Blog

April 28, 2008 – In the last letter I quoted Murray Rothbard to help explain how the practice of keeping only fractional reserves – where a bank’s cash reserves are less than its total liabilities – makes banks “inherently unsound”. But fractional reserve banking is only one of several intractable problems that plague banks. AnotherRead more

April 28,2008 – There have been numerous media reports about food shortages around the globe and the resulting riots caused by empty store shelves. Usually missing from these reports though is the reason for the shortages. The problem is not agricultural, but rather monetary. In other words, the problem is not too few food staples,Read more

April 7, 2008 – “Crises are endemic to financial systems.” So says The Economist in an April 3rd editorial about the present credit crisis. But are they right? Or are they just an apologist for banking interests and offer what has come to be accepted as conventional wisdom in order to deflect blame away fromRead more

March 17, 2008 – The center of focus this past week on Wall Street – and indeed, much of the financial world – was whether or not Bear Stearns will go belly-up. As questions arose about the quality of its $395 billion of assets that were carried on only $12 billion of equity, its customersRead more

Mar 14,2008 – Everybody knows that gold is an inflation hedge. That’s why most people buy it. They know from experience that the purchasing power of all national currencies is being constantly eroded by inflation. But they also know that their purchasing power is preserved by owning gold. For example, the price of crude oilRead more

March 3, 2008 – “Inflate or die.” I’m not sure when Richard Russell, the editor of Dow Theory Letters (ww2.dowtheoryletters.com), first penned those words. It might have been a couple of decades ago or even more, but regardless, those words are as true today as they have ever been. The dollar became a fiat currencyRead more

Feb 25, 2008 – During the fourth quarter of 2007, the gold price rose a healthy 12.4% from US$742.80 to $834.90. Obviously there was strong demand for gold during the quarter for it to achieve this gain. So I was somewhat bemused when I read a recent headline on Mineweb.com announcing that “Gold demand fallsRead more

February 11, 2008 – Do I have it right? It is a question that I relentlessly ask myself, comparing what the various markets are doing against what I had expected them to do. It is an important question, and I have been asking it a lot ever since the major stock averages last month brokeRead more

January 28, 2008 – I received an interesting email the other day from Nick Laird, the proprietor of www.sharelynx.com. He brought to my attention an eye-catching year-end change in SLV, the silver exchange-traded fund. According to the SLV website, 19.8 million ounces of silver were added to the fund on December 31st, but it didn’tRead more

Jan 25, 2008 – Now that gold has climbed above the $850 high reached back in January 1980, many are proclaiming that gold is at a new ‘record’. That’s true of course when gold’s exchange rate to the dollar is viewed in terms of nominal dollars, but nominal dollars provide a distorted picture. After all,Read more