ParkTwain's Parlor

Finally have a big one-day winner - HTI

It's been a while.

Presently long HTI, TPX, and CHAP.

[SundialMan]

Israeli religious marriage

ParkTwain, Israel was founded by a majority of socialist Zionists and some Orthodox religious Jews. They were both interested in keeping the country Jewish in nature, as a haven for Jews who arrived because of choice or persecution in other countries. Many of both the socialists and the Orthodox had seen young Jews in Europe marry outside their faith or profess an internationalism with no connection to Judiasm. They did not want to facilitate such assimilationist and interfaith marriage methods in Israel, so they gave the religious groups the monopoly on marriages. They basically didn't uproot themselves from other countries to come all the way to the land of the Bible, face physical hardships and attacks by Arabs (dating from even before the 1929 Arab riots) to then be indifferent about a Jewish identity for their marrying children.

I don't have the statistics, but I don't believe there is this large movement to get married in Europe among young Israelis that your post implied. Some of the young socialists or "citizens of the world" may do it, but many socialists and athiests (not mutually exclusive categories) have put up with dealing with a rabbi for an hour or two on their wedding day in Israel.

Today I read this useful schematic history of Islam

I found this essay ("a secular history of Islam") interesting and informative, though I don't yet take every statement as true history. It looks like it can be a basis for further reading and understanding about Islamic societies. The essay's author, Tariq Ali, was raised in Lahore, Pakistan, but received his higher education in England and still lives there today. He is a strident athiest and democratic socialist.

http://www.lrb.co.uk/v24/n03/ali_01_.html

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Judaism, Christianity and Islam all began as versions of what we would today describe as political movements. They were credible belief-systems which aimed to make it easier to resist imperial oppression, to unite a disparate people, or both. If we look at early Islam in this light, it becomes apparent that its Prophet was a visionary political leader and its triumphs a vindication of his action programme. Bertrand Russell once compared early Islam to Bolshevism, arguing that both were 'practical, social, unspiritual, concerned to win the empire of this world'. By contrast, he saw Christianity as 'personal' and 'contemplative'. Whether or not the comparison is apt, Russell had grasped that the first two decades of Islam had a distinctly Jacobin feel. Sections of the Koran have the vigour of a political manifesto, and at times the tone in which it addresses its Jewish and Christian rivals is as factional as that of any left-wing organisation. The speed with which it took off was phenomenal. Academic discussion as to whether the new religion was born in the Hijaz or Jerusalem or elsewhere is essentially of archaeological interest. Whatever its precise origins, Islam replaced two great empires and soon reached the Atlantic coast. At its height three Muslim empires dominated large parts of the globe: the Ottomans with Istanbul as their capital, the Safavids in Persia and the Mughal dynasty in India.
//

The mullahs in Iran are like Jerry Falwell? You wish they were. You'd have a lot less concerns. When was the last time Falwell got his congregation together to stone an adulterer or adulteress to death?

Is the only reason you think that Falwell is "softer" than the mullahs is that his running orders come ostensibly from the New Testament rather than the Old? (I doubt that you would want to have lived under King David.) My point is that both Iran's mullahs and Jerry Falwell are theocratic fascists, but of course Falwell hasn't yet gained his office. Each represents a step backward, a regression, in the history of mankind.

As for Israel's requiring a religious marriage, I've known that for 30 years. There are a few issues to discuss here. Firstly, this applies to Jews only, i.e., people claiming to be members of the religion. Secondly, Israel recognizes weddings that take place overseas. Arriving immigrants from Russia or Ethiopia don't have to be remarried. And native Israeli Jews have been known to go to Cyprus or Europe and get married, return with an accepted wedded status.

I just thought that the BBC article was interesting in documenting that many young Israelis are going overseas to have a non-religious wedding ceremony. Is the Israeli law behind this practice subject to repeal by the Israeli legislature? Is so, I'm interested in why it hasn't been repealed yet, since it represents the interests of a political minority in Israel.

