Well, chaps, New Year is nearly upon us, and inevitably that means the new models for next year will shortly be officially announced. Already things are looking exciting. Kernow have their Beattie well tank and Hastings DEMU on the way, Bachmann have promised us a Robinson O4 (not a moment too soon), a Cravens DMU, a retooled Class 03 and a 2-EPB EMU. Dapol have a Class 22 on the way. Even Model Rail are getting in on the act with their Sentinel shunter, something I’ve often thought would be a good choice in ready-to-run, although that’s partly because I like small, quirky locomotives. Roco have their OO9 Double Fairlie on the way, pioneering ready-to-run British narrow gauge in 4mm.

I think the most interesting lot of models, certainly if you’re a diesel person, is in Heljan’s range. We’re promised Lion, the Class 23, the Class 14, the Class 15 and, rather out of left-field, models of all four types of four-wheeled railbus used on British Railways (AC, Park Royal, Wickham and Waggon und Maschinenbrau).

There’s even an all-but-confirmed rumour that Bachmann are to bring out a ready-to-run City of Truro. Everyone’s sworn to secrecy at the moment, but here are the facts as reported in the modelling press.

• Bachmann is producing a top-secret model.
• One of the major manufacturers has been developing a model of City of Truro in secret.
• Bachmann produced a hugely successful model of Deltic for the National Railway Museum and have been looking for a follow-up.
• They carried out a poll and City of Truro was the National Collection locomotive most wanted.

Basically, this is the worst kept secret since Watergate. I look forward to it, I think City of Truro is a fine and elegant locomotive and I have no doubt that sales will be through the roof, particularly if they produce it as it looked when performing railtours in the 1950s.

No word on Hornby’s programme yet, so I’ll no doubt be scouring their website as intently as is possible with a roaring hangover on New Year’s Day.

So, what’s next for the major manufacturers? Well, frankly, I think all bets are off. Take a look at the list above and take a look at some of the models we’ve already had in recent years - the ‘Clan’, the 4-CEP, Falcon, Kestrel, Deltic, Class 17, Q1, T9, the Devon Belle Observation Car. These are models that, not too long ago, would have been considered risky if not downright insane for anyone to produce ready-to-run. Yet even the economic climate hasn’t slowed the flow of oddities. So, these would be my wild guesses.

• The Class 35, better known as the Metrovick Co-Bo, better known still if you grew up with Thomas the Tank Engine as Boco. It’s the really obvious gap in the diesel range at the moment.
• DP2, the super-Deltic produced in the 1960s. No more ridiculous than some of the one-offs Heljan has been producing, it was basically a regular Deltic externally. Bachmann, over to you.
• Duke of Gloucester. A one-off, but it’s an obvious gap in the range of BR Standards. It’s back in the news at the moment and, of course, has done extensive work in preservation.
• Come to think of it, the other BR standards, namely the 3MT 2-6-0 (i.e. the tender variant of Bachmann’s recent tank) and the 2MT 2-6-0 and 2-6-2T.
• Upgraded GWR coaching stock. Given Hornby’s upgrade of their Castle class, this is an obvious accompaniment.
• An upgraded GWR King. Generally, upgraded GWR stuff.
• Hornby, I have no doubt, will continue to expand the Railroad range. I’d imagine the old Castle and Schools class will find their way there. There’s a fair bit of Lima that would go quite well there, I’m hoping to see the LNER J50 and GWR 94XX.
• Electric traction is obviously neglected at the moment. So, BR Classes 81-85, the EM1 and EM2 for Easterners and the Class 71 and 74 for Southerners. I note that Hornby have been advertising catenary recently – preparing the ground?
• Obviously it depends how sales of Bachmann’s new 4-CEP go, but it does seem to be the dawning of the age of the old-skool Southern EMU at the moment. I would imagine a pre-war unit such as a 2-HAL to be a good choice, as it complements existing models but is reasonably different in outline.
• People keep on asking for the Blue Pullman. Will someone finally grant them mercy?
• Hornby have re-released the Dean Single and Caledonian Single in a number of guises. The one veteran from the Triang range that hasn’t been re-released is Rocket. Could this be its year?

