Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Natural Resource Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Ruffian who wrote (3396)	11/15/2003 12:50:45 AM
From: Jim Willie CB	Respond to of 108672

excellent summary of actual cost of living inflation / jw

To: Ruffian who wrote (3396)	11/15/2003 11:31:49 AM
From: Jim Willie CB	Respond to of 108672

great to have the #1 SI newshound onboard this thread / jw

To: Ruffian who wrote (3396)	11/15/2003 2:33:46 PM
From: Jim Willie CB	Respond to of 108672

Why the Fed will have to hike Steve Saville 14 November, 2003 [ME: beware of John Mauldin, a very smart man who harbors far too much conventional "dense" thinking... we have a broadside attack of bonds underway... the first was in July... the next will be in the next several weeks, as commodity and energy supply prices escalate... long-term interest rates are gonna rise bigtime] 321gold.com Extracted from commentary posted at www.speculative-investor.com on 13 November 2003: In the 22nd October Interim Update we explained why we think the Fed will have to hike official interest rates over the coming 12 months by more than the market is presently anticipating. Then, in the 29th October Interim Update, we predicted that the Fed would begin talking about the risks of rising inflation by the 28th January FOMC Meeting. We are now going to revisit this matter because it is so important and because we perceive a large mismatch between the consensus view and what is actually going to happen. Many of our readers would be familiar with John Mauldin and his free newsletter that gets sent out to literally millions of people each week. Mr Mauldin doesn't expect the Fed to raise interest rates at all over the coming year so his view could not be described as typical (the consensus view is that there will be a modest increase in rates). However, his reasons for not expecting any rate hikes from the Fed are representative of the wrong-headed thinking that appears to be dominating interest rate discussions. If you haven't already done so we suggest that you read Mr Mauldin's latest analysis for a 'take' on why the Fed won't hike next year. In summary, the argument is that a) the Fed wants to see sustainable employment growth before hiking rates, and b) the Fed is going to buy insurance for a growing economy in the form of lower rates until after the November 2004 elections. These arguments would be valid if the short-term interest rate set by the Fed controlled the long-term interest rates set by the market, that is, if keeping the Fed Funds Rate at a very low level guaranteed that long-term interest rates would remain low. In the real world, though, the opposite is true in that the Fed is typically dragged along, 'kicking and screaming', by the bond market. We've attempted to illustrate the lead-lag relationship between the bond market and the Fed on the below chart of the 30-year bond yield. ... it continues / jim

To: Ruffian who wrote (3396)	11/16/2003 10:40:30 PM
From: Jim Willie CB	Respond to of 108672

Pull the Trigger, by Richard Russell (Dow Theory Letters) Nov 17, 2003 [ME: Russell is a successful, and somewhat conservative investment advisor with the best track record over the last 30 years of any US guru] 321gold.com I believe gold below and even somewhat above 400 dollars an ounce is dirt cheap. In view of the amount of Fed-generated fiat paper that will have to be churned out in coming years (it will be in the multi-trillions of dollars), gold is the cheapest thing around. The US government, states, cities, corporations and individuals are currently loaded with $32 trillion in debt. On top of that, the US government has additional unfunded liabilities of around $44 trillion, all of which will have to financed. For these reasons, it's my thesis that gold at $400 an ounce is ridiculously cheap. As a comparison, gold today is less than half the price it was at its 1980 high. I believe three or four or five years from now we'll look back at today's price of $400 dollar gold and ask ourselves, "Where the devil were we? What were we thinking about? Gold at $400 was cheaper than dirt. Why didn't we recognize this back in the year 2003?" /jim