Lastly, ParkTwain, where is your respect for multiculturalism, especially in a foreign country? Are you saying they should change their religion and culture just to please someone who lives 7-11,000 miles away? I thought liberalism and tolerance were all about accepting other people's cultures. Or is that only for non-Judeo-Christian cultures? I doubt that a non-Catholic could be married in a ceremony in the political borders of Vatican City. And I'd really doubt anyone other than a Muslim could be married in Saudi Arabia.

How I feel about Israeli laws was not my point about mentioning Israel's marriage restrictions, but rather the question of how is it that a religious faction comprising an electoral minority in a democracy has such prescriptive sway about such basic social behaviors.

As I understand it, there are non-Jews who are citizens of the Israeli state -- or should I say less than fully enfranchised citizens of the Israeli state. So those folks can't have a legally recognized non-Orthodox wedding within Israel? I would say, this ain't the way to build social solidarity within a nation. But Israel certainly isn't the only practioner of this kind of "tribal" notion of citizenship: see also Germany.

I am distinctly biased in favor of the American principle of the government not favoring or prohibiting religious practices per se.

I'll read your response to this, should you post it, but I think we both have heard each other out and offer a lot more heat than light to anyone reading this exchange. I've heard your type of response - and my type of response - many times before.

You know next to nothing about me, except from a couple of posts on an Internet chat board. Please don't jump to your conclusions.

Finally, here is an interesting essay I found recently by Hayek in which he explains why he didn't consider himself a "conservative" but rather a classical "liberal" (i.e., libertarian) or "Old Whig."

http://www.geocities.com/ecocorner/intelarea/fah1.html

"It is for this reason that to the [classical] liberal neither moral nor religious ideals are proper objects of coercion, while both conservatives and socialists recognize no such limits. I sometimes feel that the most conspicuous attribute of [classical] liberalism that distinguishes it as much from conservatism as from socialism is the view that moral beliefs concerning matters of conduct which do not directly interfere with the protected sphere of other persons do not justify coercion. This may also explain why it seems to be so much easier for the repentant socialist to find a new spiritual home in the conservative fold than in the [classical] liberal."

[SundialMan]

"BTW - Did you know that Israel recognizes a marriage that takes place domestically only if it is performed under Orthodox sanction? Talk about using religion as a hammer! Check out this article: http://news.bbc.co.uk/1/hi/programme...ld/4215160.stm"

Park, The mullahs in Iran are like Jerry Falwell? You wish they were. You'd have a lot less concerns. When was the last time Falwell got his congregation together to stone an adulterer or adulteress to death?

As for Israel's requiring a religious marriage, I've known that for 30 years. There are a few issues to discuss here. Firstly, this applies to Jews only, i.e., people claiming to be members of the religion. Secondly, Israel recognizes weddings that take place overseas. Arriving immigrants from Russia or Ethiopia don't have to be remarried. And native Israeli Jews have been known to go to Cyprus or Europe and get married, return with an accepted wedded status.

Lastly, ParkTwain, where is your respect for multiculturalism, especially in a foreign country? Are you saying they should change their religion and culture just to please someone who lives 7-11,000 miles away? I thought liberalism and tolerance were all about accepting other people's cultures. Or is that only for non-Judeo-Christian cultures? I doubt that a non-Catholic could be
married in a ceremony in the political borders of Vatican City. And I'd really doubt anyone other than a Muslim could be married in Saudi Arabia.

I'll read your response to this, should you post it, but I think we both have heard each other out and offer a lot more heat than light to anyone reading this exchange. I've heard your type of response - and my type of response - many times before.

Jack

Remember that right now Iran is being governed by their equivalent of a committee of Jerry Falwells, and there are signs that their people are getting tired of the act. What Iran's president says to the world is meant for the play it gets at home.

I think a legitimate response to these pronouncements out of Iran is the question: Why is Iranian Shia Islam so filled with hate at Israel? Are these Shia "family values"? Hate-mongers should be called out and marginalized in international relations just as in domestic politics.