Those are just my guesses for now, but as I say, nothing is too ridiculous at the moment. Nothing at all.

The year is coming to an end so maybe its now time to consider the greatest scientific breakthrough for 2009. Luckily the journal Science recently published its list so I can comment on that instead of trying to come up with a list myself!

According to Science, the greatest discovery this year was the reconstruction of the fossil of Ardipithecus ramidus. This is a 4.4 million year old fossil of a human ancestor. In fact, to be more accurate the specimen represents an individual who made up part of the human ancestral tree. She could have easily been from a branch which later went on to extinction instead of being in the branch which lead to modern humans.

That detail isn’t critical though because we should expect a lot of specimens which aren’t ancestral to us. After all, natural selection is the major process which evolution uses so we would expect for the unsuccessful variations which didn’t survive to be in the majority. So “Ardi” isn’t necessarily a missing link as such (missing link is a very imprecise and misleading term anyway) but she is part of the evolutionary process which lead to modern humans.

Any new piece of news in the field of human evolution is generally greeted by some feeble attempt at refutation on the creationist web sites and this one is no exception. Actually, the two articles I read make an even weaker attempt that usual at discrediting this discovery. One article doesn’t really say anything except make some sort of promise at answering this awkward question in the future. And the other makes several false claims, such as evolutionary reversals being “virtually impossible” and the distinction between different species of early hominids being relevant to the science as a whole.

Anyway, moving on. The other important discoveries of the year included these…

The Hubble Space Telescope being “reborn” (not the word I would have chosen!) Further repairs and modifications were carried out this year and the HST is working better than ever. Those magnificent pictures are important from a scientific perspective, of course, but maybe are even more important because of the reaction many non-scientists have to them. As I have said in past blog entries, science is currently suffering from a lack of respect from the public but at least these HST pictures have had some positive impact.

Graphene molecules being used in materials science. New materials and other nano-scale science will be very important in the near future. Nanotechnology and advanced bottom up chemical synthesis techniques are sure to revolutionise many areas of technology.

The others were: pulsars in the gamma-ray sky, how plants use ABA receptors to get through stressful times, mock monopoles spotted, drugs that eventually could lead to life extension for humans, ice discovered on the Moon, gene therapy becoming successful again, and the first X-ray laser.

I woud like to add the successful restart of the Large Hadron Collider to this list. All science geeks were disappointed last year when LHC failed and needed extensive repairs. It now seems to be progressing well and next year should lead to some genuinely basic breakthroughs from this machine which is the greatest science experiment and the biggest and most complex machine ever made.

I hope the LHC does lead to some significant results in the area of fundamental particle physics because there are several things I really want to know! Let’s start with dark matter. I really need to now what that is. And dark energy is even weirder so I would be prepared to wait a bit longer before that is understood. Oh and let’s get the Higgs boson sorted out, can we? I really want to know if it exists otherwise let’s figure out which other theory explains the existence of mass.

I’m by now means the first blogger to comment on this story. ToryBear among others certainly got there first, but as far as speculative Xmas presents go, this is quite a treat.

Peter Mandelson considering a mayoral race against Boris in 2012. That some of the rumours come direct from the Livingstone camp is enough to give them at least the slightest plausibility – they were a friendly tip-off as Red Ken put it. This could line up to be a very exciting contest if all falls into place and all rumours are true. First we see a Labour contest for the candidacy between Red Ken Livingstone and New Labour Blairite (or Brownite) Mandelson – the mother of all ideological divisions within the party. Given that Mandelson even running is dependent on an admittedly likely General Election defeat in 2010, these ideological divisions are likely to be both more prominant and more evenly matched in opposition. Which way the candidacy goes may very well be indicative of which way the party itself will go in opposition – will we retain our New Labour heritage, or will we cast it off and lurch wildly to the left?

