Bitcoin crosses $100 mark in latest surge

Bitcoin, the virtual currency on everyone's lips, surged through the $100 mark this week. 

Bitcoin is currently trading at $117.2 on Mt. Gox (click through for current quotes and market depth), one of the most liquid bitcoin exchanges. Having traded near $15 in early January, bitcoins are now up over 750 percent in US dollar terms year to date. 

Here's a chart of the bitcoin/Euro price, currently at €92.18 on Mt. Gox. Interest in the bitcoin market recently exploded across Europe as Cyprus' banking crisis led savers to wonder if their bank deposits would be seized to help bail out ailing banks. 

As the New Yorker explains in their piece on, "The Bitcoin Boom": 

"...That a number of panicked Europeans appear to have reckoned the wildly volatile, vulnerable, and tiny bitcoin market a preferable alternative to their own banking system, even temporarily, signals a serious widening of the cracks between the northern and southern E.U. countries in the wake of the euro-zone debt crisis. 

It also illustrates the broader collapse of trust that is threatening the world of global banking and fiat money. The weakness in existing currencies stems from lack of faith in institutions—particularly central banks, which are often in league with commercial and investment banks. 

When a government bails out a failed bank or insurance company—in essence, by printing money—the net effect is that the currency as a whole is debased, in favor of a few and at the literal expense of everyone else, which amounts to a fair description of today’s global financial system. Hence the sudden appeal of bitcoins, which appear, for the moment, at least, to be immune to the machinations of inept or crooked bankers and politicians." 

I've been reading and tweeting about bitcoins and the future of virtual currencies quite a bit in recent months. Recent events seem to have sparked a great deal of interest in this area, even for those (like myself) who have yet to transact in the virtual currency market. 

We've seen a previous boom and bust cycle in Bitcoin prices, with a passing media frenzy ("it's a bubble!", "an unregulated ponzi scheme!") to match. The last peak in Google web search interest came in June 2011, amidst official alarm over the "untraceable peer-to-peer currency's" alleged role in online money laundering and the drug trade. 

Now that we're seeing a near-parabolic rise in bitcoin prices across the globe, we can probably expect another new peak and cyclical crash (or maybe a slightly calmer consolidation period) to follow soon.

However, if the decentralized issuance of bitcoins remains steady over time, we could see a flourishing market for virtual currencies develop longer-term. Whether it's Bitcoin or some other innovation that stands the test of time, we'll be watching this trend with interest. On that note, I'll leave with you with the following quotes.     

"Encrypted currency is at the Altair development stage. If Bitcoin isn't actually the Apple II, we're very close" @kevincarson1
— Guillaume Lebleu (@giyom) August 25, 2011

"Bitcoin is the beginning of something great: a currency without a government, something necessary and imperative." - @nntaleb
— David Shvartsman (@FinanceTrends) March 24, 2013

Market Wizard, Vic Sperandeo interview: gold, inflation, and trading the QE wave

Trader, author, and Market Wizard, Victor Sperandeo joins us for an exclusive interview in our first Finance Trends podcast. To say we caught a lucky break with our first guest is a bit of an understatement. 

Victor is a highly regarded veteran trader who has been involved with the markets since his first job as a Wall Street quote boy back in 1966. When he began his independent trading career in 1971, his primary goal was to make money consistently, month after month, year after year. 

After 40+ years of consistent profitability, I'd say he's met that goal. 

Over the course of his career, Vic has traded independently, managed hedge funds and CTAs (commodity trading advisors), and ran portfolios for George Soros and Leon Cooperman. He has also written three books on trading, including, Trader Vic: Methods of a Wall Street Master, a personal favorite which interlaced Vic's trading insights with sections on Austrian economics and personal psychology!

In this rare, hour-long interview you'll hear "Trader Vic" discuss his recent editorial on Paul Krugman (a "political hack") and our debt problems, the Fed's quantitative easing program and prospects for future inflation, his outlook on gold prices, Austrian economics and economic and personal freedom (or lack thereof), as well as his insights on successful trading and the importance of trading psychology. 

Plus, you'll hear about the upcoming Trader Master Class with Vic in New York City (more info below).



