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March 12, 2004

"Hong Kong Fighter Pigs"
by John Mackenzie

The past few weeks have blended into an endless tug of war, an epic battle of "Paper" over "Resources". The Gambit must be far larger than assumed as it's now no longer a skirmish largely held in check in the shadows. This war is being waged in broad daylight.

Volatility, across the Market Spectrum, is increasing dramatically and it implies "Risk".

Crude Oil continues to remain an open wound for the "Global Economy", as our economic "Artisans" barely mention the impact of rising Crude prices on the illusory "Recovery" fable.

The U.S. Apres-Industrial, Financial Economy depends largely upon the Good Will of Oil Producing Nations willingness to accept increasingly devalued Dollars for a dwindling supply of "Cheap and Accessible Oil", without it we will grind to a halt.

Our "Value Added" as a member of the International Community mutates daily within the acceptable Financial Matrix as Dollars, re-cycled through the Treasury Mill, become an ever distant "Promise of Repayment".

This becomes readily apparent as the broad Indices Plunge have not "Damaged" the Commodities Complex. Commodities are holding firm and appear to be consolidating for a far larger move as "Resources" begin to assume control from their "Paper Shackles".

There hardly exists a more predictable and transparent "Intervention" than in the Gold and Silver markets. This daily affair no symbolizes just how much is at stake. Honest money cannot be allowed to "Perform" as such. A significant risk to these markets must be right around the corner... had the Producer Price Index been released on time, it may very well have sent the Metals Complex Skyward and the Bond Market into a tailspin.

With so much at stake there is little doubt "Price Inflation" can be allowed to rattle the "Interventionist Gambit" currently underway. "Nothing to see here, please move on..." the current mantra remains in check, for now.

Unfortunately for the "Interventionists" the "Facts belie their Truths".

Incompetence is merely another "Sideshow".

No matter how the Federal Statisticians obfuscate the adjustments, the real issues remain since the prior PPI report:

- ISM Prices Paid Index is at a nine year high.

- CRB is at a twenty year high.

- Crude Oil is up 10.4%.

Cause with no effect is rarely masked for very long, not at this late stage of the "Interventionist Gambit".

It would appear there is no real end in sight for the rising trend in Resources even as the Dollar has gained strength. There are simply far too many Dollars being pushed around the plate like Jello.

How long can this go on?

It will continue until it no longer can and that day appears to be rapidly approaching.

An "Event", is going to give way and topple the "Great Game". I'd venture a guess though... "It" will come from the East.

I continue to be a buyer of Physical Gold at these Levels as I envision a time in the not too distant future where "Real, Honest Money" free of its bonds, will be demanded as "Payment" in competition for ever scarcer resources.

John Mackenzie

John Mackenzie manages private capital - Email: m2jrmfl@bellsouth.net

Copyright © 2004-2005 John Mackenzie

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