Needless to say, I’m firmly within the Mandelson camp, and I believe that the party as a whole would be – at present. Ken really should know when to throw in the towel – this will be his 4th London mayoral contest in a row, not to mention his previous career in the Greater London Assembly of the 1980s. Londoners who rejected him in 2008 are not going to welcome him back with open arms in 2012, even 2016 would be a push. If it comes down to a choice between them, I see the party favouring Mandy as by far the more electable of the two. That said – could either of them beat Boris?

Boris may not be popular in Labour circles – for partisan and non-partisan reasons. I’ve certainly stuck my neck out previously in supporting him. He’s currently less than half-way through his first term, certainly within the honeymoon period. While a broadly unpopular Labour government remains in office, Londoners will find it far more natural to direct their anger towards No 10 than they will towards City Hall. If Labour wins a 4th term, Boris will be impossible to topple – firstly Mandy will still be First Secretary of State, leaving Ken as the most prominant challenger – to go from unlikely or phyric victory in 2010 to a capturing the London Mayoralty from the Tories is almost beyond implausible.  Boris is currently the most powerful elected Tory in the country – perhaps he secretly hopes that this scenario continues.

And if the Tories win in 2010, or there is a hung parliament, Mandy may indeed be free to run. But again, many of the same factors will still be in play. Boris would have to do something significantly unpopular to lose his current support levels. Similarly, only if the Tories cuts were to disproportionately hit Londoners would they turn on Boris. What’s likely is that those voters most hit by a public finances squeeze were not those to vote Tory in the first place. Both Mandelson and Ken are more tainted by association from their previous careers than Boris -a relative newcomer to high office. Voters are not going to throw out a New Labour government only to return one of its most prominant and recognisable standard bearers to office. Career-wise, Mandy should at least wait until 2016, by which time the Tory cuts could really be starting to hurt and the mistakes of office be building up, before running.

Add to this the likelyhood that if Boris is to step down it will be in 2016 rather than 2012. His alledged Prime Ministerial ambitions would be better served by such a delay. Plus leaving London so soon would hint of a Palin-eques lack of commitment to elected office – potentially damaging to a westminster bid. While he the only Labour politician I can think of that I would support over Boris, Mandy should wait until the blonde bombshell is safely out of the way to be in with a chance of victory.

Let Ken have his shot in 2012. A second, inevitable defeat will hopefully finally end his career. Unless Cameron can finally persuade Sir John Major (or someone of equal profile) to take the Tory candidacy in 2016, Labour and Mandy will then have the upper hand. If Mandelson can make a comeback after 4 years in Europe, he can certainly return from Oppositon and the ashes of New Labour to take London.

Mandy for Mayor, just wait a while first.

Joseph, the earthly father of Jesus, only appears in two biblical books. And even in those books he is a very minor character. In fact, he disappears completely after the brief story of Jesus at the Temple at the age of 12. By the time Jesus subjects himself to John’s baptism at the age of 30, Joseph is long gone. We never hear of him again. The text never offers us insight into why he is gone or what has happened.

New Testament scholars speculate about this, but the dominant opinion is that Joseph died sometime between Jesus’ 12^th year and his baptism around the age of 30. There’s a story here about which the gospels are mute. But even their silence, when a character simply disappears into thin air, a good story teller wants us to speculate – and the gospel writers are good story tellers! They do this because in such speculation they want to reveal something incredibly important about their Main Character:

When Jesus comes in the form of a baby on that Christmas some 2,000 years ago, he does not come as a divine spirit detached from the common pains and hurts of human life. He comes in human flesh, in a broken world, in a godly family – yet one that still labors under the wages of sin.

In this sin-stained world, Jesus experiences the death of his father. His human experience is so full and so real that not only does he take death upon himself, but he takes on the pain associated with experiencing the death of his dad – one of the most vulnerable and intimate of all human relationships! He is not so far removed from human experience that the only time he ever feels pain is on the cross. If Jesus wept when Lazarus died, I imagine he nearly had a breakdown when Joseph died.

And because of that, he can sympathize with me. With us.

