The Goldwatcher

 Chevrolet Malibu Hybrid. For the scrap heap? 

The G20 and the Detroit 3:

The Goldwatcher posting on the G20 get together last weekend  was held back while the Chief Executives of the Detroit 3 - GM, Ford and Chrysler - made their plea to Congress for ‘bridge’ financing. The G20 event was a blogger’s treat.  A wedding without the bride unaffeced by the Obasm that overcame the world.  But The Detroit 3’s crisis is another story.  Another consequence of the systemic financial and globalisation crises roiling financial markets. But in this case it’s nobody’s treat. The Detroit 3 are visibly close to ruin.  Decisions taken by Congress over the next few days or weeks will have dramatic effects on the US economy and the dollar currency.  Comment will follow the decisions when the issue returns to Congress on December 2nd.

Contrarian investors and Gold Mining Shares:

The Goldwatcher book and this blog follow the line that excessive money creation, whether through debt expansion, money printing,  or any other devious means will lead to  erosion of the purchasing power of fiat paper money currencies.  Milton Friedman famously observed inflation is always a monetary phenomena.  Prospects for the dollar in a context absolutely relevant to current developments are addressed in The Goldwatcher Chapter 5.

Contrarian investors have the best track record with gold. Many among them currently see opportunities with shares in gold mining companies. Gold has performed well compared to other financial assets. Particualrly  well in currencies like the British £ that have fallen in relation to the dollar. Gold coins and other items of physical gold  are in short supply and are selling at premiums to the gold price. But the prices of all gold mining shares have been trashed. This, as we all all know, follows forced redemptions by fund managers, margin calls and other adverse factors forcing equity prices down. 

We also know that at times like this the baby often gets thrown out with the bathwater. Gold mining shares on the cheap aren’t  the sort of opportunity that will excite a day trader. Contrarian investors take a more fundamental approach and have longer investing horizons.

In an article today on a visit to the Agnico Eagle Mine Mineweb include a useful table on prices and recent price movements of Gold Mining Shares