Weekly report.

Weekly summary.

Gold has been relatively steady throughout the week closing at  $ 1,347 while silver closed around the $ 30 level at $ 29.90. The dow is continuing its nominal rise, ending up the week at $ 12,273 while the Nasdag also saw its numerary advance around $ 2,809. Oil has receded quite a bit, giving up at $ 85.26. Meanwhile the dollar index is still swarming in the lower 80s at 78.436.

It was a week that saw the fall of one of the world's longest lasting kleptocrat; Hosni Mubarak of Egypt, one of the US and Israel staunchest ally in the Arabic world. Now, it would be interesting to observe  the aftermath of the Mubarack Regime in Egypt. Will Egypt embrace an open democratic system or will the military install another strongman supported by the Western interests? Only the future shall tell.

As far as economics and the markets are concerned; inflation is on the rise across the planet and the Asians and South American governments have decided to raise their rates of interest in order to cool off the sharp rise in prices that are affecting their impoverished populations. It is quite obvious that  the US Fed as issuer of the World's Reserve currency, with its policy of QE and stimuli that serves the interests of the big banks and the spendthrift congress, is undeniably responsible for the painful effects of commodity price increase that affect the lower couches of the population across the planet. As always, the Fed and its army of Keynesians economist are refuting the argument that the US and Central Banking monetary policy are responsible for price inflation; blaming shortages and the weather instead.

Market movement are also depicting a rise in hard asset purchases out of Asia where the demand for Gold and Silver are reported to be extremely strong; pushing some expert to advance the possibility of shortage in the future. This outlook, if correct, will ultimately imply much higher price for those commodities well beyond the underlying effects of the inflationary monetary policy of the different world's government.

Lately also, there was a report of the IMF calling for a new world reserve currency to replace the much maligned dollar. The preferred option being the SDR issued by the IMF itself rather than a return to an international gold standard;  which will be our favorite option as FIAT paper monies  are valueless and always self-destruct over time.  It is clear from our own analysis that the Internationalist are panicking since most of their monetary tools are falling apart; the Dollar in the US and the Euro in Europe. An international FIAT monetary system will enable them to regain control over a world that is clearly spiraling out of control with the rise of China and other BRIC countries.

 The real question we can raise is: Will the emerging market join the party and try to leverage a little bit of  power by accepting the offers of the old western block; or, will they reject  the old order and try to establish a newer monetary system based on sound money like Gold?  With China announcing its desire to increase its Gold and Silver deposits, one can " dream" of a Yuan backed by Gold at some point in the future; which will ultimately bankrupt the old Western establishment and clearly establish China as the world economic superpower...if there is not a WW3 before that occurs!

Our investment thesis has not changed much; we are bearish on ALL governments across the planet and we know that another domino State can be toppled in the upcoming weeks or months as angry and hungry populations are trying to rid themselves of their dictators. We remain bullish on commodities like Gold, Silver, platinum, oil, agricultures, and rare earth minerals. Obviously, some economies are sounder than others like Canada, Brazil, Australia, Singapore and Malaysia; but it is important for individuals to realize that we live in a world of extreme incertitudes and political excesses.
It is a world where it is almost impossible to distinguish real, sound economic growth from government sponsored and leveraged economic boom...and future bust. Obviously, the Chinese have been growing at an extremely rapid pace over the years and we expect a cool down in the near future for the sake of stabilizing the distortion caused by central economic planning and monetary stimuli. Therefore, it is a world that should be navigated quite cautiously; and individual savers and investors should avoid excesses and remain on the defensive.
 Buying into markets that one understand very well might be the best approach or, if unsure, racking up some gold, silver, oil, and into agriculture for the next decade might probably the best approach...which is my approach!