Miscellaneous musings on the Greater Depression
The Washington Post is shocked, just shocked, that the federal government is doing an even worse job of running Fannie Mae and AIG than its previous management. "Two months after the government began taking over ailing financial companies," says the Post, "the two largest efforts have failed to go as planned, with the firms complaining that federal officials set overly strict terms and took other unhelpful rescue measures."
Fannie just turned in a $29 billion third-quarter loss. And AIG's bailout do-over we mentioned yesterday. To my considerable surprise, the Post article did not quote any experts suggesting that what Team Bush managed to foul up so royally, Team Obama will be able to fix with hope-and-change pixie dust.
Any good news today? Or even something neutral?
Well, just as John Williams keeps tabs on inflation, unemployment and GDP numbers in an honest way, ebay is now doing something similar with precious metals prices. $735 gold this morning? That's all well and good if you want to play the futures markets. But if you don't have $73,500 to drop on a contract (and prefer not to leverage up 10-to-1 with $7350 of margin — remember, Jim Rogers says that's how your uncle lost his shirt in commodities), you can get a handle on real-world prices with the ebay Precious Metals Exchange Index.
Basically, ebay wrote a computer program tabulating the gold and silver sales on its U.S. site every 24 hours. "The program tries to filter out collectable, commemorative, and unique items," according to the site. "The data is manually inspected to further refine the items included in the Index."
For whatever it's worth, Gold Eagles sold yesterday in a range between $850 and $896.
I don't know how that compares with your neighborhood coin shop, so I don't know how real-world this really is. And unless he knows something I don't, whoever paid a 200% premium over spot for Silver Eagles yesterday ought to have his head examined. But at some point an equilibrium between "paper gold" and the real thing will return. Worth thinking about.