A Melman Minute
| By | Leonard Melman |
|---|
Regrettably, this will be a shortened version of our regular "Melman Minute" this morning as we are faced with crushing publication deadlines prior to departing to South America on a mining tour later this afternoon.
However, we came across two news items worthy of comment and these relate to the ongoing debate regarding the strength of the American - and world - economies. The USA has just released their Fourth Quarter 2010 GDP report and it came in at a strong 3.2% growth rate. Coupled with other positive information, optimism regarding the American economy is growing rapidly.
In fact, it is growing so rapidly that one of America's most renowned economists, Robert Z. Aliber, a former colleague of the late Nobel Prize winner Milton Friedman, has just gone from bearish to bullish. In a published piece he now predicts:
- The economy will expand by 4.5 to 5% this year
- U.S. stock markets will advance by 15% this year
- State financial crises will ease as tax revenues increase
- "Toxic" debt held by banks will fall to manageable levels
- Unemployment will fall from near 9% to about 7% by year-end 2011
- Commodity prices will fall and warnings about $4.00 gasoline will not be valid
- Gold will fall to under $900 as confidence levels soar
Aliber concedes that some people are still hurting, but he believes the stimulation that has marked government lending to banks enabling them to spread wealth through the economy is now taking hold. He also believes that Barak Obama's conversion to Conservatism is going to grow through the year, noting, "...There is no need for the Republicans to put up a candidate in 2012. The Republican candidate is Barak Obama."
The divergent views regarding economic forecasting is what makes for lively debate and, at least for the moment, the voice for the positive side appears to be having their 'innings'.
As of 10:00 AM PST markets in the USA are overlooking all that good news and the Dow Industrials are now down by 150 points while Canada's TSX Index is ahead by about 50 points on the back of suddenly improving precious metals prices. After bottoming near $1,308, gold has surged to over $1,340 while silver has advanced from a daily low near $26.75 to just under $28.00 per ounce with growing disorders in Egypt being suggested as the primary cause for their recoveries. Base metals have also moved higher while mining share indexes are up by about two percent. In other markets, crude oil is also recovering smartly on Mideast fears, rising from about $85.00 per barrel to just under $90 at this morning's peak, long term interest rates have moved somewhat lower while the Greenback has advanced strongly in currency markets.
All quotes US$ unless otherwise indicated.
Our ability to publish Melman Minutes until I return from Argentina and Paraguay on February 6 is uncertain at the moment due to questionable Internet facilities. They will be forwarded on an "as able" basis - if at all - until Monday, February 7 when our regular schedule will resume.
PERSONAL NOTE: Just a word of thanks to those who visited my booth at the just-concluded Cambridge House-Vancouver gathering and to those who were kind enough to attend my workshop entitled "Quantitative Easing and the Precious Metals Markets." I look forward to my next appearance at the world's largest mining convention, PDAC in Toronto from March 6-9 and invite all "Melman Report" readers to attend.