Friday, January 27, 2006

Gold knows something!

Gold snorts….chortles….guffaws, it knows something!

Wanna get in on the gold rush?

The big news so far this year is the steep rise in the price of gold. The old yellow metal is telling us something. Most people are deaf to what gold is saying….They can’t hear it laughing.

Most people believe, because they have been taught, gold is a barbaric metal and it is a “speculation”. They heard it pays no dividends. They never heard of any ‘growth or any quarterly earnings projections from gold. They never look at a mountain chart of gold.

Gold never announces any fancy new technology. It never tells investors how fast it is growing or how many new customers it has.

Wanna get in on the gold rush?

Many newcomers feel daunted and confused by the tasks of diversifying their portfolio with gold. Have you ever thought about gold coins and silver coins?

As a service for clients there are some coins available for purchase. If you have an interest in a ‘quite’ passing of wealth from one generation to another, this is an excellent manner. For when I hand or send you these coins….you is the new owner and who is the wiser?

Let's see how our major trends are holding up...The days of cheap energy are over. Kuwait confessed that it has about halfthe oil it once claimed. And like a fat lady in the pastry section beforea snowstorm, China is buying up oil reserves wherever it can find them -in Nigeria, in Ecuador, and in Syria. Meanwhile, wealth leaks rapidly out of the West and into the East.

Bloomberg tells us that China's economy grew at 9.9% last year, overtakingFrance's in total output. That puts China in the number five position, just behind Britain, Germany, Japan and the United States. Economistsexpect China to run past Britain this year. Then, it will be snapping atGermany's heels.The U.S. Empire loses ground against China and the rest of Asia, too. Itsdomestic economy grew only about a third as fast last year, and not halfas well. China is growing, albeit in a reckless and dangerous way, bybuilding more productive capacity. That's real growth...growth that canadd to its wealth. America, on the other hand, is "growing" by consumingits wealth, like a man who sells the family business in order to buy abeach condo. He seems richer. He feels richer. He gets a new girl friendand a tan. At least, he looks healthy and happy when he arrives inbankruptcy court. "The American economy heads into 2006 with a full head of steam," claimedthe empire's chief executive. Neither war, nor high oil prices, norhurricanes could keep it from its rendezvous with destiny, he went on. Heis surely right; but how much destiny does a decadent empire have? According to the LA Times, polls show that half the public "thinks theeconomy is in bad shape and that Bush is doing a bad job of managing it."One survey showed that 30% of the population believes the United States isin a recession. And the bankruptcy figures show that for many people, theUnited States might as well be in a slump; they don't seem to be able tomake ends meet. After energy, health care, and housing cost increases, they have less than nothing left over. But at least they have plenty ofthat! They spent more than they made last year. And now, news thatFord is getting rid of another 30,000 decent-paying jobs. Oh Alan, Alan ...what have you done? You have lured a whole generationinto a debt trap from which they cannot get out. Debt service, as apercentage of income, is at a record high. Even with Mom and Dad bothworking, family expenses exceed income. What can the lumpenhouseholders do but pray for a miracle...file for bankruptcy...or cut back even more?

And what can your successor at the Fed do? The poor man is alreadychecking out helicopters. He figures he might have to drop $100 bills fromthe air in order to keep America's bubbles inflated. He's probably right.A credit expansion must be followed by a credit contraction. UnderGreenspan's leadership, credit expanded in the homeland even faster thanwaistbands. Now, the big trend is in the other direction. In terms of real

money (gold), asset values all over the world are going down. They may begoing up in local currency terms, but gold is going up even faster. Yes, gold is still edging up toward $560 an ounce. Yes, the dollar fellyesterday. And yes, the latest experiment with paper money is beginning anew phase. It was relatively simple for a central bank to shepherd a papermoney when it was rising against real money; the bankers could simplyprint more of it. Everyone was happy. Now, we will see what happens whenthe paper money falls. Will investors be so ready to loan out dollars?Will they buy Treasuries at today's low yields? Will housing prices go upwhen yields rise? Without higher house prices, how will consumers continueconsuming? Alan Greenspan entered the Fed with room to maneuver, for Paul Volker hadbroken the consumer price inflation of the '70s. Gold was going down.Consumer debt was less than half what it is today, while asset prices werelow. And the esteem in which central banking was held was - let us say -moderate. All he had to do was to make money easy to get. But poor BenBernanke comes upon the scene with everything running against him. Moneyhas been too easy...for too long. People already have too much credit, toomany debts, and too many expenses. But Bernanke - battling a forest firewith a woodpile - plans to give them more. We are already pulling up acomfy chair and buying popcorn; it will be fun to watch the show. [Ed. Note: No matter what the Fed and the mainstream analysts say aboutthe American economy's resilience, growth and recovery - and no matter

what kind of "proof" their accountants cook up - the real numbers tell thestory. And that story is that we're in trouble. Find out the truth aboutthe economy here.

Remember, the paper money in Germany before the rise of A. Hitler, get your wheel barrel ready!

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