Hambone -- trotsky, 10:32:20 08/11/06 Fri
a bit baffled, yes, but as i said before, i'm willing to give the bull the benefit of the doubt. you're of course right that the market will only really show its hand by September when everybody's back. nevertheless, the fact is that currently, the technical picture doesn't really look bad - we're above all the important moving averages, the ma's are rising, we've built a triangle in gold and the HUI - at worst a neutral formation - and at the same time, bullish sentiment is non-existent. this latter fact is encouraging because it's contrary to the short term trend. i define the short term trend as what has happened since the June correction low. we're going up since that low was made - in fits and starts, without any terribly convincing strong short term moves, but up nonetheless.
the rest of the market is holding us back here, but sentiment is very lopsided there as well (which argues for some sort of short term bounce not being far away).
IDT -- trotsky, 10:17:48 08/11/06 Fri
there is little doubt that the inflationary fiat money system encourages malinvestment. however, i still take issue with your reservations. note that private capital will tend to gravitate toward those areas of investment that promise the highest rates of return. the fact that a lot of capital is misled by the false signals emitted by the artificial booms created by monetary policy does not change the fact that voluntary exchanges are beneficial.
as to "I would argue that these Austrian economics principals taken individually make sense, but collectively they won't operate as expected because the system isn't operating as a free market in the way that Austrian economics is intended to function."
what makes sense individually ALWAYS makes sense on a macro level as well. why would economic laws become inoperable just because the scale looked at is bigger? it is true that the system as it's operated isn't a truly free market, but it is at least PARTIALLY free. also, just because the system overall isn't a truly free market, doesn't mean that the laws of economics cease to function. every little bit of economic freedom will enhance our standard of living over time, regardless of the system's overall state. let us for argument's sake assume that because we have noticed that the system overall isn't as free as it should be, we decide to stop all international trade (this is the logical conclusion of protectionist doctrine - if hampering trade a 'little bit' is good, then stopping it altogether must be just grand). that way we'd be consistent, since then there would be even less economic freedom. should we expect that this would make us richer? i doubt it, or rather, i'm absolutely certain that it would have the opposite effect (this is a case where one can already point to real life examples, such as Smooth-Hawley).
@pm sentiment -- trotsky, 09:50:04 08/11/06 Fri
not surprisingly, the Rydex pm fund had another outflow yesterday, erasing the inflows of the previous day. as a result, the cash flow ratio remains mired at a 42 month low - iow, Rydex traders remain more bearish than at both the 2004 and 2005 lows.
well, so we have lots of bears, or rather, a dearth of bulls. there's only one thing conspicuously still amiss - namely a decline in pm shares. for some reason, it just ain't happening thus far.
@rotten eggs -- trotsky, 07:44:20 08/11/06 Fri
this article (linked below) was posted here yesterday, but i thought it worthwhile to draw everyone's attention to it again. for one thing, it is very refreshing to see an Indian money manager putting the India story into perspective. i have always harbored considerable doubt about recent economic progress there - knowing what a slow-moving corrupt moloch India's vast bureaucracy is, and what a bunch of thugs its politicians (certain historical figures excepted of course) by and large are (Raja, correct me if i'm wrong).
anyway, one little remark struck me as especially noteworthy:
"...In every western country there has been some political backlash against the job outsourcing to India, even though, according to a report of McKinsey, for every dollar of work outsourced to India, the U.S. gains $1.12-$1.14."
and so it is with free trade and outsourcing generally - we GAIN more than we LOSE. the reason why most people think othwerwise is that they are not thinking things through. there are both SEEN and UNSEEN effects in every economic transaction. the rule by which one can determine if, on the whole, a transaction is likely to be beneficial, is whether it is entered into voluntarily.
the major unseen effect of outsourcing of course is the money SAVED and thus employed ELSEWHERE. by losing the jobs outsourced to India, capital is freed up for better use, creating new - and presumably better - jobs in new industries. why anyone would believe that the increasing division of labor is suddenly a 'bad thing' just because it has gone global is truly beyond me.
of course this rational approach is not a vote-winner, which is why many politicians , eyes firmly fixed on YOUR wallet, will utter platitudes about 'fair trade' and the like. it's an appeal to the public's emotions - xenophobia and protectionism ALWAYS sell.
rotten eggs article
this post wouldn't be complete without Bastiat's famous petition of the candle-stick makers - who want to outlaw the sun, since its rays are impertinently imported FOR FREE - which naturally hurts domestic producers of candle-sticks, lanterns, street lamps, etc.
Bastiat's petition of the candle-stick makers
bastiat.org
Hambone@CAU -- trotsky, 14:30:21 08/10/06 Thu
certainly the value of McDonalds has been wrung out of it (the Monatana deposit they lost to the anti-cyanide regs). in the meantime however, they had excellent drilling results at Briggs, plus they still own an extensive portfolio of exploration properties, some of which have been farmed out into a uranium exploration JV. anyway, it has potential, thus the valuation. there's a number of stocks floating on their potential - see e.g. VGZ. |
