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Conferences Daily Commentary 2006 (Protected)
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Duncan	22-Jun-06, 07:39 AM (GMT)
"Extreme"
m 'Extreme debt' levels get worse People near retirement were getting deep in debt, the charity found Levels of 'extreme debt' in the UK are worsening, says a charity which has seen the number of its clients owing more than £100,000 nearly double. The Consumer Credit Counselling Service saw the number of clients in extreme debt rise from 1.4% to 2.7% in a year. Statistics for its 280,000 customers for 2005 showed people aged between 40 and 59 had the highest level of debt - owing an average of £34,456. But increases in the amount of money owed were greatest among the over-60s. The CCCS said the amount of money owed by people over 60 who contacted the group had soared by 25% to an average of £33,658. The Foundation for Credit Counselling, which is responsible for the CCCS, said it hoped to use the statistics to help people in debt. Chairman Malcolm Hurlston said: "The aim of this yearbook is to make use of the knowledge and experience of CCCS in improving our understanding of people in debt, alleviating their problems and anticipating future needs." The CCCS also saw the number of young people struggling with debt increase. It was contacted by more 18 to 24-year-olds and found they owed an average of £15,079 in 2005, compared with £11,935 two years earlier. Overall, of people on one of the group's debt management plans - under which interest is frozen in exchange for a set amount being repaid each month - the average amount owed was £30,763 in 2005, as against £29,340 the year before.
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Duncan	22-Jun-06, 08:13 AM (GMT)
1. "some moves; they happen FAST"
On June 22, 1940, during World War II, Adolf Hitler gained a stunning victory as France was forced to sign an armistice eight days after German forces overran Paris. \ \ \ \ m Absolutely, but This time this is no usual bear market. We could now be entering the 1930s phase exactly like What happened in Japan in the 90s. I know of NO company or employee who is looking forward To the coming years in business or employment. That my station officer he has just received a wage cut Of £1500 this year and next and the next. After 15 years in the job firefighters received a long service Payment of £1000 a year extra, that’s now gone. I now see no business making money apart from brokers but The party is over for them to. I can see us going in to a 10 to 15 year bear phase from now. Last year I was saying about brown stealing £6 bill a year From the pension companies, people are now seeing this. That action is now starting to take effect on companies Pension budgets with the hole widening. -----Original Message----- From: duncan robertson after the mm have little product to shift; a crisis has to be engineered in order to plummet the stock markets; and the mm will be bag holding for stock, being supplied to them down the price waterfall; and heavily bag filling, near the bottom of the drop; once the stock selling, that was kicked in to gear by the crisis, has dried up, the market makers will test the market to ensure the selling from the public has dried up; then having accumulated enough stock, they will slowly start the bull train \ \ \ \ \
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Duncan	22-Jun-06, 09:33 AM (GMT)
2. "lying and violence – as long as they are conducted on a grand scale – are not only to be tolerated, but rewarded"
d and price are not going up (they may do so marginally) so they either, continue sideways (further distribution of stock) for a while (for how long) and in due course, run way to the south on wave c On 22 Jun 2006, at 08:48, m wrote: This time this is no usual bear market. \ \ \ \ Today's worries over energy supply and demand is heralding the use of new energy sources to fuel the largest economy in the world. These technologies will have just as a profound effect on world energy markets as smaller, more compact Toyota and Honda sedans had on U.S. consumer trends. While global demand for oil and gas is hitting a new high, the reverse trend is not far off. This trend will have a shocking effect on energy exporters if they do not adequately prepare their economies for the impending changes. http://www.pinr.com/ \ \ \ \ \ The Sociopathic Cult by Butler Shaffer I can imagine no more absurd explanation for the outcome of the 2004 elections than the proposition that they were a victory for "spiritual values." In the face of the continual lying and butchery practiced by the Bush administration, one can only ponder the distorted meaning of "values" that were endorsed on election day. Shall we next hear of Nazi concentration camps and Soviet gulags being celebrated for "bringing people together"? If "society" can be thought of, in dictionary terms, as "a voluntary association of individuals for common ends," these elections confirmed the total victory over society by well-organized coercive forces that I shall refer to as a "sociopathic cult." "Sociopaths" are antisocial persons who are "averse to the society of others or to social intercourse." This cult – which has always been the driving force behind political systems – is comprised of men and women of misanthropic dispositions, traits defined by one dictionary as "a hatred or contempt for mankind," or a "distrust of human nature." Such people are at war with society itself. A creative, life-sustaining society is held together by peaceful, cooperative forms of behavior. Voluntariness, persuasion, and a respect for the inviolability of individuals, are the modi operandi of social beings. The sociopaths, however, will have none of this, which helps to explain their unending hostility to the marketplace, private ownership of property, and other expressions of individual liberty; and their attraction to political (i.e., coercive) forms of organization. To sociopaths, coercion is to be preferred over cooperation, conscription over contract. Because force must remain the paramount virtue of state systems, no human action can be regarded as immune from political direction. This is a primary reason we are witnessing an exponential increase in government regulation of even the most personal matters, whether it be smoking, obesity, child-rearing, treatment of pets, or the wearing of seat-belts. Such thinking produces a world in which every aspect of life becomes a political question. Furthermore, whereas social individuals value truthfulness and peaceful behavior as the adhesive for a free and productive society, the sociopaths – in their ongoing war with society – insist upon contrary values. To worshipers of the sociopathic cult, lying and violence – as long as they are conducted on a grand scale – are not only to be tolerated, but rewarded. These antisocial qualities must not be misused for trifling purposes, however. Thus, Bill Clinton was impeached for lying about his sexual behavior, while George W. Bush was reelected for the blatant lies upon which his most visible policies were grounded! Likewise, a government official who murdered a young woman would properly be prosecuted, but a president who butchers innocent people in a war fashioned from falsehoods will be revered. For true believers of this cult, lying and violence are reserved for those who practice them in a stately fashion. Isolated acts engaged in by wannabes are not to be tolerated, as they tend to not only trivialize the values underlying cultish behavior, but create the impression that such conduct is appropriate for ordinary people. Thus, you would not abide your spouse or business partner lying to you, but will venerate politicians for the adroitness of their lies. If your child behaved at school the way President Bush behaves in his world playground, you would likely have him on a psychiatrist’s couch without hesitation. Through the principal means of schools and the media, most Americans have become thoroughly conditioned in the sociopathic cult, and are able to recite its mantras without a break in meter or misstatement of phrase. They have learned to distrust social forces, and to regard violence as the only trustworthy means of bringing about change in the world. In my experiences with law school students, I find many expressing the idea that, with a law degree, they will be able to direct state power for the accomplishment of "good" ends. Such is the mindset of members of the sociopathic cult: uncontrolled forces are not to be trusted; individual behavior is a danger that can only be overcome by the collective powers of the state; while truthfulness and lying are no more than fungible strategies to be used according to the necessities of the moment. At base, politically-minded people believe what every street-thug believes: that dishonesty and violence are the most efficacious means of promoting one’s self-interests. The re-election of George W. Bush was a confirmation of the depths to which the sociopathic cult has infected the minds of most Americans. Even the Democrats – who are also members of this cult – were afraid to confront the antisocial nature of the political system. I suspect that Democratic leaders are now in awe at just how far these cultish practices can be extended in modern society, and will endeavor to out-proselytize the GOP in their efforts to become the high-church expression of antisocial thinking and conduct. President Bush tells the world that his second term will employ state power – presumably in the form of military action – to promote "freedom" throughout the world. He talks of "freedom" in much the same way that a streetwalker might speak of "love." Are mass killings, torture, and other forms of state violence to be considered tools of liberation? Minds that have been thoroughly inculcated in sociopathic dogmas will have no difficulty synthesizing such rhetoric into their confused and contradictory thinking. It will doubtless get shoe-horned in between the lies about Saddam Hussein’s "weapons of mass destruction" and his involvement in 9/11 that have already become an integral part of popular thinking. To thoughtful minds that have not succumbed to this political orthodoxy, and who still adhere to the sentiment that a society will only be as free and peaceful – or as unfree and violent – as are its individual members, Bush’s proposition is mindless twaddle. How can people be "free" if they are in conflict, engaging in violence against and the killing of one another, using lies as a substitute for truth? Of what is one "free" if his or her life is dominated by such behavior? "Freedom" is an expression of an integrated state of mind, wherein people conduct their lives without conflict and contradiction. "Liberty" is a condition in which "free" men and women live in society; in which the integrity of that society is a reflection of the inner integrity of its members. The idea that state violence can foster individual integrity is an absurdity worthy of FoxNews, but not to be entertained by thoughtful men and women who take seriously their lives and the world in which they live. To characterize the Bush re-election as a victory for "spiritual values" is equally moronic, and illustrates the total bankruptcy of a society in entropic collapse. Albert Jay Nock spoke of the "Saving Remnant," the minority of individuals whose awareness transcends fashionable illusory thinking and passes truth on to future generations. "You do not know and will never know who the Remnant are, or where they are, or how many of them there are, or what they are doing or will do," said Nock. "Two things you do know, and no more: first, that they exist; second, that they will find you." This Remnant may remind our children and grandchildren of a truth known to our ancestors: individual "freedom" expresses itself as harmonious, integrated social behavior. If you refer to an etymological dictionary, you will discover – as I did many years ago – that the words "peace," "freedom," "love," and "friend" have interconnected origins. Our allegedly "primitive" predecessors understood what our college-indoctrinated minds have long since forgotten, namely, that a peaceful society is one in which free men and women live as friends with genuine love for one another. But all of this is empty sentimentality to members of the sociopathic cult. Individual liberty, free markets, privately owned property, truthfulness, peace, and a love for life in all its expressions, are anathema to misanthropes who express "hatred or contempt for mankind," and who place their faith in lies and violence. Even many who oppose war are not friends of peaceful behavior, but only have other political agendas to force upon their neighbors. To the politically-minded, spontaneous social processes must be suppressed or co-opted. Perhaps these cultists are, like the societies they have helped to destroy, going through the final stages of their entropic collapse. I strongly believe that this is, indeed, the case. Like other dark-side forces in human consciousness, sociopathic tendencies have always been present but, for many years, lay somewhat dormant. Such was largely the case in America until the mid-nineteenth century, when the war with Mexico and the slaughter of Indian tribes began to mobilize these shadow tendencies that were finally unleashed in the Civil War, an undertaking that James Street referred to as "a holiday for butchers." Such forces have once again found expression in America, with their destructive tendencies carefully managed by officials and advisors in Washington. A nation was offended on 9/11, and few were willing to look for the source of those atrocities as a reaction to the foreign policies (i.e., military actions) of the corporate-state with which most Americans identify themselves. For people to look inward for the causes of their difficulties, and to consider political behavior as an explanation for the disordered nature of our world, would be heretical to the sociopathic cult. Others must be blamed and sought out for punishment. In the end, it doesn’t even matter against whom and for what purported reason retaliation will be directed. To such a mindset, it is wholly irrelevant whether the Iraqi people had anything to do with 9/11. It is sufficient that they can be made convenient scapegoats to be slaughtered in furtherance of the collective catharsis that is essential to the health of a political weltanschauung. Whatever lies must be concocted in the performance of this ritual will be readily accepted. John Kerry understood this implicitly, as did the members of the Senate committee who sat on their hands listening to the current high priestess of this cult, Condoleezza Rice, express offense at the questioning of her honesty and integrity. The common threads running through the Bush administration’s first four years have included a calculated campaign to confuse "freedom" with extended state power; as well as a disregard for both truth and the consequences of its deceitful policies. The efforts of the Busheoisie to connect the dishonest and philosophically unprincipled ambitions of these cultists with "spiritual values" will, in time, be revealed as but another falsehood; one more contradiction in the state’s continuing war against individuals in a free society. January 24, 2005 Butler Shaffer teaches at the Southwestern University School of Law. Copyright © 2005 LewRockwell.com \ \ \ \ \ \
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Duncan	22-Jun-06, 10:38 AM (GMT)
3. "Bull markets correct - they have to. It's how markets work. The weak hands get shaken out and their stock is passed to the strong hands."
