I bought Physical gold today

I keep reading all these articles about governments printing billions of fiat currencies in the hope of preventing a depression. $700BB, Tarp, $600BB China, ECD , France, Britain. The list includes all the usual lemmings. I believe that all this printing will create a horrible inflation spiral in 2009. It's simply because governments are reading terrible accounts of previous economic cycles.
Just as doctors killed many more patients a hundred years ago because of lack of good diagnostic equipment, today's economic advisers are giving the press and government officials, a terrible diagnosis of what is ailing global economies and subsequent terrible economic stimulus.

FIRST of all STOP calling it ALARMING, AILING, DIRE!

We are simply deleveraging investment banks and hedge fund madness. THAT's a good thing!
Printing money and giving it right back to these people. THAT's a bad thing!

DE LEVERAGING CONTINUES
Banks balance sheets have to clean up and because they can't leverage 30:1 , it's pretty normal that their ROE will fall by an order of magnitude. Citicorp loses $100BB YTD in market cap. That's normal. They grew by dumb acquisitions, bad management and bad oversight from a purely incompetent Board of directors. Let the chips fall... Citicorp fires 53,000 employees and the stock still goes down. Poor Pandit, he has one heck of a mess on his hands. Stock going to 5 and hopefully no lower...
Goldman Sachs, now a federally regulated bank cuts 10% STAFF and bonuses to guys who racked in over $500MM a year ago in bonus...

Printing Money is NOT a long term solution
Printing money will not convince baby boomers to either save, invest or spend. So why are governments hell bent on repeating the mistakes of Germany of the late 1920s?
If you read history, the Germans had to pay exorbitant war reparations bills after they lsot WWI and after 10 years of crippling payments they just got fed up doing it for real so they started printing money. By 1933, you needed a barrel full of Deutsche marks to buy a loaf of bread. You know what happened next.


I bought my first ten ounces of a planned 400 ounces buy as a goal today. The local dealer was out of 10oz bars so I had to pay more for 1 ounce coins. For $60, the stuff gets delivered to the house. Don't get any ideas. Stuff is going straight to my bank safety deposit box. ( That gives me an idea... if banks are not to be trusted, should a non deposit business be started to offer vault services?) My local gold Dealer, http://www.kitco.com , says that since gold fell $300 , his business had the best month EVER in 20 years! It seems smart people have been converting their USD into bullion? They are not leasing or buying into pooled funds. Leasing gold from institutions that will never deliver is not wise. Pooled funds can always have a run and default so your are at risk. The only safe way is to hold the metal in YOUR hands. SO THEY ARE TAKING PHYSICAL DELIVERY.
With all the mining companies hard pressed to get their 2009 financing in place, I can safely say the coast is clear to 2010.
The recent pullback in gold is a tremendous buying opportunity. Remember I told you this less than a month ago. Hedge funds redeem their foreign holdings BACK to USD. That explains the drop in the British Pound, the Euro and countless currencies. The USD is a currency of last resort. Not much longer folks!

Even though, I also predicted a bad 2009 for the Euro, my call is for selling that gold at a significant profit in late 2009-2010 which will allow for nice purchase of real estate in EUROPE in 2011.

Stay tuned

DCW









Green tech is dying yet again after a two year sucker's bet.