Greatest-ever buying opportunity
By The Mogambo Guru
Always on the lookout for signs of inflation in prices because that is the One
Big Thing To Be Feared (OBTTBF), I was alerted to the AP news report headline
that read "Retail sales slide, producer prices drop in August", with the
equally surprising subhead "Retail sales drop unexpectedly in August, wholesale
prices fall by largest in nearly two years."
It seems the Labor Department reported that "wholesale prices fell 0.9% last
month, nearly double the 0.5% decline that economists had been expecting",
which is a doubling, which seems like such good news to a guy who is phobic to
inflation in prices.
The concept of "doubling" seems like a lot - like when my boss
made a Big Hysterical Deal (BHD) that the number of clients complaining about
me had doubled - but in this case prices were finally not accelerating to the
upside, which is really nice for a change.
On the other hand, the worse news is that core inflation, which excludes energy
and food, was up 0.2% in August, which, when annualized at 2.4%, is Pretty Bad
News (PBN), although better than the actual 3.6% increase in "core" prices over
the last 12 months! Yikes!
And that is Much, Much Better (MMB) than the whopping 8.4% annualized inflation
one gets from the 0.7% inflation of July, which was so startling at the time
that I peed in my pants and my office chair still has a funny smell.
So pity the chumps who are, like you and me, paying higher prices for
everything at the rate of, even officially, 5.6%, which is bad enough, but who
are also buying bonds to lock-in the laughable yields of less than 2% on the
shorter debt to about 4.5% nominal yield on 30-year bonds! Hahahaha! Morons!
And pity the guys who are not buying gold and silver in the face of such
inflation, as you have to be impressed with the headline "This is the Greatest
Silver and Gold Buying Opportunity of All Time" by Alex Panameno at
Canadafreepress.com.
Now, everyone around here knows why I say that "right now is the greatest
silver and gold buying opportunity of all time", and when anyone sees me
walking down the street, I can hear them say to each other "Look out! There's
that Disgusting Mogambo Idiot (DMI)! Let's run away lest he catch hold of our
raiment and harangue us for hours about how the despicable Supreme Court ruled
that the Constitution was only joking when Article One, Section 10 said that
only silver and gold will be used as legal tender in payment of debts, and how
a private bank misleadingly calling itself the Federal Reserve has thus taken
the liberty to create too much fiat money and credit for too long, and how the
despicable and corrupt Congress aided and abetted them every step of the way of
the resultant boom, and now we have a Huge, Huge, Huge Freaking Price (HHHFP)
to pay in the inevitable bust that is about to consume us, which provides the
yin of the bust to the yang of the boom, and how gold, silver and oil are the
only things that one can buy to protect oneself because that is what has always
happened in the last 4,000 years of history, and that we are a bunch of idiots
because we are not buying gold and silver right now!"
So as I watch them nervously scuttling off, I think to myself "Exactly right!
You are idiots. And destined to be poor. And you are ugly, too! Hahaha!"
But while the people around here know me and hate my guts for it, they may not
be familiar with Mr Panameno, whose optimism about gold and silver are because
"the fundamental reasons that drive a market don't change ... The market
direction has no reason to change!"
Jim Willie of the Hat Trick Letter is also in keeping with this "no change"
thing, and writes, "The three major factors pulling the US$ down are the bank
losses, the housing decline, and the job loss situation. Nothing has changed
with these factors, except they have worsened!"
Mr Panameno jumps back in with "The fundamentals have not changed!" which are,
to mention just a few more, "High energy prices, government overspending, the
under-water banking system, the credit-mess, inflation and especially the mass
production of the fiat-based US Dollar."
I can see that this is drifting too far to the "theoretical" side of things for
my tastes, and my impatience flared, as all I want is a way to make a lot of
money by betting on gold and silver soaring in price, thanks to the corrupt,
irresponsible government and central bank, just like gold and silver have
always soared thanks to corrupt, irresponsible governments and central banks
acting irresponsibly for the last 4,000 years.
I guess they read my mind, and they immediately said, "The key fundamental
reason that drives gold and silver is the mass production of the US dollar.
Bottom line, inflation is caused by a devaluating dollar. The devaluating
dollar is caused by the mass production of paper currency."
They did not mention that since government spending is half of GDP, there is
going to be a lot more "inflation caused by a devaluating dollar" as the
government borrows and spends more and more money as more and more people turn
to the government for help, and that means prices will rise, and gold will go
higher and higher.
Like we said: it's the greatest buying opportunity for gold and silver of all
time! Whee!
Richard Daughty is general partner and COO for Smith Consultant Group,
serving the financial and medical communities, and the editor of The Mogambo
Guru economic newsletter - an avocational exercise to heap disrespect on those
who desperately deserve it.
(Republished with permission from
The Daily Reckoning. Copyright 2008, The Daily Reckoning.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