There is the point of view that all this international hot air is an indication of the very real struggle for regional power in the Middle East, that Iran has chosen to step into the vacuum that was left by the removal of pressure (against the U.S.) formerly provided by the Soviet Union regarding Middle East affairs. Everyone's got an agenda, nothing's new there. And the militarist forces in the U.S., Iran, and Israel like it that way; it gives their respective militaries a "mission" out there.

What disappoints me is that American politics has now descended to the terms of debate provided by the tribal, religion-dominated societies of the Middle East, including that satellite of the West, Israel. It somehow is now seen as a wonderful thing that the U.S. is now "just like Israel" in that we now have to mobilize our entire society to address "terrorism" and wear it with a badge of honor and bravery, instead of looking at "how did we get here?" (i.e., is there no limit to America's support for Israel?) and "is all this necessary because of 20 guys carrying box cutters?" (i.e., the FAA kowtowed to the domestic airline companies about not securing airliner cockpits against criminal acts). The U.S. is NOT basically like Israel, and I don't think that the majority of Americans really wants that.

BTW - Did you know that Israel recognizes a marriage that takes place domestically only if it is performed under Orthodox sanction? Talk about using religion as a hammer! Check out this article: http://news.bbc.co.uk/1/hi/programme...ld/4215160.stm

[SundialMan]

reply to earlier post

Iran may be a 5 years away from a full workable nuclear program. But considering Iran's holding a "there was no Holocaust" conference and also recently demanding that European countries send them documentation that the Holocaust occurred, it is in Israel's - or the rest of the world's - best interest to consider the consequences of a nuclear Iran today and raise the issue. There are many towns in the US that plan 5 or 10 years ahead for water and sewage treatment. The nuclear Iran issue could lead to a lot more pollution than some high part per million bacteria in water. And many people discuss start up companies on these boards that won't have a significant market for 3-5 years from now.

Implying that anyone who is concerned about a nuclear Iran today is not one of the "calmer heads" is wrong. In fact, it is just the opposite. A calmer head would consider what to do today rather than wait until the last minute in an actual or near-actual nuclear blackmail situation.

Jack

Presently long CHAP and TPX

Bought these a few days ago and feeling OK about it ... How can we not make any $$$ right now in this market?

Comparing large oil co. stocks to the XOI

The XOI is a tradeable index of large oil company stocks.

Only four stocks that are XOI components outperformed the XOI in the last 12 months: REP, CVX, MRO, and XOM. The other components either underperformed or pretty much tracked the index.

http://finance.yahoo.com/q/bc?s=%5EXOI&t=1y&l=on&z=l&q=l&c=cvx,mro,rep,xom

You can type the stock symbol of any other stock (such as another oil stock) into the "Compare" field to see whether has performed better or worse than these.

Maybe some of the other smaller oil companies have done even better.

MRO performed with this crowd over the last 12 months, but has outperformed them over the last 24 months and over the last 5 years. I did a quick check on MRO's geographic areas of operations (sources of its oil/gas) and practically none of it is from the Middle East. Seems to me this would be an advantage if Iran and Iraq go cuckoo later this year. What good is a high price for oil if you can't get yours shipped out of the Gulf (like CVX and XOM)? I wonder whether this accounts for MRO's outperformance.

This is how I would start to find the right oil stock to own going forward. I don't want big exposure to a Mid East source or to shipments that go through the Persian Gulf.

A lot of the oil stocks move in lockstep with each other, so owning any one of those is an equivalent play (at least with regard to past price performance).

Now, go make some money!

"New Research: If a Stock Drops 5 Days in a Row, Should You Buy It?"

http://biz.yahoo.com/tm/070126/15384.html

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Avg 1-week return of stocks that close down 5+ consecutive days: 0.98%
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http://www.trade-ideas.com/StockInfo/more_down_days.html

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Description

This list shows which stocks have gone down for more than 5 consecutive days. This is based strictly on the closing price of the stock each day.

The symbol with the longest losing streak are on top. After that they are sorted by volume.
//

Israel is behind nuke rhetoric on Iran

Other non-Israel experts say Iran is "at least half a decade away" from being able to operate large numbers of cascading centrifuges for purifying uranium for bomb-making purposes.

