A Quick Quiz for You

What to do now on Gold?

Uncommon wisdom is fantastic

Larry,
(1) Is GOLD bottom behind us? I think it is.
(2) Is stockmarket due for a crash? I think it is.
(3) If Gold goes up and stockmarket goes down, what happens to Gold Mining Stocks, Indexes and Funds like HUI, GDX, BGEIX? Do they go down with the stockmaket or go up with GOLD? I think the Gold mining stocks will go down with Stockmarket.
(4) What do the study of cycles say?

-Amrit Bakare
abakare@hotmail.com

To know which market gained 65% and which gained 3% is of little value. To know the next market to gain 65% and which will gain 3% has great value.

I expect the answers re: which graph represents which is a: China, b: USA S&P, c: Japan

Re the future “better” market?… China & India say they’ll reduce lending. As some say, watch what they do, not hear what they say.

I think this number was to Mar 09… S&P adjusted earnings inflation-adjusted from 1935 approximated $1.98…, BEFORE the doubling of the currency supply was acounted for, as that is not in the CPI, and very likely will be continuing as a manipulated-away statistic from the CPI. Effectively that may be construed to be, or extrapolated to assume, S&P real earnings approximate $0.99 per 1002 of today’s S&P nominal value, which at best is a currency-adjusted 2008 value of 501. The October 2007 S&P high of 1561 would (not accounting for inflation), be currency-adjusted to 3122.

So, can the S&P rise by an amount of over 200%.. Should it equal that Oct 2007 anytime soon? Oviously, an increase from the nominal low of 683 in March to today’s 1002 is already a rise of 47%. That low, currency-adjusted, might be a real 342, representing a decline in real value of almost 90%.

This now becomes roughly the equivalent of the great depression, as salaries are also halved in real terms, and the nominal GDP has a value 50% lower after currency-adjustment. These also coincide with the great depression. Noting recent “real” return bond action would indicate we are, in fact, expecting deflation… even today.

If these are rational observations, it would be difficult to assume the US markets can do much but wistfully watch the values of real assets remaind possibly dipping below stable, but holding considerably better than the dollar and GDP.

The wildcard is: the largest banks have been stuffed with new currency, and given the continued ability to create additional new currency based on their deposit-taking actions. As it would appear highly risky to lend to legitimate business & residential borrowers, they have and will continue to lend to themselves, and invest those new monies in the markets of choice in the most highly-levered manner possible. This was apparent in the last quarterly reports.

As the public have not yet been mesmerized into placing their own bets, the banks will simply play among themselves on a grand scale. Once the public are hoovered into the fray, sufficient to re-invent the “lost” bank capital, the banks will then simply go short the markets, have their lost capital rejuvenated, their bonuses in hand, and cry “depression”, while they stand aloof waiting for the ultimate destruction which would allow them to repeat the process, and seem oh so clever and prescient in their postulations.

So, the US S&P could indeed have a banner period, until the last suckers lay their money down. But, this game of musical chairs in the grand auditorium, will only have 5-6 winners/chairs left on stage after the first round.

Potential for gain?… another near 45%, just below the previous nominal high, unless of course all the smaller, previously well-run, banks decide to play… Then nominally a S&P 1800… just to ensure their pockets get picked completely clean. As is heard among bankers.. “competition is a scourge against profits”.

Japan?.. I do expect good things from Japan. They are global manufacturers, with physical manufacturing in most important countries. They are adept in global trade, and in global banking. I expect as their population declines, the focus will be on finance, and it is likely they will become a rival to New York and London for the Asian, South America and Africa regions as the Yen is increasingly repatiated involuntarily. That currency must be deployed, and they have a chastened banking & insurance system. Much of investors’ gains will be from the YEN’s values, and certainly, as internal industrial manufacturing continues slowing, their imports of raw materials & energy will shrink from their trade statements. Increased repatriated manufacturing profits, shrinking imports, and increased white collar “exports”.. What’s not to love? Say the increased Yen?.. Not so, as it becomes loans to those trade zones, and sold for Rial, A$, Won etc., as it was i the case of the US carry-trade.

In the very short term, I expect outperformance in the US. By 12 months, Japan, perhaps only as a result of being less-damaged. Long term… you simply cannot beat a nation of 1.2 billion people wanting flush toilets, electric stoves, refridgerators and steak on the bar-bi… especially when they can readily access a very great deal of money at any point, and circulate it among their region.

The Fed is going to be completely without ability after any coming decline no matter how the American people cry for help. This time, finally the ultimate plan will work, and your homes will be rented by you from the state, with a promise you can sometime earn back the ownership,.. but… I think you ought to visit Cuba to see how you’ll have to learn a new way of life.

The job of the Fed, Cabinet and all political advisors, is not how to help you become proudly independent as individuals. It is their single, their sole and over-riding, purpose to maintain the stability of the government that feeds them, not, make no mistake, not you, the citizens. You are simply pixels on a screen.

In the ebb & flow of the next few years, as it has been throughout history, the equilibrium of wages & wealth tend to equalize and start to concentrate in wherever the new, more dynamic area will be.

Long have trade unions (globally) and socialists cried out for low-wage countries to have higher wages… “We can’t compete!”. In fact wages always do equalize, just slowly, and not in the way you dreamed they might.

So?.. Can the China momentum be sustained short term? Sure, but it will hit an apogee, and another, and another, similar to US markets since the late 1800’s. Japan, perhaps less volatility, but they once kicked Citi Bank Financial out of Japan for “undisclosed” malfeasance, and know a few new things after this past 2 years… They are not dummies. The US?… sorry guys.. things have changed for the next several decades. You are incontrovertably bankrupt.

