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FOLLOW THE YELLOW BRICK ROAD

September 28, 2005

I was a gold bug back in the 70’s when gold hit $850. I am a gold bug today and have been for four years now. And the reason for both of those seasons has two reasons (a poet I am not): inflation and debt! And we’re seeing more and more credit cards becoming deliquent as a result.

Who Wants Cheaper Auto Insurance?

Two days ago I talked about the real estate bubble and this could qualify as a follow up if you will to that commentary. I know the big news is the indictment of Tom DeLay; however, politics has no clothes either (yesterday’s commentary) so why go there? Tom will not be convicted, so let’s move on.

I am saying follow the yellow brick road, not because I am from Kansas, but because of the past, the future, and the NOW! The past three years has seen gold rise from $250 an ounce to the $470 level this week. It has had such a fast jump (called a gap) recently that I suspect it must back off a little, before heading to the $500 level. Few things go straight up: the Nasdaq bubble of the late 90’s being one of those exceptions.

We have inflation running at a 5-6% clip now- at minimum, and we are just getting started! Most people say the war will cost us $100B over the next twelve months, Katrina will cost $200B+, Rita will cost $25B+; Stan and all those that follow are not yet calculated. Oh yes and Governor Blanco was on the hill today asking for a quarter TRILLION for Louisiana alone. Can you imagine how much corruption these kinds of numbers are going to attract? We are talking Louisiana you know.

Oh yes, and Michael Griffin, the Space shuttle and International Space Station chief just admitted that we’d probably wasted $150B on the space shuttle and we’d be $100B into the Space Station by 2010. Ahh, but that’s water (can you say fiet dollars) under the proverbial bridge.

America is way in over it’s head! It’s just a matter of a little time (little as in small) before those who are loaning us the money, via debt instruments, will cease their support of our fiat monetary party. The spot market for gold closed today at $472.50. The Greenspan house of cards is about to fall on it’s own merits. Thankfully he only has 90 more days to worry about it before he retires. Unfortuantely we can’t!

Written by Ernie · Filed Under Daily Commentary 

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