Gold continues to do best what gold
does…keep people in suspense.
Up and down and even sideways it seems so goes
the price. But it is really not
the price that is important. It
is the message it portrays that is the most important. Gold is a pillar in financial
society. I thought I would
include a graph the last trading day before Christmas. I am bringing it to attention because
so many disappointingly try to predict the direction of the gold price.
It was expected by some that gold would trade
lower going into the holidays and instead it spikes up. As I said it is not the price that is
so important, but what gold represents that is essential. Has anyone noticed the new headlights
passing in the street at dark? LED
technology as I understand. They
never burn out or some such miracle.
of LEDs is as clear as night and day. The average life span of LEDs is
approximately 15 years without any reduction in the light beam’s
intensity or color. They are also very reliable,
maintenance free, and the light response time is very quick, taking just 0.1
of second to reach full intensity.
Their best feature, however, is the ultra-low power usage, which in
turn leads to less fuel consumption and carbon-dioxide emissions.” Mototorauthority.com
I’m impressed. It gets harder and harder for the older
generation to keep up with this new technology. The data below should remind all the true story which is the continual fall of the US
“Gold gains as
dollar remains weak…12-21-2007” “Gold rose above 810 USD as profit taking continued to weigh on
the dollar, increasing the appeal of the precious metal as an alternative
asset to the US currency.” “…gold, increasing its appeal as
an inflation hedge…” “At 3.11 pm, spot gold was trading up
at 811.10 usd per ounce against 798.80 usd in late New
York trades yesterday.” “Longer term,
however, most participants believe gold, which rose to a 28-year high of
845.40 usd in November, is set to scale new peaks
as early as the first quarter of next year.” “…the outlook
for gold remains strong, especially as mine supply is still falling while
safe haven buying is expected to pick up next year as tightening credit
conditions the world [over] start to impact economic growth.”
How best can we describe
gold investors today? I think a
quote from the Bible best describes their fickleness and lack of
"To what can I
compare this generation? They are like children sitting in the marketplaces
and calling out to others”
'We played the flute for you, and you did not dance; we sang a
dirge and you did not mourn.”
Everyone wants gold to rise to their occasion
and gold instead fluctuates and remains volatile. Anyway, get the picture? I lived when gold was falling to the
low 250s. I lived when gold was
predicted to fall eventually to 50 dollars an ounce. To me what it has achieved and where
it is today remains very impressive.
And 800 dollars an ounce is a figure much to be respected and
seatbelts, experts warn”
“They’re forecasting a bumpy ride for investors in 2008” USA
The following below is an email from a reader
lamenting the passing of the percolator.
“Hi David, I read
your work and sympathize with you on the sad state of events. Thought I'd
send you this card in memoriam of the dead coffee maker. Cuppa by Maldroah (allpoetry.com).”
“There, on the
ancient sideboard, the percolator lurks
and rumbles, grumbles, mumbles, burps, to prove that it still works.
And then a rude Vesuvius (preceded by a snore)
proclaims that Dame Ambrosia waits, her dark delights in store.”
“Let's fill the cup
and raise a toast to all our friends today.
Be your boots of elfin leather and your cap of faerie wool.
Be your coffee bitter never and your cup forever full.”
But while the ancient percolator has become a
historical footnote our bureaucracy marches on at an exciting pace.
you’ll realize that the only thing that keeps any state running is the
number of bureaucrats who are prepared to eat &#@! to
keep it going. That is the measure
of commitment. And the fact that
they are never mentioned by historians is the measure of their
success.” Simon Scarrow, Under The Eagle.
I read the above statement and thought of our
present government and bureaucracy and how much we take it for granted. Politicians come and go but an
entrenched bureaucracy running the wheels and gears keeps our fragile
civilization running. Of course
it is eventually this same bureaucracy that eventually becomes so enlarged
that it destroys what it previously ran.
Still, this system provides the grease that
maintains roads, cities and all that makes life endurable. We have order for a time. And it is that order we seek every day
as we go about the repetition of our daily lives.
