Wednesday, March 31, 2010

The Third (And Wildly Bullish) Scenario for Gold Stocks

In the article I wrote on March 22 ("When it Breaks, It's Going Somewhere in a Hurry"), I stated that there were two downside possibilities for the price of gold, with the bearish move to at least $950 being the most likely, and the move down to $650 being second most likely.

I also mentioned that there was a third possibility, and that the price of gold could move very rapidly to new highs somewhere around the $1325/oz level by the end of the year.

Needless to say, I received a flood of emails from gold bugs the world over, admonishing me for "in one breath saying that gold is going to make a multi-year low, and then in the other saying gold could make a record nominal high" to quote one of the least colorful ones.  Accusations of useless forecasting, throwing darts at a board and getting better results, even wasting people's article-perusing time were far from scarce.

Throw in the usual "you're crazy if you think gold is ever going below $1000 again because of [insert generic laundry list money printing/central bank/government/finance argument here]", and it made for a healthy batch of reading, and even an extension of the more offensive vocabulary.

In respone to that article, I posted my most recent one.  In it, I explained that I use Elliott Wave Theory as one of my primary methods of finding turning points in financial assets, and I showed two charts with the most likely wave counts for the HUI Index.  Both indicate a bearish situation, one with a probable 20% further loss in the HUI, and the other with a loss of 50% from here.

There is a third scenario, with some twitching and tweaking of wave structure and small bending of the Elliott Wave rules.  If one jostles enough there is a highly bullish potential wave count for the HUI (and the yellow metal itself in conjunction), which I present below.

I hope this explains to my readers why there is very little clear direction by way of gold right now - all three of these counts can work with gold at its current price level.  It is the moves out of this consolidation period that will determine the larger structure of the bull or bear market.

There are times for action and times to wait and see - if you are slow accumulator of physical metal and your end goal is to have as many ounces of gold as possible, I don't recommend making any major changes.  For traders, many are in the same boat and not committed to either side currently.  Perhaps the market will wait until the maximum number are committed to the fake move before reversing and making its real leg, up or down - we have witnessed this time and again in the long and short term, and with any number of assets.

Consolidation can only last for so long, and eventually we will see a break and follow-through of key support or resistance, indicating the larger leg in gold and where this market is taking us.

As to the very near future, although the correlation seems to be slackening of late, gold could run another $10- $20 up in light of a falling USD.  The initial stages of its larger degree move seem to be complete and the USD is due for a cool-down period before another major stab upwards.

Aside from the most-likely completed wave count leading to a near-term correction, the technicals are indicating a slower momentum against the wave 1 high, and we should see the turn of the last few days develop into something stretching out over at least a few weeks.

Stay sharp - these markets may feel complacent today but these are the times that many get snared in the trap of a huge and surprising move.

Derek Blain

As always, if anyone would like to send a comment, question, or suggestion, please feel free to email me at:


  1. In defence of Derek, what else can you say by way of prognosis comfort.

    In the short term, the markets could really swing either way - dramatically, and disastrously if you are caught on the wrtong foot with your life savings at stake.

    The world is in one of those economic
    times when the only way out was a major war. But times, and the world have changed. A world war is a 'no no' option.

    (I must continue below as we are tied to word count
    I decided to chop it here)

  2. Manipulation, and derivatives (virtual financial reality) have been carried to such extremes, that we are confused as to what is virtual, and what is real.

    Bringing our world back to managable insanity, never mind sanity, is going to be a mamouth task.

    There is no question about the amount of manipulation which goes on in anything where vast sums of money are concerned, as in the financial markets, including currencies, and economies, or even for power over others. Some people do love to control their fellow man (and women). Even some spouses do - OUCH! Children are great manipulators to get what they want - yes/no?.

    It is nothing new, manipulation - especially of people's minds (which every psychologist knows, or should know, controls behaviour) goes back to when people started herding together in tribes for safety - enter the witchdoctor, or voodoo priest. (Today, better known, perhaps, as media tycoons.)

    Anyway, enough of that,

    How does this affect that which we, or at least most of us here, are concerned with - whither goes the price of gold?

    Many believe the price is manipulated, and in my book, so it is, and has been for 'yonks' for many reasons, and most of those legitimate within the context of the economic structure of world economy.

