Monday, November 9, 2009

Update 11/9

Have decided to bail out of PSTIX and am going all in for the gold fund OCMGX (today at 22.65) for a total of $9,725 in OCMGX. The DOW and Gold simply want to go to the moon.

At the recent G20 meeting, the verdict in regards to the US Dollar (with our shameful leaders in agreement) is "let it sink like an boulder off a cliff". The "carry trade" is whats lifting the stock market, and Bernanke has apparently said this will continue until the unemployment rate begins to drop again, and this could be quite a while.

The overall trends here seem to be that all this money being printed is going one of two places: the stock markets and the US bond markets, neither of which have any trouble attracting huge amounts of money. But for the rest of us in Hooverville, the availability of cash is actually headed south as indicated by last week's consumer credit numbers; economist David Rosenberg says that 1/5th of all consumer credit is gone on a permanent basis so far. Worse, the value of the dollar versus crude oil is going down, making basic goods more and more expensive at a time when unemployment is rising and available credit is sinking.

There is a consequence to this, and that consequence will be inflation.. by year's end I can see gas hitting $3.00/gal and if this continues unabated, will near $4.00/gal next summer. Food (which is transported by truck in most cases) will also go up in price. Worse, I honestly think the Obama Administration could care less (because of environmental reasons) if gas hits $4.00/gal. But they should care for economic reasons; this means consumers will have less to spend and to pay bills with, affecting retail stores and loan default rates.

Once again, this is going to end very badly.

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