Some highlights and quotes from our interview with Vic Sperandeo: 

On gold prices: "What gold doesn't like is higher growth...gold didn't do well from 1982 to 1999. Gold likes chaos and it likes inflation. With every central bank in the world inflating, long-term, gold is a buy. Short-term, there is someone putting pressure on the gold market. I believe it's the Fed or banks working through the Fed to keep gold prices down and to make money-printing policies more acceptable."

The effects of Quantitative Easing: "QEs have not worked to the degree that most people have assumed they would because nobody is spending the money. Money velocity (the turnover of money in the system) hasn't sped up to a degree that would create runaway inflation... and banks aren't making loans of any consequence. What it's doing [with the mix of current, offsetting fiscal policies] is slowing the economy and distorting the markets as people are putting their money in stocks, thinking that this is good for corporate profits."

Vic's insights on trading and the need for emotional discipline: "Sometimes the smartest people and those who have biases, like yours truly, can cost themselves money. You try to eliminate your biases. In my case, I'm biased against believing in the Fed and in Ben Bernanke knowing what he is doing. But that doesn't subtract from trading - if you're trading you really don't care what Bernanke knows or doesn't know [set aside your biases]." 

Investing vs. trading in 2013: "We're not in a real good investment environment here. We're in a very good trading environment and a great liquidity environment. If you're a trader, you should be doing well following the uptrend in stocks because of QE. If you're taking bigger positions and you're betting on longer-term growth, there's where the differences lie and you have to be very careful. Trends and the technicals trump the fundamentals here [in a Fed-driven market]." 

How crucial is psychology in trading and in life?: "The fact is you can train a number of people to do the same thing and you get different results. Why is that? The difference is emotions - it's psychology. The problem is not in the knowledge, it's in the execution. Very few people can discipline themselves to execute the knowledge. It takes emotional discipline." 

Victor Sperandeo will be sharing his global macro outlook and his trading techniques with a select group of participants in an upcoming (March 22nd) Trader Master Class in New York City. You can learn more and sign up (class size is tightly limited) at the link above. 

I hope you enjoyed listening to this interview half as much as I enjoyed doing it. If you'd like to help us spread this discussion to more listeners, please share and retweet this post with your friends and readers by choosing from the ShareThis buttons below (email is included). Thank you for reading and come back often

If you're enjoying these posts and would like to see more, please subscribe to our free RSS updates and follow Finance Trends in real-time on Twitter and StockTwits. 

Related posts: 

1. Inner Voice of Trading: a lesson on ego and risk.

2. Nassim Taleb and Stan Druckenmiller on coming crisis (Bloomberg interviews). 

3. Lessons from Hedge Fund Market Wizards: Steve Clark (full post series).

Jim Rogers on Street Smarts and outsized investing returns

 
Jim Rogers has a new book out called Street Smarts and he's out talking about it, along with a few other favored subjects. 

Here are a few highlights from his recent interview with Open Currency: 

1. Asked about Germany's repatriation of gold from American vaults, Rogers says they're right to do it and he's surprised they haven't done it sooner. Recently, the Federal Reserve refused the Germans an audit of their own gold, and according to Rogers "it's clear some of that gold has been lent out, or something, as it will take 7 or 8 years to move the gold." 

2. Nearly all governments are printing money, for the first time in recorded history. All major banks are "printing" and debasing their currencies, which brings us to Rogers' favorite safe haven - hard assets. 

3. We are destroying all the people who save and invest. People are getting wiped out because interest rates are zero and below the rate of inflation. Those who borrowed huge amounts of money and went bust are being bailed out at the expense of those who saved. This is disastrous for society.

4. Is it possible for this generation's investors to replicate Quantum Fund's investment returns of 4,200% over 10 years? Rogers says such returns are entirely possible for those who work hard and are great investors. Of course not everyone will do it, but "there's gotta be someone who is smart enough and ambitious and driven enough" to achieve that. 

5. His new book, Street Smarts, contains much of what Jim has learned over the years and reflects on many of the things he has done. Jim's thought processes, mistakes, and successes are shared, along with his thoughts on how the world will look over the next 10-20+ years.

