Peterson Foundation. You can read Gene's bio here.
*You are receiving this e-mail because you registered at www.PGPF.org or www.IOUSAtheMovie.com, or because you signed up through another site to receive messages from the Peterson Foundation about the fight for fiscal responsibility. If you feel you are receiving this message in error, or if you would prefer not to receive e-mails from us, please click here to immediately unsubscribe.
Wednesday, November 19, 2008
Press Release for END THE FED in DC, Please Help Circulate
FOR IMMEDIATE RELEASE: November 18, 2008
CONTACT:
Debbie Krueger not12submit@gmail.com
Jordan Page jordanpagemusic@gmail.com
Adam Kokesh adam.kokesh@gmail.com
On November 22nd, commemorating the secretive conception of the Federal Reserve System, a growing movement of citizens concerned with this country's fiscal policies will gather in 39 cities nationwide at each Federal Reserve location to demand an end to the Fed, return to sound monetary policy, and an end to corporate bailouts. In Washington, DC, they will gather across the street from the Board of Governors of the Fed at 20th and Constitution at 1pm. Denied a permit to protest on Federal Reserve grounds by the Fed's Public Affairs Office on the basis that it is private property, the rally with a stage and amplification system will be held across the street with a permit granted by the Parks Department. National coordination is being provided by Aaron Russo's Restore the Republic (restoretherepublic.net) and more information can be found at endthefed.us.
Speakers will include Gary Franchi of Restore the Republic to discuss his organizational plans for furthering this issue and the duty of all patriotic Americans to get involved. Kevin Zeese, former US Senate candidate, current Executive Director of Break the Bailout, (breakthebailout.com) will talk about building a broad coalition to stop further “theft from the taxpayers.” Anthony Teolis, veteran of the First Gulf War, member of Veterans For Peace (veteransforpeace.org) will show how the Fed is the primary enabler of our destructive interventionist foreign policy. Rick Williams is a founder of BreakTheMatrix, (breakthematrix.com) and serves as Chairman and Chief Executive Officer of Basic Media, Inc. From the Center for Economic and Social Justice, (cesj.org) Norman G. Kurland, President of the Board of Directors, and former Congressman, the Hon. Rev. Walter E. Fauntroy will outline an alternative just economic system. Paul-Martin Foss, Legislative Assistant to Congressman Ron Paul, will explain pending legislation H.R. 2755 and what the movement can do to support it.
Co-organizer and performer for the rally Jordan Page is a young poet, singer/songwriter, guitarist, political activist, and social commentator who has become an outspoken voice promoting freedom and liberty. The hyper-inflation of American currency, the funding of worldwide interventionist military policies, the unconstitutional income tax, the recent bailout, and the engineered economic depressions the Fed causes have all motivated Jordan's involvement in this most historic citizens' movement. “Please stand up for the Constitution on November 22nd and help us to support HR 2755 calling for the abolition of the Federal Reserve.”
Adam Kokesh will serve as master of ceremonies at the rally. He is from Santa Fe, NM and served in Fallujah, Iraq in 2004 and has been a vocal critic of the war since leaving the US Marines. He has continued to honor his oath to support and defend the Constitution by taking on those he sees as its domestic enemies, especially the Federal Reserve System. He has also advocated various forms of nonviolent resistance including not paying taxes. “As long as the Federal Reserver System has the power to create money from nothing, the individual income tax is nothing more than a means to oppress and enslave the American people. As with all forms of tyranny, Americans have a duty to resist this injustice.”
