The Great Variety of Poor Rich People:Magambo Guru

By: Richard Daughty, The Mogambo Guru - The Daily Reckoning

-- Posted Thursday, 14 August 2008 | Source: GoldSeek.com

If you'd like a sample of the kind of "hedonic" qualifying idiocy running rampant in economics these days, The Economist magazine reviewed a paper by Christian Broda and John Romalis at the University of Chicago. These two guys say that the inequality between the rich and the poor is not as bad as it looks. This was such a surprising development that I and all my pals rooting around in the dumpsters behind the grocery store stopped to listen! We are not poor!

First off, we bums found out that we are not as bad off as we think we are because "around two-thirds of the increase in the standard inequality gauge is offset by the poor's lower inflation rate", which we get by consuming mostly non-durable imported items like food, clothing, and footwear that were falling in price!

The rich, who consume more services, comparatively suffer because they mostly consume domestic services, which are NOT imported, and so have prices that are going up with the inflation in the money supply!

I suddenly felt so bad for the rich that Lefty and I made a promise that the next time we come across an apple that isn't too mushy, we will give it to a rich guy as our way of helping them out!

And if that was not enough, these university egghead guys actually go on to say that the poor are actually thriving, as "the range of goods consumed by poor households increased by far more than for rich households. The benefit of this extra variety is not captured in income or inflation, but it can be quantified."

At this promise of quantification of the benefits of diversity of available imported goods as impacts inflation, I said, "Shut up you guys! This is going to be good!" As I stretched out on a pile of rotting cabbage in preparation for this exciting bit of news, I was actually all tingly at the thought of seeing how the inequality between the rich and the poor can be shown to be offset by sheer variety of goods in the marketplace!

It wasn't long in coming, and sure enough, before I could even get comfortable, the very next sentence was "If that gain is expressed as an addition to real income, the remaining increase in inequality vanishes."

Hahahaha! This is too much! The poor are as rich as the rich!

And lest you think that I am exaggerating the effects of inflation because that is just the kind of Hysterical Reactionary Loudmouth (HRL) I really am, this is one time I am not, as inflation in imported prices is still inflation in imported prices, and for those who are encouraged by the recent reports of seemingly positive GDP growth of 1.9%, Randall Forsyth in his Current Yield column in Barron's reminds us that GDP accounting means that "Soaring prices of imports, including petroleum, lowers the GDP deflator" because "imports count as a negative." Hahaha!
Inflation went down because imports went up in price!

In effect, he says, the government is applying "truly Orwellian logic: higher import prices mean lower inflation and therefore higher growth"! Hahaha!

This is so bizarre that even he can barely control his laughter, and says, "You can't make this stuff up."

Perhaps this is why I am so miserable these days, sitting here in the Mogambo Powerful Bunker Of Doom (MPBOD), uselessly looking at my desk covered in charts, reams of erstwhile useful analysis and miscellaneous "past due" notices from various creditors, knowing that it is all crap.

Even Chris Powell, of the Gold Anti-Trust Action Committee, agrees with me and says, in a pithy phrase that should congeal your blood at the tragic implications,

"There are no markets anymore only interventions."

Ed Steer of Casey Research tells me that we are not alone, and presents a commentary by Peter Degraaf and posted at Bill Murphy's lemetropolecafe.com, who "doesn't mind admitting that (technical analysis) is pretty useless in the face of this kind of intervention."

What kind of intervention? How about foreign central banks suddenly plowing a staggering $28 billion into buying U.S. debt last week, and stuffing the enormous haul of government and agency debt into their accounts at the Fed itself, taking their total ownership of government and agency debt to $2.4 trillion! At a lousy 5% interest, this is $120 billion in cash that we are shipping out of the country per year to these guys, just in interest payments!

And why are these foreigners doing this? James Turk at goldmoney.com explains "When central banks intervene in the currency markets, they exchange their currency for dollars. Central banks then use the dollars they acquire to buy US government debt instruments so that they can earn interest on their money. The debt instruments central banks acquire are held in custody for them at the Federal Reserve, which reports this amount weekly."

This would, then, explain why the dollar shot up last week, out of nowhere, for no reason that I can think of other than that all the alternative currencies suck even worse! Hahaha! What a world!