I've just received a review copy of Rogers' latest book, and I look forward to reading it. Look for a follow-up post on Street Smarts in the near future. Until then, you'll find a whole lot more from Jim Rogers in the posts below.

Related posts:

1. Jim Rogers' case for the Asian century (at CFA Atlanta via Jeffrey Tucker).

2. Jim Rogers interview: lessons on life and investing.

3. Jim Rogers interview with UK's Channel 4.

Lessons from Hedge Fund Market Wizards: Ray Dalio

In our second installment of "Lessons from Hedge Fund Market Wizards", we'll offer up some trading and macroeconomic insights pulled from Jack Schwager's interview with Ray Dalio of Bridgewater Associates. 

You've probably heard of Ray Dalio if you have even a cursory knowledge of the hedge fund industry (or the Forbes billionaires list), so let's get right to it. These notes will fill in the rest of the story. 

1). Dalio is the founder and former CEO (now "mentor") of Bridgewater Associates, a fund that has returned more money ($50 billion) for investors than any hedge fund in history.  

2). Bridgewater still manages to achieve excellent returns on a huge base of capital and has done so over a long period of time. It is among the few hedge funds with a 20-year track record. 

3). Dalio believes that mistakes are a good thing, as they provide an opportunity for learning. If he could figure out what he (or someone else) was doing wrong, he could use that as a lesson and learn to be more effective.

4). His life's philosophy and management concepts are set down in a 111 page document called, Principles, which drives the firm's culture and daily operations. Identifying and learning from mistakes is a key theme. It also advocates "radical transparency" within the firm; meetings are taped and employees are encouraged to criticize each other openly.

5). "The type of thinking that is necessary to succeed in the markets is entirely different from the type of thinking required to succeed in school". Ray notes that school education emphasizes instructions, rote learning, and regurgitation. It also teaches students that "mistakes are bad", instead of teaching the importance of learning from mistakes. 

6). If you are involved in the markets, you must learn to deal with what you don't know. Anyone involved in markets knows you can never be absolutely confident. You can't approach trading by saying, "I know I'm right on this one." Dalio likes to put his ideas in front of other people so they can shoot them down and tell him where he may be wrong. 

7). "The markets teach you that you have to be an independent thinker. And any time you are an independent thinker, there is a reasonable chance you are going to be wrong."

8). Ray learned in his early working years that currency depreciation and money printing are good for stocks. He was surprised to see US stocks rise after Nixon closed the gold exchange window in 1971 (effectively ending the gold standard). The lesson was reinforced when the Fed eased massively in 1982 during the Latin American debt crisis. Stocks rallied, and of course, this marked the beginning of an 18-year bull market.

9). From these earlier experiences, Dalio learned not to trust what policy makers say. He has learned these lessons repeatedly over the years (much like our previous "Market Wizard", Colm O'Shea).  

10). Dalio vividly recalls a time when he was nearly ruined trading pork bellies in the early 1970s. He was long at a time when bellies were trading limit down every day. He didn't know when the losses would end, and every morning he'd hear the price board click down 200 points (the daily limit) and stay there. The experience taught him the importance of risk management - "I never wanted to experience that pain again".

11). "In trading you have to be defensive and aggressive at the same time. If you are not aggressive, you're not going to make money, and if you are not defensive, you are not going to keep money.". 

12). Bridgewater views diversification and asset correlation differently than most. As Dalio puts it, "People think that a thing called correlation exists. That's wrong.". Instead, he describes a world in which assets behave a certain way in response to environmental determinants. Correlations between say, stocks and bonds, are not static, but are changing in response to "drivers" (catalysts) that can cause assets to move together or inversely.

13). By studying how asset prices move in response to certain drivers, Bridgewater looks to build portfolios of truly uncorrelated assets. By combining assets that have very slight correlations, they are able to diversify among 15 assets (instead of 100 or 1000 more closely linked assets). This helps them cut volatility and greatly improve their return/risk ratio. 

14). We are currently in the midst of a "broad global deleveraging" that is negative for growth. Since the United States can print its own money, it will do so to alleviate the pressures of deflation and depression. The effectiveness of quantitative easing will be limited, since owners of bonds purchased by the Fed will use the money to buy similar assets. Dalio elaborates on our future economic course and possible policy approaches to these problems throughout the interview.