    The problem with manipulation within something that is very complex, and intertwined, is that as you use it to correct one objective, it affects others that do not always fit the plan. Then you get the 'robbing Peter to pay Paul syndrome with variations on a theme. And this usually creates more problems than the one with which you started.

    It is too complicated for me to explain here in detail, obviously, and I am assuming most of you are intelligent enough to work things out for yourself, especially if I give you some pointers.

    Let me start with a question. Has the price of oil increased, say for the past decade, or even beyond? If you thinks so - to whom?

    Not to the main oil cartels, it seems. To them, the price has been reasonably steady. WHY?

    Answer: Because they sell it for GOLD! - not currencies. Gold is the real money of International economics. And the Arabs, as with all Semitics, have a long history of arithmetic, and accounting. They were great traders long before oil was discovered in the desert.

    Do they teach this in Academia? No wonder they always get it wrong.

    Oil, that most vital of all tradable commodities. Without it, the industrial revolution would never have happened.

    Gold, that most vital store of wealth, and commodity known as money, without it the oil would never have left the ground, or the ideas that flourished in that industrial revolution been brought to fruition.

    Britain could not have organised a military campaign to defeat
    unstoppable Napoleon without the loan of GOLD arranged by Rothschild and co.

    Why did he lend us gold - to make bullets and shells out of the metal?

    Gold he lent, gold he wanted returned. REAL MONEY! Gold itself had no direct use in the battles fought by the actual armies. It was merely the solid financial backing to make it all happen.

    And that is just one example of many thousands throughout history.

    Is it slowly sinking in?

    Now I am going to leave this and hand you over to this link below. Read and digest. Then work this out in your head using IMAGINATION - more important than knowledge according to Einstein.

    Academia is full of people with vast knowledge, but little or no imagination, so they teach and hope that it sparks the imagination of those few who possess this rare quality.

    Good fortune awaits those with imagination, and use it. But without it, and I don't mean the MSM (main stream media's) version, you are doomed in the markets.

    This is a time of watch (carefully) and wait (patiently)

  3. Imcidentally, we will probably have to wait until after Passover now before any significant movement in the markets.

    Unless an 'external force' plays a hand that brings the unexpected that trips the hand of the controllers.

    The 'marketeers' are prepared, their sophisticated extra sensory software and intelligence network, will detect, and act, even if they are vacationing.

  4. Ray,

    You misspelled Mammoth( mamouth) which as a psychotherapist I can tell you is a freudian slip.However----------------------------------
    You do have a Mammoth Mouth desparately manipulated by a minute pea brain whose insufficiencies you cover up by talking down to
    Derek and the rest of us. Give the little noodle a break or it may burst into little pieces. Perhaps Derek will consider offering you
    a brain transplant because what he would give up to fill that little receptacle of yours would amount to an infintesimal snip of his considerable intellect. I am submitting your
    name for the NO-Bell International BlowHard
    Award.Give it a rest and please find another
    forum i.e. "One Flew Over The Cukoos Nest".
    PS Good news! No charge for the analysis.

  5. Well, well a comment from someone who does not know his up from his down, and is too busy looking for specks in other eyes fails to see the log in his own.

    First, please point out where my post talks down to Derek. As for talking down to such as you, you are so low on the intellect scale it would be difficult for anyone not to, if he lay on your couch while he did it.

    Have you a problem with comprehension as well as YOUR spelling.

    I suggest you take more care of your own problems before pointing out others.

    Freudian (freudian) should be capped. And you were so desperate (desparate) to jump in with your verbal onslaught, that besides your lack of reading comprehension, you trip over yourself.

    Oh, check your 'infintestmal' and your 'Cukoo' birdbrain. Perhaps YOU should consider looking for another forum that caters for screwed up psychos.

    If you have such a qualification did you get it at some 'degree-mill'. I believe they are quite common in the US.

    I close with - Physician, heal thyself.

    Second thoughts, in your case better get someone well qualified to do it.

  6. MY,My,did I hit a nerve?

  7. Was it painful?

    You sure shot yourself in the proverbial mouth.

