November 2011 Market

[68Camaro]

Ah, the dangers of posting on an Internet forum (especially in a jet-lagged condition). I see now that my comments towards you were too strong. Conditions are just so Orwellian lately.

No worries

[68Camaro]

I have to keep reminding myself that the "market" (e.g., US the equities market) is no more a real indication of the health of either the US or the world than the value or stability of the dollar. For 2011, to date, the US market is essentially flat. On the surface that could suggest that things are sort of, or at least, stable. But does it have meaning? I think not. At best it's an artifact of the odd situation the world finds itself in, where the "best" investment area is one where the economy is "only" in deficit by 1-GDP, and only in debt by 15 GDPs (though potential liabilties dwarf that, probably at 100 GDPs), and where the currency (though diminishing) remains the world standard. The markets in the balance of the world - almost without exception or location, even in China - have fallen 10-20% on the year.

The Fed ...

http://www.zerohedge.com/contributed/hi ... rrows-cash

...appears to be in the middle of doing some weird things to their balance sheets which have not yet been explained, but could possibly be part of a back-door bailout of Europe. Wouldn't it be quite an end to this story if the US becomes the printing press even for Europe, when Europe won't print their own way out of this.

So, continue to be careful out there...

PMs, as measured in fiat USD, remain more or less stable for the moment at their new slightly elevated position. Despite the previously noted currency rate adjustment, and the turmoil of the last few days, gold remains around 1760 and silver around 34.

[68Camaro]

And from... (http://finance.yahoo.com/news/Gold-Silv ... ml?x=0&l=1)

Despite what central banks may claim, inflation is alive and well.The cost of Thanksgiving dinner will be 13% higher this year than last, as prices rose for everything from turkey to green peas. A meal for 10 people will rise to $49.20 this year, up from $43.47 in 2010, the biggest increase since 1990. The American Farm Bureau Federation has based its estimate on prices for foods traditionally served on Thanksgiving, including stuffing and pumpkin pie. Turkey was the most expensive item on the bureau’s report, and also had the biggest gain, with a 16-pound bird up 22% to $21.57.

[Mossy]

And from... (http://finance.yahoo.com/news/Gold-Silv ... ml?x=0&l=1)

Despite what central banks may claim, inflation is alive and well.The cost of Thanksgiving dinner will be 13% higher this year than last, as prices rose for everything from turkey to green peas. A meal for 10 people will rise to $49.20 this year, up from $43.47 in 2010, the biggest increase since 1990. The American Farm Bureau Federation has based its estimate on prices for foods traditionally served on Thanksgiving, including stuffing and pumpkin pie. Turkey was the most expensive item on the bureau’s report, and also had the biggest gain, with a 16-pound bird up 22% to $21.57.

But, inflation is only two or three percent.

Hah.

[68Camaro]

Overnight, Silva, President of PORTUGAL is recommending to the ECB that they extend their mission and be prepared to buy unlimited amounts of European sovereign debt. (Practically speaking, this can only happen if someone - either Europe or US - prints money. If the US does this then effectively it is America that would be buying their debt.) Of course he (with a Doctorate in ECONOMICS) would say this - Portugal is worse off even than Italy! And while a smaller country, it is arguably next in line before Italy to collapse, even though they are officially propped up by the ECB.

The headlines are working to try to calm the masses, noting that just because the Greeks have selected a new PM (a former BANKER!) and the Italians seem to have a major candidate in their sights (again, an ECONOMIST, of all things) as replacement for Berlusconi, that this is positive news. Positive? Wow - I'm glad they are stable enough to be able to transition governments. That certainly makes me want to invest in them!

[shinnosuke]

Overnight, Silva, President of PORTUGAL is recommending to the ECB that they extend their mission and be prepared to buy unlimited amounts of European sovereign debt. (Practically speaking, this can only happen if someone - either Europe or US - prints money. If the US does this then effectively it is America that would be buying their debt.) Of course he (with a Doctorate in ECONOMICS) would say this - Portugal is worse off even than Italy! And while a smaller country, it is arguably next in line before Italy to collapse, even though they are officially propped up by the ECB.

The headlines are working to try to calm the masses, noting that just because the Greeks have selected a new PM (a former BANKER!) and the Italians seem to have a major candidate in their sights (again, an ECONOMIST, of all things) as replacement for Berlusconi, that this is positive news. Positive? Wow - I'm glad they are stable enough to be able to transition governments. That certainly makes me want to invest in them!

Can you say, "Taxation without representation?" I'm pretty sure the founders never intended for US citizens to support the lifestyles of foreigners with our time and treasure.

[rsk1963]

"buying their debt" with what? Ben crank up that printing press...

[68Camaro]

Imagine how you would feel if you were a Slovakian in the following...

