Tuesday, May 30, 2006

Eye of the Beast

Sometimes I just can't resist this stuff from NASA.

In the center of a swirling whirlpool of hot gas is likely a beast that has never been seen directly: a black hole. Studies of the bright light emitted by the swirling gas frequently indicate not only that a black hole is present, but also likely attributes. The gas surrounding GRO J1655-40, for example, has been found to display an unusual flickering at a rate of 450 times a second. Given a previous mass estimate for the central object of seven times the mass of our Sun, the rate of the fast flickering can be explained by a black hole that is rotating very rapidly. What physical mechanisms actually cause the flickering -- and a slower quasi-periodic oscillation (QPO) -- in accretion disks surrounding black holes and neutron stars remains a topic of much research.

Monday, May 29, 2006

More Maher

If, like me, you suffer when the Bill Maher season ends on HBO, you will rejoice when you discover a new venue featuring new Maher - Amazon.com's Fishbowl - true Internet TV. (And to think, I just heard a TV executive say last night that it would be a long time before people started viewing TV on the Internet.) Go here and enjoy Bill's latest endeavor.

P.S. Don't be confused when the viewer restarts. Its another segment being downloaded.

Sunday, May 28, 2006

United States of North America

Those of you who have read this blog from the beginning (harhar) may remember one of my first blogs, proposing that the US "convince" Canada and Mexico join their states with ours to expand the Republic.

Now I've run accross this report which reveals that this is the plan currently being followed by the three countries. Imagine my dismay when I finished reading the article and found it was written by one of the Swifties (Kerry attackers). Oh well, maybe I'm really a rightwingnut.

"What is the plan? Simple, erase the borders. The plan is contained in a "Security and Prosperity Partnership of North America" little noticed when President Bush and President Fox created it in March 2005:

In March 2005, the leaders of Canada, Mexico, and the United States adopted a Security and Prosperity Partnership of North America (SPP), establishing ministerial-level working groups to address key security and economic issues facing North America and setting a short deadline for reporting progress back to their governments. President Bush described the significance of the SPP as putting forward a common commitment "to markets and democracy, freedom and trade, and mutual prosperity and security." (Read entire article ...)

Friday, May 26, 2006

Fire in the Theater

from Richard Benson

FMNN Market Trends Strategist Publisher

Benson's Economic and Market Trends

"In order to fully understand what is really happening on the central bank front, Larry Summers is worth listening to, now that he is free of all the politics at Harvard. Mr. Summers who served in a series of senior policy positions – most notably as the secretary of the treasury of the United States – specialized in the currency markets. Indeed, he was “the man” who successfully engineered foreign central bank gold sales to help hold the price of gold down and make the dollar look strong!

Mr. Summers is now urging the poorer, smaller countries with excess dollar reserves, “to do something with them”. Perhaps his advice is to sanction foreign aid, but I suspect he may be encouraging these smaller central banks to swap out of dollars early before the big banks do. This would preserve the real value of their foreign exchange reserves, and save the IMF a lot of money down the road for not having to bail them out.

Just remember, when someone yells fire in the movie theatre, you want to be sitting in the back row near the exit door, so you can get out before it’s too late. Larry Summers has just yelled “fire”.

The dollar is in grave danger because there are hundreds of billions of dollar assets funded by hedge funds that will be sold. Worldwide, central banks are beginning to buy fewer dollars at a time when the U.S. needs new buyers of dollar assets to fund our escalating trade deficit.

If America, as a matter of policy, is going to let the dollar go, there are many investments you must not own as an investor or saver: One investment is dollar-denominated bonds. A falling dollar is very inflationary. As inflation rises, it forces interest rates up so you’ll lose on the currency devaluation, as well. U.S. Stocks will fight the headwinds of inflation and may go up in dollar terms, but they will most likely not keep pace with inflation." (read entire article...)

Thursday, May 25, 2006

Those Pesky Petrodollars Again

How much longer can the dollar reign supreme?
By Linda S. Heard
Online Journal Contributing Writer
May 25, 2006

Saddam Hussein stopped trading his oil for dollars before Iraq was invaded. Iran gets set to open a new oil bourse and futures market that will trade in euros, while Venezuela is said to be mulling over whether to follow suit.

Now Russia has joined the bandwagon. On May 10, President Vladimir Putin announced the creation of a Russian oil and gas bourse along with his intention to convert the ruble into a convertible currency that would be used for the trade.

Russia has recently swapped some of its dollar reserves for euros.

