Williams Inference

Debt is changing ominously.

Fringe Areas

On the edges of the dollar-gold situation there is e-gold. E-gold is a "digital currency." Customers can use a false name if they like because no one checks. With a credit card or wire transfer, a user buys units of e-gold. These units can be transferred to anyone else with an e-gold account. For the recipient, cashing out - changing e-gold back to regular money - is just as convenient. All told, there are at least a dozen such digital currencies worldwide. Eight of them, including e-gold, claim to be backed by actual bullion.

Another fringe area involves gold derivatives. The Bank for International Settlements released a report in June 2005 in which the value of gold options rose dramatically from $189 to $237 billion.

Foreign Involvement

Over the last year, gold sales surged 11 percent in China and 47 percent in India. During the same time span, Japan reduced its investments in U.S. Treasury securities by 1.5 percent. Japan as traditionally increased purchases of U.S. Treasury securities.

How Much?

Inference tries to predict the direction of a trend. Currently, our WIC probe "Debt Mania to Gold Mania?" infers an increase in price. The chart below indicates how much.
 

The world is now in a commodities cycle which probably has another decade to run.

India

Many years ago we started a series of probes on commodities, based on China's voracious appetite. Today, with a population in excess of one billion and one of the world's fastest-growing economies - its gross domestic product growing at about 8 percent - India someday will generate many of the same commodity-market pressures that are emanating from China.

These pressures are already evident in the oil markets. As Indian car ownership rises and new highways come online, some companies such as BHP Billiton Ltd. already are betting heavily on India commodity demand.

Ethanol

Brazil has developed a cost-effective alternative to gasoline. Instead of reaching for the gasoline, a Brazilian motorist spends $29 to fill up his car on ethanol made from sugar cane, an option that is available at 29,000 gas stations in Brazil. A comparable tank of gasoline would cost the motorist $36. Ethanol now accounts for as much as 20 percent of Brazil's transport fuel market. In the U.S., the government is encouraging car makers to produce vehicles that can run on ethanol. U.S. ethanol is produced from corn.

Agriculture

Agriculture often seen as the laggard in the current commodity boom may come to the fore. The world demand for food is rising each year. In the U.S., growth in wheat stockpiles is not keeping pace with demand. The U.S. Department of Agriculture recently estimated that inventories of wheat will fall to 143 million metric tons from 150 million metric tons.

Some $100 billion has moved into commodity index investments during the last two years. To put this in perspective, the total was estimated at $12 billion at the end of 2003.— CPM Group
 

A quest for excitement or lack of boredom is showing in the retail environment.

Online Buying

The new retail market involves the Internet. Added choices, more information and ease of execution was evident this Christmas. There was a 24 percent jump in Internet sales from last year. Consumers' growing confidence with Internet shopping helped propel Internet sales to the best showing since online sales records first were tracked in 1999. Consumers spent $143.2 billion on the Internet last year.

Search Engines

Search engines are sparking Internet interest by providing more information. Google has received most of the attention. Piper Jaffray brokerage predicted Google's stock price, which has climbed more than 350 percent since its initial public offering in 2004, and was $422 at the time, would hit $600 a share by the end of 2006. The search engine world also includes Yahoo and Microsoft. Another entry is Quaero, which is billed as Europe's answer to Google. Quaero - which means "to search" in Latin - is still in the development stage. Designers insist that Quaero will not just be a search engine, but also a set of tools for translating, identifying and indexing images, sound and text.

Deep Web

The deep Web, also called the invisible Web, refers to the mass of information that can be accessed via the World Wide Web but can't be indexed by traditional search engines. According to the chief technology officer at BrightPlanet Corp., more than 500 times as much information as traditional search engines "know about" is available in the deep Web. Interestingly, deep Web sites appear to receive 50 percent more monthly traffic than surface sites do and they have more sites linked to them, even though they are not really known to the public.
 

India's knowledge is producing economic results.

College Enrollment

Smart India has turned to education with enthusiasm. In 2005, India produced 200,000 engineering graduates, about three times as many as the United States and twice as many as all of Europe. The astonishing statistic is this: In 2005, India enrolled 450,000 students in 4-year engineering courses, meaning that its output of engineers will more than double by 2009.

Increasing numbers of science, business and technology students from elite colleges and universities in America are heading to India to get "global experience." Last summer, Yale president Richard Levin took a 12-member team to set up joint ventures with several Indian universities. Yale will send 30 interns to India this year and expects to send 50 next year. The Massachusetts Institute of Technology's India program flew 28 PhDs to India to pursue their research in science and economics.

Industrialized India

With all these engineers, India is seeing signs of industrial renewal - where local carmakers seek to sell abroad. With a car coming off the assembly line every 80 seconds, Tata Motors sees itself as competitive enough to make its biggest ever push into the export markets. "Made in India" is coming of age.

Before 2010, China and India's economies will be bigger than the United States. — Complete Investor, Winter 2006