2010 Gold Eagle and Silver Eagle Coin Sales
Sales of the United States Mint's 2010 Gold and Silver Eagle bullion coins are off to a fast start. Sales levels for the one ounce silver coins have already eclipsed the levels achieved in the year ago period. The one ounce gold coin sales were also strong.
After going on sale January 19, the 2010 Silver Eagles recorded sales of 2.44 million coins on the first day of availability. Earlier in the month, the US Mint had sold 367,500 coins, representing the remnants of the inventory of 2009-dated coins.
The month to date total for Silver Eagle bullion coin sales has now reached 3,592,500. By comparison, in January 2009, the US Mint had sold 1,900,000 coins. The high monthly sales total is made even more impressive by the fact that the one ounce silver bullion coins were completely unavailable for six days during the month between the sell out of 2009 coins and the start of sales for 2010 coins.
The 2010 Gold Eagles, which also went on sale January 19, recorded sales of 30,500 on the first day of availability. The US Mint additionally sold 18,500 of the 2009-dated coins on the same day, since authorized purchasers were required to take a certain amount of the old dated coins for each 2010-dated coins ordered.
For the month to date, gold eagle sales have reached 85,000 of the one ounce coins. This compares to 92,000 sold in the year ago period.
Before I go…
This is it. With bittersweet emotions, we have come to the final edition of Notes from the Investment Underground. Although without the burdens of daily writing chores I will be free to pursue some exciting trading endeavors, I will most certainly miss having a captive audience for my research and opinions.
While my time at the helm of Notes resembles Jay Leno’s shortened primetime tenure, the last three months have been quite fun. I have written for several daily newsletters in my career; none of them have been as outspoken and responsive.
Every day, my inbox was filled with the well-informed opinions of readers from across the globe. Without a doubt I will miss your additions to my inbox, even the less-than-friendly missives – they keep me on my toes.
But I don’t want the final edition of Notes to be some sappy, look back on our history together, especially since that history only spans to November.
Instead, I want this last column to be just as informative and actionable as I hope the rest of our editions have been.
With that, I take you to the hallowed halls of the U.S. Supreme Court and a ruling issued just hours ago.
The nation’s top court has decided that legislation created in 1990 that restricts the amount of money a corporation can donate to a political campaign violated constitutional free-speech rights.
With the court’s decision following party lines, the five conservative judges outvoted their four liberal counterparts. The decision can be considered yet another win for the nation’s conservatives during a week that has proved costly for Democrats.
With corporate “citizens” now able to virtually unload their treasuries in an attempt to gain favorable leadership in Washington, Big Business has gained even more power amongst the nation’s ever-greedy politicians.
While I am just about as conservative and pro-business as can be, I am not sold on this ruling. It’s not so much that I don’t feel corporations should have the same rights as citizens. It’s because I believe all campaign donations need to be limited.
The path to Washington is not filled with good deeds, fairness and logic, but is paved with the golden goodness of campaign contributions. Cash equals votes.
Imagine the next presidential election when Goldman Sachs unleashes part of its $13.4 billion bottom line on getting a Wall Street-friendly politician at the wheel. It won’t be good for the country and it won’t be good for the economy.
Now, don’t think I am laying the blame for this decision on the Supreme Court. Although party lines suspiciously decided the vote, the court followed the laws and precedents before it… I hope.
If we want to rid ourselves of a Washington that only represents special interests and lobbyists, we need to ensure politicians don’t get any more money than they need.
So I leave you with this: Do something about it!
Write your representatives, protest, join a tea party; don’t just sit back and complain. Your financial wellbeing should not revolve around what is happening in Washington.
Until we fix this mess, sadly, your wealth has everything to do with those morons.
It’s up to us to fix it.
Enjoy today and the days beyond,
Andrew Snyder
2009 Ultra High Relief Double Eagle Gold Coins
The US Mint recently wrapped up sales of the 2009 Ultra High Relief Double Eagle Gold Coin. The sales officially ended on December 31, 2009 and more recently some final details about total sales became available.
The coin was authorized directly by the United States Secretary of the Treasury back when it was Hank Paulson. The 2009 Ultra High Relief Gold Coin recreates the design from Augustus Saint Gaudens on a one ounce 24 karat gold coin issued in 2009.
The program seemed like it might run into problems since it was being launched amidst an ongoing scarcity of precious metals blanks, but for the most part, the offering went as planned.
The coins were originally offered for sale on January 22, 2009 and were priced at $1,189 each. The coins were limited to just one per household, but that didn't stop collectors from ordering more than 40,000 coins in the opening five days of sales. A few coins from the initial orders shipped in early February, with a greater number shipping later in the month.
During the course of sales, the price of the coins at the US Mint slowly ratcheted upwards, as the price of gold rose. On November 25, 2009, the coins reached their highest offering price of $1,539 each. This represented a $350 increase from the initial price level. The last price in effect when sales ended was $1,489 per coin.