Together Iran, Venezuela and Russia corner some 25 percent of the export market in oil. If the three countries do away with the petrodollar, this could seriously buffet the US currency, forcing up interest rates, increasing the cost of imports in the US and contributing to an inflationary economy or a recession.

William Clark writing in the Energy Bulletin says, “What we are witnessing is a battle for oil currency supremacy. If Iran’s oil bourse becomes a successful alternative for international oil trades, it would challenge the hegemony currently enjoyed by the financial centers in both London (IPE) and New York (NYMEX) . . ."

At the same time, nations in this region have been exchanging percentages of their dollar reserves for other currencies.

In March, following the Dubai Ports World debacle, the UAE Central Bank said it was considering converting 10 percent of its dollar reserves to euros. Kuwait and Qatar have hinted that they might do the same.

The Commercial Bank of Syria has exchanged all its dollar devise for euros, following a call from Washington urging US banks to cease acting as correspondents for Syrian financial institutions, ostensibly because of money-laundering concerns.

Last month, Sweden cut the dollar share of its $21 billion foreign reserves from 37 percent down to 20 percent, causing the dollar to tumble almost 2 percent in one week.

Sweden’s central bank said the switch to euros was an effort to stabilize its foreign currency reserves and reduce volatile currencies.

Iran, Venezuela and Russia are hardly on warm terms with the US government and their proposed flight from dollars is thought to be partially if not wholly politically motivated. However, if the dollar value plunges as a result, then central banks around the world will be left with devalued reserves, and may have to start switching as well. Continue reading...

Saturday, May 20, 2006

Skype and Freedom

Skype, the free and easy to use internet telephone, has announced that calling to non-Skype numbers (called SkypeOut) will also be free (for the US and Canada) until the end of 2006. This is amazing news. Download Skype from www.skype.com . You’ll need a headset with a microphone (cost about $30) to prevent feedback and give you excellent quality. Then start calling with your free long-distance internet phone. Whoopeeee!

My question: Are these calls also being monitored by the NSA? I don’t think so.

Another workaround: instead of using email, which is searched automatically by NSA for keywords, use your mic and headset to record mp3 (audio) files and attach these files to an email. They would have to be played to be searched for keywords. I don’t think the NSA has gotten to that yet either.

Google Echelon for your own edification. And please comment if you have any additional information.

Friday, May 19, 2006

Gold and Silver: Dips and Corrections

Another kind of dip!

This is some of the best advice I've seen. If you are not in the market, buy now. If you are already in, read on...

By: Jason Hommel, Silver Stock Report

My portfolio of mostly silver stocks is down about 17% from its high last week on May 11th. And in that time, gold has dropped back from a high of about $720-$725 down to a high of $719 earlier today, and loads of so-called analysts are calling for a correction, or trying to describe this week's price action as a correction. Sigh. I've not been doing this for very long, only about 7 years now, and I've seen my own portfolio of silver stocks lose just about 50% three times now, on the way up to over 1000% gains. I never use stop losses--that's just a way to get kicked out at the bottom--which is a fool's game. I stay fully invested in the sector, rarely trade more than 10% of my portfolio in a month, and keep my cash to generally between 1-5% of my overall holdings. So, be patient, take heart, and stick with it; especially you newer investors.

Continue reading

Monday, May 15, 2006

NSA Phone Phlap

In all of the blognostication over the illegal NSA surveillance of our phones, I have yet to see one mention of the infamous NSA Echelon, which has been known about for years. This latest “revelation” is nothing more than part of what has been stardard operating procedure in the NSA Echelon project since the ‘70s. What gives?

See also CALEA.

Sunday, May 14, 2006

Dollar in Meltdown Mode - IMF to Act?

Something big is coming this week. Maybe a whole bunch of big things: Rove indicted, dollar plummets, gold, silver, gold and silver, Iran, full NSA Echelon exposed, Bush's head explodes, who knows. But I feel it in my bones. Be alert - the world needs more lerts.

By way of GATA:

We are in meltdown mode,' said David Brown, chief European economist at Bear Stearns. 'It's all being whipped up into a bit of a selling frenzy. The dollar has a massive portfolio of negatives against it: it's the long-term problems of the trade deficit, and the government's budget deficit.'

Bloom warned that 'phase two' of a sell-off would cause turmoil in the equity markets, as on Friday, when both the Dow Jones and FTSE saw sharp losses. 'I'm expecting an increase in volatility and uncertainty across the board,' he said.

