Wednesday, July 16, 2008

A golden day!

My, what a wonderful day! We had a perfectly beautiful summer day here in the New York area and the Dow and S & P 500 were up a lot, over 2% and the Nasdaq over 3%:

S&P 500*1245.3630.452.51%
10-YR Note*3.940%-29/32-0.89%
* at closeSource: Dow Jones, Reuters

My last post mentioned gold as a possible safe haven that might, just might, hold its value up until the election. Then this afternoon, I read the Forbes article below. I like the gold sector, but it is very volatile and unexpected and has massive downward spikes. These downward spirals are very startling when they happen but a rout tends to be followed by a gentle ride up.

From today's Forbes website, a new article by John Tamny, "Inflation is worse than we think":

...So while inflation problems around the world confirm that our government measures of inflation are faulty, the bigger story is what a rising dollar price of gold means for the average American. In short, when gold rises, paychecks are emasculated, investment in innovative, job-creating enterprises subsides and money flows to the relative safety of the "real."

Rather than clinging to the CPI as false evidence of light inflation, and worse, targeting consumer prices, monetary authorities should instead target a stable gold price with an eye on bringing it down substantially. If history is any kind of indicator, an upward correction of the dollar would quickly cheer an electorate that presently has much to complain about.

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