Resource economies?.. Yeah, sure. There’ll be a bit of excitement here & there. But the people who will use the greatest amount of hard product stock-pile it during the down times… They won’t need more than a touchup here & there if prices get too high. And if there is a true shortage in the supply chain… OH MY GOSH!!, didn’t they have a few orebodies tucked away under the Mongol desert and in the boulders surrounding Nepal. Who’d a thunk it!.. Let’s see, China & India… essentially massive sub continents with miles of “unexplored” seabeds. OK then. And, oh golly gee whiz, these guys think in terms of generations. Doesn’t that screw up the Harvard business professors’ views of economics and their quarterly postulations and the ‘efficient use of money’. Hey Ben!.. What about that one, eh? And think this one through Mr Brown… Those folks in India?… Yup their “scotch” whisky is pretty darned good, and turnaround is three years! Stick that in your secretly-proud to support Havana!

Gold as currency?.. Come On! You may as well pick seashells or beads or iron knives & Bay blankets. It will always have a value, expressed in some publicly-acceptable medium of exchange. But, like diamonds, it’s a novelty item. If you want to own something of value, ask “what do I need… I mean “NEED”. Then you’ll understand what’s important. That also means you Mr Physician… charging a bazillion dollars a year just because an insurer can shuffle the deck to pay you, just to get your malpractise premiums back… What a game that is… and another reason the US is really in the deep stuff right now.

Did this little summary provide my speculative view on the short term markets in a proper fashion? I’ve never ‘blogged’ before. This is my first time out of the closet.
Cheers!

Given that the dollar is in a long-term bear market, when would be a good time to diversify out of the dollar and into some other currencies (for those who haven’t done so already) as you have previously suggested? I’m wondering when the best timing would be since in your August 6 Uncommon Wisdom video you mentioned that there might be a short term rally in the U.S. dollar in the near future.

I think this is right. Green china, red britan, black usa, that would also be my guess…

Real estate, I don’t think so, wait until the end of 2010 & see what happens with the unemployment & the adjustable % rates do to the housing market. I am looking to buy myself, but I am holding back…..

Green - China ETFs
Red - India
Black - US

My guess is–

Green - China

Red - India

Black - Maybe Brazil, I don’t think that the USA is that high

Green is china

red is india

black is U S

Question #1. Which MAJOR national economy do you think will enjoy the best GDP growth for the next 12 months? ANSWER = CHINA

Question #2. Which one do you think will suffer the weakest growth (or biggest decline) in the next 12 months? ANSWER = USA

Question #3.
The country ETF represented by the green line is up 65 percent; (ANSWER = CHINA)

The one represented by the red line is up 40 percent; and (ANSWER = BRAZIL)

The black one is up only 3 percent. (USA)
Care to guess what countries they are?

Question #4. Which would you prefer to invest in? A country where the market has had the best performance so far this year? Or one which may be lagging but can be bought more cheaply?
(I’LL TAKE THE BEST PERFORMING ON DRAWBACKS.)

Looks like Larry has found the “Fountain-Of-Youth” or is using a much older picture now. Which is it?

Wouldn’t it be appropriate for ‘The Foundation Alliance” to have a RECO of China ETFs?

Wally

green - china

red - India

black- USA

Q 1 China, or Brazil, or India
Q2 EU Germany and the US
Q 3 China, Brazil, India
Q4 Where there is the best return, of course the country’s that are performing better.

The red is china, the green is USA, the black is GBritain

Real growth (not stock market averages) over the next year: China, Japan, India

#1 China
#2 USA
#3 Green - China
Red - India
Black USA
#4 Buy low and sell high - However, the “up” prospects must be a factor

green–china
red–india
black–australia

#1 Greatest Growth: India
#2 Worst Growth: England (U.K.)
#3 China, India, USA
#4 Best performing - buy on pull back

Q1. Which MAJOR national economy do you think will enjoy the best GDP growth for the next 12 months? - CHINA

Q2. Which one do you think will suffer the weakest growth (or biggest decline) in the next 12 months? - UK and US

Q3. The country ETF represented by the green line is up 65 percent- CHINA)

The one represented by the red line is up 40 percent - INDIA

The black one is up only 3 percent. - US

Q4. Which would you prefer to invest in? A country where the market has had the best performance so far this year? Or one which may be lagging but can be bought more cheaply? CHINA and INDIA

Looks to me like China is the place to invest both short and long term. It’s an emerging economy with huge numbers potentially and a real desire to join in the world’s trade. but I also believe that one has to be cautious and discerning when choosing what to invest in - there and elsewhere. This isn’t going to be a “dot.com” bonanza. Of course there are still excellent opportunities in America but they are going to be increeasingly limited by the excessive government spending programs. it looks like health care, long term care and bio techs will be strong everywhere including America.

I. China
2. U.S.
3. China, India, U.S.
4. Best performance

Q1- India
Q2 - Europe ( Eastern )
Q3 - India, Brazil, Europe
Q4 - 2nd one on put backs; 1st one will come down more quickly Q2 of 2010

When do you see the pullback for gold to $850/oz or less?

1. China
2. U.S.
3. 65% - China
40% - India
3% - U.S.
4. lagging but can be bought more cheaply

1. china

2. usa

3. china, brazil, usa

4. lagging, with room to the upside

We are on the the program on Aug. 13 but we will be in the Black Hills of S.Dak on vacation with no computer. Will this also be in the form of an email? Hope so! Noreen Wieczorek