Brown added that the dollar's woes were likely to be exacerbated by central banks shifting their reserves towards other currencies, including the euro. 'Asian central banks have been buying fistfuls of dollars as the flipside of their massive current account surpluses. They're long dollars.'

He added that with the US current account deficit with the rest of the world worth 7 per cent (ed. note: 5% in any other country would be melting point) of its GDP in 2005, the White House and the Federal Reserve would probably be happy to watch the dollar decline. 'I don't think Washington's going to be concerned,' he said.

How High Will Gold and Silver Go?

As has happened in the past, when I do the research for a particular blog, I find material containing the information that I had planned to present that is better than I would have been written myself.

For example, read
The Gold Price – A “Spike” Or Something Else? By: Julian D. W. Phillips, Gold Forecaster for extensive coverage of the question.

And then listen to
this interview.

One of my main points is to compare the 1980 "spike" at $850 to today's $715 for gold. Remember, you have to adjust for the shrinking dollar.

another analysis:

"Now let’s take a look at where we are with gold and its previous historic high. The high reached in gold was $850 an ounce seen in January 1980. Adjusted for inflation, that would correspond to $2088.90 for an ounce of gold today!

Gold in 1980 $850.00
In 2006 Dollars $2088.90

Let’s look at it from a reverse perspective. The recent (05/11/06) price of gold is $715.10 an ounce, which would correspond to $290.98 an ounce in 1980 adjusted dollars, nearly 66% below its previous peak.

Gold on 05/11/06 $715.10
In 1980 Dollars $290.98

If you listen to the interview, you'll might want to follow the advice given there... JUMP IN WITH BOTH FEET!!

Saturday, May 13, 2006

Cheney Retires for "Health Reasons".

Oh wait, I'm getting ahead of myself. That hasn't happened - yet. What has happened is this report by Reuters that Fitzpatrick is going after Dick (Stentman) Cheney. Cheney's recent inability to stay awake may be related to the hardening of the arteries in his brain. That's not a joke. Really, see for yourself.

Thursday, May 11, 2006

SLV, GLD, CEF or Physical Possession

Ok, you have finally started paying attention to the rising price of gold and silver. You didn’t listen (or if you did, please leave me a comment) a year ago when I was gently suggesting that you might consider these archaic metals as investment opportunities. Now your TV is telling you that gold and silver are hot. You are wondering if you have missed the boat.

My answer: No, not yet. You missed the first boat, but more are leaving daily. There is still time. But what should you do?

Before I get to that, let me make my usual disclaimer: I am not a financial advisor. I have no special expertise. But I have spent the last two years reading what the experts were saying and researching investment opportunities they have suggested. You can search this site for references to gold and silver to review what I’ve reported. And, most importantly, I have followed my own advice and made money. You, of course, should do your own research and due diligence before you make any investment. I’m just reporting what I’ve found and what I’ve done. Perhaps you can benefit from reviewing this information.

I am not going to document everything I say in these articles. You know how to use Google.

First, understand the difference between money and currency. Gold and silver have served as real money for thousands of years. Currency is the paper we currently use. In the past, our currency has been based on gold and/or silver (as mandated in our Consitution). That is no longer true. Our paper is “fiat” currency, based on nothing more than belief. Its value is determined by 1) how many dollars are in existence, and 2) how much the world believes that the US of A is the best place to invest.

Currently, #1 is going way up, and #2 is going way down. The result is that the value of the dollar is decreasing, and we call this inflation.

Second, you should understand that all of the government data; CPI, inflation rate, employment rate, jobless claims, etc. is juiced data. All of the formulae from which these numbers are derived have been tinkered with by the government to the point that their relationship to reality is severely strained. We are currently being told that the inflation rate is around 3%. Real-world estimates are closer to 10%.

Sooo…the price of everything isn’t really going up as it seems, your dollars are just getting littler. Gold, silver, copper, platinum, palladium, and all other commodities seem to be going up in price because of these little dollars. To counter this effect, you must buy something that it not losing its value with your shrinking dollars. Real estate used to be a hedge against inflation, but it has been jacked too high at this point to be of use right now. (Unless you can sell it and convert the dollars.)

Another choice is to buy gold and/or silver. This is fairly easy to do these days. The popular choices are electronic trading funds (ETF), gold mining shares, CEF (a Canadian gold and silver holding company), or actual bullion (coins or bars).

Two ETFs are GLD (share price fixed at 1/10 an ounce of gold) and the newly-minted SLV (share price fixed at 10 ouces of silver). I've owned neither. I've heard it said that they are "not for the little investor". I don't see why.