Article by the Manchester Guardian (UK):

http://observer.guardian.co.uk/world/story/0,,2000303,00.html

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Peter Beaumont, foreign affairs editor
Sunday January 28, 2007

Iran's efforts to produce highly enriched uranium, the material used to make nuclear bombs, are in chaos and the country is still years from mastering the required technology.

Iran's uranium enrichment programme has been plagued by constant technical problems, lack of access to outside technology and knowhow, and a failure to master the complex production-engineering processes involved. The country denies developing weapons, saying its pursuit of uranium enrichment is for energy purposes.

Despite Iran being presented as an urgent threat to nuclear non-proliferation and regional and world peace - in particular by an increasingly bellicose Israel and its closest ally, the US - a number of Western diplomats and technical experts close to the Iranian programme have told The Observer it is archaic, prone to breakdown and lacks the materials for industrial-scale production.

The disclosures come as Iran has told the UN nuclear watchdog, the International Atomic Energy Agency [IAEA], that it plans to install a new 'cascade' of 3,000 high-speed centrifuges at its controversial underground facility at Natanz in central Iran next month.

The centrifuges were supposed to have been installed almost a year ago and many experts are extremely doubtful that Iran has yet mastered the skills to install and run it. Instead, they argue, the 'installation' will more probably be about propaganda than reality.

The detailed descriptions of Iran's problems in enriching more than a few grams of uranium using high-speed centrifuges - 50kg is required for two nuclear devices - comes in stark contrast to the apocalyptic picture being painted of Iran's imminent acquisition of a nuclear weapon with which to attack Israel. Instead, say experts, the break-up of the nuclear smuggling organisation of the Pakistani scientist Abdul Qadheer Khan has massively set back an Iran heavily dependent on his network.

A key case in point is that Tehran originally procured the extremely high-quality bearings required for the centrifuges' carbon-fibre 'top rotors' - spinning dishes within the machines - from foreign companies in Malaysia.

With that source closed down two years ago, Iran is making the bearings itself with only limited success. It is the repeated failure of these crucial bearings, say some sources, that has been one of the programme's biggest setbacks.

Iran is also believed to be critically short of key materials for producing a centrifuge production line to highly enrich uranium - in particular the so-called maraging steel, able to be used at high temperatures and under high stress without deforming - and specialist carbon fibre products. In this light, say some experts, its insistence that it will install 3,000 new centrifuges at the underground Natanz facility in the coming months is as much about domestic PR as reality.

The growing recognition, in expert circles at least, of how far Iran is from mastering centrifuge technology was underlined on Friday by comments by the head of the IAEA, whose inspectors have been attempting to monitor the Iranian nuclear programme.

Talking to the World Economic Forum at Davos, Switzerland, Mohamed El Baradei appealed for all sides to take a 'time out' under which Iranian enrichment and UN sanctions would be suspended simultaneously, adding that the point at which Iran is able to produce a nuclear weapon is at least half a decade away. In pointed comments aimed at the US and Israel, the Nobel Peace prize winner warned that an attack on Iran would have 'catastrophic consequences'.

Yet some involved in the increasingly aggressive standoff over Iran fear tensions will reach snapping point between March and June this year, with a likely scenario being Israeli air strikes on symbolic Iranian nuclear plants.

The sense of imminent crisis has been driven by statements from Israel, not least from Prime Minister Ehud Olmert, who has insisted that 2007 is make-or-break time over Iran's nuclear programme.

Recent months have seen leaks and background briefings reminiscent of the softening up of public opinion for the war against Iraq which have presented a series of allegations regarding Iran's meddling in Iraq and Lebanon, the 'genocidal' intentions of its president, Mahmoud Ahmadinejad, and its 'connections' with North Korea's nuclear weapons programme.

It also emerged last week in the Israeli media that the country's private diplomatic efforts to convince the world of the need for tough action on Iran were being co-ordinated by Meir Dagan, the head of Israel's foreign intelligence service, Mossad.