T-Mobile to launch 3G broadband in August We wait for months for one compant to launch 3G broadband - then two come. Yesterday it was Vodafone and now T-Mobile has announced a service to go live in August. T-Mobile's high-speed download service will go live in the UK on August 1st, covering all key urban areas and public facilities. Initially, the technology will provide download speeds of up to 1.8Mbps, though T-Mobile admits real-world speeds are more likely to be around 1Mbps. The potential maximum will rise to 3.6Mbps in 2007, the company said, then to 7.2Mbps, 10Mbps in 2008/2009 and an impressive 20Mbps by 2011. \ \ \ \ http://www.pcpro.co.uk/news/88670/vodafone-plugs-in-3g-broadband-data-cards.html \ \ \ \ DILEMMAS & REDUX Jim Willie CB June 21, 2006 home: Golden Jackass website subscribe: Hat Trick Letter Jim Willie CB is the editor of the "HAT TRICK LETTER" For specific detailed analysis of the Gold, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and Fed monetary policy, see instructions for subscription to my newsletter research reports, which include stock recommendations positioned to rise in the commodity bull market. Articles in this series are promotional. Don't look now, but a dilemma faces almost every single policy maker on the planet, and some tyrants roaming the planet. A few tyrants have no dilemmas like Putin in Russia, Chavez in Venezuela, and the faceless Sudanese dictator; they continue to rampage and pillage. Morales in Bolivia already made his decision; his die is cast. A fork is presented in the road in at least five power centers globally. As anyone with a sense of odds, chance, gambling, or probability knows, each fork has two choices. That makes for a great many combinations of directions, 32 actually (two to the power five). No analysts worth their salt can competently put forth a forecast without contingencies and various scenarios. No one power center make can be deemed more important than another. They are all critical. As one center takes action, other centers respond or join in a similar action. The entire globe is stretching and heaving. Financial tectonic plates shift. US Federal Reserve The US Federal Reserve must make a choice. Continue to hike rates in order to support the USDollar with maintain the advantageous bond yield? Continue to hike rates in order to attract foreign USTreasury Bond purchasers in incremental credit supply? Doing so places considerable stress on the housing market. Is their true motive to appeal to bond and currency traders in foreign locations? Or is their attention more on domestic price inflation and fighting expectations? Does the USFed plan to destroy the world economy in order to be regarded as credible in their fight of inflation? This sounds like a strange question to begin with, since their reason for being (raison d'être) is to provide, create, and manage monetary inflation. It is like asking a farmer to limit the effects of food production. Should the USFed permit Weimar inflation rather than suffer the shameful outcome of a gathering global recession instead? Are the financial leaders and central bankers aware that the USEconomy is nothing but a gigantic bubble, vulnerable to higher rates? To tighten this economy on its inflation sustenance is to restrict its primary blood supply. It is wholly dependent upon inflation, and little else. Given that the Gross Domestic Product contains a 5% exaggeration, USGovt official statistics are full of propaganda about growth. Almost all, perhaps all, of US GDP is improperly adjusted price inflation. How can we stand by and nod our heads that the CPI contains a 3% fudge, yet accept the GDP as an accurate number? This is not possible. The GDP contains the further exaggeration owing to a 1% fudge from the GDP Deflator being lower than the absurd CPI. Not a single analyst who writes on the planet ever talks about the obscure GDP Deflator. The other 1% is from the foolish hedonic adjustments for greater speeds in information technology (which permit more daydreaming at the desk, and idle time for commercial applications of equipment). Does any computer operate around the clock? Do workers ply their trade without pause? So therefore, a theme of my scribbles for three years, the USEconomy has been in a stall for five years. Check the 4Q2005 for evidence. Gasoline, diesel, crude oil, and natural gas prices zoomed up in the wake of the hurricanes. Complaints were lodged for inadequate response by USGovt relief operations. Sales and economies in the entire Gulf Coast region were shut down, stopped cold. Initial economist estimates called for a 1% decline in GDP from the storm damage. Yet the GDP rose??? NOT A CHANCE, pure b.s. One must conclude that the USFed is hiking rates in the middle of a stall. Claims of 5% GDP growth are pure poppycock and fantasy. But in any mythology, fantasies prevail. What this writer analyst finds astonishing is that even the gold community accepts the nonsensical GDP numbers. At the Vancouver gold conference in mid-June, my ears heard at least five speakers cite strong US growth, the world's strongest growth. It is pure deception, distortion, delusion, built upon lies. They comprehend most lies in statistics, but not in the GDP, which is an inconsistent observation. Crises occur when policy is ineffective, as accidents wreck havoc. Gold will benefit when the crises happen more often and with shorter time intervals between them. One can safely say that US banking leaders are like a bunch of captains with a poor past job history controlling the bridge of a once great ship USS America. They stand as arrogant blind lunatics at the helm reading faulty control instruments on the bridge. Their instruments are designed to placate, not guide. They urge on business, much like the sale of ship passage tickets, rather than to warn properly. Icebergs lie ahead. As recently as year 2000, icebergs were hit. It is worse than described. Credible arguments can be made that some icebergs are intended to be hit. Accidents are planned. You see, the USGovt sells the lifeboats. They are called US Treasury Bonds. A perverse desire persists, that the lifeboats not become too expensive. There must be sufficient accidents so that the price of lifeboats do not fall too low. By killing off stock investors aboard the USS America, they are directed into the lifeboats. Worse still, they might find it preferable to return to rationing and allow some "economic dead zones" (like an array of icebergs) so long as prices remain low, inflation not rage, and lifeboats remain in demand. Isn't that right out of the wartime playbook too? The Bank of Japan Since February and March of 2006, the BOJ has threatened to end their Zero Interest Rate Policy (ZIRP) which has kept rates very low for five years. They threaten also to end their Quantitative Easing (QE), which is not the same thing. We can have both higher rates and full flow of money in liquidity ponds. Emerging markets got butchered. Iceland and New Zealand found themselves victims among the smaller economies worldwide. Should the BOJ tighten, end ZIRP and QE, sharply reduce easy money employed by speculators, spread traders, carry traders, even if it knocks down global stock markets by 20%? The major developed economies have also been hit, see London, Paris, Frankfurt, Tokyo, and NewYork. Instead, should the BOJ keep the monetary spigot of easy money wide open, and permit domestic consumer prices in Japan to rise? Should they permit their Nikkei stock market to zoom out of control again, and Tokyo property prices? Tough decisions. At least Japanese officials do not use faulty statistics like US officials do. Instead, they are timid and reluctant to act forcefully. They are all too aware of 12 to 14 years of deflation, after they wrecked their financial markets in 1989. The fact that 0% is their official interest rate (or thereabout) signifies extreme failure and embarrassment. More than any other culture on earth, the Japanese react to shame. It is painful. They want to end ZIRP but are skittish. Is the BOJ a lackey to US bankers? Do they act independently? Are they on an increasing basis marching to the beat of the Beijing drums? If the BOJ does not hike rates, they essentially issue a green light to the potential rampage of consumer price inflation, a runaway bull market in stocks, and a property bubble? To complicate the matter, nobody has an accurate gauge on the size of the Yen Carry Trade. It is estimated to be greater than $2 trillion ($2000 billion). Amazingly, in 2005 the total money supply of yen worldwide surpassed the total USDollars sloshing around worldwide. That is no mean feat, since the USDollar has been horrendously abused with over-supply for years. Well, simply stated, both the yen and US$ have been abused in similar fashion. If the Germans (or really Europeans?) fail to join the parade of destroying their currency, will the European Union economy crumble? Watch their export trade if the euro currency jumps toward 135 again, or jumps past that level. Such is the nature of the currency race to the bottom. Does the BOJ talk of hikes more than actually hike rates? To do so would employ FedSpeak in a high jinks game. We will see. The USFed might threaten to fight inflation with words more than actual continued hikes, and err on the side of excessive tightening. Japanese bankers might err on the side of excessive accommodation. Just today, BOJ chief Fukui again guided world financial markets to expect rate hikes soon if dictated by economic conditions, but gradually implemented. They seem painfully aware they might exacerbate swings in the economic cycles. Perhaps they should hike by only 10 basis points, or even 5 bpts, so as to check the market reaction. An ongoing battle is underway between the Ministry of Finance and the Bank of Japan. Their power center is more in the Administration ministries than the central banker, unlike the United States. This is discussed more at length in the June issue of the Hat Trick Letter. Chinese Yuan Currency Last July 2005, Beijing leaders relented. They removed the direct link from their yuan currency to the USDollar. They have been diversifying their mountainous reserves for a year now. A few months passed with no USTBonds purchased at all. A paltry $30 billion have been increased since the early months of 2006, offset by a similar sale of USTBonds by Japan. Few seem to talk about it, but on a net basis Asia is no longer buying US Treasurys. The yuan was upgraded by order last July by 2.1%, a mere adjustment. Since then the yuan has lifted another 1%, not enough to matter. The Chinese foreign reserves have amassed to a total of $885 billion, finally overcoming the Japanese stockpile of US debt paper. Shrill calls emanate from the US Congress and USGovt for China to raise their yuan currency significantly higher. The threats of a 27.5% trade tariff are on again, off again, a constant looming threat. It seems WashDC talks of tariff, only to motivate response. Beijing talks of wider diversification away from US$-based securities, only to motivate response. Usually, the credit master calls the shots. Congressional and political leaders (ministers also) seem to think those in control of the marketplace (shopping malls) and extend debts are in control. Perhaps they believe owners of the military weapons call the shots. Lately, a hazardous change has taken place. USGovt leaders have openly complained that the Chinese government has spent too much money on military weapons and systems. The USGovt spends 4.0% of its GDP on military, versus 1.5% of GDP spent by China. In volume, dollar terms, the US spends 15 times as much on defense (or is it offense?). A double standard of hypocrisy cries out. The rub is that China is building a military on the backs of outsourced jobs from the USEconomy. The magnitude of the deficits are astounding. China, with its $15 to $18 billion monthly bilateral trade surplus with the United States, could afford an entire naval fleet each year, every year. They could keep the Japanese and Korean shipyards bustling to emerge as the fastest growing employer on the planet. Chinese leaders face a difficult decision. If they do nothing on yuan currency upgrades, they create internal strains within their economy, their banking system, and their Asian neighbors. They have to date relied upon managing the Chinese bank reserve ratios. That has created two types of stress, depending upon low ratios enforced, or high ratios. This is discussed in the June Hat