Cara’s Commentary & Community Chat, Mon., May 25, 2009

[7:30am ET] The discussion of risk-reward within this community versus the typical chat room is like night and day, which pleases me greatly. Thank you for your contributions.

There is no magic, you know, to successful portfolio management. It

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  1. Ron Sen(118083 comments)-
    May 25, 2009 at 1:16 pm

    Peace on Memorial Day, all.

    Some ‘stuff’ for today and leftovers from yesterday…
    – Socionomic overview…are these songs ‘upbeat’ or something else. Little help?
    – Some point-and-figure charts
    – The ‘early cycle’ graph for the believers
    – A bunch of 6 by 60 minute panels that help define risk reward for me
    – Is Bernanke killing Schroedinger’s Cat?

  2. shark_attack(118083 comments)-
    May 25, 2009 at 1:18 pm
    • Bill Cara(118083 comments)-
      May 25, 2009 at 3:07 pm

      shark and others, re my comments on the price of precious metals:

      Before they started to move, I anticipated a run to maybe 17 for silver and to maybe 980-1000 for gold. That was a very short-term call, and if it happened I said I’d be looking to sell my positions into strength because the US Dollar is extended on the downside to permit the market to stay high while HB&B does its required financings. But any day now I think the risks are too high that the Fed will step into markets with a boost for the $USD and a knock-down for precious metals. If I thought the pull-back would be a mild one, I’d hang in, maybe buy some inexpensive protective puts, etc, but in fact I think the down-draft could be a serious one, and it will likely extend across all sectors and most industries for several weeks, possibly months. Hence I will be happy to stand aside.

      Longer-term, I have opined that within the next 18 months, I believe that gold will be 2000-2500. I also believe it could go much higher within 3 to 5 years. But, in my stating time and again that my decision-making horizon these days is one day to three weeks only, and even that could come down if I see a slide in market prices, I was thinking very short-term when I wrote that comment.

      At the end of the day, managing risk is all-important to our success. So, when you see the $USD plunge from 87 to 80 in a single month, you have to recognize the risk of Fed intervention is soaring. I have a lazer focus on risk, and try to make gains when the risks are acceptable.

      I recognize that, with gold and silver, the biggest gains by far are when the risks are greatest. But it is one thing for me to trade minute-to-minute and another to write a free blog for an international community that trades on average maybe a dozen or two times a year, and who only has so much time available for reading.

      I appreciate your asking for clarification though because I constantly have to remind myself to do a better job in linking discussion to the time frame.

      • kaimu(118083 comments)-
        May 25, 2009 at 4:07 pm

        ALOHA !!

        Someone correct me but I believe we have already seen the USDX go below 80 intraday. The 80 number is the 35 year psychological low … Of course, until last year! It is expected that the US FED would defend the 80. They are not that stupid to let a 35 year icon go down without a fight!

        • Dr. Strangelove(118083 comments)-
          May 25, 2009 at 4:17 pm

          kaimu –

          USD did break below 80 intraday last week.

        • Chickenpookie(118083 comments)-
          May 25, 2009 at 5:02 pm

          kaimu “It is expected that the US FED would defend the 80. They are not that stupid to let a 35 year icon go down without a fight!”

          They seem to be experiencing brief technical difficulties, hopefully they don’t throw in the towel before I execute my move back into gold.

        • vinod(118083 comments)-
          May 25, 2009 at 5:06 pm

          March and april 2008 $USD was around 72

          • Chickenpookie(118083 comments)-
            May 25, 2009 at 5:27 pm

            vinod – “March and april 2008 $USD was around 72”

            True, and at the time much less was known about exactly who, what, when, where why and how. Gold topped briefly at the highest level in history and the government had yet to commit $12 Trillion to economic recovery efforts.

            In the interim much has changed, definition has taken place.

      • ToddinFL(118083 comments)-
        May 25, 2009 at 10:26 pm

        Bill, thanks for this clarification of varying trading time frames for your readers. This is a very important point.

        Also, your continued emphasis on risk management is very apropos. The use of options and/or tight trailing stops is very important in current market activity.

        One idea that should be remembered is to NEVER let a winning position turn into a loser. Cutting losses short should always be of utmost importance.

        Thanks for all that you put forth FREE of charge to the public. We appreciate your efforts.


        • Bill Cara(118083 comments)-
          May 26, 2009 at 12:50 am

          ToddinFL, or others, Please don’t hesitate to ask this very question of me (re time frames) at any time you are confused. It’s not up to you to have to guess. If I write something, it’s up to me to be precise in its meaning.

          As for this being free, I appreciate your sentiment, but nothing’s free. If you think it’s of value, you will invest your time to review it and think about it. There is a cost of doing that. Time is the most precious thing we have because it represents the future. Memories (of times past) represent our lives and is also very important to us.

          Somebody once told me that it’s up to us to decide whether we are going to live one year 20 times or 20 years in one. Think about the importance of that.

        • Telestar3d(118083 comments)-
          May 26, 2009 at 2:27 am

          Ditto, thank you Bill for your tireless efforts to share.

    • kaimu(118083 comments)-
      May 25, 2009 at 4:09 pm

      ALOHA !!

      Shark posted … “Is it time for Kaimu to get out the shovel and trade all his pirate’s treasure for fiat currency?”

      As with any “trend” there has to be some fundamental shift that either makes the trend end or ramp up. So far as I see the “gold trend” is intact 1000% as I see no shift but rather an acceleration in EMPIRE. EMPIRE has in historical terms been built upon DEBT and DEBT is built upon SPENDING and as I report the US TREASURY DAILY STATEMENT there is absolutely no evidence, not even microscopic evidence, that our elected leaders intend to CHANGE. EMPIRE dies in overwhelming DEBT … It is, in their minds, their God given Right to save us from ourselves … That is the basis of “fiat currency” … the pure insanity of the human condition.

      The “external games” that surround the tiny gold market are just that “games”. What is it that HB&B is most noted for and most accomplished at? STACKING THE DECK … shaking out the speculators … rigging the trade … The sheer legacy and the veracity at which HB&B attacks such a tiny market as gold and silver is astounding, so that, in and of itself, to me, is a GIANT “KLUE”! Why would such huge HB&B players like JP MORGAN and GOLDMAN SACHS even care about the gold market if they believed honestly that it was insignificant in the grand scheme of all things monetary? In the vane of Shakespeare … “they doeth pretend too much!”

      The rise in the POG since 2000 has been signaling the demise of something. I believe it is the C WORD!