The escalating sense of crisis is being driven by two imminent events, the 'installation' of 3,000 centrifuges at Natanz and the scheduled delivery of fuel from Russia for Iran's Busheyr civil nuclear reactor, due to start up this autumn. Both are regarded as potential trigger points for an Israeli attack.

'The reality is that they have got to the stage where they can run a small experimental centrifuge cascade intermittently,' said one Western source familiar with the Iranian programme. 'They simply have not got to the stage where they can run 3,000 centrifuges There is no evidence either that they have been stockpiling low-enriched uranium which could be highly enriched quickly and which would give an idea of a malevolent intent.'

Another source with familiarity with the Iranian programme said: 'Iran has put all this money into this huge hole in the ground at Natanz; it has put a huge amount of money in these P-1 centrifuges, the model rejected by Urenco. It is like the Model T Ford compared to a Prius. That is not to say they will not master the technology eventually, but they are trying to master very challenging technology without access to everything that they require.'
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Gann's How to Make Profits in Commodities

Just picked up a used copy for $10.00 in hardcover at a local used bookstore. This is a tough book to find at a low price. See Amazon.com, Alibris.com, and Abebooks.com to get my point.

[mimo_100]

The Future Worth Of A Nickle

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THE FUTURE WORTH OF A NICKLE
by Mike "Mish" Shedlock

"People who melt pennies or nickels to profit from the jump in metals prices could face jail time and pay thousands of dollars in fines, according to new rules out Thursday," reported USA Today last week.

"Soaring metals prices mean that the value of the metal in pennies and nickels exceeds the face value of the coins. Based on current metals prices, the value of the metal in a nickel is now 6.99 cents, while the penny's metal is worth 1.12 cents, according to the U.S. Mint…

"'The nation needs its coinage for commerce,' U.S. Mint director Ed Moy said in a statement. 'We don't want to see our pennies and nickels melted down so a few individuals can take advantage of the American taxpayer. Replacing these coins would be an enormous cost to taxpayers'…

"Under the new rules, it is illegal to melt pennies and nickels. It is also illegal to export the coins for melting. Travelers may legally carry up to $5 in 1- and 5-cent coins out of the USA or ship $100 of the coins abroad 'for legitimate coinage and numismatic purposes.'"

Note the irony in the mint for being concerned about those who would "take advantage of the American taxpayer," when the actual production cost for each penny is now up to 1.73 cents, according to the Houston Chronicle. Year in and year out, The U.S. Mint wastes money by coining pennies.

Notice that the Mint produced $78,612,000 worth of pennies at a cost of $135,998,760, thereby wasting $57,386,760 of taxpayer money through November 2006. Worse yet are the continued handling charges (and time wasted) by merchants and banks sorting and counting the damn things.

Following is an e-mail conversation I had with John Rubino at Dollarcollapse.com shortly after I wrote "Pennies, Nickels, and Dollars":

Mish: Oddly enough, it is quite likely that The Mint will bring upon the very conditions it hopes to prevent! Telling people 20 nickels are worth 40% more than a dollar can only invite hoarding.

Rubin Exactly! I told my 9-year-old about the nickel thing today (he's home from school with a cold) and he immediately got our change jars out and started picking out the nickels.

The Mint had to be crazy to announce that a nickel is worth 7 cents. I got to thinking about this a bit more, and a nickel is really 0.05 dollars plus a call option on the price of copper and nickel (the metals) in the nickel. If that option is ITM (in the money) enough, the mint cannot prevent people from hoarding them, which will in turn drive up the cost of producing them. In fact, the actual price does not even have to get high enough; the mere expectation that metal prices will get high enough could cause hoarding. Of course, the Mint tried to negate that call option by making it illegal to melt the coins, but that will not stop hoarding if the expected or actual price of copper and nickel gets high enough.

All the Mint really accomplished was telling everyone that a nickel is backed up by something useful, even if a dollar is not. Eventually, this is likely to force the mint to debase the nickel by replacing the copper and nickel in the nickel with steel or aluminum.

Recall that the Mint long ago replaced much of the nickel in nickels with copper, just as it removed the silver in silver dollars and replaced the copper in pennies with zinc. That is actually the process I was referring to when I suggested nickels would soon be confiscated.