There's a lot more in Schwager's chapter with Ray Dalio. These notes just scratch the surface on Bridgewater's process and their quest for the Holy Grail of investing. 

There is also an addendum to the chapter containing Dalio's big picture view of long-term economic cycles and a historical "stage analysis" of the economic rise and fall of nations.

Be sure to check out this latest Market Wizards book (a very worthwhile read) and look for our upcoming posts for more "Lessons from Hedge Fund Market Wizards". In the meantime, you'll find more lessons and interviews in our related posts below. 

If you're enjoying these posts and would like to see more, please subscribe to our free RSS updates and follow Finance Trends in real-time on Twitter and StockTwits. You can also check out our related posts below for more market wisdom and trading insights.  

Related posts:

1. Lessons from Hedge Fund Market Wizards: Colm O'Shea.

2. Jack Schwager interviews on Hedge Fund Market Wizards.

3. Ray Dalio in Barron's: "It's a D-Process". 

4. Ray Dalio's 'Principles'.

*Photo credit: Ray Dalio Blog.

Marc Faber on the global economy, bubbles, and inflation

Marc Faber offers some forecasts for the global economy in this recent Dubai hedge funds world conference video. 

Faber makes 2 important points at the outset of this talk.

First, he notes that at the start of his career (1970) investment banks were all private partnerships. Not a one was a publicly traded corporation, whereas today most large banks are listed corporations.

As a result, the risk profile at investment banks has completely changed from the days when partners at investment banks were personally liable for other people's mistakes. Today, bankers risk other people's money and face no real consequences for their mistakes. In fact, they are often bailed out with taxpayer funds when they go bust.

Secondly, Marc points out that the (neo-) Keynesians want to make interventions in the capitalist economy and "smooth out" the business cycle with fiscal and monetary measures. 

In Faber's view, these interventions have actually made fluctuations in the business cycle more violent and extreme. As he puts it, "the Keynesians always try to address long-term structural problems with short-term fixes...with an emphasis on creating bubbles to "help" the economy. Whereas bubbles usually hurt the majority of market participants." 

Check out the full presentation above for Faber's thoughts on how to navigate our global course of negative real interest rates, understated inflation, serial bubbles, and centrally planned markets. 

If you're enjoying these posts and would like to see more, please subscribe to our free RSS updates and follow Finance Trends in real-time on Twitter and StockTwits. You can also check out our related posts below for more market wisdom and trading insights.  

Related posts: 

1. Marc Faber: final crisis yet to come (video).

2. Nassim Taleb on Anti-fragility.

5 predictions from 'Trader Vic' Sperandeo

Victor Sperandeo makes 5 "Frightening Market Predictions", as well as a few policy prescriptions for the USA in this Real Clear Markets piece. Here's a taste: 

"...1. The U.S. is going into recession.

This is being entirely caused by the woefully misguided fiscal policies of the Obama administration.

Their anti-business, socialist agenda is killing the "Golden Goose" (i.e. Capitalism). Raising the costs for small and big business via tax hikes, Obamacare, and massive regulation is in effect causing a capital "strike" by entrepreneurs. As a result, GDP is going to decline..." 

Recession is not the only thing on Trader Vic's mind. Head on over for a few thoughts on gold, the future of the EU, hyperinflation, and the global bubble in debt. 

Plus, a few key changes that may help the US fix its problems and change our course for the future (only wish Victor had some more time and space to really flesh these out). Check it out. 

Jeffrey Gundlach interview: deflation risk

Noted bond fund manager and DoubleLine founder, Jeffrey Gundlach speaks with FT.com about the economy, deflation risks, and his views on Treasury bonds. 

Some highlights from this interview:

• DoubleLine notes that the market has been affected by shifts in sentiment relating to potential inflationary outcomes vs. deflationary outcomes. Gundlach seeks to take advantage of pendulum shifts in sentiment by positioning his portfolio more into government bonds when everyone is focused on inflation, bucking the prevailing sentiment trends. 

• As unattractive as Treasury yields appear to be from a historical standpoint, investment managers should own bonds "even today" as a hedge.