      There is no more guaranteed way to destroy CONFIDENCE than to intervene. I believe Bill spoke well to this in the WIR today. The HB&B Masters that make up the US FED have been doing that in spades, while the US government, itself a subsidiary of HB&B, just passively watches along with 90% of American Voters.

      So NO … we are a long way off before I trade something of great value for something of no value …

  3. Les(118083 comments)-
    May 25, 2009 at 1:23 pm
    • ezmoney(118083 comments)-
      May 25, 2009 at 2:57 pm

      Good article….

      Toitally agree on the end of the year for the bottom, with small increases, but lower highs and lower lows until then. The current market is mainly driven by the current storage situation, half full and expected to be full by mid September, 2 full months before demand outstrips supply in the winter.

      One item about this article that needs to be addressed is the cost of production. Shale gas is pretty similar for cost of drilling etc. (when comparing the large shale plays – Barnett, Fayetteville, Marcellus) Some places are slightly more expensive (i.e. Haynesville) but a lot of the economics depend on acquisition costs. That is why Chesapeake says it needs $7-8 gas in the Barnett. They simply paid too much for acreage. When you are paying $20,000/acre lease bonus and 25% or more royalty, these are very high upfront costs and the producing costs are spread over 3/4 barrels instead of 7/8 in a typical royalty interest scenario.

      Trust me on this…


      FD: Work for a large oil company.

  4. baz22(118083 comments)-
    May 25, 2009 at 2:00 pm

    Market correction ? How about market reality. The truth that the US cannot compete globally because of labor costs at home. Its not that we have lived beyond our means, as US citizens. Its just that our ‘ means ‘ are, and have been, totally out of wack vs. the rest of the world, since around 1950. The American dream is just that. We have a great country, but as human nature is what it is, fear took control. Fear of not living in the ‘ right ‘ neighborhood, having a new car (truck), clothes, and on and on. Nothing wrong with wanting, but so does the rest of the worlds population, and they are willing to undercut the US to get it. I don’t have any answers, other than to get use to living with less, and that includes expensive foods, insurance and dreams. Bill is right. The banks will keep this broken system propped up till the last straw breaks. There are just too many people all wanting the same thing.

    • Ron Sen(118083 comments)-
      May 25, 2009 at 2:13 pm


      Nail on the head.
      – Capital flows to its most efficient use, and emerging markets have no legacy costs, limited worker benefits, and baseline cheaper labor
      – Ergo, convergence of standard of living, with improvements at the low end and regression at the top
      – If the 19th century was the agricultural revolution and the 20th the industrial, then the 21st was to be the ‘alchemy of finance’ revolution where structured finance was going to manufacture dollars

      Ironically, with regime change and Kaimu’s new math, that’s exactly what happened.

      • number2son(118083 comments)-
        May 25, 2009 at 2:57 pm

        Ron, one problem with that equation is that while capital is now free to move around globally, labor is not. This is a fundamental inequity.

        So while corporations who drape themselves in the RW&B are free to move operations to other shores that do not give workers the basic benefits we in the U.S. have long taken for granted – and earned, despite the ongoing complaints of Mr. Wellman, through the struggle of our forebears in the labor movement – the only solution so many can offer is that this will lead to an eventual equilibrium as the “low end” countries demand better working conditions while those of us in the “high end” suffer an increasing degradation of our “high” standard of living.

        Easy for someone in a profession that cannot be outsourced to say.

        But so long as an increasingly pressed working class in the U.S. and Europe will find ways to stretch its shrinking purchasing power at places like Walmart – the prime example of how this dynamic has worked to destroy the people’s means to make their own living – it’s a.o.k.

        Eventually something will give. In fact, it already is and has been in excruciatingly slow motion. Communities destroyed economically have become, surprisingly enough, seed beds for crime. Couple that with years of hard core conservative public policy that has prioritized prisons over schools and corporate welfare over public investment, and we have a system in the U.S. that is on the brink of collapse.

        Happy Memorial Day.

        • nemo(118083 comments)-
          May 25, 2009 at 6:34 pm

          “Ron, one problem with that equation is that while capital is now free to move around globally, labor is not. This is a fundamental inequity.”

          Not exactly true, but if it is “fundamental” then why worry about it? It’s like maple trees being pissed off because the taller oaks blot out their sun.

          Interesting…some 32% of the adult voting population pay no federal taxes. From my understanding that will reach approximately 38-40% in the not so distant future. So there is welfare all over.

          Hell, we were paying 25% tariffs on imported cars of much higher quality than Detroit to protect the car companies and the UAW. So they collected their higher union wages (for which the union took a nice cut) and higher corporate salaries at our expense (lousy product and much higher priced imports than necessary). They basically fiddled while their Rome burned. Now that their Rome has burned, we get to pay for it AGAIN!

          “So while corporations who drape themselves in the RW&B”

          Replace “corporations” with “politicians”

          Come to think of it, wasn’t the liberal Mr. Schumer from NY who was supporting Wall Street not too long ago. Oh yeah, they pay for his campaigns

          Conservatives, liberals…who exactly was it that intitiated the rape of Social Security in the 60’s? Basically taking the money paid in with taxes promising to pay it back with additional money taken through more taxes. All for a good cause though? Wasn’t that supposed to be to build The Great Society? Wasn’t that supposed to be for public investment? What did they do with it?

          What has that led to, the welfare industry. Is it in the interest of the social service bureaucracy to solve problems? Think about that? The welfare industry creates jobs. I understand the liberal argument that, well the problem is here, what are you going to do about it. The problem occurs once you establish the infrastructure to address the issue. First, you continue to facilitate the condition, plus you now have to support the infrastructure that facilitates it, FOREVER.

          As for prisons, yes perhaps many of the personal use drug offenders shouldn’t be incarcerated,unless of course they are committing crimes to support their habits, but is there really a logical argument not to have prisons?

          As for schools, seems they spend alot of time on social indoctrination. Then again, we have huge bureaucracies built up around the school systems also. It might be interesting to look at the ratio of teachers to administrators in the various school systems.

          Once these bureaucracies are in place they are never subject to the laws of the marketplace because their revenue is derived from the taxpayer, even if we don’t want their product. Thus we have legislators and state/federal /municipal employees receiving cola adjustments while the rest of us punt. They award themselves pension plans, which in many ways, are ponzi schemes built on the back of the taxpayer. The last I looked both liberals and conservatives were a part of those programs.

          Frankly, I think there’s more than enough blame for both sides of the aisle.

          • alberio(118083 comments)-
            May 25, 2009 at 6:49 pm

            “Interesting…some 32% of the adult voting population pay no federal taxes. From my understanding that will reach approximately 38-40% in the not so distant future.”