(From http://www.zerohedge.com/news/while-eve ... k-republic)

The Slovak Republic has 63 billion Eur of GDP with debt of 29 billion. That is only 46% debt to GDP, but they are only rated A1/A+ with S&P having them on positive outlook. Their credit has been on an upward trend. It was A3 back in 2004 with Moody's and has been steadily clawing its way up. It got their by being fiscally prudent. It hasn't seen credit improvement by taking on debt obligations willy nilly. Its EFSF guarantee commitment is 7.8 billion euro. That is just over 10% of GDP, which as the high end, but it is 27% of its current debt outstanding. That is a staggering amount of money. If this country had wanted to raise 5 billion and spend it on itself, the quality of life would be much higher. With just of 5 million people, that is about 1,000 euro per person that they are using to support countries that have more benefits than they provide their own citizens. People can pooh-pooh what is going on in Slovakia. They can make fun of how the whole world is focused on this little country, but they are wrong to. This country, like Finland, is being dragged into something they don't want to do. They are going into debt to provide money to countries who spend more per citizen than they do. Shouldn't they be spending that money on themselves? Taking on debt to help someone else when they have survived by being responsible makes no sense to a lot of people there. They have a nice 2015 bond that trades about 3%. Not great like the best countries in the Eurozone, but sustainable. Will their commitments start impacting their own ability to raise money?

[68Camaro]

FOFOA on physical wealth and money:

http://fofoa.blogspot.com/2011/11/moneyness.html

Love the thoughts by FOFOA. Not to be a detractor but they are not an easy, short reads. The style is not conscise and sometimes uses repetitive arguments, with occasional rabbit-trails onto related topics that I don't believe are necessary to make the main point (and I'm not always convinced of, but fortunately aren't necessary in this one.)

The above link is worth the entire read for those with time; for those with less time, my brief synopsis follows (any misunderstanding is my error - and might be in part due to my lack of my own time):

It is very common (especially in these days) for people to confuse money and physical wealth - but money and physical wealth are actually two very different things.

(Yes, of course there are other metaphysical forms of wealth: love, friendship, health, heavenly wealth, but those are other topics.)

Money is not wealth. Money is a concept of units of commonly accepted, transportable, tradable value. It is a mental thing. In the US of today that concept takes the *form* of units called dollars (or the subunit cent) expressed in coins or bills. It is the acceptance of the dollar as money that makes it money. If the dollar ceased to be accepted as money then it would still be a dollar, but it would not be money. The dollar is not wealth - it represents wealth only as long as it is accepted as a transferrable unit of value. If the unit being used as money has no intrinstic value (which is our current state) then any trade using it is simply using it as a form of credit.

Wealth is not money; it is physical things of value: land, oil, grain, gold, silver, etc.

Money is not needed for trade or commerce. Wealth can be traded directly without use of money, as long as two parties agree to the trade. Oil can be traded for land. Wheat can be traded for oil. Etc.

Gold is the most widely valued form of transportable physical wealth in all of human history. The most common lessor forms have included silver and bronze/copper. Newer, lessor forms include nickel and copper/nickel alloys. Newer precious metals include platinum.

Bullion is wealth, but not money.

At various times in history people have agreed to actually use forms of mini-wealth, in small pieces, directly as money - i.e., precious and base metals as coins.

The cycle of gold becoming money, being debased, the value transferred to bills (or other similar intrinsically valueless items), then inflated until the money becomes worthless and it all starts over, has been going on for all of recorded history.

Most important single quote:

Clearly the 63% destruction of the dollar unit reference point over the last three years did not immediately translate into a 170% rise in prices at the grocery store. And I wouldn't expect it to. It never works like that. Henry Hazlitt explained it like this: "The value of the monetary unit, at the beginning of an inflation, commonly does not fall by as much as the increase in the quantity of money, whereas, in the late stage of inflation, the value of the monetary unit falls much faster than the increase in the quantity of money."

It continues on to discuss concepts of modern money, and how they've been abused, but you need to buy into and understand the above before reading the whole thing.

