Act One

One has to wonder whether we are seeing Act One in what we have termed the “flight to tangibility”. Our original thesis involving  the shift towards hard assets involved a sharp decline in the dollar brought about by a crisis of confidence involving governmental finances. While we have no doubt that this latest food fight in Washington will be resolved, the ease with which lawmakers were willing to create a crisis of their own making gives us pause as to their ability to make the truly hard choices should a real crisis occur. I am absolutely staggered by the ignorance displayed on both sides regarding the real world implications of a default( soft or not).  While large scale holders such as the Chinese and Japanese sit in amazement at our inability to exhibit any kind of fiscal restraint, they should both hold their fire to some extent as they have both been willing participants (Japan especially) in this world wide game of print and spend.