Update On Our Shiny Friend!

After a long time (I think 1.5 months), gold has made its largest move upwards today, moving up around $7.50 to 385 range. I have yet to sell anything I own. It’s a tough-tough ordeal when you see all these people rushing for the door at the same time and literally dragging down the price of financial assets linked to gold. My plan this time is to base all decisions on fundamentals w/ stops being placed once I see an article in NYT, WSJ, or FT telling their readers to ‘BUY GOLD TODAY!’. (A few weeks ago FT ran an article telling everyone to run away from gold.) Since buying into gold assets last August, I think things have slowly improved (in terms of justifying gold investments) w/ the war getting worse for the administration, w/ the price of nearly every asset from Kleenex to milk to goat meat rising in price. Moreover, I read the USDA report on their Commodity forecasts for 2005 (filled w/ bunch of positive news on how all prices will soon decrease and we will be magically rescued from all these high prices!). It’s so positive that you might think that the USDA is on some other planet.

I think today’s rise might be linked to what old, Arab men part of OPEC told their oil hungry customers. OPEC simply will not take blame for surging price of oil. I’m sure they’re enjoying the extra 30 bucks on each barrel.

The only thing that’s truly changed is that the Fed will be increasing rates (finally). The fed should think twice about increasing rates b/c they have many-a-trillion dollars in debt & intrest payments in a higher interest rate environment is simply not a positive thing. The fed & our government are like two teenagers w/ their first credit card, except they have a special credit card—they can keep creating money out of thin air & filling it into our ballooning economy until one day it goes pop! Actually, no one really knows what’s going to happen. I personally don’t think it will be that severe because capitalism depends on FINANCING and if US were to default on its debt that would mean China, Japan, India and whole host of other countries are left w/ a lot of useless paper in their vaults w/ really large numbers written on them. Worst case scenario in my eyes is an endless series of debt restructurings in an environment where US will be battling deflation & inflation.

Ok, I know no one who’s interested in this crap will ever read these, so this is more like a personal log than anything else. 🙂