Trick Letter issue in more depth. US Military No need to go into a wide discussion. Too much politically charged stuff. If the United States attacks or invades Iran, for whatever reason, whatever motive, whatever weapon, whether threats are real or imagined, whether legitimate or contrived, consequences occur. The biggest problem nation is not Iran, but Russia. They sell Iran nuclear technology. They sell Iran defensive missile systems. They sell Iran uranium refinement equipment, and supply Iran refined uranium. They cooperate with Iran in connecting oil supply to the Iran pipelines. In the background are two threats never mentioned in the US press & media. Iran won the great oil pipeline war. This is not a "winner take all" game, but without doubt, most of the Central Asian oil output can flow through ports controlled by Iran. The Iran Oil Bourse is set to sell crude sooner rather than later, but in euro currency transactions. Nowhere will the topic of the Petro-Dollar and its vast banking superstructure appear in the US press. It is taken for granted. It is a self-designed purposeful blind spot. It might be motive for war when directly challenged. Just today, the Saudi finance minister Faisal warned that military attacks on Iran could easily result in at least a doubled crude oil price. This is a standoff, a "lose-lose" situation requiring cool heads, mature leaders, constructive engagement. Curiously, USGovt leaders might be forced to demonstrate they are indeed toilet trained. Stranger still, the United Nations might act as the baby sitter parent, making sure the kids act nice and play fair. Ayatollah Khamenei in Iran indirectly threatened the West with an oil cutoff, as he flicked the nose of the United States. "If the United States makes a wrong move regarding Iran, definitely the energy flow in this region will be seriously endangered. We are committed to our national interests and whoever threatens it will experience the sharpness of this nation's anger… Today our nation has taken a step forward and has bravely resisted. There is no international consensus against Iran's nuclear program except by some monopolist countries and this consensus has no value… You are not capable of securing energy flows in this region." Although Iran holds the world's second largest oil reserves, and is the fourth largest oil exporter, it lacks refinery capacity. Iran imports a sizeable 40% of its 15 million gallons (50 million liters) in daily gasoline consumption. It seems every nation has a protruding vulnerability, even feisty Iran. Iran has at its disposal state-of-the-art Russian Sunburn missiles. The US naval fleet is sure to be attacked if the US attacks Iran. In fact, Iran has been conducting drone reconnaissance over US warships, to test our response. Worse, Russian President Putin has promised to come to Iran's defense if Teheran is attacked by an external aggressor. Such games, never to mention the aggressor. Lying in the background are the Israelis. Their participation in the intelligence, planning, black bag operations, and more, receives little attention, but is very real. In 2001, Russia, China, and four former Soviet republics formed the Shanghai Coop Organization (SCO) for the chartered purpose of security, as well as mutually collaborative economic development. Recently, the SCO activities seem to be more focused upon energy project development and large long-term contracts for crude oil and natural gas. China operates with much less disdain for dictators and tyrants. They break bread easily with leaders who make no pretense of civilized behavior. Hence they have succeeded to make more alliances with rogue nations led by genocide practitioners such as Sudan. Oil pipelines are the prizes, even in West Africa. The US is being outflanked on the geopolitical chess board, not just by China, but by Russia. These thorny topics are treated in the June Hat Trick Letter issue. Russia Pushes Aggressively Let's face it. The Soviet Union might have ended the communist system. But the KGB continues, with its former head Vladimir Putin now sitting as elected president. The only presidential election more contested than in the United States, with fraud and rigging among major nations in the last decade, is the Putin election inside Russia. Their government is often described as an autocracy, meaning a single strong man dictates the policy. The rule of law is far gone, displaced by convenient legal treachery and violations of legal contracts so widespread, that most Western nations have criticized Putin sharply. The Yukos confiscation was a criminal act. The auction of Yukos property was a rigged event. The jailing of Khordorkovsky reads like a comic book. The auction was a blatant grab by Putin and his cronies handled in secrecy, under the guise of rectifying the blatant grab by Yeltsin and his cronies after Gorbachev unloosed a measure of capitalism. Putin is a master chess player in real life. He is proving to be an excellent poker player, whose hand is much stronger than we like to admit. He is also a competent syndicate head, delivering on midwinter natural gas shutoffs to Ukraine, affecting Europe. He has issued threats to redirect natural gas supply away from Europe amidst obstacles put in place by London govt officials. Gazprom wanted (and succeeded) to acquire the British natural gas firm Centrica. Other battles have been waged with London stock exchange officials, amidst dispute over the initial public offering (IPO) of Rosneft. Their properties are in dispute from the controversial Yukos auctions. Watch the pricing Rosneft shares. Should Putin push aggressively for more complete monopoly into Europe of energy supply? Should he push on the financial front with sale of crude oil in euros and rubles? How will the new Russian exchange for oil and gold play out? Are these maneuvers evidence that the US Empire is fading, or is weakening? The United States leaders rarely criticize Putin or Russian policy, until lately. These incredibly dangerous issues are discussed in the June Hat Trick Letter issue. The price of crude oil and gold will be affected. NOT LIKE 1980 Oftentimes one hears how the current commodity boom resembles the 1970 decade, when gold peaked at $850 per oz in 1980. My analysis finds little in common except a rising crude oil and gold price. Sure, oil and gold zoomed in price to gather world attention. But that is about as far as the parallel extends. Here are differences, which paint a profoundly different picture in 2006 from what we lived through in the 1970 decade. China was asleep three decades ago. Well, economically anyway, since Mao Tse Tung and Chou En Lai were hardly conducive to slumber. Now China serves as the world's factory to build things, from electronic products to fiberoptic equipment to housewares. They have put in place a firm wage ceiling in the entire industrialized developed world. Wage gains are pathetic in the US and Europe. Outsourcing of jobs is a trend which is highly likely to continue as long as Chinese professional wages are 10% of those in US & Europe. India was a quiescent subcontinent three decades ago. Exploiting their language skills has enabled a grand economic development which extends far beyond simple call centers. Software development in Bangalore is a high priority project for numerous major US firms such as IBM, Microsoft, and Oracle. In fact, software jobs in the US are hard to come by, unless you take a 30% pay cut upon layoff. Computer and connectivity speeds used to stumble along at 10k and 25k baud early in the 1980 decade. In the previous decade, connection was not even done. Cable TV was in its infancy. Modems were just hitting the market. Computer networks were in their infancy, with niche leaders Cisco and Wellfleet kicking butt and taking names. Nowadays computer networks connect with international subsidiaries for file sharing worldwide in a blink of an eye. Internet access is broadband for those willing to pay for it. South Korea and Ireland are the world's most widely connected in high speed flow. The United States lags Asia and much of Europe. Information flow is rapid, available, and easy, unlike the 1970 decade. Price structures have adjusted accordingly. Although Maestro Greenspan regarded this fast info flow as a justification for higher stock prices, it was the opposite. It has leveled the playing field, and has brought down prices and corporate profitability. Competition in this environment is fierce, the opposite of three decades ago. The concept of "cost push" was easy back then, impossible today. Hedge funds did not exist in the 1970 decade. Sure, private equity funds existed, but not to the tune of $1.2 trillion collectively on a global scale. Nor did central banks deploy intervention counter-measures so routinely. The financial practices of today bear no resemblance to the past. In the 1980 decade, the Plaza Accord was informally ratified in order to bring down the USDollar, to enable a return of US mfg to our shores, to restore balance of trade. Paul Volcker, the last competent USFed Chairman, raised interest rates in order to attract foreign capital and quell the fires of price inflation. Arabs took the sucker bet, as they recycled their petro surpluses into USTBonds. Arab bond investors took a 20% to 30% loss as US monetary inflation was permitted to pay for the higher energy bills, when all was said and done. Arabs served as bagholders. Today, both Arabs and Asians have begun to resist this shameful role, but they still hold far too much USTBond paper. They are turning to gold as a diversified asset. Their USTBonds held in reserves are an order of magnitude greater in size than they were three decades ago. In the 1970 decade, the Soviet Union counter-balanced the United States. The USSR was seen as belligerent, while the USA was seen as more the peace maker. My oh my, how we live in different times. The Soviet Union is gonzo. The United States is largely unchallenged. Nowadays, when the US takes military action, both crude oil and gold shoot up in price. The TBond might not work so well as a safe haven anymore. Gold works better, maybe not in the last five weeks. When the gloves come off, and the stakes are great, and the opposing forces are monumental, gold works better. The Wars The Vietnam War ended in 1971. We declared victory and went home, which sounds better than the reality. Leave the details for historians. An oil embargo slapped against the United States by Arab nations spawned the birth of OPEC itself. US support for Israel riled Arab nations. A certain strain existed, but without direct military conflict between the US and Arab nations. The Shah of Iran was firmly rooted in Teheran, a puppet friendly to the West. Saudis were new in their rule, busy collecting billion$ at the expense of an impoverished nation. The US cut a deal without formal treaty. The US Military was to provide security protection for the Saudi royals, in return for their support for US financial markets (stocks & bonds & property). The current situation involves much wider conflict, occupation of an oil producing nation, and direct armed conflict between the US Military and Islamic fighters. A war over the "domino theory" of spread communism has given way to a war of "Islamic terrorists" whereby the intractable politics of religion has been ignited. To me it remains unclear who lit the fuse. THE HAT TRICK LETTER COMBINES MACRO ANALYSIS WITH INVESTMENTS. From subscribers and readers: "I trade silver futures for a living. So I try to keep up with the omnipresent geopolitical & economic big picture. I can count on one hand the gents I'm willing to invest the time to study on a regular basis, and you are one. Your recent radio interview with the intriguing analysis of the carry trade put me over the edge." (Lisa Q in California) "I trade commodity futures for my company and it has been one hell of a volatile 2006. Please never compromise on the manner in which you write and thanks for the no BS. I stopped reading Business Week, Economist, Forbes, Barrons, Wall Street Journal, in the 90´s. I am very selective these days." (Bill S in Argentina) "Your insight and incredible ability to pull together divergent sources and facts are amazing. This is the best money I've ever spent. I only wish I had started reading you years ago." (Rhonda S in Idaho) Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 24 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com. For personal questions about subscriptions, contact him at