            I’ve seen these types of numbers as well and higher.
            It’s mind boggling to me.
            What is it exactly in the tax code which allows SO many people not to have to pay taxes?

          • mayhem991(118083 comments)-
            May 25, 2009 at 7:33 pm

            One of the greatest curses I can think of is “May you never pay another cent in taxes.”

            Think of what that would mean. You’d have no income to pay taxes on, and buy nothing you would pay sales tax on, no home to pay property taxes on, and many other things that you would never do because you’d have no money to do them with. A large number of those who are not paying taxes are probably the homeless.

          • Grym(118083 comments)-
            May 25, 2009 at 8:37 pm
          • Chickenpookie(118083 comments)-
            May 25, 2009 at 9:19 pm

            “If their income is low enough they file to receive a “rebate check” anyway.”

            Yes, this is their hook to get/keep everyone enrolled in the system.

            alberio – “What is it exactly in the tax code which allows SO many people not to have to pay taxes?”

            Reported income and special interest loop holes. The tables exclude anyone below poverty level income, and the well to do capable of accessing slick accounting firms take full advantage of various forms of tax shelters as a means of reducing their burden.

          • alberio(118083 comments)-
            May 25, 2009 at 9:26 pm

            CP, I assumed it was a combination of all that but the number is so large!
            The middle class continuing to get squeezed.

          • Freedom57(118083 comments)-
            May 25, 2009 at 7:04 pm

            “Interesting…some 32% of the adult voting population pay no federal taxes. From my understanding that will reach approximately 38-40% in the not so distant future. So there is welfare all over.”

            No federal taxes of any kind, or just no federal income taxes?

            The total tax burden of citizens is much broader than income tax. Poor people pay just as much tax on a gallon of gasoline (or on many other goods and services) as a wealthy person, and of course the effective tax rate on the less well off for those consumption-based taxes is higher than on the wealthy.

          • nemo(118083 comments)-
            May 25, 2009 at 9:28 pm

            Which make politicians that much more duplicitous. They won’t vote against what they don’t see.

        • Grym(118083 comments)-
          May 25, 2009 at 8:09 pm
    • Grym(118083 comments)-
      May 25, 2009 at 2:47 pm
    • number2son(118083 comments)-
      May 25, 2009 at 3:08 pm

      baz22, I don’t disagree with what you write, but I have to wonder how this situation has resulted in the widest disparity between rich and poor in the U.S. in generations? The middle class continues to get squeezed toward the bottom while a tiny wealthy elite grows wealthier.

      What fundamentally must change is the idea that a few may continue to enjoy outsized rewards at the expense of the many.

      When will the system that perpetuates this gross inequality change? This is the meaning of Obama’s “hope” – something that sadly has so far only served as a marketing gimmick.

  5. FranSix(118083 comments)-
    May 25, 2009 at 2:23 pm

    Profits from a quick trade instead of buying and holding. Thus we are defeating the banks. Are we not parodying ourselves?

    I would say that if the majority of hedge fund operators had a sudden epiphany, and decided that taking physical delivery of gold based on cash purchases and holding their bullion through thick and thin, that this would be the winning strategy.

    Because, after all, its about the control of assets, not prices. And the biggest holders of bullion in the private sector are holding their gold because they can afford to. At some point control of these bullion assets will come under the central banks at purchases far higher than they are today.

  6. M R Ducks(118083 comments)-
    May 25, 2009 at 2:23 pm

    “The discussion of risk-reward within this community versus the typical chat room is like night and day..”

    The conversations here are the principle reason I keep returning to the Cara Community (aside from actually making money from listening to all of you and then following up on leads) several times a day. Typical chat rooms and comment sections everywhere but here seem to invite those minds who have so little respect for others with whom they disagree, that more often than not any potentially productive conversations are squelched.. and name-calling laced with vulgarities so often becomes the end result. It’s such a turn-off.

    I’ll take this opportunity to express my appreciation for you all, especially Bill in keeping this virtual-community-hall respectful and adult-like. It’s because of this site and listening to you that I literally saved myself last early September by ceasing to remain a buy-and-holder and bailing out of the market entirely. Since then I have got in and got out like “a little bird attacking the backside of big lumbering chicken hawk”..
    Well, you know what I mean. (“cut your losses and let you winners run”). In and out.

    So Thank You one and all. This community is the best!
    (currently keeping my powder dry and holding onto SLV, GDX, GFI, GG, all in healthy black territory I might add [knock wood] 🙂

  7. Chris Start(118083 comments)-
    May 25, 2009 at 2:34 pm

    FANTASTIC WIR this week Bill. I think it is the best one I have read over the last 4 years and I have read every one.


    • alberio(118083 comments)-
      May 25, 2009 at 2:47 pm

      I’d like to add my agreement to this comment and to thank you Bill (again) for everything you do. Hope you enjoy your day on the beach.

  8. CaptK(118083 comments)-
    May 25, 2009 at 3:28 pm

    Don’t know if this site has been posted previously but for the TA challenged and for those interested in chart patterns found the 2 videos posted this weekend illuminating. They are more or less in line with Mr. Cara’s projections.

    Have a great Memorial Day.

  9. Mark Barry(118083 comments)-
    May 25, 2009 at 4:58 pm

    2nd- Can you believe this?

    • 2nd_ave(118083 comments)-
      May 25, 2009 at 6:58 pm

      A $100 buy-in and over 4 hours of play? Some people around that table may have walked away with 5/6/7 figures.

      You might enjoy Yonkers Joe- Rented the DVD last weekend. A story about a con man and his mentally challenged son, set in the casinos/around the craps tables of Atlantic City and Las Vegas.

  10. alberio(118083 comments)-
    May 25, 2009 at 5:21 pm

    Total US nat gas production is currently (10 day MA) about 56bcf/d, slightly lower than the same time last year and is starting to trend down.
    With the current rig count I can’t imagine this number staying this high for very long but we’ll see.

    • David(118083 comments)-
      May 25, 2009 at 10:30 pm

      alberio, where do you get the 10-day MA of the total US nat gas production? Thanks!

  11. French_Canuck(118083 comments)-
    May 25, 2009 at 5:23 pm

    Sounds like Bill may be on to something about the people facing down HB&B.

    “Congress can’t figure out what it is mad about with the Fed, but it is mad about something,” said Fed watcher David Jones.

  12. NYUGrad(118083 comments)-
    May 25, 2009 at 5:29 pm

    “Job Losses Push Safer Mortgages to Foreclosure”

  13. Chickenpookie(118083 comments)-
    May 25, 2009 at 5:46 pm

    Grym – If I’m comprehending Mauldin’s article correctly, it appears he believes the treasury market is saying no to deflation. This theory is supported by recent price action in gold but not supported by recent (past few days) stock and real estate price action(last few months). Higher rates should increase real estate downward price pressure unless alternative preventative measures are taken.

