Short-Term Key: Favorable Long-Term Key: -50 (Neutral)

               We had one roller coaster of a past week on the markets, and one that illustrated the real issues in today's economic and financial environment. In particular, it confirmed our position that there are two types of problems in this world: those that can be solved with money, and those that can't.Read more...

November 16, 2009 Read more...

Three seemingly disparate news items last week strongly suggest that the investment world is bifurcating into commodity and non-commodity investments – or if you will long-term winners and long-term losers.

First, India's central bank announced that it had bought 200 tons of gold from the International Monetary Fund. That's half of the total amount the IMF had planned on selling. For a relatively small central bank to buy that much in one fell swoop is a big deal. It promotes gold from the status of a “barbaric relic” to that of an alternative reserve currency. Moreover, it leaves China – and other Central Banks – with egg on their face.

If India does not buy the rest (and they have not ruled that out) it is almost certain other Central Banks, Sovereign Wealth funds, all those who are underinvested in precious metals to join a prospective scramble for gold et al. that far exceeds what the IMF is willing to sell. No wonder. Money supply in so-called non-inflationary countries have climbed 15 fold in the past generation or so while the total value of all above-ground gold has only doubled.

But we are not just bullish on precious metals. The second announcement was Warren Buffett's biggest investment of his career... Read more...