Bet Against the Majority. Buy Gold.

I was laid out on the couch, which I remember distinctly because my wife was yelling, “If you’re going lay down on the couch instead of doing something around the house to help me out, at least take your damned shoes off!” and I was using the remote to idly flip through the channels on TV, hoping to catch something in the vein of happy mindlessness, maybe something in the Gilligan’s Island-Bewitched genre, so that I did not have to keep track of a complicated plot and/or a bewildering cast of multi-faceted characters.

The Ins and Outs of Chinese Gold Reserves

Here we go again. Markets have caught a chill after signs of inflation fever in China. And that’s not even the half of it. Let’s dive in…

Consumer price inflation in China hit a 16-month high in February – a 2.7% year-over-year increase. China’s National Bureau of Statistics was quick to put out a statement reassuring everyone that “price rises this year will be moderate and controllable,” but that’s not enough to calm traders looking for excuses to feel jittery.

The Safety Downsides to Globalization

China, “workshop to the world,” produces low-priced goods that have overwhelmed the global economy with value… except for some notable exceptions.

Historically, it’s a nation that’s not always held to the same health or safety standards to which US manufacturers, for example, are obligated to uphold. Occasionally it’s resulted in disastrous consequences.

Uranium and Specialty Metals: A Few of My Favorite Things, Part II

Uranium – One of the best investments you can make right now is to pick up relatively secure, low-cost uranium – the feedstock for nuclear reactors.

The demand for uranium is building in intensity like a heap of hot coals. There are already 436 reactors up and running today. And there is a surge in demand coming in the next decade from the hundred or so new reactors expected to come online. Yet the industry is about 400 million pounds short of meeting that demand, as shown in the chart below.

Investing in Gold During a Fed-Induced Bounce

Stocks up, gold down.

Once again yesterday, investors demonstrated their preference for paper over the shiny yellow metal. The Dow Jones Industrial Average notched a slight 3-point gain, while gold tumbled about $17 an ounce.

This divergence between stocks and gold is not enormous, but it is telling. Most investors believe the credit crisis is a mere memory, and that an economic recovery is underway.

How Long Will China Support the US Dollar?

China says it is continuing to buy US bonds “every day.” It doesn’t have much choice. It earns money by selling things abroad. In fact, exports in February were up more than 40% over February ’09. This leaves it with a lot of foreign money – most of it in dollars. What can it do with so much money?

More Billionaires in China Than any Other Nation… Except the US

Forbes has revealed its annual list of top billionaires and big gains have been made in Asia. China, for the first time ever, has the most billionaires outside the US when Hong Kong is included.

Notably, a decline in the number and wealth of US billionaires is continuing. The total number of US billionaires is down to 40 percent from 45 percent last year. Also, this year’s number one, worth $53.5 billion, is Mexican telecom and conglomerate business owner Carlos Slim. Though, as would be expected, Bill Gates and Warren Buffett follow.

Traders Fear Chinese ‘Bubbles’

The big story on the screens this morning comes to us from China where inflation has reached a 16 month high. These dramatic headlines have sent currency investors heading back to the Japanese yen and US$ as many of these stories suggest the Chinese will be stepping in to slow the Chinese economy. But if you look beyond the ‘16 month high’ headlines, you will find that consumer prices rose just 2.7% in February from a year earlier, and increase yes, but hardly the stuff of a ‘bubble economy’. Premier Wen Jiabo has stated a goal of keeping inflation around 3%, so the inflation number is still below his goal. And the Chinese have already started pulling liquidity out of the Chinese banking system with increases in the reserve requirements and internal interest rates.

Brazil Launches Salvo of Trade Sanctions Against US

According to the head of economic affairs at Brazil’s foreign ministry, Carlos Marcio Cozendey, the plan is “to distribute the retaliation broadly in order to maximise pressure.”

The “retaliation” he refers to includes trade sections on 100 US goods, ranging from cars to milk powder. The tariffs are in response to cotton producer subsidies the US has kept in place despite a 2008 WTO ruling that found the practice discriminatory.

CBO Budget Projections and the Horrors of Inflation

The pills that I thought were tranquilizers turned out to be vitamins, and although I am on the verge of some kind of mental breakdown because of the mix-up, I feel great!

Turning to the old tried and true, I soon learned that I had started too late, and I was not nearly drunk enough to have properly anesthetized my nerves when I chanced to read Agora Financial’s 5- Minute Forecast report that “The CBO’s latest numbers reveal that President Obama’s proposed fiscal 2011 budget would add $9.7 trillion to the national debt over the next 10 years.”

Investing in India: News and Forecasts for the Long Haul

The private sector ruined itself in the bubble of ’03-’07. Now, it’s the public sector’s turn. All over the developed world – with a few exceptions – the feds are adding debt at an alarming rate.

The US has already passed “the point of no return,” says a report from Casey Research. Ken Rogoff and Carmen Reinhart put that point where external debt passes 73% of GDP or 239% of exports. IMF data, says the Casey team, shows the US has already gone too far on both scores, with external debt at 96% of GDP and 748% of exports.

Deciphering the VIX Index and the Rally in Overconfidence

Hip hip, hooray! Hip hip, hooray!

Our little big bull market celebrated its one-year anniversary yesterday, albeit in tentative style. The Dow managed to eke out an 11-point gain, while the broader S&P 500 fared only slightly better. Investors, it appears, are awaiting the next catalyst to keep the momentum going. But are they running out of excuses to buy?