    You picked the wrong day to be foolish and make unwarranted personal attacka

  8. I agree that attack went way overboard. But I actually wanted to write about my frustration with this market. I have never felt so much at sea as I do now. I did not jump in at the bottom, so I am not scooping up all the prizes and big percentage gains that are shown daily on CNBC. I know people who bought KMP (natgas) and other such stocks, and have been collecting big dividends and had great appreciation. I am tempted to jump in with the thought that even if there is another dip the market will come back and I will still get dividends along the way. In my defense I have to say I sold all my stocks before the crash. I was only in currencies and gold when the crash hit. I stayed in currencies too long though with an irrational fear of the dollar and that cost me. When gold hit $1,053 I sold. Now I'm in cash and 10% speculative gold stocks and some CEF (Central Fund). I have a tendency to be conservative and to listen to voices saying to stay out of markets. I sold some real estate too early by a couple of years too, making a smaller profit than I would have. I tend to be defensive. So I didn't have big losses, but my gains are now small and I want to change that. If you are not on the inside of a Goldman Sachs you don't know when they are planning a big buy or sale of a company/stock. And that's a tough situation. I can be patient and watch stocks soar and be left behind in the dust. Again, very frustating.

  9. E.D. do not be frustrated. Once you move out of your defensive mode, you will be gambling. The reason is because any store of wealth is always losing purchasing power, relative to those who are able to invest capital in profitable enterprises. Gold will only keep you steady relative to your networth's proportion of the total production of the globe. Since global production is increasing, your quality-of-life can increase if you own gold, assuming you can evade or do not live within a society that will try to tax and ration away those gains (i.e. any western country).

    Do not be jealous of those who have not yet recovered the amount they lost in stocks since 2007 (or silver if they bought at $21). Or just look at any stock index priced in gold since 2001, and you can see that the simple act of purchasing gold has outperformed.

    With a 3-5 year horizon, you can buy gold at any time with your eye closed, and you will come out ahead of those who gambled in the markets.

    As for additional income, above and beyond gold this requires real production, and that means not in the financial casino. I repeat some will make extraordinary gains trading, but eventually all will end up no much better off (and probably much worse) than if they had simply purchased physical gold, especially when the effort, time, frustration, and lack-of-sleep caused by being involved in the financial casino.

    Frustration expressed in this forum is evidence of the failure of gambling in the financial casino. Ray has no insight which allows him to do better (over the long-term) than buying physical gold at a random time, neither do I nor Jerry nor Derek.

    There are much more productive things to do in life than post in the blog.

    My wish for all us is that we find a more interesting and productive life.


  10. Simplification of prior post.

    Stop! Buy gold, stop using your computer, sell all of your financial instruments, and find something real & productive to do.

    One thing we can do is simplify our life and lower our expenses. From that, will generate new perspectives and productive directions. It is as easy (or difficult) as unplugging from western life.

    Perhaps I am soapbxing here, because I am trying to prod myself to do the same (I am, but need to stop the relapses and tangents).

    I intend no malice, if this goes against Derek's direction herein. I am sincerely wishing that as many of us as possible can unplug from this hamster wheel of a life. The secret is not to tie a stick to our backs with a piece of meat (promise of fortune) in front of our mouth, being a mindless crab who forever chases himself.

    There isn't just "one more big win". The 1990s gift (theft from the 3rd world) is done and burnt. There is no more wealth to be extracted from these financial markets except for those who run the casino.

    Find salvation in a simple life, a store of gold, and new found values and thus productivity.

    I wish this for all of us.

  11. Some math justification for it being time to leave the fiancial markets:


  12. "...There are much more productive things to do in life than post in the blog...."

    Shelby, that surely depends on why one posts.

    I have found that writing things down helps to formulate acquired knowledge from experience - ones own, and others.
    By focusing one's thoughts, it keeps it to the forefront of the mind.

    It is so easy to forget that which should be retained, in order to govern
    future action.

    It is like self-talk. (Very therapeutic if you say the right things)

    In other words, I am really instructing myself to keep myself on track.

    To me, speculating is a business, and an interesting, and rewarding one in many I treat it thus. (As I would any business)

    No one has to follow me. I put it on the table, no one has to take it up.

    The fact that I have a blog or forum to post on, encourages me to do that which I should do (write thoughts down) when the discipline to do it otherwise is lacking.

