Solid Gold Doggie...

Good day!

I'm solid gold... at least, that's what they tell me. I wish I was solid gold. If I was solid gold, I'd be worth around $8000 us dollars.

The Royal Canadian Mint unveiled this morning in downtown Ottawa their new 100 kilogram gold coin. No, seriously. It's a new worlds record. Previously, there had been a 31 kilogram gold coin, which was roughly the dimensions of a steering wheel. The new 100-Kg is said to be the diamter of an car tire, and as thick as a hardcover novel. I think I'll stick with the 1-oz gold coins, thanks.

Which might be just enough to put gas in my truck! Wow...

Let's review for a second: the price at the pump is within a few cents of the all time record, hit when Katrina happened. Meanwhile, the price of a barrel of West Texas Light Sweet Crude Oil is around $12 cheaper per barrel right now... Seriously. All I can say is, WOW. Whew...

And hey, quick memo to all you people e-mailing me your "Boycott Exxon-Mobil" emails: Knock it off. I'm not sure such a boycott would work... let's face it, how long can crackheaded addicts boycott their crack dealer? Exactly, they can't. But, suppose I give you that point. I admit a boycott has merit, for the sake of argument. Okay, obviously, IF a boycott is to occur, the LAST place we want to boycott is an AMERICAN Company!!! You idiots. For starters, we have Citgo, who is controlled partially by Hugo Chavez and his band of Venezuelan Commie Socialists. So, if you must Boycott, start with Citgo. Next, you could easily move to Royal Dutch Shell, and boycott them. Boycott the foreigners, people, not the Americans. Exxon Mobil still actually employs some of the last employees in America, and they actually pay living wages. At this point in time, I think we need to protect that sort of activity.

Enough on that. Interesting report, naturally unreported widely, but buried in Barrons was this little tidbit. Bank reserves have fallen to $39.6 billion dollars, near a record low. Which is fascinating to me. In 1994, bank reserves stood around $60 Billion dollars, which was still very low, but, it was $60 Billion. Today, in the US Banking system, deposits are roughly double what they were in 1994. And the banks collective book of outstanding loans is north of double. And as we have seen, some portions of this book of loans is, shall we say, risky. "Subprime" may be the word you've heard. Still, reserves have fallen. Does the phrase "Fractional Reserve Banking" mean anything to you?? Did a chill just go thru your body, as you imagine the overburdened overextended american consumer (whose wages are dead flat, if they still have a job, but the payments on their ARM mortgage keep rising) defaulting on their stuff??? Did you involuntarily feel a twinge of panic, picturing the "house of cards" falling down, when the defaults start hitting, and the banks have no reserve to fall back on?? You should've...

The Dow is up above 13,000, and people seem excited by that. Fair enough. Let's turn to the Minneapolis Federal Reserve Bank, and see how excited they are. They released some interesting numbers. Starting in 2000, looking at the actual prices of the items in the CPI, without the "hedonic" (read BS) adjustments from 2000 to 2007, the Dow would have to be at 14,100 right now, just to be "even" with the 11,500 dow peak in 2000. It hasn't even kept up with inflation. so, congrats on that Dow.

Peter Schiff, President of Euro Pacific Capital, had these interesting observations: the 13,000 is quite a hollow number. Again, measured against prices of a basket of things, the Dow is down 2000 to 2007. To wit:

o In January of 2000, The Dow bought 43 Ounces of Gold. Today it buys 19 Ounces.

o In 1929, the highest close of the Dow was 380. In 1929, 380 bought... you guessed it, 19 ounces of gold.

Despite all the hoopla, it looks like the rise from 380 to 13,000 is mainly inflation.... and it's barely keeping up, it would seem...

So you hate gold?? No problem. Let's look at some other stuff:
Again, 2000 to 2007:

o The Dow buys 30% less Euros than it bought in 2000. Ouch.

o The Dow buys 35% less Milk than it bought in 2000. Oops.

o The Dow buys 40% less Wheat than in 2000. Sensing a pattern?

o The Dow buys 65% less Silver Bullion than in 2000.

o Buys 70% less Oil than in 2000. Okay, I don't NEED Silver, but I DO need Oil!!

o Buys 80% less Copper. Hold off on that wiring project...

o Buys 90% less Uranium.

Housing, Insurance, College Tuition... you get the picture.

Luckily, I have some Gold, Oil, and Uranium Investments. Thus, I can eat Bacon Cheeseburgers with impunity, and sleep like a tired puppy every night. Can you??

Until next time!