The ordering limit was also changed during the course of sales. After holding at just one per household for about six months, the limit was raised to ten coins per household in late July. This led to some increased buying activity as dealers established a position in the coins. The limit was raised again to twenty five coins and then removed completely.
The final sales total for the Ultra High Relief Double Eagle Gold Coin recently became available. During the course of the year, the US Mint sold 115,178 coins. This level of sales was achieved during a year when Gold Eagle bullion coins were subject to rationing for more than six months on two separate occasions, collectible gold offerings were canceled, and fractional gold bullion coins were delayed until a brief window in December. Somehow there was a steady supply of blanks all year for this premium priced gold coin.
The great turnaround of 2010
Today is a huge day for this country. Not only did the GOP take back a pivotal seat, but the markets are reacting fiercely and appropriately to a horde of economic data. The possibilities from here are unlimited.
Oddly, the action reminds me of my first few days as a fishing guide. There I was, a typical East Coast grad student with a vision and not much of a plan.
As I dropped my bags on the dock outside the state’s southernmost airport, I used the change in my pocket to dial my only contact in the 49th state. She did not answer. In fact her phone was disconnected.
Great… 4,000 miles from home and stranded in the rain.
I must have looked lost because a bushy bearded that most resembled the kind I’m used to see begging for change, asked me where I was headed. I told him some basic details and he grabbed my bags.
With nothing to lose, I followed.
Within an hour, I was strapped into a floatplane cruising 750 feet above what would turn out to be my new home for the next two years.
On the dock, I saw a figure.
Little did I know it would be the girl I would marry and who is now eagerly counting down the last four months until she becomes a mother.
For me, uncertainty led to great things. I see much the same for the country today.
Over the last six months, the economic data has told us very little. For the last several quarters, we’ve been told to “wait for next month’s figures.” Or we heard “this time next year, things are going to be better.”
So far, even with the help of massive stimulus and governmental manipulation, we’ve done little more than tread water. Instead of following the creepy guy on the dock, we’re waiting around for somebody familiar to pick up the phone.
Until, that is, today. Look at the market. It’s in crazy rough shape, cutting nearly two percent from the top indices.
At first glance, it’s horrifying.
But with some careful studying and a keen eye for what it all means, it is fantastic news. Right now, we’re circling over our destination and are closer than ever to uncovering our fate.
For America, until last night, the question was if the country’s citizens would roll over and let a government force us into something highly unpopular. Today, we know democracy still rules and the political power players are laying flat on their butts from a catastrophic blow.
They may get back up and throw a few more punches our way, but they will never have the deadly dangerous momentum they had just 48 hours ago.
For the nation’s economy – here’s the truly good news – a strong dollar and slipping interest rates proves we remain the beacon of safety for global investors. China may be a powerhouse, but when things get tough, we always run to those we trust the most.
As commodity prices plummet today, the prices you and I pay for just about everything from heating oil to creamed corn will follow. Just as inflation threatened to crimp our shot at growth, Mother Economy proves her ability to create equilibrium.
If all of this is sounding different than what you are hearing on TV or reading in the rags, you’re right. It is different. It’s the contrarian’s take. When everybody is fleeing for the exits, we’re holding the door open, eagerly waiting to take what they left behind.
It’s a good idea to be buying what these folks are selling today.
***As a guy that has spent thousands of hours on the nation’s coastal waterways, I have had my share of run-ins with the Coast Guard – all of them good.
To prove that the core of this nation remains strong and true, I have included a press release my friends at the Coast Guard emailed me this morning. It’s a small glimpse of what Americans are doing to help their global brothers in trouble.
Here it is:
The first U.S. asset to arrive on scene to Haiti after the earthquake remains engaged in Haitian relief operations one week later.
The Portsmouth based Coast Guard Cutter Forward arrived off Port au Prince Jan. 13, at about 8 a.m. The crew provided air traffic control for military aircraft due to the damaged and inoperable control tower at Toussaint Louverture International Airport. They also began assessing the port, and ferrying supplies and injured people with their small boat and helicopter.
One of their primary missions was to pave the way for supplies to be delivered into the port of Cap Hatien. They began assessing the port and noted significant damage and destruction of its infrastructure adding to the difficulty of bringing aid to the country. The Detroit based MH-65 Dolphin helicopter crew, that deployed with the Forward, flew over some of the roadways leaving the port and verified that relief efforts delivered to Cap Haitien can be trucked to Port au Prince. They also observed multiple oil, fuel and sewage spills in the area.
Monday they were able to perform medical evacuations with their helicopter from the Killick Haitian Coast Guard base to the Sacred Heart Hospital in Milot.
“The flight mechanic talked about two children on the first flight who wanted to hold his hand for comfort,” said Cdr. Diane Durham, the commanding officer of the Forward.
“I am glad to be a part of the relief efforts in Haiti. It is a life changing experience and is the reason I joined the Coast Guard. It feels good to be part of something bigger than myself,” said Fireman Kendall Wilson, a crewmember aboard the Forward.
