STAFF NEWS & ANALYSIS
George Soros: Gold in a Gargantuan Bubble!
By Staff News & Analysis - January 29, 2010

Mr. Soros, arguably the most famous hedge fund manager in history, warned that with interest rates low around the world, policymakers were risking generating new bubbles which could cause crashes in the future. In comments delivered on the fringe of the World Economic Forum, Mr. Soros said: "When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold." Gold prices last month reached a record level of just over $1,225 per ounce, having risen around 40% last year. Investors are piling into the metal amid fears both of potential inflation and fading faith about the stability of previously-assumed safe assets such as government debt. However, the chairman of Barrick Gold, the world's biggest producer, Peter Munk, said he expected the metal's upward march to continue. Mr. Soros added that by proposing imminent "exit strategies" from the unprecedented support handed out to troubled banks and consumers, governments around the world could be in danger of triggering a double-dip in the global economy. In comments which will reinforce Labour's plan to fight the next election on promises not to start raising taxes or cutting spending too soon, he said that it was still too early to slash budget deficits. … He said: "I think that since the adjustment process to the recession is incomplete, there is a need for additional stimulus. Some countries, like the US and European countries, have plenty of room to increase their deficits. The political resistance to doing so increases the chances of a double dip in the economy in 2011 and after that." – UK Telegraph

Dominant Social Theme: Everybody out!

Free-Market Analysis: We didn't plan to write three articles in a row about gold, but we don't control the news (certainly not the mainstream press!). Anyway, in this article, we will use Soros' points above about the horror of the impending gold implosion to illustrate a larger point about the Bell's approach to news and economic analysis. For a refresher, you can read the other two articles here:

Gold Bottom is US$1,000

Why Does CNN See Gold at US$500?

We must begin with the Bell's readership. The Daily Bell recently commissioned a global survey designed to find out what kind of people read the Bell. What the survey showed unequivocally is that the Bell is a most attractive read for people with IQs near or over 200. Now we don't really think IQ is a measurement of anything very important – plenty of low IQ people succeed and plenty of high IQ people fail – but we do think the survey's information as regards the Bell is noteworthy. It certainly shows that really smart people read the Daily Bell. And we are not surprised.

The survey showed us some other interesting numbers. Our readership goes up a lot during Bilderberg meetings and during Davos. Right now, because Davos is taking place, our numbers are through the roof. If you were to go to Davos, you would probably find the Daily Bell on many computer screens of the rich and famous. You would find many billionaires, and even some trillionaires hunched over our articles, intently studying them, and forgetting even to sip their expensive, fruity cocktails. We say this not because we wish we to blow our collective horn, but because it is absolutely true.

The Bell, alone among Internet publications is dedicated to analyzing the dominant social themes of the power elite from a promotional and investment standpoint – and the power elite surely understands this. That's why the Bell is doubtless read in such high places. Understanding power elite promotions is the KEY to investing in the 21st century. Indeed, dear reader, you may have come to the Bell thinking it is primarily a sociological journal – since a lot of our articles do not feature money per se. But since you are so smart, you soon realized the underlying truth, that the Bell was offering readers a compelling investment analysis, probably one of the most acute on the ‘Net. (Well, OK, the MOST acute.)

Why is this so? We don't need to explain it to you (do we?) but we shall do so for newbie readers and those with lower IQs who have wandered onto our site by mistake. These individuals may be reading back articles right now, searching in vain for the kind of investment tips you might find in Money magazine. They might be looking for an article on mutual fund analysis, or the wisdom of a Wall Street analyst. They might be searching for an update on money velocity or what kind of stocks are apt to be the most popular over the next few months.

These individuals will go away disappointed. But you, dear reader, will stay. You will stay because you have figured out what we, too, have figured out (though we are, actually, not nearly so smart as you – an ironic point that we will discuss in a moment). What YOU have figured out is that investing in the ERA OF THE POWER ELITE/INTERNET is all about figuring out whether or not the dominant social themes the power elite create and promote are going to prove persuasive enough to the mass of Western citizens that they are aimed at (in an Internet era). We are dealing with LARGE waves here, not the SMALL ones.

In the 20th century you could take a power elite promotion to the bank. If you could have figured out what the promotions were, and how and where they were being implemented, you could bet the trend and likely win every time. Is gold or silver going down – post 1980 anyway? Almost certainly. The power elite made its intention crystal clear about the future of gold prices after the 1970s run-up, and if you studied what was going on, you'd have shorted the heck out of money metals for about 30 years. Are rates going down while the stock market goes up in the 1990s? Absolutely. Just peer behind the curtain.