Aside from the stock and bond markets, Mr. Degraaf says that even "Gold closed just above the $850 support line during a washout caused by the performance of a US dollar that defies belief. Without any improvement in fundamentals, the dollar rose 132 points today. The largest gain in
years! Despite a banking crisis, low interest rates, huge deficits, money supply running in double digits, housing sector in shambles, the US dollar has now risen 8 out of the last 9 days. Someone please convince me that this is not rigged. Meanwhile at $855.00 the gold price is back at $323.00 expressed in 1980 dollars!"

And it is not just gold acting weird and grossly under-priced, but silver, too, as Mr. Steer notes that

"Ted Butler also mentioned yesterday that silverby any measurementis the most oversold it's ever been in its history."

In history!

My mind screams, "It's the time to buy!" And I would, too, but I went to the kids' piggy banks this morning and there is nothing in them except useless scraps of paper that say "IOU $5. Love, Dad."

They are not going to be happy when I explain to them that we are both victims, as I have no money either, just like them, and similarly because the Social Security Trust Fund is holding my "money" in the form of IOUs, whereas at least I said "love" at the end, which is a hell of a
lot more than the spendthrift, bankrupting government ever did for me! The bastards!

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Editor's Note: 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.

The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning and other fine publications.

Visit The Daily Reckoning's website.

Mogambo Guru speaks as the darkness descends

BORROWING TO GET A BETTER BARGAIN
by The Mogambo Guru

A reader of Agora Financial’s 5-Minute Forecast wrote, “You spend a lot of time talking about the loss of purchasing power of the dollar – and rightly so. Therefore, I fail to see the problem with anyone spending dollars as quickly as possible and incurring debt. That dollar spent today will be worth less, if not worthless, tomorrow, and the dollar repaid will be of lower value than the dollar borrowed. Can’t have the argument both ways.”

I was hoping that someone would ask me to field that question, as I was really chomping at the bit at the sight of a potential target for a test-drive of Random Mogambo Attack Mode (RMAM), where I take strange, unnatural delight in punishing stupidity by being rude, sarcastic, insulting, arrogant, argumentative and truly hateful, as is implied by the words “Attack Mode”.

And my reply would have been a real bargain, too, as it was a “two-fer”; not only would I have rebutted the argument, but I would have also been entertaining in a horrifying, embarrassing way, for no extra charge! Free!

For those who wish to hear my entire reply, I have handily expurgated the screaming obscenities, malicious lies, various libels, incoherent words and phrases, personal attacks and random death threats, and now the entire 50-page essay is boiled down to just the paragraph, “If you can guarantee that you will have an income that will rise faster than inflation, interest and taxes for the rest of your future life as your debt rises for the rest of your future life, then you are right; borrow as much as you want and party down, dude! You will, indeed, be paying back with cheaper dollars, handing yourself a bargain in the process, which is no problem for you because you are so smart and important that your employer will no doubt be happy – happy! – to pay you more and more wages and benefits at a rate that is actually higher than inflation in prices and taxes, for all the rest of your life! Lucky you!

“But if you are like the rest of us miserable creeps out here who are living hand-to-mouth and are one lousy ‘written reprimand in our employee file’ away from being fired and probably sued for sexual harassment or that whole embezzling thing, then no; borrowing for the sake of getting more of a bargain on some consumer item is really, really, really stupid.”

And I say this because a study by the University of Central Florida found that, as reported by the St. Petersburg Times,

“56 percent of low-income respondents said they could not pay their bills if they missed one month’s pay”

, which is not very remarkable since these are low-income people. But the startling part is that

“38 percent of middle-income respondents” also said that they could not pay their bills if they missed one month’s income, and that “24 percent of upper-income respondents made that same claim”!

And what percent of each class felt like they were so far in debt that “they will never be able to get out”? Oops! Low income: 25 percent. Middle income: 14 percent. Upper income: 10 percent!

And they are not going to get any help from their houses going up in value, as Martin Weiss of moneyandmarkets.com reports that, “The S&P/Schiller Home Price Index plunged 9.1% in December. Worse, the median price of new homes sold has tanked 15.1% from January of last year, the biggest drop in any month since at least 1964, when they first began tracking this measure.”

And so it is obvious that the reason nobody has any money is because they have no more money or credit after paying higher prices for everything else, as you can surmise from Ambrose Evans-Pritchard at Telegraph.uk.co, who reports that

“40pc of the world economy has an inflation problem”, which he proves by reporting inflation of consumer prices in China (7%), Vietnam (15%), Russia (12%), Bulgaria (12%) Romania (8%) Estonia (11%), The Emirates (12%), Qatar (14%), and India (5%).

