Situation Normal, All F***ed Up.
The US$ is now everything in the world markets. The US interest rate policy has created the largest carry trade EVER (a "carry trade", if I can oversimplify, is when investors borrow currency in a nation with very low interest rates, and convert the low interest rate currency into other, higher interest paying currencies and/or markets). When these carry trade investors all clamor to convert back into US$'s, they are going to drive the US$ straight up - and everything else straight down. Or not. See, the US is doing its level best to destroy its currency and overwhelm the carry trade exit. The opportunity here is profound. My sense is to watch what the Anti-Christ, er.... Government Sachs, ugh.... I mean Goldman Sachs is doing. These guys dominate the world financial markets and they understand this situation better than your average bear (as in Yogi Bear, not a market "bear").
This is much more complicated than "buy Gold". Gold is not the only answer to the US$. Yes, Gold, Platinum, and Silver will always have some value, long after paper currencies have gone to the happy printing press in the sky, but they are not the end all and be all. You can't eat them, defend yourself with them, ride them, live in them, clothe yourself with them...
I have been a Gold Bull for some time, Silver too. I have a fair amount of bullion. I won't be adding to them at these prices. That does not mean that I am right, but that is how I am playing this. Gold looks stretched out to me. Nothing moves in a straight line. Not that I am looking for a bear market in precious metals, but I would need to see a stiff correction before I would add to precious metals.
Farm land, Hard Wood Timber tracts (not pine plantations but hardwoods like Oak, Maple, Hickory, etc... there is a big difference), livestock, warehouse space in close proximity to rail heads... you gotta think outside the box a little in this environment. I like selling out-of-the-money calls and puts in commodity markets, but that is only for people with a comfort with math and the discipline of a Kung Fu monk.
The key here is to store VALUE. You work hard, consume less than you earned, now what do you do with the stuff left over? How do make sure it holds its value in an era of $1.8 TRILLION budget deficits (oh, and just WAIT till the big bills start coming in for Medicare and Social Security)? What will hold value? Well, what held value in post WWII Japan and Germany? Certainly not their currencies. The guy who had a farm and livestock, or a functioning dental office, shoe repair shop, hair salon, massage parlor, etc... or precious metals, timber, a fishing boat, etc... This is just food for thought, I am not suggesting one more than the other as it all depends on you and your circumstances, but you get the idea. Right now, over 95% of the folks I know rely 100% on their respective currency. I think that that faith is misplaced.
Oh, and here's a quaint notion. Living in a fully paid for, easy to maintain, low property tax home.
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Mexico is the 3rd largest Oil exporter to the U.S., after Canada and Saudi Arabia. In 2006, Mexico's production topped 3.25 million barrels per day ("bpd"). So far this year, Mexico has averaged 2.62 million, and during that 3 year period, Mexico's domestic consumption increased (then click on 1.1b). If there is so much Oil out there, how come nobody stepped up to fill Mexico's shoes - especially in an environment of $80 crude? Because it ain't there, it ain't gonna be there, and it this trend is going to accelerate rather briskly over the next 4 years or so.
While inventories of petroleum products are bulging in the U.S. at the moment, and at this pace it would take over 6 months and maybe a year to bring them down to where they were at this time last year, anything can happen the price of Oil. If you are going to trade it, I'd play the short term trend and be gone if I were wrong. Given the Iran thing, I would not be short. You never know, and that could ruin you.
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California, that basket case of Silly Something For Nothing, has real unemployment of 21.9%, and headline unemployment of 12.2%. It gives me no satisfaction to watch working class people suffering because of the inability of the San Francisco City Hall Communists to understand the human condition. I can't say enough bad stuff to describe Pelosi, Feinstein, Boxer, Waxman and the rest of sh*t-for-brains people dominating that state's politics. Arnold? He's just an ineffective embarrassment, he didn't do California in. It took 30+ years of hard work by some really arrogant jackasses to accomplish this Chernobyl.
The funny thing is, I am sure there is some left wing California propaganda group working hard to place the blame on GWB.
Speaking of which... How come Obama gets a pass on Afghanistan? Never mind. We all know the deal here. But I can't help myself... OK, guys, you are now in charge... show us how its done.
I take it back. Spare me.
Libertariananimal at Gmail dot com