Why should this day be any different?

Just because it's year end, doesn't mean that the day should be different than the other days where gold is nicely higher in Asia, only to reverse lower in Europe.

Gold bounced off resistance at $847+. However, the dollar index is quite weak and oil is stronger. My guess is the bears are using the thin volume to keep the lid on the upside.

It's very early so we'll see. But one of the lessons I have learned over the years is gold rarely reverses itself to the upside in NY. On the other hand, gold makes it a habit to give up any and all gains and will reverse to the downside in a heartbeat. That's NY trading for you

Where we stand at the end of 2007

As I type this on Sunday, December 30th, around 3pm, my Philadelphia Eagles are beating the Buffalo Bills 10-6. The Eagles this season are kinda similar to the economy at the start of 2007. Both were supposed to be good this year and both stumbled when it was revealed that both had major flaws. In the Eagles case it was a shaky defense, QB and offensive line. In the economy's case it was a housing market that was supposed to bottom this year, a credit crisis that "Wall Street" didn't see coming, and a credit derivative situation that no one talks about. A situation that now stands at over $600 Trillion dollars. ( If you want to sound educated be like me and say over $1/2 a quadrillion dollars---it really impresses the chicks!).

So, what to make of 2008? Unfortunately, what I see happening here, is something that many never thought would happen; and that is we are turning into Japan circa 1990. Our banks are refusing to write off the full amount of their mortgage/derivative exposure, the Fed and the US Gov't are conducting laughable attempts at putting a band aid over the situation, all this while the situation gets worse. For the banks part, I think, at this point, even they don't know the true extent of their losses as they, themselves don't even know the extent of the carnage.

So, where does this leave us for 2008?

Unless gold has a major splattering tomorrow, which is always possible, well, because it's gold, I owe a couple of people dinner. I thought there would be no way in hell that gold would be able to close over $800 at the end of the year? Never in history has gold ended a month over $800--let alone a year. I even had a bet with one scribe that gold would see $765 before it saw $850. I might lose this bet also.

It seems, maybe, hopefully, please God, let it be, that gold is finally trading on its' own merits. During this short covering rally that the dollar just concluded, gold acted very well. In gold's favor, the amount of liquidity that has been pumped into the financial system is mind boggling. The ECB, last week pumped in over $1/2 Trillion in one day to keep the money markets juiced with enough liquidity for the year end. Does anyone really think the ECB can just withdraw that money? During this short covering rally that the dollar just concluded, gold acted very well.

The Fed has promised to pump enough money into the system for as long is necessary. Is this deflationary? Inflationary? On one hand, what is going on is deflationary. During a credit crisis, banks refuse to lend out money. On the other hand, the Fed continually pumping the wheel via injections and interest rate cuts is inflationary. In then end, the US economy is going through a nice bout of stagflation. And that my friends, is like crack to gold and death to stocks.

Tomorrow should be interesting in the gold market. First, no one is around. Second, gold is poised to break through the double top of $847 and change. By some miracle is gold gets through this level convincingly, say $852, I will be buying with both hands and feet. This trick worked when gold broker through $802 the first time. (I had buy stops over $805). IF GOLD BREAKS $852, THEN IMO, IT WILL MAKE A MOON SHOT TO $887. I would expect the gold stocks to follow.

On the other hand, like I mentioned, no one is around, so the bears will try everything in their power to prevent the breakout from happening. It should be an interesting day.


I have thought about this for a while, but I really can't see how in 2008 the markets can go higher on a sustained basis. There is a slowing economy (either in recession already or heading there) record oil prices, the credit crunch, housing problems etc, etc. Yet, the markets are within 7% of their all time highs. So either reality has not caught up with the markets or the markets are discounting all this and say the worst has passed. I will be betting on the former.

I don't think the housing problems, nor the mortgage/derivative situation get solved in 2008--if anything they get worse. I can't see the consumer who is overmaxxed on his cc's and HELOC's keeping up their rapid spending spree. I do see tax revenues falling at every level as home prices fall and homeowners demanding (and receiving) lower tax bills. I see a dollar, which has finished its' short covering rally crashing to all new lows. In all, I see a pretty bad 2008.

All roads point to gold.

tap....tap...tap...tap.tap.tap....is this thing on?

Now that I am finally free from the shackles of the retail investment world, it's time to have a little fun, share a little knowledge, but most importantly try and make money. (In due time, I will explain why the big wire houses are pure evil and should probably be avoided by the retail investor.)

I have been an investment (cough, cough) professional, for the last 15 years, so I think I might know a little how these things called stocks and the markets work. (I stress the word "little" as this is an education and we are all learning all the time).

I want to use this blog to share my ideas, hopefully dole out some good advice and again, most importantly help everyone (most importantly, me) make money.

Here, for the next couple of years at the least, this blog will have a concentration on precious metals (most specifically gold and silver) and gold stocks. This is the number one area that I think make money over the next few years as the world economy continues to deteriorate.

I intend to update this blog often. As many who have read me in the past know I can be a bit emotional, sometimes the language may become a little raw. So, consider yourself warned. (But I promise to try and be on my best behavior.)


But first the legalese. Anything I say here should be viewed as strictly my opinion. Just because I mention it, doesn't mean it's correct. It's my opinion and I am wrong frequently. However, I am right just enough to make a nice living to support my family. (After all if I was right 100% of the time, would I really be doing this or living on my yacht somewhere off the coast of Negril, Jamaica?) If I should happen to mention a stock, please conduct your own research. Just because I like or hate a stock doesn't mean you should go out and mortgage your house to buy/short it. (See the already mentioned note about if I was correct 100% of the time).

What I am trying to say here is, don't hold me responsible for your actions off of my words. DO YOUR OWN RESEARCH.

I would like this blog to be interactive, so feel free to leave your comments and questions.

So off we go..........