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Thursday, December 18, 2008

Videos, Interviews, Gold, Oil and More

Yesterday I did a MaM-TV video talking about potential movements in ExxonMobil and gold. Exxon Mobil failed to follow through on its breakout from Tuesday; we'll have to see what happens next. I showed you the Exxon chart yesterday. Here's a version of the chart of the GLD that I showed in the video ...

You'll see that the GLD is at the top of its channel. It has support close by, and will probably go back and test it before making a serious breakout attempt. That would give everyone another chance to get long.

Or, maybe the GLD will fold its wings and plummet to the bottom of its channel.
But with the US dollar sliding lower, that seems unlikely.

You can go check out MaM-TV, which is linked at the top 0f, if you haven't seen the video yet.

I also talked with Phil from about my latest, column, Mexico’s Streets of Gold. As usual, when I talk to Phil, I enjoy myself way to much. You can listen to Phil's podcast HERE.

Here is is an update from Doug Short of of his graph of "Four Bad Bears".A couple of notes: The Great Depression crash is based on the DOW; the three others are for the S&P 500. Our current bear market (blue line) was down 51.9% at its low (so far), beating out both the tech crash (green line) and the 1973 oil crisis (red line).

The latest Oilwatch Monthly is out. Its track of global crude oil production is an eye-opener.

The December 2008 edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.6 MB, 24 pp).

Finally, I want to point you to some analysis by Merrill Lynch's David Rosenberg. He says 2009's dominant themes could include political risk, "Beggar-thy-neighbor" policies, rising gold prices, a bearish trend in consumer spending, and a perhaps surprisingly bullish turn in commodities.

Other stuff I'm reading ...

Gold Rises for Ninth Day in London as Dollar Extends Decline
Gold rose for a ninth day in London, its longest winning streak in two years, as the dollar’s slide boosted the metal’s appeal as an alternative investment and physical bullion purchases increased. The precious metal gained 15 percent in the past eight days, as the dollar lost 12 percent against the euro in the same period.

UAW Busting, Southern Style
The foreign nonunion auto companies located in the South have a plan to reduce wages and benefits at their factories in the United States. And to do it, they need to destroy the United Auto Workers.

They claimed that they couldn't support the bill without specifics about how wages would be "restructured." They didn't, however, require such specificity when it came to bailing out the financial sector. Their grandstanding, and the government's generally lackluster response to the auto crisis, highlight many of the problems that have caused our current economic mess: the lack of concern about manufacturing, the privileged way our government treats the financial sector, and political support given to companies that attempt to slash worker's wages.

When one compares how the auto industry and the financial sector are being treated by Congress, the double standard is staggering. In the financial sector, employee compensation makes up a huge percentage of costs.

At Goldman Sachs, for example, employee compensation made up 71% of total operating expenses in 2007. In the auto industry, by contrast, autoworker compensation makes up less than 10% of the cost of manufacturing a car. Hundreds of billions were given to the financial-services industry with barely a question about compensation; the auto bailout, however, was sunk on this issue alone.

An internal Toyota report, leaked to the Detroit Free Press last year, reveals that the company wants to slash $300 million out of its rising labor costs by 2011. The report indicated that Toyota no longer wants to "tie [itself] so closely to the U.S. auto industry." Instead, the company intends to benchmark the prevailing manufacturing wage in the state in which a plant is located. The Free Press reported that in Kentucky, where the company is headquartered, this wage is $12.64 an hour, according to federal labor statistics, less than half Toyota's $30-an-hour wage.
This Is What a Crisis Looks Like in the Balance of Payments Data

At least a crisis marked by a run out of risky US assets and into safe US assets. Right now Agency bonds — think Freddie and Fannie — are considered risky assets while Treasuries are not.

A run out of all US assets and the dollar would look very different.

Obama Considers Stimulus Spending Exceeding $850 Billion to Spur Recovery
Barack Obama may ask Congress next year to approve a stimulus plan of around $850 billion, an amount that has grown as the U.S. economy sinks deeper into recession, an adviser to the president-elect said.
2009 to witness global agri-commodity shortage

LONDON: Despite stronger production and falling prices for many food staples in the second half of 2008, the risk of food supply shortages remains acute in world markets. These supply shortage risks stem from reduced producer incentives – and ability - to boost food production.

Reduced access to trade credit, rising costs, bio-fuel competition, and infrastructure shortages are among key factors that continue to weigh on trend growth in world agriculture supply. Inventory levels are also low relative to their long run averages, highlighting the underlying tightness in food markets at present.

Tightening and more expensive credit is limiting the ability of producers to borrow to finance seasonal inputs – notably seed and fertilizer. The costs of these inputs has increased dramatically over the past few years, with the USDA estimating that US total inflation-adjusted farm costs have increased 28.5% since 2002 (a 52% increase in nominal terms).

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