JAPAN ASIA INVESTMENTS
ROCK, PAPER, SCISSORS:
CRASH MODE
November 9, 2005
Nikkei: 14,075.96
*April 2003 low: 7,603.76
*- See March 31, May 3, & May 30, 2003 reports linked on homepage.
The following are the Gold and Dollar excerpts from the November issue of the Sid Klein Comment (SKC), which is available in its entirety via www.sidklein.com.
GOLD:
Greenspan has cautioned that asset prices don't sufficiently take into account the risk level that is embedded in asset prices. Then, he prints money. Two-faced? Not at all. This man will have proven to be the most honestly consistent guy in the world, once he retires and buys his puts.
Anyway, let's look at gold (and silver) and the Dollar. There is something that each have in common. Conspiracy theories abound about each and SKC will only lightly touch on them, before explaining what really matters, as well as what we believe are the correct investment conclusions.
The Barrick raid of Placer is deemed to either be a need to acquire gold out of desperation to fulfill its forward contractual obligations, or is part of an insidious plot to be able to sell forward contracts in perpetuity, thereby holding gold down, as the US government has made special arrangements via select investment banks, whereby the forward contracts may not ever be called.
THE GUESSING GAME IS MOOT!
It is absolutely unnecessary to determine what the scenario is. Know the big picture and don't lose vision by focusing on the powerful particles of yesterday's news.
There is a Western mythology about how the future is shaped by the will of men of earthly power. Barrick's board, for instance, is and has been well known to such powerful men. However, earthly power is bestowed according to the will of greater forces and, as so often explained in these pages, power, wealth and dominance are shifting from West to East for the next 500 years.
Whatever the earthly powers of yesterday's heroes and villains were, they are being swept aside. Nothing Western will continue in perpetuity.
CONCLUSION: Gold is in the process of being held almost exclusively in the hands of Easterners and there's nothing the West can do about it. It belongs to them, now. SKC felt that $455 would be the worst case scenario. We're there now. $445 wouldn't change a thing. For what it's worth, since January 2002, SKC has forecast spike corrections that stopped on a dime at those levels, at which points we would also warn of what could be the next and meaningless level - that would almost never materialize anyway.
DOLLAR:
The story is similar. The stock market bears and gold bulls are supposed to be terrified by the imaginary and special powers of sorcerers in three-piece suits.
Forget it. The printing of US Dollars is Dollar bearish, the activities in the gold market (hammering it down, etc.) is bullish. Manipulations may have been to buy Placer cheaper, for all we know. Similarly, raising rates in the US where the economy is rolling over badly is just an opportunity to get out, as the Yen and Swiss Franc resume their secular bull trends.
Foreigners will be unmoved as they continue to watch Dollar-based holdings erode, when converted back into their own paper. The Dow, keeping foreigners at home, has long since peaked in foreign currency terms and has been putting in lower highs, en route to 6,500 in 2006, with 9,000 a real two-month possibility. The Fed can print all it wants but, at one point, the jig is up. A rock is as good as scissors, if the paper is thin.
CONCLUSION:
Our model of 50% gold, 25% Swiss Franc and 25% Yen remains unchanged. Moreover, those not yet so allocated, now have the opportunity to make the necessary adjustments. Remember, rates are in a bull trend everywhere, except that the East will continue to raise rates as a result of economic strength, not weakness.
Sid Klein
This newsletter is solely the work of the author for the private information of intended recipients only. The views (including any recommendations) expressed in this newsletter are those of the author alone. The information contained in this newsletter is drawn from sources believed to be reliable but the accuracy and completeness of the information is not guaranteed, nor in providing it does the author assume any liability. No solicitation to buy or sell securities should be inferred from either the contents of this newsletter, nor its dissemination. Each potential investment decision and its appropriateness must be considered within the context of the entirety of the individual investor's circumstances. This information is given as of the date appearing on this newsletter and the author assumes no obligation to update the information or advise on further developments relating to the information provided herein.
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