-- Posted Sunday, 21 September 2008 | Digg This Article
| Source: GoldSeek.com
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 2 years."
It seems the Labor Department reported that "wholesale prices fell 0.9 percent last month, nearly double the 0.5 percent 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 U.S. 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 U.S. 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!
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Editor's Note: 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.
The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning and other fine publications. Click here to visit the Mogambo archive page.
-- Posted Sunday, 21 September 2008 | Digg This Article | Source: GoldSeek.com
