By Jennifer Bawden
September 8, 2008
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It is a universal law, what goes up must come down.

Newton’s apple falls to the ground. Speaking of apples, doesn’t one spoiled apple spoil the bushel? Those nice clean treasures are now mixing with a growing number of rotten apples.

I would like to quote the head of the International Monetary Fund, Rodrigo Rato, who warned on September 15th that “there are risks that an abrupt fall in the dollar could be triggered by, or itself trigger, a loss of confidence in dollar assets.” He was referring to the risks taken on by the US government in its backing of toxic junk being brought at an alarming rate to the Fed window.

I thought Justice Litle of the Taipan Publishing Group said it best on September 16. “You’ve got to boil the frog slowly if you want him to stay in the pot”, referring to the Fed’s influx of money and the dollar’s drop.

Don’t let the pain of gold and silver losses over the past months let us forget that simple supply and demand dictates that when sovereign wealth funds sell dollars to amortize their risk, panic ensues and gold will be in great demand.

With a massive re-inflation campaign now underway to try to jumpstart the dying banking system and the economy, we won’t have to wait long.

For the first half of 08 we all heard Paulson, fearless leader of the Committee To Save The World give his standard rehearsed and almost apologetic answer, “a strong dollar is in the best interest of our economy.” Yet his hands were ties. On August 8, just as smart investors worldwide were doubling down on their dollars short trade, central bankers started to buy, buy, buy.

They will fight hard before giving up control.

Well, it’s been generally uphill for the buck ever since and it could continue its rise as the world continues to flee to the safety of T-Bills.

The dollar’s rise has been the single largest force in Gold’s and Silver’s tumble. Second only to the great deleveraging of hedge funds and investors who inadvertently threw the baby out with the bath water.

But not to worry, the tide is rising. Liquidity is being pumped into the system in breathtaking gulps in an attempt to keep the US credit creation machine going. The reality is, the American consumer will be forced to stop spending as much on credit and our economy will continue to deflate.

The consumer is tapped out, house prices are eroding, their life savings have been annihilated in the market and many more have lost, or will lose, their jobs.

Numerous forces are at play indicating a dollar rally in the near term, but eventually the piper will have to be paid. The excesses of the credit party of US citizens and the US Government will eventually prove too great, putting heavy downward pressure on the world’s reserve currency.

©2008 Bawden Capital. The information above and the opinions expressed in the Contrarian Consensus are those of the authors and do not necessarily represent that of Bawden Capital and/or its affiliates. This website has been prepared without regard to the individual financial circumstances and objectives of persons who view it. Information or opinions discussed in this website may not be suitable for everyone. Bawden Capital and the Contrarian Consensus makes every effort to provide you with useful information, but makes no representation that it is accurate or complete. Bawden Capital has no obligation to tell you when our opinions or information change. Our reports have been prepared solely for informational purposes, and are not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate trading strategy. Nothing in this article should be considered personalized investment advice. We give general advice only. Our staff writers are not licensed under securities laws. We cannot address your particular investment situation. Any communication between us can not be deemed as personalized investment advice. From time to time we will own or have owned stocks or ETFs we recommend. Do not make any investments without first doing you own due diligence and consulting your own investment advisor. We cannot be held accountable for the trading decisions you make!

By Jennifer Bawden
September 12, 2008
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Jennifer Bawden reporting from Marbella, Spain. In late August as I rushed along the boardwalk to the internet café on the beach (the signal was out at the house, as usual), I watched hundreds of tourists and locals sunning on the beach, having a leisurely drink at a café or slowly strolling to look at the sea side shops.

I thought of screaming “Run! Run! The tsunami will soon be upon you! Are you blind? Don’t you realize what’s coming? It’s time to get your affairs in order while you still can!”

I arrived in Spain in early June to get rid of my last bit of debt while I still could.

In the last 6 years I bought two properties: An apartment overlooking Palm Beach in Florida and, you guessed it, a summer villa in Marbella, Spain. Arguably two of the worst hit real estate markets in the world!

I knew the Southern Spain flood was about to turn into a tsunami so I priced my home well below market and prayed. Thanks to a harsh learning experience in Florida I undercut the market. We quickly found a willing buyer who disappeared back to England to work on the mortgage that he is sure he will get. Update: Woops! The market collapsed and banks stopped lending even to their best clients. So, our buyer reneged. Now it’s November and I’m stuck in purgatory. Thanks to the depreciation of the US peso since my purchase, my mortgage here has skyrocketed so all my efforts are dedicated to selling this gorgeous country club villa for half a million dollars less than what I put into it in the last three years. Even though I have it on at a bargain price, European buyers in this area are already now very sparse.

When I bought it off plan in 2002 I had a panoramic view of the sea. Now there are hundreds of apartments covering the hills. I would estimate 95% of them are empty and many small 3-bedroom apartments are priced for what I am offering my 5-bedroom villa with garden and pool.

