Saturday, October 24, 2009

Markets, Money and Life With Grandich and George –

Good afternoon to you all and hope you’re preparing for a great weekend. Please find enclosed our next installment of Money, Markets and Life With Grandich and George . We covered some great topics in just 20 minutes including:

  • China’s massive gold imports in 2008
  • How Grandich reconciles higher US interest rates AND higher gold
  • Answering a ton of questions posted by you earlier today on the blog, including but not limited to:
    • Why didn’t Grandich double-dip by riding the “melt-up” and then ride it down
    • Capital preservation strategies for retired investors
    • Continental Minerals, Formation Capital and others
    • Gold
    • Copper
    • How both New York football teams fared last week :-)
    • An apology to my dentist’s wife for having to wait for our show to be over before he’ll come to bed. Sorry Christine!!

Without further adieu, here is this week’s show.

For those of you whose Flash player isn’t up to snuff, here’s the MP3:

David Morgan, Silver and Stocks

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Comparing 1974-75 and 1938-39 vs 2009

Schlaes: Early Retirees Killing Social Security

Columnist Amity Schlaes says that the U.S. is facing a Social Security crisis this fall as the number of early retirees is unexpectedly surging.

“In the 12 months ended Sept. 30, 21 percent more seniors opted to begin collecting their Social Security benefits than in the year-earlier period,” writes Schlaes on the Bloomberg wire.

“This was higher than the 15 percent increase actuaries forecast. Many signed up to collect cash at age 62, forgoing the significantly higher pension due to those who retire later in their sixties.”

The government may need to adjust the benefits to cope with this, but has not done so yet. (more)

World Financial Report, Oct 23, 2009

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The Economist (October 24th - October 30th 2009)

With a special report on China and America

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FREE PDF download click here

S&P 500 Retreat Signaled by ‘Bearish Wedge’: Technical Analysis

The Standard & Poor’s 500 Index may drop at least 7.5 percent based on a “bearish ascending wedge” pattern, according to Tom McNally, a money manager at Wilbanks, Smith & Thomas.

Drawing a so-called “bottom trend line” from the S&P 500’s 12-year low on March 9 and a “top trend line” from its close on May 8, at the time a four-month high, creates a nearly complete bearish ascending wedge, McNally said. The pattern usually signals stocks are about to retreat and hasn’t preceded a rally in at least five years, he said. (more)

Business Week (02/11/2009)

* APP$. The profitable new business of
smartphone software is more than fun and games.

* China's economy behind all the hype.

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Globalization is to save the world. Free Trade is supposed to benefit the western nations. This jurist sees the ebb and flow of economic demise as more of a factor of capital flight. The stock market crash of 1929 was supposed to be the harbinger of the great depression, but it was not. The depression happened some time later. Adding insult to injury was the capital flight. They didn't teach us that in school. The lion's share of Wall Street's investment dollars went to Germany and Hitler. For some strange reason they experienced an economic miracle. Anyway its perfectly clear where the jobs went. They're in the black. The suckers who let it happen are in the red.

When the money stopped flowing to Germany, we see a sharp spike in the manufacturing graph. Some people say you need a war to have prosperity. I say stop the capital flight. The decline is quite obvious post WWII with the Marshall Plan coming into effect.

George Freund

Goldman should be allowed to fail

A decade ago, when Goldman Sachs was a private partnership, it had $6.5bn in equity and its 220 partners, most of whose money was tied up in the firm until they retired, took good care of their pot of gold.

The bank’s trading and principal investing division – the part that took the most risks with partners’ capital – was balanced with its fee-based investment banking and asset management divisions. Trading contributed about a third of its revenues in the two years leading up to its 1999 initial public offering.

After it sold shares in the IPO to outside investors – pension and mutual funds hold about 80 per cent of its equity – it steadily increased its appetite for risk. Its fixed income and currency division has become dominant, bringing in two-thirds of Goldman’s revenues in 2006 and 2007 (and 78 per cent in the first nine months of this year). (more)