Friday, February 20, 2009

Gold approaches $1000

Gold is approaching $1000/oz. as I write this, and equity markets are declining. The Dow has fallen below its November low, but the S&P 500 still has a few points left before it too hits a new low. The mood is obviously grim. It's a perfect storm of bad economic and political news.

President Obama's "stimulus" bill contains virtually nothing that is likely to stimulate the economy, yet it will result in the biggest expansion of the federal government in generations and will create deficits as a percent of GDP that are measured in double digits. That in turn will be a millstone around the economy's neck for many years to come, and that's just for openers. On top of that he wants to pump hundreds of billions into the housing market in an attempt to keep prices from falling and families from losing their homes. Instead of boosting incentives to work and invest, he's rewarding those who aren't working and have failed. Instead of trusting the people and the market, he's staking everything on his belief in his own wisdom and the power of government. (As would a community organizer eager to help those who have fallen on bad times.) If the economy recovers it will be in spite of Obama's ministrations.

As for the economy, the good news can be found only if you dig, and only on the margin. If you read the headlines, all you see is doom and gloom.

I'm getting that sick feeling in my stomach that usually comes at market lows. It's time to go take a long walk on the beach.


Brian H said...

A walk on the beach sounds very nice...

The Therapist Is In said...

I am going into San Francisco and donate some warm clothes to homeless people, then maybe stop at the beach on my way home.

joemckendrick said...

Chin up... You do a great job of keeping things in perspective, of keeping our spirits positive. Optimism and innovation -- which can't be captured or quantified in economists' projections -- will drive the next wave of growth. Heck, even Roubini is making piles of money telling people they are going to go broke -- is this a great country, or what?

Scott Grannis said...

The walk was nice. It's about 68 degrees out, the sun is shining and the ocean is placid. Lots of people out and about enjoying the weather and running and walking on the trail that runs along the railroad tracks. Hard to be too depressed, and I came back and saw that the market is doing a good job of shrugging off all the bad news.

Thanks to all for the encouragement.

Daniel said...

thanks Scott. My optimism says "buy on Monday". I think ill give it a shot.

dave said...

I'd like to be optimistic, while I share your belief in the ability of the economy to bounce back, these guys are just getting started.

My concern is that Washington will continue producing growth retarding policies that drag down the economy and the market.

The market is clearly expressing a negative outlook on the future
of the economy.

Hopefully summer comes early to DC this year and they get the hell out of town for vacation where they are far less dangerous.

Mark A. Sadowski said...

I'm officially done. I called in my appraiser today. I'm selling my gold. You can call me wrong all you want. But I am done.The uncertainty has peaked. The rest is all downhill.

Gene Prescott said...

Scott wrote:
((Instead of boosting incentives to work and invest, he's rewarding those who aren't working and have failed.))

Just noting that there are folks unemployed at the moment who are both willing and qualified for work. Even so, I still agree with your overall notion.

Scott Grannis said...

Very good point, Gene. I got a bit carried away.