| The Weekend Edition - September 12-13, 2009 |
Gold futures surpass $1,000 an ounce this week... The Mogambo on how to use your clunker to its full potential... Jim Nelson with 4 ways to protect against a falling dollar... Rob Parenteau suggests a new name for the recent holiday... Chris Mayer on the effects of this epic stimulus... Bill Bonner takes a look at the Fed's fake recovery...and more!
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The Daily Reckoning's Highlight of the Week:
Do We See a Golden Lining?
Baltimore, Maryland
The big news this week: after teetering on and around this level all week, gold futures went above $1,000 an ounce on Friday morning. What drove the boost? Well, the falling dollar, of course. The green back fell against the euro to a fresh one-year low...and investors turned, as the always do, to the yellow metal as a hedge.
This year, as the worldwide deficit spending eats away at currencies relative to gold and commodities, gold has risen 14%...while the Dollar Index has shed 5.6%.
No doubt the dollar will keep in this free-fall as the Feds chip away at it, but is this run-up in gold prices sustainable for the short- term? Probably not, we will most likely see a correction. But in the long-term...those who are holding gold should end up pleased.
In the Highlight of the Week, Bill Bonner looks at commodity prices and wonders why they aren't following the normal protocol for a depression.
...if it's a depression, how come commodities are up? And stocks are up? Above all, how come Chinese stocks are up? Everybody knows China earns its money selling products to Americans and other non-Chinese. If the rest of the world is in a depression, who is China going to sell to? How come China isn't in a depression already? But there you are - there's another thing that hasn't happened. Chinese stocks haven't collapsed.
And getting back to commodities, they're all up. Commodity prices don't go up in a depression; everybody knows that. They go down. But commodities are NOT in a bear market. Go figure.
And, of course, there's gold. The metal gave up a dollar on Friday, but it's still just $4 short of the $1,000 mark...and just a shadow below its all-time high. Gold is a commodity...but it's also money in its purest, more reliable form. Commodities go down in a depression. Money goes up. But since gold is an alternative to paper money, it tends to go up only when paper money goes down. As explained above, the dollar has NOT collapsed. So why is gold going up? It should be going down, reflecting the effect of a recession...
There are two possible answers.
First, maybe the iron laws of economics have been repealed.
Or, second...maybe the iron laws just haven't caught up to the market - yet.
[It's going to take longer than most realize for the market to recover...and who knows how many more billions in bailouts will be spent. However, due to a legal 'loophole' in the bailouts, you can collect 'bailout income' checks this year - and every year - until the US economy recovers. Your next check could be in the mail soon. Get the details here.] The above is just an excerpt from Bill's standout essay from this week. You can read it in its entirety on The Daily Reckoning site - it's an essay you don't want to miss. Get it here.
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The End of Our Dependence on Foreign Fuels?
Energy costs are rising. You and I both know that. Heck, in the past few months alone, the cost to heat and power my home has gone up by 27%.
The Navy knows that too...and they've tapped a secret source of energy 113 miles northeast of Los Angeles.
This source of energy has enough reserves to reduce our dependence on foreign oil...and my former Navy 'insider' has found a total of five ways by which you could grab a piece of the profits.
See here.
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| ALSO THIS WEEK in The Daily Reckoning: Don't worry if you were too busy grilling up some burgers and dogs on Labor Day and missed an issue of The Daily Reckoning...we have all of this week's issues catalogued for you, below...
Evicted From Your Brand-New Clunker
by The Mogambo Guru
Tampa Bay, Florida
"...since people can stop paying on their house but still live in it because the bank doesn't want to evict them, people will start living in their cars and stop paying on them, too!"
4 Ways to Protect Against a Falling Dollar
by Jim Nelson
Baltimore, Maryland
"...it wouldn't surprise us if the US' credit rating fell. That would cause an immediate panic in the currency markets and send the buying power of the dollar into a tailspin."
Unlabor Day
by Rob Parenteau
San Francisco, California
"As summer slips away into the flaming leaf show of fall, we conclude the labor market is still a mess, but we can find some broadening of hiring activity even though total payrolls are still contracting."
The Effects of Epic Stimulus
by Chris Mayer
Gaithersburg, Maryland
"These shifting patterns of trade always fascinate me. And we are living in an era of great change on that front, as new patterns emerge on a scale we have never seen."
The Fed's Fake Recovery
by Bill Bonner
London, England
"There are 500 basis points between zero and 5%. It would take a miracle for central bankers to find exactly the rate the market needs precisely when it needs it most."
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Before we sign off, we wanted to let you in on some pretty exciting news. Our most elite options trading service is having an amazing hot streak. In 2008, out of 37 recommended picks, not one of them was a loser...and if you played your cards right, you could have made $232,381 in profit.
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Enjoy the rest of your weekend,
Kate Incontrera
The Daily Reckoning
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| | | | The Daily Reckoning - Special Reports: | Gold: The Truth About Gold Fiat Currency: Using the Past to See into the Future Introducing the Single Best Way to Make Sure You'll Never Run Out of Money... | |
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