The Coast Guard Cutter Forward deployed with Maritime Intelligence Support Team 0410 and an MH-65 Dolphin helicopter crew from Air Station Detroit.
In total, the Coast Guard has medically transported 29 critically injured U.S. Embassy personnel out of Haiti, evacuated approximately 662 American citizens and delivered 512 urban search and rescue team members to Port au Prince.
The Coast Guard will continue to support the massive relief effort in Haiti by providing humanitarian assistance to Haitian survivors, evacuating critically injured U.S. personnel and evacuating U.S. citizens from Haiti. The complexities crews face with this massive relief operation are immense due to the magnitude of damage to Haiti’s infrastructure.
Additional Coast Guard assets responding to the area are:
- An HC-144A Ocean Sentry aircraft from Coast Guard Aviation Training Center, Mobile, Ala.
- An HC-130J Hercules fixed-wing aircraft from Coast Guard Air Station Elizabeth City, N.C.
- An HC-130 Hercules fixed-wing aircraft from Coast Guard Air Station Sacramento, Calif.
- Two HC-130 Hercules fixed-wing aircraft from Barber’s Point, Hawaii.
- Two MH-65 Dolphin helicopter crews. They are from the Coast Guard HITRON based in Jacksonville, Fla., and Coast Guard Air Station Detroit, Mich.
-Two HU-25 Falcon jet crews from Coast Guard Air Station Miami, Fla.
-The Coast Guard Cutter Valiant, a 210-foot medium endurance cutter homeported in Miami, Fla.
-The Coast Guard Cutter Mohawk, a 270-foot medium endurance cutter homeported in Key West, Fla.
- The Coast Guard Cutter Tahoma, a 270-foot medium endurance cutter homeported in Portsmouth, N.H.
- The Coast Guard Cutter Oak, a 225-foot seagoing buoy tender homeported in Charleston, S.C.
That’s the kind of showing that makes me proud to be an American, even if I am contrary.
US Mint Accepts Orders for 2010 Gold and Silver Eagles
Today the US Mint began accepting orders from authorized purchasers for the 2010 Gold and Silver Eagle bullion coins. The initial ordering date this year comes a bit later than usual and carries some special stipulations.
Only a select group of authorized purchasers are able to buy the bullion coins directly from the United States Mint. These APs then resell the coins to other dealers and the public, as well as facilitate a two-way market for the coins.
Usually Gold and Silver Eagles bearing the following year's date are produced in November and December of the preceding year. This allows the US Mint to build an inventory of newly dated coins, accept orders from authorized purchasers in mid December, and deliver the coins in early January. This year, production of 2009 dated coins continued to year-end, pushing back the availability of the new coins.
The 2010 Gold Eagles will have a special ordering requirement. As of January 13, 2010, the US Mint had a remaining inventory of 51,000 of the one ounce 2009 Gold Eagles. As long as this inventory remains, authorized purchasers will be required to order Gold Eagles on a "3-to-1 basis." This means that for every three 2010 Gold Eagles ordered, they must also order one 2009 Gold Eagle. Only one ounce coins will be available.
Both 2010 Gold and Silver Eagles will continue to be subject to the US Mint's allocation program. This program rations the maximum number of coins that authorized purchasers can buy.
Is Obama a closet capitalist?
It’s a huge day in the nation’s history. As with a couple of other great revolutions, America’s latest smack to the face of an overpowering government comes from Massachusetts.
Six months ago, few would have guessed one of the most left leaning of states would hold the fate of the nation’s healthcare and a super-majority in its hands. But disappointingly, I am far from convinced a GOP win means the end of Obamacare.
I take Pelosi and her cronies at face value when they say they will cram this legislation down our throats at any cost. (I’m paraphrasing her actual words, but we all know that’s what she meant).
I can picture her and Barney Frank feverishly pouring through 234 years of laws, looking for any loophole to twist to their advantage in case Brown receives a concessionary phone call later tonight.
Healthcare and all the ways it will affect your life will be a popular topic for months, if not years to come. The majority of the healthcare sector today is trading in positive territory thanks to the brewing storm in the Bay State. It’s a small prelude of the volatility that is to come.
It is sad to think we only have a couple of more days to cover it all in Notes.
Because we’re operating on borrowed time, I’m going to put off the speculation of healthcare for tomorrow when we know (or at least hope to know) Massachusetts’ decision.
For now, let’s stick with what we know for sure.
One thing that is 100% going to happen is, in just a few weeks, Obama is going to unveil his latest budget proposal. In it is going to be increased defense spending (which I’ve already covered) and also decreased fiscal dedications to NASA.
Instead of giving cash directly to the top space agency, Obama wants to embrace his capitalism roots (there’s a line you don’t see every day) and give the cash to the private sector.
Now that the space shuttle fleet is up for sale, NASA needs a new way to get its astronauts into orbit. Of course, the big recipients of NASA-based money, Washington cozies like Lockheed Martin, Boeing and Raytheon, are not so keen on the idea.
After all, if NASA outsources the shuttles duties, they stand to lose a long-producing cash cow.