For all the joy Christmas will bring this year, it will also bring much sadness for many people (I just read the obituary of a 6 day old baby). For all the peace Christmas will bring, it will also remind many families of their loved ones in Iraq or Afganistan. And for all the families Christmas will bring together, it will also remind many of us that our families have experienced a separation that can never be mended.

In the midst of this kind of pain, Christians have more on our side than sentimentalism and clichés.  We have an incarnate God who experienced human frailty, the worst of human disorientation, and the deepest of human depression. We have an incarnate God who can sympathize with our weaknesses, our fear of death, our times of disarray, and our feelings of loss. He became one of us, not only to save us (great as that is!), but also to know fully what it means to be human in a broken and chaotic world. The cross was the culmination of a lifetime of pain (that’s why he is the ‘man of sorrows’). Because of his participation in the universal human experience of seeing a loved one die, I know that Jesus can help me as I struggle with that same reality.

With a broken heart I can do nothing but offer praise to such a God as this!

(CFD.net.au – Contract for Difference, Share, Forex, ETFs, Commodities Traders) – today is the euro’s drop, and the central bank’s announcement should help the peso revert to a weakening trend,” Barney said. “The inflow of government dollars has stopped so we don’t have a big offer of dollars in the local market. Under this scenario, the central bank’s intervention intervention will be much more effective in weakening the peso than if it were fighting against the current.” The peso plunged 1.6 percent to 1,948.70 per U.S. dollar at 4:19 p.m. New York time, from 1,917.95 on Oct. 23. It touched 1,949.9, its weakest level since Sept. 21. The peso has Dropped 4 percent in the past week, the most among currencies tracked by Bloomberg, on speculation the central bank would act to curb gains. Should the peso weaken beyond 1,950, it will decline to 2,000 as early as this week, Barney predicts. The dollar advanced from a 14-month low against the euro on speculation the dollar’s decline beyond $1.50 will be hard to sustain. The dollar climbed 1 percent to $1.4865 per euro. Inject Cash Colombia’s government on Oct. 15 said it will refrain from selling dollars in the market for the rest of the year after expectations of higher dollar inflows helped push the currency to its strongest since August 2008. President Alvaro Uribe this month urged the central bank to find a “solution” to the gains in the peso, which he said has caused exporters to cut jobs. Policy makers said in their Oct. 23 statement that the purchase of dollars and peso bonds, known as TES, was to inject cash into the financial system. They also left the benchmark lending rate at a record low of 4 percent at the meeting that day. The central bankers didn’t disclose how much of the up to 3 trillion pesos would be spent on buying securities and how much on purchasing dollars. “I’m seeing demand from local pension funds buying dollars today,” said Daniel Arguelles , a senior currency trader at Bogota-based brokerage Corredores Asociados. He expects the peso to slide to 1,990 per dollar in the next few days. Colombian bonds rallied following the central bank’s announcement. bolivar Weakens The yield on Colombia’s 11 percent bonds due in July 2020 fell 17 basis points, or 0.17 percentage point, to 8.42 percent, according to Colombia’s stock exchange. “Even though you don’t know exactly how much the central bank will buy in bonds, whatever amount it does buy will favor the market,” said Camilo Perez , an analyst at Banco de Bogota SA, the country’s second-biggest bank. “That’s what we’re seeing in the yields today.” Venezuela’s bolivar weakened 1.3 percent to 5.3 per dollar in unregulated parallel market trading from 5.23 at the end of last week, traders said. Venezuelans buy dollars in the parallel market when they can’t get government authorization to purchase them at the official exchange rate of 2.15 per dollar. The bolivar fell after terms of a bond sale by state oil company Petroleos de Venezuela SA disappointed local investors, Henrique Tejera , director of Unicapital Casa de Bolsa CA in Caracas said in a telephone interview. The implicit exchange rate resulting from selling the securities abroad was higher than the rate in the parallel currency market, he said. ‘Illogical’ “The fact that the bonds are being issued under local law means that investors abroad are pricing the bonds lower,” Tejera said. “It’s illogical to offer bonds at a higher rate than the parallel rate.” PDVSA, as the oil company is known, sold $3.26 billion of bonds due in 2014, 2015 and 2016 that can be bought in bolivars and sold abroad for dollars, according to a statement today posted on the company’s Web site. In Chile, the peso slid 0.4 percent to 534.45 per dollar, from 532.50 at the end of last week. The yield for a basket of Chile’s 10-year peso bonds in inflation-linked currency units, called unidades de fomento, rose eight basis points to 2.93 percent, according to Bloomberg composite prices. Argentina’s peso weakened 0.1 percent to 3.8235 per dollar from 3.8208 at the end of last week. The yield on the nation’s inflation-linked peso bonds due in 2033 rose two basis points to 11.82 percent, according to Citigroup Inc.’s local unit. Peru’s sol declined 0.7 percent to 2.8890 per dollar, from 2.8690 at the end of last week. The yield on the country’s 8.6 percent sol-denominated bond due August 2017 rose two basis points to 4.84 percent, according to Citigroup. To contact the reporters on this story: Drew Benson in Buenos Aires at abenson9@bloomberg.net ; Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net Last Updated: October 26, 2009 17:44 EDT Colombian Peso Drops to Five-Week Low on Dollar Purchase Plan – Bloomberg.com

