Wednesday, October 14, 2009


Four Ways To Profit From the Falling Dollar

King Dollar looks more and more like the court jester.

The currency fell to a 14-month low last week. In fact, the US dollar index is now off more than 15% from its March high. More to the point, some economists and strategists argue that the greenback’s fall won’t come to an end anytime soon.

Dr. Bill Witherell, chief global economist for Cumberland Advisors, wrote recently to his clients that he'll be looking for advance indications that the greenback’s decline has come to a halt.

“We fear that wait could be a long one,” he said.

So, how can investors position their portfolios for a continuation of US dollar weakness? (more)

Jim Taylor: Turning Hard Times Into Good Times, Oct 13, 2009

click to listen to audio

3 World Financial Figures Share Their #1 Investment For The Long Term

Jim Rogers on the Next 10 Years

I’m moving to China … possibly to live in a bunker. At least that was my inclination after listening to a presentation by Jim Rogers yesterday.

Now don’t get me wrong – Mr. Commodities wasn’t all doom and gloom. In fact, his talk was both informative and highly entertaining. But Rogers doesn’t sugarcoat things – he’s very matter-of-fact about his concerns and projections for the future. And most of them don’t bode well for the U.S. (more)

Goldman Sachs set to announce record $23billion bonus pot

City bank Goldman Sachs is expected to confirm tomorrow that bonuses will smash all records in 2009, just a year after the Government rescued the financial system from oblivion.

The Wall Street giant is on course to lavish £14billion on pay and bonuses on staff this year following a surge in profits between July and September, experts said.

Goldman's 5,500 UK workers are now set to pocket an average of almost £500,000 each for this year - the highest rewards in the firm's 140-year history. (more)

When money is worthless

The Financial Times on October 6 noted a disturbing new trend - hedge fund and other investors are increasingly seeking to invest in physical commodities themselves, rather than in futures. Given the excess of global liquidity, this is not entirely surprising. It does, however, raise an ominous possibility of a supply shortage in one or more commodities, caused by investor demand that exceeds available mine output and inventory. That could potentially produce a collapse in economic activity similar to that from the 1837-41 and 1929-33 liquidity busts, but with the opposite cause. (more)

World rice stockpiles hit as yields drop

Global rice stockpiles have plummeted because of poor crop yields, raising fears of upheaval in international grain markets ahead of the World Food Summit in the Italian capital next month.

Sharp increases in rice prices since last year have hit consumers across the world, especially in Asia and the Americas, the Food and Agriculture Organization said. Whole communities depend on the grain as their staple food or as an important ingredient, as in Asian American communities.

Amid warnings of another surge in rice prices, after the runaway inflation triggered by shortages or export cuts in 2008, FAO experts are citing sharp reductions in the stockpiles of the grain held by the five leading exporters -- the United States, Vietnam, Thailand, Pakistan and India. (more)

Shiller: This Is No Housing Boom

Yale professor Robert Shiller says the recent upturn in housing prices doesn’t signal that everything is now hunky dory for the home market.

In fact, it’s just typical price volatility in an uncertain market, says the guru who called the massive housing crash years early.

“The sudden rise in home prices suggests that the psychology of the market has shifted substantially,” Shiller wrote in The New York Times.

“But what should we expect in the months ahead? Not necessarily that we’re entering a new housing boom.” (more)

Skarica: Time to Buy Gold Stocks Is Now

Investors should buy gold and gold stocks right now, says David Skarica, gold expert and editor of The Gold Stock Adviser newsletter.

Skarica says gold is entering its buying season, so investors should begin acquire the metal, better still, leveraged gold mining stocks, soon.

November has been the start of a popular buying period since 2000, Skarica notes.

“That is the seasonality where the gold and gold stocks have been strong,” he said.

Part of the demand occurs because the Indian wedding season occurs in the fourth quarter and increases buying, he says. (more)

Gold, US Dollar Index and the S&P 500

click here to watch the video

Consumer Credit Craters

30% of American shoppers plan on spending less this holiday season than last year, reports market research biz NPD Group today. What’s more, when the Xmas shopping season arrives in force, 50% of respondents said the “state of the economy” will have a “significant effect on their holiday spending.” Recall our leadoff bit in yesterday’s 5, which showed that consumer spending now accounts for a record 71% of U.S. GDP… might be a rough start to 2010.

“Consumers continue to ditch credit cards at a hefty clip,” writes Rob Parenteau, “exceeding that of the two prior steep recessions of 1973-5 and 1980-2. Since this is the highest-cost form of household debt, this reduction of consumer credit outstanding helps immensely in slimming the interest expense burden of debtor households while at the same time reducing the leverage on household balance sheets.

“There are many who are eager for banks and other creditors to open up the taps again for private credit flows. We have no disagreement in the case where sound business expansion plans need to be financed, especially for small businesses. But we see much to be gained by encouraging households to save for future expenses and by encouraging households to keep their spending growth below their income growth. After the debt distress and financial fragility revealed in this last recession, when the household sector achieved an unprecedented deficit-spending position, it is hard to understand why this is even a source of dispute, but there are many who seem convinced a return to just a lighter, somewhat diluted version of the prior growth pattern, which was clearly dependent upon serial asset and credit bubbles, is the best way forward. We are certain Dr. Richeb├Ącher would find this s tance rather bizarre, but old habits and addictions don’t tend to die very easily.” (From Agoracom)