<Every time CNBC mentions gold, they positively sneer at it. They don't treat other non-performing sectors, such as commodities, in the same way.>
Fact#1: The U.S. Federal Government views Gold as financial public enemy NUMBER ONE. The Bush Administration is no different. This country is now in a position where it has to keep Gold down at all times, or see its position as the supplier of the world's sole reserve currency die.
Before you invest in Gold or a Gold Stock you must understand the present situation: the U.S. Dollar is the reserve currency of the world.
Yes, Gold is the shining alternative to the U.S. Dollar. It is waiting in the wings. It can be trashed, scorned, manipulated but not destroyed.
The fundamentals are compelling for some sort of long position in gold and gold stocks. Fact#2: Last year, the NET external debt of the United States increased by 44.1%. U.S. interest rates are imploding, U.S. markets are hanging by a thread. Yet the Dollar is rising. That is not sustainable given the current economic backdrop. But trying to pick the top of a bubble is almost impossible.
The Fed has cut short-term U.S. rates by 275 basis points in 6 months. But U.S. stock markets are still all in the red, and corporate and Treasury debt paper is a wasteland.
The U.S. Dollar is in a Bubble. In a Bubble, rational valuations are ignored. But Bubbles do eventually burst.
These are my thoughts from the Jersey Shore on the beach.
Message sent on my Palm IIIc.
Enjoy the weekend. |
