Dow / Gold Ratio Drops to 9

Timing is everything sometimes. Since our little series on currency, gold has taken off like a shot, topping $1165 an ounce today.  The Dow hasn't been sleeping though this uptrend, moving up to 10450 today.  However, the Dow / Gold ratio has now dropped from 10 to 9 in a matter of one month.

Experts continue to tell us that the dollar will remain weak as long as the Fed continues its stimulus plan of low interest rates and printing currency.  The health care vote in the Senate this past weekend spurred gold into the latest uptrend as worries about where the money (~$1 trillion) to pay for the bill has yet to be debated.

Experts also tell us that the weakness in the dollar will turn when the Fed tightens money policy and the economy turns around.  However, when pressed for an answer on when that will occur, those experts have been hemming and hawing.  In fact no one in the government has stepped forward to even venture a guess.  In other words, the dollar will remain weak and there is no solution in sight on if or when it will strengthen again.

The gold bugs say that gold should move to $1300 with relative ease unless the government makes a policy shift.  That should push the Dow / Gold ratio down to 8 or less by spring 2010.  Commodity-based stocks should also perform well during this time frame.

A Time For Thanks, But Also For Giving

The 2009 holiday season is upon us and the lights are coming out and the annual shopping hustle and bustle has begun.  The economy has been through a lot and the experts tell us we are on the road to recovery.  Most of us have more to be thankful for this year than most. Things we took for granted the past decade now seem to have more meaning, such as a job or home or even just family.

However, this season will also be unlike any other for many.  Nearly 16 million are unemployed and nearly 750,000 families have lost homes due to foreclosures.  For them, the holidays will be quite subdued and even depressing. Therefore, I ask you please give to others in need this year to make this holiday season just a little bit brighter and give them hope for 2010.  While the government says they are helping, the true sign of American strength is people helping people, not government.  It can be a small donation, but to those receiving it this year, it can make all the difference in their lives.  Local food banks and Toys for Tots are my favorites to give to, but any charity that caters to those in need will be most appreciated.

May you and your family have a wonderful Thanksgiving.

India Chooses Gold over US Treasuries

In a stunning move today, India purchased 200 metric tons of gold from the International Monetary Fund (IMF) for $6.7 billion dollars. It is the largest single purchase of gold in nearly a decade. The move spurred gold up to a record high $1085 an ounce.

You can read more about this and its implications here:
http://www.bloomberg.com/apps/news?pid=20601012&sid=al7qXOH.bVn8

California Takes Bigger First Cut

The fallout from the budget debacle in California has two little surprises not widely publicized by the media:

Surprise #1: Income tax rates will increase by 0.25% across all income levels.

Surprise #2: Beginning November 1, California will increase the state tax withholding on your paycheck an extra 10%. For example, if the state was withholding $80 per paycheck, it now increases to $88. 

For those on tight budgets, this will only squeeze the taxpayer harder.

Read about it here:
http://www.ftb.ca.gov/aboutFTB/press/2009/Release_31.shtml