March 10, 2008

Dear Sis~
I guess I was guilty of excessiuve hubris when I assumed that Obama would win either the Texas or Ohio primary and would thus effectively sew up the Democratic nomination. Clearly I underestimated Hillary's ability to successfully fight and claw her way back from the brink of defeat. Now it looks inevitable that this battle will go all the way to the August convention, with Hillary & Obama attacking each other all the way, while John McCain sits on the sidelines smiling like the Cheshire Cat, looking presidential. This internecine warfare will be mutually destructive and may implode the Democrats' chance to win the White House if their eventual nominee comes out of a brokered convention with all the hallmarks of a back-room deal (especially if Hillary gets the nod over Obama if Obama enters the convention with the lead in delegates, which is a virtual certainty). This general election shopuld be the Democrats to win, but they may well snatch defeat out of the jaws of victory. At least McCain is a decent and honorable man, with common sense and integrity, so if he prevails, it won't be a total disaster...
Gold closed at $980 an ounce last week, up 17% since January 1st. Platinum closed at $2,240 (up 48% since Jan 1st), while silver closed at $21 (up 38%) Virtually all commodities are up double digits (petroleum, copper, wheat aluminum, coffee, etc...) which will only continue the rest of the year. I think gold has the most upside, though, as an investment vehicle. I expect it to hit $1,000 an ounce very soon, and to be at $1,500 to $2,000 by years end. Gold has different dynamics than silver and platinum (i.e., it responds to different market forces) and an investor can buy into it easily by purchasing a gold ETF (Exchange Traded Fund), which trades like a stock on the stock market. I know there are also silver ETF's and probably a platinum-based ETF. Anyway, normally I'd never recommend investing in gold (it is terribly volatile) but the economy is in a very unique situation now (recession, inflation, stagflation) which makes gold a good bet for substantial gains. If I had a big chunk of money to invest, I'd put it all into gold. Another big reason for the rise in gold is because of the falling dollar. Gold, like petroleum, is priced in US dollars, so as the dollar falls, gold must rise (as must petroleum, which closed at a record $107.20 a barrel today). A bet on gold is a bet against the dollar, and unfortunately, a bet against the dollar is a safe bet. The dollar has been sinking like a rock for over a year and will continue to do so for some time to come due to the fundamental weaknesses in our economy and our fiscal/economic policies. Our economy is going to get a lot worse before it improves, believe that. (Preisdent Bush is about the only American who still believes we are not in a recession. Hell, we were in a recession back in December). So, if you hit the lottery or fall into an inheritance, my recommendation is to put it into gold!
Love, Bill