Update: Apparently in the past month thousands of homeowners unable to sell their home over the summer are handing the keys to the banks. A familiar story with a predictable ending.

The point is, Spain has many more times the empty apartments than I saw on the Florida coast. Miami pales in comparison. To say that there is an abundant supply of unoccupied homes here would be a gross understatement.

This ticking European time bomb will surely affect the fate of the Euro. 10% of the Spanish economy was linked to the housing boom so it is no surprise that unemployment has jumped to 10%.

Experts are predicting prices could fall 35% in the next 3 years. After watching my Florida waterfront apartment fall from $450,000 to $240,000 in less the 18 months, I can tell you 35% will be clipped off prices here in Southern Spain by this time next year.

Things are about to go from bad to worse, fast.

When the Euro zone ‘wakes up’ to the gravity of the situation and starts slashing rates rather the raising them, it will be too late. 98% of Spanish loans are set off floating rates linked to the Euribor. The Euro’s massive retreat is just a matter of time.

©2008 Bawden Capital. The information above and the opinions expressed in the Contrarian Consensus are those of the authors and do not necessarily represent that of Bawden Capital and/or its affiliates. This website has been prepared without regard to the individual financial circumstances and objectives of persons who view it. Information or opinions discussed in this website may not be suitable for everyone. Bawden Capital and the Contrarian Consensus makes every effort to provide you with useful information, but makes no representation that it is accurate or complete. Bawden Capital has no obligation to tell you when our opinions or information change. Our reports have been prepared solely for informational purposes, and are not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate trading strategy. Nothing in this article should be considered personalized investment advice. We give general advice only. Our staff writers are not licensed under securities laws. We cannot address your particular investment situation. Any communication between us can not be deemed as personalized investment advice. From time to time we will own or have owned stocks or ETFs we recommend. Do not make any investments without first doing you own due diligence and consulting your own investment advisor. We cannot be held accountable for the trading decisions you make!

By Jennifer Bawden
September 5, 2008
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In a rush to deleverage before the mass panic set in, I sold my South Florida apartment and raced to Southern Spain to sell my property there. A New Yorker with limited driving experience, my 23-year-old assistant had to accompany me. As we drove home from Marbella, I stated that buying a house in Spain was singularly the biggest mistake of my life. For good measure, I added that God throws the good and bad at us simultaneously.

She replied “Everything that happens in life is a result of a series of good or bad decisions you have made.” Every decision has positive and negative consequences that bring you to where you are in life.”

This fast-forwarded me to my current decision to load up on gold mining stocks. Or rather leg in much lower to offset losses on others I chose to hold long term.

I have been waiting for my own version of triple witching; the day when cyclical forces push gold down for the summer, the dollar has a bounce and the market has the large September/ October correction I expect. My shopping list has been scrutinized and I’m ready to pounce!

Gold mining stocks have gotten pummeled each market sell off as the baby has been thrown out with the bath water. Many of the names on my shopping list are selling below their 5-year lows!

China, India and emerging market investments have done well but, as the US economy plunges, so will the markets in all these countries. Even Canada, rich with resources, follows us down when we dip. If you are in cash you will be able to grab some great buys after markets have been beaten down.

As the dollar rebounds and gold gets pushed down by very nervous central bankers, we will have our chance. I suggest holding on to the reins and waiting for the inevitable big washout this fall to get unbelievable deals in Goldcorp, Kinross and Yamana, to name a few.

So, I sit and wait patiently with my shopping list of Canadian Gold Mining Companies. Be ready with your own shopping list when the market crashes. I suggest ETFs over Mutual Funds, as they are much cheaper and easier to get in and out of.

A crashing market will pull most stocks down. The markets are accelerating. Things happen world wide now at lightening speed. My strategy will be to buy mining companies on the dips.

There is always a bull market somewhere and when the great inflation of the US currency resumes, I will be ready.

©2008 Bawden Capital. The information above and the opinions expressed in the Contrarian Consensus are those of the authors and do not necessarily represent that of Bawden Capital and/or its affiliates. This website has been prepared without regard to the individual financial circumstances and objectives of persons who view it. Information or opinions discussed in this website may not be suitable for everyone. Bawden Capital and the Contrarian Consensus makes every effort to provide you with useful information, but makes no representation that it is accurate or complete. Bawden Capital has no obligation to tell you when our opinions or information change. Our reports have been prepared solely for informational purposes, and are not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate trading strategy. Nothing in this article should be considered personalized investment advice. We give general advice only. Our staff writers are not licensed under securities laws. We cannot address your particular investment situation. Any communication between us can not be deemed as personalized investment advice. From time to time we will own or have owned stocks or ETFs we recommend. Do not make any investments without first doing you own due diligence and consulting your own investment advisor. We cannot be held accountable for the trading decisions you make!