Well, in preparation for Christmas soon among
us it is raining and the temperature hangs in the low 40s here in the Deep
South. In Montréal this
morning the snow is so thick that it is burying cars making them difficult to
find. The weather in the south
and the north truly are different.
Can’t even imagine what Santa must be enduring in the extreme
temperatures of the North Pole.
I would like to say that gold was taking a
well deserved break right before the holidays, but not with that last spike
Friday afternoon. Personally, I
believe gold to be preparing for 2008.
And I think 2008 will be a doozy. The subprime mess is expected to
really explode big time next year.
And getting back to the subprime mess?
“We are led to
believe that the sub-prime [SP] mortgage market is "worth" about
USD 1.3 billion. But that figure is misleading: it is only the tip of the
iceberg. Here is how such mortgages have been chopped and diced:”
The SP mortgages have
been combined into Mortgage Backed Securities [MBSs];
2. These MBSs, in turn, have
been packaged into Collateralized Debt Obligations [CDOs];
3. These CDOs have then been
divided into tranches, whereby 80% are rated "AAA" and so on, with
4% being parked in the "BBB" lot;
4. These "BBB" CDOs
have been re-packaged into CDOs to the power of 2 [CDO2s] instruments;
5. These CDO2s, in turn, have
been carved into various tranches: 75% of them are designated as being of
"AAA" quality, and 4% have been rated as "BBB".
“If you are not yet
confused, re-read the above alphabet spaghetti and get confused!”
“All that this means is that nobody can measure just how deep this
dormant volcano is.” “…we do maintain that America will
fall strongly…” Seekingalpha.com
another very real reason why gold is growing as an international capstone
among the nations?
Tom Holland - “The reader must first be
conversant with a bit of political science theory. Shortly after the end of
the Cold War, a Harvard political scientist by the name of Samuel Huntington
predicted a coming “clash of civilizations.” The fault lines of
future conflict, he declared, would not be economic in nature but cultural.
The line between Western Civilization and Islam would prove in particular a
contentious one. While his theory initially met plenty of naysayers, after
9/11/2001 some found it prophetic in retrospect.” “Before the
twentieth century, the East-West dichotomy had been construed as a clash
between Christianity and Islam, culminating in the medieval crusades and the
fall of Constantinople. The present now embraces the past,
as East vs. West is once again a contest between citizens of Christian (and
post-Christian) cultures, and those of the Dar-Islam.”
“All of my personal forays into history since have led me to the
conclusion that somewhere just beyond the Western coast of modern Turkey is a
flash point between civilizations. It has simmered frequently for 2500 years
and shows no sign of abating.”
go back to the subprime mess and this single circumstance all by itself seems
to have the capability to draw us down.
Christmas is upon us and for a few short days the financial world is
numb. But the problems are still
there just waiting to be addressed again. There is fire in the wind and it is
blowing our way.
“The tentacles of the subprime mortgage mess in America are reaching
from the once-red hot real estate markets to the cold canyons on Wall
And who is this subprime mess affecting?
mortgages are crumbling. How far will the damage spread?”
“…the 24-year old web designer from Sacramento bought seven
houses in five months. He lied about his income on “no document”
loans and was not asked for anything so
old-fashioned as a deposit. Today Mr Serin has debts of $2.2m. Three of his houses have been
repossessed; others could share that fate.” “It also matters to
investment banks, which packaged the securities and often own subsidiaries
that originate mortgages. It may determine whether America's economy falls
into recession. It could even affect the outcome of next year's elections.”
“The worst effects may not be felt until the mortgage payments of many
borrowers with no equity in their homes rise
sharply.” “Is this a mere irritant in America's vast economy, or the start of something much worse?” “…the subprime squeeze
marks the start of a broader credit crunch that could drag the economy into
But who needs gold as insurance as this
scandal grows, huh?
“The troubled U.S.
subprime lending sector has sent a shudder through Wall Street and may
further cloud an already souring outlook for corporate earnings this
It’s not too late to invest in gold
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By : David Vaughn
Editor, Gold Letter, Inc.