• "I used to be an inflationist several years ago". Gundlach understands the printing-money-to-cover-entitlements view, but feels that this pro-inflation scenario is unlikely to happen without a crisis. Gundlach feels you will first see economic weakness and a societal trend towards reigning in deficit spending. Hence, deflationary arguments are at the forefront.

• Tremendous income polarization in the United States. This has often led to societal unrest. Hard times for working class vs. plush times for multinational corporations will lead to calls for increased corporate taxes. Expect lower PEs for stocks in that environment.

Catch the full take at the link above.

Banknotes as wallpaper: Weimar Republic, 1923

When Money Dies: Banknotes (Marks) as wallpaper. Weimar Republic, 1923.

*Photo via Wikipedia (Deutsches Bundesarchiv), Hyperinflation in the Weimar Republic. 

Related posts: 

1. FT interviews Adam Fergusson: When Money Dies - Finance Trends.

2. Dying of Money: Financial Sense Newshour special on inflation - Finance Trends.

Keep talking, Ben: US Dollar update

Listening to the Flamin' Groovies as the dollar burns. $USDXThu Apr 28 14:06:14 via webDavid Shvartsman
FinanceTrends

This is what's going down. Here's the weekly chart on the dollar index:

Wouldn't be surprised to see a new low on the index shortly, followed by a consolidation period and a months-long rally in the USDX. That seems to be the pattern, anyway, over the last several years. We'll be watching.

Wealthtrack interview with James Grant

Grant's Interest Rate Observer founder, Jim Grant sits down with Consuelo Mack for an interview on WealthTrack.

Topics include: the rising cost of living and commodities, the US dollar's decline, and the Federal Reserve's targets for "desired inflation". See what Grant has to say about all this, and more, in this discussion.

By the way, I don't think anyone who caught Grant's interview or Michael Burry's recent talk on America's financial condition was surprised by S&P's recent warning on America's AAA debt rating. Only the timing of the outlook revision might have come as a surprise, and even that may have been telegraphed to market participants earlier.

Related articles and posts:

1. Jim Grant and John Hathaway chat with Charlie Rose.

2. Jim Grant's latest interview with King World News.

3. Lew Rockwell and Jim Grant discuss Austrian economics, gold standard.

Features of the Week

It's been a while since we compiled a Friday Features linkfest, but we've got some great posts and news items to share with you today. Set a spell and enjoy our "Features of the Week".

1. Wikileaks confirms what we already know: Saudi oil reserves are overstated. (Al Jazeera).

2. Egypt unrest: how Mubarak's end came. (BBC News).

3. Mubarak resigns, but will he hold on to his estimated $70 billion stash? (FP blog).

4. The Perils of Intervention and a humbler American foreign policy. (C4Liberty).

5. An interview with Pimco CEO Mohamed El-Erian. (Der Spiegel).

6. Inflation is so much worse than we're told: Chris Martenson. (Financial Sense).

7. Q&A: Michael Lewis on the politicians that sank Ireland. (Vanity Fair).

8. Shades of 2006? Exchange fever takes hold as LSE-TMX merger followed quickly by NYSE- Deutsche Borse deal. (FT.com)

9. G.C. Selden trading psychology: hunches and gut feelings. (Tischendorf Letter).

10. Howard Lindzon interviews red-hot blogger, James Altucher. (StockTwits TV).

You can follow all our updates and tomfoolery in real-time via Twitter and StockTwits, or subscribe to the Finance Trends RSS blog feed and stay up to date with all our posts.

Have a great weekend.

New weekly high on S&P 500 $SPX

P/E multiple expansion, cheap money via QE, bullish psychology & social mood...whatever it is that's driving the market, US stocks continue to climb higher.

Today the SPX is down a bit midday, but as you can see from the weekly chart posted above, we're seeing a fresh weekly high in the S&P 500 as the index moves above its August 2008 resistance at the 1313 level.

Your take on the continued bullish action?

Is QE fueling commodity, food price inflation?

Is the Federal Reserve's quantitative easing policy fueling inflation in asset prices, including the price of commodities and foodstuffs?

That seems to be the big question in recent days, as civil unrest in Egypt and in other parts of the Middle East and Asia demonstrate how long-simmering tensions can quickly boil over when grain prices rise and the spectre of food shortages looms over a population.