    Intervention and regulation manipulation created this mess, likely intentional abuse combined with misunderstanding of market behavior on behalf of HB&B.

    Truly a mess of royal proportion, “All In”(the crapper) – They may have sacrificed the war in the name of winning the first battle, shock and awesome!

    So I just wrote a song about it, wanna hear it? Here it goes!!!:

    SuperSTAGafragilisticexpealiquadrillion, Um diddle diddle diddle um diddle ay…A spoonful of sugar; in the most delightful way…

    • Grym(118083 comments)-
      May 25, 2009 at 8:30 pm
      • Chickenpookie(118083 comments)-
        May 25, 2009 at 8:53 pm

        Grym – “I believe the Fed can say, “No,no,no” to inflation. I don’t believe the Fed has any real power to do so. That is the crux(IMO) of the entire inflation or deflation expectation.”

        If the FED can say “no”, then that gives them power. I suspect you mean they have little to no say.

        Anyway, the market has the ultimate power, which was Maulden’s point. He says the market is saying “no” to treasuries, which means migration to “risk” from “safety”.

        So we(I) am expecting more migration from “safety” to somewhere else.

        Note: “safety” may not turn out to be equivalent to safest as federal reserve note dilution occurs, therefore migration elsewhere. Okay, so your point is that the FED is incapable of diluting the value of the dollar because demand is the dominating force.

        • Grym(118083 comments)-
          May 25, 2009 at 9:33 pm


          “If the FED can say “no”, then that gives them power. I suspect you mean they have little to no say.”

          What I mean is I believe they have no fundamental power beyond The Idea the Fed Can Do Something.

          In this case the ultimate power rests with the American public.

          If you have never been truly scared, you can’t realize how it is right now for so many people. People who are young enough to have lost little in the past year don’t feel it. People who have never missed a paycheck don’t feel it. People who are not upside down on a mortgage or car payment don’t feel it.


          The Fed, the rating agencies, the Wall St. pundits, mutual fund salesmen, have lost credibility and, as Kaimu puts it, the C-word (confidence) has been trashed.

          Most people don’t think in terms of the value of the FRN. Most think gold is the kind of charge card they have. Most Americans are almost totally ignorant of investing principles and techniques.

          My wife and I visited our best friends of over forty years just yesterday. We are all in our seventies. He told me for the first time in his life his asset allocation strategy has not worked and they have lost 30% of their net worth.

          Like me he has no pension and is dependent on those investments to last as long as he and his wife live. He is a life long bank trust officer and bought into the buy & hold, diversity is safety and is completely invested in Vanguard Total Stock, Total Bond and Total Global market Funds. What is the likelihood they will rise 30% and stay up anytime soon?

          What I am reading says the US is better off than Europe. If they are worse than we the future of international trade is bleak.

          There is no way we are going to borrow and spend even though we have super credit records.

          Those who are scared of losing jobs houses, etc. won’t either. Only those who really need to borrow to continue buying the necessities or to keep up payments want to borrow and the banks are not going to accept the risk.

          The current talk about credit cards gives an idea of what is about to be the credit atmosphere for a long time.

          Bernanke is living in a dream which will not last, nor have happy ending.

          Just my (very firm) opinion, but based on what has happened and is happening to people today.

          • mrmockbird(118083 comments)-
            May 25, 2009 at 9:53 pm

            Grym, I always enjoy your comments. We can all benefit from your experience. Thanks so much.

          • Grym(118083 comments)-
            May 25, 2009 at 11:58 pm


            Thanks for your encouragement. I know I’m usually sounding grim (the Grym name is what a friend told me is vicious in Swedish:) in my outlook, but this is the absolute most disturbing period I have ever witnessed and feel caution is the best thing for the longer term.

            I don’t really do a lot of short term trading, but find a lot of interesting comments here from Bill and others who do.

          • Chickenpookie(118083 comments)-
            May 25, 2009 at 10:53 pm

            Grym, I too appreciate your viewpoints a great deal and there’s not much doubt that current economic conditions are great enough to scare a great many people. I know some that have sold their paper and bought safes in which to store their cash. I wish them well.

  14. westcoaster(118083 comments)-
    May 25, 2009 at 5:50 pm

    The action on the TSX is sure muted when HB&B USA is not throwing its weight around.

  15. Lori Smyth(118083 comments)-
    May 25, 2009 at 5:58 pm

    Kudos to you Bill for allowing yourself some downtime, rest and relaxation today. It is imperative for you and your fabulous team to recharge the batteries once in a while. A very wise old lady told me when I was a young girl “your health is your fortune”. I’ve never forgotten those words of wisdom. Wealth without good health to enjoy it, is meaningless. Happy Memorial Day everyone

  16. dr.cosa(118083 comments)-
    May 25, 2009 at 6:03 pm

    old treading water and gold shares in canada are down.

    my contention for some time has been that without gold moving higher large, the gold shares will slide down along w/ the market. the volume in the miners has been lacking over all through this last run up, so i can see why Bill and others are anticipating a crack down should the US dollar bounce back up.

    i suspect even gold at $980 right now would barely take the shares with it.
    and i further think the next big hit in the markets will bring the miners down inordinately hard, and will unveil additional problems in terms of currency and base metal hedging along side cost issues.

    the Jr.’s are as a whole class done. i maintain this, and think that several good jr’s will emerge and enrich investors but for those investing in multiple jr’s or funds will find they miss out during a large bull run. this will be masked by claims of such and such jr’s rising, but they will be drowned by non-stop drama and illegalities perpetrated by far too many jr golds that are nothing more than ponzi schemes.

    trading the miners seems like the best way to play gold. holding them for long periods seems like a slow torture.

    Newmont is just dying to roll over, look at that chart. ugh.

    as i said, a much higher gold price will take them reluctantly along for the ride but today’s action shows us how a side tracking market see’s the miners drop. remember gold bugs have been saying the miners will turn around and start restoring their value to gold every month for the past 2 years. that and the chineese are going to stop buying US treasuries. ugh. ….

    • Chickenpookie(118083 comments)-
      May 25, 2009 at 6:37 pm

      Dr.cosa – Looking at the chart, it seems like gold got a little ahead it itself in terms of the 20d EMA while MACD looks strong but could roll over, and I would guess miners have as well(repeating action of mid March?). But who can blame them for the exuberance considering how the dollar’s performance has begun to match expectation… Now I suppose the administration will impose a new round of taxation to compensate for monies thrown into the black hole we all lovingly call HB&B, as opposed to going after root causes while supporting manufacturing jobs creation. Supposedly there’s been lots of money thrown around but I don’t see that much of it has actually made the journey into the hands of the common folk.

