Oldtent Archives 2007 - 2008

Tie Packers with 3 minutes left…give up a stupid kickoff return and then block a 35 yard. field goal by the Pack with 25 seconds left and are now in OT How about them apples…
Gold to da trophosphere…not moon ..in Jan

You stacked the poll! You put Paulson as the first choice and he got 43 votes;  go on down the line and see that as the next choice Bush got 8 votes; down further Bernnake gets 6 votes, then further down Madoff gets 5 votes.A stacked poll,LOL!

Is Paulson, the landside tent winner, a Grinch?  No way, Henry is the ultimate Candy Man.

You are welcome, and I am glad you appreciate “The Crash Course”.  Without a doubt the best, short form presentation of all that ails the economy… and connects the dots.

Regarding posting opinions of bullishness… all I can say is ‘Hope Springs Eternal’… although sometimes foolishly.  Lots of posters here are tired of me saying ‘All Paper shall burn.’  Many yet fantasize of leveraged stock returns.  But those days are over, IMO.

Food for thought…

Murph:

One of my “unwritten rules” for sifting through investment ideas is that I NEVER pay any credence to an idea proffered by anyone a) with less time on the field – i.e. fewer years in the trading trenches than I, and b) who is younger than I am.

With all of the newsletters and market commentaries out there, that leaves basically Richard Russell and the following veteran writer for Barron’s, the venerable cynic (on Wall Street “wisdom”), Alan Abelson, whose “Up and Down Wall Street” column has been around for as long as I have been reading Barron’s, which goes back to the late Seventies.

With that as an intro, here is what Alan says in his Weekend column:

“Roughly a month ago, we suggested that gold, which was around $742 an ounce, seemed like a pretty good bet and, while we were at it, we allowed that oil, then $57 a barrel, might be interesting as well in “the not-too-distant future” (a cowardly formulation, we have to admit, designed to get us off the hook). Since then, oil has gotten worse and we’ve gotten a bit braver.

Our hunch is that once year-end selling runs its course, we can boldly suggest that “the not-too-distant future” translates into “early in the new year,” and energy stocks, particularly the exploration and production contingent that has been beaten to a bloody pulp, are due for a decent bounce. And, oh yes — with Washington and its counterparts in Europe and Asia in a mad race to reflate — we still think gold is a no-brainer.

(The was added by yours truly.)

I also believe that Alan’s reference to a rebound in oil “particularly the exploration and production contingent that has been beaten to a bloody pulp” is bang on but never more valid in the “bloody pulp” as it would apply to the TSX Venture Exchange, where the vast majority of new discoveries of gold, base metals, diamonds, uranium and potash have all been made over the years.

My grey-bearded colleagues who have been through more than a couple of TSXV bear markets all agree that the 2008 mauling of the junior mining sector has created the most incredible opportunity since the ’73-’74 bear market ended, which gave rise to a meteoric rise in this space until early 1980. My partners and I believe that the majority of the “penny dreadfuls” (junior exploration companies) have all now been re-priced to “shell valuation levels” – viable companies with great projects and even nominal working capital have been priced to levels that a year ago would be afforded to shells with zero property, a couple of hundred grand in the bank and a TSXV listing.

That is what happens when you let the 30-something kids loose with “other people’s money” running a fund (or two, or three) that have zero understanding of the history of the junior mining sector (TSXV). I asked one of ‘em a few days ago if he knew how Barrick Gold (ABX.T/NY) got its start and he said he thought it was “from the merger of a bunch of consolidating juniors back in the 80’s” at which I summarily “dissed” him and told him that it was around this time of year in 2003 that a little Vancouver Stock Exchange-listed company called American Barrick Resources Ltd. stuck a drill into a punky little heap-leach zone in Nevada and after going to depth as a “lark” to fill up the work hours before the Christmas Break, they wound up finding the enormous GoldStrike Deposit and the rest is history. These are the “kids” that have blown out ECU down to below a buck because they have no clue what occurred in thew 1975-1980 period where the public moved en-masse from the portside (long paper) to the starboard side (long gold/silver and PM shares) resulting in immense wealth creation for but a miniscule portion of the investing public.

We are now in the same “sweet spot” as we were in the mid-Seventies. And it feels good.
Go Gata!
J. B.

