A great example of turning "bad" into "good" was the productivity numbers post hurricanes. As the number of workers fell, the calculated productivity level per worker increases if GDP stays the same (or increases). So I guess Ford cutting 30k jobs is "good" for our "new" economy where manufacturing is not important.

If the administration is going to improve things here in the US, the easiest way to do that would be to keep taxes low while "printing dollars" to pay off our debts. This would devalue the dollar and slow the exporting of our jobs overseas. This is what they have been doing, but the trade was so obvious last year that the dollar rallied. Some of the factors that led to the dollar rallying in 2005 will not be present in 2006, like the repatriation of $usd due to the Homeland Investment Act.

All this says; buy gold. I am repeating myself from earlier posts, but this is the big picture. Central Banks have been in a "currency war" for a number of years in an attempt to keep their manufactured goods cheap to other countries. Printing money = inflation of money supply = lower currency = more exports to country with lowest currency value (Japan) = gold price increase. Until these policies change, gold will be increasing in many currencies (as we see today). Everything else is just noise IMO.

BTW, CNBC had more positive gold talk on yesterday than I have heard before. Maybe this is the start of the race to gold Assets Under Management. Stockman says (correctly) that if Wall Streeters are speaking positively about gold, that says they are negative on their core business - which would not be good for business. But I wonder if the future talk on gold will focus on the "positive" aspects of gold due to Asian middle class growth. I don't see being positive on gold as being negative, rather I view it as being fundamentally correct. I'll buy stocks after they sell off, which they will eventually.

Have a great day!

Have a great day!

Rydex cash assets jumped over 8%! yesterday, I guess traders decided to bank some of those Christmas presents after all. Note that the cash levels are still at lower end of the range of the past 12 months and there was no corresponding increase in bear fund assets.

Stockman,

I no longer get the Rydex info (although I should), but I have profited from it in the past. So, thank you for your updates.

g034/stockman/Bill-
Gold very strong overnight AGAIN. Look for your portfolios to smile at the open. I had been looking to place more on the table but if it keeps leaping at 3/4-1% a day, and if its going to $525 (very soon now) AND then $600, don't I need to just bite the bullet here? Comments please.

Signed, Shaking My Head At My Stupidity

For my simple mind- if real rates of return on TBills (cash) is NEGATIVE, then GOLD (long term preserves purchasing power) is an alternative for reserve banks AND investors to allocate cash. Real rates are negative and seem likely to stay there for now.

The dynamics of the etf is on my mind. Never before has it been so easy for investors to buy gold. The etf creation is taking sizable supply off the market as investors continue to embrace the metal as an alternative asset. It is perhaps the begining of a self reinforcing cycle which could offer surprising gains.

Past cycles have been more self defeating (as are most commodity cycles). That is as gold rose in price it became more cost effective to bring nore production on. Investor interest as expressed by the mining shares provided the capital. Demand for jewelry declines as prices rise. Supply meets demand and the cycle unwinds.

In this cycle more investment is flowing directly to the metal. This is from investors as well as world banks. That implies less money flowing to the miners for capital investment. If so, this makes this cycle unique. Greater demand for the metal itself driving prices higher and (relatively) less capital going into increasing production. The demand is not for a product rather for investment AND rising prices of gold could stimulate even greater demand.

Implications? This cycle could last longer and be of far greater magnitude than even the bulls currently perceive.

MarkM- stay disciplined, you will have many, many opportunities to buy weakness. If you buy into strength now, you will be technically incorrect, although you may make money.

In my experience, when I miss a trade (even adding to current positions like you now), chasing it is a losing proposition.

I am fully loaded, but I wanted to add to some names at certain prices that didn't materialize. I will have another shot later.

MarkM- I agree totally with g034.

Friends-

Thank you for your input!

To reinforce what Stocman is saying, look at the XAU/GOLD chart from Stockcharts.com. Miners are sitting at .235% or so of the bullion. They should be at .25% by now as they were in 2004, on their merry way to .26%. In other words, despite leaping 5-9% in the last couple of days, they are still a RELATIVE bargain. That's a head shaker as well.

I still believe that miners have derivative issues regarding their hedges and non-recourse loans that are tied to the price of gold. Also, most gold traders (not hedgies) are postive on the metal, but not on the equity market, so there may be some consternation to buying miners vs. gold itself.

Speaking of derivatives, what ever happened to Refco??....