This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Business Intelligence: Marc Faber has short term concerns about commodities, says gold may drop to US$800, November 6, 2009. Marc Faber the Swiss fund manager and Gloom Boom & Doom editor said he has some short-term concerns about commodity prices including gold. He is also reluctant to invest in bonds.

• Aline van Duyn (Financial Times): Why dollar carry trade faces hidden dangers, November 7, 2009. Most investors agree that it is out there. What is less clear is how big it is, or how worried investors should be about it. The “it” in question is the dollar carry trade. This is an investment strategy that has recently been extremely profitable and as a result has become increasingly popular.

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Gold didn’t do a lot in Far East trading on Tuesday. The low of the day occurred at the open in London…and for the next two hours, gold put on a spirited rally [$10+] that ended with the price going vertical about half an hour before the Comex open. However, as is always the case at moments like these, the usual not-for-profit sellers showed up and did their dirty until it was time for them to go for lunch at 12:00 noon in New York. Once ‘da boyz’ were at lunch, gold made a $7 run higher, which ended the second that floor trading was over on the Comex…and electronic trading began.

And by the time that gold trading was over for the day…most of that gain had been made to disappear…and gold finished down about a dollar from Monday’s close.

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IT GETS dug out of the ground in Africa, or some place. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it

IT GETS dug out of the ground in Africa, or some place. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head. Warren Buffett.  The bedrock case for gold:

THE basic premise is not new, but then nothing’s changed much… Ludwig von Mises, the father of Austrian economics, who recognised early on that government attempts to massage the credit cycle always end in tears, memorably described the phenomenon as follows: “There is no means of avoiding the final collapse of a boom expansion brought about by credit expansion. The alternative

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The “final and total catastrophe of the currency system”, is in this case the dollar. If you believe that’s where we are headed then gold still has some way to go. To believe it doesn’t is to believe the worst is pretty much over, that the excesses have all been unwound, that the central banks have triumphed, that paper currencies have won the day… without threat of inflation.

What about deflation? All over the world the central bankers’ reaction to the threat of a slowdown has been the same: print more money, slash interest rates, find ways to stimulate. If the patient is going to die, even the most radical course of action is better than doing nothing. Most paper currencies will suffer the consequences.” – could be authored by Ludwig von Mises and/or Marc Faber – take your pick.

versus:

“The gold

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What’s the true cause of inflation? Jimmy Carter underrated? Really? And what makes Von Mises right after all these years? Read on to find out…Thank you (once again) for all your excellent responses on the Obama-Carter connection. When your thoughts and comments roll in, my only lament is a lack of space in which to reply.

Well, that and one other small quibble. Where are all the haters? Surely more of you must think I’m off my rocker, or otherwise dead wrong somehow. Let’s start off with a rare bit of snark just for sport…

The lessons learned from the past…8 years of taking us down…and now a dynamic leader trying to pull it together…and presenting a better picture of America to the world…now, can you or Rush Bimbo do that?

– TD reader NB

Rush who? I’m not up on the guy, as I haven’t paid attention to him since the early ’90s.

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More than six years ago, Fed Chairman Ben Bernanke — then still Fed Governor — gave a laudation for Milton Friedman, one of America’s leading economists. Friedman’s view on the Great Depression holds that the stock market bubble of the Roaring 20s was not the reason for the Depression. Instead, it was the wrong fiscal and monetary policy in the years after the bubble had burst that caused the Depression. Bernanke publicly said to Milton Friedman: “Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”...

I recently posted a video of of Mr. Schiff on CNBC to demonstrate a point about the Obama Administrations economic polices. Intrigued by the simple, logical fundamentals of his arguments, I decided to do some more research on Peter himself. What I found was very fascinating.

Probably his most famous video, entitled Why the Meltdown Should Have Surprised No One, opened my eyes to a very common sense approach to explaining economics, and, coincidentally, free market economies. The video is a real eye opener; if American’s would have just opened their eyes the could and should have seen economic and market crash coming 18 months ahead of time!

His common sense approach is on display here as well, where he directly refutes the Greenspan / Bernanke economic theory of cutting interest rates to stimulate the economy.

Peter is a student of Austrian economics, which when broken down to

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Neither gold nor silver did much of anything in Far East or European trading on Wednesday. A short, sharp rally into the London a.m. fix went nowhere, and there wasn’t any serious activity after that until the floor traders on the Comex went to work yesterday. Gold tacked on $10 in about two hours time, but once the London p.m. fix was in at 10:00 a.m. New York time, that was it for both metals. Volume was very light…only around 69,000 contracts…net of switches.

Tuesday’s open interest numbers were underwhelming, as volume was very light on Tuesday as well. Gold open interest dropped a mere 1,227 contracts…and silver o.i. was down a minuscule 48 contracts.

What I mentioned might happen yesterday never materialized. All in all, Wednesday was a big zero in the gold and silver market. It was nice to see the precious metals stocks eke out a gain despite how

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The high for gold came at about 1:30 p.m. in Hong Kong yesterday…which was half past midnight Tuesday morning in the Eastern time zone. From there, gold got sold off about $15…and never fully recovered the rest of the day. An attempt to break out early this morning (Wednesday) met with the usual fate in Far East trading.

Silver was similar…but far more volatile. Unlike gold, it managed to finish positive on the day…even over $12. Let’s see if that lasts into today.

As I said yesterday…today is options expiry…and I’m ready for anything…both before and after the close of trading on the Comex this afternoon.

The open interest on Monday was a little more subdued. Gold o.i. rose 1,568 contracts to 361,473…and silver o.i. rose 300 contracts to 88,899 contracts.

The usual N.Y. commentator had the following yesterday, which I thought was worth sharing…”Since gold’s recent low nearby Comex close of $807.30 on

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Fears of deflation are overblown, says Ed Bugos. He refutes the use of the ‘velocity of money’ theory as a reason why prices are ‘destined’ to fall. While a bout of deflation is possible, we know that the Fed will do what it takes to re-inflate. And the real worry should be that it will probably succeed.

This from The Daily Reckoning:

The markets got off to a bad start Wednesday following the news that some members of the Federal Open Market Committee slipped the word “deflation” into the minutes of its last meeting, in December.

Thus, the media jumped all over the deflation theme. Although there was only one mention of “deflation” in the entire 6,000-plus word release, it prompted headlines like this one from MarketWatch: “FOMC Members Discussed Mounting Risks of Deflation, Depression at Mid-December Meeting.”

The stock markets crumbled. Most commodities fell. And even though the dollar fell,

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