The Present in Plain Text

The E-E: Playing Book Tag

As a favor to my friend The E-E, I figured I'd be polite and answer his call to know what I'm reading.

So here goes (and a public special thanks to both the E-E and an old friend PJL who both contacted my during my absence to remind me that I have done something good in my life....):

1. Total number of book I own: It's hard to say, most of them have been packed up in boxes for the past two years. I would venture a guess at around 400-500. My secret confession is that I'm a really bad reader, and while I love stories I don't like reading very much. If Capt. C.Vain had a blog (her placeholder LJ does not count) her entry on this would be much more interesting.
2. The last book I bought: The Politically Incorrect Guide to American History. Very fun and illuminating for this product of the public school system.
3. The Last Book I Read: The Writer's Journey by Christopher Vogler. Actually I'm currently re-reading this in an effort to restart my desire to write screenplays in my off time.
4. Five books that mean a lot to me: Just 5? Even for this avowed bad reader, there are a bunch of books that have single handedly changed the course of my life. Maybe, it's less that I'm a bad reader than that I'm a terribly picky reader. The Lone Mantis calls me a "Flighty Bastard" pretty regularly, and I tend to agree with him. So, for a me to read a book right now, it really needs to grab my attention and prey on my borderline OCD personality. Yes, flighty and Obsessive-Compulsive is not a good combination.... for those who are religious, say a prayer for C. Vain because it'll only get worse from here. That said, here are the five most important books to me:
1. UBIK by Philip K. Dick. Literally 180 pages of life changing words. I love this book almost as much as I love my dogs. I think I truly am the only person who celebrates June 5th as a holiday. I've probably read this book 20 times and I still find something new each time through it and as I get older it gets more profound.
2. Do Androids Dream of Electric Sheep by Philip K. Dick: You will begin to notice a trend here. DADES was the first book of PKD's I bought as a 13 year old. I never devoured a book before this in my life. It was like finding water in the desert. This book started me down the road that I'm still on today.
3. The Road to Serfdom by F.A. Hayek: When I first realized I was a libertarian, I read Atlas Shrugged. I burned through that book in a week (forsaking even watching hockey to *gasp* read... C.Vain nearly fainted). The last book I read prior to that (rereading PKD's A Scanner Darkly) took me six months. Atlas Shrugged left me feeling odd... there was something about it I didn't agree with. On the other hand, Hayek's book is a simple, straightforward expression of what people will do if given the opportunity to do so. I went through it at a methodical pace (probably three weeks) digesting and internalizing each chapter and the lessons therein. It is so wise it's unbelievable. By comparison Atlas Shrugged feels like a 'big, dumb book.'
4. The Gulag Archipelago by Alexander Solzhenitsyn: Now, admittedly, I've only read the fist half of Solzhenitsyn's three volume work, but, that doesn't matter. I started reading this as a teenager, around 17, I finally stopped picking it up around 20 or so. It was just too painful. For all of those people who are still Marxists out there.... read this and be ashamed of yourselves.
5. The Trial by Franz Kafka: "Like a dog!" are Joseph K.'s last words, and every time I see some petty tyrant lording it over someone and enjoying doing it, that's all I ever think of. It makes me really angry.
5. Tag Five People and have them do this on their blogs.
1. Daniel Franke: The most fascinating "youngling" I've met in the past five years
2. Thomas Knapp: A better communicator than I am and more committed to the cause.
3. The Ozark Rambler: A fellow Homespunner, Hank is a fascinating, unreconstructed guy. I'd love to see his thoughts on this.
4. Tex: @ Unfairwitness. A tireless worker in the face of the lies from Iraq. He's been very kind to me here as well.
5. Stephan Kinsella: LRC denizen and passionate defender of liberty. Also, a fellow Stephen R. Donaldson fan.

