The Rude Awakening PRESENTS: Alchemy - it's real. According
to the NY Times, two Russian scientists have figured out
how to turn alchemy into a commercial reality…keep
reading for the full scoop…
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THE ALCHEMIST
by Tom Dyson
What would you say if we told you two Russian physicists
had figured out how to manufacture gold at a cost of $200
an ounce?
You'd either laugh at us or swear at us, depending on how
much gold you owned.
But in January 1980, things were different and stories like
this were taken pretty seriously…even by the mainstream
press. We found this one in the New York Times…
"Alchemists have actually found a way to manufacture gold
out of lead, and at commercial prices," claims the archived
article from January 20, 1980.
Like a football referee facing a tough ruling - last week
we jogged over to the sidelines and inspected the slow-motion
replays of a climax in precious metals' prices. They peaked in
January 1980. We wanted to find clues that might help us
evaluate where gold stands now, and where it may be headed
in the future. Instead of the state-of-the-art equipment football
referees use, we had to make do with the old microfilm archives
at the local library…
"A Russian physicist emigrated recently to Israel and
reported, that before he left the Soviet Union, two former
schoolmates, working at a nuclear research laboratory near
Siberia's Lake Baikal, had happened on a way to make gold,
and more importantly, to make it at a cost of $600 an
ounce," reported the NY Times.
Today, one ounce of gold sells for around $420. But when
the article was published, it was trading over $800…and
still rising.
"According to the Russian scientist, the breakthrough at
Lake Baikal happened by accident. After an experiment in
nuclear bombardment, the lead shielding inside an
accelerator or - it isn't clear - the vessel of an advanced
form of nuclear reactor changed composition. The result:
gold."
It is true that lead can be turned into gold. The
alchemist's theory - that one element can be transmuted
into another - was vindicated by the discovery of the
structure of the atom in the early 20th century.
Subsequently, American scientists in experimental physics
have produced minute quantities of gold through particle
bombardment in an 'atom smasher' - at a cost of around $60
million an ounce!
But to produce gold at a cost of $600 an ounce?
At the time - considering the price action in gold and
Russia's relationship with the U.S.A. - the news would have
been hard to ignore. "In some areas of particle accelerator
technology and in nuclear fusion technology, the Russians
led the world, including the United States…" writes the
author, New York Times foreign correspondent, Clyde
Farnsworth. "American scientists do not deny that the
Russians could have hit upon something they are unaware
of."
Twenty-five years later, it's easy to see the story was a
hoax, and to laugh at the fools who believed it. The story
still has value though…at least, more value than the
Russian alchemy it reported. For two reasons:
Clyde Farnsworth used the story as the base for his debut
thriller spy novel, 'Shadow Wars,' published in 1998. "A
good action packed racist novel," wrote one reviewer on
Amazon, "the characters are boring and one-sided, and each
and every Arab is a lying, stealing, murdering weasel."
Secondly, the story has value as evidence of a bubble top.
It's a symptom of the euphoric fever that spreads over
people when a bull market reaches its climax.
It is also exactly the sort of story we'll be on the hunt
for if the gold market really heats up.
[Ed. Note: If alchemy ever became a commercial reality, the
big money is in lead. Lead is one of Jim Rogers's favorite
metal investments. He likes it - not because he thinks
it'll turn into gold - but because everyone else hates it.
But gold? Notwithstanding alchemy, gold should keep rising
in value. We like gold coins - because everyone else hates
them. Here's the best way to invest in gold coins:
The Gold Summit II
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-------------------------
Did You Notice…?
by Tom Dyson
Some Philadelphia Eagles fans are so desperate to buy
Superbowl tickets, they have taken out home equity loans to
raise the cash.
"If I had any equity left in my house, I probably would,
too," said a young woman speaking to the Associated Press.
One mortgage banker said two couples had already been
approved and a dozen other fans have enquired. "It feels
like Christmas Eve," said another pre-approved Eagles' fan.
A sign of the times? We showed how stories of alchemy
marked the high point in a bull market for gold…could
borrowing against your home to watch a game of football be
the hallmark of a climax in the money business?
If that's not evidence enough, then what about this, from
Daily Reckoning contributor, Byron King:
"If you plan to watch the National Football League's Super
Bowl on Feb. 6, you ought to know - and I am sure they will
tell you - the halftime show is being sponsored by
Ameriquest, one of the largest, fastest-growing "sub-prime"
lenders in the country."
"All of the fancy Super Bowl glitz - the music, the
marchers, the floats, the airships in the sky - are being
paid out of the lending fees and high interest rates
Ameriquest collects in the course of its business. A
significant portion of Ameriquest's cash flow comes from
its "sub-prime" borrowers. If you happen to stop by your
local bankruptcy court and sit in on a few U.S. Trustee 341
meetings, you might even meet a few of Ameriquest's
customers…"
From these two Superbowl observations, we'd have to
conclude that a bubble in the mortgage lending business is
approaching climax.
This is precisely the euphoric fever we'd have expected to
see.
[Ed. Note: How do you profit from a collapse in the
mortgage business? Dan Denning is waiting to plunge. He's
had his finger on the trigger for over two years. It's
going to blow, the question is 'when?'
Perhaps as early as this afternoon, dear reader. The Fed
is meeting as we speak and they may yet hike another 25
basis points. You'll want to take note of these words of
Fed Chairman Greenspan that we recently published right here
in the Rude Awakening:
"… rising interest rates have been advertised for so
long and in so many places that anyone who has not
appropriately hedged this position by now is obviously
desirous of losing money."
We've got our eyes firmly on the Fed…and we'll be
sure to keep you up to date with any new developments…
