As IF Times

link Gold Rising as Euro Weakens Spurs More Speculation (Update3) – Bloomberg.com.

While this all makes sense in the context of history, all of the publicly broadcasted incidences of professionals plowing into gold should throw up a cautionary flag to people.  Some big name smart guys are long the metal including George Soros, John Paulson etc, people who are known in investment circles as savvy people.

Upon reflection, history has indeed shown that when nations debase their currencies and there is financial panic, gold is the haven of refuge.  Of course, history does have a tendency to repeat but here’s something to consider.  At the moment, gold is still below the inflation adjusted highs recorded a while ago.  Many will say that this means it’s a good time to get in.  In my lifetime of experience, there is seldom a time when the investment train is waiting for you at the station.  Usually, you are chasing the rapidly moving train down the track.

As we all should know, markets are a discounting mechanism, that is, prices already reflect anticipated news at any given time.  Professionals move into an investment before the public realizes what’s going on.  Typically, the public clambers on board near the end of any particular move.  The fact that neither gold nor gold stocks are moving significantly higher should be a warning sign. All this financial distress crowding the headlines didn’t just happen, the crisis has been simmering for the better part of a year or more, so there has been ample time for gold and gold stocks to have discounted this.

That’s also not to say that the dangers in the financial environment are near a resolution.  Unless employment really picks up in a meaningful way, specifically non government driven employment, it’s difficult to see how the financial system can recover given the enormous tax and cost burdens coming down the pike. While to most people, the problems of Greece, Portugal and Spain may be distant and abstract, the ripple effects of how these nations treat their problems have wide reaching implications for all.  Backstopping all of these currencies is by implication, the U.S. dollar and we know what good shape that country is in.  No wonder people are being pushed towards gold.

One other thing to keep in mind about an environment in which gold rockets to the dizzying prices some forecasters have called for; $2000, $5,000 or $10,000 dollars an ounce.  If you consider the type of environment which would give rise to the price of gold reaching those kinds of levels, it would imply some pretty ugly conditions in the economy and even in society.  If it really got that bad, as I’ve always opined, you’re better off owning guns than bars of gold.  Remember, the U.S. is the home of the second amendment.  Let’s not even go there.

link  Supreme Court rules in favor of 6,000 black applicants for Chicago firefighter jobs – latimes.com.

This will be interesting.  If one reads the linked article closely, one won’t find anything about the firefighter’s exam that excluded race, at least not that I can see.  On a job competency test, the threshold needed to pass for consideration to be a firefighter was a score above 89, a threshold which was applied after receiving 26,000 applicants for only a few hundred jobs.  I’ll assume the test is more than asking candidates which is the working end of the hose.

Somehow, this has transmogrified into a racial issue with potential estimated damages of over $100 million payable to aggrieved candidates.  !!!  This will be interesting not because of the debate over the common sense of the issue, but because the dispute is centered in Chicago, home of the President AND hizzoner Mayor Richard Daley, who will each wind up on opposite sides of the battle.  If the city loses, they will have to pony up $100 real large, money which they don’t have.  If  the city wins, it will be seen as another blow to Obama’s allies.

But before we discuss this, there are some aspects to the statistics that were not revealed.  While the article states that 6000 blacks were excluded because of the “arbitrary” cutoff line of the test scores, how many whites were excluded as well?  How many Asians? How  many Hispanics?  Were there any blacks that tested over the threshold score? If so, does this not preclude a racial issue and instead create an issue of aptitude?   Apparently, experts insist that even with much lower scores than the threshold, people could become competent firefighters.  Perhaps.  But in the real world, people will choose the best available quality item that their purchasing power will allow.  If this is not evidently common sense, it’s because there are lawyers involved. 

For me, I cannot recall a time when shopping for food, that I didn’t try to select the best apples or bunch of bananas in the produce area.  I’m pretty sure I’ve never selected the off color product thinking, what the heck, it’s  all the same.   In the case of spending taxpayer dollars, why wouldn’t the city try to get the best candidates possible for the job as a matter of duty to the taxpayers?  Whether the civil servant is a firefighter, policeman or ambulance driver, the public should expect that the employees have gone through some kind of competency filter not a quota system.  When your house is aflame, you don’t want to be directing the fireman where to point the hose. The race of the guy holding the hose is irrelevant.   If a city cannot set some kind of standards for hires ( and remember we’re talking civil servants here), why have any at all? Just hire people on a  first come first served basis. 

In fact, think of how this policy would greatly expand the supply of doctors in the country.  Overnight, the applicants to medical school would skyrocket and the health care crisis is solved!  As we all know, they’ve essentially done this to driver’s tests, since competency is clearly not required, at least not  in our town. The only other area of work that has no test for competence is politics and look where that’s got us.

However, as said earlier, the interesting part of this story will be how the opposing factions resolve the issue.  There are some pretty powerful and vested interests here and the implications are far reaching.  Kind of like two mafia groups fighting for dominance over turf, except in this case, they’re all members of the same family.  This will be better than Godfather 2.