Tommaso, I was waiting for the second tablet with the other five commandments(G).
1. The upside of gold is limited not only by the low cost leaching technology, but mostly by the 20,000 tonnes of the stuff above ground (in coffers of central banks) just waiting for a rally to sell into. I believe central bankers have decided a long time ago (maybe even during the Brentwood meeting?), that gold will never gain serve as a monetary instrument, if they let it serves as such, they will doom the world to permanent inflation (it is simple mathematics, and I can go through the calculations again if you insist).
2. I think it is easy to forget that the US has served as a consumer of last resort to the world's economy in the last two years, stopping a catastrophic cascade starting in Asia and going through Russia and other countries, in essence saving the world from a major economic contraction cycle. Thus our horrendous trade deficit. If the dollar goes much lower (more on average than the 10% I mentioned earlier), and thus the competing currencies (Euro and Yen) go higher, suddenly, many of our products will become "too competitive" our trading partners are trying to avoid this (thus BOJ interventions at the 102 to 104 yen/ollar level, so far).
3.As for high multiple stocks, I rarely wait for the "end" one way or the other, it is enough for me to be with the trend part of the way, I prefer uptrends, since I do not have the constitution to go short. I am not bashful staying in cash, and right now, I even start to find stocks under book and with PE's in the "respectable " range of 8 to 12, of course the danger with these, they can stay that way for a long time, so I try and buy them on "breakouts. Sometimes, I get "stuck". I can also draw some wonderful rationale why one would put a high price on stocks not having yet any earnings, but I'll leave this for the next five tablets (G).
4. No arguments.
5. I despise the yellow (it is something "religious with me, my direct ancestors were severely punished when they bowed to the golden calf<vbg>), as for oil, sure, but I do not expect spikes above $35 to last more than a fleeting moment, simply because there are plenty of alternatives to crude that become cost effective above these prices.
Zeev |
