Oldtent Archives 2007 - 2008

Updated File

goldtent.net/wp_gold/wp-content/uploads/2008/11/gann_sq9_1_.xls

added info : can allow the determination of An Angle associated with any number in the Square of Nine.

2_p

The guy who went out eagle watching with me has just moved to Oregon from Denver and he’s into PMs (as well as everything else under the sun).  I told him about this group, so he’s going to be lurking around the Tent until such time as he decides to jump in and introduce himself.  Real nice person, will fit right in.

There seems to be golden stuff everywhere.  As mentioned last night, a friend and I went out today in search of the eagles that congregate at this time every year in a place about 30 miles away, where they feast on the spawning kokanee salmon.  It snowed and rained a bit as we drove out, then turned into a mellow morning.  Underfoot the ice crystals crunched, having pushed up the soil at water’s edge.  As hoped for, the eagles were out en force, balds and goldens, mature and immature, regularly swooping down and catching fish.  They weren’t as thick as in SE Alaska, but we saw probably 40-50 eagles and maybe a dozen great blue herons, one of my favorite birds.  They’re so gracefully awkward and have the coolest prehistoric-like croak.

WE ARE QUITE CERTAIN THAT IN THE UNITED STATES, BANK AFTER BANK WLL BE RESCUED AS CITIBANK WAS THIS WEEKEND

WHO WILL BE NEXT…BANK OF AMERICA, JP MORGAN, GOLDMAN SACHS, MORGAN STANLEY?

The surprise is not that they will be rescued, the surprise is that not enough attention is being paid to the fact that the U.S. will have to sell several $ trillions in bonds in order to finance the above bail outs.
If bond buyers wise up, they will stop buying a bond with an almost infinite quantity for sale, and they will start selling them. This will send the US dollar lower. We expect the market to awaken to this obvious outcome, sooner rather than later. We are bullish on foreign currencies and gold longer term.

FOR THOSE WHO THINK THAT DEFLATION WILL BE A LONG TERM OUTCOME

May I remind you of the words of Milton Friedman, who said “Inflation is always and everywhere a monetary phenomenon”.

My money is on Milton Freidman. He will be proven correct as the devastatingly inflationary monetary policies being pursued worldwide will lead to inflation in years to come. His former co-author, Anna Schwartz, said as much in a recent Barrons’ interview, inflation will return.

I lived through the inflation of the 1970’s and have been a student of inflations worldwide for 40 years. In past recessions (much like today’s), as the recession/depression starts to get underway, it can initially appear to be a dis-inflationary cycle as prices moderate for a few months.

We go through a large amount of economic data every month. A tremendous amount of liquidity has been added to the global banking system, but the system has not yet engendered enough confidence for it to function. As confidence returns to the system, all the money circulating will ignite inflation. If confidence does not return to the system, we expect even more and more liquidity pumped into the system…which can create the possibility of a loss of confidence in the government’s ability to manage the problem. This will likely set off a run on the currency. In other words, if the U.S. continues its rapidly growing liquidity creation, and it does not create confidence in the banking system…eventually confidence in the U.S. Government will be damaged…and the world investors will not want to hold the main asset of the U.S. Government, its currency.

In this case, the country’s currency becomes an unattractive investment, because of the perception that the government has failed to bring order to its banking system. Recent examples are Iceland and Zimbabwe. In both cases, when the banking system failed, the currency collapsed.

POLITICIANS PANIC

Meanwhile, politicians are panicking. It is not good for their re-election prospects to have a slow and sluggish economy. Their constituents want benefits, they want restrictions on imports, they want handouts, they want special treatment for their industry, and they want government loans for themselves or their family. Eventually, whole classes of citizens (the poor, the homeowners, those in certain states or professions) will be lining up for their share of the pie. Politicians listen, and act in their own best interest…which for most of them is protecting their place at the public trough.

Eventually, the effects of the unwise, inflationary monetary and fiscal policies (which are being promulgated not only in one country, but in many countries worldwide) begin to seep into the system. Inflationary psychology takes hold, and rational investors begin to invest for inflation. The final result is prices rising higher…and for longer.