[68Camaro]

Milton Friedman interview from 1979, compare to today

No need to either put Milton Friedman on a pedestal, nor vilify him, and before you do either, get the facts on him first. But regardless of your opinion of him or his policies his core conservative/libertarian ideals speak as loud now from the grave than they did then, in this 5-part ~45 minute interview and Q&A on the Donahue show from 1979. Amazing how far down we've come since then, and how our problems now were the same then. If you only have time for one, pick the 3rd one, especially the first 2-3 minutes of that one.

http://www.youtube.com/watch?v=E1lWk4TCe4U
http://www.youtube.com/watch?v=5Lp2kGJASGY
http://www.youtube.com/watch?v=GapXLpLoZBs
http://www.youtube.com/watch?v=I0Ocv8aMBjk
http://www.youtube.com/watch?v=brBvdjoNC6Y

As I suggested above, be careful about why you dislike someone's views, and which views you object to. No one is perfect. Friedman was a strong defender of capitalism, even libertarianism. But (IMHO) he had it completely wrong on monetarism. I've had a nice quiet Sunday afternoon to do a lot of enjoyable miscellaneous reading, and this never-presented speech on Friedman's views, by Antal Fekete, is priceless. He takes Friedman fully to task for his views on money, and on his support of the dismantling of the gold standard.

http://www.safehaven.com/article/6411/w ... went-wrong

[theo]

Just wanted to thank you for sharing your insights and reading suggestions.

I've been reading Griffins' "The creature from Jeckel Island" Griffin views the last two centuries as a series of banker caused ponzi schemes, starting with the Rothchilds' profiteering during the Napoleonic Wars, through the banking elite financed Russian Revolution (apparently using the Red Cross as a front) to today's "to big to fail" bailouts. I suppose I should take some of these claims with a grain of salt, but Griffin makes a compelling case.

Milton Friedman interview from 1979, compare to today

No need to either put Milton Friedman on a pedestal, nor vilify him, and before you do either, get the facts on him first. But regardless of your opinion of him or his policies his core conservative/libertarian ideals speak as loud now from the grave than they did then, in this 5-part ~45 minute interview and Q&A on the Donahue show from 1979. Amazing how far down we've come since then, and how our problems now were the same then. If you only have time for one, pick the 3rd one, especially the first 2-3 minutes of that one.

http://www.youtube.com/watch?v=E1lWk4TCe4U
http://www.youtube.com/watch?v=5Lp2kGJASGY
http://www.youtube.com/watch?v=GapXLpLoZBs
http://www.youtube.com/watch?v=I0Ocv8aMBjk
http://www.youtube.com/watch?v=brBvdjoNC6Y

As I suggested above, be careful about why you dislike someone's views, and which views you object to. No one is perfect. Friedman was a strong defender of capitalism, even libertarianism. But (IMHO) he had it completely wrong on monetarism. I've had a nice quiet Sunday afternoon to do a lot of enjoyable miscellaneous reading, and this never-presented speech on Friedman's views, by Antal Fekete, is priceless. He takes Friedman fully to task for his views on money, and on his support of the dismantling of the gold standard.

http://www.safehaven.com/article/6411/w ... went-wrong

[68Camaro]

Theo - while I have read only excerpts from Jekyll, it is highly recommended. As to if what we have is a formal ponzi scheme with plans behind it, or greed masquerading as ill-informed plan, I'm not sure, but I'm also not sure it makes a difference.

I have come in late to this all, and am humbled by the extensive writings of those many that have written extensively on these topics for decades - while I slept, metaphorically speaking. I have felt some discomfort with the markets for more than a decade, but it's only been the last 4 years that I've started slowly doing something about it, and only the past 16 months that I've acted fiercely. My actions to date have been somewhat instinctive, and guided by quick things I've been able to read, which seemed trustworthy. In the past few weeks I've started to go back and correct my lack of education on what has gotten us to this place, and what might happen going forward. All comments from others are welcome, as this is where I think out loud. 68...

[theo]

Theo - while I have read only excerpts from Jekyll, it is highly recommended. As to if what we have is a formal ponzi scheme with plans behind it, or greed masquerading as ill-informed plan, I'm not sure, but I'm also not sure it makes a difference.

Perhaps you are right in a practical sense, however, I still want to understand "the why" along with "the what." Its scary enough if we are merely dealing with the greedy and foolish, but if there is a method to their madness then, for me, it changes the game entirely. It means that someone is actively trying to steal from me as surely as a thief trying to get in my basement window. I know this attitude may seem overwrought, but it serves a small purpose in that it adds an edge of urgency to my plans. As chilling is it may be, I am biased toward the idea of an adversial relationship because I understand it. A fool is far more difficult to predict.

[68Camaro]

Well said...

[shinnosuke]

68, mind if I drop this article into the discussion? Watch the video of the Blackrock CEO. He makes several telling comments, but he's definitely in kicking (down the road) mode.

http://www.ftense.com/2011/11/european-debt-to-gdp-map-french.html

[shinnosuke]

And this? It's an excellent video of our Texan friend, Kevin Bass, the man with 20 million nickels. In this BBC interview he actually says, "short hairs" on TV.

http://news.bbc.co.uk/2/hi/programmes/hardtalk/9639507.stm

[68Camaro]

68, mind if I drop this article into the discussion? Watch the video of the Blackrock CEO. He makes several telling comments, but he's definitely in kicking (down the road) mode.

http://www.ftense.com/2011/11/european-debt-to-gdp-map-french.html

Interesting. Question will be, does Europe have the ability to react quickly enough? I think how quickly they are able to act decides between this becoming a "simple" stagflationary spiral over time vs a complete total meltdown. Like it or not, the US has the ability to act unilaterally and quickly. Europe - not at all.

