Interview Highlights...

• Negative real interest rates in nearly all the major currencies underpinning strength in Gold (large fund flows).
• More and more large investors are willing to take Gold up in their portfolios due to the rising mis-trust in economic policy of the US, Europe and Japan.
• Some central banks have negative equity in their balance sheets encouraging further fund flows in to the Gold market.
• Asians are buying Gold to protect against inflation, not systemic risk - as are virtually all other emerging economies.
• Mining shares are undervalued by historic valuations, however Global equities are probably entering in to a mini bear market in to next year unless central banks come in - in a big way - to push liquidity in to the system.
• Any money coming in to the Gold market is really running to exit the financial system (the credit system) in the form of Bullion investment and not necessarily mining shares.
• Inflation in major currency environments in the US or in Europe is peaking by the way it is measured and serious disappointment lies ahead for these economies.
• Financial markets and the real economy suffering from disparity.
• Recent prospering of the financial market environment was due largely to the money printed by the US Central bank in particular.
• Fiscal policy is fading.
• In an over-indebted economy, 'Monetary policy' doest work any more, however 'Fiscal policy' does.
• We will be disappointed by the coming economic numbers in the US and in Europe.
• All of the European periphery will be back in recession by the fourth quarter and the US economy will dissapouint.
• At some point the Central Banks will come to the fore again to try to influence sentiment and the balance sheet of the consumer to force asset prices higher. That can only come after things have gotten worse.
• QE was counter-productive for the real economy as it punished consumers through higher costs for energy and food, leading to weakened private consumption.
• All the leading indicators point sharply to a deterioration of the US however QE3 cannot be called for until stock markets are lower and economic numbers come in at very disappointing levels (sometime in the 4th Quarter).
• 1100 on the S&P by the fourth quarter wouldn't be a surprise.
• There is a small window of opportunity for current rally in equities to continue before a nasty decline.
• Bonds may continue to rally off Euro weakness (lowering yields towards 2%).
• The Euro currency could weaken making the US Dollar look strong for a while (6 months).
• Long term Government Bonds are Trading vehicles, no longer investment vehicles.
• Deposits shrinking in Greece, Ireland and Italy.
• Once the European Central Bank is forced in to creating more liquidity, the Euro will begin to weaken against the US Dollar.
• Sever inflation is still a long way off as we are in a deflationary environment which requires money printing to fill the hole created by the deflation.  It is only when the hole is filled beyond necessity and the money printing continues that will you see inflation risk.
• Developed, industrialised economies will follow in the footsteps of emerging economy reformation that has taken place during on a number of occasions during the past 100 years.
• Bankrupt nations will eventually have to cut out debt, create new currencies and start all over again.

.."Don’t trust your own opinion and back your judgment until the action of the market itself confirms your opinion"..

Jesse Livermore Trading Rule


.."Markets are designed to allow individuals to look after their private needs and to pursue profit. It's really a great invention and I wouldn't under-estimate the value of that, but they're not designed to take care of social needs"..

George Soros



.."The problem with socialism is that you eventually run out of other peoples' money"..


Margaret Thatcher

.."it is better to have few stocks and to watch them carefully”...

Bernard Burach


.."Until an hour before the Devil fell, God thought him beautiful in Heaven"..

Arthur Miller, “The Crucible”
 [Contrarian Investing]