Source: By Drew Benson and Andrea Jaramillo Oct. 26 (Bloomberg) — Colombia’s peso fell to a five-week low after

Bank of America Corp on Wednesday tapped insider Brian Moynihan as its next chief executive, ending months of speculation about who would succeed Kenneth Lewis to lead the largest U.S. bank.

Source:
http://www.reuters.com/article/idUSTRE5BG0AG20091217

China’s leaders are becoming increasingly alarmed that a bubble may be forming in the country’s booming real estate sector.  That’s why, late last week, they announced the reimposition of a nationwide property sales tax in an effort to rein in speculative buying.  But while their intentions are sound, the new tax takes China in entirely the wrong direction, and is more likely to make the problem worse rather than better.

To understand why, it’s important to realize what the new tax is and is not.  It is not a “property tax” as understood in most Western countries, i.e., an annual tax on the value of property holdings.  China’s government has often announced its intention to impose such a tax, but each time the move has been postponed due to the panicked opposition of real estate developers.

The policy announced last week is a transaction tax.  According to the Financial Times, it “requires anyone selling a secondhand apartment or house within five years of its purchase to pay a sales tax of 5.5 per cent.”  Previously, the same tax had been imposed only on owners selling within two years.  The idea, in both cases, is to discourage speculators from buying residences with the sole intention of selling (or “flipping”) them for a quick profit, rather than to live in.  Such practices were highly prevalent in the U.S. in the past couple of years and played a key role in contributing to the formation of the real estate bubble and sub-prime mortgage crisis there.

In China, however, “flipping” is not the problem.  Some people may be engaged in short-term ”flipping,” but as I’ve described in my FEER article “China’s Real Estate Riddle,” a lot more are buying residences — in many cases multiple units — and holding them vacant indefinitely as an unproductive ”store of value,” like gold.  As I mentioned in my article, the Financial Times estimates that there are 587 million meters of apartment space that buyers have purchased over the past five years only to leave lying empty (for a concrete notion of what this statistic means, take a look at Al Jazeera’s report on Ordos).  This puzzling phenomemon is due to the fact that Chinese citizens have relatively few investment options, and China’s real estate sector (unlike its stock market) has never experienced a sustained downturn since the country converted to private home ownership in the mid-1990s.  The fact that China has no annual holding tax on property means there is little penalty for letting property lie idle, in the hope that it will appreciate or at least retain its value.  The result is an inflated market where the demand for property as a pure investment vehicle far outstrips the demand for affordable, usable space.