And where did all of this inflation in prices come from that is making people hungry and angry? Mr. Evans-Pritchard is right on the money when he says, “I totally agree with those who blame the debt crisis on the irresponsible policies of the Fed and fellow central banks from 2003 to 2006, and indeed for [the] better part of fifteen years. They stoked this bubble by artificially holding rates too low (by government fiat). The money leaked into asset prices, just as it [did] in the US in [the] 1920s, and in Japan in the 1980s. (Two other low inflation eras).

“In effect”, he says, “central banks rigged the price of credit. In doing so they caused massive ‘inter-temporal misallocations’, to use the posh term of the BIS.

Or put another way, they stole prosperity from the future.”

You can imagine the powerful cinematic effect when he added, with just the perfect touch of ominous undertones, and augmented by my adding a soundtrack of people screaming while being torn apart by ravenous wolves,

“The future has now arrived.”

Ugh.

Until next week,

The Mogambo Guru
for The Daily Reckoning

The Mogambo Sez: “There is a darkness descending upon us.” Well, that was my first thought, and with which I was pleased in a strange, pretentious little literati way, but upon reflection, now I change that to, “The thread holding the sword of Damocles suspended above our economic heads is unraveling”, which suits the situation perfectly, but unfortunately doesn’t lead me to a clever segue to how you should buy gold and silver bullion, and oil stocks to save your financial butt, but which is, once you think about it, so obvious I don’t even have to mention it to someone as smart as you!

DEAD ZONE, Ted Butler

One problem with doing this type of blog is that I cover TOO many bases. I supply the dots; I am the "pamphleteer" so to speak against the King.

While trying to ensure the integrity of what I post. I try to not "cherry pick" the articles to suit my thesis

(and there IS a thesis under this - which is that all toxic garbage must go if we are to survive or not go totally insane and the rule of law IS our best guide to maintaining a sober, sustainable society .. )

but I aim to post those articles to show that there is truth out there if you care to look.

I do have a network, and I don't have time to post everything I get. No one possibly could post it all as we hit "peak" everything, so I stick with the trends keeping an eye out to figure out how it will all play out.

The blog is a summation of information and it's REALLY aimed at the younger people - those I actually know have not been exposed to the truth. I truly wish I could have found a source of information I could rely on when I was younger. One that threw labels and ideology into the wastebasket before putting out their propaganda (and it's all propaganda, folks!)

To my way of thinking - if I can show them what is happening with their EQUITY, that is what they are producing, and what is really happening to it, they'll be able to not be ripped off as much as I was. I made people many many many millions of dollars during my career and I have less than nothing to show for it despite never every using credit nor taking risks I could not afford.

It delights me that I could "see what's coming"; it saddens me now that it is here.

Some of what is going on is so purely manipulative it's unreal - and unfortunately the language used to describe can be very arcane to those who don't read the financial news regularly. Even those who do cannot and will not see the deadly hands overseeing today's "markets" and commodities .. and as resources continue to be rapidly depleted, it seems wise to me to PAY ATTENTION. That way we can arrive at solutions.

Thanks for the link being sent - my "inbox" on financial news is laden, and I'll just have to speed link much of the rest. But this call for oversight demands posting .. it's written from a trader's perspective which is not MY perspective!! But I do understand theirs and I think this shows up a fundamental PROBLEM. Without market integrity, how to you continue to get things to market? Hmm. Good question? You decide. I'll continue to post what I think is relevant by relying on "experts" who I think have some Good Suggestions. I know who I trust.

Here is a google search on the new Shanghai Gold (precious metals) exchange. Try to stay up on the trends as best you can. This is mother talking, obviously.

