I am back in Minneapolis this week. It is always nice to go back “home,” even though I am officially a Florida resident. Home is not where you live; it is where your heart is. We Minnesota people are very different from the Miami folks – so much so that Susan and I constantly hear “You must not be from around here,” because we are friendly and nice. Yeah, that old saying, “Minnesota Nice.”
Here is my most important advice for the day – when in doubt, re-boot.
When I got back home, my mouse wouldn’t work. I put in new batteries but that didn’t help. What could I do? I had to get today’s daily out in less than 24 hours and without the trusty old mouse, it wouldn’t be possible. In desperation, I went to the Apple Store and bought a new one. Guess what? The new mouse didn’t work either. It turns out all I needed to do was re-boot the damn computer; there was nothing wrong with the mouse or the batteries.
Right before we left Miami, Susan couldn’t get the bedroom TV to work right. There were several lines of information on the bottom of the screen that she couldn’t eliminate, no matter what she tried. We figured it was a Comcast problem. How did we solve it? I gave it the good old time-tested try and unplugged the cable box for 10 seconds (“re-boot” to the rescue).
One of the first things I did when I got home was to turn on my ultra-high end audio system. “What is life without good music?” I say. I was greeted by a buzzing and crackling sound coming through my speakers. What to do? Re-boot the preamp, of course (which uses a micro processor). Buzzing, gone! I must have “zapped” the preamp with a static charge that I picked up walking across the carpet (it’s winter in Minnesota and the heat is on and the humidity is very low).
It’s tough on us old geezers who grew up with shift cars, dial phones and eight-track stereo. Now, computers are part of everything we use and count on, and they need the occasional “re-boot” to work properly. Remember that and you will save yourself a lot of aggravation and money. I now have two perfectly good Apple cordless mouses, the second one, which cost nearly $100, and was totally unnecessary. Of course, I didn’t figure that out until after I took it out of the box and found that it didn’t work either. That’s when I remembered to “re-boot.”
Have you noticed that Kitco is now “featuring” Kira McCaffrey Brecht as their lead-in gold writer – ahead of “perma-bear” John Nadler (winner of the Moron of the Year award, awarded by LeMetropole Café). To me, this is pretty significant. For whatever the reason (maybe because Nadler, Kitco’s front-man has been consistently wrong for over a decade), Kitco has taken on a bullish posture in place of their (Nadler’s) bearish stance.
US Debt Ceiling Battle Could Prove Bullish For Gold – Kitco.com
Friday January 04, 2013 13:27
By Kira McCaffrey Brecht
While U.S. policymakers delivered a mini fiscal-cliff deal in the final minutes of 2012, many larger issues were not resolved with the last-minute legislation, most significantly government officials failed to address the U.S. debt ceiling limit.
This is a significant factor for gold investors to monitor as the yellow metal has shown great sensitivity to this issue.
First, let’s start with a little background. The U.S. Constitution gave Congress the so-called “power of the purse strings,” or the ability to control spending and borrowing. Congress is required by federal law to authorize the government to borrow funds needed to pay for current spending outlays.
The debt ceiling is the official limit to allowable borrowing for the U.S. government, which currently stands at about $16.4 trillion. Economists estimate the debt ceiling needs to be raised by about $1.5 trillion to meet current commitments. While the government already hit that limit at the end of 2012, Treasury Secretary Timothy Geithner is utilizing “extraordinary measures” to buy a little more time—likely until the end of February.
Over the years, as the national debt has increased, the U.S. Treasury has bumped up against this debt limit and Congress has raised the debt ceilings dozens of times. However, in late summer 2011, the battle to raise the debt ceiling sparked a political firestorm that rocked financial markets and took the country to the brink of default and ultimately resulted in a credit downgrade for U.S. sovereign debt.
Nearby gold rallied to its all-time high during that time period.
Is the U.S. headed for a repeat performance in the weeks ahead? Moody’s Investors Services has put the U.S. on warning about a potential downgrade to its debt if no long-term deficit reduction deal is reached.
Now that the New Year’s parties and initial fiscal cliff rally is over, U.S. policymakers have to face the hard issues of tackling a plan to cut long-term spending, raise additional revenues and agree to a debt limit increase.
“The upcoming negotiations are likely to be even more difficult and contentious than the ones just completed,” wrote Nomura economists in an Economics Research note. “Two main principles will shape the upcoming negotiations over the debt limit. Republicans have argued that they will only support an increase that is matched, one-for-one, with spending cuts. This is a demanding standard… On the other hand, President Obama has stated that any future deficit reduction deal will have to be ‘balanced’ that is, any spending will have to be paired with additional revenues,” Nomura economists added.
Bottom line according to Nomura economists? “These two principles mean that the upcoming negotiations over raising the debt limit will (again) focus on trading off long-term spending cuts for additional revenues. Given the fractured nature of U.S. politics, there is no guarantee of success.”
What does this mean for gold? While rallies have been used as selling opportunities in recent weeks, if U.S. policy makers dig their heels in on opposing camps, the stage is set for a possible repeat of the late summer 2011 political battle. That could ultimately be bearish for stocks and bullish for gold, just like in the summer of 2011.
According to my friend, Trader David R, the reason for gold’s drop at the end of 2012 is, “People taking profits ahead of tax hike next year, some people have been long for a very long time. This is the ultimate dip to buy. This will be the BUY of the century, these sellers will be buying back in January!” This is pretty significant because David R. deals in “paper” for a living and he has decided that NOW is the time to move funds into the “physicals.” When one of the top traders in the business says, “This will be the BUY of the century,” I say THIS IS SIGNIFINCANT.
For all of you “doubters,” I urge you to read Jim Sinclair’s astute comments in today’s daily. Jim is giving you a road map. It favors gold and is very unkind to the dollar.
Sellers of gold and buyers of the dollar last week forgot to see this Google map on their journey into markets.
Read the full article at jsmineset.com
Last, but not least, my all-time favorite writer has come out of his fortified bunker and is writing again. It’s great to see he is up to his old tricks once again. In today’s final article, published over at GoldSeek.com, the Mogambo Guru is back! Long live Mogambo. If you have never read him, make it a point to do so today. His style, wit and humor are priceless. Sometimes humor is the way to deal with the uncomfortable news we present to you every day. Read MG and laugh at his “up yours” style toward Wall Street and the Fed.