When will we return to normal?

To all; over the last few days I keep hearing from the shills on CNBC that stocks are cheap, April fools day is still 3 months off isn’t it? I also saw this morning that a poll taken of economists revealed that we should have positive economic growth by the third quarter of next year. I am also to understand that inflation should be no problem because unemployment is rising, and everyone knows that inflation goes down as unemployment rises, right? The economy is strong, the banking system is sound, stocks are cheap, we have a strong Dollar policy, real estate will bottom soon, blah blah blah. So my question is, when do we return to normal?

To answer this question one must know what normal really is. I don’t really know what normal is because I’m too young to have really experienced it, however I do know what it is not. Normal is not buying a house with nothing down and taking an adjustable rate that takes 40% of your income to pay each month. Normal is not having two or three cars in your driveway, each one owned by the bank. It is also not buying lunch at Mickie D’s on your credit card and adding to your $20,000 balance.

When it comes to banking, normal is not leveraging your equity 30 or 40 to one. Normal is certainly not investing in derivatives that you don’t understand, because your competitor says he made money last quarter in these WMD’s. I’m pretty sure that when we last experienced normal, the terms tier 2 and tier 3 capital did not exist in the banking system, nor did TARP, TALF, or even RALPH.

I’m pretty sure that back when things were normal no country had armed forces in 172 foreign lands, nor did that “force” have an un backed currency that the entire world used as reserves and for so called “settlement “of trades. Back when things were normal, the word “billion” was nearly unfathomable, quadrillion was only something a scientist would use to count grains of sand on a beach. Zero percent was only normal for something that also had zero risk, for example an ounce of Gold or Silver.

I think I read somewhere in college that 12 times earnings, 1.6 times tangible book value, and a 4.5 % dividend yield was normal for stocks. It used to be normal for the US Treasury to have a full audit performed EVERY year on their finances AND Gold reserves. My Dad told me that normal was going to work for the week, getting paid and having a little left over to save for the future. He even told me that a long time ago, people used to save a little each week and be confident that what they saved would retain value and maybe even grow at 1-2% per year.

I also don’t think that it is normal for any person, firm, state, or even any nation to perform business or take a risk that causes their failure, then ask for, NO, expect a bailout. I understood a “bailout” as something Bugs Bunny would do when his row boat started taking on water. I don’t think fraud of any magnitude, especially at the highest level of society was ever normal, sweet deals and wink, wink, maybe, but not fraud. The election process used to be more “normal” back when business was primarily done on a handshake. Even steel skyscrapers used to be more normal, they didn’t used to fall down so easily.

Back in the good ole days, governments used to run balanced budgets and trade balances, these balances were regulated by the payment of Gold for settlement. If you spent like a drunken sailor, or you were lazy and produced little, you would wake up one day and all your Gold would be on the other side of the border in your trading partners’ vault. I’m starting to think that “normal” was probably a pretty cool thing, so my question remains, when will we return to normal?

Next year? 3 years? 5 or 10? How about, “probably not in your lifetime”. I don’t know the answer, but I do know that “normal” was certainly not the last 25 years. I don’t think we will ever return to the last 25 years in our lifetimes. The last 25 years was certainly an aberration, not the norm. Can we return to normal again? I think YES we can. Can we ever return to the last 25 years in our lifetimes, I think IMPOSSIBLE. Surely we can return to normal, it will be painful and we probably won’t like what normal really is, but we can get there.

Returning to normal will require a lot of work, start with sound money, then move on to rebuilding your productive and industrial base. Next thing might be pulling back your military and making their purpose “defensive” instead of “invasive”. Then maybe give the people incentive to work and save, through much lower taxes across the board. Oh yeah, how about liberty? You know, those rights that were fought so hard for and then guaranteed in the Constitution. I KNOW, go back to following the Constitution! I can’t believe I figured this out all by myself, how incredible! We could go back to normal if we followed the Constitution, what an unbelievable concept! I bet Washington might resist this a little. Regards, Bill H.

