Sunday, July 18, 2010

Credit Troubles On Financial Sense Newhour

This week's Financial Sense Newshour podcast highlighted two little-reported items from the news. The first involved uranium, but the second pertained more to gold. A mainland Chinese ratings agency downgraded U.S. sovereign debt from AAA to AA. Needless to say, the American rating agencies won't follow suit; that downgrade was far out of the mainstream. If heard about in the U.S., it was likely scoffed at.

In the third segment [.pdf file], it was brought up twice by Jim Puplava. He passed it by James Turk, and Peter Schiff later. It ties in with the deflation-to-hyperinflation theme. Schiff said the U.S. dollar is going to fall; Puplava reiterated his belief that there will be another stimulus and/or quantitative easing before the 2010 elections. Turk had an interesting sell point for gold, which he believes is going much higher: the time to "sell" gold is when you spend it.

There was also mention of Shadowstats inflation figures. As made clear in its inflation graph, this last decade was a lot like the 1970s if '70s inflation-calculation methodology is used. Another Shadowstats graph, of the M3 money supply, both puts doubt on the recurrence of inflation and adds to the QE2 story.

Puplava also mentioned that his firm has been advising clients to buy put options on their gold stocks, as those stocks have been acting poorly lately.

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