In the short term, it is likely the value of a nickel drops to a nickel or less because of the falling price of copper. If there were as much nickel in nickels as there used to be, then nickels would be worth even more than today's copper nickels.

Many of you know that I have been bearish on copper for quite some time. I have been bearish on copper simply because so much of it is used in housing. I expected that symmetrical triangle to break down, and it did. Also note that I was lenient in how I redrew that triangle. The lighter blue line at the base was the lower edge of the previous triangle I was looking at.

We have since then seen a retest of support at the 320 level that seems to have failed, as well as multiple failed tests of the triangle (using previous lines). My target remains the 220 level, but 160-180 is not out of the question. Technically, copper is broken. Can it blast higher anyway? Yes, it can. I just do not think it is likely.

Exactly what are Dr. Copper and Lumber telling us? To me, it is obvious. This economy is in trouble.

Let's now return to my previous question: "In what time frame will the current (and probably soon-to-be confiscated) nickel be worth more than a dollar?"

Aaron Krowne gave a couple of possible answers to that question on AutoDogmatic.com:

"If base metal values continue to increase by 5% per year on average, and the dollar continues to depreciate by about the same, then in about 26½ years, a nickel will be worth a dollar in inherent value. If the rates are 10% per year, then in a bit over 13 years, this milestone will be reached."

Some might think Aaron is asking too much, others too little, and in the short term, I am still calling for a pullback in copper prices. But what's to lose by hoarding nickels? Oddly enough, hoarding nickels is a hedge against both hyperinflation and deflation. If hyperinflation kicks in, a nickel might be worth more than a quarter (in metal content) in no time flat. If deflation kicks in as I suspect, cash will be a good thing to have. If you are going to hold cash (change), it may as well be in nickels.

Regards,

Mike Shedlock ~ "Mish"

Editor's Note: Michael Shedlock (Mish) worked in the financial services industry for 20 years at some of the top institutions in the country including Harris Bank, the Bank of Montreal, Bank One, First National Bank of Chicago, and First Data Corp. Mish is currently doing economic and investment research for a number of clients. In addition, Mish runs one of the more popular stock boards on the Motley Fool, Investment Analysis Clubs/Mishedlo and one of the more popular boards on Silicon Investor as well, Mish's Global Economic Trend Analysis.
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Rob usually catches spelling anomalies.

THE FUTURE WORTH OF A NICKLE
by Mike "Mish" Shedlock

I believe that nickel is the accepted spelling of the US coin, although nickle is a variant listed in Webster.

bot BVX today, sold ICON

holding THI, DISCA

may still buy HTI going forward

My trading acct will probably end the CY with a measly +12% or so gain. I lost track of the market early in the summer due to major problems at work and never got my mojo back.

from The Daily Reckoning blog - value of a nickel

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THE FUTURE WORTH OF A NICKLE
by Mike "Mish" Shedlock

"People who melt pennies or nickels to profit from the jump in metals prices could face jail time and pay thousands of dollars in fines, according to new rules out Thursday," reported USA Today last week.

"Soaring metals prices mean that the value of the metal in pennies and nickels exceeds the face value of the coins. Based on current metals prices, the value of the metal in a nickel is now 6.99 cents, while the penny's metal is worth 1.12 cents, according to the U.S. Mint…

"'The nation needs its coinage for commerce,' U.S. Mint director Ed Moy said in a statement. 'We don't want to see our pennies and nickels melted down so a few individuals can take advantage of the American taxpayer. Replacing these coins would be an enormous cost to taxpayers'…

"Under the new rules, it is illegal to melt pennies and nickels. It is also illegal to export the coins for melting. Travelers may legally carry up to $5 in 1- and 5-cent coins out of the USA or ship $100 of the coins abroad 'for legitimate coinage and numismatic purposes.'"

Note the irony in the mint for being concerned about those who would "take advantage of the American taxpayer," when the actual production cost for each penny is now up to 1.73 cents, according to the Houston Chronicle. Year in and year out, The U.S. Mint wastes money by coining pennies.