TED BUTLER COMMENTARY January 15, 2007 DANGER ZONE (This essay was written by silver analyst Theodore Butler, an independent consultant. Investment Rarities does not necessarily endorse these views, which may or may now prove to be correct.) When anyone speaks in absolute terms, they set themselves up to be absolutely right or absolutely wrong. Being right is easy to handle, but being absolutely wrong, especially in full public view, is something to be avoided. That�s why it's good to avoid speaking in absolute terms about markets. I�m going to disregard that normally good advice and speak in absolute terms about the gold and silver markets. I�ll be talking about something truly important, something that has me very nervous. The Problem In simple and absolute terms, the gold and silver markets are in the most dangerous position since I've followed them, or more than 35 years. I have definitely not turned bearish on silver, nor am I expecting lower prices in the long term. Although I expect near term volatility to increase, I�m more bullish on silver than before, if that's possible. Then, what's the danger? The danger is to the market itself, specifically to the COMEX, the world's leading precious metals exchange. Trading on the COMEX has come to dominate the world price of gold and silver to such an extreme extent that it has become unhealthy. A large part of the danger is the concentrated short positions. They have grown to such an alarming size that they threaten normal operations and, perhaps, the very existence of the Exchange. But it�s not solely the concentrated short position, as I hope to explain. Please keep in mind; the COMEX is part of the New York Mercantile Exchange (NYMEX), which, in turn, is the largest energy exchange in the world. This is no minor matter. Any disruption of such an important financial institution, now a publicly traded company, could have serious repercussions. I know that this is a complicated issue. I know I have been alone in writing on this issue. I know I bring it up repeatedly. Although I focus on the silver concentrated short position, lately it appears that gold has caught the silver concentration "disease." I am convinced it is the most important issue in gold and silver. The paper COMEX market has been allowed to become so dominated by large traders that it is doing something that is expressly against commodity law. Because the regulators at the CFTC and the NYMEX have allowed them to do so, the largest traders in COMEX gold and silver futures now set the price, rather than "discover," or follow, the price set by the fundamentals. It is important to grasp this concept. Commodity law and regulation are intended to prevent the futures markets from controlling the price of world commodities. The futures market "tail" should not wag the world market "dog." Yet that is precisely what has occurred in silver, and now gold. Large speculators in COMEX silver and gold, both on the short side as well as the long side, now set the world price of each. This is contrary to commodity law. Over the past three weeks, the price of gold has climbed $100 per ounce and silver has climbed more than $2 per ounce. The large non-commercials on the COMEX accounted for roughly 95% of the net buying in gold and silver over this period, with the "little" guys (unreporting traders) making up a very small 5% of the total net buying. My point is simple � large speculative buyers of paper contracts were behind the gold and silver price moves, not refiners or jewelry fabricators or industrial consumers. Nor were long-term investors who pay cash on the barrel. Therefore, paper speculators determined the price. That is against commodity law. Period. While it is true that large paper buyers are responsible for the recent price increases, that in no way, diminishes the real crime and danger in the gold and silver markets, namely, the continued expansion of the concentrated short positions. The concentrated short sellers in COMEX gold and silver futures threaten the very existence of the Exchange. Since it started moving up from $4 oz several years ago, it made no sense that silver should have the largest short position of any commodity in history. The only reason, and it can hardly be called legitimate, is to attempt to manipulate the price to be lower than it would have been without the giant short position. It should be clear today that whatever their motivation, the big shorts miscalculated and they are on the wrong side of the trade. The latest COT Report, for positions held as of January 9, indicates new record extremes in all the concentrated short categories in silver and gold futures. In both the 4 or less traders category and the 8 or less traders� category, the net short concentrated positions rose to levels never witnessed. In gold, the eight largest traders accounted for 95% of the all the COMEX commercial selling in the past three weeks (with the 4 largest making up most of that amount). Without this concentrated short selling, prices would have climbed much higher. The remarkable fact is that the natural hedgers, the gold mining companies, have been retreating from forward selling, leaving the question open as to who the heck the sellers are and what is their legitimacy? At precisely the time the gold miners hold the lowest forward sale position in many years, the four largest traders on the COMEX hold a record net short position of 75 days of world mine production and the 8 largest traders hold a short position of more than 104 days world production. Gold�s concentrated short position, expressed in days of world mine production is the largest of any commodity other than silver. The 4 or less traders in silver are now net short more than 282 million ounces, or more than 161 days of world mine production, another ugly new record. The 8 largest traders are net short almost 200 days of world mine production. Not only is this a record for silver, it is so far beyond a record for any commodity that I can confidently predict that no commodity will ever again have such a preposterously large short position. It is the combination of aggressive (and yes, manipulative) buying by large COMEX speculators and the reckless concentrated short