Break the $1,100 barrier today? Maybe. The price of gold did a moonshot on Tuesday when word of a major gold sale from the IMF to India was announced. Gold (chart above) continued its move early this morning and there’s a good chance today we could pass the $1,100 mark. The question, however, is when does a pullback begin; or does one happen in here at all?
The challenge to all this for the aware investor is sorting out what’s really going on here. True enough, the headlines are saying that the price of gold has gone up about $25 in the last 24-hours. nice move, yada, yada, yada. But there’s another possibility – and this is The Big Ugly that no one else will be mentioning in headline today: The purchasing power of the Dollar just went down more than 2-10th’s of one percent. Shhhh! Don’t say that too loudly!
The Big Ugly is something the Fed will have real problems with when it creeps out. For today’s meeting of the Fed, no move is about a slam dunk. Despite some statistical hints on the economic front that a bottom may be in, Americans are pretty damn skeptical since unemployment is still sky-high and outsourcing is continuing. Just yesterday Acme & Acme…I mean Johnson & Johnson announced they would be laying off around 8,200 of their workforce.
Against this background (unemployed, record foreclosures, continuing mass layoffs) you can’t really be surprised that the republicorps posted big governorship wins in both Virginia and New Jersey. As that famous economist Bob Dylan said: “You don’t need to be a weatherman to know which way the wind blows“. Besides, any economist without a discography (like Dylan’s), or at least a humorous anthology, must surely be a fraud.
You could do worse than join me as a member of the Bob Dylan/Mark Twain School of Economics. Their stuff made sense: “I am opposed to millionaires, but it would be dangerous to offer me the position.” said Twain. Or Dylan’s “Democracy don’t rule the world, You’d better get that in your head; This world is ruled by violence, But I guess that’s better left unsaid.” Truly.
Local government, unchanging as the sunrise for at least three more years, still has its hooks out – as stories from news outfits like the Sandusky Register leak that “Home prices drop steadily but tax valuations show little change“. Being repeated almost everywhere – which means local government hasn’t come to terms with economic reality yet and consequently, government has been one of the more secure places to work, at least as long as you don’t have a partisan label on your nameplate.
Even in places like lesser-hit Texas, I’m expect to file a property tax evaluation appeal if our assessed value goes up – which it shouldn’t…but like I said, local government still hasn’t tasted cake like the working class…yet.
Bottom Line here: Gold may go up further, gold may have a pullback, Fed’s not likely to do anything today but they are being herded into a box canyon on rates. Oh…did I mention beer’s still too expensive?
Ain’t economics simple?
More good reading: BBC financial editor Stephanie Flander’s piece “The Economists New Clothes“.
As We Go Crashing
…at least we’re going slower….a tad slower…. “Pace of job losses slows: ADP Report shows payroll decline lessons. Challenger report points to fewer job cut announcements.” Hard sell at Acme & Acme, though.
Woo hooo! Is this a green shoot or….uh…..If this was an airplane, we’d all still be in the crash position to survive impact. Green shoots would be the flying equivalent of the seat back trays coming down and cocktail service coming through the cabin…so let’s not get that precise. Let’s just memer on…”Good Times Are Just Ahead!” You Acme-ites with us or against us?
Government having its hooks out is not just something down at the county assessor’s office. It’s also going on in Washington where unsatisfied with how many billions in secrets under the TARP and a trillion dollar healthcare plan, we’re now reading how a “Proposed law would require pay for sick workers.“
As a self employed person, I have to figure out how to handle the accounting of telling myself to stay home, since I am home, and how to pay myself which I’m already doing. These ideas from Washington are obviously the root of many substance abuse problems. I spend weeks trying to get this stuff right.
Word that a girly-girl fight on a subway results from a cough in New York is a fine thing. Figure it’ll all be repackaged by government PR wonks as the rollout of a new national fitness program, or some such.
Vote for Money
The report that the “House repudiates report on Gaza war” doesn’t mean to me that the UN investigation is wrong in its conclusions. Only that there was more money on the table behind rejecting it than embracing its findings. Congressional elections come next year and checkbook democracy is hard at work for you.
Washington Truth: Can’t say No to Dough or you Go. Too bad no enterprising member of congress has figured up a rebate plan for folks in the district…ooops! Forgot about pork…sorry.
Why The Country’s In Trouble
The report in the Washington Post this morning that “Policies sought to add jobs without piling on the deficit” is amusing.
The fact, as any damn fool can see, is that there really is no free lunch. Yet, after making so many promises of free lunches, dinners, healthcare systems, etc. the folks in Washington have kinda gotten into lockstep group-think on this track. Looking under this rock and that for an idea which will magically unwind economic reality but just for this one special cause…that of employment is crazy. But then, consider who is doing the searching…
Unfortunately, every special interest group with a spending agenda has already looked under every rock, tilling up whole fields, too, trying to find the next magic bullet. Why, their perseverance inspires awe. As in “Aw sh*t, are they trying that same old answer again?”
Shake & Quake
5.3 off the Oregon Coast this morning. If the 2012′ers are right…this level of quake oughta be a nonevent by 2011. Not even worth mentioning amongst the 7′s and 8′s which ought to be along by then. Earthquake insurance? Going the route of buggy whips. You saw recently where it was estimated a 7.2 shaker in California could cost insurance outfits $19-billion?