JimWillieCB@aol.com \ \ \ \ \ http://www.gold-eagle.com/editorials_05/cote062106.html \ \ \ \ \ \ m The reason this is different is because the fed has used up all its ammo against this happening. They have a dilemma now. Do they raise rates to slow down inflation which also occurs is they squeeze business till the pips squeak Do they cut interest rates to allow cheap money again and get hyperinflation? Do they print another trillion dollars and let the dollar collapse. Countries and merchant banks are getting very worried about holding dollars. I think buffet and gates were correct at davos about the dollar but it will take The fullness of time to see if they were correct. Buffet is very rarely wrong in his investments reason being, He is the best investor in the world He has the most money in the world to invest as a single person He has vast experience look at his age He always invests with simple logic behind it From: duncan robertson and price are not going up (they may do so marginally) so they either, continue sideways (further distribution of stock) for a while (for how long) and in due course, run way to the south on wave c On 22 Jun 2006, at 08:48, m wrote: This time this is no usual bear market. \ \ \ m Do you know that I have never made money from borrowing money. Apart from my house of course. Borrowed money for spreadbetting, bookmaker, online poker. Not onced have I made money from it. Think I am coming to the end of my betting days. Its trying to realise that for the fun im having is not worth the money its costing. Although I know that this is not the answer to the holy grail, its trying to Convince myself that change is imminent. \ \ \ \ http://www.gold-eagle.com/editorials_05/aden062106.html Obviously, we don't know how this will ultimately end up. But we do know that the ingredients are in place for a 1970s type performance, or better, for gold. Don't forget, gold was a dead market for over 20 years from 1980 to 2001. Commodities dropped about 80% in real terms and since these markets fell for such a long time, there was little exploration for new metals deposits. That too supports the fundamentals for a long lasting and strong bull market in gold, especially once the public joins the party. But also don't forget that no market goes straight up or down. There will be setbacks and steep corrections along the way and we're currently in one of those periods. These are normal. The gold bull market of the 1970s, for example, was interrupted by a decline that lasted 1½ years before it resumed its stellar rise. Most important, this is a major, mega trend and it's going to take time, so don't get discouraged or impatient. As long as this major bull market stays in force, plan to stay on board and we think you'll be glad you did. \ \ \ \ \ m Bank of England Says Policy Maker David Walton Died (Update1) June 22 (Bloomberg) -- Bank of England policy maker David Walton died yesterday unexpectedly after a short illness, the central bank said in a statement. ``All our thoughts are with David's wife, his young children and his parents,'' Bank of England Governor Mervyn King said in a statement. ``David inspired the respect and affection of all his colleagues in the bank and today's news has come as a shock to us all, as it will to those who knew him in the City, where he made his reputation as an economist.'' Walton, 43, joined the U.K. Treasury as an economist in 1984, before moving to investment bank Goldman Sachs in 1987. He became a policy maker on the Bank of England's rate-setting committee in June 2005. Walton cast the first vote in a year for an interest-rate increase at the bank's May meeting, which he repeated in June. The bank's seven other policy makers kept the benchmark rate at 4.5 percent. ``He was a sound economist and obviously in the short time he was with the MPC I think made a valuable contribution,'' said Neil Mackinnon, chief economist at hedge fund ECU Group in London, who was a friend of Walton and worked together with him at the Treasury. ``He will be sadly missed by friends and colleagues.'' To contact the reporter on this story: Craig Stirling in London at cstirling1@bloomberg.net. Last Updated: June 22, 2006 05:19 EDT \ \ \ \ d seemingly we are ahead of the curve; no cards for g3 on intel macs Monday 6th September 2004 Vodafone announces mobile Web access for Macs 11:45AM Vodafone is the first UK mobile company to announce Mac support for its 3G/GPRS service that enables laptop users to remotely connect to the Internet. Vodafone Mobile Coonect uses a PCMCIA card - compatible with the 15in and 17in PowerBooks - to provide a 384Kbps connection at a variety of tariffs. There are two versions of the service - one permits full Internet access and the other is for secure connections to corporate networks. Bill Morrow, CEO Vodafone UK, said, 'Users of Apple Macs have a rich variety of working habits that we believe are ideally suited to the 3G environment. From business people through to designers and photographers - all of these professional communities have sub-groups, characterised by heavy and frequent mobile data use, that are devoted to the Mac.' For more information visit www.vodafone.co.uk/business. \ \ \ \ \ m Dead at 43, sounds dodgy to say the least. Looks to me like suicide. \ \ \ \ http://www.gold-eagle.com/editorials_05/captainhook062106.html like Rome, where it was not outside forces that finally caused its demise, but the rot from within, sooner or later price managers / bankers / politicos will have used the above described dynamic to it's full extent, meaning they will have rung as much speculation out of the current population as possible, and stock markets (most equities) will ultimately collapse in price. And with regard to the factors that will bring down this house of cards in meaningful fashion in the end, without a doubt investor sentiment as expressed through put / call ratios and short positions will play key roles, as they are the ultimate expressions of how investors see the market in that money must be spent to place a vote. This we see developing as time progresses past 2010, and into the next decade in what can be termed a Kondratief Winter. \ \ \ \ \
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Duncan	22-Jun-06, 10:52 AM (GMT)
4. "lets lead the gullible crowd off a horrific cliff."
June 21, 2006 Just Speculating Here, but... by Ed Bugos Could the recently hawkish Fed rhetoric and changes in the reins of dollar policy be aimed at obscuring the true reason for the March/April (technical) break down in Treasury prices, which we argued last fall was going to be the most significant consequence of the expected drop off in Asian official sector demand for US dollars? It would be the logical policy response. After all, a drop in official sector demand should theoretically present an added inflation problem for the Federal Reserve if its growing stream of money (or fiduciary media as Mises regarded the issue of uncovered bank notes) is harder to 'place'. The administration's trade and foreign policies, to the extent they have been unpopular, have undoubtedly provided general impetus in this direction (although this is a factor that could be changed I don't believe it is likely to, at least given the current broader trade philosophy of the administration). But its criticism of China's foreign exchange and monetary policies in particular probably played a part in the Chinese government's own decision to diversify away from dollars, accentuating as well as confirming a more global trend in changing central bank reserve compositions - lessening the dependence on dollar "hegemony" as it were - growing for several years now. For, even up until about 2004 the enormous appetite of the Asian central banks for dollars went a long way in explaining Greenspan's yield curve conundrum. At least we thought it did. They bought so many dollars that the prior Fed chief pleaded that they stop. But, despite the criticism levied against its handling of foreign exchange rates as well as its general attitude towards American policies in particular, China was nevertheless willing to continue to finance the twin US deficits. Why? Mainly, the answer is because it worked for a while, at least until they realized the costs of sustaining the scheme. The most important benefit was that it enabled them to maintain a relative trade advantage by "pegging" their currency to the value of the US dollar. In other words, in order to prevent the Chinese currency from climbing like its other trade competitors (Japan, Europe, etc.), i.e. to maintain the peg, and especially in an environment where the dollar was falling in value generally, the bank would have to buy dollars and dollar denominated securities like mad, which it did, at record rates. But the scheme eventually un-nerved China's competitors, yielding political pressure to float the exchange rate. China has shown reluctant compromise by making gradual adjustments to the peg with the presumed (hinted?) intent of eventually letting it float - once it is comfortable with adequate safeguards against sudden inflows / outflows of capital, or so it says - and by gradually removing the monetary accommodation that helped maintain this peg. Adding to this problem of a significant decline in official sector demand for dollars, which is itself a limit on how much the Fed can inflate, was China's publicized intent to accumulate strategic commodity reserves for the future needs of its country. So talking tough on monetary policy would be one way to offset the effects of any expected decline in foreign exchange demand, and to potentially generate Treasury demand. If the main benefactor of the previous Asian policy was the US Treasury market then the recent break down in bond prices could not have come as a big surprise in light of subsequent changes in its foreign exchange, monetary and trade policies. Psychologically, however, it could have serious further implications for foreign dollar demand if the break down is perceived as the result of a diminishing appetite for dollars rather than a tough Fed. Although our hypothesis is speculative (i.e. not likely to get corroboration even if it were true), if it is even part true, then the events we've witnessed (at the Fed and Treasury) appear to make more sense. It's called damage control. Talk Back Sincerely, Edmond J. Bugos GoldenBar.com Edmond J. Bugos is the founder and editor of the Goldenbar Report - calling markets accurately since 2000. The GoldenBar Report is not a registered advisory service and does not give investment advice. Our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While we believe our statements to be true, they always depend on the reliability of our own credible sources. Of course, we recommend that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments. Copyright © 2000-2006 The GoldenBar Report \ \ \ \ \ \ http://www.safehaven.com/article-5416.htm own gold in physical form \ \ \ \ \ \ June 22, 2006 Bank of England Minutes Confirm Wait-and-See Stance by Victoria Marklew The minutes of the June 8 Bank of England policy meeting, released this morning, confirmed that the members of the Monetary Policy Committee (MPC) remain in wait-and-see mode. The MPC voted 7-1 to keep rates on hold earlier this month, with David Walton the lone hold-out hawk arguing for an immediate 25bp rate hike. While the other members did worry about inflation, they also worried about the possible impact of last month's market turmoil on growth and inflation (The FTSE-100 index of leading shares suffered its worst month in more than three years in May). The policymakers concluded that only time would tell whether this was the start of a more significant correction of financial asset prices or merely a temporary adjustment. So far, there is nothing to imply that households were affected by the stock market slide. Data last week suggested that the March-April slowdown in the housing market may have run its course already. The British Bankers' Association reported that underlying mortgage lending rose by its biggest amount in just over two years in May, and the Royal Institution of Chartered Surveyors reported that house prices rose at their fastest pace in two years in the three months to May. Also last week came the news that World Cup-related spending boosted retail sales last month, with sales rising 0.5% on the month and 4.0% on the year. With only one member arguing for a rate hike, the BoE minutes give the impression of a committee comfortable to keep rates