Bill H:

Mission Impossible

To all; the Fed and Treasury have now entered the zone of impossibility, by this I am saying that anyone with second grade math or enough sense to look both ways before crossing the street knows that what is, can’t be. The Fed has lowered rates to zero while the Treasury is in the process of borrowing every last cent, peso, and crumb of capital left on earth. The global marketplace so far has gone along with this farce. Think about it, the Fed says rates are zero % so the Treasury can borrow for free.

Digging a little deeper it gets even more hilarious, you see, the Treasury has already announced plans to borrow $ trillions and they will pay you back with the same Dollars that you lent them, only they will be worth much less or probably even be worthless.. Well, actually not the same Dollars because between now and when the debt comes due the Fed will have created many $ trillions more of new Dollars so you’ll surely get new Dollars with fresh ink. The point is this, if you run scared with the herd into Treasuries for their perceived safety, you are actually moving into the riskiest asset on the planet. I am amazed at how many “smart, veteran, Ivy League degreed” boneheads are all buying into this “safety trade” hook, line, and sinker. They have gotten hooked on a fallacy and are standing in line for Treasuries like they actually have a scarcity value, and SINK they will.

So the “safety trade” is this, you buy Treasuries because you are afraid, and 3 months, a year, or 30 years from now you just want to make sure you get your original Dollars back, you don’t care about getting interest or more Dollars because they are so valuable to you today. What about tomorrow? The Fed is exploding their balance sheet and goosing money supply like never before, they have told us that they will use “quantitative easing” to get inflation bubbling again, and what, investors don’t believe them? I for one have always been skeptical of government announcements but I think that this time they are surely telling the truth. If they say they are intent on creating inflation and destroying the Dollar, BELIEVE THEM because at this point no matter what anyone does, the Dollar is toast.

We are where we are now because 6 months ago it was decided by the Fed and the Treasury that they “needed more time for a miracle”. They knew back in the second quarter where all this was going, they new that they would need to borrow unheard of quantities of capital, so they leaned on commodities, probably bought Dollar futures with freshly printed or newly borrowed Dollars and got the “deflation trade” started. Don’t get me wrong, we absolutely have deflation because of the amount of imploding and disappearing debt, BUT with a fiat currency that has no backing whatsoever, NEVER in a bazillion years could that currency become more valuable under any circumstances. It was all an illusion, nothing more, nothing less. All they had to do was get the story started in the pits and by the media, use a small amount of capital and leverage it up through the futures market and PRESTO, commodity crash, Dollar rally, and guess what,….. ZERO PERCENT interest rates as declared by the Fed and unbelievably confirmed and highly sought after by institutions.

When history looks back at the current travesty, no one, and I mean NO ONE, will believe that this 0% interest rate scenario could have actually happened. There are probably less than 10 people on earth that could be convinced individually that the worlds’ worst credit could be allowed to pay the worlds’ lowest interest rates for virtually unlimited quantities, but, spread the lie and make the rounds and pretty soon almost everyone loses their mind. People will be shocked very shortly when this deflation trade blows up, they certainly shouldn’t be, but they will. We are now exiting the biggest mania, biggest bubble, the biggest fraud the world has ever seen. It will end with the bankruptcy of the US Treasury!

The world is lending gobs and gobs of capital at 0% to “guarantee principal repayment” in a currency that has been in a confirmed bear market for 6-7 years now. This will not stand, very shortly you will begin to see hiccups in the Treasury market, it will start slowly at first and then gain speed as more and more foreigners begin to repatriate their capital. This will lead to weak and then weaker auctions until one day the Treasury has a failed auction.

They may not publish it as a failed auction and may even falsify “bids”, it won’t matter because the big money will know who was present and who wasn’t. This is the when the moment of truth occurs, the Treasury will have only one buyer remaining for their debt, the Fed. The entire fiat experiment on a global basis will be over, they tried to accomplish “mission impossible” and took the global capital markets down with them.

When investors take 10 seconds to think this through they will all end up with the same conclusion. If they are so scared that they will accept 0 % interest for a year, or 5 years, or whatever, just to preserve their capital, they will now all strive for “the best currency”.

This next event will be the biggest bubble in history, far bigger than the current US Treasury farce. The next bubble will be petrified global capital with nowhere to go and no place to hide, except into the Gold market. “There is not enough Gold in the world for people to buy” is the argument against Gold as a reserve currency. I say, yes you are right at today’s current prices, imagine trying to fit Niagara Falls through a garden hose? It can’t be done right? Well, it depends on the size of the hose. The only way this would be possible is to increase the size of the hose 1000’s of times. The only way the Gold market will be able to accommodate the capital coming its way will be to “revalue”, this revaluation will occur alongside the default of the US Treasury and Federal Reserve. In fact, the coming revaluation will be awe inspiring as the Dollar approaches “0″, real assets will mathematically approach infinity.

Let me leave you with this thought, if investors are so scared that they “won’t get their money back” and are willing to invest in Dollars at 0 %, why not invest in eating utensils, pencils, or even gravel? Spoons, knives, and forks have an actual use, they require more labor and capital to produce than Dollars, and they won’t shrink. Dollars are guaranteed to shrink, the gov’t has told us as much, and this time I for one am inclined to believe them. Regards, Bill H….

More from Dave from Denver…

It’s now being reported that

GS CEO Lloyd Blankfein and MER CEO John Thain are paying themselves well over $50 million in bonuses this year AND they are still tooling around the country in Company lear jets. Please note for the record that this is OUR taxmoney at work courtesy of Hank Paulson. Please note that Thain is an ex-Goldman guy. Also, AIG is now reportedly paying out $100’s of millions in bonuses. Our tax money again.

This is a massive transfer of wealth from the middle class of this country to a few corrupt Wall St. crooks. This reminds of the 1970’s and 1980’s, when the dictators of several Latin American countries would steal IMF and U.S. loans meant for redevelopment of their countries. The U.S. is now no different than a Third World corrupt banana republic.

Ah-haaaa! Finally dawned on me why Paulson left his post as CEO of Goldman Sachs to take the Treasury job - and it wasn’t just so he could unload $700 million worth of GS stock when GS was tradings over $200/share ($80 now) and avoid paying taxes on his gains.

He took the Treasury job so that he could try engineer the monetization of the fraudulent derivatives transactions that Goldman pedaled globally under Paulson. Keep in mind that AIG is being kept alive because their demise would expose Goldman to over $20 billion in derivatives counterparty risk. And that the ONLY reason AIG is being kept alive with taxpayer money. Check this out:

From Mike Morgan:

I still don’t understand why none of the media bobbleheads have not yet done an in depth piece about what Paulson was responsible for during his tenure at Goldman Sachs. He ran the company that created more different forms of derivatives and more volume, than any other ten companies in the world combined. And with more offices in more countries than any other investment bank, Goldman Sachs peddled the toxic assets to every corner of the world.

Bill,
On 12/12 the total COMEX silver inventory stood at 126,826,996 ozs but the dealer registered inventory was 77,756,068 ozs while the eligible inventory was 49,070,928 ozs. Today, 12/22, the total inventory stands at 126,845,345 ozs which shows almost no change from 10 days ago. However, it is not the total COMEX inventory that matters; it is how much the dealers have to meet delivery requirements. The dealer’s inventory (registered) stands at 67,186,284 which is down by 10,569,784 ozs since 12/12 while the customer inventory (eligible) stands at 59,659,061 ozs an increase of 10,588,133 ozs. What this means is that investors have taken delivery of 10.5 Mozs over 10 days but have not taken it off the exchange (yet?). None the less this is extremely bullish as this is 10.5 Mozs of silver which is not available to the dealers. At this rate of depletion of dealer inventory the dealers will be out of silver in 67 days…i.e. February 2009. It will be interesting to see how low the dealer inventory gets before the short squeeze comes into play!
Cheers
Adrian

As an aside, I mentioned to the CFTC on my trip to see them Friday that there was no silver in the major banks in Canada, like The Bank of Nova Scotia. I didn’t receive any disagreement.

The gold open interest fell 4103 contracts to 290,731, as new longs were sent running. The silver open interest fell 167 contracts to 85,917.

The GTU (Central Gold Trust) premium is way up there at 23.5%, which is around a record high according to Andy. He went on to say it only has 4.5 million shares out, so it is a lot less liquid than CEF. But with the premium this high, and a huge shelf offering filed last week, you can bet an offering is coming anytime.

