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  • Central Bank Insurance

    Possibly, the question I am asked the most is, "What do you think about gold?" While I have written brief bits about the yellow metal, I cannot remember the last time I devoted a full e-letter to the subject of gold. Longtime readers know that I am a steady buyer of gold, but to my mind that is different from being bullish on gold. In this week's letter we will look at some recent research on gold and try to separate some of the myths surrounding gold from the rationale as to why you might want to own some of the "barbarous relic," as Keynes called it. My personal reasons for owning gold have evolved over the years. I will tell you the story of my own journey, and you can decide for yourself whether to think about coming along.

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  • Peak Oil or Peak Energy? – A Happy Solution

    A consistent theme in this letter has been the connections between items that may seem to be far removed from each other but are actually linked at the very core. If you push on one end you get a reaction in what would seem to be the most unlikely spots. Today we explore the connection between the fiscal deficit and energy policy. Everyone in Washington is starting to “get religion” about wanting to fix the deficit, with serious thinkers on all sides acknowledging that there must be reform and a path to a balanced budget. Burgeoning healthcare and Social Security costs are rightly pointed to as the problem, and entitlement reform will soon be front and center.

    But the fiscal (government) deficit in the US cannot go away unless we also deal with the trade deficit. As we will see, it is a simple accounting issue, and one based on 400 years of accepted accounting principles. And dealing with the trade deficit in the US means working with our energy policy.

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  • A Gold Standard?

    There are times, my friends Michael Lewitt and Dr. Lacy Hunt agreed today at lunch, when the study of economics is best informed by a sound knowledge of history. Indeed, Michael's son wants to follow his father into the finance world, and Michael is starting him off in history. I have spent hours listening to Lacy stroll through economic history, detailing the path of economic thought from Fisher to Kindleberger to Minsky. The last few days have been one of those times when I realized how much I don't know and how much more there is to learn. Not only Lacy and Michael are here in Florida, but a long list of bright minds to learn from. James Rickards, who has recently written the tour de force book Currency Wars, Harry Dent, Doug Casey, Porter Stansberry, Greg Weldon, and John Williams of Shadow Stats, with whom I look forward to meeting (do I have questions for him!). And so many more.

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  • It’s All About the Jobs… and Gold

    The Flat Earth (Employment) Society
    Let’s Do a Little Time Travel
    The Implications of an Older Workforce
    How Do We “Fix” the Employment Problem?
    Some Thoughts on Gold
    Europe, New York, Conferences, Etc.

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  • The Multiplication of Money

    The economy grew in the fourth quarter by 5.9%, the most in years. The adjusted monetary base is exploding. Bank reserves are literally through the roof. The Fed is flooding money into the system in an effort to get banks to lend. An historically normal response by banks (to increase lending) would have been massively inflationary, causing the Fed to stomp on the brakes. Despite raising the almost meaningless discount rate (as who uses it?), this week Ben Bernanke assured Congress of an easy monetary policy, with rates remaining low for a long time. Many ask, how can this not be inflationary?

    This week we look at some fundamentals of money supply and the economy. If you understand this, you won't get misled by people selling investments, telling you to buy this or that based on some chart that shows whatever they are selling to be what you absolutely have to have to protect your portfolio and/or make massive profits. And we touch on a few odds and ends. And yes, I can't resist, a few more thoughts on Greece. It will make for an interesting letter, as I'm writing on a plane to San Jose. And it will print a bit longer than usual, because there are a lot of charts.

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  • Back to the Future Recession

    This week we look at the second half of my speech from a few weeks ago at my annual Strategic Investment Conference in La Jolla. If you have not read the first part, you can review it in the website. The first few paragraphs are a repeat from last week, to give us some context. Please note that this is somewhat edited from the original, and I have added a few ideas. You can also go there to sign up to get this letter sent to you free each week.

    MV=PQ

    Okay, when you become a central banker, you are taken into a back room and they do a DNA change on you. You are henceforth and forever genetically incapable of allowing deflation on your watch. It becomes the first and foremost thought on your mind: deflation, we can't have it....
  • Thoughts on the Continuing Crisis

    Thoughts on the Continuing Crisis Margin Clerks of the World, Unite! Where Do We Find New Sources of Credit? In Defense of Alan Greenspan What Now for Gold, Oil, Etc? Baseball, Mexico, and Travel Costs My essay in Outside the Box last Monday seemed to...
  • Gold, Housing and the Yield Curve

    Introduction I have often written about the high probability of a recession following an inverted yield curve (where short-term rates are higher than long-term rates), based upon research which suggests the yield curve is our most reliable indicator of...
  • It's All About Your Time Frame

    Introduction It's a slow Thanksgiving Friday, and I decided I would rather be writing to you than shopping in the malls. In fact, I would pay good money not to go to the malls today. Which my kids think I am because they pointed out on Thanksgiving...
  • As Though It Were Real Money

    Introduction "Our analysis leads us to believe that recovery is only sound if it does come from itself. For any revival which is merely due to artificial stimulus leaves part of the work of depression undone and adds, to an undigested remnant of...
  • Forecast 2005: The See-Saw Economy

    Introduction Once again it's time for me to demonstrate the foolhardy part of my nature by putting to electronic pen my forecast for 2005. I spend more research time on this one letter than on any four or five combined, simply reading hundreds of...
  • Don't Confuse Me With the Facts

    Introduction Why do we do the things we do? How can two people, or even large groups, look at the same set of facts and come to such widely different conclusions? Maybe even more important would be to ask why? Is there some bias involved? Does being a...