E.D. Hart

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  • Why Oil and Gold Are Headed Much Higher
    The authors comment, citing an analyst that gold would be $2200 inflation adjusted is based on published reported Government inflation data.
    Real inflation over the last 25 years is likely 2-3 times higher, based on shadowstats.com, and global monetary growth.

    Thus, by my back of the envelope calculations, gold has quite a bit of catch up to do, and in real inflation terms, (not bogus government data) the price should be headed to north of $3500 per ounce.

    Moreover, gold is perhaps the single most manipulated commodity by governments worldwide.

    It is always in the interests of the gov. to encourage gold leasing, gold paper contracts short sales, and falsifying government reserve holdings.
    Considerable evidence has been published to show this is exactly what is happening.

    As the world comes to a new era of the unwinding of the great credit bubble of 1983 to 2008--metals and commodities will be primary beneficiaries.

    In the short term, (two years) gold and other commodities may fall another 20%--but the bull market is intact for commodities, and gold.

    Full disclosure: I don't own a concrete bunker, nor so I stockpile bottled water, ammunition, and old Soldiers of Fortune magazines.
    Oct 19 23:33 pm |Rating: 0 0 |Link to Comment |View article
  • Why I'm Not Worried About the Market
    LT--Good points. I dont pretend to know what the future holds. I try to hedge both ways, with commodities, currencies, and quality stocks.

    The reference to Japan was that NO ONE PREDICTED IT, AND AFTER IT HAPPENED, THE CONSENSUS WAS THAT IT WOULD WORK OUT IN A COUPLE OF MONTHS, THEN A COUPLE OF YEARS, THEN A COUPLE OF DECADES. (and still not recovered).

    Ok so were AMERICANS were smarter, bigger, faster, stronger---it cant happen here--seems to be the view.

    It was a reference to human psychology, and how the improbable is discounted, denied, and gradually accepted. The reference to war was the same--people dancing in the streets and the markets reacting positively at first, no idea of what the true shock that lied in wait.

    The US housing market has wiped out $3 trillion worth of homeowners equity, and reliable sources indicate that we will likely see another $3 trillion in homeowner equity destroyed, just as baby boomers are hitting retirement.

    An article in the WSJ today, tucked away in the back indicated the harmful effects of inflation--that by the end of the 70'S the average PE multiple had fallen to 7. That when iflation increases a percent yoy, the corresponding return in markets is miniscule. Others point ot the corporate margins being at all time highs, and can only fall.

    Falling margins, falling PEs, falling homeowner equity--its a perfect storm. (odwn the road next year--higher taxes, higher interests rates) It spells lower markets for some time to come. My own prediction is (since predicting is free) that the DOW will hit 9000 sometime before the end of 2010, when we start to dig out of this hole.

    Your right--we will survive.

    We will be the largest Economy (until 2035) , but maybe not the best run (See Canada, Singapore) nor the highest return (Brazil), nor the most efficient in the use of resources for education and healthcare (two areas we spend way more than other developed countries on average, with much worse results--Im an educator).

    Im optimistic for the future--we will find a way through this crisis, but the shock is much bigger than what people are positioned for.
    Feb 26 16:22 pm |Rating: 0 0 |Link to Comment |View article
  • Why I'm Not Worried About the Market
    Read "Black Swan" by Taleb. He pretty much demolishes the argument that "we always manage to make it somehow, so this wont be that bad". A Thanksgiving turkey reason that each day he is fed by the farmer he is safe because he has always been taken care of before. THe turkey has no idea of his fate. Ok, just one of many examples in the book.

    In fact, prior to WW1, people were dancing in the streets in London (AND US) as war was declared, with no concept of what the war would extact from the country in blood and treasure. Same for the US civil war. The markets didnt react harshly at frst.

    Countless examples exist of exogenous shocks that people seem to to deny, then ignore, then dig in to wait out, thinking it can't get any worse, and then finally seeing each year getting worse....for years. (Take a look at Japans recent market history--Nikkei still hasnt recovered from 1989)

    We are witnessing the end of the US Dollar hegemony and the unwinding of 30 years + of profligate monetary policy. To say it is all gonna be dandy because it always works out shows little understanding of monetary history. It may be devastating, or it may simply be awful, but it makes sense to hedge your bets and ask "what if Im wrong?"

    Well what if Im wrong? If Im wrong and the housing, financial, and stock markets rebound in a year or two, and we all go back to happyville, then I didnt really lose out because my insurance policy is GG, SLW, XTO, PAL, XES, and other stocks that are about 50% of my portfolio. The rest is blue chips.

    Buy and insurance policy and hedge your bets, and ask "what if your wrong?"
    Feb 26 02:06 am |Rating: 0 0 |Link to Comment |View article

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