If people were trying to “flip” their properties, that might actually be a good thing.  At the very least, it would mean those residences would have to be brought onto the secondary market and priced.  What we see in China, though, is an extremely weak secondary market.  In the U.S., the ratio of secondary to primary residential property transactions for the first half of 2009 was 13.45; in Hong Kong it was 7.25.  In China as a whole, that ratio was 0.26 (four times as many new home purchases as secondary sales).  Even in China’s most developed markets the ratios were just 1.30 for Beijing, 1.56 for Shanghai, and 1.35 for Shenzhen.  [Keep in mind that an immense quantity of existing housing stock was privatized in the 1990s, at nominal prices, so the explanation cannot be simply that China is a "new" market -- China actually has a higher rate of established home ownership (80%) than the U.S. (70%)].

The way I read these figures is that an immense amount of new housing is being purchased and accumulated (in a vacant condition) off-market.  Nobody has any idea what it is actually worth because there is little urgency to offer it, to end users, on the secondary market and actually see it priced based on their demand.  If investors were at least trying to “flip,” we might find out, but they’re not, and so prices for new residences (especially on the high-priced luxury end) continue to rise without anything to bring them back down to earth.

What China desperately needs is an annual property holding tax, like in the West, that imposes a hurdle rate of return — effectively, a penalty for allowing property to remain idle.  What it is getting is a sales tax that gives buyers an incentive to let their property lie idle even longer, and withhold it from being priced on the secondary market.  The fact that this tax is being adopted as a temporary measure — a bid to calm a momentarily overheated real estate sector — rather than a permanent change only gives investors a further incentive to hold onto their vacant properties longer to try to wait out the government’s mood.

If China’s real estate sector were experiencing a typical bubble, where assets are being rapidly flipped higher and higher until the music suddenly stops, China’s new property sales tax would make eminent sense.  But this new policy misdiagnoses the problem, which is that property is being accumulated and left idle, indefinitely, as a store of value.  As long as that property remains off-market, and is not compelled to be priced based on actual demand for affordable usable space, the asset price illusion will continue and the bubble will grow.  If China wants to bring it real estate market back to earth — and that’s a big “if” — it should be offering investors a reason to use, rent, or sell.  An annual property holding tax does this.  A higher property sales tax, while well intentioned, only makes things worse.

[FYI, for those who might be wondering if I've suddenly converted to advocating tax increases, I have not.  In my view, the imposition of an annual property holding tax should be revenue-neutral, i.e., should be offset by trimming or abolishing other taxes.  China's top personal income tax rate of 45%, for instance, is sorely at odds with its desire to develop Shanghai as a financial center, compared to Hong Kong with its tax rate of 16%.  And its 3% revenue tax on service firms (in addition to corporate taxes on profits) imposes yet another burden on a sector whose development China desperately needs to encourage.  What I advocate is not raising taxes, but revising the tax structure to reward productivity and discourage the wasteful accumulation of idle assets.]

More Q&A. Science has the power to transform questions into answers; speculation has the power to change answers into questions.

As the transfer window is about to open for the winter signings, the grapevine has already started in the English Premier League. Some are just fake rumours to know more about the players while some put pressure on both the club as well as the players, in the worst case the die hard fans start to abuse… But that is all part of the club game.

Latest from the premier league is that FC Schalke goal keeper Manuel Neuer has been linked with Manchester United, a bid in order to find a replacement for the current star Edwin Van der Sar who is in the twilight of his career. The tall 6’4” German has been representing his national team regularly and he has been seen in saving some of the vital saves for some time now. The contract with his present club is till 2012 but if Manchester United is able to convince him then he may be the next royal guard at the old Trafford.

More problem can be felt at Liverpool where The Daily Mirror are reporting that Chelsea are set to make a £30 million offer for Liverpool captain Steven Gerrard this summer in an attempt to get the England star away from Liverpool and boost Chelsea’s midfield. Chelsea’s previous offer was turned down by the ace midfielder a few years ago in the hopes of winning something with Liverpool. Situation is somewhat more tense and Gerrard’s loyalty and character will be tested in the weeks to come.

Arsenal may be on the verge of loosing their star midfielder Cesc Fabregas who may head back to Spain to join Catalunyan giants Barcelona. But the players has turned down the false allegations by saying “Since I was 18, they have been saying… but I am still here. I hope I can be at Arsenal for many years and lift trophies like the Champions League, the Premier League, FA Cups.”

