One of the most interesting news items I’ve found was on the cover of The Financial Times, where I learned that a guy named Lahde “made tens of millions of dollars from betting against the financial and property sectors during [the] past two years”, and he now wanted to thank “the low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA” who made it all possible for him to find enough suckers.
He noted that “These people who were often truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the aristocracy,” he says, “only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.”
This goes along with an article in the St. Petersburg Times about Tom James, chairman and chief executive of Raymond, James Financial, who had “some tough words for the wizards of Washington, DC who oversaw the $700-billion bailout package”.
He reports, “The Brave And Wonderful Mogambo (BAWM) was right all along! Those government weenies are the biggest freaking morons you ever saw, and we as a country should be ashamed of ourselves for having elected such corrupt, half-witted, utter failures and congenital idiots!”
As you have probably guessed by now, he did not say those exact words, but he implied every syllable when he said, “Legislators were almost embarrassingly ignorant of how the financial system works”, which I figure explains how they don’t understand the linkage between their own Bad, Bad Performance (BBP) as legislators and the subsequent Bad, Bad Performance (BBP) of the economy, and he says that only 3 of 16 legislators that he talked to actually understood what was going on in the “credit crisis.” Less than 20%! Hahaha! We’re doomed!
Well, maybe these Congressional losers will understand the unfolding economic slowdown, as evidenced by the Baltic Dry Index, which is an index of the cost to transport stuff by cargo ship, and which has fallen precipitously, which seems very important to me, and to Junior Mogambo Ranger (JMR) Riccardo, too, who is also alarmed by this like – as I previously said – me.
It’s actually beyond scary, in a terrifying kind of “ain’t nobody buying nothing in a consumer economy” kind of way, which means that without the consumer buying stuff as his or her contribution to the famous statistic of “the consumer is 70% of the economy”, we are, in case you ain’t heard, freaking doomed!
Well, maybe not all buying is drying up, as silver market analyst, Ted Butler, reports that in the last 10 months, “some 150 million ounces of silver can easily be documented to have been bought by investors. Undocumented purchases would add tens of millions more ounces.”
In fact, when you add it all up, “Investment demand for silver this year is running at a full 25% of world mine production and over 20% of total production (including recycling). This is a remarkable historical turnabout.”
Thus, it is easy to see why Mr. Butler is “bullish beyond belief for silver”, since this kind of demand means that “In silver, the documented 150 million ounces bought in the first ten months of this year is equal to 15% of all the silver bullion equivalent thought to exist!” Wow!
More than one-seventh of all the silver bullion “thought to exist” in the whole world was suddenly bought up in less than a year, and yet the price of silver has been pounded down to less than 10 bucks an ounce? No wonder I am so bullish on silver!
He also notes that the gold/silver ratio is at more than 80, which is “one of the biggest differences in history.”
And not only that, but since there are 4 to 5 billion ounces of gold in the world versus only 1 billion ounces of silver, that means that “the total dollar value of all the gold in the world is worth 300 to 400 times more than all the silver in the world (80 times 4 or 5)”.
Talk about undervalued! Hey! This investing stuff is easy! Whee!
Until next time,
The Mogambo Gurufor The Daily Reckoning
P.S. In dollars and cents, the dollar value of all the gold in the world is about $4 trillion, while the value of all the silver in the world is but a laughably low $10 billion! Where do YOU think the most profit potential lies? Me, too!
Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning , and other fine publications. For podcasts featuring the Mogambo, click here.
Hey, welcome back! You were missed.
The Kitco site reports the G/S ratio is closer to 60–still pretty good argument that, as a percentage, silver should appreciate more than gold.
Glad you are back Mogambo.
Great post as always
Glad to see the great Mogambo again.
there you go again with your new math
have you been sharing the air with any gubmint folk
that would explain it, what with your nummers being all flated and mostly wrong
Once your head clears you’ll be back to your old self again–pasty, sweating, twitching, mumbling–you know, normal.
Sorely missed your dailies, glad to see you return. Keep up the almost good work (KUTAGW)!
On what planet is silver under $10/oz? I’d be gleefull at $15. Otherwise, nice to see you back!
Oh Great and Wise Mogambo (OGAWM), welcome back! I need constant reminders of impending doom and salvation via gold, oil, and silver, lest I listen to the poo-poo heads at my brokers…
I believe this is a repost, perhaps it is from “Best of…”?
(as the article mentioned was from 2008, found on portfolio.com)
That said, where IS the Guru?
I believe both silver and gold should be a part of every investor’s portfolio to give balance to it.
I too am surprised that the price of silver has not increased more rapidly. It wilkl, but when? Why has the price not “gone through the roof”?
Mogambo, and I say that with the highest respect, your intelligence and truth are truly refreshing. People never have enough time to stop and really think. Deep thinkers fully realize that you are “the messenger” desperately trying to warn and advise them. You are trying to help us and enrich us – this is greatly appreciated. No matter how much you and others like the “Early Warning Report” frantically wave your arms and jump over tall buildings to wake us up, most will sleep at their own peril. Keep up the good work!!
Malone Petroleum Consulting
I have the utmost respect for the Mogambos’recommendations and although I have “much gold investments” (MGI) I don’t yet have silver. This article has convinced me and I’m buying Tuesday. This is Canada and we’re closed for Thanksgiving. Hopefully there will be some left for me. (SLFM)Next up-oil-
According to this web site http://www.gold-eagle.com/editorials_05/zurbuchen011506.html multiple studies show that there are about 44 billion ounces of silver produced to date in the world, and about 4.25 billion ounces of Gold. Where do you get only 1 billion ounces of silver in the world?
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