ECONOMICS IN 2006

World economic growth should be reasonable in 2006. China, India, Russia, and Brazil will continue to grow at a rapid rate and continue to push the global economy. Every year Cassandra’s call for a melt down in China, and every year they are wrong. Where is the evidence? China recently revised up its GDP growth for the first nine months of 2005 to about 11%. This is strong by any measure.Click here to read full article...

I trust everyone will enjoy the holiday season. We send our warmest greetings to all and are writing this note partially for that purpose. There is, however, another reason for our writing.Click here to read full article...

IT’S ALL STILL HAPPENING:
GOLD, US STOCKS, GLOBAL STOCKS, COMMODITIES AND A FEW CURRENCIES ARE SEEING INFLOWS. REAL ESTATE IS SEEING OUTFLOWS.

The global liquidity bubble is in the process of gradually shifting from real estate to commodities and stocks. In the last few weeks, most stock markets that are connected to reasonably good economies, and some financial transparency, have gotten new cash infusions from investors.Click here to read full article...

WORLD INVESTMENTS AND THE MAJOR STOCK MARKETS

The U.S. and other major stock markets are strengthening as investors notice that real estate is losing its grip as the premier investment area. As a result, money is shifting from real estate to stock markets globally. If we look on a macro scale, we see that real estate bubbles worldwide have been driven by excess liquidity. This excess liquidity is in the world’s pension funds, investment portfolios and large corporations, and is a result of central banks all over the world increasing liquidity by excessive amounts over the past decade.Click here to read full article...

In some ways, today reminds me of 1973. Let me list a few. Fear dominates. You have: fear of inflation, fear of slower economic growth, fear of political crisis, fear of loss of tax cuts, fear of expanding budget deficits, fear of higher interest rates.Click here to read full article...

U.S STOCKS ARE DOWN FOR 3 VERY GOOD REASONS

1. Refco Capital Markets, which I believe to be one of the biggest over-the-counter derivatives firms, has serious problems. This company is a non-regulated arm of Refco, Inc., which handles over-the-counter transactions (derivatives), foreign exchange, fixed income trading and stock lending. In other words, they are active as a party to many derivative contracts. The Fed and every other central bank must act quickly to bail out this mess before it spreads. In my opinion, Jim Sinclair knows as much about this problem as anyone, and is the most truthful person on earth about the magnitude and potentially devastating effects of a derivatives failure. Everyone should go to www.jsmineset.com and read Jim’s article entitled “Run On Major Financial Entity Occurs”, which he published October 13, 2005.Click here to read full article...

Today, world oil production and world oil consumption are roughly in balance [assuming production shut downs for recent hurricanes end soon]. World consumption and production of oil are each about 85 million barrels per day.Click here to read full article...

President Bush’s plan to reform Social Security is dead. The huge expenses connected with the wars in Afghanistan and Iraq plus the 2 big hurricanes, have used up all of the money that the administration wanted to expend to restructure the social security system and Medicaid.Click here to read full article...

WHY GOLD DOES NOT NEED INFLATION TO GO UP, AND WHY THE DEFLATION OF THE REAL ESTATE BUBBLE MAY VERY WELL PROVIDE ALOT OF BUYING POWER FOR GOLD

I do not believe that the U.S. or Europe will go into a serious recession in 2006, although higher oil prices may cause U.S. and European corporate profits to rise very slowly, or even be flat in 2006. Retail sales will not collapse but they will definitely slow.Click here to read full article...

Several years ago, we became bullish on energy and precious metals for our clients. Our bullishness was a creature of long term economic and social events, which will continue to effect the world for at least one generation and probably longer. The most important event is the entry of about one billion new people into the developed world economic system. On top of the generational trend there are shorter-term trends as well. They may be connected to the election cycle in a country, or to seasonal or other cycles, which are a function of local events within an individual country (i.e. changes of government, wars, political instability). We did not become bullish on energy because of terrorism and Middle East tension, although it is a secondary reason to see oil and gold go higher.Click here to read full article...