If you are one of the people who write to me and question my consistent advice to buy gold, silver and oil (“Dear Mogambo, You’re an idiot, which means that you are probably wrong about gold, silver and oil, too! (signed) A guy who can recognize idiots from a mile away”), and who must think that oil will remain low forever, think again: Bloomberg.com reports that “China’s passenger-vehicle sales rose 37% last month, the most in three years, as government subsidies spurred demand for minivans and small cars.”
I know what you are thinking. You are thinking, as I was thinking, “Only a bunch of commie morons would pass out free money so that people could buy cars!”
Well, it turns out that the Chinese can’t hold a candle to us American idiots, as Congress has not only legislated a commie-think $8,000 tax credit (also known as “actual cash back at tax time!”) to “first-time home buyers” but also a tax credit as a rebate for a portion of the price of a new, more fuel-efficient car!
In this regard, Junior Mogambo Ranger (JMR) Jim B. sent a collection of witticisms by Ronald Reagan, one of which goes “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” This is the subsidize part! Hahaha!
In China, the incentives were a success, as total vehicle sales in China, including buses and trucks, “rose 25% to 1.15 million.”
Well, I don’t really know about China, but if people in America are going to afford cars, they are going to need government assistance, too, as the Bureau of Economic Analysis reported that “Personal income decreased $34.4 billion” in March.
And it is not just oil that is going to go up because of supplying more and more gasoline to more and more cars, but gold and silver will, too, shoot up in the horrific inflation as a result of the eye-popping increases in the money supply as part of the unbelievable stupidity known as Quantitative Easing (QE).
And as for my demand that you buy silver, well, Ted Butler, writing at GoldSeek.com, surprises us with “a statistic that is stunning and troublesome at the same time. In 1959, there were about 5 billion ounces of silver physically held on US soil. This includes the 3.4 billion government holdings plus privately held silver, including hundreds of millions of ounces of silver objects that would be subsequently melted in the early 1980s.”
In comparison, “In 1959, there were about 9 billion ounces of silver bullion-equivalent in the world (half of that in the US, both public and private). With a world population of 3 billion, there was a per-capita amount of 3 ounces for each of the world’s citizens. Today, 50 years later, there is a per capita amount of silver of 0.15 of an ounce remaining (1 billion ounces divided by a 6.8 billion population).”
In short, “The per-capita amount of silver bullion equivalent in the world has declined by 95% over the past 50 years.” Wow!
Contrast that with today, when he figures that there are only about “300 million ounces held on US soil, including all the 118 million ounces in COMEX-approved warehouses and privately held silver.”
And as for gold, which historically has always risen with inflation in prices, Andrew Mickey of Q1 Publishing has done some research and finds that “The last few times U.S. government spending reached these levels (as a percentage of GDP), the consequences, which were always the same, followed close behind.”
And what happened, you wonder? Well, “In 1861, the Union printed more money, borrowed everything it could, and spent it all to fight back the ‘rebels.’ Inflation between 1861 and 1865 ended up at 117% for the period. That’s 16.7% on an annualized basis.
“In 1917, President Woodrow Wilson aggressively emptied the government coffers in World War I. Prices increased 126% between 1917 and 1918. That’s 50.3% annual rate.
“In the 1940’s we went through it again. The U.S. involvement in World War II forced another surge in government spending. This time the prices rose 108% between 1941 and 1945. That works out to a 15.7% annual rate of inflation.
“Then in the 1960’s, during the quest for the ‘Great Society’ amidst the Vietnam War, the U.S. government stepped up spending in a big way. The end result was the ‘lost decade’ of the 70’s and stagflation which followed.”
I sum it all up to the Austrian school of economics being Exactly Freaking Correct (EFC) that inflation in the money supply is Bad, Bad News (BBN), as anybody at Mises.org can tell you.
But Mr. Mickey thinks he can roughly estimate the inflation we are going to suffer, and says “all the forces are pointing towards a huge wave of inflation coming – an annual rate of 10% to 20% given the historical ranges. And right now, while the inflation/deflation debate rages on, it’s giving us a chance to protect ourselves from the coming inflationary wave inexpensively and maybe actually profit as well.”
Which, of course, brings us to the Daily Mogambo Admonition (DMA) to buy gold, silver and oil because, brother, I am here to tell you that we are freaking doomed from the idiotic Obamunist administration, freakishly stupid commie-think Congressional deficit-spending insanity, and the loathsome Federal Reserve creating the avalanche of money and credit to finance the Whole Stinking Mess (WSM).
Which, of course, makes deciding what to do a real snap; follow the DMA!
Whee! This investing stuff is easy!
