5. Capital preservation is the name of the game. Hence bonds, gold and tight stops.<\/p>\n
6. No one has any idea what the next boom will be. The last one was housing. The previous one was tech. You get the idea. The next one will not<\/strong> be clean energy.<\/p>\n Consuelo Mack runs a show called WealthTrack<\/em> on PBS. She gets some classy people to interview. You can always watch a rerun of her interviews on WealthTrack.com.<\/strong><\/a> She recently interviewed David Rosenberg, a talented economist, who believes, as I do, that interest rates are not<\/strong> rising. He recommends select corporate bonds. Says David, ” Some corporate balance sheets are in better shape than many government balanace sheets.”<\/p>\n He’s very high on Canada. He works there now. He believes “global capital will flow to where it’s treated the best.” Canada has a pro-business government. We don’t.<\/p>\n He likes gold because it is\u00a0 “a hedge against the lingering concerns on\u00a0 global financial instability.” 13% of Canadian stockmarket is gold and silver companies.<\/p>\n Watch the interview. Click here.<\/strong><\/span><\/p>\n Here is gold this year. If you owned it you did well. I think the present pullback is a good opportunity to grab some more.<\/span><\/span><\/p>\n This recent piece from the New York Times sums up investing in gold. I don’t buy his conclusion. But then I don’t think gold will skyrocket. I think it will continue its steady climb.<\/span> November 25, 2010 It is an investment that historically made sense when inflation was rampant, and yet it is soaring while the Federal Reserve frets about the threat of deflation.<\/p>\n It is gold.<\/p>\n It is tempting to view the soaring price of gold, which went above $1,400 an ounce earlier this month and remains close to that level, as a warning of imminent inflation. Such interpretations have fueled critiques of the Fed\u2019s latest round of monetary stimulus as being the forerunner of a collapse of the dollar.<\/p>\n But I think it reflects first and foremost a dismay at the current state of the world economy, and a conclusion that the elites who are running it do not know what they are doing.<\/p>\n Or, as a friend of mine put it, \u201cYou are buying gold because it is the alternative to this collection of stupid politicians around the world.\u201d<\/p>\n It is not easy to have a calm discussion about gold. There are people who all but worship it and there are people who view it as a barbaric relic of an earlier era.<\/p>\n If you are in the latter group, you probably look at it as just another commodity, whose price should reflect the demand for it in various industrial uses and for jewelry.<\/p>\n That analysis basically prevailed in the 1990s. That was an era of growth around the world, and it was the time when central bankers convinced governments that they deserved independence in the pursuit of wise monetary policy.<\/p>\n But the last decade was another matter, as was the late 1970s, when we had the last explosive move for gold bullion. Then the problem appeared to be runaway inflation. Now the problem seems to be perpetual weakness in rich economies that have been hobbled by debt foolishly taken on by people from bankers to subprime home buyers who had one thing in common: a belief that the risk of something going very wrong was all but nonexistent.<\/p>\n The problems of 1980 and 2010 manifested themselves differently, but they led to the same conclusion: that the modern monetary system \u2014 called \u201cfiat money\u201d by critics to emphasize that nothing real stands behind the value of currencies \u2014 does not work. Gold is the alternative.<\/p>\n You could argue that having gold behind a currency is also a form of fiat, that gold should be worth its value as a commodity rather than seen as a great and perpetual store of value. After all, gold was a very bad investment for 20 years, from 1980 to 2000. And why should the world decide that something found in South Africa is more valuable than a resource found elsewhere?<\/p>\n One advantage of gold, of course, is that it does not deteriorate with age. Gold mined 1,000 years ago may be in that ring on your finger. Other things do not last. A banana standard might seem like a wonderful idea in Central America, but it would not work.<\/p>\n A disadvantage of gold as an investment is that it costs money to store and produces no income. But who cares these days? The yield on short-term Treasuries is almost nothing. To get any kind of interest rate, you have to take some real risks of the type that blew up so spectacularly in 2008 and 2009.