      As I sit here in my chair I wonder what the common folk are up to today.

  17. fireworks(118083 comments)-
    May 25, 2009 at 6:52 pm

    What the experts from BMO are saying…

    Gold stocks have outperformed the gold price itself in 2009, which is a major change of pace from recent years. But according to BMO Capital Markets analysts David Haughton and Andrew Breichmanas, the senior and intermediate companies still look relatively cheap compared to past bull markets for gold.

    In a note to clients, they wrote that the stocks are pricing in gold prices that are about 15% below the current spot price (which recently topped US$950.00 an ounce).

    Meanwhile, the miners themselves are likely to post higher earnings as they benefit from a gold price approaching record levels. They are also getting help from the fact that currencies in most gold-producing countries are down against the U.S. dollar, and oil prices that are much lower than they were a year ago. In both cases, that means lower costs.

    Mr. Haughton and Mr. Breichmanas also pointed out that the balance sheets of gold companies are rapidly improving. They calculated that their gold stock universe carried US$9-billion of debt in 2008, expected to fall to US$5-billion this year and just US$1-billion in 2010.

    Put together, they think the outlook for gold stocks remains very strong.

    • dberryclan(118083 comments)-
      May 25, 2009 at 10:21 pm

      My thinking:

      I will sell all my miners this week w/ any pop in prices. Got in late, bought some risk….want to avoid that from here on out…..Then wait till the market looks real tired after a “last hurrah” pop and then short the S&P….

      On another note, lending standards are tighter than I’ve ever seen’em… wife and I have borrowed money on and off for the past 30 years…..we recently financed a home for a child at 5% fixed…(when will we see that again :-)… close on that loan took a freaking act of congress and we are currently flush with cash!…..I’ve borrowed more than that with 20g’s to my name before and the bank tripped over itself to give me the money.

      I asked the banker what gives? Her answer was that the amount of law suits over the recent foreclosures is terrible and so the bank wants to close every imaginable loophole possible before it lends a dime….. I say what credit thaw? It was frozen nearly solid last week for me…..Geeez!!!!

      I Love this site…learning to avoid risk, one of the biggest lessons in trading so far this year….the financial media loves to lure an investor in to buying risk……..I’ve put on a whole different set of glasses in viewing the financial markets thanks to Bill and this community……

  18. johnuk(118083 comments)-
    May 25, 2009 at 6:59 pm

    I dont know if this has been posted ,apologies if it has already as this article is from 17thMay.note The amount of Gold they are talking about moving to Dubai from London might not be large, but it may be the beginning of countries and regions storing more of their own Gold,and why not!

    DMCC’s (Dubai Multi Commodity Center)new vault became operational on April 26 this year. “We want to bring the gold held under DGS ETFs at the HSBC vaults in London to Dubai. What has been holding us back is the difference in gold specification between London and Dubai,” a DMCC official told Emirates Business.


  19. MG(118083 comments)-
    May 25, 2009 at 7:14 pm

    How does one mitigate the risk of falsified financial information that is released to the public by major corporations?

    I ask because two days ago, I heard on NPR that a recent survey of corporate CFO’s revealed that only 30% CFO’s surveyed were not asked to falsify financial information. About 20% said they were asked to falsify information and the rest did not comment. If we assume that about 60% of corporations falsify financial information, this practice adds an important twist to how we should view earnings, especially when a company beats earnings by one to two pennies.

    I would love to know who gets the penny.

    The program I listened to was an Oxford-style debate between experts on the topic of “Who is most responsible for the financial crisis – Wall Street or Congress? Before the debate, an audience vote showed that 42% believed Wall Street was to blame and 22% believed Congress was to blame, and the rest were undecided. After the debates, the audience voted again and 62% blamed Congress and 27% blamed Wall Street.

    The reason many changed their minds about Wall Street is because the debaters who blamed Congress were able convince the audience that Wall Street is a predator and it is the job of Congress to protect the economy and the public from predators. Congress failed to protect us from all the politicians who receive campaign contributions from Wall Street.

    As Bill has mentioned several times, this will not change in the foreseeable future.

  20. NYUGrad(118083 comments)-
    May 25, 2009 at 8:04 pm

    I think its only a matter of time before it does. The lower volumes, inability for ‘name your price’ buyers to come back in to support the markets, GS going red Friday, etc.

    Add the Iran/North Korea geopolitical risk, GM bankruptcy, Chrysler Bankruptcy, quantitative printing, job losses, housing debacle, etc. it’s a no brainer.

    Timing is key. i will add more to my short positions once the s&p closes below 878.

    Not meant as investment advice. Just sharing my observations.

    • Chickenpookie(118083 comments)-
      May 25, 2009 at 8:26 pm

      NYUGrad – “Add the Iran/North Korea geopolitical risk, GM bankruptcy, Chrysler Bankruptcy, quantitative printing, job losses, housing debacle, etc. it’s a no brainer.”

      I’ll agree with much of your list except for the quantitative printing observation. Does a weakening currency make for lower equities prices? Personally, I wouldn’t want to hold currency if I were anticipating weakness?

      • NYUGrad(118083 comments)-
        May 25, 2009 at 10:29 pm

        I am not a currency expert, by the past few sessions there has been an inverse correlation with usd and equities. The past thur and Friday we saw this relationship broken. To save themselves hb&b may inflate the usd short term. But right now I think smart money has been rotating into gold and oil.

        • Chickenpookie(118083 comments)-
          May 25, 2009 at 11:45 pm

          NYUGrad – Throwing a long term chart of the dollar,gold,TBT and S&P on screen confirms the relationships, except for the past few days where everything seemed to fall out of bed in terms of correlation. I’m chalking this recent action up as an anomaly due to extreme dollar weakness. Still searching for possible alternative explanations, none found yet. The minute short-term signals seem illusive to the untrained eye, and picking real data points from the background noise presents a challenge, so a thorough understanding of fundamentals and proven mechanisms helps one find his way through the dark.

          It seems almost as if there’s an inverse relationship to extreme currency weakness/strength where opposite reactions(dislocation) can rapidly occur, such as equities weakness with extreme dollar weakness, for instance. This is the anomalous condition of which I speak, perhaps gold, (etc?) spike as if they are circuit breakers.