unchanged through the summer months. Most of the members concluded that economic developments were unfolding broadly in line with the forecasts made in the Bank's May inflation report. The report had concluded that interest rates would rise gradually from the current 4.5% to 4.7% by mid-2007 (see May 10 comment: "Bank of England Assumes Rates Will Go Up - But Probably Not Anytime Soon"). Data to watch as we head into the summer months include May mortgage and consumer lending (June 29); the next GfK consumer confidence report (June 30); May labor market data (July 12); and June CPI (July 18). The BoE looks set to keep rates on hold at its next policy meeting, on July 6. The minutes of that meeting will be published July 19. Talk Back Victoria Marklew The Northern Trust Company Economic Research Department "The economics of what is, rather than what you might like it to be." 50 South LaSalle Street, Chicago, Illinois 60675 The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions. \ \ \ \ \ \ June 22, 2006 Actuarially-Driven Investors and Financial Fads by Bob Hoye Summary: No matter how wild they get, financial markets don't impose upon the calculation of mortality rates. Unfortunately, the ivory tower culture of actuarial work is vulnerable to the vast but recurring changes in fashions in stocks, bonds, real estate, and (shudder) now in commodities. Recently, HSBC estimated that by the end of 2006 institutions will hold some US $100 billion in commodity indexes. This compares to US $10 billion held at the end of 2003 and very much less at the cyclical low for commodities in late 2002. This is the first direct venture by such funds in history and marks a remarkable departure from "The Prudent Man Rule" into the fad de jour. In the past, the clash between the aloof long term view and undeniable market forces has resulted in corporate damage. Observations: In this article, the term actuarially-driven investors refers to insurance companies and almost anything related to pension funds. These, of course, include sponsors and pension fund managers, with the connecting theme being long term studies by actuaries on mortality rates as well as projected investment returns. Obviously, so-called federal government pension plans are not included as falling under a heading of electorally-driven promotions. In contrast with a rapidly changing financial world (particularly with volatility exceeding that typical of previous new financial eras), mortality rates change at a glacial pace. Often this culture of a virtual constant state sets itself up as removed from the variable nature of investment markets. At other times, it locks on to investment fads. It is one thing to be detached from shorter term fluctuations, but the pedestal of the "dignified long term perspective" has, in a number of cases, been isolated - particularly from the remarkable financial volatility typical of great asset inflations. For example, at interest rate lows in the 1940s and 1950s, insurers were very comfortable with the fashion to favour fixed income investments over risky equities. Regrettably, the unthinkable was building and that was soaring CPI inflation which, in the early 1960s, was considered a plague that could only happen in inferior countries. Looking back on it, the irony is exquisite. As bonds were being trashed, salvation was found in equities which, in turn, were soon trashed by soaring alternative investments in commodities or real estate, which eventually turned disappointing as well. Some History: As with generals always fighting the last war, the complacency that seems to go with many large funds leaves them vulnerable to the inevitable major changes in investment fashions. Since the late 1600s, insurance companies have been the largest investors, but this review is limited to North American life insurers since the 1860s. One observation is that the financial violence found with our period of asset inflation occurred in two previous examples. Another is that the steadiness of mortality calculations may foster a complacency vulnerable to the extraordinary events that attend great asset inflations. In the mid-1800s, some insurers in England had shown a long success of operating conservatively, providing full protection for their policyholders, with a return of 3% on their funds. In Canada and the U.S., this was about half the return from first class securities. Businessmen in Canada, for example, saw the opportunity that, with a wider margin of safety, they could charge lower premiums and show a good return to shareholders. The Sun Insurance Company of Montreal was incorporated in 1865 and initially the Board of Directors reviewed each policy applicant and investments. Disqualifying rules were complex and included sailing on ships crossing the Atlantic and travelling too far south into the U.S. Malaria and a variety of enteric diseases in the hotter climates were a real risk. Of interest, the fine print also forbade payout on death due to suicide, dueling, or at the "hand of justice". Sun, which became a global giant, is a suitable representative of the industry. Actuarial review by a consultant was first engaged in 1876 and a full-time actuary was appointed in 1881. The New Era That Ended In 1873: While our review is by no means thorough, the sampling is random as to which reports were readily available. For example, the Pacific Mutual Life Insurance company started in Sacramento had their operations reviewed in 1871 by an actuary from Boston. In 1873, one was hired who had the only calculating machine in the West. This was an "Arithmometer of Sir Thomas de Colmar" and the company's history describes it as a big brass machine that, in accomplishing astonishing feats, "its wizardry brought in many visitors". Unfortunately, it required frequent trips to San Francisco for repairs by an expert watchmaker. In the 1870s' boom, the Northwestern Mutual Life Insurance Company extrapolated confidence and took "long term" positions in higher yielding but lower grade securities. The "new era" climaxed with a bubble in 1873 and narrowing quality spreads reversed to widening in the consequent distress and collapse of liquidity. Chagrined, the investment committee discontinued the policy of trying to obtain high returns through risky investments. The 1873-1895 contraction was called "The Great Depression", which became an enduring illustration of risk forcing prudent investing. The New Era That Ended in 1929: The next new era developed in the 1920s and Sun became one of the great companies in the world. T.B. Macauly was both an actuary and a visionary who had, at the end of WWI in 1918, sensed the coming of a new era of industrialization. As history records, he didn't understand the risks of the subsequent great financial boom. His way to participate was through equities, with selection the key, and no investments were to be made for early sale or making a quick profit. In the mid-1920s, Macauly wrote, "We are conservative in our selections and we retain our holdings indefinitely, regardless of market fluctuations.". The rationalization was, "We have enlisted the brainiest and most experienced men on the continent to manage the investments.". (This compares with the boasts from a hedgefund in March, 1998 that their staff included "a disproportionate number of the world's leading computer scientists, system architects, and financial engineers". The fund became insolvent in September, 1998.) With the benefit of hindsight and the duress of the early 1930s, this policy came into question and was rejected. But, in foresight, this was an impossible view as the 1920s progressed and Sun's aggressive approach to equities was unique in North America and was matched by only a few life companies in England. In 1927, 55% of their investments were in various classes of corporate bonds and some 30% was in common shares which, at the top in 1929, amounted to 52% of the company's assets. This was well appreciated by speculators as the stock soared from 560 in January 1927 to 4100 in September 1929. The low on the consequent debacle was 145. Infatuation With Fixed Income At Secularly Low Interest Rates: A 1971 history of the company observed that if the wagon is hitched to the star it must follow the star. Sun's business contracted with the bust and no dividends were paid for four years. In the mid-1930s, management proudly announced that since 1931 they had exclusively invested in "fixed interest-bearing securities". This, of course, brings us around to the regard in the 1940s for fixed income that pushed long treasury yields down to less than 3% as concerns for risk in equities had investment-grade shares at a 6% dividend yield. Since the early 1700s, there have been six "new eras". Typically at bear market lows, investment-grade stocks traded at a 6% dividend yield and with the enthusiasms at bull market tops at 3%. On the credit cycle, interest rates for senior government bonds typically traded around 3% at an economic trough and at the height of a boom near 6%. (Over 300 years, the 15% in 1980 was the exception.) By the late 1960s, widespread concerns about another depression were dispelled by a wonderful bull market. As that one was peaking, the popular projection claimed there would be so much institutional money coming into the stock market that there would be a "shortage of equities". Expanding earnings multiples and new issues were also featured. Despite this allure, the policy at a large life company was that any investment that fluctuated in value had no value because the actuary could not match with any certainty the sanctified 30-year forecast of mortality rates. Investments, therefore, required fixed income. All bonds were held to maturity. Even if the issue was rated as junk, it qualified as an "in" investment while equities and real estate were "out". In the early 1960s, equities were restricted to 15% of investment funds and undesirable real estate was kept at 1%. Infatuation With Real Estate At Secularly High Interest Rates: The greatest bear market in history for bonds accelerated in the 1960s, making fixed income investments unpopular. As the rate of inflation was getting well beyond most coupons, actuarial assumptions suddenly forced direct investments in real estate. Pension funds bought a wide variety of properties at inflated prices. Out of the speculative real estate collapse in the early 1980s, another great bull market for common shares started. With this, another cult of equities developed with actuaries eventually recommending a 60%+ weighting. Despite the collapse of radical speculation in techs, this has maintained. This compares with the aggressive 52% weighting by Sun Life in 1929. Using the DJIA, equities didn't break even until 1955. This, so to speak, is an actuarial life-time and, although there was little change in mortality rates, the investment culture had changed to minimize rather than celebrate equities. More recently, equities are very much in fashion, real estate again has been wonderful, and confidence in the Fed's ability to depreciate the dollar "forever" is so strong that former champions of fiduciary responsibility are speculating in commodities. Recent changes in the yield curve and credit spreads are indicative of the financial stresses that accompany the culmination of any great boom. This review starts with the asset mania that blew out in 1873 when the leading New York newspaper editorialized that nothing could go wrong because, without a central bank on a gold standard, the Treasury Secretary had ample powers to prevent a contraction. It lasted from 1873 to 1895 and senior economists called it "The Great Depression" until as late as 1940. However, as history has shown, institutional infatuation with a fashionable asset class provides a reliable indicator of a paradigm change. For around 150 years and despite an august dedication to the long term, financial institutions have flocked to fashion and then suffered chagrin. This ranged from being overweight in bonds at a 3% yield in the 1940s to being overweight equities in the late 1960s when the S&P started a 66% decline in real terms. If Sun Life, for example, suffered considerable remorse in being overweighted in stocks in 1929 at a 3% dividend yield, is a similar remorse possible with being overweight now at a 1.84% dividend yield? Taking this line a little further, what is the potential for chagrin when positioned in commodities with no coupon, let alone dividend? The history of the investment behaviour of financial institutions provides an answer. Talk Back Bob Hoye Institutional Advisors The opinions in this report are solely those of the author. The information herein was obtained from various sources; however we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each securitys price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities or options or futures contracts. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. In addition, investors in securities such as ADRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk. Moreover, from time to time, members of the Institutional Advisors team may be long or short positions discussed in our publications. \ \ \ \ \
