Good Morning:

More Deflation Talk, The Goldman Settlement

More Deflation Talk

An article today titled 'The article is written by Edward Harrison, the 6th most 'followed' contributor of articles to Seeking Alpha (+44,500 followers).Mr.www.stockresearchporta..., a resource investment website I continue to develop) and am increasingly considering the possibility of near-term deflation and the possible consequences to resource prices (including the gold price) and resource stocks. Harrison is the founder of the blog

I am also becoming increasingly skeptical of the veracity of Government Statistics generally, and wonder if we are going to wake up one day (perhaps sooner than later) to one or more negative world economic events that result in the 'frying pan' tipping us unexpectedly directly 'into the fire' .

I am particularly attracted to Mr. Harrison's reference to 'crony capitalism on the one side with bailouts and record bonuses all around for bankers' with 'massive budget deficits and a still weak economy and employment outlook' on the other end of the teeter-totter. I see fundamental wrong and nothing good in this, and think at some point 'the piper will have to be paid' for this continuing imbalance.

You will note the reference in my comment to deflation in the context of resource and resource stock prices.As only one example, it seems to me that the stock price of a company owning the best unexploited copper/nickel deposit in the world is unlikely to do well in a deflationary period.

That said, I plan to think hard about the likely effect deflation will have on resource prices and stocks over the next two weeks.I will pass my thoughts on in these e-mails as I develop them.

The Goldman Settlement

Last week it was widely reported that that Goldman Sachs had agreed to pay U.S.$550 million in exchange for the U.S. Securities and Exchange Commission dropping fraud allegations against Goldman related to a 'pre-September 2008 'sub-prime mortgage portfolio offering'.

I doubt that in the first instance the SEC alleged fraud in order to generate a fine.Presumably the SEC had reason for, and believed in, its allegation or it would not have made it.Assuming that to be the case, for whatever the political or economic reasoning of the U.S. Government, the case against Goldman will never be heard.

It strikes me the U.S. (and I am not sure we in Canada are much better) increasingly live in a world of 'moral compromise'.Although I do understand the practicality of this in many instances, I don't see how that can be a good thing economically or otherwise going forward.

In the meantime, whether Goldman likes it or not, it seems to me this 'Goldman Matter' can't but cause U.S. Main Streeters and investors generally to have other than 'less than good and fuzzy feelings' toward Wall Street than they had prior to the SEC publically making allegations against Goldman as it did.

StockResearchPortal.com