But that’s not the case for companies like Orbital Sciences (NYSE:ORB), SpaceX and Rocketplane Kistler that could be the recipient of healthy government contracts as Obama puts a toe into the private sector.
Unfortunately, Orbital Sciences is the only publicly traded of the three, but with a Street value of less than a billion bucks, it offers investors a shot at a “smallish” space-industry up-and-comer.
There are a couple of arguments against Orbital Sciences.
First, its price tag is inflated. With a trailing P/E of nearly 25, investors have obviously priced in lots of growth potential. But if Uncle Sam starts writing the company a couple extra checks each year, the current bottom line will look paltry in comparison.
But then there are the naysayers that believe the private sector cannot compete with the deep pockets and industry experience of NASA. They cite factors like national security and safety.
While I believe safety and quality is almost always better in the private sector, security is an issue Obama must measure before he goes and cuts NASA’s budget. Space superiority has been a significant ingredient in the country’s defensive success over the last 50 years.
The bottom line is if you’re looking for a place to put some speculative dollars and get your tax dollars back where they belong – in your pocket – than the aerospace sector is worthy of an in-depth look.
What about tomorrow?
The world remains shocked over the tragic events unfolding in Haiti. While every life saved is worth celebrating, for every success story, there are tens, if not hundreds, of tales with horrific endings. A country that many thought could get no poorer was dealt a knockout blow.
As much as we complain about the problems in our own country – political, economic and social – the tragedy has done a terrific job showing the rest of the world, that even though we are in a rough patch, America is still the world’s go-to force.
No other country has mobilized quite like we have. From the outpouring of cash to a massive military effort that proves we can fight two wars and still have power and passion to spare, America’s reaction has been impressive.
But what we boast in strength, we lack in endurance.
Resolve is America’s downfall. This week, we are all about helping Haiti. But this time next month, the support will have waned, the troops will be moving on and the news outlets will be covering the latest headline maker.
Yet hundreds of thousands will still be sick and living on the streets.
That is a notion to ponder as Obama unveils his latest budget proposal in just a couple of weeks. While we spend trillions on worthless stimulus, bailouts, campaigning, false science and no-good healthcare initiatives, an entire nation will be following with hungry, tired eyes.
If we are going to be a leader in times of tragedy, we must be leaders when the waters are calm.
So far, we’ve failed that mission terribly.
Ironically enough, the fate of the nation’s healthcare system appears to be in the hands of one of the country’s most liberal states. When Massachusetts takes to the polls tomorrow for its special senate-seat election, voters have the chance to speak for the rest of us as a vote for Coakley is a vote for big government’s overtaking of the health system and a vote for Brown is a vote against it.
To say the world will be watching sounds like a stretch, but it’s true.
If you caught last night’s NBC newscast, you saw a story about a young girl pulled from the Haitian rubble. After awaking from a surgery that amputated a badly mangled leg, the tough survivor’s first words, at least according to the hyperbolic types at NBC, was the question of who was going to pay for the surgery.
That question proves that fixing healthcare goes beyond political borders. But sadly, here at home, we have turned it into little more than a popularity contest.
After bastardizing the separate pieces of legislation approved by both sides of Congress, Americans are now facing the reality that our representatives are about to ask us to accept mind-blowingly expensive and unfair healthcare regulations.
If the current negotiated terms become law, the issue won’t be how much you make or how you make it, but who you work for and where you live. If you live in Nebraska or Louisiana or are part of a labor union, you’ll be liable to one set of rules. For the rest of us, however, we’ll be paying more and getting less.
It’s not just those greedy, no-good politicians that deserve the blame. It comes back to the issue of resolve once again.
What happened to those tea parties that were all over the news last year? How many of us wrote letters to our representatives in the last couple of weeks? How many of us have taken the time to study the proposed legislation in more depth than what NBC or Fox is giving us?
We get plenty of hot air from Washington, but maybe that is representative of the majority of Americans. We talk a big game, but when it comes to endurance, we’ve barely got what it takes to finish a sprint.
For that, I truly feel sorry for the folks in Haiti.
If you gave last week, don’t forget about next month and next year. They have a marathon to endure.
It’s the same story for us investors. The markets have rallied huge over the past nine months. But we all know the sustainability is questionable. As soon as the nation moves onto something other than economic discussions, the inflow will cease and we’ll be left wondering how things got so bad.
Invest for today, but don’t forget about the future.
Don’t get fleeced with the rest of them
Some stories just have to be repeated. Like the one from Sweden that tells of a collapsing floor during a Weight Watchers weigh-in. As twenty or so dieters filled the room to measure the fruits of their effort, the floor beneath them rumbled then failed.
Priceless irony.
It proves Americans, especially us East Coasters, aren’t the only ones with size-management issues.
As the markets sink under their own weight today, I cannot help but think much the same is taking place on Wall Street. The equities market can only hold so much fat before it gives up support and comes crashing down.
