Texas hospital employee gets Ebola: Obama should be assigned to her nursing team instead of to the presidency

VGPMX at 9.63 hasn't been this cheap since 2003

The 2009 low was 9.73.

The thing is, the historical low water mark for this sector fund, which is a stock fund not a pure metals fund, was in August 1998 at 5.05. You could really lose your shirt in this fund even at this bargain price. I'd look for a broader stock market correction than the current 5% before I even thought about it more seriously.

On January 2, 2002 this fund was at 8.56. Following the Peter Cundill rule, you would have sold your entire initial investment in this fund at that price by late 2003 and recouped it because it would have doubled already at 17.12. (Often the easy money is made quickly off the lows, but it did take until February 2002 for the 5.05 price to double to 10.10, not quite four years.) The all-time high for this fund at 40.02 in May 2008 did not come until almost five years later.

US Federal Reserve continues to fail against deflationary headwinds

Bloomberg reports here:

The Fed needs a clear strategy for getting the inflation rate higher after falling short of its 2 percent target for 28 consecutive months. ...

Prices fell 1.2 percent for the 12 months ending in July 2009, when the economy had just exited the recession, according to the inflation measure the Fed uses, the personal consumption expenditures price index. Unemployment that month was 9.5 percent. Since Fed officials first published their inflation target in January 2012, the index has averaged 1.5 percent. ...

The 2 percent inflation objective first appeared in a January 2012 statement on longer-run policy goals, and has been restated each January since. The statements say nothing about tactics for returning inflation to 2 percent over the medium term.


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The all-items consumer price index shows the same thing, with the average of the annual average change at just +1.59% for each of the five years 2009-2013. In the most recently completed year, 2013, the change from 2012 was just +1.46%. And year over year on August 1, 2014, the change has been just +1.69%.

Despite a balance sheet for all Federal Reserve banks which appears to have peaked at $4.459 trillion on September 24th as QE prepares to end and excess reserves only slightly off peak at $2.677 trillion, inflation is slim to none in this economy, and slim just left the building.

In point of fact, these numbers are nearly meaningless in the face of the real deflation in the economy, which has nothing to do with prices but with credit. Total credit market debt is hardly expanding at all. Compared to the post-war record, where credit creation has doubled on average about every eight years, we have hit a brick wall since 2007.

At that time total credit market debt outstanding stood at $50 trillion. Seven years later it is barely $57.5 trillion, and there isn't a snowball's chance in hell that next year it will be at $100 trillion or anywhere close to that.

What we are witnessing is the unraveling of the post-war credit based economy, and no one seems to have a clue how to fix that, least of all the US Federal Reserve.