Williams Inference

Debt is changing ominously.

Non-Players in Gold

A very successful stockbroker who specializes in the gold and silver sector was recently asked if his phone was ringing off the hook. He answered, no, only one call to sell some shares. The public is buying mutual funds and technology stocks, but not gold.

Buyers of Gold

India and China are set to take millions more ounces of gold off the market. China has recently announced that it will plow at least 2.5 percent of its trade surplus into gold. Both China and India have recently fully opened their domestic gold markets to private investors, and India is already among the worlds biggest buyers. Central banks in Russia and Argentina are buyers of gold in order to diversify their currency reserves. The interest in gold by private investors is mirrored in the impressive rise of Dubai as a major gold-trading city in the world.

Sellers of Gold

Four countries—the U.A.E., Oman, Qatar and Bahrain—have sold out nearly all of their gold. European Central Banks have sold and leased gold into the market. Leasing is especially tricky and has led to a huge derivative short position in the gold market. In such an arrangement, the gold still exists as an asset on the books of the Central Banks, while the actual physical gold has left the vaults a long time ago. It is inconceivable that the short position can be covered easily. Gold companies sell short gold for future delivery. Theadore Butler writes articles on gold in the publication, Investment Rarities. Butler says that Barrick Gold is the largest gold hedger in the world, holding a short hedge position of almost 13 million ounces. "The almost $3 billion open gold loss on Barrick's books is greater than their cumulative total profits for the entire existence of the company."
 

In a fragmented business and social environment, in a morass of information overload and speedup, many Americans find their lives void of support and meaning.

Meaning Void & Prozac

Everywhere one looks in American society, there is a quest for meaning. Many new religions have appeared. Eastern religions such as Buddism, have strengthened. Even magic has gained more adherence. Our emphasis over the years has been on Prozac. Since the debut of Eli Lilly's Prozac in 1988, Prozac-type drugs have grown into an $11-billion-a-year market in the U.S. alone. These antidepressants are called selective serotonin reuptake inhibitors (SSRI's). Such drugs are dispensed more than any other drug except codeine. Perhaps one out of 20 adult Americans are on them now.

Poor Mans Prozac - Caffeine

Starbucks Corp. is the nations largest specialty coffee chain. Currently, Starbucks plans to unveil a new strategy aimed at rebranding the chain as a quick specialty coffee shop. At Dunkin' Donuts, coffee makes up 62 percent of sales. Starbucks sees a growing demand for drive-through coffee. The coffee chain once shunned the drive-through concept. Eventually, it got hard to ignore coffee lovers demand for a quick Java fix without leaving the warmth of the driver's seat.

Caffeine by the Can

Caffeinated energy drinks have become the fastest growing sector of the $93 billion domestic beverage industry. Sales of energy drinks, that sell for $2 to $3 a can, have grown a torrid 61 percent this year in the U.S., according to Beverage Digest. Energy drinks have as much sugar and roughly three times the caffeine of soda.
 

Free enterprise is beginning to flourish in Communist China.

A Divided Populace

Across Chinas heartland, anger at local authorities is growing violent. By the government's own count, there were 87,000 "public-order disturbances" in 2005, up from 10,000 a decade earlier. Income disparity between the urban rich and the rural poor is at its widest since the People's Republic was founded in 1949. Seventy percent of the population lives in a dire condition.

Savings

Last year, China saved about half of its gross domestic product or some $1.1 trillion. At the same time, the U.S. saved only 13 percent of its national income, or $1.6 trillion. Put another way, a personal savings rate in China is 30 percent of household income, compared with a U.S. rate that dipped into negative territory. This is an extreme difference.

Chinese Stocks

It is one of the greatest paradoxes of the Chinese economy that its stock market has lost half of its value in the past five years, while the economy has grown 50 percent. Until recently, two-thirds of all the shares of companies listed on China's stock exchanges were "temporarily nontradable."

This April, the Chinese law will change and the Federal Ban 18 will be lifted . On that day, the best businesses in China—now listed on the NASDAQ, the AMEX and the New York Stock Exchange—will be allowed to return home. These shares will be listed in the local markets of Shanghai and Shenzhen. For the first time in history, China's citizens will be allowed to buy these stocks—a sudden demand of 1.2 billion people.
 

India's knowledge is producing economic results.

Dell to Double its Staff in India by 2009  — Associated Press

Growth

China's growth is a product of its efficient, all-powerful government. India's growth is messy, chaotic and largely unplanned. It is not top-down but bottom-up. It has vast and growing numbers of entrepreneurs who want to make money. This bottom-up activity is not simply among entrepreneurs. The Indian consumer is also looking for action. Young Indian professionals don't wait to buy a house at the end of their lives with their savings. They take out mortgages. The credit-card industry is growing at 35 percent a year. Personal consumption makes up a staggering 67 percent of GDP in India.

Democracy is India's destiny. A country this diverse and complex—17 major languages, 22,000 dialects and all the worlds major religions—cannot really be governed any other way.

Banks

As millions of Indians discover credit cards and car loans, the country's banks are cashing in on India's shift from government-directed lending to aggressive retail banking, riding a wave of consumer spending. There are cultural obstacles to Indian banking, however, because traditionally millions of India's poorest eschew banking almost entirely, instead putting their savings into jewelry.

"In India, our competitive advantage does not lie in cheap labor," says Baba Kalyani, the chief executive ofBharat Forge. "It lies in cheap brainpower." — Fortune, 10/31/2005

In an attempt to serve small savers, ICICI Bank is creating technologies that it hopes will enable it to reach the poor. The bank has developed a rural ATM, for example, that will run on solar energy and accept the tattered bank notes that are commonly found in rural India. In short, India's retail-banking business is expected to grow 16 percent a year over the next four years, according to McKinsey & Co.