I rarely use technical analysis as a primary analytical tool, but I will use the help of charts and lines to back up my opinion and help find out exactly where trouble may lie in the road ahead. Just like we don’t drive by staring at a roadmap, we can’t invest solely on the charts. But when you’re lost, there’s nothing like a quick glance at a map.
When I wrote to TFN Strategic Trader members this morning, I told them to watch the action of the S&P 500 closely. The key index hit the pivotal 1,150 mark yesterday and almost immediately turned the other direction.
It is a sign that investors need to prepare for a correction. We are seeing the front end of the action today as the markets give up more than 1% of their value.
If you are a frequent reader of Notes, the action is no surprise.
Only an economic fool believes massive government spending, bailouts and increased regulations will lead to a sustained rally.
There is no way current valuations will hold unless we get two things, more jobs and more credit. Everywhere I look, companies are begging for loans and laying off more employees.
Get this. Over the last decade, for every dollar this country saw in GDP growth, we took out $6.02 in additional credit.
Now that that credit has dried up and, even worse, has left massive holes in corporate balance sheets, there is no way we are going to realize higher valuations until we either restore credit or shake out all the marginal players.
According to the front page of my local newspaper, the latter is happening quicker and quicker. Just today we lost another major employer and a local restaurant. Even worse, a local school district is figuring out how to close a $200 million budget gap now that it has raised taxes as far as it legally can.
It’s the same kind of story all over the country.
It’s evident that investors are pulling their money out of stocks and putting it back into the safety of the Treasury market today as the yield on the 30-year plunged by double-digit proportions. As much as investors hate America’s borrowing habits, Uncle Sam remains one of the strongest protectors of assets.
Until that changes, we aren’t going anywhere.
*** Don’t think the news out of JPMorgan Chase (NYSE:JPM) is any indication that we are on a path to recovery. This bank and its Wall Street brethren are raking in profits as the markets re-inflate after the credit bubble collapsed.
In fact, they’d love to see it pop once again as they hedge away their risk and profit no matter which way the market swings.
As long as they are covering all sides of the trades and have Washington chasing its regulatory tail, we are going to see these financial smartypants raking in huge profits and walking away with mouthwatering bonuses.
But their profits don’t say anything about small-town America’s ability to prosper. Instead, Wall Street’s profits show how volatile and dangerous it is to be trying to make a buck in this country.
If JPMorgan is making money, somebody else is losing it.
That’s why it’s great to be a contrarian investor. We don’t get fleeced with the herd.
What’s more important than making money?
There is a time for making money and there is a time for giving money. Now is the time to reach into your heart and help your global neighbors.
As rumors of a death toll in Haiti that could stretch into the hundreds of thousands slowly become reality, we need to spend a moment or two wondering why we do what we do.
As investors, we risk our hard-earned money so we can obtain the freedom and enjoyment of spending that money how and when we want it.
We can buy a boat. We can buy a pile of gold. Or we could fulfill our human obligation of helping those in need.
Now, I’m not going to tell you to cut a massive check or ponder the notion of tithing. The mainstream media is doing a fine job of that.
I am writing you telling you to send whatever you can.
From what I am told, thousands of Haitians may succumb to this tragedy simply because of a lack of water. Imagine the impact you could have on a person’s life if you could help supply them with just a day’s worth of water.
The same amount of cash you’re planning on spending on dinner tomorrow night could help turn around the lives of dozens of people facing an unimaginable battle.
I am glad to report the corporate world is wasting no time doing what is right. So far, I have found reports Wal-Mart is donating $600,000 in cash, plus a $100,000 worth of meal packages. Lowes, UPS and Coca-Cola are each offering a million in cash and services to Haiti’s recovery effort.
Even down-and-out General Motors recognizes a charity case when it sees it. (It takes one to know one.) What’s left of the carmaker is donating $100,000.
Whether you donate or not, I urge you to not let this horrific situation erode into a disgusting partisan or religious battle. Thanks to Pat Robertson’s comments yesterday, it is already happening.
The fight that lies ahead for this battered nation’s people stretches beyond all of that. The radio and TV personalities making this a political matter, Rush Limbaugh included, are showing their utter selfishness.
When there are no lives hanging in the balance, we will have time for the bantering.
Today, however, there’s work to be done.
*** While I promise to never make a natural disaster a political tool, I would be derelict of my duties if I did not discuss the financial world and help you maximize the amount of cash you have available to donate.
There’s no debating one of the biggest drains on our cash each year are taxes. From sales tax to income tax to property tax, you can’t move in this country without paying for it.
With the Democrats boasting a super-majority, it is only going to get worse. Taxes are going to rise.
The most popular sport in Washington these days is picking on the nation’s big banks. In one breath we curse and penalize them for creating this financial fiasco, yet in the next we tell them to lend even more.
It must be painful to be a political punching bag.
The pain will only grow if Obama gets his way. He’s lobbying for a $90 billion tax on the nation’s fifty or so largest banks in an attempt to repay taxpayers for TARP losses.
If the measure goes through the way it is planned now, it will be the most idiotic and counterproductive tax yet.