The recent situation recalls the commodity and grain price surges of 2007-2008, when food stocks were diminishing and shortages and worries over food riots were a global phenomenon (and news item). Then, as now, grain ethanol and "excess speculation" were offered up as contributing causes to rising food prices.

Image via: FAO Food Price Index.

So what about the role of quantitative easing and increased money creation by the Fed and other central banks? Might that sort of liquidity operation be fueling a rise in asset prices across the globe?

Or are prices rising due to demand from increased populations and rising wealth in emerging nations as Fed Chairman Ben Bernanke would have it?

Last night, while reading through some interesting reactions to this topic on Twitter, I decided to do a little quick research and see what sort of answers I could find. As rising food prices and global inflation have been a big theme with economists and macro analysts in recent months, it didn't take long to find some worthwhile articles and posts addressing this topic.

One particularly interesting article from October 2010 anticipated a great deal of what we currently see unfolding in the world. Here's an excerpt from, "Bernanke sets the world on fire":

"...In 2007-2008, Bernanke's loose monetary policy fueled unprecedented commodity price inflation. But Bernanke put the blame on China and on oil producers.

So far in 2010, the price of crude oil has jumped by 27%, of corn by 63%, of wheat by 84% , of sugar by 55% , and of soybeans by 24%. Without the Fed's unprecedented loose monetary and near-zero interest rates, it would have been highly unlikely for commodity prices to increase at these alarming rates...

...The frightening food price inflation has raised the specter of another food crisis and food riots... Since liquidity for commodity price inflation is abundant and cheap, food price inflation could run up, stall world economic growth and spread social unrest. "

Certainly many other factors, including the use of food for ethanol, growing populations, increasing standards of living (changing diets), weather events, and gradual loss of prime arable land to urbanization are playing a large role in ongoing food price rises.

Still, is it possible that the role of cheap money flowing into asset markets (including commodities) is an under-acknowledged spark fueling higher prices?

Related articles and posts:

1. Bernanke says policies boost stocks, not food prices - Barron's.

2. Countering the myth that "World is running out of food" - Big Picture Ag.

3. FAO food price index and reports - United Nations, FAO.

They'll just change the rules

Inflation or deflation ahead?

Why, after the bursting of a massive credit bubble, do losses from defaulted debt go unrecognized? How is that we simply continue to hum right along?

Chris Martenson explains in, "Don't worry, they'll just change the rules":

"Suppose, for the sake of argument, that there is a world in which banks are allowed by their regulators to pretend their default losses simply do not exist. And, even more outlandishly, some of these banks are allowed to sell heavily damaged loans to their central bank at nearly their full original price.

What does "deflation" mean in such a world? Not much, as it turns out. At least from a monetary perspective, because money is not being destroyed at nearly the rate that would be expected or predicted by the size and rate of the defaults.

This is the world in which we currently live. Trillions in probable and provable losses quietly exist, out of sight, on the balance sheets of the Federal Reserve and other financial institutions. If they ever come out of hiding and onto the books, I think the deflationists will be proven correct beyond all doubt..."

Which brings Martenson to his next point: the "extend and pretend" game which favors the "too big to fail" (TBTF) banks is part and parcel of the trend towards changing the rules of the game at will. In this framework, what should happen may not transpire at all, or at least not for some time.

"...The theme here is simple enough: If and whenever the circumstances justify a major response, existing rules will be changed, altered, bent, or broken.

Because of this, I routinely argue that what should happen won't happen, at least not right away, and that there's really no such thing as investing anymore, only speculating -- unless you are a big bank, favored by the Fed, with advance information..."

Check out the full piece to hear why the rules of the game are constantly changing, and why we're all speculators (as opposed to investors) now.

Purchasing power of US dollar 1920-2009

The price of gold took a big hit today, something we noticed while having an interesting conversation about the dollar index and US dollar's recent strength (as measured by said index) earlier today on Twitter.


Still, we have to keep our eye on the big picture here. The long-term trajectory of the US dollar and its purchasing power, as measured against a constant store of value (such as gold), is down. Conversely, the longer-term trajectory of the dollar price of gold is up.