There are so many other great books to talk about.... It's hard to believe I left Collected Fictions by Jorge Luis Borges off this list or any one of a dozen other books by PKD. Zelanzy's the Chronicles of Amber, The Lord of the Rings, The Complete Wallace Stevens, Bug Jack Barron, The Gap Cycle by Donaldson...

and lastly, the novelization of the Star Wars screenplay, the first book I ever re-read, multiple times BEFORE I'd ever seen the movie..... but that, my dear readers (all 3 of you), is another post entirely.

Ta,

Francisco D'Greenspan ?

This week over at kitco.com Chip Hanlon has a great piece which starts by floating the theory that Alan Greenspan is the breathing embodiment of Francisco D'Anconia from Ayn Rand's Atlas Shrugged. This is of particular interest for me because on many an occassion I've half-facetiously thought the exact same thing myself. I just never had the courage to float that argument in public, preferring instead to keep such ideas bottled up in my living room.

The rest ofthe article does an admirable job of thying to piece together a rational scenario for what may happen with the U.S. dollar during the next few years. His underlying assumption is that the bond market is too smart to let a catastrophic scenario (like those promugated by members of the gold community) unfold if they have the power to prevent it. This is sage advice I think and a point of view that one should consider when placing bets on the future.

I, personally, am prone to catastrophic flights of fancy, being first and foremost cursed with both a vivid imagination, an ability to see to the root cause of a problem and a over-developed sense of the dramatic (something Capt. C. Vain accuses me of all the time). This leads to some very restless nights let me tell you.

So, Mr. Hanlon's words are the kind that should cause some sober re-examination of the state of the financial world. As always just FUD for thought.

Ta,

Interest Rates and Gold: Why Conventional Wisdom Isn't

Like the people who Lawrence Roulston describes in the following quote, I stopped reading this article about halfway through (b/c I knew what the rest of it was going to say):

In reality, the reaction in both the currency and bullion markets was more due to the perception than to fundamentals. Traders, in this era of Internet induced group-think, often click the sell icon on their screens before their eyes get past the first paragraph of a news story. The days of somber reflection seem to be long gone.

"A higher interest rate means a stronger dollar. A stronger dollar is bad for gold. Buy dollars. Sell gold." What else does one need to know?

In answer to Mr. Roulston's question, "Everything." This seemingly logical progression is simply not true when the actual data is looked at. There has been a substantial amount of work produced which suggests the real market psychology runs completely counter to this idea.

Gold does better in an environment of rising interest rates, not lower. Why? High risk ventures have to offer high rates of return to attract investment. Treasury Bonds are no differenct in that respect than corporate bonds. In essence, the direction of interest rates is inversely proportional to the investment community's confidence for the prospect for success. So, as long as interest rates are rising, and the political situation which gave rise to the weak currency conditions have not changed, then people will look for an alternative place to park their value while the investment currency rights itself (if it ever does). With the dollar falling sharply from 1.22 to 0.80, the price of Gold has gone from $255/oz to $430/oz. Nothing politically has changed and the baby steps by the FED indicate that they are actually aware that they haven't been selling bonds at the same rate they used to, and are adjusting their behaviour accordingly.

My strategy, is, simply to hold a reasonable amount of gold and silver at these fundamentally low prices until such time as someone at the FED 'pulls a Volcker' and dramatically raises interest rates (i.e. contracts the money supply) to balance out the books of the U.S. economy. When that happens, I'll liquidate my positions in gold and silver, which will have topped (at whatever that price may be... Jim Sinclair is talking $1650/oz gold) and buy T-Bills at that point.

Basically, when interest rates are rising, the Dollar is in a bear market. Therefore, Gold should be in a bull market. Once interest rates peak, the Dollar bull market will begin. At that point, gold will go back to being in a bear market.
You can always tell the end of a bear market... that is that moment when nobody (except you) wants to buy the thing that you are considering, stocks, bonds, gold, dollars.

So, at this point, with leg one of the Gold bull market complete, the question you should be asking yourself is, "Why don't I own more Gold?"

Ta,