          • Mackinaw(118083 comments)-
            May 26, 2009 at 12:13 am

            Tossing my 2 cents worth:

            I think 3 weeks ago all global equity markets (including S&P 500) broke through some vital resistance. For many of these markets this breakout signalled an end to the pattern of lower highs and lower lows in this bear which got underway Nov 2007. See for e.g. VEU


            2 weeks ago, the markets pulled back to test that break-out. It held and so the rally resumed last week, EXCEPT, in the US, which tracked sideways (at a key support level). It wouldn’t surprise me in the least if US markets resumed upwards this week to catch up. On the other hand it wouldn’t suprise me, either, if they broke down (IF their was some serious negative news/data impetus).

            I think the US$ action last week, and the accompanying commodities and bond action support the bull case. Especially the “return to risk” thesis related to the $. I guess the key is whether 1) US$ weakness is causing return to risk or 2) whether return to risk is causing US$ weakness. My vote is for 2). It seems more consistent with the action we’ve been seeing in assets since Oct/Nov 2008. There’s a lot of serious asset management going on around the world – they are not all transfixed to c-span and cnbc watching Americans flagellate themselves for their past financial transgressions.

          • Chickenpookie(118083 comments)-
            May 26, 2009 at 12:24 am

            Mackinaw – I suspect “1) US$ weakness is causing “return to risk””, because this is, or should be, the ultimate goal of the FED and their actions (buying treasuries) are consistent with that goal. Increasing of prices, that is.

          • Mackinaw(118083 comments)-
            May 26, 2009 at 12:37 am

            I see that angle, CP, of course. I wonder, really, whether it’s even a worthwhile debate. Fact is, an overweight in US$, be it in treasuries or whatever, was panic investing which, while it worked well JUL-NOV 2008, is sure to yield you next to nothing in the long run. Whether it’s the Fed’s recent actions driving investors to take on more risk (btw, did anyone find an accounting of what durations the FED is actually buying? I looked hard Friday evening and couldn’t find out) or whether the low interest environment has already started to work it’s magic (I know it drove me out of a lot of cash back in Dec-Jan) doesn’t seem too relevant.

          • vinod(118083 comments)-
            May 26, 2009 at 12:53 am

            Historically major bear markets don’t typically end until PE ratios are in the area of 8 or 9. Assuming a PE of 8, that would translate the earnings range of $50-70 into an S&P target of 400 to 560.

          • Mackinaw(118083 comments)-
            May 26, 2009 at 1:09 am

            Historical p/e ratios of 8 are extremely rare for S&P 500, Vinod. One occurred in the early 1920’s, one during the great depression, another in the 1940’s when it looked like the allies were losing the war, again in the early 1950’s (Cold War agnst?), during the period 1970-1984 (Vietnam/Gold standard, etc), and that’s it!


          • vinod(118083 comments)-
            May 26, 2009 at 1:13 am
          • Mackinaw(118083 comments)-
            May 26, 2009 at 1:32 am

            Yes I do, Vinod. I think two key charts are:


            and the one attached (which I have lost the link for)

            I think there is a reason that interest rates are at, essentially, zero worldwide and central banksters are declaring that they’ll remain that way into the forseeable future. They’ve learned a lot during the last 100 years. They’re trying very hard to prevent an overshoot to the downside and all its accompanying social instabilities – like a resurgence of Fascism.

          • vinod(118083 comments)-
            May 26, 2009 at 1:22 am

            I also believe that there is fear out there in the world and fear is not inflation or deflation. But fear is the rise of totalitarian/fascism from this crisis.
            Bush was manipulated by defense industry; Obama is manipulated by banking industry. and Just because the fundamentals say something doesn’t mean that the market will react that way. One who bet on rationality and efficiency of markets hays lost money

          • Illini(118083 comments)-
            May 26, 2009 at 2:04 am

            “Bush was manipulated by defense industry; Obama is manipulated by banking industry.”

            Vinod….I think they are both manipulated by the two. Both industries are powerful. Pick your poison.

          • Grym(118083 comments)-
            May 26, 2009 at 1:13 pm


            I doubt that very many people are thinking as deeply as you and looking behind the headlines at what the real longer term dangers may be.

            In the US during the 1930s there were factions who believed Stalin had the better vision and was showing results. This got a lot of press and congressional attention post WWII with the McCarthy hearings and communist witch hunts.

            But there was also a strong belief by many that Hitler’s Germany was the better way and a move to fascism was attempted. The congressional hearings took place just before the outbreak of WWII and much of it was covered up and didn’t appear in the news accounts. This was backed by major financial institutions and individuals.

            Power, money and corruption are what we are seeing today and need to watch carefully. I am very uncomfortable with the ignoring of the US Constitution due to “crisis conditions”. Both by Bush and by Obama, especially with the common denominator of big financial and individuals once again.

          • David(118083 comments)-
            May 26, 2009 at 4:39 am

            vinod: this bear market can end with the P/E on S&P below 10 if the prices sidetrack for the next 7 years while the earnings on the S&P grow. I think that’s what happened in the 70’s. While being bullish for this year, Jeremy Grantham is suggesting that after the stimulus euphoria wears out from investor’s minds, the US markets will have “seven lean year” of subpar growth or even sidetracking.

          • Chickenpookie(118083 comments)-
            May 26, 2009 at 1:54 am
          • Grym(118083 comments)-
            May 26, 2009 at 1:01 pm
          • vanillabean(118083 comments)-
            May 26, 2009 at 2:17 am

            I agree with Mackinaw plus the deck is stacked with Hum BB controlling the market.

            I will continue to hold cara equities and will buy more on dips (including miners).

            *well that is my plan tonight, might change in the morning at 5 am like bill said, we have to be agile?


  21. M R Ducks(118083 comments)-
    May 25, 2009 at 9:27 pm

    Preview of things to come for the rest of us?
    Renters are being forced out with no notice.. 20 minutes to get out and whatever belongings you can’t get out within 20 minutes now belongs to the bank.
    Sure feels like legalized theft to me.

    • Telestar3d(118083 comments)-
      May 26, 2009 at 2:03 am

      Stunningly, profoundly, sad.

  22. David(118083 comments)-
    May 25, 2009 at 9:48 pm

    Several people on this blog have wondered the reason for the declining VIX, and yesterday I came up with a possible explanation for this, after reading Jeremy Grantham’s 1Q2009 letter: he wrote that 880 is the fair value for S&P500 now, and since his letter is very widely read, many market participants might have decided that there is no reason for S&P to deviate much from 880 (some money managers might have obtained a similar number to 880 independently), and so VIX (which measures expected annual change in S&P) has naturally decreased.

    This suggests that a good trading strategy now might be to buy stocks, sell short puts and cover short calls when S&P falls below 850 and sell stocks, cover short puts and sell short calls when S&P rises above 900.