    I have found it productive for me, I cannot speak for others.

  13. Blain - please spare the world from any more of your mindless blathering - it's really annoying

  14. I personally admit when I am wrong, get out of that trade and then do the opposite I thought would happen.... works for me!!!!!!! But then again, I dont have a newsletter either.....

    Gotta go with the trend, it is your friend.... manipulation and all

  15. "I personally admit when I am wrong, get out of that trade and then do the opposite I thought would happen.... works for me!!!!!"

    Are you sure it is working? Comparing the increase of your net worth since 2001 due to trading, to the price rise of gold. Have you done better? I doubt it. Most people think they have done better, but when they sit down and do detailed calculation of their gains since 2001, they become sobered.

    The casino is for wasting your time and keeping you out of physical gold, so that you are not busy being productive and fighting the manipulators in that way. As long as you stay in the casino, the more they can push this trend to total chaos by extending the duration that they can manipulate the physical gold and silver prices.

    If all of us sobered up to the reality that we are not outgaining physical gold, then out gains in physical gold would be even greater and we would bust the crime sooner. If we stay in the casino, we are aiding the demise of ourselves and our civilization.


  16. Expect 5-7 % correction in US markets in April. This dip may be a short term buying opportunity. Emerging markets may correct more than 10%.


  17. Derek, You are trying to trade the gold and silver market, from the work you have done so far, I must assume you are not doing so well. Why don't you keep it simple, buy gold and silver every few months regardless of price and hold it.

    Investors like yourself are going to be the buyers at gold 3000oz and silver 75oz becasue your charts let you down, you can not time this market, this is going to make the stock market seem like a rational market before it is all said and done.

  18. All of this long winded hypothesizing by our resident economic experts has obviously done nothing to guide their investment decisions one way or another. When you have traded as long long as i have you realize that 99% of that hypothesizing is utterly worthless and has zero profit potential in the real world (although it does make certain individuals feels superior in their own mind). The charts tell me everything i need to know, i read not the news nor the long winded analysis of wanna be economists. The charts tell me what the news or the opinions of experts never will...direction!..and when to buy and when to sell. That is all that matters. Anyone that wants to trade successfully should learn not to value others opinions. I only visit here once in a while to see whats stirring but the arrogance on this board is sickening. There is nothing of value here at all, neither the sub par technical analysis nor the lectures on how to live your life from people who obviously have none. I expect a 3 page response to this but unfortunately i will not be around to read it, i dont have time to waste reading drivel... ..Jerry

  19. Jerry,

    Now why am I addressing you by way of response when you have said that you won't around to read what you expect?

    Because, Jerry there are many kinds of BS. I know, as you knew when you wrote your missive that you would look for, and read, any responses.

    Nothing wrong in that, only in the denial.

    TA only tells you what has happened, and providing sentiment does not change will 'possibly' continue. But getting a broad feedback from analysts, and participants at Financial Websites can give you clues of when sentiment could be changing.

    Information, any information, is only as useful as how it is interpreted, and used.

    You make some very valid points in your post which I certainly would not dispute as they follow my own.

    Most analysts, and their prognoses, are, as you say. But there are the odd exceptions to the rule.

    I believe the Arden sisters as far as gold is concerned have great insight in this area. And they chose their words well.

    This may sound sexist but it is not intended, when I say that it astound me to find women with such perception and knowledge in what is generally viewed as a male dominated sphere of interest, and activity.
    (sorry any girls out there, I am just being honest)

    You state that you use only charts because they give you direction - all you need. (well that is what you wrote).

    That is a bit like saying that you only need to know the tides, and read a chart in order to be a proficient sailor.

    Was it not reading analysts of one sort or another in the past that got you to charts, or what ever method you use?

    At school, I experienced good teachers and bad ones, but I learned from both.

    By attending one of the most prestigious Economics Academy's in the world, the LSE
    (London School of Economics) I learned from the rubbish that is taught about economics (all pure theory) why most economists get it wrong - Academia treast the possibility of 'manipulation' as a dirty word never to be uttered. So my time there was not wasted.

    Having said all that, I do understand, and go along with, your basic message. It is just the presentation, and lack of understanding investing, or speculation, is not quite so simple, otherwise, we could all be multi millionaires. by sitting at our computers for no more than an hour a day, or perhaps week.