position that puts the Exchange potentially in harms way. The big shorts are so exposed that they could now be desperate. In the last three weeks, the eight largest short traders in gold and silver have racked up market losses (and margin calls) of more than $3 billion. This, in addition to hundreds of millions they were out prior to that. These new losses are far beyond any that they have ever experienced. And because of the record large short positions they hold, their exposure to new losses has never been greater. This should be alarming to market observers (and regulators). The extreme concentrated short position in gold and silver is the prime reason to be alert to an attempt for a vicious and engineered sell-off by the shorts. It also will be the reason for a market melt up, if the shorts lose control. There is nothing good one can say about the concentrated short position. It smells to high heaven and this is why I write about it so frequently. It is obvious that neither the regulators at the CFTC nor the Exchange have lifted a finger to rectify this dangerous situation, in spite of repeated public petitions. Due to the uniqueness surrounding the silver concentrated short position, and how much it represents in terms of real world metal, it wouldn�t take an extreme market move to disrupt the Exchange. A $20 up day in gold and a 50-cent up move in silver (which has been experienced recently) generates an additional $630 million daily loss and resultant margin call to the 8 largest shorts in gold and silver. Two such days and you double the loss to more than $1.2 billion. It is likely that the 8 large shorts are close to the same in each market. If one or more of the concentrated shorts run out of liquidity, due to growing losses, and they are unable to fund daily margin calls, the Exchange would be impacted. Because the shorts are held in such concentrated hands, the losses and margin calls are automatically concentrated. Therefore, if one or two (or more) of the big shorts get into trouble, the Exchange and the markets get into trouble. This is the problem. If a big short can�t meet continued margin calls, the burden falls, eventually, to all the other clearing (guaranteeing) members. There is a guarantee fund maintained by the NYMEX, and a separate default insurance policy to meet a clearing member default, but the two combined only total about $250 million in protection. http://www.nymex.com/ss_main.aspx?pg=3 Because the size of the concentrated short position is so large, in a default, those funds could be exhausted quickly. Then it comes down to demands on other clearing members. Thus, in a case where one of the big concentrated shorts gets into trouble and can�t meet margin calls, other clearing members (and, effectively, public shareholders of NYMEX stock), not involved in gold or silver (like energy houses) will be required to pony up massive amounts of money to clean up the mess. If that�s fair, the explanation is lost on me. Let me be clear, if the shorts lose control, the price will explode. If the shorts are able to rig another sell-off and are able to cover many of their short positions on tech fund liquidation, it will set up a great buy point. But it will still be how this short position plays out that is the main factor in the market currently. From a free market perspective, that�s nuts. The Solution My solution involves nothing more complicated than selectively increasing margin requirements. This is something the Exchange does on a regular basis, and is understood by all to augment the strength and integrity of the Exchange. But my solution involves targeting the margin increases to where they will really do some good. The problem in COMEX silver and gold is because of the largest traders, not the small traders. Therefore, that�s where the focus of the solution should be. Smaller traders haven�t had anything to do with the manipulation or in creating the potential margin default. So, they should not be subjected to higher margins to safeguard the market. I would use the Exchange's and the CFTC's own definition of large and small traders to determine the margin increases. The definition of a large reporting trader is anyone holding 150 or more contracts of silver and 200 contracts of gold. For all traders holding fewer contracts than those levels, no special margin increases. For those traders holding more than the reporting limits, and up to 1000 contracts each of silver and gold, I suggest increasing margin requirements to one-half the full cash value of a contract. Any such margin increase should apply to both the longs and the shorts. For those very few traders holding more than 1000 contracts in gold or silver, the margin should be the full value of the contract. This would probably involve less than 25 silver traders and 100 gold traders. The only exception would be for shorts depositing warehouse receipts to be delivered in the current delivery month. Why am I proposing this steep increase in margins for the very few largest traders? To protect the market from default and to discourage unnecessary speculation or manipulation by either giant shorts or longs. Such full contract margins would restrict the very largest traders from trading in massive quantities of paper contracts and nullify their heavy resultant influence on prices. Not only does every exchange use margin increases when they deem it appropriate, the NYMEX, in particular, has resorted to even more extreme measures in the past. In 2000, they increased the margin in palladium to almost double the contracts full value. http://www.gold-eagle.com/gold_digest_00/butler081900.html When the NYMEX instituted the extreme margin change in palladium, it was intended to punish the longs and protect Exchange insider shorts. My proposal is to strengthen the integrity of the market and does not discriminate against either the longs or the shorts. I am suggesting my margin proposal be enacted before a default is apparent. Extreme margin increases and trading restrictions will, by precedent, most likely be enacted by the regulators after the problem becomes apparent. I know governments and regulators are reactive, rather than proactive, but they need to do something now.

