Because ALL over prices are climbing - food, foodstuffs, building raw materials, precious metals, industrial metals, oil, shipping costs. Take a look at the charts below. Needless to say, but I VEHEMENTLY disagree with Greenspan, Snow, and whomever tell me it ain't so….because it is so. And on top of that, engineers and managers, who have now become burger-flippers are soon to counted as "manufacturing jobs", if those in high places, would have their way. I hereby give evidence to the contrary, in the case of INFLATION .vs. THE PEOPLE.
CRB Index
What a pretty picture ! The longterm chart shows the old resistance around 260 taken solidly out with the thrust….and keeping well within the pitch-fork guides. At this point my gut tells me "this cant continue" but yet it's keeping strong. Why? Well, with the continued USD weakness, it takes more $s to buy "things", i.e. raw materials.
 It might have a blow-off top, consolidate a bit, and re-surge. But, right now the RSI is slightly overbought and thus may be ready for a pullback to its resistance (red line). 274 now / 185 (Jan 2002) = 48% rise But remember, Greenspan says there is no inflation.
Oil Index
Another pretty picture if you invested here - horrendous if you drive an SUV! Although approaching overbought, it was overbought in all of December as well - consolidated slightly - and kept charging. The longterm chart (below) shows a massive reverse head & shoulders thus could see an upward potential to 50$/bbl.
 Since December 2003 until now, 3 months, the index has risen 24%. Since Q1 2003 until now it has risen 42 % But remember, Greenspan says there is no inflation.
 Now if it goes sideways for a while, producing a parabolic tea cup & handle, this remains bullish as well - either way, looks bullish to me - and the histograms on the MACD look still solid. My guess though is that a consolidation will need to occur back towards the 50 dma, as it looks a bit over extended as shown by the RSI.
Silver & Ratio
Another pretty picture if you invested here - both in USD and EUR. It is now approaching 7 USD, and has, as I write this, crossed over 7 and pulled back to 6.95. Notice however, Silver has now separated from movements in Gold, and is acting more bullish. In 6 months Silver has risen 40% in USD terms. (5 x 1.4 = 7)
 This is in line with the falling Gold-Silver ratio (chart below), which implies it is more beneficial to invest via Silver than Gold, as it is rising faster. This has been the case since October 2003.
 Notice it has gone from a ratio of around 80 down to its current 57. That is a 40% advantage for silver over gold, in bullion terms. Now, we see that the ratio is well into oversold territory - so either silver needs to pull back or gold needs to hurry up and improve. Hard to say right now. The USD is putting on a good bear rally - which tends to cap the gold upward moves - so I am biased towards a 50/50 move right now - gold up a little - silver consolidate a little - but not too much either way. The USD looks lightly weaker right now - at least for some coming weeks. But remember, Greenspan says there is no inflation.
Gold in EUR
Gold/EUR ratio has risen near 4x in the last 3 years. This goes in conjunction with the 30% drop of the USD vs. EUR since Jan. 2002. What the picture tells me is that Gold in EUR terms is not yet so attractive for EUR based investors, as is evident in the recent breakdown of the bullish teacup & handle. In my opinion it is only a matter of time before Gold starts moving against all major currencies and not just the USD. That will be the time when Gold is acting like a currency and not a commodity. The world is awash in USDs, and exporters who buy USD denominated instruments, such as US Treasuries, are only increasing their own currency devaluation - in other words, it's a race to devalue to save the foreign exporters. That will end abominably, as it spreads the USD risk to all parties and hence risks a worldwide meltdown. Something which cannot go on forever doesn't.
 Remember Epicitus, who said, "The extreme of any position will ultimately become its opposite". Greenspan says we don't have inflation - yet every chart tells a different story. A rather strong & evident different story. The position in reality is now the opposite of what the Fed and the government keeps telling you. Now, whom do you believe, Greenspan or Epicitus ? 8 March 2004 Der Invest Informant based in Berlin, Germany Editor/Publisher : Randolph Buss derinvestinformant@yahoo.de Der Invest Informant - supplying you with information and opinion about the markets Further dissemination of this document is legal but must contain the full title, date, editor's name and full email address. Otherwise please contact the editor for express written consent. This document is intended for informational purposes only. DII is not a registered financial advisor. All feedback is gladly accepted (good, bad, indifferent) The DII is a free newsletter. If you would like a FULL version, please
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Inflation
vs. The People
If
you believe the government, your costs have
not risen in the last years. That is because Greenspan and
Co. have come with wonderful terms like cost-averaging,
the productivity factor, least-cost replacement, etc.
which have certainly been statistically verified by hoards
of mathematicians locked up in solitary confinement for the
last 3 years. Now those guys are dangerous
! To your financial health. If you happen, like me, to live
in the non-Greenspan world, then you have noticed your
pocketbook getting a bit tighter.