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Duncan	22-Jun-06, 11:21 AM (GMT)
5. "Short Selling Record"
http://news.goldseek.com/RickAckerman/1150988400.php \ \ \ \ \ http://bigpicture.typepad.com/comments/ Short Selling Surges to Record in Markets | Psychology/Sentiment | Technical Analysis | Trading The WSJ reports: "Short-selling activity jumped to a record at the New York Stock Exchange during a reporting period in which U.S. stocks pulled back broadly amid fears of higher interest rates and weakness in overseas financial markets. For the month ended June 15, the number of short-selling positions not closed out -- known as short interest -- rose 5.5% at the Big Board to 9,087,309,158 from 8,613,110,732 in mid-May. Marketwide, the short ratio, or the number of shares that investors have sold short divided by average daily volume, fell to 4.9 from 5.0." High short selling can be a contrary indicator, depending upon who does it. When its the general public, it is typically a good fear indicator. At extremes, its a buy signal. Rallies can often get started with short covering, and this can lead to fierce price spikes as shorts scramble to cover (like last Thursday's 200 pointer). However, short-selling by "smart money" -- e.g., NYSE specialists, market makers, etc. -- is often a sell signal. When too much of the public clamors fopr stocks regardless of price, the professional selling can often mark a top. These often come form the Commitment of Trader's reports (more on the CoT soon). The short selling reported last week is the total short position of the exchange -- that sets the stage for a modest advance. As these shorts cover, its fuel for the market to grind higher. > Source: Short Selling Surges to Record On the Big Board Softness in Markets Abroad And Interest-Rate Concerns Drive Dimmer View of Stocks PETER A. MCKAY WSJ, June 22, 2006 http://online.wsj.com/article/SB115093390630986973.html Thursday, June 22, 2006 | 05:48 AM | Permalink | Comments (0) | TrackBack (0) Question for the Commentariat in Weblogs Here's a new question for you: I am hugely grateful for the terrific commentary 98% of you post. For the most part, I leave the comments pretty open ended. The Commentariat here are intelligent, insightful, enormously helpful. Wired magazine calls this process "Crowdsourcing." Then, there's that other 2%. I almost deleted a comment personally disrespectful to me -- but I figured I'd let it slide. Then I pulled up this person's comment history: a grand total of 8 comments over 3 months, most of which were smarmy, unhelpful, borderline troll behavior -- and worst of all, quite frequently wrong: • I think you're wrong on the FIRST QUARTER, Barry. It's going to come in hot! (2/21/06) • The chart says buy the S&P 500. It is due to catch up (3/21/06) • CORE inflation is benign. (5/19/06) So I deleted the comment. Disrespect me in my house, you're out on your ass. Here is the Crowdsourcing question: What is the preference for handling these issues? • Leave the comment intact; The market place will ignore bad ideas/unhelpful posters; • Respond directly in the comment; (see the last comment here as an example); • Edit out the offensive part; (Nanny blog lives!) • Delete the comment; (with extreme prejudice) • Delete dumb comments and ban the offender! (Long live the Benevolent Dictator) I'm not sure the best way to go, but I am very curious about the group dynamic. I've been spending alot of time dealing with comment/trackback spam, and ignoring some of the other issues with comments -- but I want to clean them up, keep the comment function useful, and also stay vigilant against trolls. What say ye? Wednesday, June 21, 2006 | 11:12 PM | Permalink | Comments (34) | TrackBack (0) \ \ \ \ \ \ http://www.theherald.co.uk/business/64574.html \ \ \ \ \ http://www.ft.com/home/us \ \ \ \ Housing boom is biggest on record Economist: Increase in U.S. prices possibly psychological E-mail | Print | | Disable live quotes By Amy Hoak, MarketWatch Last Update: 2:29 PM ET Jun 19, 2006 (This update clarifies that the U.S. housing boom is the biggest on record.) CHICAGO (MarketWatch) -- The recent housing boom is the biggest the United States has ever recorded, but its underlying reasons may have been psychological, economist Robert J. Shiller said on Friday. New data also suggest the market might be at the end of a cycle, he added. The only time since record-keeping began in 1890 that compares to the recent residential real-estate market is just after World War II, the Yale University professor said during a presentation on U.S. home prices, held at Standard & Poor's in New York and broadcast to journalists on the Web. "After World War II, the soldiers came back and they wanted houses and started the baby boom. And when you had babies, you wanted houses with at least two bedrooms -- and that wasn't so common back then. They went on a buying spree and it pushed home prices up," he said. The recent boom, however, doesn't have the same fundamental variables causing prices to soar, he said, adding that variation in such things as building costs, population and interest rates doesn't adequately explain the reason for the housing boom. "I don't see why home prices should be shooting up that strongly," Shiller said, adding that speculation may have played a role. "It's a sign of concern." Shiller was co-author of "Irrational Exuberance," a book that chronicled the stock-market bubble of the late 1990s. He also co-developed the S&P/Case Shiller Home Price Indices, designed to measure the average change in U.S. home prices. The indexes are based on 10 cities -- Boston, Miami, New York, San Diego, San Francisco, Washington, D.C., Chicago, Denver, Las Vegas and Los Angeles -- and are now the basis of new futures and options trading at the Chicago Mercantile Exchange. Within that index, Shiller has noticed a short-term trend of cooling home prices that could signal an end to the cycle of steep appreciation increases. Investing in the index could help homeowners hedge against price fluctuations in their homes, he said. Shiller disclosed that he is not allowed to invest in home-price index futures. During a question-and-answer session, he said that the stabilization of home prices could also have some effect on consumers' means of gaining equity. Low interest rates inspired people to refinance their homes, and the increasing value of their houses allowed them to pad their pockets with spending money; consumers will now have to turn to other means for financing, including credit, he said. In the future, insurance companies may offer policies to shield consumers from lowering home prices, thanks to the futures now available, according to David Blitzer, managing director and chairman of the Index Committee at Standard & Poor's, who also participated in the presentation. He identified the housing market as a continued stable investment. "If you want volatility, go to the stock market," he said. "If you have any doubts of that, take a look at it over the past six weeks." \ \ \ \
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Duncan	22-Jun-06, 01:19 PM (GMT)
6. "right brown and up"
http://www.safehaven.com/article-5420.htm \ \ \ \ \ \ http://bigpicture.typepad.com/comments/ \ \ \ \ \ INDEPENDENT PAPERCHASE: Wednesday 21 June 2006. By Clementine Gallot QUOTE OF THE DAY: I’d like to end Guantanamo. I’d like it to be over with. George Bush, US President, speaking in Vienna yesterday. THOUGHT OF THE DAY: Leisure is the mother of philosophy. Thomas Hobbes, British philosopher. BROWN DECLARES SUPPORT FOR TRIDENT In a speech last night, widely reported in today’s nationals, Chancellor Gordon Brown confirmed his commitment to renewing Britain’s ageing nuclear weapons program for the first time. Until yesterday, The Chancellor of the Exchequer had always been wary of publicly endorsing a plan that Prime Minister Tony Blair had long supported, encouraging anti-nuclear campaigners to hope that the favourite to take over from Mr Blair would spend the money on public services instead. In a Mansion House speech yesterday, however, Mr Brown said he would replace Trident, the current nuclear weapons system, with a new generation of nuclear submarines at an estimated cost to the taxpayer of some £25billion. Parliament should decide next year whether the ageing submarine fleet will be too old to function properly. The current system is due to be decommissioned in 2024. While the Times’s defence editor Michael Evans, says a new submarine-based system is a "militarily and politically attractive" option, the Guardian warns/objects that such a weapon would mean a "colossal waste of money". Fleet Street’s military experts cannot agree on the final cost, it appears, with the Times arguing the new system will soak up £12-15 billion, and the Guardian and Independent opting for the higher figure of £25 billion. Anti–nuclear campaigners are appalled by the turn around in Brown’s policy and argue that any new weapons upgrade will make persuading countries such as Iran and North Korea to give up their nuclear programs all the more difficult. But The Independent notes that "British ministers are reluctant to leave France as the only European country that is equipped with nuclear weapons". Many of Fleet Street’s commentators see last night’s speech as yet another attempt by Chancellor Brown to show his willingness to lead the Labour party after Mr Blair’s departure – expected sometime soon. "Brown has come a long way since elected on Labour’s one-time non-nuclear defence policy" writes the Times whilst the Guardian suggests the Chancellor is once again asserting his position as “prime-minister-in-waiting". The Indy’s Steve Richards says Brown’s support for the nuclear option is a clear indication to middle-ground voters that he’s not the left-wing firebrand his opponents like to describe him as. “He might as well hold a placard above his head: Vote for me – I am not marching to the left,” Richards quips. \ \ \ \ \
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Duncan	22-Jun-06, 01:21 PM (GMT)
7. "micro mindlessness"
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Duncan	22-Jun-06, 03:03 PM (GMT)
8. "each of the nat west 3; have found out the 1.5mill pounds they each trousered; it simply was not worth it"
