The Phone Call

Here is a hypothetical secured phone call sometime in the future from the head of Norway’s intelligence agency (NIS) to President Trump:

Trump: Hello ...

NIS: President Trump?

Trump: Yes ...

NIS: Sir, I am the head of the Norway Intelligence Service and I have some very important news for you  ...

Trump: Yes?

NIS: Sir, we have recently recovered a body off of our northern coast who had a letter in his pocket to Putin marked “for your eyes only” which requests a wire transfer of $50 million to a bank account in Cyprus which we have traced to the head of your FBI. We have verified that this man was a Ukrainian operative with close ties to Russian intelligence and he had recently visited Washington, DC with a trip to the DNC. We believe that the head of your FBI and at least three of her lieutenants also visited the DNC shortly thereafter ... and that they have been compromised. We think that this is a serious threat to your national security.

Trump: How sure are you of what you just told me?

NIS: 100%

Trump: I can’t say how important this information is to the United States. We will not forget your help in this matter. Goodbye and thank you ...

NIS: Goodbye ...


Now, according to George Stephanopoulos and much of the US media, Trump should immediately notify the head of his FBI of this phone call. I know that this is only a hypothetical, but so was Stephanopoulos’.

Should he?

Why is Gold in the Toilet?

The price of gold has dropped today $93, as I write this, to $1409 per ounce ... down from $1803 last August ... and an all-time high of $1920 in September of 2011.  That is almost a 27% decline and is causing a lot of consternation among the gold bugs and panic among those schlemiels who bought gold after listening to those high-pressure ads on television.  Now the question is, why has this "guaranteed investment" gone sour,  I can offer four reasons:

1) The price of gold has been anticipating the return of rampant inflation as a result of the U.S. Federal Reserve Bank and other central banks around the world printing new money as fast as they can get the paper delivered to their mints.  Like any speculative market, the price of gold was discounting the future and, when the "future" doesn't occur on schedule, things can get messy.  Ben Bernanke's interest rate manipulations and a continued weak U.S. economy/employment picture has kept a lid on inflation  ... which has pushed back the date of the big payoff for U.S. gold bugs.

2) Since there are significant carrying cost to owning gold (storage fees, margin interest cost, no dividends, and steep selling discounts), an unloading of same was almost destined due to the drawn-out timing of the expected "rally." (The price of gold in Japan, based on the recent and dramatic quantitative easing of the yen, is hitting new highs.  This maybe is another gold market bubble in the forming.)

3) Because of the austerity measures being imposed on some European Monetary Union members, there is considerable pressure on these central banks to sell gold reserves to meet their debt obligations.  Apparently last Friday, Cyprus was the first country to crack under the strain and either is or will be selling off significant amounts (tons) of gold.  Are Spain, Portugal, Italy, Greece, and Ireland to follow?

4) Independent of these three fundamental factors, clearly technical factors are now ruling the roost.  If speculators, such as hedge funds, see the price of gold plummeting, they head for the exits, elbows akimbo.  Small private investors often get crushed in the stampede.

So, dear readers ... gold now is in the toilet ... and may stay there until there are real signs of inflation rearing its ugly head again.  When might this occur?  I am not that good at predicting things.  But, I can safely say that, when it does occur, it will probably be lightning fast.

Afterward: as of 10:30 on 4/15/13 gold is selling for $1342 per ounce.

Inside Information

Did you ever wonder why go-getters go into government?  It generally isn’t to “serve the public” as they often profess.  Plain and simple, it is to get wealthy.  And the way that they get wealthy is most often with inside information.  Yes, yes I know that private-sector people go to jail or pay big fines for trading in tidbits of data that the rest of us don’t have access to (see: Bloomberg Story ), but just look at the number of millionaires who are in Congress ... many of whom were relative paupers before they went to Washington.  As a perfect example of such unfair leverage, just recently the President of Cyprus transferred millions of Euros out of his country right before the banks were shut down and depositors lost large chunks of their savings … see: Intellihub Story

Remember John F. Kennedy buying a lifetime’s worth of Cuban cigars just before he imposed an embargo on that country?  This vignette is chuckled about now but it is representative of the type of advantage insiders in government have.  It was just last summer that Congress passed a revised law that forbade its membership from trading on privileged information that they picked up during their closed-door sessions … see: CNN Story.  However, the ACLU and this country’s judiciary seems to be rolling back even this sensible law … see: Jurist Story .

When I was a callow youth I was a investment analyst on Wall Street and, thus, I have seen from the inside what being in the catbird seat can do for one’s bank account.  I had to live under very strict guidelines vis-à-vis insider trading, yet learned that there was quite a bit of slew still in these restrictions.  I also quickly learned to ignore whispered tips that I often received ... for they often were given to benefit the tipster and not myself.  But what I did learn was to pay attention to was that flash of fear that crossed the eyes of a CEO when I asked about his company’s outlook … or the overcrowded parking lot of a company which was expecting a current boom to continue indefinitely.  Insider information very often is an elusive concept.

I still remember one of my fellow analysts asking if another analyst thought that XYZ company was a good buy.  The reply he got was, “Well if Arnie Mankowitz’s (our economist) GNP forecast is correct …”  To which he got this terse reply, “Forget Arnie Mankowitz’s forecast, this is real money!”

Afterward: See how the insider trading law has been eviscerated here: Breitbart Story