  23. NYUGrad(118083 comments)-
    May 25, 2009 at 10:51 pm
    • nemo(118083 comments)-
      May 26, 2009 at 3:16 am

      “Scientists have discovered the oldest and most complete fossil of a human ancestor.”

      What? Haven’t they been to Washington, D.C. and visited Congress?

      • Chickenpookie(118083 comments)-
        May 26, 2009 at 3:25 am

        “Haven’t they been to Washington, D.C. and visited Congress?”

        Next time you’re in DC standing in the mall area, try to stop and listen to background noise. Every time I do this, I always hear ambulance sirens and suppose they’re hauling another fossil off to cardiac surgery.

        True story.

  24. Bill Cara(118083 comments)-
    May 26, 2009 at 1:01 am

    I submitted my signature to one of these free handwriting analysis programs. The answer came back as follows:

    The results of your analysis say:

    You plan ahead, and are interested in beauty, design, outward appearance, and symmetry.
    You are a social person who likes to talk and meet others.
    You are diplomatic, objective, and live in the present.
    You are a talkative person, maybe even a busybody!
    You enjoy life in your own way and do not depend on the opinions of others.


    Now, if there is someone out there who wishes to give me a true professional analysis, I’d love to see it because I do believe that handwriting tells a lot about the person. In a virtual world where we don’t often meet people face to face, this kind of thing is important, I think.

  25. Telestar3d(118083 comments)-
    May 26, 2009 at 1:31 am

    This feeds in well with Bill’s “dancing with the market’s” concept.

    Well worth your time.

    OK, file to big, here is the link.

    click on “Value Investing in Range Bound Markets”, in the first paragraph.

  26. Illini(118083 comments)-
    May 26, 2009 at 2:06 am

    BSI87, where are you? Last post was May 8. You were a frequent poster/trader. I miss you.

  27. Chickenpookie(118083 comments)-
    May 26, 2009 at 2:13 am

    Mackinaw – Have you recently looked into/thought about DBV?

    • Mackinaw(118083 comments)-
      May 26, 2009 at 2:26 am

      Yes, yes, and yes. Looked at it Saturday. It’s in play, don’t you think, although I would expect some short term, very minor, downside. Hardly a ten-bagger, but as an alternative, in one’s FI allocation, why the heck not? Especially after I see this one blow off:

      which was wonderful to hold the last few months – insane dividends!

      • Chickenpookie(118083 comments)-
        May 26, 2009 at 2:34 am

        Mack – Well then, in that case what do you think of FXA?

        • Mackinaw(118083 comments)-
          May 26, 2009 at 2:47 am

          FXA is a win bet on China. FXC is a win bet on US. It’s a horse race. They’re both setting the pace as far as I can tell although it appears FXC is pressing the leader hard recently:

          • Chickenpookie(118083 comments)-
            May 26, 2009 at 2:52 am

            I thought you might prefer the dividend on FXA… vs none for DBV.

          • Mackinaw(118083 comments)-
            May 26, 2009 at 3:09 am

            DBV pays a dividend ~ 5% annualized, I think (e.g. $0.27 Dec. 30)

          • Chickenpookie(118083 comments)-
            May 26, 2009 at 3:20 am

            $0.27/21 = 1.29%, for an entire year. FXC/FXA horse race: US has enormous debt baggage issue.

          • Mackinaw(118083 comments)-
            May 26, 2009 at 3:31 am

            $0.27 for the quarter, no?

            FXC/FXA horse race… US Trade defecit has “quietly” declined during this drama:


            Also, U.S. Savings rate has risen dramatically:


            I haven’t counted out the U.S. yet.

          • Chickenpookie(118083 comments)-
            May 26, 2009 at 3:32 am

            DBV: $0.27 every December according to Yahoo chart event, where do you find quarterly payout info?

          • Mackinaw(118083 comments)-
            May 26, 2009 at 3:39 am

            “FXC/FXA horse race: US has enormous debt baggage issue.”

            FXC/FXA horse race: China has huge infrastructure, poverty, and intellectual capital issues. Not to mention a raging inferiority complex. Don’t get me wrong, you know where I’m overweight.

          • Chickenpookie(118083 comments)-
            May 26, 2009 at 3:46 am

            Sorry, didn’t know you were overweight but won’t judge based on physical characteristics.

            I can accept your horse race concept, maybe more equal than I’d imagined.

          • Mackinaw(118083 comments)-
            May 26, 2009 at 3:49 am

            And on that note, I can only bid your selfish self a “Bonne nuit!”. Happy trading tommorow, all.

  28. baz22(118083 comments)-
    May 26, 2009 at 3:17 am

    ‘ bottom base ‘ is put in ( guessing around 7100 on Dow, and 750 on S&P )… It seems Amgen, Celgen and the other usual suspects will do well ( still think CELG will be bought at $ 75.00 by December ).. But my real interest is a company called Vical ( VICL ), and their DNA delivery platform. Most people associate it with the ‘swine flu’ vaccine ( and the US Navy has them under contract ), but they have licensed their technology to many major think tanks, and it is cutting edge. DNA is the key to RNA activation, and Vical has focused on this for a long time. They sure remind me of ISIS a few years ago….. Anyway, hope Memorial day was good for everyone.. I certainly enjoy the well informed and intelligent people that reside in the cara community…

  29. Alberto(118083 comments)-
    May 26, 2009 at 4:31 am
  30. Les(118083 comments)-
    May 26, 2009 at 7:49 am

    I didn’t know that Adam Smith was noted much more for the book on moral philosophy he wrote, as opposed to his writings on the free market. Its a very brief and broad overview of his work, but his ideas of what the free market should be, in his view, is elaborated well in this interview and it helps shed the ideology that has stuck to the concept of a free market in modern times. Worth a listen.

    Opening excerpt:

    Alan Saunders: Before we get into the detail, let’s do the ‘Adam Smith thou shouldst be living at this hour’ bit. I notice from your book that Smith said that ‘profit is always highest in the countries which are going fastest to ruin’.

    PJ O’Rourke: Had that nailed, didn’t he?

    Alan Saunders: Yes. So is he telling us something about present woes?

    PJ O’Rourke: Yes, indeed he is. People have asked me repeatedly, what would Adam Smith say about this? He who virtually invented the free market. He’d be laughing so hard he wouldn’t have a chance to say anything really. What Smith meant by that statement of ‘profits always highest’ is that an extortionate rate of profit, an historically excessive rate of profit, is indicative that something is amiss.

