With all the big corruptions all around us, let's not forget all the petty
corruptions, such as the one uncovered by Tony Cherniawski of The Practical
Investor newsletter, who said, "JP Morgan paid US$1.9 billion for WaMu's
[Washington Mutual] deposits and real estate. It got the questionable $307
billion portfolio at no cost. In addition, it received $31 billion in tax
losses for which it paid nothing. What a deal! At a corporate tax rate of 35%,
JPM instantly made $10.85 billion in tax write-offs alone. Economically, JP
Morgan expects the takeover to add earnings of 50 cents per share in 2009."
Soon, since I have no respect left for Wall Street, the banks, Congress,
government in general, the news media, the schools, the Supreme Court, the
United Nations, or anybody I can think of, I am soon bored with another
scandal, and I am mindlessly
picking at a scab on the end of my nose, thinking that if the Girl Scouts were
president, at least maybe we could get cookies out of the deal.
But I was interrupted mid-pick when Mr Cherniawski suddenly said, "Investment
in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, has
jumped 18% in two weeks." Wow! Talk about an increase in demand!
Maybe this new demand for gold is because people are waking up and saying,
"Hey! That Loudmouth Idiot Mogambo (LIM) and the Founding Fathers were right! I
gotta get me some gold, and lots of it, and right away!", which would explain
why the Central Fund of Canada, "an exchange tradable refined gold and silver
bullion holding company", is expanding by up to US$600,000,000; gold ETFs are
all reporting big inflows of money, there are reports of shortages of gold, and
Reuters is reporting the headline, "Germany's Bundesbank To Keep Its Gold
Reserves", meaning that Germany's "Bundesbank will hold on to the vast bulk of
its gold reserves in the next 12 months."
I assume this means that the practical nature of Germans has seen the folly of
paper, fiat money and the wisdom of gold, thus explaining why they are suddenly
opting out of "the terms of a five-year deal between 15 European central banks"
to sell gold into the market, suppressing its price with this flood of supply,
but now Germany says, "It would sell no gold apart from 6.5 tonnes to the
German Finance Ministry, as already agreed," which is what you would expect
when Germany actually sold very little gold the whole time of the agreement,
and which "consistently passed on most of its quota to other institutions and
sold only enough bullion to mint coins".
And it is not like they can't afford it, as the Bundesbank, with 3,400 tonnes
of gold, "is the second-largest hoarder of gold behind the US Federal Reserve",
although my Germanic heritage and the Austrian school of hard-money economics
makes me bristle at the term "hoarder" when talking about gold.
My plan is a simple one, that if Reuters does not issue an apology right away,
I shall take this as an act of war and, as a good German in the extreme sense,
invade Poland, and subjugate France and all of Europe until the idea of gold
backing the currency is seen not as "hoarding", but as "the smartest damned
thing that a people can do for itself, if it wants to protect its money against
the predations of the government and the banks, and anybody who says
differently will be picked up and interrogated!"
Well, you better get used to this kind of thing, because a police state is the
end-result of the misery that will be caused because the S&P500 index is
back to where it was in 1997, which is 11 years ago!
So, it seems that there are people who made no money by investing in the
S&P500 in 11 years, although there are a few people who are still making
money if they bought the stocks in 2003, but there are a Whole Freaking Lot
(WFL) of people who have lost a lot of money in the S&P500 since 1997! The
damned thing was 30% higher than it is now, twice in the last few years!
And yet there are still people who seriously think that they can fund a
retirement by not only making no money, but usually losing a lot of money, and
then have the little bit of money that is left be debased by over half its
buying power in those same 10 years? Hahaha! The average "betting my retirement
in the stock market" moron has lost over two-thirds of his, or her, buying
power in the last 10 years! Hahaha!
In effect, they invested enough for a whole pizza, and now they lost so much
(mostly due to inflation) with their stock market investments that they only
have enough in their retirement account to pay for a third of a pizza! Hahaha!
You gotta laugh at anybody who thinks that there is a free lunch somewhere, and
fortunately, you get not only a good laugh from it, but a handy reminder to buy
gold, which HAS increased in value since 1997 when it was $325 per ounce, and
which will increase in value from here because the government is going to try
and provide people with free lunches by borrowing and spending money, which
increases the money supply, which increases prices, which makes gold go up!
Whee! This investing stuff is easy!
Richard Daughty is general partner and COO for Smith Consultant Group,
serving the financial and medical communities, and the editor of The Mogambo
Guru economic newsletter - an avocational exercise to heap disrespect on those
who desperately deserve it.
(Republished with permission from
The Daily Reckoning. Copyright 2008, The Daily Reckoning.)
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