I’m writing this post on the edge of Labor Day Weekend here in the USA. This holiday was traditionally set up to honor the work of Labor Unions and Tradesman throughout the US (and Canada). As time has progressed, this day has come to honor the average worker (and is an excellent excuse to hop in the pool one last time before it closes, and grill up 20 or 30 lbs of cow.) This particular weekend has reminded me of something I have wanted to tell our readers for some time now.
Last September, I had a conversation with my Dad that went on for three weeks. During this extended conversation, I begged him to take his investments out of the stock market, and buy gold instead. I have to admit that much of my concern was for his future welfare. He’s done hard labor over his lifetime to build up a very modest nest egg, and I didn’t want the market to take away all of his years of toil. (“toil“, for the purpose of this article, is defined as: rising at 2am to hand-load a truck on your own, delivering merchandise, stocking the shelves with that merchandise, and finally getting home around 4pm, so you can get to bed by 8 to repeat the process, 5-6 days out of the week, 25 years in a row.)
That was the fear portion of the argument. The other half of was the opportunity that I saw for him to keep his investments stable, and/or realize a massive profit. Spot gold was hovering around $740 an ounce, and all predictions pointed to it reaching a new high within a few months. The good news was that it went much higher (somewhere in the neighborhood of $1040, if you bought the famous, 1 oz. “Golden Eagle“). The bad news is that he stayed with his stock, and took a small hit(he’s conservatively invested, at least). He could have made a massive profit, and moved out of those fickle investments.
Yes, as his son, I was disappointed by the fact that he didn’t take my advice. What upsets me more, is that there are millions in the USA(and around the world) in the same condition: They think all is fine with the World’s financial system. The dollar is safe. Cash is king. We may have to tighten our belts for a bit, but things are looking up. After all, isn’t the stock market on the rise? The world is in recovery, and everyone can return to the boom years of 2006, just after we get over this last hump.
Friends, there may be a few “green shoots” here and there, but they will be short lived. I say this as someone who has made 12-30% gains on most stocks he has held. The stock market is a lie, from beginning to end. It’s worse than quarter slots in Vegas. Do you know why the Dow is up? It’s an industrial average of the top 30 stocks. They get to pick and choose who is in there. Look it up. To make the Dow look like it was performing, they kicked long time DJIA staple General Motors out of the index. If you drop a stock that is in the toilet,and replace it with something that is doing moderately well, of course your average is going to improve. Top that off with the fact that the market is in the middle of what is known as a “sucker’s rally”. This means that people think things are returning to safe levels, put their money back in, and the bottom proceeds to drop out of the market.
So cash is king, huh? Maybe for the time being, until faith is lost in the dollar entirely. I know I have talked about China being a huge financier for our national debt here in the US. What I haven’t spoken about is our second largest creditor: Japan. This week, they had a major shift in leadership. For the first time, their Democratic party has taken power. Unless their position has changed since May, they have little confidence left in the USD. China, as we reported a few months ago, is converting their dollar holdings into assets. The only reason they are keeping the Chinese Yuan (or Reminri) down, is because their economy depends on exports. So, the only reason they continue to put up with us, is because it is in their best interests. Once that situation changes, we can kiss our chances of being back on the top of the economic heap “goodbye”.
As for tightening our belts, well, that’s actually part of the reason why the larger economy is still tanking. People are busy paying off debt, eating in more, renting a DVD instead of going to the theater. They aren’t taking vacation trips. According to AAA, travel this Labor Day weekend is going to be off by 15% or more. This would be a good thing, except for the fact that our economy (and the rest of the world) depends on America’s consumption of goods. There is another reason people are not consuming: They can’t afford to pay even the interest on mortgages and credit cards. Thus, all of their labors go to pay off existing debt, rather than consuming newer resources. Decreased consumption has the effect of killing of jobs. This is in turn, means that people either have to settle for less money at their current job, or face the prospect of no job at all…leaving them with less money for their growing credit card interest and bills.
You may be asking yourself at this point ” Why am I still listening to this sad sack?” or “I get it. Things are bad…are you getting to a point anytime soon?” The point is this: It’s Labor Day, and our labor has no value. The American worker no longer gets any respect, because their money is propped up by Asia, their car companies are owned by the government, and their houses are owned by the bank (which in turn, are owned by investors in Saudi Arabia.)
Last night, I helped my Dad load his truck at 8:00 PM, so he could start his route at 2 AM. His labors mean something to me. They provided security for my family, along with a few pleasures in life, like the family vacation. I am tired of my government, and the rest of the world devaluing his work through their bad decisions. This is why I plead with him to purchase gold. Not so he will retire rich, but that his labor may not be in vain.
That is my wish for all of you as well…That your labor be not in vain.
We wish you a blessed, restful, and prosperous Labor Day.
Until next time, we’ll be…
Signing off…
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