<\/p>\n People my age can recall when the dollar was worth precisely one thirty-fifth of an ounce of gold. But that was near the end of the era when currencies were tied to gold in any way. The United States government had made it illegal for us to own gold, for fear we would buy it and drive up the price. There was a lot of inflation between the time Franklin Roosevelt set that ratio and the time that Richard Nixon severed the link, but the stated gold price remained the same.<\/p>\n During the last gold boom, there were other ways to bet on the continuing failure of American political leadership. One could buy German marks, or Swiss francs or Japanese yen. All those economies appeared to be much better managed than those of the United States or Britain.<\/p>\n Now there are fewer alternatives. Those who think the big inflation is coming in the United States do not think we will suffer alone. If the Chinese renminbi were a freely traded currency, people would flood into it and drive the price up. But of course China is determined not to allow that, and the rest of the world appears powerless to do anything but mutter about how unfair it all is.<\/p>\n The international furor over the Fed\u2019s quantitative easing shows how sensitive countries are to the prospect of other currencies losing value against their currency. It is not easy to conjure up a situation in which the dollar plunges for a prolonged period against the euro or the yen. In fact, the opposite has happened since the Fed spelled out its plans.<\/p>\n There is a real threat of inflation in China and some other developing countries, but the rest of us can only wish we were so lucky.<\/p>\n I say lucky because there is a case to be made for the current desirability of rising prices. Imagine for a moment that asset prices in the United States, and Ireland and Spain, for example, rose sharply over the next few years, as measured by euros and dollars. Imagine that incomes rose much more slowly, so that real inflation-adjusted incomes fell even though nominal incomes rose.<\/p>\n In other words, imagine the late 1970s came back. We used to call that period \u201cstagflation,\u201d and no one has fond memories of it. Those of us with money would be poorer, because the money would buy less. It would be even worse if we had lent the money for a number of years at the current low interest rates.<\/p>\n But the borrowers would be much better off, and just now they are the ones in the worst trouble. People with homes that now seem to be hopelessly underwater would find they could sell and pay off the mortgage. Banks would discover they had fewer bad loans than they thought they did. Unemployed people could afford to move in search of work.<\/p>\n Nominal gross domestic product would rise sharply in all of those countries, even if real G.D.P. rose more slowly. The debt-to-G.D.P. ratios that are now causing so much hand-wringing would be reduced, not by budget surpluses but by devalued debt.<\/p>\n Saying that a lot of people would benefit from something happening is not the same as explaining how it would happen. Just now, deflation looks more ominous in many Western countries. Ireland is planning to cut the pay of public workers, again, and fiscal tightening \u2014 something needed to fight inflation, not deflation \u2014 is the order of the day in many countries. We may think central banks blew it in the last decade, but we apparently will not do anything to help them in their current struggle. The plea by Ben Bernanke, the Fed chairman, for the government to find a way to invest more now, while cutting spending later, received little attention because the idea appeared to be a political impossibility.<\/p>\n It is distrust of elites that feeds some of the current gold fever, and that helps explain why it may make sense for one company that is promoting gold as an investment to hire G. Gordon Liddy as a spokesman. This is a man whose fame comes from committing the Watergate burglary on behalf of the very president who severed the last ties binding the dollar to gold, and is therefore vilified by gold bugs. But Mr. Liddy has an anti-establishment tint, and the intended audience is not committed gold bugs but instead worried and suspicious people. They may not be believers in gold, but they know all too well what can go wrong with investments in stocks and real estate.<\/p>\n Over the last four decades, the only ones in which gold was freely traded, gold proved to be a good buy precisely when it appeared the system was failing. In the 1970s, gold zoomed upward from artificially low levels, while stocks did not come close to keeping up with inflation. In the 1980s and 1990s, stocks rose at rates greater than 15 percent a year, and gold went down. In the first decade of this century, stocks declined while gold rose at a compound rate of almost 15 percent a year.<\/p>\n So far this year, both gold and stocks are up. That combination is unlikely to last out the current decade.<\/p>\n Betting that $1,400 gold will soon be $1,800 gold or $2,500 gold is basically a bet that the West really is in permanent decline this time, with countries facing the prospect of bankruptcy or sharp reductions in spending on everything from schools to pensions. Or perhaps all of the above.<\/p>\n Let\u2019s hope the bet is wrong.<\/p>\n A Dying Banker\u2019s Last Instructions. <\/strong>He has brain cancer and is dying. His bucket list was writing a book on\u00a0 what he’d learned about investing. You can read the story here.<\/strong><\/a><\/span> The book asks readers to make just five decisions.<\/p>\n First, will you go it alone? The two authors suggest hiring an adviser who earns fees only from you and not from mutual funds or insurance companies, which is how Mr. Goldie now runs his business.<\/p>\n Second, divide your money among stocks and bonds, big and small, and value and growth. The pair notes that a less volatile portfolio may earn more over time than one with higher volatility and identical average returns. \u201cIf you don\u2019t have big drops, the portfolio can compound at a greater rate,\u201d Mr. Goldie said.<\/p>\n Then, further subdivide between foreign and domestic. Keep in mind that putting anything less than about half of your stock money in foreign securities is a bet in and of itself, given that American stocks\u2019 share of the overall global equities market keeps falling.<\/p>\n Fourth, decide whether you will be investing in active or passively managed mutual funds. No one can predict the future with any regularity, the pair note, so why would you think that active managers can beat their respective indexes over time?<\/p>\n Finally, rebalance, by selling your winners and buying more of the losers. Most people can\u2019t bring themselves to do this, even though it improves returns over the long run.<\/p>\n Hunting season has opened up north.<\/strong><\/span> The bear asks, “Don’t you know this is not bear hunting season?” The guy answers, “Yes, I know.” The bear takes his rifle and smashes it on a rock, then throws the guy across a tree trunk, pulls his pants down and does it* to him. Then he tells the guy “Now, get out of here. I don’t want to see you again.”<\/p>\n The guy is incensed and hurries back to town and buys the biggest bear rifle he can find and goes back into the forest. Soon he spots the bear and empties the rifle. He looks for the bear but no body. Then the tap on the shoulder and the bear tells him “I told you not to come back.” He smashes the new rifle, throws him on the ground and gives it to him again. Then he says ” This is the last time I’m warning you. Don’t come back.”<\/p>\n This time the guy is berserk. When he gets back to town he buys a M16 and goes back. He’s sure he’s spotted the bear in the bush and empties the entire magazine of the M16 into the bush. Still no body and then the familiar tap on the shoulder.<\/p>\n The bear asks him “You’re not really in this for the hunting, are you?”<\/p>\n Harry Newton who is concerned about our fruitless war in Afghanistan. Tonight at 9:00 PM, the National Geographic Channel is running a two hour special “Restrepo: Afghan Outpost.<\/em><\/strong>“<\/p>\n![\"\"](\"https:\/\/www.technologyinvestor.com\/wp-content\/uploads\/2010\/11\/GoldThisYear2.jpg\" "\\"GoldThisYear2\\"")
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\n Gold Fever: Pondering the Causes<\/strong>
\nBy FLOYD NORRIS
\nIt is part religion, part politics. It is a way to voice a lack of confidence in the central banks of the world and a yearning for the world as it used to be.<\/p>\n
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\nA guy is hunting bear and spots one in some bushes and blasts away. He goes to investigate but sees no bear. Then something taps him on the shoulder and he turns to see the bear.<\/p>\n![\"\"](\"..\/wp-content\/uploads\/2010\/08\/HarryNewtonNewShot2.jpg\" "\\"HarryNewtonNewShot\\"")
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