P.T. Barnum Inflation Launched Jan 20th?

Richard MayburyOne of my heroes, Richard Maybury, the “economic historian”, has just posted “Special Emergency Bulliten #8”. He talks about the “velocity of money” [explained here] and the possibility of hyperinflation.

Here is what I think is about to happen.

Obama is probably told every day that the world is being swept by fear, causing (money) velocity to plunge, and he is the only person who can do anything about it. He is the de facto president of the world.

I think Obama and his gang are preparing some kind of PT Barnum spectacular for his inaugural address January 20th.

If it works, (money) velocity will reverse, and we will go back to where we were August 07 through June 08—meaning the early stages of a runaway inflation, with non-dollar assets heading for the stratosphere. Gold, oil, copper, art, antiques, almost everything you can name will go to new highs within a few months, and the dollar will plunge.

If the PT Barnum spectacular does not work, (money) velocity will continue falling, and we will spiral on down into a depression. Non-dollar assets will collapse even further than they already have, and long term Treasury bonds will continue their ascent.

As far as I know, the only investment plan that minimizes the risk on both sides of this crisis is Harry Browne’s, which I have written about often.

I wish I could be more help. In the 4/07 and 6/07 EWRs, I wrote about the fall of the US Empire. Now I think it’s begun, and it won’t be any more fun than the fall of the Roman Empire was in 476 AD. Today’s economic chaos is just the economic symptom of this monumental event.

In short, the fall of the US empire is, I think, baked in the cake, as certain as anything in human affairs can be. The specific form it takes during the next two years or so will be determined mostly by Obama’s performance on January 20th.

A day or two after Obama’s inaugural, I plan to give my subscribers an analysis and forecast for what I think is coming. It will be posted on the Subscriber Access part of the web site.

But regardless of what happens, keep this in mind. We got into this runaway deflation through the stupidity of the demigods in Washington. Instead of firing most or all their ammunition at the deflation as soon as it arose, they fired a round here and there, never producing an improvement large enough to be noticeable to the general public. The lack of results, time after time, has demoralized the whole world population, causing velocity to drop further.

It’s been similar to trying to stop a brush fire not by dumping a deluge of water on it all at once but with one bucket every hour.

In other words, Washington’s emergency measures have made the emergency worse.

Expecting the new crew to do better would be naive, which I will explain in the January EWR. During his campaign, Obama promised “change!” but now he is hiring the same people who have roamed the halls of power for decades and who played no small part in creating this disaster.

The bottom line is, be ready for an even wilder ride than we’ve already had. Obama’s PT Barnum spectacular could send us in the direction of almost any conceivable fate.

Your next EWR is scheduled to arrive the first few days of January. And, again, look for my analysis and forecast for the results of Obama’s inaugural speech on the Subscriber Access part of the web site a day or two after January 20th.

Merry Christmas, and fasten your seatbelt.

Click here to see more posts by/about Richard Maybury.

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Vaporize COMEX 2008-12-23

Gold: 47.0% depleted. Delivery notices today: 11,900 oz.
Silver: 45.7% depleted. Delivery notices today: 420,000 oz.

Link to all Vaporize COMEX posts:
Vaporize COMEX Graphs

comex-countdown-gold-2008-12-23

gold-data-2008-12-23

comex-countdown-silver-2008-12-23

silver-data-2008-12-23

COMEX trades hundreds of times more gold & silver than they actually possess. If enough investors demand delivery of PHYSICAL gold & silver COMEX stockpiles will be depleted. If COMEX runs out, the ensuing rush to grab physical metal to settle contract obligations *could* be the spark that ignites the long-awaited precious metals wildfire.

Explanation:
COMEX warehouses contain both “registered” and “eligible” metals. The “registered” metals are available for physical delivery. The “eligible” metals are not ready for delivery until they become “registered.” Although this pool of “eligible” metals is stored at COMEX warehouses there is no obligation to “register” these metals for subsequent physical deliveries.

The graph shows:
1) the cumulative ounces of metal delivery notices this month,
2) the ounces of “registered” metal available for delivery,
The percentage shown is based on the cumulative physical metal delivery notices for the month against the “registered” amount of metal in COMEX.
“Eligible” metal inventories are not shown as they do not have a direct bearing on the inventory depletion ratio.

Sources:
[1] COMEX precious metals warehouse stocks:
gold: http://cmegroup.com/trading/energy-metals/files/Gold_Stocks.xls
silver: http://cmegroup.com/trading/energy-metals/files/Silver_Stocks.xls
[2] COMEX precious metals daily delivery notices: http://cmegroup.com/trading/energy-metals/files/delivery.pdf
Link to master list of reports: http://www.cmegroup.com/trading/energy-metals/nymex-daily-reports.html 

More info:
Gold: Is This It, NOW?
Attack of COMEX Gold & Silver
How 2 Track COMEX Deliveries
Sinclair Sez “Help Me Bust Comex”
This Guy Plans 2 Kill “Paper” Silver
COMEX: Taking Delizery Is EZ

Biggest Drop in Home Prices Since Great Depression

From MSNBC.com:

Home prices plunge as sales slow sharply.

Median price for existing homes falls record 13% to $181,000

Sales of new and existing homes plummeted in November, as buyers stayed out of the market amid the growing financial crisis and deepening recession, according to figures released Tuesday.

Sales of existing homes fell 8.6 percent, far more than expected, to an annual rate of 4.49 million in November, from a downwardly revised pace of 4.91 million in October. The median sales price fell 13.2 percent — the largest amount on record — to $181,300, from $208,000 a year ago.

That was the lowest price since February 2004 and the biggest year-over-year drop on records going back to 1968. The drop in home prices was probably the largest since the Great Depression, NAR chief economist Lawrence Yun told reporters. [more]