  31. Les(118083 comments)-
    May 26, 2009 at 8:24 am
    • NYUGrad(118083 comments)-
      May 26, 2009 at 11:37 am

      Lol, that’s like enron. What’s next, allowing the banks to count website traffic as revenue and email received as earnings?

  32. Ron Sen(118083 comments)-
    May 26, 2009 at 10:25 am
  33. Mackinaw(118083 comments)-
    May 26, 2009 at 11:41 am


    This morning, I made the following graph based on Schiller’s data. To my untrained eye, earnings action of the last year looks more like a shock rather than a trend; kind of like 1922.

  34. davefairtex(118083 comments)-
    May 26, 2009 at 12:00 pm

    From Bill’s lips to Gold’s ears. HA! Gold down -11.50 to 947. Was as low at 936 (-22) briefly earlier this morning on one of those “Fed Spike” down moves.

    Is this a day of continuous Fed gold bombing, or was this a one shot this morning and then its up for the rest of the day? Do you want to roll the dice, based on zero information? Or is it better just to stand aside and let other more intrepid investors take the risk?

    Probably THE most valuable lesson I’ve learned lately is, when the risks in a particular market are elevated, it is best just to stand aside and watch.

  35. Tommm(118083 comments)-
    May 26, 2009 at 6:26 pm

    Stock market is surging this morning on good consumer confidence numbers. Ned is long MA POT

    and GOOG stocks (which keep going up day after day after day)

    Breaking News: Iamned now allowing free

    link submissions for economics, finance, and technical analysis articles from bloghers/websites
    Interesting Finance Articles From News and Bloggers
    Financial Crisis is may be over already

    1:03 PM Small-cap value stocks – to date this year’s worst segment – have led the charge in

    each of the last five economic recoveries. ETF vehicles include DSV, VBR, PWY, IWN, RZV, JKL

    and UVT.

  36. kaimu(118083 comments)-
    May 27, 2009 at 6:33 am


    Here at the OCC-Office Of The Comptroller Of The Currency website is the list of the TOP 25 banks and their derivatives exposure as compared to “assets”. This was released to the public the exact same time we were all at the CTAB Conference 2009, on March 27, this year. This data covers up to Q4 2008.

    The TOP 5 banks in the derivatives trades are no surprises. First is JP MORGAN, then Bank America, then Citi, then Goldman Sachs and then HSBC.

    While JP MORGAN has the largest derivatives exposure at $87.363TRIL it is Goldman Sachs who utlilizes the greatest leverage to “assets”. JP MORGAN uses 50:1 levergae to assets, but Goldman Sachs uses 186:1 leverage to assets. By far Goldman Sachs is the heaviest at risk in the derivatives markets, yet somehow the GS stock price is the highest of the TOP 5. Goldman Sachs has derivatives exposures of $30.230TRIL USD and assets of $162.5BIL USD. By far GS has its butt hanging out the most of any bank in terms of asset leverage.

    This was written of Goldman Sachs in wikipedia: “On December 4, 1928, it launched the Goldman Sachs Trading Corp. a closed-end fund with characteristics similar to that of a Ponzi scheme. The fund failed as a result of the Stock Market Crash of 1929, hurting the firm’s reputation for several years afterward.”END

    Recall that on Sept 21, 2008 GS changed from investment bank status to bank holding company status so that they could qualify for TARP. Prior to Q3 GS was not on the OCC list.

    The average leverage of the TOP 25 banks is 20:1, with some $200TRIL exposed to derivates markets.

    The link is below and the info I report is on page 22 of 33 pages in the pdf.


    As far as I know this is the lastest info on this subject by the OCC. All I know is a lot can change in five months …

  37. kaimu(118083 comments)-
    May 27, 2009 at 7:51 am

    ALOHA !!

    Savings? Disposable income? If you don’t count “food and energy” as part of PCE then discretionary income/savings went up.

    If you adjust for inflation based on a 2000 dollar the US saving rate is back in negative territory.

    All this info is buried at the bottom of the BEA pdf files.

    Personal outlays and personal saving

    Personal outlays — PCE, personal interest payments, and personal current transfer payments — decreased $24.5 billion in�March, in contrast to an increase of $38.7 billion in February. PCE decreased $24.2 billion, in
    contrast to an increase of $39.1 billion.

    Personal saving — DPI less personal outlays was $455.3 billion in March, compared with $432.6 billion in February. Personal saving as a percentage of disposable personal income was 4.2 percent in March, compared with 4.0 percent
    in February. For a comparison of personal saving in BEA national income and product accounts with personal saving in the Federal Reserve Board flow of funds accounts and data on changes in net worth, go to

    Real DPI and real PCE

    Real DPI –DPI adjusted to remove price changes — increased less than 0.1 percent in March, in contrast to a decrease of 0.3 percent in February.

    Real PCE — PCE adjusted to remove price changes — decreased 0.2 percent in March, in contrast to an increase of 0.1 percent in February. Purchases of durable goods decreased 0.8 percent, compared with a decrease of 0.6 percent. Purchases of nondurable goods decreased 0.6 percent,
    in contrast to an increase of 0.4 percent. Purchases of services increased 0.1 percent, compared to an increase of less than 0.1 percent.

    PCE price index — The price index for PCE decreased less than 0.1 percent in March, in contrast to an increase of 0.3 percent in February. The PCE price index,excluding food and energy, increased 0.2 percent, the same increase as in February.


    Estimates have been revised for January and February. Changes in personal income, current-dollar and chained (2000) dollar DPI, and current-dollar and chained (2000) dollar PCE for January and February — revised and as published in last month’s release — are shown below.

    Data shows (0.3)

    Here is the real story on “savings” in America. This chart shows the effects of long term inflation, which is mainly caued by US government spending. See the dotted line at the bottom of the chart showing real savings at (15%) and $500BIL?


    I use this chart because it shows the height of the real estate boom going into 2005. So somehow the BEA wants us to believe when the values of our 401ks and homes were at their peak we had 2.5% savings rate yet now that these 401ks and homes are worth a lot less50%+ loses)we have 4.2% savings rate. Well, it depends on what you count as savings. Can you have NET savings technically if you own a mortgage? I personally only count savings after DEBT is deducted. If you own a mortgage then you have no savings. Those who lose their jobs understand that aspect.

    Really, it is a waste of time to calculate personal savings when we have a government that has spent $29,939 USD for each man, woman and kid in America over the past eight months. We’ll never have “real savings” in America until our government defaults. Seems they won’t stop spending voluntarily! Really how can they stop spending with all these PROMISES they’ve made?




    What savings?

  38. kaimu(118083 comments)-
    May 27, 2009 at 7:53 am

    ALOHA !!



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