    (Which, I have read, quite a number of
    others, with your expressed philosophy, say you can.)

  20. DEREK, I wish you would provide at least a short time in which to edit a post after it has posted.

    For some reason I spot errors I make more easily when I see it posted.

    This could be because it is displayed in full.

    Some other sites are able to do this. It should not be difficult

    (I apologise for the errors in the previous post)

  21. I now see what all those 'Newfie' jokes are all about up in Canada. We have a real live(brain dead) Newfie in our midst contaminating Dereks
    site. We have a mutant or shall we say Newtant
    dribbling over Dereks pearls of wisdom. Anyone
    have a spare straightjacket lying around?

  22. Why? Has the old one they strapped you in worn out and you feel 'something missing and insecure' without it?

    BTW Anonymous, are you Derek's mom? You jump in so quick, and see things against him that aren't really there.

    He's a big boy now. You got to let go and let him stand up for himself. You don't run these sites if blessed with a thin skin.

    Remember he posts articles on a large website and as he explained, if you will read what he writes above, he takes a lot of flak from around the world....

    "...Needless to say, I received a flood of emails from gold bugs the world over, admonishing me for "in one breath saying that gold ........."

    You will also see, if you get someone to read for you as you seem to have learning difficulties, that my opening posts here are structured in defence of his current offering.

  23. Jerry please provide verification of your performance over past 20 years.

    "Whatever happened to all of the hot shot day traders who were making bundles during the tech boom?

    The reason you haven’t heard about them over the past 10 years is because there aren’t many. From what we’ve heard, most of them lost nearly everything."

    If I have understood Jerry correctly from his past posts and private emails, he has purchased the dips. He bought too high in 2008 (not exactly at bottom in Oct 2008). He recently bought hundreds of acres of farm land in Canada.

    Purchasing dips is what I have done also. I am not purchasing farm land, because I think both fuel and food prices will rise.

    I also purchased gold during this consolidation.


  24. Jerry read this:

    Earnings season and then the "sell and go away in May"?


  25. Tremendous 'events' are building up. They are going to impact markets sooner than is believed. By events, I mean 'causes with dramatic and consequential, effects, and 'affects'

    I recommend you reading -

    Now, for all the doubting Thomases there may be lurking out there. THINK!

    If what you read is only 25% correct, it is significant. Personally, my belief is that it is more significant than is being presented. China plays its card very close to its chest.

    Oil and Gold, yes and the dollar (at present) are intertwined. OPEC sells oil for 'real money' GOLD. They are not stupid. (so many barrels to equal one ounce of gold) that makes for simple, consistent accounting.

    They call oil 'black gold', but they do not call gold 'yellow oil'. Gold was 'the key' long before crude oil was discovered, and used.

    So many equate .manipulation with holding a price DOWN. Manipulation means 'control' not necessarily 'suppress'.

  26. CHANGE! This is the word that got the US president his 'ticket to ride.'

    It is also becoming the byword here in the UK with the impending election.

    Agreed 'change' cannot be faulted because it is constant and it can be both a positive (as people expect, and are sold by politicians to expect) or negative depending on how it affects you, or you perceive it will.

    Great change is taking place, and much more coming, that if you throw away the doom and gloom and watch for the opportunities, you can reap great rewards.

    For some strange reason, people focused on gold tend to be pessimistic.
    That is a great failing of the masses.

    The 'Masters of the Universe'.The movers and shakers of our world do not see it this way. Gold has got them to where they are today from over many centuries.

    China, which is now the world's largest gold producer, and the fourth largest oil producer and with a growing industrial might is the only nation which can threaten to modify the activities of those who are often referred to as TPTB - the money men (real money - GOLD)

    What the West did with gun boat diplomacy, the Chinese will do, and is doing, with even handed economics.

    The US always had a large home market to help its economy. China has a growing, demanding, home market almost four time that of the US.

    Has there ever been any crisis that does not always provide an opportunity for some? It is not what happens, but how we perceive, and react to what happens that is important.

    And that goes however one interprets the Chinese characters of 'Weiji'.

