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June 7, 2006

Hello Belgium; Cara to Belgium, Wed., June 7, 2006, 10:55 AM

As the writer's English is better than my French, German or Flemish, let's stick to English.

"H" from Belgium checks in to let us see his perspective on what's happening to the world today. The view could just as well have come from Boston.

Now I knew Belgium had a King and a head office for the EU, but I never realized Bill Gates was Prime Minister there. LOL

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Hi Bill, We all "know" what is supposed to happen? From an financial and economic prespective, gold is to rise as are intrest rates , the dollar sure is to decline(versus other currencies) as are the stockmarket(s). After reading your blog daily (much appreciated and needed ) and the comments of Jim Puplava at Financial Sense and after charts behaviour lately, is a global "New Deal" emerging? "New Deal" agreements: - Talk (only talk, no actions) the dollar up. Weaker Euro, Yen and Chinese currency resulting in happy politicians and markets in these country's.(brouhgt to you by the central banks worldwide).The dollar is our currency and your problem, isn't it.(brouhgt to you by the central banks worldwide) - Continu printing money worldwide. We will do it without you noticing of course(no more M3). All this resulting in stockmarkets in "Weimar"mode making new highs.(brouhgt to you by the central banks worldwide) - Iran: remove the fuse from the barrel (oil price declines, other commodities will follow).Agreement on Irak, allowing US a solution without losing face.(brouhgt to you by the "Gold"man,Russia, China ,Iran and others) - Intrest rates down worldwide: keeps the US housing markets from crashing and George Bush happy at least untill the elections in november.Everybody loves low intrest rates,right ?(brouhgt to you by the central banks worldwide) - Keep selling evil "Gold". Making you believe(again) in the fiat money system.Need that desperately, don't we?(brouhgt to you by the central banks worldwide) But "we the little people" right now need to buy foreign currencies, sell stocks, keep money in short term accounts and buy gold so "the power elite" can take the other side of that trade. Keep on dancing on the Titanic untill the music stops and there is no more postponing the day of reckoning and what is supposed to happen is going to happen and the reset button is pushed. Ultimately gold and honest money will prevail, but will "we the little people" be owning gold at that time? Don't think so. Right or wrong on these assumptions, only time and the charts will show us. Just my two euro-cents on current events from a student of markets and politics. Greetings from Belgium --"H"

10/4 good buddy.

Posted by Posted by Bill Cara on June 7, 2006 10:55:55 AM | Category: Blogging World

Discourse

Honestly, I do not understand some people's obsession with gold. It is a mineral. Dug up out of the ground. It has no value except what people imply to it, and in this it is no better than the pieces of paper we call money.

If I had "invested" in gold over the last 25 years, I would have lost 90% of my value compared to my peers. (Good thing I invested in those "manipulated" assets like stocks, bonds, and real estate!)

Yes, gold has run up in the last two years. So what? My house price did the same thing, and I can sleep inside of it. All I can do is look at these shiny gold coins. I look at them and wonder why some people are so obsessed with it of late. Gold is an industgrial commodity, a bauble I can wear on my finger, and in terms of the market, an asset class (and historically a very bad "investment"), not the key to the global economy.

Posted by: Novalawyer [TypeKey Profile Page] at June 7, 2006 11:56 AM [link]


Novalawyer:

What is wrong with us is called: “Mal de Piedra�
or
The sickness of rocks.

This is what happens when you pursue the elusive ounce of gold.

Posted by: C.Note [TypeKey Profile Page] at June 7, 2006 12:16 PM [link]

I currently hold no positions in gold. I invested and will look for potential entries into gold because it's timely, because all the factors in my system support it.
If you look at DJIA from 1966-1981, in those 16 years, you would've lost 75% of your investment accounting for inflation.
Actually, statistics are manipulated as well. The return of the DJIA over the last century? 5.3%! Yet most Wall St statistics use post WWII returns etc. Now you know why. Like Buffett said, equity returns cannot forever outperform business returns too long.(or with too wide a margin)
So to cap up, I think we're headed for another decade of inflation and consolidating in the indices, so investments in commodities ARE timely. Bill Cara stated he isn't a gold bug. We're just dabbling in it because it's the thing to do in this environment.
To finish off with another Buffett quote, if one could get rich from history, then the Forbes 400 would consist of librarians :D.

Posted by: FirstConsul [TypeKey Profile Page] at June 7, 2006 1:33 PM [link]

FirstConsul is right because I have no more a passionate interest in gold than I do for any sector of the equity market. In fact I have often written that gold is merely a class of unallocated assets, which get that way because traders are unable to find suitable reward to risk characteristics in markets as economic opportunities are squandered by political bungling and overreaching, which is the case today. At these times, sometimes the USD is strong and so cash is king. At other times, the USD is weak and so gold is king. But most times, the economy is relatively healthy and growing and deserves the capital we can provide.

Posted by: Bill Cara [TypeKey Profile Page] at June 7, 2006 2:02 PM [link]