THIS IS THE FUTURE AS WE SEE IT…THE QUESTION IS…WHEN WILL INVESTOR PSYCHOLOGY REFELCT THIS EVENTUALITY?

…..Tommorow O K ?

….got your # in the Office

….manyana chow

This is Not the Great Depression - but it could turn into the Great Inflation
snip:

“By the end of next year the US may have near zero interest rates, a fiscal deficit of 8% of GDP or more, and a chronically weak currency. This is a classic recipe for inflation. It is a myth that a weak economy necessarily means low inflation, especially if the size and role of government are expanding. Company failures and low investment weaken the supply side of the economy but improve pricing power for the survivors. Once the credibility of the currency and policy has gone people and businesses seek to protect themselves in real assets. Inflation can rise then very rapidly even in a weak economy. I expect US inflation in the 5-10% range by the end of 2010 and in 2011.
The inflation outlook thereafter depends on the policy reaction. If policymakers do not regain their grip the longer term outlook becomes seriously disturbing. I began this article by rejecting the Great Depression as a model. I have begun to study a very different but equally alarming model - the Weimar Republic hyperinflation in post World War One Germany. It is too early to postulate such extreme outcomes for the US. However, I draw your attention to the opening sentences of the classic work* on that period ( paraphrased slightly):
“ On July 31st 1914 the Reichsbank suspended the convertibility of its notes into gold…….On August 4th 1914 a new law authorised the Reichsbank to discount short-term bills issued by the Treasury, together with commercial bills, as cover for its notes…..thus was initiated a monetary inflation that was without precedent in history
……..the inflation ended (in 1923) on the day that the Reichsbank ceased discounting Treasury Bills”
The new powers and policies adopted by the Fed will seem impossibly arcane to most people. They are not. They could be very dangerous. My preliminary look at the Weimar experience suggests potentially ominous parallels. If the Fed embarks on the road of monetising Treasury debt the longer term inflation outlook becomes more frightening. I intend to watch Fed and Treasury actions intently. I suggest you do too. ”

http://www.prudentbear.com/index.php/commentary/guestcommentary?art_id=10157

I don’t think it is time to trade SLW but buy and hold for the turnaround…sure.  Their Lunden mine has closed down (just read about it) and until silver (and base metals?) can move up a bit SLW will languish until Penisquito starts producing (end of 2009 probably)…that leaves Hecla…which has always been a better trading silver stock than SLW even in good times and I still haven’t figured out exactly why…

Hecla is silver-cash-cost positive (they were negative for years) at the moment but they look to weather out this bottom and if silver turns up will be the best performer in the silver sector IMO until SLW gets back in the game…whoever has an operating mine now is at the front of the pack…that is the key in a cash crunch.  Did SSRI wait to long too develop one?  We’ll see.

…what the Hell is this ?

Alright, we got you, and Floridgold and a couple others weighing in on SLW. Lookin good! But what does Barney say about it?

Good to see you pull up a chair around the campfire.

Best, Farmboy

Some nice ride you found there!

Not quite as snazzy as that oval shaped puddle jumper you keep trying to get AuGirl to ride to Belize in, but every bit the sleak 21st Century coach like that silver one you posted the other day. Still though, I have some sentimental attachment to that old club car picture of years gone by…but what the heck, when our Precious is marked to fair market one day, I say lets ride all dem trains.

The older steam powered ones may provide the best ride. They had cow catchers right? Figure there will be some folks who catch up with thier local bankster, stock broker, or real estate agent, and want to tie them to the tracks. Yep, those old models might avoid a lot of bumps. (grin)

Sounds like you are making the transition from the Island to the mainland well. May the road rise to meet you, Best, Farmboy

FGC posted a great ECU chart last night at 23:30 - breakout of a falling wedge.  Up today US$0.205 (+29.5%), CA$0.35 (+40.18%).  All of the move was in the last 25 minutes before the close.  Maybe somebody’s getting nervous.

That’s what we’ve been expecting for these quality small caps.  Hopefully all of us here will see a lot more of this kind of ‘economic stimulus’ soon!

As I mentioned in the last post on this stock. We have (hopefully) successfully retested the lows. I have bought today but will place a stop loss below the lows.

aurum