    I am very positive about the opportunities coming. I find it exciting and rewarding. I write this more for me that I do not forget or become side tracked by the negative news which abounds.

  27. Ray, agreed on great change, but bear-in-mind that manufacturing profits are being driven to 0 (even negative as China is subsidizing their production now). China has been handed the industrial revolution at it's death throes.

    Food economies-of-scale were driven so high with petro-farming, that it became unprofitable to be a farmer and farms were subsidized by govts, debt financing, and by a *negative* EROEI for farming petrol inputs. Now industrial production is entering a similar fate.

    The future is not the agricultural nor industrial revolutions, just as we are not going back to Stone or Bronze ages.

    Rather the future is about information and knowledge networking. Nanotech, biotech, and cloud computing...

    Unless someone can figure out a way to involve the masses in producing value with these new technologies, then the masses have been reduced to "useless eaters". This shift to making industrial production a 0 profit (raw material cost), which is making billions of people unemployed, is what is causing the deflation. This is why the world has no choice but to use money printing to socialize the problem. There is excess industrial productive economies-of-scale now (capacity).

    I understand that the technology solution in the cloud computing space will be one of proliferating the ability of masses to do mashups and design. We will have all this 0 cost productive capacity and we need a proliferation of designs to match all the varied needs of humans, since humans are not cookie cutter and have diverse needs.

    The energy economies-of-scale will take another leap with nuclear. TPTB are holding this card back, they will play it when it best suits their interests.

    This is a N-dimensional chess board, you need to look at how all this interacts and timing.


  28. Add to above post, that developing world has billions been forced from farms into cities to seek income. Right now they are taking over the mundane office work from the western world ("call centers"), professional services (nurses, doctors, programmers, etc), but many of these are jobs that will be eliminated with computer automation in coming years.

    All trash (dead end) jobs are being dumped on the developing world, leaving the west a shell of debt-dependent masses and developing world too will never reach full employment.

    The people supporting the economy now are the high tech workers (and some one-time infrastructure build out in developing world), and this will worsen, unless someone figures out a way to involve these masses in the new information technology economy. That is why I am working on


  29. And this is why so many are being turned into gamblers (ahem "traders"), because they can find no suitably profitable employment.

    But there is a role for people who can involve themselves in the new technologies and/or in the transitional chessboard (e.g. the infrastructure build out in developing world, cultural/language interfacing, etc).

  30. Shelby,

    I am afraid you are perhaps clouding your vision with too many perceived problems.

    In my view, there have only been two large divisions of economies since humans entered modern civilisation, and these are the agrarian society, and the industrial one.

    Technology, and information were present at the start of the Industrial revolution and was an integral part of it. In fact, it could not have happened otherwise.

    It is just that today the development has advancd them, and they are now more sophisticated, and mechanised, and specialised.

    The populations are much larger, and growing. So the world has to adapt.

    The factories, and working conditions today in the more modern cities of China bear little resemblance to the early British factories of its Victorian era. Because of technology they can produce more goods with less employees.

    There is still a need for 'factories' to produce manufactured goods but they have to be modern, and that that they can operate on less physical labour.

    This is the real problem facing mankind how to find employment for a growing population with advancing technology being implemented.

    Which is, I think; a point you were making.

    However, this affects any type of industry and commerce, and every nation, even with a recovering,growing, economy (from present levels)

    China will engage in both - manufacturing, and technology and it has a lot of natural resources something neither Britain, nor Japan has, or had. Hence their need for conquest, and Empire building.

    The only thing that keeps the UK going is 'the City'. That is the Financial centre of London. And what helps this is the fact that the international date line a relic of Britain's days of glory runs through it. Plus, its long history as a Financial Centre where everyone speaks the adopted international language.
    Lose that and we are sunk EOS.

    The point I am trying to make is that China is well placed, and is doing all the right things so far, that will be favourable to it in the world we are moving (or should I say, being moved) towards.

  31. Relative weakness in mining stocks and silver today:

    Ray thanks for you thoughts.

    I have not been to China, but I've been to Hong Kong, and I am in Philippines right now. What I see is that China has a huge population, and much of it is still rural and not educated with the type of creativity that will be necessarily to compete in the new technology epoch.

