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December 10, 2004

The Goat Chimes In... Pass the Cheese
by John Mackenzie

Well knock on wood, Gold did not drop back to $400 yesterday but nor did it begin a breakaway assault on its 50% retracement level of the entire bear market. I WAS WRONG and yes the asbestos hazmat suit itched for awhile, but it's been locked back up in the Bunker we refer to as the Roach Motel... the one where I climb down and scribble on the walls in crayons in order to maintain a healthy degree of sanity in this mess of a country.

The level of bearishness has reached a near fever pitch once again and wouldn't ya know it, none other than Bob Precther has announced the Precious Metals complex has topped. Well Bob, Tim and about anyone else within slapping distance, I could not disagree more staunchly. The Gold community has begun its semi annual smacking contests with the bonfires ablaze once again. My old buddy Yogi remains an avid seller of silver, advertising a hefty premium over spot while offering up his latest invention on eBay. I suspect he's actually adding metals while unloading "things" he needs to "dump." He's stuffing precious metals into his picnic basket this time of year and wife Deb is no doubt going to be receiving a few Gold trinkets. We may feign disgust, but I sure hear quite a few people adding to their Precious Metals savings accounts. My biggest Client walked in Wednesday and plunked down a good amount of FRN's and suggested I "Call Hannes" and buy some more yeller dirt... 550 Maple Leafs were promptly removed from circulation.

OPEC decided it might be a good idea to cut production about 4% or one million barrels in order to stabilize the price of crude. This is immensely Bullish, of course as under the New Economy Paradigm; we need less oil not more. So thank you OPEC! Big Hugs from across the Pond. I'm pretty certain the Strategic Petroleum Reserve will hold up for awhile longer, barring no unforeseen aggressions, but that is unlikely as we need to point a finger somewhere, anywhere but here.

Uncle Buck aka the Dollar aka Usurious Federal Reserve Note is twisting in the wind again. Watching this game of Hot Potato has become all too disturbing as the Dollar's perch is tenuous at best. How long it will hang on like stinky confetti is anyone's wild ass guess, but I do suspect one player is going to decide it's simply not worth it, break from the Red Rover daisy chain and not allow any more "cheap dollars" to come over. Have a look at our Dollar this morning, there's a party going on right now.

The Zombie note is being managed between 3.94 and 4.35 and it's going to take more time, but not much for it to break loose. Europe is faced with holding the bag and they'll flat refuse soon enough. They'll do anything to support the dollar outside of buying too many more or euro-investors would not be fleeing our markets. So prepare for more phantom Gold Sales, Rate follies and Words. When the Ten Year begins to wobble, it is going to be my leading indicator to re-don the Hazmat Suit. This leading indicator will issue my sell signal on Gold Shares, not immediately, but shortly thereafter as when uncle buckie begins to plummet, I sincerely doubt there's going to be any earth left unschorched by the maelstrom of paper ablaze, including Mining equities.

Between now and then, I do believe we are heading up George Lindsay's Dome, this means we're likely off to a near new highs in the Dow Jones "Theoretical" Industrials. And yes, it sounds insane... but allow me this transgression. It's All or Nothing in the New Age Financial Economy, so heaping Moral Hazard upon Moral Hazard is really a keystroke away. Take a gander at the Bank of International Settlements Funded Liability Debt Placements. How on earth is it these tiny Nation States in the Caribbean are absorbing that much Debt?

I dunno, perhaps Credit Bubble Maestro Doug Noland will investigate and man is he bearish so may be he shouldn't. Reading his weekly missives makes my spidey senses tingle. At some point in the very near future, the "Custodians of Debt" or COD's (ironic eh?) are going to determine the sheer amount of heavy lifting required will need to go up & away. I believe they'll recognize the inverse relationship of dollar prop to debt implosion all too quickly.

Which brings us back to Gold, the real deal.

Avoid the ETF's. Please do boycott them, James Turk has exposed the WGC/GLD/SEC scramble for what I do believe it is... another hatchet tool for the criminal Cabal; one that adds another layer of sticky veneer to Uncle Buck. I doubt anyone with two stems cells attached is going to allow it dry. Paper is merely a trade, a levered play on speculation. When the great unwinding occurs, precious metals will weather the storm far better than anything else. Secure your savings today, our nations leaders appear to be hell bent on spending their way to the promise land.

John Mackenzie

John Mackenzie manages private capital - Email: m2jrmfl@bellsouth.net

Copyright © 2004-2005 John Mackenzie

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