Economy Heating Up
The economy
appears
to be doing well. Of course, the operative word here is
appears.
What we have going on right now is the classic late stage of an inflation
created boom, right before things begin to turn for the worse. Employment is up,
interest rates still fairly low, people are beginning to feel comfortable, even
gas prices are going down—though, to be sure, they're still rather high.
What, then, does anyone have to worry about? Everything's fine, right? Well, not
quite.
Gold has almost risen to $500 an ounce. That, in
and of itself, would be cause for concern. Gold is one those last resort kind of
investments. When nothing else looks good, when everything else looks bad, the
investors turn to gold. The fact that this has all happened pretty much under
the radar of the major financial media suggests that the smart money has moved
into gold, while the not so smart money remains in stocks, bonds, and housing.
What does the smart money know that everyone else appears ignorant
of?
They know that the dollar is
weakened, that the stock market is overpriced, that the housing market is
overpriced, and that inflation, in recent years, has been
underestimated—written down by clever accounting tricks, such as liberal
seasonal adjustments so that the rise in energy prices can be factored out of
inflation. Why don't they also factor out the drop in technological goods
prices, as not being legitimate because always falling? Computers, in
particularly, are continually falling. But no, if the prices are going down,
they are including in inflation estimates; if they are going up, means are found
to discount that.
Posted: Tue - November 29, 2005 at 04:04 PM