Take a bullion pill in case of an inflation "burp", otherwise hold cash?

The following article is reproduced with the kind permission of The Gold Report:

James Dines Follows His Prediction of a Commodity Crash with Another One the Mainstream Media Is Ignoring

Source: JT Long of The Gold Report (5/3/13)

When the metals markets tumbled in mid-April, The Gold Report reached out to "the original investor bug" and author of The Dines Letter, James Dines, for perspective. He predicted a crash in commodity prices two years ago based on his analysis of a weak Chinese economy. Next, he says, will be a bond market bust once interest rates start to climb. This will lead to "a stampede to get out of bonds like a herd of elephants attempting to exit through a revolving door." How can investors protect themselves? That is Dinesism #38.

The Gold Report: What does it mean that leading stock market averages have been in Uptrends, while commodities markets are in Downtrends?

James Dines: Our "Sell" signal on China's economy in The Dines Letter (TDL) of Sept. 16, 2011, is still stubbornly resisted by the mainstream press, which instead persists in calling for 7.5% growth by China Since we perceive China as a barometer for the commodities markets, it followed that there would be a decline in raw-materials prices.

We find it astonishing that we seem to be the only voice in the world's mainstream press calling commodities markets in the last two years "a crash." Cotton down 70% from its high is merely one example. It's not in the world's headlines yet, but we find it remarkable that virtually all commodities are down, worldwide, even including precious metals, oil, uranium and rare earths. How could leading market averages be in Uptrends, presumably forecasting a business upturn, even while commodities have plunged? After all, to market things, they need to be made, with commodities, do they not? China was the biggest consumer of commodities, so we infer China's economy is in trouble, especially its banks and real estate, as predicted in our 2013 Annual Forecast Issue (pages 26-29; also The Dines Letter of Mar 15, 2013, page 7). So our next "Buy" signal on China will be crucial in attempting to discern the cyclical advent of the next raw-materials upturn.

Because of excessive government interference with interest rates, those desperate for income—including pension funds—have pushed prices of virtually all secure sources to nosebleed heights. When the Fed eventually does raise interest rates, the bond bubble will be pricked and the stampede to get out of bonds should be like a herd of elephants attempting to exit through a revolving door. What to do in such a bond market crisis? Aside from TDL's blue-chip recommendations, we always recommend dispersing assets in several "friendly" countries. Also, diversifying in golds and silvers, including Saint-Gaudens double-eagle gold coins, rather than just keeping capital entirely in fiat currencies.

The world is in what we call "The Second Great Depression," comparable with the first one, in the 1930s. As laid out in my final business book, "Goldbug!," doubling the money supply in 1922 to pay for World War I caused a great inflation that after 1929 was corrected by the First Great Depression, in the 1930s. The similar printing of enormous quantities of paper money, not backed by anything except more paper, has also resulted in the current Great Deflation, still deepening, worldwide. The soup kitchens of the 1930s have been replaced by food stamps, but the resemblance is not coincidental.

Realizing that Keynesian economics failed to end unemployment after the 1932 crash, until World War II began around 1940, enabled us to predict with specific clarity that it would not work these days either. Indeed. Historically, large quantities of printing-press money has failed to reduce the downward trend of Americans with jobs in recent years. Few believed our prediction of "The Coming End of the Age of Jobs," or that it would lead to "The Coming New Social Order," but it is already unfolding. Unemployment in Europe already ranges between 20% and 50%, depending.

It is difficult for investors to protect themselves in this situation, but we cover it as best we can. We have recommended blue-chip stocks that have a dividend yield higher than that of U.S. Treasury paper, because they are proxies for institutions seeking to park their cash in areas other than overpriced bonds. That should end when the Federal Reserve finally allows interest rates to rise, but its fanaticism in continuing to suppress rates despite the Keynesian method not working represents a triumph of hope over experience—and will not end well.

Especially shocking is the delusion that adding inflation to a deflation would somehow cancel each other out, but is in fact the futile attempt to cure a problem with its cause. Overprinting paper runs at increasing risk of an eructation of "hyperinflation"—please note it is a word not used anywhere in the mainstream press these days. Predicting a hyperinflation is so daring in today's environment that we might be mistaken, so we will have to get closer toward the end game to be more confident of it. We hope we are mistaken.

TGR: What will be the next big sector?

JD: We refer you to Dinesism #38, of the 65 that guides our methodology: "Rich or poor it's good to have a lot of cash." And you may feel free to quote us on that. Also, parking some long-term capital in gold and silver, especially during pullbacks, would be useful if a hyperinflation eructs.

