Thursday, October 02, 2008


In September, investments in Gold ETF's increased by 4 BILLION DOLLARS! We are hitting the hair pin curve of the turn very hard and yet the public is going the wrong way around the curve! They are in a scramble to see who can run right smack into a freight train first.

Today, the evidence is as strong as ever that the turn is here. Basic material stocks are down almost 10% in one day! Conglomerates, energy stocks and capital goods stocks are are down n the 5% to 7% range. With the basic commodities such as oil down 4% (gold down 5%), it may seem strange that the transportation index is down 7%! Take a look and you will see it is the railroads that are taking the bulk of the hit. The demand to haul coal, iron ore and forest products is falling and the advantage that trains have over trucks is falling with each decline in the price of fuel.

The numbers are compelling. Four Billion Dollars in Gold Funds, the government ran out of the popular gold buffalo coin and one month treasury securities pay almost nothing. Warren says to buy when other are fearful. You nor I can get the same sweet deals as Warren but Warren is buying highly leveraged positions. He purchased shares in Goldman and in GE. GE, among other things, is a lender. If you buy GS and GE, you will make money, not as high a return as Warren but you will make money.