$700, a 16 month high..

Good day. Been a little busy playing with some furnitre repairs, but I'm back for the bacon snack!!! Errr, I mean the attack, yeah, the attack...

Well, gold closed over $700 for the week, and was around $707 at various points today.... Hopefully, you established those gold, silver & oil stock positions a few weeks ago, when I told ya to.... The HUI closed above 358. In a month, you could have made around 25%.... Nice.

I hear a lot of talk about how the government is going to "bail out" these mortgage lenders, and "restore order", and how "we're at the bottom" of housing, which I've been hearing for 18 months now, and the default rate keeps growing...bottom... But anyway, on the subject of a bailout, Peter Schiff says it far more articulately than I ever could:

Schiff:
Now that home mortgage defaults are spreading like wildfire from coast to coast, there is a growing sense of certainty that the government will attempt to bail out homeowners and lenders. The ideas put forward last week by President Bush may be the camel’s nose pushing under the bottom of the tent. However, just as some things are too big to fail, this problem is far too big to fix.

First of all, one has to consider the moral hazards inherent in any bailout. Immediate relief in the form of debt reductions and more favorable loan terms will create a powerful incentive to default. Why would anyone stretch to make a burdensome mortgage payment while others are being rewarded for failing to make theirs?

Even without the incentives of a government bailout luring more people into default, policy makers simply have no idea as to the scope of the problem. Before this home mortgage correction runs its course, nearly every homeowner in the country who had availed themselves of an adjustable rate mortgage or a home equity loan will be in need of a bailout. Even a sizable percentage of those with traditional fixed rate mortgages will find themselves in danger. With millions, or perhaps tens of millions, of home owners on the rocks, there is simply no way the government can structure a bailout without bankrupting the country or destroying the currency.

Unfortunately, the only realistic way to “pay” for such a massive bailout would be for the Fed to monetize it. If that were to happen, the value of the dollar would plunge, and consumer prices would go through the roof. Now that the dollar Index has finally broken below the key 80 support level, an event that I have been forecasting would eventually occur for years, a run on the greenback may already be in motion. Ultimately, long-term interest rates will soar as a result, and we will experience unprecedented stagflation and a substantial decline in our collective standard of living. This week’s surge in the price of gold, which traded above $700 per ounce for the first time since May of 2006, reveals that some investors are finally beginning to figure this out.
/end

I'm not sure I agree that people in favorable fixed rate mortgages are in trouble... but he makes some good points. Let's take a guy who has a 5.75% fixed mortgage, a very doable mortgage for a long period of time. To me, what he's basically done is "sell short" in dollars, and the decline is his friend. He's going to pay off his mortgage with very inflated dollars... not a bad idea. He's locked at 5.75, it doesn't matter if shadowstats.com says inflation is running 9.7%, it doesn't matter if bond traders wake up and start demanding a real return... he's locked at 5.75!! But I digress...

Now I know, I know, you now think it's "too late" to establish a gold position, or to make some sort of move.... it's not.

Let's listen in on The Mogambo Guru, who, I must say, hardly appears at all at kitco.com, but is now featured daily on dailyreckoning.com, along with Chuck Butler.

Mogambo:
So imagine my chagrin when it turns out that I could have saved myself a lot of time and trouble by merely asking Doug Casey of the International Speculator newsletter about the general attitude towards gold, who writes that there is no rush, and you can still buy gold and silver at bargain-basement prices at your leisurely convenience.

This is the conclusion I get from his referring to the behavior usually encountered in the "mania phase" of classical boom-market phenomena, which is that glorious ultimate bull phase of a boom market when there is mass, universal public participation, as literally everyone with two nickels to rub together is buying and clamoring to climb aboard a booming asset bubble, and prices are rising to the moon because of it.

Specifically, he reports that the mania phase lies ahead, as, "The public is still out of the gold market. I promise you that every market top I've witnessed in my life was accompanied by cocktail party chatter about the asset class in question. I have yet to have any indication the public has a clue that gold and other resources even exist. If this is a market top, it's unique."

This very point was brought home to me the other day when I had accidentally driven my tee shot into a greenside sand trap. I instantly sized this up as a "touchy shot", and since nobody was looking, I just picked the ball up and threw it onto the green, very nearly holing it out and leaving just a two-inch "tap-in" par.