What keeps hitting me over the head is what great bargains gold, silver and the shares are today when taking into consideration what the US and other countries are doing to prevent economic collapse. You couldn’t dream up a better scenario for gold and silver. And yet most of Planet Wall Street is neutral to bearish on the gold outlook for the years ahead, only slightly bullish to bearish on their silver forecasts.

Those low forecasts, many of which were recently brought to your attention, show just how much bias there is against gold on Planet Wall Street. More importantly, NONE of these people know what the GATA camp knows about the real supply/demand story and what is in store for The Gold Cartel, the people suppressing the gold and silver prices. They will be blown away as the gold price suppression scheme finally blows up.

Just one of many reasons for investors to own gold and silver…

U.S. 2-year note yield lowest ever-Treasury

WASHINGTON, Dec 22 (Reuters) - The high yield of 0.922 percent on Monday’s auction of $38-billion of two-year Treasury notes was an historic low, the Treasury Department said.

“(The) high rate/yield today is the lowest ever,” the department said after the results were published.

Analysts had been watching for a yield under one percent for the notes since the Federal Reserve slashed official interest rates to range between zero and 1/4 of a percentage point last week.

-END-

Good shes a good healer, one thing that starts going against us the older we get…we don’t alway bounch back as fast as we did in our twentys. Probably wouldn’t hurt for her to take vitamin supp. now esp. the B vitamins lke ribo may help promote healing. Because of surgery she will and they should be watching the other eye too. Well enough of preaching, beside we have Ferrit for that now. He’s probably thinking oh no they found me out, and the questions will be flooding in.

…… and both are Gold !

Thanks littleguy. Thought it was pretty good deal. Will have to check into that place a little more often!

A little here and a little there and eventually there should be enough.

Gold Quietly Taking Limelight As THE Investment

“Cautious, careful people, always casting about to preserve their reputation and social standing, never can bring about a reform. Those who are really in earnest must be willing to be anything or nothing in the world’s estimation, and publicly and privately, in season and out, avow their sympathy with despised and persecuted ideas and their advocates, and bear the consequences” … Susan B. Anthony

GO GATA!!!

It was a quiet day of trading on the Comex, with most of the strength coming early on, following some good bids in Europe. $850 and $11 appear to be our short term technical hurdles to be breached.

As we all remember, The Gold Cartel prevented gold from taking out $830 time and time again. Now through that level, it becomes a support point, which has held so far. A successful test of that area, and a close above $850 ought to propel gold towards $930 in the near future.

The PM Fix came in at $849.

If gold can finish out the year at this level, or better, it will mean its price will have risen 8 years in a row, and still gold gets so little coverage and respect from Planet Wall Street. Those who own gold in currencies other than the dollar are really happy campers. Most investments went into the tank this year, while bullion in their currencies has made a new yearly high by a wide margin.

And, as New Zealand’s Ed W notes:
Hi Bill:
Looking at the screen at 2:45 PM EST I see

DOW = 8442.99
Gold = 844.24

The ratio is an almost a perfect 10.

Recall we started the year with a ratio on Jan 1 2008 of 15.89

DOW = 13264.82
Gold = 834.50

Therefore Gold can buy 59% more DOW shares than 12 months ago.

Who says Gold had a bad year.

Cheers from Auckland, Ed Wener

  yeah sure.

  He just went thoughtfully insulting anyone who has held gold and gold shares and will continue to do so on a goldbug website. LOL

  ….and still hasn’t answered a simple question about whether he even owns a single ounce of gold.

  I find it pretty disingenuous to come on here and remind posters who’ve been honest enough to say “I lost money”  while not disclosing positions of their own.

  Yes, we’re all delusional.

  Oh well, there’s always the GIM and cyclist thread.

I’m with you Redneck.  The inmates are running the assylum.  When the scared crowd that is running to bills and bonds figures out that inflation is eating their principal as fast as Wimpie ate hamburgers, it’s gonna be a scary ride going the other way.  What are they paying on 30 year bonds, around 3%?  Boy that doesn’t make much sense.   Interest rates are gonna shoot up and that’ll be #2 of the one two punch, the knockout punch.  Printing money always eventually causes interest rates to rise and printing boatloads of it will… well I don’t even want to think about it.

and where will people go then for protection?  I think we both know the answer to that.

Cheers, ipso