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Quote of the Day

Thursday, February 09, 2012

February 9, 2012 -- I just went through the latest Rapaport jewelry and diamond magazine, and I was frankly amazed at the record prices paid at auction. Obviously, big money is investing in valuable tangibles. The prices that some of these jewels have gone for simply mind-blowing heights.

 

The Elizabeth Taylor diamond, sold at Christie's NYC, Dec., 2011, estimated sale price $2.3 million, it sold for $8.8 million.

 

A pear-shaped 100 carat white diamond, auctioned at Sotheby's May 1995, estimate $13 million, sold for $16.4 million.

 

Graff pink 24 carat pink diamond, sold a Sotheby's, estimated at $27 million, sold for $46.1 million, November 2010.

 

A blue 38 carat diamond auctioned at Christie's, estimate $15 million, sold Dec. 2008 for $34.3 million.

 

A Bulgari emerald brooch. Estimated at $500,000, sold Dec. 2011 at auction at Christie's, sale price $6.7 million.

 

A 24 carat pink diamond auctioned at Sotheby's -- estimate $27 million, sold Nov. 2010 for $46.15 million.

 

NOTE -- many of these rare jewels are one of a kind, and have never been put up for auction before.

 

The magazine lists over 30 of these fantastic jewels with almost all selling far above estimates.

 

I list just a few examples to show subscribers that big (huge) money is investing in almost priceless, rare tangibles. These stones are often handed down from generation to generation, and only appear when one generation puts a stone up for auction.

 

The fact is that today there are thousands of millionaires around the world and hundreds of billionaires. These people have enormous buying power, and there greatest problem is protecting their fortunes and their purchasing power. Hoarding great jewels is one way to do it. For instance, compare a $60 million rare one-of-a-kind diamond that weighs less than an ounce with $60 million worth of gold. And the diamond is smaller than the smallest joint of you little finger!

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You think this presidential race is nasty? The Founding Fathers had it beat. In the race between John Adams and Thomas Jefferson for president in 1800, Jefferson called Adams "a blind, bald, crippled, toothless man who is a hideous hermaphroditic character with neither the force and fitness of a man, nor the gentleness and sensibility of a woman."

 

In turn, Adams called Jefferson "a mean-spirited, low-lived fellow, the son of a half-breed Indian squaw, sired by a Virginia mulatto father."

 

Compare these with the relative politeness of today.

 

Below is a chart tracing the yield on the bellwether ten-year note. The income for lending your money to Uncle Sam is practically nothing.

 

As we move on, the cry will go up for INCOME. Where do we find anything like safe income? Answer -- get a cushy job with the government.

 

  

 

TODAY'S MARKET ACTION:

 

My PTI was up 2 at 6375. The moving average at 6334, so my PTI is bullish by 41.

 

The Dow was up 6.51 to 12890.46.

 Transports were up 10.48 to 5309.09.

 

Utilities were down 1.46 to 451.02.

 

NASDAQ was up 11.37 to 2927.23.

 

S&P 500 was up 1.99 to 1351.95.

 

There were 1533 advances and 1510 declines on the NYSE.

 

There were 180 new highs and 5 new lows.

March crude was up 1.00 to 99.71.

 

Total Volume on the NYSE and associated exchanges was 4.0 bn.

 

Bonds: Yield on the 10 year T-note was 2.03. Yield on the long T-bond was 3.18 Yield of the 91 day T-bill was 0.091%.

 

Dollar Index was down 0.03 at 78.60. Euro was up 0.37 at 132.90. Yen was down 1.07 at 128.81. Currency Prices as of 1 PM Pacific Time.

April gold was up 9.90 to 1741.20. March silver was up 0.21 to 33.91.

 

My Most Active Stocks Index was down 5 at 299.

 

The Big Money Breadth Index was unchanged at 992.

 

GDX was down 0.29 at 55.25.

 

HUI was down 1.07 to 533.09.

 

CRB Commodity Index was up 0.73 at 35.50.

 

The VIX was up 0.47 to 18.63.

Permanent Portfolio Fund (PRPFX) was down 0.07 at 49.29 (previous day closing). YTD Return: 6.94%.

 

Late Notes-- According to the Lowry's Buying and Selling Indices, there's little desire at this time either to buy or to sell. I note that Bernanke is almost talking the economy down. This allows him to add stimulus (print more money) in the weeks or months ahead, and thus give the President and the politicians what they want -- a higher stock market, a bit more inflation, and a "better" economy.

 

As for today's market, the Dow sunk back to close up only 6 points, back in its 5% line area. Another day of churning with not much buying or selling. Gold holding nicely above the 1700 area. We sit and wait.

 

My son, Ryan, bought a house in downtown San Francisco. The house throws off $3500 in profits. Ryan called me to tell me that a man offered him one million for the house. I told Ryan to keep the house and not sell it. It's income property bringing you in a nice little income. What can you do with the money if you sell the house? You can't get any income from bonds. You can't get any income from stocks or funds. No, keep the house as a great source of income. Everybody is screaming for income. Everyone needs income, and they can't find a safe place to get income. So keep your house in downtown San Fran. Consider it gold. Ryan got the point, and he's keeping his house and collecting the valuable income.