I went out to dinner with an assortment of people earlier tonight (there were 5 of us total), and noticed something I have noticed often before:

The waiter comes up to the table and asks the person to his immediate left, “what do you want to drink?” She replies, “Oh, I’ll just have water.” The person to her immediate left says the same. Then the next person orders an iced tea – and the two remaining people (I was last) both get cokes. Neither of them get water.

What’s notable here is how often it goes like this – the first person asked almost always gets water, and then either it goes around the entire table with everyone getting water, or someone will get something else and then everyone left feels free to get whatever they want. Rarely will the first person not get water, and rarely will anyone get water after someone has “dared” to not get water.

What’s the explanation for this? I don’t know exactly, but my guess is it has to do with people not wanting to look profligate or poor, and not wanting to force other people to do so either. Buying a coke in a restaurant costs two or three dollars, which is just enough to not be a completely insignificant amount of money. Thus if the first person gets a water, it’s “OK” for the next person to do so as well, and so on, and once someone gets a coke, everyone else has the choice presented to them and usually chooses to get a coke, since, after all, it tastes better. But if the first person got coke, no one could get water without looking cheap, which is no good.

Click here to listen…

Listeners of my radio show and readers of my blogs are always asking my opinion about gold. Is it going higher? Is it too high? Curiously, they are often ready to spout their opinions before I have shared mine.

It goes something like this: “Steve is gold going higher? Because, you know, with all of the new money the US government is printing it seems inflation is just around the corner. Don’t you think we should be back on the Gold standard? Because, you know, the dollar has lost so much of its value over the last 35 years”.

My response is usually, “Of course what you say may be correct, but there are no easy answers and understanding the true value of gold is especially troublesome.

Gold is affected by any number of factors; like its fabrication into jewelry and its role as a “storehouse of value ” in many countries around the world.

A few weeks ago I discussed an article from a well regarded expert at KIMCO, the large gold trading company, who stated he saw the real value of gold in the $600 to $850/ounce range versus the $1,000/ounce it was at the time of his article and the $1,100/ounce it is trading for around the time of this writing.

I further stated that due to the invention of the new exchange traded fund (GLD) which directly holds gold bullion to back up the share values, investors of all kinds can buy gold as easily as buying any common  stock. Furthermore, you can do other “stock” type things with this new security like going short(selling gold you don’t own in the hope of buying it back at a lower price)  and borrowing money to buy it. This expands ownership in the metal by enabling more investors to get in the game. This  also means that sophisticated speculators can get into the game as well which further changes the fundamental dynamics of gold ownership.

All of this new activity leads us to ask new questions in order to truly understand what is going on. The most important question in my opinion, is whether the current price of gold accurately reflects its “true” or inherent value or is trading at a speculative price. This is not an easy question to answer but it is the most important question to ask.

As I stated before. the analyst at KITCO believes gold is now trading in a speculative range.

So, if gold is a speculative investment, does it mean you shouldn’t buy it? Not necessarily, you just  need to understand that investing right now is more risky and dangerous than it was in the recent past. Can money still be made? Yes, without question. In my opinion, I think the price will continue to rise, but be sure you understand that you are investing at your own peril. Here’s what I mean; As we have seen time and time again, lots of money can be made speculating as long as you are no longer invested when things go sour. Like driving at top speed in a sports car, all is well, all is fun, and all is good-up to the very last second when you hit the wall. Then as we all have seen, it can all end badly.

What is the “appropriate” way to think about investing in this precious metal without “hitting the wall”?  For the answer to this I want to share with you the ideas of Jeff Clark, Editor, Casey’s Gold & Resource Report
(http://seekingalpha.com/article/177692-how-to-predict-the-price-of-gold). He suggests keeping your eye on the U.S. dollar index; “This six-currency gauge of the greenback’s value has dropped 7.8% so far this year (as of December 3)”, meanwhile, gold is up 38.7% year-to-date. In other words, for every 1% drop in the dollar index, gold has risen 4.9%. If that approximate percentage holds over time, one can begin to estimate what the gold price might be if you know what the dollar might do”.