James Dines is legendary for having made correct forecasts that were in complete contradiction to the rest of the financial community. He is the author of five highly regarded books, including "Goldbug!," in addition to his popular newsletter, The Dines Letter, and videotaped educational series. Dines' highly successful investment strategies have been praised by Barron's, Financial Times, Forbes, Moneyline and The New York Times, among others.

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DISCLOSURE:
1) JT Long conducted this interview for The Gold Report and provides services to The Gold Report as an employee.
2) James Dines: I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions.
3) Streetwise Reports does not make editorial comments or change experts' statements without their consent.
4) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

Arguments for gun control (1)

E-ink phone: I want one!

The problem: mobile phone visuals are terrible when you use them in a mobile way, outdoors or even in some lighting conditions indoors.

The solution: read them with ambient light, using the same sort of technology as Amazon's Kindle.

And like the Kindle, battery power is used only to change what's on the screen, so a full charge should last a week.

See reviews from the Mobile World Congress in February here and here.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Climate change: the role of ash, and volcanoes

The excessive zeal of some scientists has made it difficult to discuss climate change (which, amusingly, was first headlined simply as global cooling, then global warming). But it's universally agreed (I think) that the Earth has been a lot hotter, and a lot colder, in past millenia. The question is, what's happening now?

Up in Greenland, they're now growing strawberries and potatoes; and last month the albedo of the ice sheet was lower than in any April in the last dozen years, hinting at an even bigger melt than before.

Yet there is still debate over whether Earth's total ice cover is growing or decreasing, as a Dutch study reported last month. It seems that while the Arctic's is melting, the Antarctic is piling on more.

The network of causes and effects is complex: CO2 and high-altitude water vapour (quite a lot from planes, I think) interrelate with air and sea temperature (which vary around the globe). An explanation as to why ice is melting in one place and melting in another is that particulates from burning forests and fossil fuels are settling on Northern glaciers, absorbing energy from sunlight and conducting extra heat into the ice below.

The ash can also come from volcanic eruptions - but the causal connection goes both ways. Another study, published last December by researchers in Germany and the USA, seems to show that as ice cover decreases and sea levels rise over long periods, tectonic plates are warped by the changes in their burden and volcanic activity increases.

And the causes can sometimes oppose each other. I recall how in 2010, when flights over the UK were banned because of the ash cloud from Iceland's Eyjafjallajökull volcano, we saw not grey, cloudy days but brilliant sunshine and chilly, starry nights. I wonder what is the relative importance of hydrocarbon emissions and water vapour?

Enough brickbats have been thrown at those who forgot their professional scientific objectivity in the debate. It's time for both sides to reexamine evidence and hypotheses with open minds.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy.

Greenland: Accelerating ice melt?

Jason Box's Meltfactor blog reports that albedo (ability to reflect light) of Greenland's ice sheet was significantly lower in April than it has been since before 2000.

If there is a self-reinforcing feedback system here we may have to reconsider our scepticism on climate change.

We don't necessarily accept that it's all the fault of humans, though it's still possible (as reported earlier) that the additional melt may be influenced by a light-absorbing darker layer on top of the ice, of atmospheric particles from the burning of forests and fossil fuels.

UPDATE: The Guardian newspaper has caught up with the story (12 June 2013).

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy.

UK local election results 2013

UK (Cornwall): Shelterbox

Once a year, the Tregothnan Estate near Truro, Cornwall, opens its gardens to the public. Aside from being being a botanical safe haven for many rare plants and trees, it's the only tea-grower in England. So we visited.

The charity they sponsored this year was Shelterbox. This is a truly brilliant idea, the brainchild of Rotarian Tom Henderson OBE. It's a survival kit packed into a sturdy plastic box, and the stroke of genius was to work backwards from external constraints: what was the most weight two airline baggage handlers would be prepared to carry, and how many boxes could be fitted into a standard steel shipping container.

For £590 a pop, you get this:

Contents can be varied according to need, but the basics include a waterproof tent with raised door (protects against floodwater and creeping creatures), stove with cooking and eating equipment, and most importantly, an ingeniously designed water filter. The filter is to help prevent the outbreak of disease that tends to decimate the survivors of the initial disaster, and it can be flushed out and reused in case of prolonged encampment.

Thousands of these boxes are stored in places around the world, for maximum speed of delivery in emergencies. But the stores need topping up and you can not only sponsor a box but track where it's gone.

Fabulous. I'm contacting them to see if a local Rotarian can do a show and tell for a school; maybe you can do something, too.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy.