Just a few thoughts…

The Gold/Silver ratio has gone to 70, while the Platinum/Silver ratio has fallen to 80. This shows increased interest specifically in gold. I safe-haven buying finds its way into silver I think there could be fireworks.

The Bailout and Ban of Short-selling (of financial companies) were announced on September 19 when the Dow closed at 11,400. It has since fallen over 5% and has been down almost 9%. This occurred in only 8 trading days. I think people are beginning to realize that not allowing traders to sell forward and a measly $700 billion ain’t going to save the day.

Let’s do some math: $700 billion in taxpayer money, $455 trillion in outstanding derivatives. Thus the bailout constitutes a mere 1/6 of 1% of all the money in the game. This money doesn’t even exist in any form other than future profits and liabilities, yet. If even a fraction of this does, you can kiss any value in debt-based currencies goodbye.

Marked-to-Market accounting. Isn’t it fascinating how the same method that offered the biggest opportunity for fraud ultimately resulting in the collapse of Enron, is now causing havoc in the complex-priced derivatives market? But why mark-t0 market when we can just mark-to-model?

Isn’t bailing out the FDIC such a paradox?

I was reading Benjamin Graham‘s introduction to Security Analysis. It shows how stocks, as well as bonds, can often be more speculative than ensuring. And, with the language spoken and situation we are in, it seems like it could have been written yesterday.

Till next time!

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