He continues; (the numbers quoted are edited by me to make them more current).  “Today, the US dollar index stands at 76.49. If the dollar were simply to return to its March 2008 low of 71.30 next year – a 6.8% drop from current levels – this would imply a rise in gold of 33.3% and a price of about $1,495 an ounce.

Over the very long term we can calculate the long term value of gold IF these ratios stay the same. Its simple math, maybe a little too simple, but let’s play with it anyway. If you believe the dollar will lose half its value from current levels, this would imply a gold price around $2,807. Just increase the price of Gold by 5% for every 1% decline in the dollar index.

Clark states;  “Unless you think the dollar’s problems are solved, its eventual demise is gold’s eventual glory”.

One glaring problem with Clark’s idea is that these types of mathematical relationships change over time. Any specific ratio (in this case, 5 to 1)  is good while it works, but since the ratio will change over time, it gives you very little insight into future prices. In other words, today’s ratio will be tomorrow’s curiosity. Beware of overly simplistic ideas.

To summarize, buying gold today is more speculation than investment. It may continue to rise very much like growth stocks did in the late 90’s,housing in 2005 and oil in 2008. Unless you are a particularly nimble speculator, keep your eye on the intrinsic value and focus on capital preservation.

This is probably going to end up being a less ‘ranty’ chain of words that is similar in nature to my ‘Under the Water’ post, which is fine as it seems an appropriate way to make my first ‘Speculations’ post. Basically, I find myself musing on what makes a person great.

Whereas many would find greatness in people who achieve things viewed to be difficult or even amazing to achieve… I find myself nonplussed by them. I don’t underappreciate what they’ve done, but I often find myself thinking they could do more. This becomes particularly true of millionaires and politicians. Ironically, I pay little attention to either.

To go a step further in explaining this line of thoughts.. Is the person who gives $20,000 dollars to a charity great? What about the person who gives $200? What if the person who gave $20,000 has $8,000,000 to their name and the person who gave $200 has $2,000?

Perspective changes everything. It’s become quite an evident factor in my life… I always try to see things from multiple perspectives. What’s fun about that is trying to make sure my own perspective doesn’t taint the ‘perceived perspectives’ of others.

Which is another point entirely… Thumbprinting. Leaving a bit of your ideals in your perceptions of the actions of others… How do you know they did not do something great for what they’ve been exposed to in life? How do you know they did?

Speculative moods bring my mind to some pretty strange ponderings. I’m thankful to say that usually the string of thoughts can be followed with relative ease if laid out before a person other than myself (that means I’m not crazy, right?). For now I think I’m done with my ‘thinking aloud’ if you will. =)

People are saying Wade is pulling a Whince Carter on Miami?

So… what if Wade is not “unhappy” and is just in a slump?

People still underrate Wade. Yeah he is struggling, but it looks sincere. He started the year feeling like he could hit any shot, went on a slump and now the man is trying to get his game back. But it is not like he is straight garbage out there, he is running around making plays and still looking like the best player on the floor every night.

Wade is only having issues with shot selection, and from a guy with his bball IQ, I’m surprised he hasn’t figured it out yet. When he came into the league he was a cerebral player that could analyze his own game and always take the smartest shot selection. It is what seperated Wade from most guards at the time. Lately his selection is suspect and his shot is not as reliable as it has been… but it could be just a slump.

Im more worried about him not going to the bank shots and other repertoire that he had back in the day.

If Wade forces a trade out of Miami I really would not be surprised.

The man bought a house in Chicago.

Has a trainer in Chicago.

Has a charity event in Chicago.

Wears Air Jordans.

I mean c’mon…

I remember that ill converse- wearing wearing rebel DWADE that took sick backboard shots. Maybe living in Chicago will bring the fun back to Wade’s game or something..I dunno. Maybe he just doesn’t like Miami.

:0

I wish him the best if he goes.