The Economy Guy

Stocks jumped 104 points today on the news that the Treasury Bond auction went okay.  Why did it go okay?? Because the interest rates had already shot up over the past 2 days.

Bonds moved sideways, and the Dollar lost a little ground against the Euro.

Oil and gasoline continued their climb upward.  You can definitely count on higher energy prices throughout 2009 as oil is now in a new trading range.

Gold gained $8 today, and continues its climb to test the $975 level.  Go Gold!!!!!!

In the news today…..

Foreclosure Rate – 12% of all mortgage holders are late in a payment, or in foreclosure.  This is the highest rate ever. But, more importantly, this rate will continue to increase throughout 2009.  Don’t believe all that “good news” being spread around by stock brokers.  The mortgage crisis created this mess in the first place, and it must be solved before we can dig ourselves out of the overall economic mess.

Jobless Claims – was 623,000 last week.  The stock market celebrated because this was less than the previous week.  I just don’t understand that behavior – but then I’m not a stock broker.  The number of people claiming unemployment rose last week to a new high – and will continue to climb as long as the jobless claims are in this sky-high range.  The Unemployment Rate will climb when it is next announced – that’s easy to predict.  All this is bad news to our economy as less people are working – and that’s easy to predict too (you see it really doesn’t matter if the Congressional Stimulus money is being spent or not, if you’re out of work.)  Oh, I almost forgot, the GM and Chrysler layoffs haven’t hit yet, so I wouldn’t be surprised to see the jobless claims number jump over the next month or so.

GM to close 14 plants – and will make this announcement on Monday.  This equates to more layoffs over 2009 and 2010.  So, that’s how GM will make less cars as they have less dealers selling them, and their sales are in the tank too.  But, much more intriguing is WHERE will GM be making their cars to be sold in the USA in the future???  Not in the USA is the answer.  Two models are being planned to be manufactured outside of the US, and imported to sell to Americans.  Without being too cynical, I can remember when “imported” cars were a joke, and no red-blooded American would buy one of those junk cars.  Naturally all that changed over time as quality control hit the Japanese, and then Korean auto industries.  But, will this ugly specter of laughable imports happen again under GM????  We’ll see.  I can also remember that the TARP and stimulus money was to create American jobs – what ever happened about that???  Oh, by the way, who’s in charge at GM??? – the President of course.

The dealership closures by Chrysler appear to have a lot of STINK around them.  It appears that the dealerships being “closed” just happen to COINCIDENTALLY be the ones who contributed to the Republican party!!!!!!!!  Like Mel Brooks said “It’s nice to be King!!”  Thank you President Obama for your leadership in morality – as if nationalizing the car manufacturers weren’t enough.  When dealers are closed for POLITICAL reasons, and not for business reasons, guess who suffers???  YOU DO!!!!!  The taxpayer is the one who owns these companies, and you will be hurt by these non-financially driven decisions.

Manufactured Goods – rose last month.  This is good news as factories are cranking out more goods since they slashed their inventories so much at the beginning of this year.  However, manufacturing is only a small percentage of GDP, so this doesn’t shake the entire economy – until they start hiring people – and they aren’t doing that yet.

Tonight’s Dinner Conversation…..

Gold – let’s talk about gold a little.  Did you know that about 0.6% of the world’s wealth was invested in gold at the end of 2008? In 2006, that percentage was 0.2%.  What does that mean?  Does it mean that there is 3 times as much invested in gold over that period?  No, the big change was the devaluation of almost everything else – stocks, bonds, property, etc. – over that period, and more gold was produced and purchased also.

But, here’s the big news as far as I’m concerned.  In 1968, that percentage was 4.75% of the total.

I believe there is the beginning of a stampede in buying gold (actually buying anything to get out of Dollars, and have an inflation hedge) going on right now.  Now let’s talk about a stampede – a full blown stampede….

Have any of you lived through a “panic in buying”????  I saw it in gold the first time gold went over $800/ounce so many decades ago.  The price went up day after day.  Each day the price gain was greater than the day before.  If you are in the buying spree yourself, you are on a “high.”  It is addictive.  This must be much better than any drugs.

And then comes the crash!!!!!!!  And, that’s the purpose of this conversation.  Be prepared in the distant future (it’s not going to happen this year) to sell your gold.  When do you sell it?   You sell it when that explosive growth in price is going on.  So, you ask why sell when the price is going up???  Because when the price crashes, it crashes even faster than it went up.  Don’t be greedy (I know that’s harder to do, than to say) but take your profits when the “buying panic” happens.

I can smell that buying panic coming.  A lot more things must fall into place before it happens.  Like massive interest rate hikes!!! Like an obviously falling Dollar!!!  Like the “inflation” talk is on every news station – TV, radio and internet!!!  We aren’t there yet, but I want to educate the economyguy readers on what to be looking for.  The most important thing to look for is the explosive growth in the gold price!!!!

I’ll be watching.
 

Here are the last numbers for today:
Dow Jones 30 Industrial – 8404 (up 104 points)
10 Year Treasury Bond – 3.67% (down 0.02%)
Euro – $1.3946
Gold – $963 (up $8)
Oil – $65.08 (up $1.63)
Gasoline $1.91 (up $0.02)