Finance Trends Letter

For any one who hasn't seen it, James Turk was interviewed in the latest Barron's. I see that someone has posted it to the Stockhouse Bullboards forum , so you can go there to read it. Or you can buy/borrow/steal a copy of the latest Barron's and see it in newsprint with the gold/oil chart included. Either way, give it a read because Turk makes more sense in two pages of print than most "economic commentators" will make in a lifetime. Update : new link to Barrons' May 29, 2006 interview with James Turk .

Is the commodity bull market over? Or will the recent drop in prices result in a months-long consolidation phase that sets up the next advance of a secular bull move? It seems a lot of attention has been focused on the overheated metals sector and the recent drop in prices. The precious metals, gold and silver, have pulled back from their recent highs(from around $730 gold & $15 an ounce silver). Palladium has pulled back from its recent move up to $400 and even Platinum's recent strength has ebbed slightly. The base metals seem to be the real focus of attention, as observers debate over the possibility of a "commodity bubble" in the wake of copper's recent surge. Now that some prices are starting to drop, a large number of commentators are coming out of the woodwork to proclaim the end of "the commodity bubble". Forgetting, for a moment, the fact that there are other commodities outside of the precious metals and base metals sectors, and that some of th...

But then, I don't think we were supposed to notice it. Toni Straka of the Prudent Investor blog pointed out a recent Business Week story that I'd like to include here. It says that John Negroponte, the "White House's top spymaster", has been given broad authority to excuse publicly traded companies from reporting certain disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye. Securities-law experts said they were unfamiliar with the May 5 memo and the underlying Presidential authority at issue. Pretty under-the-radar stuff, no? Even the experts are faced. See the article link for the full story.

Just finished reading some of the interesting comments (maniacal ravings?) put down to electronic paper by Richard Daughty, aka the Mogambo Guru. Daughty, the self described "angriest guy in economics", is a bit unsettled at the prospect of our having to rely on the inflationary machinations of the world's central banks/financial institutions to keep the world financial system afloat. Here's a taste of the Mogambo's ire: we have an economic system where the definition of debt = money, then thus less debt= less money. This is not so chilling until you realize that less money = losses. But the decline in the value of the dollar is currently being met with an equal, and off-setting, infusion of credit into the banking system. The idea is (and follow along closely here), that this new credit will be borrowed, used to buy stocks and bonds and dollars, which drives their prices higher (thanks to the new demand), and this increase in money-wealth offsets your losses in r...

There's been some interesting news lately of innovations in the financial markets. A number of new and previously unseen products were released onto the markets over the course of the past year, and during the week the just ended. The rise of exchange traded funds, coinciding with the accelerating popularity of commodities, has brought about the creation of several new ETFs based on assets once relegated to the futures exchange. Market particpants can now take positions in gold, silver or oil as though they were buying a stock, but that is not all. Soon it may be possible for some intrepid souls to speculate in an asset class new to financial exchanges: residential homes. Flipping houses, bacon Just one of the week's recently launched products, the Chicago Mercantile Exchange housing futures began trading May 22. The CME housing contracts are based on ten different city markets and a composite housing index. So far the market has been slow to take off; a total of 52 contracts t...

Financial Times looks at demand for gold and silver in two seperate articles found at FT.com. Chris Flood's report, "Investment demand for gold soars" , takes a look at the latest numbers from World Gold Council's Tuesday update. While higher prices sent jewelry demand down, the increased popularity of gold ETFs helped fuel an increase in investment demand. Excerpt: Investment inflows into gold ETFs rose by 23 per cent to the equivalent of 496 tonnes at the end of the first quarter as long-term investors such as pension funds bought bullion to aid portfolio diversification. For a couple related items, see this post on jewelry demand from Asia and the role played by investment demand in fueling the gold price rise. This year's investment demand was also raised in April's post, "Recent gold action" . The topic of recent silver price action , as raised by FT's Chris Flood and Kevin Morrison, also touched on the investment demand brought about (lar...

I happened to be reading an editorial by Sol Palha written in 2003 for Financialsense.com. The name of the piece is "Insanity is Prevalent" and it contains some interesting points regarding gold, fiat money, savings, and the value of what we are commonly taught in our "learning" institutions. Here is an excerpt: The modern education system is slowly but surely stripping our self-identity. We don’t know who we are, what we are capable of doing and what it is we really want. All we know now are values that are being force fed through subtle means via so-called higher-level education systems. It's truly sad that very few young people have any idea about the concept of money management. It is even sadder to find out that "saving" is an alien term to them. I've read some of Sol's articles in the past, and while I don't always agree with his arguments, I find that he makes some very interesting observations about the markets and the human condit...