Mar 18, 2009 Beverly Hills Economic Club Speech Ken Gerbino 321gold ...inc ...s

Kenneth J. Gerbino
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Kenneth J. Gerbino & Company
Mar 18, 2009

Two major problems: Banking Crises and Big Recession in Progress.
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The U.S. Government has three major programs going that are all inflationary. Bank Bailouts, Stimulus Package, Bloated Budget Package.
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All three programs are mostly inefficient, wasteful, and will require massive amounts of new money and credit injected into the economy. New estimates are now $4-5 trillion.
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First four months U.S. Budget deficit was $569 billion.
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Unemployment over 8%.
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All bailouts and taxpayer funded programs take money from people who would otherwise spend it themselves; therefore government programs (usually pet programs) are not needed and mostly inefficient. 8,000 plus earmarks on the budget and stimulus package alone.
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New Deal economics was a huge blunder - similar programs today. Roosevelt raised taxes to 90%. AAA (Agriculture Adjustment Administration) paid farmers not to grow crops and by 1935 we were importing corn, wheat and cotton. Digging a hole and filling it up is work but not good economic policy - GDP increases from the wages but no real wealth is created.
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So called Deflation is a ruse to allow inflationary policies to bail out the banks.
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Obama's New Energy Policy eliminates all incentives for Oil and Gas drilling and exploration in the U.S. Exact opposite as stated in his energy independent speech.
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Prices are declining from overpriced, overbought and speculative levels and the current pullback will reach equilibrium soon. Then inflation will reemerge

Result of the Above:

Prices of everything will again start to rise when the money supply starts to circulate.
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Wall Street will stabilize. But as inflation moves higher, interest rates will go much higher and this will hurt the stock market.
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Gold and Silver investments will become solid investments and an ultimate store of value.
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Currency traders will soon turn to gold as an alternative currency. Central banks and paper money losing credibility.
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Commodities will resume bull market:
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- 1) Supply constrained by curtailed projects due to banking crises.
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- 2) Demand looming with industrialization of third world continuing.
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- 3) Natural effects of the monetary excesses increasing prices.
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Gold in 1980 at $800 was overvalued but based on the U.S. Price Index's from 1789 should have been worth $265. Money supply in the U.S. has increased 5.6 times since 1980. This implies a minimum gold price of $1484. With $1-2 trillion of more money supply possible this ratio should go much higher. India and Chinese demand much higher than 1980. Bullish.
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Mining stocks: growth industry as global progress revives mineral demand.
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Precious metal companies will excel in the coming "deflation" to inflation environment.
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Copper above $1.70. One of the most important economic indicators saying no Great Depression.
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Best Investments: Gold, Swiss Francs, T-Bills, Oil, Basic Materials.

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Mar 17, 2009
Ken Gerbino