One of dozens on gold and inflation

MINING FINANCE AND

INVESTMENT

WHAT’S BAD FOR STOCKS, GOOD FOR GOLD

Economic research affirms gold and silver price/inflation link over long term

Recent university research has reaffirmed the old adage that what historically has been good for gold prices, isn’t good for stocks, and vice versa—if the period involves a longer timeframe.

Author: Dorothy Kosich
Posted: Monday , 22 Oct 2007

RENO, NV -

An Oklahoma City University study reinforces the belief that, when circumstances are bad for the stock market, the conditions are good for gold and silver prices.

Contrary to popular belief, however, the author of the report also claims that today's bull market is not based on investors' expectation of inflation heating up, but rather upon the growing wealth of developing nations where gold ownership is more culturally prevalent.

Associate Professor of Economics James Ross McCown and student John R. Zimmerman, both of the Meinders School of Business at Oklahoma City University, gathered data for the years 1970 to 2006, testing "for the correlation between each of the metals [gold and silver] and the U.S. CPI [Consumer Price Index] inflation rate," using time intervals ranging from one month to five years.

They concluded that the "correlation is very small at the one month horizon but become larger as the horizon is lengthened. These results confirm the findings of Jaffe (1989), and Levin, MacMillan, Wright, and Ghosh (2004) that metals prices are unrelated with inflation at short time horizons and positively correlated with inflation at long time horizons."

The researchers also examined a theory of former Federal Reserve Chairman Alan Greenspan that gold prices served as an indicator of expected future inflation. The two tested the ability of metals prices to track inflation as computed from the yield spread between nominal U.S. Treasury securities and the U.S. Treasury Inflation Protection Securities (TIPS). The discovered "the prices of both metals show a large positive correlation with the expected future inflation rate, and that the correlation is highest for the time horizon over ten years."

Nevertheless, they noted that large increase in metals prices beginning in September 2005 "were not matched by corresponding increases in expected inflation."

Among the methods of gold and silver investment considered by McCown and Zimmerman in their study were purchase of physical metals, mining stocks, and derivatives based on metals prices.

The data researched in the study found that spot prices of gold and silver between 1970 and 2006 actually produced lower returns than the MSCI U.S. Stock index, and had higher volatility. During that period gold had a return that was 2% lower than that of stocks, and about 2% higher than U.S. Treasury bills.

The researchers then divided their time periods into three subperiods. From January 1970 to January 1980, gold and silver had annualized returns of more than 29%, or "far in excess of stocks and inflation," they explained. During the second subperiod from February 1980 to August 1999, "both metals had negative returns as compared with the large positive returns enjoyed by stocks."

For the third subperiod from September 1999 to December 2006, gold and silver again had positive returns, "far in excess of inflation and the meager returns to stocks during the period," according to the researchers.

When viewed according to monthly increments, the study determined that "both gold and silver returns are virtually uncorrelated with inflation." As the time horizons are increased, "we see higher and higher correlations, culminating in a positive correlation between gold and inflation of 0.0711 and between silver and inflation of 0.530, for the five-year horizon."

"Both metals show strong evidence of an ability to hedge inflation risk over the long term," the researchers asserted.

Among the study's conclusions:

• Gold and silver show evidence of ability to hedge a stock portfolio.

• Both metals also show ability to hedge inflation, which increases in effectiveness at longer time horizons.

• Confirming Greenspan's (1993) claim that the price of gold is a useful indicator of expected inflation, "both gold and silver prices show high correlation with expected inflation as measured by the spread between nominal U.S. Treasury securities and TIPs yields."

In an interview with Mark Hulbert, Editor of the Hulbert Financial Digest, McCown attributed the current gold bull market to "the influence of newfound wealth in parts of the world where there is a strong predisposition to owning gold, like India and some countries in the Middle East."

To download the study, "Analysis of the Investment Potential and Inflation-Hedging Ability of Precious Metals," go to http://ssrn.com, the website of the Social Science Research Network. The study may be downloaded for free if the reader registers with the site.

Try This LINK.

Heavy, eh??

Personally, I think tracking currencies versus the US dollar is a wise move - it will give you a REAL view of how inflation actually is, at least for those with more flexible, livable incomes. The people at the bottom just continue to get screwed .. it's just WORSE than ever now.