I do not buy gold or silver mining company shares because there are too many confounding variables; are they hedged, do they have good management, are they located in dangerous countries, subject to dangerous environmental concerns, etc. You can make a lot of money here when junior companies are bought up by larger companies, but you have to be very knowledgeable, which I am not.

CEF is a Canadian company that baby-sits gold and silver. They seem tightly regulated. Sometimes you can see that the price of CEF lags the action in GLD and SLV.

Open yourself an online stock trading account (I use eTrade), transfer some money from your home bank account, and buy some shares. You’ll learn how to keep track of things, so you can buy and sell when it is advantageous to you. Or just leave it there, and don’t worry about it for a while.

Unfortunately you can't just forget about it, because if the dollar really crashes, as many predict it will, you will want to cash out of your stock account and convert to physical gold or silver. If you wait too long there may not be much available at a reasonable price.

Which brings us to the end game, physical gold or silver. There are many considerations but here are a few.

Gold coins (Eagles, Krugerrands, and Maple Leafs) are called bullion. The difference in price disappears when you sell as does the condition (mint or not), so buy the cheapest. Gold coins are a very compact medium for value, easily stored and protected. Today 14 one ounce coins are worth about $10,000.

In silver this would be about 577 coins, much bulkier and harder to store. But silver is up 61% this year compared to gold’s increase of 36%. Some of both?

There are other forms of physical to be considered: junk silver (1964 and older silver US coins), rounds (like coins but not stamped), and bars.

They are all really cool. The form they are in might become important if you were to actually use them as a medium of exchange.

Next article: How High Will They Go?

Tuesday, May 09, 2006

So Much for Holding Off on Silver

Yes, apparently the Buffet news did have an effect yesterday, but by this morning it had worn off and both silver and gold jumped out of bed with great enthusiasm. Although this is old news now, you can find further analysis here.

Sunday, May 07, 2006

Hold Off on Buying Silver

My guess is that this news will send the price of silver down - temporarily.

Warren Buffett Sells the Family Silver
By Jon A. Nones07 May 2006 at 12:57 PM EDT

St. LOUIS (ResourceInvestor.com) -- With the market abuzz with anticipation of what Wall Street legend Warren Buffett intends to do with Berkshire Hathaway’s $40 billion in cash, a small, but perhaps very significant little bit of news may have been overshadowed.
At the company’s shareholder meeting in Omaha, Nebraska on Saturday, Chairman Warren Buffett announced that the company has divested its silver holdings.

David Morgan, author of “The Morgan Report,” sent a note to clients quoting an anonymous source at the Berkshire meeting who confirmed the sale.

According to the source, no sell price, date or addition data were given other than the announcement that the company not longer owned any silver.

The source said Buffett didn't really talk about silver other than he sold it, but said he would rather hold businesses that have earnings.

According to news sources today, Buffett told shareholders, “We had a lot of silver at one time but we don't have it now.”

In 1997, Buffett purchased an estimated 130 million ounces for delivery in 1998. In February 1998, the silver price jumped to a high of $7.81/oz, rallying 50% since mid-1997.

The CPM Group estimated earlier this year that Buffett still held somewhere between 100 and 129 million ounces.

Buffett said that Berkshire had not benefited from the particularly steep rise in silver prices.
“I bought it very early, I sold it very early. Other than that it was perfect,” he joked.

Silver hit a 23-year peak of $14.68 two weeks ago. On Friday, July silver futures closed at $13.89 an ounce.

Buffett said he detected speculative participation in the recent run up in prices, particularly metals.

“What the wise man does at beginning, the fool does in the end... any asset that has a big move based on fundamentals will attract speculators...,” he said, according to sources.

“Something like copper is speculative on both sides of the market, and responding more to speculative than fundamental forces,” he added.

However, it might important to note the timing of Barclays’ silver ETF iShares Silver Trust [AMEX:SLV], which just launched on April 28.Jason Hommel, Editor of “Silver Stock Report” previously told Resource Investor that “we just don’t know” where the silver will come from to back the ETF, and it is possible that Warren Buffett could be the supplier, which isn’t causing a shortage in the market.

Furthermore, the SEC seemed to easily dismiss the opposition by the Silver Users Association and comments from sources about the illiquidity of the silver market in its 32-page order.

Many analysts estimated that the ETF would need perhaps as much as 130 million ounces of silver to cover investment demand - the same amount Buffet originally bought in 1997.

Barclays’ Christine Hudacko could not be reached for comment.