Instead of taxing revenues or earnings, Washington wants to impose a 0.15% balance-sheet tax. In other words, it is a tax on growth.
Sure, it will raise billions of dollars for Geithner and his red-ink Treasury, but it will force banks to raise borrowing costs or curb lending. Either way, you and I are ultimately paying for it.
Jeb Hensarling, a Republican representative from Texas said it well. “How you are going to tax banks and expect them to lend more is frankly lunacy.”
Whether it is the smart way of raising more money or not does not appear to be a concern with Obama. With a Q1 deficit of $388.5 billion and an annual shortfall of $1.502 trillion staring him in the face, the president has got to do something to reduce the gap between revenues and expenditures.
If not, we all know what’s around the corner. A dollar crisis.
Now that the American citizenry is on the hook for $12.285 trillion dollars, our global lenders are sharpening their teeth just waiting for a chance to clamp down and take a bite out of our fiscal superiority.
“It has got to be done. It will be done some day. It may be done with enormous pain. Or it may be done more rationally,” Rudolph Penner, the former top dog at the Congressional Budget Office, said on the subject of minimizing the country’s deficit.
One thing is clear when it comes to this nation’s history of stopping credit-based calamities before they strike; we are horrible at it.
We missed our chance in the 1930s, we missed our chance in the ‘80s and we missed our chance once again in 2008.
Flat out, it is not politically strategic to raise taxes and/or cut spending. Unfortunately, if we are not willing to do it, Mother Economy will.
And she doesn’t use painkillers.
*** Finally, I mentioned the subject of international diversification yesterday. A British Columbia-based reader emailed me with a good question.
Why do so many investors ignore or overlook the natural resource investing potential in Canada?
The reader mentions that our northern neighbor’s natural resource base is larger than Australia’s and is also America’s chief source of foreign oil.
My answer lies in that last nugget of information. Without America’s unquenchable thirst for crude and other natural resources, Canada would be forced to sell its goodies overseas, in a much more competitive market.
There’s no doubt Canada is a good place to put a few investing dollars. The profit potential in a bull market is second to none. But pull America out of the equation, and Canada has some serious issues.
That’s why when it comes to seeking international diversification, Canada is a no go. Its correlation to the American economy is far too strong.
When China comes calling on Uncle Sam, Canada will have plenty of problems of its own.
Fiscal fitness: America is too fat
What’s worse than having Wall Street kingpins like Bernanke and Geithner in charge of America’s economic future? China taking the reins, that’s what.
While Washington’s all-powerful ego may have our leaders believe they still control our fiscal fate, they lost that power long ago. Now, the Fed and the Treasury may dictate who gets what, but China decides how much and when.
That’s scary.
After yesterday’s unnerving trade-deficit report, Americans are waking up to Beijing’s power and its dangerous shenanigans. If it continues unabated, this nation’s role as a supreme power is over.
It is absolutely no coincidence China unveiled new banking reserve requirements on the very same day the Commerce Department reveals the largest trade gap in ten months. With a seriously undervalued currency working to its advantage, China needs to appear like it cares about America’s financial future.
In reality, we know the truth. China doesn’t care. It already owns us.
All across the globe, calls for yuan (China’s currency) appreciation are growing louder by the day. Of course, you won’t hear much from the Obama administration. After all, it’s hard to talk when an important appendage is getting squeezed in a vice.
But France’s Nicolas Sarkozy has the, um, guts to say what needs to be said. He doesn’t have a $400 billion trade imbalance to worry about. Flat out, he tells the world “The monetary disorder has became unacceptable.”
But as American voters have learned. Talk is cheap. It won’t get you anywhere, especially with China.
If America is not willing to politically attack Beijing’s manipulation, it will have to do it by good old-fashioned belt tightening. Stop asking China for so much of its goods and free cash and the country’s ears will quickly bend our way.
Obama has his chance to stand up for you and me next month. But will he do it? Has he ever?
The political and financial pundits will be all over the president in February as he reveals his latest budget proposal. If he does what is best for this country, this will be a watershed event for the world markets.
But if Obama falls to the pressure of ever-political Pelosi and the constituents that elected him, it will be a non-event that proves we are enslaved to Asia.
As for me, I’m hoping Obama does what he’s promised (for a change) and cuts the nation’s spending by at least 5% next year. That would show China that we’re not ready to lie down just yet. Even better, it would slow down our government’s massive growth.
You and I know Obama is not about to cut tens of billions of dollars without slipping an equal amount through some sort of accounting loophole, especially when the Peace Prize winner is about to ask for another $33 billion on top of an already record-shattering defense budget.
If all goes as planned, Obama will allocate close to $750 billion in Defense Department spending next year. Who will be lending us that money? You guessed it, China.
But don’t expect that to be a line item on Obama’s upcoming budget. If Bush managed to hide defense spending, you know this “ultra-transparent” administration will find an even better way.