Notice that the Mint produced $78,612,000 worth of pennies at a cost of $135,998,760, thereby wasting $57,386,760 of taxpayer money through November 2006. Worse yet are the continued handling charges (and time wasted) by merchants and banks sorting and counting the damn things.

Following is an e-mail conversation I had with John Rubino at Dollarcollapse.com shortly after I wrote "Pennies, Nickels, and Dollars":

Mish: Oddly enough, it is quite likely that The Mint will bring upon the very conditions it hopes to prevent! Telling people 20 nickels are worth 40% more than a dollar can only invite hoarding.

Rubin Exactly! I told my 9-year-old about the nickel thing today (he's home from school with a cold) and he immediately got our change jars out and started picking out the nickels.

The Mint had to be crazy to announce that a nickel is worth 7 cents. I got to thinking about this a bit more, and a nickel is really 0.05 dollars plus a call option on the price of copper and nickel (the metals) in the nickel. If that option is ITM (in the money) enough, the mint cannot prevent people from hoarding them, which will in turn drive up the cost of producing them. In fact, the actual price does not even have to get high enough; the mere expectation that metal prices will get high enough could cause hoarding. Of course, the Mint tried to negate that call option by making it illegal to melt the coins, but that will not stop hoarding if the expected or actual price of copper and nickel gets high enough.

All the Mint really accomplished was telling everyone that a nickel is backed up by something useful, even if a dollar is not. Eventually, this is likely to force the mint to debase the nickel by replacing the copper and nickel in the nickel with steel or aluminum.

Recall that the Mint long ago replaced much of the nickel in nickels with copper, just as it removed the silver in silver dollars and replaced the copper in pennies with zinc. That is actually the process I was referring to when I suggested nickels would soon be confiscated.

In the short term, it is likely the value of a nickel drops to a nickel or less because of the falling price of copper. If there were as much nickel in nickels as there used to be, then nickels would be worth even more than today's copper nickels.

Many of you know that I have been bearish on copper for quite some time. I have been bearish on copper simply because so much of it is used in housing. I expected that symmetrical triangle to break down, and it did. Also note that I was lenient in how I redrew that triangle. The lighter blue line at the base was the lower edge of the previous triangle I was looking at.

We have since then seen a retest of support at the 320 level that seems to have failed, as well as multiple failed tests of the triangle (using previous lines). My target remains the 220 level, but 160-180 is not out of the question. Technically, copper is broken. Can it blast higher anyway? Yes, it can. I just do not think it is likely.

Exactly what are Dr. Copper and Lumber telling us? To me, it is obvious. This economy is in trouble.

Let's now return to my previous question: "In what time frame will the current (and probably soon-to-be confiscated) nickel be worth more than a dollar?"

Aaron Krowne gave a couple of possible answers to that question on AutoDogmatic.com:

"If base metal values continue to increase by 5% per year on average, and the dollar continues to depreciate by about the same, then in about 26½ years, a nickel will be worth a dollar in inherent value. If the rates are 10% per year, then in a bit over 13 years, this milestone will be reached."

Some might think Aaron is asking too much, others too little, and in the short term, I am still calling for a pullback in copper prices. But what's to lose by hoarding nickels? Oddly enough, hoarding nickels is a hedge against both hyperinflation and deflation. If hyperinflation kicks in, a nickel might be worth more than a quarter (in metal content) in no time flat. If deflation kicks in as I suspect, cash will be a good thing to have. If you are going to hold cash (change), it may as well be in nickels.

Regards,

Mike Shedlock ~ "Mish"

Editor's Note: Michael Shedlock (Mish) worked in the financial services industry for 20 years at some of the top institutions in the country including Harris Bank, the Bank of Montreal, Bank One, First National Bank of Chicago, and First Data Corp. Mish is currently doing economic and investment research for a number of clients. In addition, Mish runs one of the more popular stock boards on the Motley Fool, Investment Analysis Clubs/Mishedlo and one of the more popular boards on Silicon Investor as well, Mish's Global Economic Trend Analysis.
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