Suddenly, one of the other guys in the foursome yells out "Hey! I saw that! I just saw you throw your ball onto the green, you Cheating, Lying Piece of Mogambo Crap (CLPOMC)!"

Naturally, I yelled back, "You can see me throwing a little golf ball, even when your back was turned to me, but for some reason you can't see that your own government is lying to you, and the Federal Reserve is lying to you, and they are destroying the purchasing power of your money right in front of your eyes? Is that what you are telling me, you stinking mashie-niblick moron?"

As I walked up to my ball with my putter in hand and tapped in for par, I continued yelling, "Well, you are a lying piece of trash, because you couldn't have seen me throw it on the green because I purposely waited for you to turn your back to me so that you COULDN'T see me throw it on the green! And yet even with your remarkable power to see out of the back of your damned stupid head that even Superman would envy, you don't buy gold in response to the blazing destruction of your own money caused by the Fed issuing so much more of it, right in front of your stupid, ugly face?"

Well, skipping the ugly details of the ensuing animated discussion, I got the par and they all resolved to watch me much more closely from now on, and one day they will start watching gold, too, just like Mr. Casey said they would!
/end

Now, is today the day to buy gold?? No. Probably not. It just hit a 16 month high. Will there be a correction?? Of course. There's always a correction. Anything in the 650-660 area is a blue light special. 670 is a buy. Gold is very seasonal. It's going to run up for awhile, a month or so. Foreign demand is huge right now... the whole continent of Europe just got back from a monthlong vacation... and some of them are frantically re-allocating their money into something dependable, like gold, until the storm blows over....

Econ... I've bored half of you to death already.

Football Season kicked off last night. I hit my 16 point pick in my pool, with the Colts. I also had the Colts in a pick-one pool, so I live to pick another week. Football... always bittersweet. It means summer is coming to an unfortunate close, but it also means that the National Football League is back, to give our empty lives some meaning....

I see a few more boneheads have stepped up to defend Mike Vick. Amazing. Hunting is legal, don't see the difference...the usual BS. Even Whoopie Goldberg, I saw saying "Dogfighting is a very normal thing, where Mike is from..." Whaaa?? Huh? My head spins...

I'm trying to get off of dogfighting, but it just keeps rolling, and it's so horrific, I can't handle it. Jim Rome, on his radio show, summed it up like this (and I'll have to paraphrase, I don't have the exact verbage):

Rome:
Look, I'm not about hunting... that's not my bag. But I get it that dogfighting is a very very different thing than hunting. For starters, one is a Felony, and one is not. For another thing, I've never seen anyone dress up in camoloflauge, go in the woods with a rifle, shoot a dog, and mount his head on their wall. I've never seen that, ever, a dog head on a wall. And I've never seen anyone with a deer for a pet, either, okay... It just doesn't happen. Nobody is out walking their pet deer after dinner in my neighborhood! Dogs are our PETS. They're MAN'S BEST FRIEND. They LIVE IN OUR HOMES. They sit with us, they fetch our slippers, they get the newspaper, they play with our kids, and plenty of dogs have defended their homes from intruders. They're DOGS. They're our PETS. I'm not about hunting, don't ask me to defend hunting, but at the same time, you can't tell me there's any similarity whatsoever between dogfighting and hunting, because there isn't any.
/end

So, enough about dogfighting. For now, I guess, until someone else pops off...

These half-baked defenses really get me in this aspect, too. Look, we're not talking about a guy who was SEEN at a dogfight, like ONE TIME. If he went to ONE dogfight, ONE, sure, he could say hey, I was with friends, I was curious, I didn't know what it was about... okay, sure. I get it, that he's from a different backround, and maybe that's what people do. But what he did was pump hundreds of thousands of dollars into a full blown professional dogfighting operation, complete with dog breeding, dog selling, fight promoting, dog training... and yes, dog execution for poor performance. And he didn't just FUND it, he PARTICIPATED in everything, even the execution of the dogs, himself, personally, with his own hands...

See, there I go again. Okay, seriously, I'm gonna get off dogfighting now, we're going to talk about something else from now on...

I'm gonna go get a little bacon burger, and calm down....