We are in the midst of a critical year for this country’s fiscal fitness. By my calculation, we have not fallen of the cliff yet, but the ground beneath us is crumbling. If we don’t swallow our pride and jump to safety now, we will likely never get another chance.
China has open arms, awaiting our fall.
*** As investors, this is heavy stuff. If the value of the dollar falls, so does our wealth. If national security weakens, so does our wealth. And if our taxes rise, we lose even more wealth.
The future is scary. But inaction will make it even worse.
For many investors, gold is the fallback. But I don’t buy it. If America fails, Washington will either steal your gold or unload its own onto the market.
Diversification is the key. If you are holding a portfolio filled with domestic stocks, you are sitting on a time bomb. You don’t want to own American companies when the Chinese are increasing their share of the global market. You want Chinese companies.
And you want Indian firms. And you want Japanese companies. And you most certainly want exposure to Australia’s vast natural resources.
You don’t need any more exposure to the land of broken promises and empty rhetoric. Talk is cheap and Obama’s only making it cheaper.
What not to do for economic success
Baltimore — The radio is a fantastic mirror of the economy. Advertisements, radio personalities and even the tunes themselves, do a fine job of illustrating the highs and lows of a region’s fiscal situation.
I spent the past weekend knocking a few items of my honey-do list. Living in a 110-year old farmhouse, however, it’s more of an ever-expanding notebook than a measly list. This time, I was charged with ripping out half-inch thick wood paneling and replacing it with modern drywall.
Like any self-respecting handyman, I cranked up the radio to help lull me into a sawing and hammering stupor – anything to break the monotony of measuring twice and cutting once.
What I heard was a lesson in local economics and national politics. The airwaves that should be filled with car ads and news of mom-and-pop grand openings were buzzing with public service announcements and advertisements for government programs.
There were ads for drug-intervention programs, a new community center and even a savvy attempt to get me to donate my blood.
The only folks buying airtime are the ones getting checks from Uncle Sam.
Isn’t that indicative of the nation’s economy? With so much focus on reducing debt and shoring up their balance sheet for a no-growth economy, few companies are willing to advertise.
Even if they want to pay high advertising rates to grow their top lines, most companies couldn’t get the loans they need to boost their production capacity. Again, the only companies eager to hit the airwaves are the ones spending your tax dollars.
That’s the conundrum this nation faces until the market forces naturally bring a credit-addicted economy back in line with its true potential. Look at it as the same kind of gridlock that ruins your Friday-night commute home. The only way to alleviate the situation is to remove some of the traffic.
That is exactly what China is doing.
As one of the few economies with a shot at any real growth potential over the next couple of years, risk-seeking investors are flooding the Chinese markets. Beijing thinks it’s a dangerous situation.
And it is.
As America has learned, speculative capital tends to wax just as quickly as it wanes. If not faster.
China, with its double-digit GDP growth, was flooded with an estimated $26 billion in cash inflows during Q3 2009. For a country trying to keep its currency undervalued and its inflation tame, suitcases filled with cash are nothing but trouble.
But just because Beijing doesn’t want investors flooding the market, doesn’t mean the speculation will stop. As Bernanke and Geithner have found out, smart money can squeeze through some tiny loopholes.
And who ever said stopping speculation was a good thing? Sure, it prevents the kind of painful bubbles that have made so many Americans rich and just as many poor. But without speculation, an economy will essentially flat line.
Just ask Japan.
After a near economic meltdown, Japan worked tirelessly to rid its economy of the risks associated with speculative investing.
Sure, the country has been devoid of bubbles, but it also spent the last few decades walking in place. Many investors, including myself, are convinced America is dangerously walking in Japan’s footsteps.
As we close our factories and tell Wall Street to stop making so much dang money, we show our susceptibility to eroding into a growthless economy that does nothing but feed off itself.
Service-based economies won’t make you rich.
Japan’s service sector is worth three quarters of its GDP, which is yet another reason its economy hasn’t grown by more than a handful of points over the last two decades.
The way I see it, America is at an important crossroad. We can let Washington intervene by unleashing trillions in stimulus, creating a bevy of new taxes and fees and putting excessive regulations on Wall Street.
Or we can reap what we sowed and face a cold, hard economic correction.
In one scenario, we can reduce the pain at the expense of decades worth of growth potential and in the other, the short-term pain will be immense, but the long-term benefits will allow more than just politicians to get rich.
Japan made its choice and is still paying the price.
Americans will know our direction come the November elections.
*** I know what you gold bugs are thinking. What does a decade’s worth of no growth mean for the precious metal?
The answer is one you likely won’t want to hear. Gold’s a safety net. It’s ultimate use, at least according to today’s buyers, is for protection against a major economic disaster.
Unfortunately, if Washington “heroically” rids the world of speculators, it also removes much of the risk of currency collapse, at least in the short term.
Gold prices will show the reduced risk with lower prices.
As we enter another critical earnings season, we will see a bevy of divergent data. It’s the start of the side-to-side vibrations that mark a stagnant economy.
Get ready for the “Japanization” of America.
