Dear Comrades In Golden Arms,

As we approach the New Year it seems the party has already begun, and the commentators are all full of spirits. I can't find a bear in the woods.

According to them the equity market is going up, the dollar is going up, commodities are going up, and even lip service is being paid to gold, but lip service only. The conviction being blasted out there is a line up of former pro-gold guys like Faber and Rogers. Today they rolled out Barton Biggs for his bullish equity-bullish dollar forecast. Soros and Buffett have already made their contribution to a dollar rally.

Now go back to February of 2009. You could not find a bull on anything anywhere. I did an interview for a major F-TV station where I specifically said that the bottom of the equity market would occur in March 09. Even the interviewer argued with me.

Right now it is the absolute opposite even though the economic improvement given as green shots do not equal the real rate of inflation at the checkout counter.

In my opinion, the economy as a result of unprecedented stimulation is simply bottom bouncing, an experience seen in 1932.

I am posting this interview so you can travel back in time to witness the absolute opposite of the present pep rally for everything tradable that is taking place.

I do not buy this spirited party but it is damn lonely out here.

I take comfort from having seen the best of my friends in full retreat in the 70s, leaving me out there looking like an army of one.

With credit card write offs (more than 90 days past due - no payment) rising today above 10%, and unemployment staying high this recovery looks more like bottom bouncing lacking the proper input to adjust for inflation at the checkout counter.

Asia is a different story because their stimulation was more towards business than the banksters. They execute, not bail out, banksters.

As I see it gold will return and better $1224 then move on to $1274- $1278 before visiting $1650.

I would bet on Alf and Martin's numbers more than mine.

Respectfully,
Jim

Later