And they're off!

Asian Central Banks Cut Rates to Counter Impact of US Crisis. The race to the bottom has begun. In this environment, the US Dollar does not need to have a near death experience for gold, and especially the gold miners to have a strong advance. That first stage, the one that cut the HUI in half, that one? That was the stage where the surging Dollar took down everything. That was the stage where the go-go 'Look at me, I'm a commodity bull and making money is easy!' inflation trade imploded, shutting down the casino and taking the gold miners and their product with it. Interestingly, gold 'went down less' than nearly everything except T-bill rates, which is as it should be in the impulse toward deflation.

The fiat paper currencies of the world are all suspect or worse. They are measured (by Forex) against each other but it becomes a game of which degrading debt paper backed by nothing is in favor this month? It is nonsense to think economies that depend on a gluttonous and irrepressible American consumer are not going to take the hard down as well. Asian central banks, representing America's #1 macro vendors, have just blinked. The point is that people who are watching the US Dollar as the lynch pin for their investment stance going forward are likely to miss the big picture. And that's okay because we want to be part of the smart money, not the dumb money that thinks this is as easy as 1-2-3 connect the dots and color in the picture in a childrens' coloring book. It isn't. Ratios are now more important than ever.

Here are some important ratio indicators going forward. We have gold-dow, gold-silver, gold-industrial metals and gold-oil. With the understanding that gold most certainly can decline here, it's bullishness relative to the gold miners' cost inputs is what is important and that is why the gold miners stand a good chance of being the top performers in a contractionary environment. Another cost input that is on the decline is human hope for prosperity and what that means is that labor costs and availability should improve going forward along with the ratios that are more easily quantifiable in the charts below.

This is close to the theme that the coming subscription letter will center around, at least as long as it is what is demanded by the current environment. I want this to be different from what the herd is getting. We will tune out the noise and focus on what is happening beneath the surface of the markets. One day, I hope to be able to follow a theme of resurgence and prosperity for the macro world. One day.

Edit (12:40) Thanks to 321gold for this YouTube link to a BoobVision show where perma bulls like Toby Smith lampoon the sane and very correct Peter Schiff. This goes back to my critique of the MSM featuring all sorts of cartoons like Toby, Hannity and Kudlow. Sadly, the majority actually believes the garbage that spews forth. This newsletter is going to be an antidote for this stupidity.