The Media Goes Blog Crazy! in Financial Press | Intellectual Property | Investing | Media | Web/Tech | Weblogs We have previously discussed the MSM's tentative probes into blogging. We first looked at the WSJ's blogging moves, and then the NYT's foray. Since then, we see a full array of additional bloggers have rolled forth. Barron's tech columnist Eric Savitz has a daily blog, TECH TRADER DAILY. Barron's has (so far) kept that out from behind the firewall. Most of the other WSJ blogs are behind firewalls (a mistake IMO) Also blogging is a threesome from another Dow Jones property, Marketwatch: Bambi's Blog by Bambi Francisco Herb Greenberg's Market Blog Frank Barnako's Media Blog Lots of other mainstream journos have been blogging for quite some time. The San Jose Mercury News has had a tech blog for about 10 years (Good Morning Silicon Valley). I used to think the NYT had the most blogs of any MSM outlet, but it looks like Businessweek has edged them out (although they do a good job hiding them): • Auto Beat • Blogspotting • Brand New Day • Byte of the Apple • Deal Flow • Economics Unbound • Fine On Media • Hot Property • Investing Insights • New Tech in Asia • Nussbaum On Design • Tech Beat • Working Parents Finally, TheStreet.com's Real Money has about a half dozen blogs, although I would hardly call TSCM mainstream media. Like the WSJ, theirs are also behind a subscription firewall. So far, I think the NYT is doing the best job of all the major media with their blogging efforts -- but the WSJ is the dark horse. If they ever figure out what they want to do with their blog collection (I gave them lots of good advice for free here), and execute well, they could leapfrog the competition from the Times. One of the few things besides p0rn that people are willinhg to pay for on the internet is financial info. This will be intereresting to see how it developes. Thursday, June 22, 2006 | 10:00 AM | Permalink | Comments (1) | TrackBack (0) http://bigpicture.typepad.com/comments/ \ \ \ \ \ AP Investors Scout N. Korea Industrial Park Thursday June 22, 8:57 am ET By Kelly Olsen, AP Business Writer Potential Foreign Investors Tour North Korean Industrial Project Amid Missile Tensions KAESONG, North Korea (AP) -- The possibilities for turning a profit in North Korea overshadowed concerns over the communist country's missile program Thursday as potential foreign investors toured a showcase inter-Korean industrial project. ADVERTISEMENT Executives from about 80 foreign or foreign-financed companies based in South Korea visited factories at the two-year-old Kaesong Industrial Complex in North Korea, near the heavily fortified demilitarized zone separating the countries. The South Korean branches of Tupperware Corp. of the United States, Philips Electronics NV of the Netherlands and Japanese auto-parts maker Piolax Co. said it would likely take considerable time before North Korea would be an attractive place to even consider setting up operations. "In the future it might be possible," said Toshikazu Kato of Yokohama-based Piolax, which counts Nissan Motor Co. among its major clients. He added that at its current scale, the Kaesong project simply wouldn't be feasible for his company. The sprawling industrial park, still mostly undeveloped, is so far largely a symbol of inter-Korean reconciliation set in motion by a historic summit between their leaders in 2000. It combines South Korean technology and management expertise with North Korean land and cheap labor. The site, about an hour's drive from Seoul, sits on 2,720 acres surrounded by mostly hills and farmland within the confines of the city of Kaesong, an ancient capital of Korea and known historically for its shrewd merchants. Opened in 2004, the project remains small, though with big ambitions. So far about a dozen South Korean companies have moved in, manufacturing clothing and items like watches for export to markets in South Korea. One venture, which makes cases for cosmetics, is a joint operation with a company based in Japan. Though the zone has yet to attract major companies, it has had a dramatic effect on inter-Korean trade, which in 2005 topped $1 billion for the first time, boosted by a quadrupling of trade at Kaesong. About 6,000 North Koreans work in the enclave, alongside hundreds of South Koreans. The North Koreans earn a monthly minimum wage of about $50, of which 30 percent is deducted for a North Korea-run social welfare fund. South Korea's Unification Ministry, responsible for North Korean affairs, and Hyundai Asan Corp., the South Korean company spearheading the project, envision up to 2,000 companies operating at Kaesong in 2012. The foreign executives seemed impressed with what they saw, but appeared to take a wait-and-see attitude, using the trip as a chance to catch what for most was their first glimpse of North Korea. "Down the track, maybe there's potential to do business here," said Seoul-based Charles Henry, president of Tupperware Korea. "I think it's some distance off. If the country opened up as a consumer market it would be interesting." North Korea, which since 2002 has embarked on limited economic reforms and encouraged trade with China and South Korea, has remained largely impoverished after decades of Stalinist-style economic management and relative isolation from the broader world economy. At the same time it has flexed its muscles, deflecting international efforts to end its nuclear programs and pursuing development of a long-range missile. Tensions have heightened this week, amid apparent preparations to test what analysts think may be an advanced version of its Taepodong missile launched over Japan in 1998, and which could be capable of reaching the United States. North Korea said at the time it was a satellite. North Korean officials sent to act as interpreters and guides for the visitors parried queries about the missile issue. "We are a peaceful country," Chang Mi Son, wearing a white dress with a badge depicting North Korea's late founding father Kim Il Sung, said in fluent English. "We want peace." South Korean officials in the zone also stayed on message, downplaying tensions and focusing on business. "Our company, we just (want to) make money, we don't worry about politics," said Kwon Soon-jin, general manager at Samduk Tongsang Co., which makes athletic shoes in the zone. The capitalist, highly developed South is betting that the Kaesong project will encourage further economic reform in the North and make easier eventual unification for the countries, divided since the end of the Korean War in 1953. Still, officials had considered delaying the trip over the missile concerns, said Yoon Man-joon, president and CEO of Hyundai Asan. "However, we concluded that our continuous process" of inter-Korean projects "would be of help to reduce the tension surrounding the Korean Peninsula," Yoon told participants. \ \ \ \ \ AP Brits Have Week to Fight Enron Decision Thursday June 22, 6:27 am ET 3 British Bankers Wanted in Enron Case Have a Week to Appeal U.S. Extradition LONDON (AP) -- Three British bankers wanted in the United States on Enron-related fraud charges have a week to appeal to the European Court of Human Rights against their extradition, their lawyer said. ADVERTISEMENT David Bermingham, Gary Mulgrew and Giles Darby, former executives at Greenwich NatWest, a unit of Royal Bank of Scotland Group PLC, had appealed to British courts to block their extradition. Their case was rejected by the High Court in February, and the House of Lords on Wednesday said it would not hear the case, their lawyer Mark Spragg said. The Home Office gave them seven days to apply to the European Court of Human Rights, Spragg said. The three men had argued in the High Court that most of the alleged offenses took place in Britain and that any trial should be held here. Being forced to stand trial in Enron's home state of Texas would be unjust and incompatible with European human rights law, the men argued. The three men, all British citizens, were charged in the United States in 2002 with bilking National Westminster Bank of $7.3 million and each face seven counts of wire fraud. They allegedly advised NatWest in 2000 to sell part of an Enron business it owned for less than the stake was worth, in a scheme allegedly devised with Andrew Fastow, former finance chief of the collapsed energy-trading company Enron Corp., and his colleague, managing director Michael Kopper. The three men then left NatWest, bought into the firm themselves and sold it off for a much higher fee, each pocketing about $2.6 million in the process, according to prosecutors. Enron filed for bankruptcy in 2001 after revealing that it inflated its profits and filed false accounts to hide debts. \ \ \ \ \
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Duncan	22-Jun-06, 04:08 PM (GMT)
9. "global housing boom of unprecedented proportions and everybody needs to be aware of the consequences of such a situation"
VIDEO - HOUSING: BOOM, BUBBLE, OR BUST by George J. Paulos Editor/Publisher Freebuck.com June 22, 2006 I was recently invited to present my views on the housing boom to the Stillwater, MN Critical Thinking Society. We had the opportunity to videotape the presentation and we have uploaded the video to the new Google Video engine. You can view it at this link: http://video.google.com/videoplay?docid=-3511058310767509403 The presentation is 52 minutes and it’s a pretty big file. High-speed internet connection is recommended. The Google Video system does not require any downloads and offers instant viewing on any browser that has the Flash plugin installed. Most PCs are already configured to view Google formatted video. The video and audio is a bit rough at times but the information is very timely and would be of interest to homeowners and investors alike. The condition of the housing market at this particular place in time is critically important to the future of the economy and investments. The world has experienced a global housing boom of unprecedented proportions and everybody needs to be aware of the consequences of such a situation. I am planning some future presentations with better quality audio/video. Please let me know if there are topics that would be of interest in this format. © 2006 George J. Paulos, All rights reserved. Editorial Archive George J. Paulos is Editor/Publisher of Freebuck.com, a website devoted to wealth preservation and enhancement using alternative investing approaches including precious metals and natural resources. The information contained herein is deemed reliable but no guarantee is made about its completeness or accuracy. The reader accepts this information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Any statements non-factual in nature constitute only current opinions, which are subject to change. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Neither the information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The author/publisher of this letter is not a qualified financial advisor & is not acting as such in this publication. Investors are urged to obtain the advice of a qualified financial & investment advisor before entering any financial transaction. CONTACT INFORMATION George J. Paulos Freebuck.com Email | Website \ \ \ \ \ http://www.financialsense.com/fsu/editorials/skarp/2006/0622.html \ \ \ \ \ IS IT TIME TO SELL? by David N. Vaughn Gold Letter, Inc. June 22, 2006 I joked last week about someone having the vision to hold a gold show aboard a cruise ship. Now a combination gold show and cruise would definitely attract a greater number of retail investors. But mark my words well because investor involvement in resource stocks will only grow and grow over time. Pay attention today to China. China is presently attempting to get their hands on every major mine and resource in North America. Dave, “Two years ago I bought gold, silver and other metal stocks. I started with 500.00 dollars and a no fee credit card for 6 months. I bought stocks at very low prices. At times I seemed to be the only one buying and now I have 175,000 shares of stock worth $150,000 and that’s after my stocks went down $45,000 in the recent correction. I did not know much about the stock market until two years ago when my wife taught me how to run a computer. I have been reading your editorials in XXXX and other sites and it has been good for me and hope it has for others.” Anonymous email from a reader. I am excited! I continue to see nothing but opportunity in the years to come from investing in precious metals, base metals and rare earth metals. Now if you think I am wrong in this thinking then tell me so. And the key to this growth I believe will continue to be the growing expansion in Asia and China. China today is building an empire. I really do not think that the average folks or analysts comprehend this fact or what this really means. David, “Isn't it nice so many people are sure the metals bubble is over? I bought my first HUI today and plan to add more as time and cash allow. I already have some OIX buy have to move up date.” “I am old but new to this and I agree with you 100%, 45 trillion dollars worth of debt in the hands of our competitors does not bode well for us. What else is there to say? I understand Mr. Bush has ordered 300 million pairs of Ruby Slippers. I think a nice collection of commodity options to back up my Canadian oil Trusts and Central Fund gold and silver trusts will help smooth the rest of my time. Thanks, I will watch for more of your stuff. You know you are the third article I have read this week that comes out and says the world has changed and its time you changed to, the alternative will be most unpleasant.” AR I recently talked to a neighbor of mine who just retired from Fluor Daniel as an engineer a couple of years ago. He spent over 12 years in China supervising various engineering projects. And during these 12 years in China he worked very close with the Chinese political and industrial infrastructure. I asked him if he thought this present tremendous growth China is experiencing today is just a short term and