Thanks for the link!

[68Camaro]

Another economic milestone. When I was in high school (even then being aware of the issue) I recall being apalled at the then national debt of 450 billion. This year the US will have spent more money on the interest on the national debt, than the total debt of 35 years ago.

[68Camaro]

And this? It's an excellent video of our Texan friend, Kevin Bass, the man with 20 million nickels. In this BBC interview he actually says, "short hairs" on TV.

http://news.bbc.co.uk/2/hi/programmes/hardtalk/9639507.stm

Well, the dude has been so very right so many times, and clearly is on top of the latest news and stats, that it's hard not to just accept his opinion at face. Thanks!

[68Camaro]

Back to comments on the market in general, and what decisions that drives.

The economic news is - still, and even more - psychotic. It's almost impossible to feel trust from any news - this is the "fog of war". The big picture messages indicate looming chaos which TPTB - by their methods - can only avert, for a time, by the printing of more money - if enough of that cash creation is even possible in Europe. What is real and what is not? Well, physical gold and silver are real, that's for sure. So are cans of beans on the shelf, and a Beretta 92G 40SW in a holster (or HK P30 40SW, or Kimber 45).

For those of you with non-optional funds in 401Ks that cannot be removed, like me; I'm stuck with trying to make the best long-term investment I can (physical gold and silver funds for the discretionary portion which I am lucky to be able to direct there), against the possiblity of total loss should the brokerage (which I can't control) go under. So I have to plan my life around the possibility that (as with SSI and my pension) I will never see any of that "wealth" (assuming it is lost in some market chaos like MF Global), or that those parts which I have no control over will be inflated down to nothing by the time I have access to it.

[shinnosuke]

Back to comments on the market in general, and what decisions that drives.

The economic news is - still, and even more - psychotic. It's almost impossible to feel trust from any news - this is the "fog of war". The big picture messages indicate looming chaos which TPTB - by their methods - can only avert, for a time, by the printing of more money - if enough of that cash creation is even possible in Europe. What is real and what is not? Well, physical gold and silver are real, that's for sure. So are cans of beans on the shelf, and a Beretta 92G 40SW in a holster (or HK P30 40SW, or Kimber 45).

For those of you with non-optional funds in 401Ks that cannot be removed, like me; I'm stuck with trying to make the best long-term investment I can (physical gold and silver funds for the discretionary portion which I am lucky to be able to direct there), against the possiblity of total loss should the brokerage (which I can't control) go under. So I have to plan my life around the possibility that (as with SSI and my pension) I will never see any of that "wealth" (assuming it is lost in some market chaos like MF Global), or that those parts which I have no control over will be inflated down to nothing by the time I have access to it.

It is possible to own gold/silver in an IRA. Not allowed in a 401k? Of course, in the case of the IRA you can't take delivery of the physical. I suppose I could invest in the physical and when things get hairy just take delivery and suffer the tax consequence haircut for my decision.

I like your list of handguns, but you need something that can reach out a bit farther.

[68Camaro]

I can own gold/silver in the 401K via PSLV and PHYS, such as that is. And I do. However, if the brokerages go down, and they haven't kept their accounting straight (e.g., MF Global), I may be out of luck.

I have two 12-gauge shotguns and three rifles, just didn't list them. But I am less well equipped in the rifles. Have been shopping around for a 30-06/308 type, but haven't quite found what I want.

[68Camaro]

Both silver and gold completely bounced off the short action late this morning as though immune. The shorts knocked it down a percent for about 90 minutes, and when they left up off the throttle, both gold/silver immediately bounced back to their previous spot.

[NHsorter]

I can own gold/silver in the 401K via PSLV and PHYS, such as that is. And I do. However, if the brokerages go down, and they haven't kept their accounting straight (e.g., MF Global), I may be out of luck.

I have two 12-gauge shotguns and three rifles, just didn't list them. But I am less well equipped in the rifles. Have been shopping around for a 30-06/308 type, but haven't quite found what I want.

An AR-10 is a nice rig if you want .308 - One of these is very very high on my want list.

[68Camaro]

Based on info in this other thread post...

viewtopic.php?f=9&t=9678&p=96747#p96747

I don't think we've seen the bottom of this drop yet. Even if it ticks up later today, I believe the several sources that believe that this drop is purposeful and targeted, and has more to go.