In the spirit of not suffering from confirmation bias, in today’s Notes we will try to make the bearish case against gold. So before you storm Notes HQ in Buenos Aires craving blood, hear us out. Many of our staff here love gold and have long term holdings.

This issue is entirely in the contrarian spirit of playing devil’s advocate. So put your pitchforks down. Take a deep breath. There is plenty of space to poke holes in (or rant) about our thesis by writing to info@contrarianprofits.com

So here it goes. The four reasons you shouldn’t buy gold today…

Reason 1: Did you know that the seventh largest holder of gold in the world is not a country, but an exchange traded fund? Yes, gold ETF SPDR Gold Shares (GLD) has amassed the seventh largest gold reserve in the world. This fund holds more gold than China, Switzerland, Japan, the United Kingdom or the

Fed’s Beige Book disappoints…Dollar rebounds on the day…Currencies come back on the night…RBNZ leaves rates unchanged…And Now… Today’s Pfennig!

Good day… And a Thunderin’ Thursday to you! It’s a Thunderin’ and lightenin’ here in St. Louis. It all began last night, went through the night, and still hangin’ round this mornin’! Yes, I’m into dropping “g’s” today! HA!

Well… We had “Turn Around Tuesday”, and that was fallowed by “Whipsawed Wednesday”! The euphoria of the dollar bears, turned quickly yesterday, with the dollar bouncing back… I’ll tell you this dollar has more lives than a cat! But that’s OK… I certainly don’t want to see a dollar collapse, as some have called for… I just want to see it at a “fair” level, given the fundamentals of exploding deficit spending… That seems fair, eh? Trends… Weak dollar, strong dollar, alternating throughout time… Well, at least since Nixon closed the Gold window in

MARKET COMMENT

January 27, 2009

Again bulls were able to effect a few “stick saves” as markets were wobbly early. But there’s something to be said for bulls who seem perfectly able to absorb a blizzard of bad news (Consumer Confidence at lowest level since records were maintained back to 1967 and home prices took a record dive). But, oh pish-posh let’s look at really good news on earnings shall we?

AXP rose because if lost less money than feared. Great!
TXN rose because earnings only fell 86% and they’re firing thousands. Great!
X rose nearly 7% because it made a profit due to an acquisition. Wow, more accounting wizardry!
NFLX rose sharply because consumers are retrenching and making their own popcorn and enjoying their big screens they bought with the last stimulus check.
And lastly, but the most fun, were statements that the markets …

With the benchmark Federal Funds rate already down to 1.0%, U.S. Federal Reserve Chairman Ben. S. Bernanke has only so much room for another cut (although many economists are predicting an additional half-percentage-point cut at the Dec.15-16 meeting).

The Fed extended the lives of recently initiated programs (lending facilities for investment firms, for instance) and is exploring additional moves (like Treasury purchases) aimed at reviving the credit markets.  Bernanke believes more needs to be done to slow the pace of foreclosures, especially since they jumped another 10% in September.

Meanwhile, the U.S. Treasury Department is working on a plan to rejuvenate the housing market by slashing mortgage rates to 4.5% on new purchases.  Experts say that at some point these stimuli must take hold, but that’s not necessarily true.

This week’s economic calendar is highlighted by two late-week releases that are sure to garner much analysis.  The producer price index (PPI) brings another

The government is banking on the American consumer to rescue the economy. But debt-ridden households have had enough, says Andrew Gordon. He says the government’s massive bailout are benefiting very few in the short-term. But the long-term consequences will be felt by all.

This from Investor’s Daily Edge:

The government’s latest bailout moves have me scratching my head. It’s throwing $200 billion worth of guarantees at recent and current loans tied to consumer and small-business spending.

Hank and Ben want the consumer to bail out the economy. And they want to do it by putting consumers deeper into debt.

They don’t get it.

They don’t get that consumers are tapped out.

What do they think when they see numbers that show that American households are in deeper debt than ever before? Or when they see that consumer spending in October fell the most in

In a recent interview with Barron’s, Jeremy Grantham cautioned that the biggest mistake might be buying too soon. He co-founded Boston-based GMO, an investment house overseeing $120 billion in assets, in 1977.

In July this year Grantham said: “Ironically for a ‘perma bear’, I underestimated in almost every way how badly economic and financial fundamentals would turn out. Events must now be disturbing to everyone, and I for one am officially scared!” In terms of strategy, he summarized his view with what he believes should be investors’ motto: “Don’t be brave, run away. Live to fight another day.”

Although his warnings go back a number of years, Grantham was eventually right. It

Still on the topic of the bail-out plan, guest contributor Bill King (The King Report) offers his ideas on how to put a more credible plan together. His thoughts are insightful and deserve the urgent attention of the powers that be.

Premises • The US credit system is broken. • The Paulsen-Bernanke Bailout Plan does not insure that those banks and brokers that receive bailout aid will increase lending. The reality is the market is hoarding liquidity and these banks are likely to do the same. More importantly consumer lending has been a small, often insignificant part of their business. They made money by trading and through securitization of debt. • It is necessary to create a new system parallel