Food for thought.

Related articles and posts:

1. Bloomberg: weak dollar, inflation "illusory" - Finance Trends.

2. Dollar's purchasing power annihilated - Zero Hedge at Seeking Alpha.

Cotton, palladium, silver lead futures gainers YTD

Did some charting on Finviz yesterday and came across this relative performance chart of the year's top futures gainers (year-to-date).

As you can see from the chart, cotton, palladium, and silver lead the performance YTD. We all know gold's been having a headline-grabbing year (+25%), but silver futures have handily outpaced the yellow metal (+71.5%).

Interesting to note that lumber is up 40% YTD, second only to top-performing cotton (+93%) in the soft commodities group. Lumber futures had a very poor showing in '06 - '08 as the housing bubble collapsed and the homebuilders fell on hard times. However, we saw a pickup in '09 and the rebound seems to have gathered steam all through 2010.

Natural gas futures were a bottom-dweller this year, down (-)27% YTD. There were a few other poor performers, but for the most part we see green on this chart, reflecting a year of strong commodity demand and QE (money printing) operations in the US.

As Jim Rogers has pointed out many times in recent interviews and talks, cheap money will only fuel advancing prices of in-demand commodities in the months and years ahead. Stay tuned for 2011.

Jim Rogers at Reuters 2011 Outlook Summit

Jim Rogers said that the US government's inflation data was "a sham" and that interest rates would be heading "much, much higher" in the next few years while speaking at the Reuters 2011 Outlook Summit.

You'll find video of his chat w/ Chrystia Freeland at Investment Postcards or you can check the related video links in this Reuters article to see the full panel discussion.

As usual, Jim pulls no punches while discussing Ben Bernanke's foibles as Fed Chairman and the difficulties facing the US and European economies as inflation and runaway deficits take their toll.

He also points out some potential bright spots that could come about if the US government were to reduce its out of control spending and simplify (or do away with) the tax burdens on its citizens. Long term strength of the developing economies, commodities, and the rise of Asia are also highlighted.

Interview: James Grant & Co. talk gold with Charlie Rose

James Grant, John Hathaway, and Peter Munk sit down with Charlie Rose to discuss gold and the nature of our monetary system in this important roundtable discussion.

I was surprised and delighted to find that Grant & Co. would be Charlie's guests on Monday's program. The topic of discussion became even more newsworthy as the US dollar gold price hit a record high (in nominal terms) that same day.

But this is more than just a chat about a commodity hitting a new high. As you will see from James Grant's opening statements to Rose, gold is money and it has been for centuries. What we see in the rising gold price is a concurrent loss of faith in the viability of all paper currency systems worldwide.

This is the basic truth about gold and silver as real money and store of value that Rose and his audience need to hear.

Plus, John Hathaway, subject of one of our earliest posts, and James Grant provide some much needed counterbalance to the prevailing narrative of the 2007-2009 financial crisis and the Fed's ongoing money printing operations (aka "quantitative easing" & QE2). It's all here in this interview, one of the most important discussions I've heard at Charlie Rose's table.

Related articles and posts:

1. Lew Rockwell interviews James Grant: Austrian economics & the classical gold standard - Controlled Greed.

2. Jim Grant: Requiem for the dollar - Finance Trends.

3. The Gold Standard: an interview with Guilio Gallarotti - Finance Trends.

4. Quantitative easing explained (plain English) - YouTube via Finance Trends.

The Gold Standard: an interview with Guilio Gallarotti

Wanted to share this McAlvany podcast entitled, "The Gold Standard: An Unwelcome Political Restraint. An Interview with Guilio Gallarotti".

Hat tip to Maoxian, who noted that Jim Grant recommended Gallarotti's book, The Anatomy of an International Monetary Regime: The Classical Gold Standard, 1800-1914, to better understand the workings of a gold standard monetary system.

As I said on Twitter the other night, there are some fascinating insights offered by Gallarotti in this interview, particularly in his discussion of how universal suffrage politicized economics during the 20th century. I'm sure you'll find much more of interest besides, so tune in to the interview above and enjoy.

Quantitative Easing Explained (plain English)

Excellent and very humorous clip. Hat tip to Mises Blog.