In the 21st century, understanding power elite promotions is more important than ever if you want to make real money – and more confusing as well because of the Internet, which is undermining power elite themes as quickly as they can be created. Yes, if you are someone who understands power elite memes, and wants to make money, then every day you are trying to figure out where dominant social themes are headed.

Is the global warming meme going to succeed or fail for instance? Trillions are riding on this question, both in the long and short term. We might not invest in green companies right now, based on the failing nature of the meme, but maybe the power elite will figure out a way to resuscitate it, and then it will become more attractive from an investment point of view. We report, you decide.

The same goes for gold and silver. George Soros, in our opinion, has been "damaged goods" every since he made billions betting against the pound. The Queen called him in for a private talk after he took his profits, and ever since then he's been a virtual whirlwind of socialist energy – a ghost of his former assured self, jumping at every shadow and writing incomprehensible book after incomprehensible book to make sure that no one understands that he is, at heart, a kind of Austrian economist. In fact, despite the free-market analysis he regularly employs, there is not a statist cause that George hasn't backed since that conversation – and what a conversation it must have been, one that spawned a thousand think tanks. Anyway, knowing this as you do, dear reader, you must make up your mind about Soros and his prediction, as excerpted above.

Yes … first understand the pressure he came under. Then decide whether or not Soros' statement is an expression of his deepest conviction (and of the place where his wallet is at). As a subscriber to this sort of investing technique, you must also make a determination as to whether Soros' statement is indicative of power elite preferences at the moment. Finally you must make a determination as to whether the free-market itself, aided and abetted by the truth telling of the Internet, will win out over power-elite intentions, whatever you have decided they are. Call these decisions a "Power Elite Investing Analysis" – or call it something else (as we have in the past). It makes no difference. The bottom line is that you are in a position, willy nilly, of evaluating power elite memes and their impact on the larger society (and your own bottom line).

We said we would return to our ironic observation that even though our readership is doubtless made up of geniuses and senior Mensa officials, we ourselves are not nearly so smart. What we do have, collectively, is a work ethic. So we began to read, and think, and write about these topics long ago. We met likeminded people, and gradually we figured out that almost every part of our society was in a sense manipulated by power elite dominant social themes – and that these themes were beginning to collide with the Internet itself. We realized, finally, that successful investing in the 21st century would be the result of determining how well power elite promotions would fare under Internet scrutiny. And that is when we began to set up websites reflecting these themes. The Bell is the latest incarnation.

It is not easy! First one must break through the natural reluctance to engage in "conspiratorial" thinking. Fortunately there is the Internet. Read the Internet in a concentrated and open-minded way and it soon becomes impossible to assert that an elite does not exist or has no express influence on current or past events. Acceptance of this is the first step to real understanding the World As It Is in our opinion. The second step is to understand Austrian free-market economics and how life really works in the modern age. The third step is to begin to analyze power elite memes – and the impact of the Internet -with an eye toward taking human action for oneself and one's family. The fourth step, of course, would be to find sources of information that dealt with such issues on a regular basis. Oh, wait. There is only one!

Ben BernankeNOTED: Bernanke Gets Second Term … The Senate voted 70-30 to reappoint Ben Bernanke for a second four-year term as chairman of the Federal Reserve. Earlier, senators voted 77-23 to end debate, clearing the way for a final vote. During more than two hours of debate on the Senate floor, Bernanke backers warned that voting him down risked sparking turmoil in U.S. and foreign markets and thwarting a budding economic recovery. They said the Fed chairman deserved an opportunity to finish what he started. … "To vote against confirmation could unnerve investors and exacerbate economic uncertainty in the marketplace, which is exactly what we do not need at this time," said Sen. Robert Menendez, Democrat of New Jersey. "We need the wisdom of patience," he said. "Let us not judge the man or the work prematurely." (Ed note: Time for a competing currency?)

After Thoughts

Yes, sorry to say, only the Bell, as we understand it, fully implements the sociological investment paradigm explained above. It has not been easy to assemble, nor describe. But by understanding the reality of investing in the 21st century, the Bell has attracted an exceptionally smart and influential readership. Even more importantly, our survey (does it really exist? It should! … ) shows definitively that many of our readers did not begin with the brilliance that they now evidence. Simply by exposing themselves to the Bell over time, it seems, their intelligence has grown by the leaps and bounds. Someday, we hope, this phenomenon will rub off on us as well.

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