• Gold…gold…gold. The metal has bounced off our latest buying target of $425 all the way to $434.40. It rose more than $5 yesterday, and seems to be in a solid upward trend.
• What is that sound? Do we hear a fat lady? “Prices have been falling in London for the last eight months,” said Merryn Somerset-Webb, editor of MoneyWeek, yesterday. “Just like I said they would,” she added.
From the other side of the Atlantic, comes news that housing starts were down 17.6% last month — the biggest drop in 14 years. In other news, the “Economy wobbles under cost of oil,” says one headline from the new world. “GM lost $1.1 billion in the first quarter,” says Bloomberg. GM is being “eaten alive by a free lunch,” says a Washington Post piece. At Ford, prospects are not much better. “Bleak outlook,” says the FT of Ford’s future.
• Kevin Kerr comments on the Consumer Price Index for March, which saw the highest monthly increase in the index in two and-a-half years:
“The impact of surging oil and gasoline prices has certainly been reflected in today’s higher CPI numbers. Short term, this may indicate that a slow down in demand is imminent, albeit very short. Oil prices are struggling to stay in positive territory today, even on the back of the surprisingly bullish inventory numbers. This also indicates that the market price may be a little top heavy.
“There are a great many analysts who strip out food, energy and other essentials from the CPI number. As someone on the NYSE floor said today, if you do that “It’s like we are all naked, living in caves.” I agree…CPI is only accurate when looked at as a whole, not piece by piece. Continuing high prices will likely drive some consumers to cut back on discretionary spending until energy costs get reigned in a bit, and we may be seeing that now in the crude which should continue to fall. This will probably only last until the end of summer for crude; conversely, gasoline prices will likely remain very high all summer, I expect to be paying $3 a gallon by July here in Connecticut.”
• The “one, true and holy Church” has a new master, or should we say, a new servant. The white smoke signaled that a new pope had settled onto the throne of St. Peter. What does the new pontiff think? “We are moving towards a dictatorship of relativism which does not recognize anything as for certain and which has at its highest goal one’s own ego and one’s own desires,” said Cardinal Ratzinger in his homily. He quotes St. Paul; people are “tossed by waves and swept along by every wind of teaching arising from human trickery.”
• Today is Adolph Hitler’s birthday. “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man,” wrote George Bernard Shaw in “Man and Superman.” Hitler was an unreasonable man. Does all progress depend on people like him?
Typically, Shaw lost the plot completely. Reasonable people make progress by taking reasonable steps in their own private lives. Unreasonable people insist that other people drop what they are doing and walk in the direction they tell them. If they are good demagogues, the rabble rouses to them and begins shouting puerile slogans: Tax the rich! Germany needs room for living! Onward to the Holy Lands! Make the world safe for Christians! Make the world safe for democracy! Freedom! Save the Union! Decent housing…and adequate recreation! The next thing you know someone is robbed…shot…or hung from a tree.
Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century.