Million Dollar Bash

I hear my friends talking incessantly about how prices are going up. And of course, they are. Despite the “Fed” talking about low “core” inflation at 2% - 3%, anyone who goes shopping on a regular basis knows that prices are up, up, up. Anything that had to travel to get to the store where you are buying it (everything) is being impacted by the double-whammy of increased fuel costs and “reality-based” inflation, which does include food and energy. Some estimates I’ve seen are as high as 12%. Is hyper-inflation next in our growing list of things you can’t stop worrying about? ‘Fraid so.

Because, you see, the dollar is going down. I don’t think people get it. Our dollar is not worth a “dollar” – some fixed amount of something somewhere – anywhere! Not gold, not silver, not anything. Its value is determined by 1. How many of them there are, and 2. How much everyone believes in their value, i.e., believes in the worth of the US of A. #1 is going way up and #2 way down.

BTW – this is something that is being done to us by predetermined policy – not by accident or force of nature.

An Indian friend told me a story his people have been telling for many years: a white man comes to the village and offers to pay $100 for a loaf of bread. No one is willing to sell.

Asia Is Getting Ready to Dump the Dollar Peg
By Andy Mukherjee, Columnist
Bloomberg News Service
Monday, May 8, 2006

Li Yong, China's vice minister for finance, said he had heard
a "rumor" that the U.S. dollar was headed for a 25 percent drop. If
the gossip was true, the consequences would be "shocking," he said.

Li's comment, which he made at a discussion on global financial
imbalances last week at the annual meeting of the Asian Development
Bank in the Indian city of Hyderabad, was aimed directly at fellow
panelist Tim Adams, the U.S. Treasury undersecretary of
international affairs.

The unspoken message was: "Don't try to talk the dollar down." And
Adams knew better than to ask, "Well, what are you going to do about
it?" The answer to that question has already begun taking shape:
Asia may be getting ready to fix its currencies to a local anchor,
dumping the region's unofficial dollar peg.

Even as they continue to pile up U.S. debt in their foreign-exchange
reserves to keep their currencies stable against the dollar, Asian
nations, China among them, are preparing for a scenario where the
dollar does indeed collapse under the weight of a record U.S.
current account deficit. (click title to read on ...)

Maybe...Maybe Not

So we have conflicting reports on not only whether Iran will open its oil bourse, but if they do, what the effect will be. My guess is that they will, but that the effect will be just another crack in the foundation of the USD, slowly adding to its continuing decline. After all, this is the only way the US can attempt to manage its massive debt position, all at the expense of the US middle class, of course.

By The Associated Press
via the Globe and Mail, Toronto
Friday, May 5, 2006

Iran -- Iran took a step on Friday toward establishing an oil market denominated in euros, a plan analysts described as highly unlikely to materialize but which in theory could have serious consequences for the U.S. economy.Iranian state-run television said the country's oil ministry granted a license for the euro-denominated market, an idea first floated back in 2004, though just who would trade on it remains unclear.If the market were to succeed, or if Iran simply demanded payment for its oil in euros, commodities experts said, it could lead central bankers around the world to convert some dollar reserves into euros, possibly causing a decline in the dollar's value.

Oil is currently denominated in dollars around the globe, whether through direct sales between producers and consumers or in trades made on markets in New York and London. But if one day the world's largest oil producers allowed, or, worse, demanded euros for their barrels, "it would be the financial equivalent of a nuclear strike," said A.G. Edwards commodities analyst Bill O'Grady. Click title to continue reading...

Tuesday, May 02, 2006

What Hyper-inflation Looks Like

"How Bad Is Inflation in Zimbabwe?

Published: May 2, 2006

HARARE, Zimbabwe, April 25 — How bad is inflation in Zimbabwe? Well, consider this: at a supermarket near the center of this tatterdemalion capital, toilet paper costs $417.

No, not per roll. Four hundred seventeen Zimbabwean dollars is the value of a single two-ply sheet. A roll costs $145,750 — in American currency, about 69 cents.

The price of toilet paper, like everything else here, soars almost daily, spawning jokes about an impending better use for Zimbabwe's $500 bill, now the smallest in circulation.

But what is happening is no laughing matter. For untold numbers of Zimbabweans, toilet paper — and bread, margarine, meat, even the once ubiquitous morning cup of tea — have become unimaginable luxuries. All are casualties of the hyperinflation that is roaring toward 1,000 percent a year, a rate usually seen only in war zones."

Zimbabwe's solution to the problem? The same as ours - print more money.