Stay with commodities where supply is tight and there is no immediate cure.For 2011, I’d say uranium has the most upside, outside of the precious metals. Even though prices rose in 2010, they still don’t compensate miners for the risk of building new mines. It’s also a very concentrated industry. More than 60% of all […]
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.
Once again you have rendered your ever dwindling audience speechless. (This is a mercy comment.)
One would think ya’ll could figure out how to spoof some comments. It won’t help much but at least you get the illusion of readership.
I’d laugh harder but knowing whats coming makes me want to cry. You are so obviously right on! Giving the people who brought us this mess control of the economy to overcome it is like giving an arsonist gasoline! I’m watching my neighbors and union brothers sell their toys and have yard sales while the banks steal their homes. Yeah Amerika is a grate place.
Instead of wanting to change the mind set that keeps leading us down these paths your great advice is to horde gold, silver, and oil. Unimaginative to say the least.
Yeah! unimaginitive! I mean, as an internet blogger, why dont YOU have better answers. I mean, its not like this is free or somethin’…oh, it is, but that doesnt change anything! I have NEEDS, damn it man! And how am I supposed to eat oil, gold and silver. Shouldnt I be investing in tacos, enchiladas, and guacamole? Please respond asap!
Booze is supposed to be a good investment. Some people will trade almost anything for it. Or better yet invest in a still.
Why not invest in tobbacco, papers and rolling equipment? Now that state governments have shut down all out of state tobbacco sales with new tax rates on native American products, the black market could easily fetch $4 a pack, or 25 cents for singles.
that’s much better
And just to think, a high school friend was happy that she got $1100 for some “old gold” she had sitting around the house….
ummm no thanks I’ll keep mine right were it is….
I’m happy to see that the booze and tobacco products are getting some props now! They are a great investment because, even if a ray shoots from the heavens and magically makes it like 1999 again and everything’s alright, you can consume them!
Now if you are worried about guacamole and other healthy tortilla meals, learn to make it/them from scratch.
But remember the Wise Just Mogambo isn’t just making a chef cap out of jiffy-pop foil… it’s not alright anymore, there is no ray coming from the heavens and we’re all frickin doomed.
Thanks for good advice shared humorously.
If 5000 people start working at age 18 how many people will make it to age 66
smoking in China has always been on the increase and continues to escalate because people know that its a good means of enjoying a very small personal indulgence that is a satisfying individual addiction in an otherwise desperate life that is not as alluring to survive as religions want us to believe .. so onward with destruction of the homo idiot species!
As long as people are encouraged to spend every nickel they earn and more and they do, silver and gold will not go anywhere.I have a 1923 US silver dollar in my pocket and could not buy a cup of coffee with it unless I convert it first.Would you say that that is a distortion of values?
I carry a Silver dollar also because it reminds me of what my Father always preached. “That piece of paper in your pocket is just that, a piece of paper!”
Buy canned goods and ammunition.
TMG’s core message makes sense, even when his delivery becomes black commedy.
So yes, keep valuable durable commodities (e.g. Gold Bullion), somewhere secure (offshore), but also built a cache of durable essentials, and equipment, before they become scarce, or real inflation ramps up. The Mormons offer useful tips on storage, and useful equipment, like outdoor water filters.
If we really are due for a depression in the UK, then shortages, stoppages, riots, or war, are a possibilities, and I really don’t want to have to hunt for essentials during these hazards.
Sure some of the things he says toward the end are a little loopy but if the fundamentals are true (supply vs demand) then the price will go up. However amount of silver per human being is not an accurate representation of supply vs demand, since every human being does not own a portion of the above ground silver. However, silver is used in a much wider array of consumer goods, electronics, and even medicine than most people imagine. Based on this the bullish case for metals is good. I look at this rather than the political under pinnings because both conservative, and liberal websites simply blame the other for the crisis in some way. If you serious about investing in something you have to look past that then look at fundamentals as well as other things. I personally think that as long as the US is the world reserve currency there will not be hyper inflation, but who knows what the future holds. I’m not a dooms dayer at all like some people here but I have prepared a bit, still it is important not to let fear take over reason. Interesting article and best of luck everyone.
In reference to how much silver there is per person in the world, this is jolly good information (JGI) … cause when this worthless pile of rotting paper meets its maker in the pit of hell (POH) … everyone one is going to be scrambling for silver … and you’ll wish you had some … think how flifthy rich and self indulgent you will all become .. ops thats sounds to much like the meglomanics that are ruling the world today. Anyone get the feeling we are on a merry-go-round.
We all should do something useful with our lives an read the Riga Veda … or a least read up on Karma Sutra.
Watching all the idiot cretions stuff things up on earth is an interesting past time … hilarious actually.
wee … this analyzing life on earth stuff is real easy. (TALOESIRE)
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