Links Fest and Summaries

Why I’m Happy to Hold Wealth in Gold and Silver

“Gold has been in a great bull market for a decade and, though still in a corrective phase, has still risen solidly for months. It started the year at $880; at mid-year it is $926.70. That’s a rise of 5.3%, or 10.6% annualized. And if double-digit annualized returns are what gold is giving when it is “sleeping,” what will it do when it awakes? Silver started the year at $11.33. At mid-year, it was $13.54. Again, maybe many are not satisfied. But do the math and you get a 19.5% return. That’s nearly 40% annualized”.

Yes, that’s one of the wonderful things about buying low. No excitement, no competitive bidding wars.

Seven Secret Hiding Places for Your Cash (random, yes I know)

1. In the freezer wrapped in aluminum foil. 2. Sandwiched between the cardboard backing of a hard-to-reach picture frame. 3. Under a piano, entertainment center or anything weighing a couple hundred pounds or more. 4. Inside a used can of soup.
5. Buried in the “soil” of a fake plant. 6. In hollowed out pages of a book on your book shelf. 7. Inside a kid’s toy hidden in their closet.

Catching the Gold Bug

WSJ had an interesting yet still skeptical article on gold. Many points can be admired and many argued. I’d say their still half-way between complete denial and euphoria.

“More and more investors are acquiring physical gold, or bullion, in the form of small bars the size of iPhones or coins like American Eagles and South African Krugerrands. Individuals’ bullion purchases almost doubled last year, amid apocalyptic panic over the financial system, to 862 metric tons. “When you’re in uncharted economic waters, people buy gold.” The U.S. Mint, the federal agency that makes America’s coins, has had to step up its gold-coin production.”

Cheaper Airfares to Boost Demand

“Southwest Airlines, the largest discounter, led six other major U.S. carriers in offering one- way fares as low as $30 to generate demand when the peak U.S. travel season wanes in September. The sale is Southwest’s biggest nationwide reduction in 13 years. Delta, American, United, Continental, JetBlue and US Air joined Southwest in offering sale prices today and tomorrow for travel Sept. 9 through Nov. 18”.

Bloomberg: Britain Currency to Crumble

“Our public finances are easily the worst we’ve ever had in peacetime. The amount of borrowing the government will have to do as a result of the deficit is very worrying. In a worst-case scenario, there could be a run on the currency. Britain needs deep cuts in government spending right away. This kind of red ink implies both spending cuts and tax hikes that could make the 1980s look like a teddy bear’s picnic”.

Your Best Shot to Buy Cheap Gold This Year

“A move down to support at $810 puts gold just above its 40-month EMA. It keeps the bull market intact, and it creates a wonderful risk/reward setup for buying the metal”.

Do bear in mind that we may never see $810 again. If we do it is sure to be a brief occasion. And even then, who’s to say there will be any precious metal available for purchase.

We’re in the Middle of a Crash

Nassim Nicholes Taleb, author of “The Black Swan” says “We’re in the middle of a crash, so if I’m going to forecast something, it is that it’s going to get worse, not better. The government needs to deleverage debt and not try stimulus packages that will inflate assets”.

Investors More Confident, Equity Holdings at 2009 High

“U.S. fund managers’ exposure to stocks rose to the highest level this year in June, encouraged by growing evidence the economy is coming out of its worst recession in decades, a Reuters poll showed on Tuesday. between June 16 and 29, firms held an average of 62.5 percent of their assets in equities. In 2008, exposure to equities peaked in March at 64.7 percent of assets – the same month that U.S. bank Bear Stearns collapsed”.

Note that such a development is extremely bearish. Unlike assets which work based on the supply of goods, stocks fair based on the supply of buyers. As buyers disappear, so do gains.

Jim Rogers Sells Dollars, Plans to Short Treasuries

“The government is printing lots of money and borrowing even more; that’s not the basis for a sound currency. The idea that anybody would lend money to the U.S. government for 30 years at 3 or 4 or 5 or 6 percent interest is mind-boggling to me.”

Stocks in Sri Lanka are the only equities Rogers said he would consider buying at the moment, adding that he plans to hold on to his holdings in China for many years to come.

The Cheapest Places to Live in the World for $500 a Month

Thailand, Cambodia, Philippines, Costa Rica, Belize.



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