unsustainable rally doomed to expire soon. He looked at me very seriously and said with conviction that the Chinese do nothing short term as there is a vision and long term plan in every thing they do. And I believe this too. China and Asia are growing their wealth exponentially and in their plans this empirical growth will come with or without the USA as part of the equation. David- “I see Lundin, Sinclair, Russell, Casey regularly and invest totally in oil and gas, uranium, and the metals. Try to do my DD (due diligence) and appreciate being able to talk on a first name basis with many in the smaller companies. Several IR people are good personal friends which helps sort wheat from chaff. A trip to Vancouver in Sept. 2004 allowed me to visit a dozen or more junior companies as well as meet my broker there.” “Go to PDAC when I can or NY Gold Show, want to return to BC when I can and even fly fish! The more you learn the more you are then able to learn. If you can unlock a good mining entrepreneur's enthusiasm, you are in for a most rewarding experience.” “Thanks for your perspective.” A reader The U.S. is really very arrogant in believing that the world is solely and totally dependent on their consumer based market. These usually have been the last rallying cries of any empire on its last legs. Arrogance always precedes a fall. What is growing and developing in Asia will eventually surpass anything the United States can imagine. Refuse to believe this at your own peril. In every age there is always one empire on its way up while another empire is on its way down. And after 9-11 it became evident to the world that the United State is no longer invulnerable to world wide terrorism. In the worlds eyes the destruction of the World Trade Towers marked the end of an era of total U.S. supremacy. And those are the facts and views as perceived by the rest of the world. David, “Enjoyed the read and was glad to hear that you enjoyed yourself in our fair city of Vancouver....if you think Vancouver is nice, plan an extra few day's next time your out this way and visit our fair Capital city of Victoria, Vancouver Island.... definitely worth the trip over.” LD But getting to the title of this article is it time now to buy or sell? What intrigues me always is how people consider their investments including the individual companies they invest in. If the truth were really told most investors look at their individual share holdings as trophies they line their living room wall with. So much thought and personal reflection is often put into the selection of just one single stock. And of course there is nothing wrong with this. But the one single fact that always fails to escape me is that most folks become so in love with their stocks that they never think of selling the beloved things. I observed this back in the late 1990s when so many share holders refused to sell even a single share as they watched their stock portfolio climb to over a million dollars. These folks thought of their stock portfolio as a bank account which most definitely a portfolio is not. The vagaries of the market are such that a stock can oscillate up and down and back up again and even back down again. Woe unto the investor who buys even a single share with out a prearranged selling strategy. While it is a great deal of fun participating in this great bull market in resource stocks remember that you cannot really lay claim to any profit until you sell. And that is a “secret” I am sharing here. The secret that no investor ever wants to hear. “You mean I have to sell my beloved shares before I make any money?” Yes. Those are the facts. Bottom line is this. Have a selling strategy before you purchase even your first share. If you don’t then when you do see your share holdings rise you will become overcome with greed and ride the wave all the way to the top and then still be holding on all the way back to the bottom. A simple formula is to sell half when the value doubles. But the point I am trying to make is that your eventual goal is to sell at least a portion of your shares on the way up to lock in and capture your profit. I commented in last weeks ravings that the institutional funds were driving the price of gold as evidenced by the fact that so many of the Vancouver attendees had a very significant percentage of their shares held by professionally managed funds. A couple of years ago Rob McEwen made the comment that only 1% of the total equity investment dollars in the world goes into gold stocks. And I don’t think this number has risen very much even in the last couple of years of this gold bull market. Why is this? I still do not see any significant number of retail dollars going into the precious metals stocks or resource sector in general. And presently folks are nervous about the present gold correction. But summer is always a slow time for the gold market as everyone is on vacation. But I am still confident that we will see gold climb again this fall and back to the 700 dollar an ounce level before the end of 2006. David, “I have been reading your columns for quite some time and appreciate the insight. I have followed Gold from $250 all the way up to its recent top. What I have heard all along is Gold is the ultimate inflation hedge and safe haven investment. Everyone agrees that inflation is out of control and that the dollar is supposedly dead. Yet it looks to me as if Bernanke and the Fed are killing Gold and the bull is over. How can gold win when raising interest rates simply makes Gold a less desirable investment?” Rates down - Gold Up Rates up - Gold Down. “I don’t see it any more complicated than that. If Gold truly is the inflation protecting investment, then all that needs to happen is raise rates to fight inflation and Gold tanks. Everyone is worried about inflation right? So why is Gold going down big time? Its supposed to be the best thing to have in times like this.” Thanks JN Asst. Vice President, IT JN, the fed is loosing control of its battle against inflation. We will continue to see inflation become a factor weighing down our economy more and more as time passes. And remember the following time proven fact below. Rising Inflation = Higher Gold Price Yes, we will see oscillations with the price going up and down but let’s just wait for this fall and see where gold goes to by the end of the year. I still believe we will see a solid 700 base by year end. Shoot me if I am wrong but I believe this will come to pass. There are just too many solid fundamentals weighing against our economy presently and I do not see these problems going away. Sure, we may observe a shot in the arm on occasion as everyone momentarily rallies around the dollar, but these US dollar rallies will only grow weaker and weaker with time. © 2006 David N. Vaughn Editorial Archive Subscribe to Gold Letter, Inc. to receive emailed alerts of under valued gold, silver and resource stocks. to order, click here! Let me hear from you. Send me an email with your comment. If it’s a good comment I’ll post it next week. If it stinks I don’t know what I’ll do with it. By your sending me your comment you are agreeing that you don’t mind my posting it. If you want me to post it anonymously or posthumously please let me know. Gold Letter, Inc. Commentary is carried only on the best websites. If I am not there then maybe you shouldn’t be either. CONTACT INFORMATION David N. Vaughn Gold Letter Inc. Website - Subscription Info (888) 836-7758 Email
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Duncan	22-Jun-06, 04:20 PM (GMT)
10. "Be right and Sit Tight"
HOLD 'EM OR FOLD 'EM? by Elliott H. Gue Editor, The Energy Letter June 22, 2006 Jesse Livermore was perhaps the most famous stock trader of the early 20th century; he made and lost millions of dollars in his day. And, for the record, that was a lot of money 100 years ago. Livermore was most famously immortalized in Edwin Lefevre’s thinly veiled biography Reminiscences of a Stock Operator, probably one of the best and most helpful books on trading and investing ever written. One of Livermore's trading rules was “Be right and Sit Tight.” He also said this is one of the hardest lessons for any investor to learn. In other words, Livermore suggested jumping on board a major trend and then having the courage to hold on to make the really big gains. Clearly, energy is just such a major trend. As I've outlined on numerous occasions in The Energy Strategist, demand for oil and gas is booming while the world's ability to expand supplies and production is, at best, limited. The great commodity bull markets throughout history have lasted for at least 15 to 20 years--this current up-cycle has more than a few good years left in which to run. But that doesn’t mean there won't be corrections. Long-term readers are well aware that we've seen three significant energy corrections during the past 12 months. Each pullback lasted between one and three months and resulted in prices 15 percent to 25 percent off the highs for most stocks in the group. Each pullback also represented an excellent buying opportunity as the group subsequently rallied to new highs. The important thing to remember is that no great bull market has been immune to such corrections. Even the Nasdaq in the 1990s and gold in the 1970s saw corrections of as much as 30 percent in the context of a longer-term trend higher. These corrections make following Livermore's “Be Right and Sit Tight” rule so difficult. All too often, investors panic and get shaken out of the market during these corrections, thereby missing out on the even greater returns to come. At the same time, investors are correct to want to protect their gains; after all, making big money on a stock only to watch it evaporate is a sad strategy indeed. By late April even energy bears were giving up and jumping into the sector; greed and the desire not to miss out on big gains were the prime emotions driving the market. Technical analysts (also known as chartists) term such action a "blow-off top." Normally this sort of parabolic rise and fall leads to a correction that lasts for a few months. It seemed rather odd to be speaking of a downturn with oil near $75 and energy stocks breaking to new highs. While the fundamentals for the group are undimmed longer term, I’m not convinced we’ve seen the lows of this correction. Every great bull market in history has seen periodic vicious corrections of as much as 30 percent before ultimately rallying to new highs. It’s these ugly sell-offs that tend to shake out investors at just the wrong time; investors panic near the lows and bail out of their investments. And it’s been a long time indeed since the oil and oil services names have corrected to that extent. I suspect we’re currently in the middle of such a cathartic sell-off that will end in a bout of panic-driven selling. Eventually this will offer another top-notch buying opportunity, but we’re not at that ideal buy point just yet. How To Play It Our first line of defense is to stick with more defensive sub-industries within energy. A perfect example of a defensive group is the master limited partnerships (MLPs) and pipeline plays. These income-oriented investments don’t move in line with the rest of the group. Specifically, when energy stocks were red hot earlier this year, investors totally ignored these “boring,” slow-moving MLPs. But when the energy patch hits a periodic correction, money tends to rotate out of the growth-oriented energy plays and into the steady eddies like the pipeline MLPs. In addition, the pipeline companies are getting some attention from private equity firms due to the Kinder Morgan buyout plan; speculation regarding the potential for more deal-making activity is helping to put a floor under the group. While not totally immune to a pullback, the pipeline and coal MLPs I outlined in the most recent TES are the most defensive buys during this pullback. Our world is mired in a perpetual energy crisis. Common energy investments will yield uncommon profits in this new Gilded Age. I would like to serve as your guide going forward, helping you to minimize risk and maximize profits in the financial markets. You be the judge, okay. Don’t let the greatest energy bull market this century pass you by. Best regards, Elliott H. Gue Editor, The Energy Strategist © 2006 Elliott H. Gue Editorial Archive KCI Communications, Inc. 1750 Old Meadow Road, Suite 301 McLean, VA 22101 703-394-4931 phone 703-905-8100 fax email \ \ \ \ \ \
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