You will still be able to make big money by playing the markets, but it won’t be fundamentals or intriguing growth stories that get the big rewards. We are entering an event-driven world, where one piece of legislation or a sliver of data can make or break a company.
The market as a whole may not move, but many of the individual pieces sure will.
Ignorance is expensive
Baltimore — It is too late to debate. A debt-fueled crash is imminent.
I made a promise to my wife late last fall. Once the holidays were over and she was well on her way to recovery after a recent surgery, we would hit the local furniture stores and redecorate our living room.
Next time I make such a promise, I’ll research current furniture prices first. With four-digit price tags for a simple sofa, it is no wonder just about every furniture pusher is hocking no-payment, no-interest plans to unload their stock.
As a cash-only kind of guy, I didn’t fall for the gimmicks. But judging by the looks on the salesman’s face when I handed him a pile of crisp bills, I am in the majority.
For years, all sorts of retailers offered “money-saving” financing schemes to entice cash-strapped buyers into the checkout line. For somebody with the financial might to pay off such accounts before the massive interests and penalties kick in, these plans really could save some dough.
But as Congress was eager to prove recently, most Americans end up in a very expensive trap. That’s why the folks in Washington outlawed the no-payment plans starting next month. Our leaders know the dangers of getting in too deep.
Why shouldn’t they? Washington’s got $12 trillion of debt to manage that it isn’t making payments on, at least not any substantial payment.
If you and I tried what Washington is doing – paying off debt with more debt – they’d put a stop to it in a heartbeat. But because they are too concerned with the next election to listen to some geeky economist, our lawmakers keep hiking down a deadly path.
If you listen to the growing chorus of pundits (I am one of them), that path is going to lead to a dead-end in the very near future.
One look at the gold markets today (an ounce is up by more than fifteen bucks) will show you investors are once again worried about the strength of the American economy. With an employment market that is the worst since the Great Depression began (a U6 reading of 17.3%), the hopes of an easy, painless recovery are waning fast.
In an economy leveraged to the max by credit, “painless” is never an option.
While lawmakers and government policy makers are worried about propping up the average Joe, a new, virtually unstoppable crisis is building. The collapse of sovereign debt – the money owed by the world’s governments – is going to be huge.
The only way out of the situation is severe pain. Venezuelans know what it feels like. Chavez and his politicos cut the value of the nation’s currency in half last week to battle the nasty effects of a crippling recession.
Just imagine the ramifications as this wave slowly creeps across the globe. One country after another, in a rapidly growing crescendo will be force to restructure their economy and their balance sheets to battle the natural effects of credit overload.
National banks will default. Inflation will soar. Stimulus will be a word of the past. Welfare programs will be cut.
The only good thing is the government’s natural tendency to continue growing will be destroyed.
Washington and its global counterparts will be forced to contract. There is no debate. It won’t come after months of political debate. Instead, the markets will do the thinking for them. Eventually, nobody, not even China, will lend to us or our over-burdened brethren.
When it happens, it won’t be pretty. Unfortunately, it is happening far faster than anybody predicted.
Every day, I prepare for the horrific headlines.
You should too.
***One of my favorite classes in grad school was a statistics class. I know I am not supposed to admit a fondness for the subject, but there is nothing better to shut somebody up than the right set of numbers and a statistical formula.
Correlation analysis is good for anything from finance to fisheries management. But I like it most when it proves Washington’s fiscal ignorance.
According to a recent Associated Press study, Washington’s construction-related stimulus package has done nothing to improve local economies. No matter how much Uncle Sam sent local bridge workers and road constructors, the study was unable to find any correlation to employment figures. None!
One would think that would instantly eliminate any calls for another round of stimulus, but we all know the truth. It will only force Washington to ask for an even larger sum of cash or a new set of statisticians.
The Obama administration just doesn’t get it. In an economy valued at over $14 trillion, even a hundred billion in construction spending won’t create more than a ripple, especially when the tide is gushing in the opposite direction.
The only thing saved or created by Obama’s massive spending is the notion that stimulus works. Politicians say it is worth every penny. But those of us that bother to run the numbers know the truth.
The truth is, we’re in trouble.
2010 American Gold Eagle Release Date
After a year of heavy demand, the United States Mint will begin offering the 2010 American Gold Eagle bullion coin with a slight delay. Typically, authorized purchasers are able to order the coins in late December for delivery in early January. This year orders won't be accepted until January 19, 2010.
The reason for the delay is because the US Mint continued to produce the 2009-dated Gold Eagle bullion coins up until the end of the year, amidst the continuing high demand. This demand resulted in the fourth highest annual sales total of gold bullion in ounces.
Typically, production of coins bearing the following year's date will begin by early December. This, in turn, allows the US Mint to accept orders earlier and begin delivery a few days into the new year.
The only gold bullion coin offered will be the one ounce 2010 Gold Eagle. The status of fractional weight offerings has not been provided. During 2009, the US Mint sold only the one ounce coins for the first eleven months of the year and offered the fractional Gold Eagles during December.