    Given that a large population is a liability in era of increasing automation, then I do not see how China has a strong position. Also China has a severe demographic bubble that will peak around 2020, due to their insane 1 child policy.

    Someone sent me humorous image of how China "does not waste anything", and it was 100m meter track start, with the starting gun pointed at a dissident's head, with arms tied behind back.

    I have also been told by someone who outsources manufacturing to China, that the factories have razor thin profit margins, and they get by not paying their suppliers on time, floating on the inventory for 90+ days, etc.. Also I have observed the mentality of the Chinese who run most of the business in Philippines, they try to extract every last penny (centavo) of cost cutting, even if it means service sucks. For example, the least expensive place to buy computer supplies here in Philippines is CR King, and they have walls and walls of stuff from China at like 1/2 to 1/3 the price of the other name brand stuff in other computer stores. But their are only 5 ladies serving dozens of customers, and so you have to take a number and wait up to 1 hour to get served. That cuts the costs as much as possible, except for the customer who loses the cost of his time. That works economically here, because there are billions of underemployed people in Asia with nothing to do with their time. That is why SMS txting is so popular here (and becoming more popular in west), because even it is slow to type with 2 thumbs, people have too much time to waste.

    And where does all this wasted time end up? It ends up in economic failure.


  32. Ray the point is that manufacturing (industry) is now a liability, not an asset. Proof is as I wrote before, China is forced to subsidize their factories now with their savings, proving it is a negative ROI activity. Farming has long been a liability.

    The assets now will be pure technology and design.

    TPTB in old europe have handed China the trash.

    The strong position now is not a nation, but individuals who possess strong new technology skills. The rest will have to attach themselves (even if indirect recipients of govt spending in their area) on the coattails of an expanding government (that must expand to steal from the producers to feed the expanding supply of useless eaters).


  33. To make it clear, the reason that manufacturing is a liability is because the value added (over the input raw materials cost) is driving towards 0. This is because automation is accelerating exponentially.

    The value added is in the design of both the automation and even more so on the products to be produced.

    And this applies to software also. The cost of manufacturing software is 0 (electronic copy), the valued added is in the programming or design of the electronic product.

    The X generation understands this shift. They grew up with it. The smartest 20 year olds are in biotech, nanotech, or at least looking for jobs abroad to be part of the transitional phase of this epoch of globalization and industrial revolution death throes.


  34. Although a smaller population is preferable in the death throes of industrial age, a declining population is also a transitional social delimma, because the lower quantity of workers have to support an increasing quantity of retirees.

    China is expending savings to subsidize industrial full employment, and this is evidenced by both a Yuan peg (that traps all savings in the country) and the recent govt stimulost in excess of 20% of GDP. The savings of China is not allowed to seek its optimum path. Rather it is centrally allocated to western treasury bonds, commodity stockpiles, overexpansion of manufacturing capacity at razor-thin profit margins, etc..

    TPTB are driving us away from the technnology solutions and towards a massive global implosion in employment that will drive the world towards a one world govt.

    To defeat this, we technologists/futurists (such as myself) have to get more busy at delivering technological paradigm shifts. So in short, I need to shut up.

    Hope my input has helped some. If you have necessary skills (I mean if you are top 1% in your university and career), please get in touch with me. I am working on some revolutionary things in software.


  35. In deference to others, as much as I enjoy this topic, I will desist. It could go on ad infinitum.

    However, I will say, manufacturing of goods will continue as long as the present human race endures.

    China is continuing to amass great wealth from somewhere, and most of it as yet is from manufacturing. (As we continue to slide deeper into the mire.)

    China will continue to confound her many critics, as she has continually in the past.
    Let me close with a quote from Napoleon
    which was made around 1800 era.

    "Ici repose un géant endormi, laissez le dormir, car quand il s'éveillera, il étonnera le monde"

    What a visionary.

  36. Incidentally, he, Napoleon, was pointing to China on an atlas when he made that comment.

    I believe he made a simiilar comment, referring to China as a tiger or dragon, when he was imprisoned on St Helena

  37. Ray I also believe that Asia will make great leaps forward, but I am also saying that manufacturing is not a very profitable activity (in terms of rate of ROI).

    There are bigger forces at play. And yes we could go on and on, so I will save my thoughts I guess for a book I will probably never write.