The analysts from Casey Research proof this is not the case, they give a clear example that one very well-informed investment decision per decade is all you need to retire with a small fortune. And we’re not talking about stock picking here, buying a stock like Microsoft (MSFT) at its IPO would have given you a 30,138% gain, but picking these kind of winners is really hard. The example from Casey isn’t about becoming lucky by buying winners but about having lots patience and identifying major economic trends early.

The story starts in 1970 with the purchase of one troy ounce of gold for $35. In January 1980 the price of gold hit a peak of around $850, but in this example the gold is sold at $627 and invested into the Japanese Nikkei index. One decade later it’s time for the next investment, the Nikkei went up more than fivefold and the initial capital of  $35 was turned into $3,548. This money could then be invested in the NASDAQ and sold for a tenfold profit in 2000. Oil or gold were a good place to put the tech money into, an investment into oil would have given you close to $112,336 while an investment in gold would have quadrupled your investment to $134,081.

Basically, if a young guy in the 1970s identified these trends he could have turned $1,000 into over $3 million by the time he retired. Here’s the chart from Casey Research, they reached a higher number as they wrote this report in 2008 when oil was still trading over $100. Now the challenge is to identify the trend for the next ten years

One of the interviews I enjoyed reading today was one with Jim Rogers over at The Economic Times. He predicts a lot of inflation is ahead of us and believes it’s dangerous to short stocks right now because of the risk of hyperinflation. Rogers claims quantitative easing (the printing of money) could cause huge nominal increases in stock markets, the S&P 500 could triple and in the case of a US dollar collapse you could see the S&P 500 at 50,000 and the Dow Jones at 1,000,000 due to Weimar-like hyperinflation.

What kind of a market are you witnessing now?

It’s a bear market rally. I was going to say I don’t think S&P 500 will see new highs. But I have to quickly temper that by saying against the dollar because the S&P 500 could triple from here if they print enough money and the value of the US dollar collapses, then S&P could go to 50,000, Dow Jones can go to 1,00,000.

Which is one reason why I am not shorting stocks right now. Because there is a possibility of this sort of a thing. There is a possibility that stocks could go through unheard of levels, but would be in worthless currency.

He also offers advice on investments in commodities and predicts agriculture awaits a bright future. Ten years from now, it may be the farmers who will drive the Lamborghinis, he says. Funnily enough, Lamborghini used to be a prominent tractor maker.

Demand for gold, silver and other precious metals is high these days and yesterday it was reported that the Royal Canadian Mint is missing a significant amount of its gold, silver and palladium inventory. At present it’s unknown whether thieves or sloppy accounting are to blame for the unaccounted metal.

Geithner was in China this week, telling Chinese university students that the country’s dollar assets are safe. However, it seems he wasn’t really convincing as his statement drew loud laughter.

“Chinese assets are very safe,” Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.

His answer drew loud laughter from his student audience, reflecting scepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.

More criticism was outed by Yu Yongding, a former Chinese central bank adviser, he would like to see some figures on how the US government plans to achieve its objective of cutting the fiscal deficit to “just” 3 percent from a projected 12.9 percent this year. Yu wondered how the US plans to withdraw all the money it created out of thin air and questioned whether there would be enough demand to meet US debt issuance this year.

Referring to the Federal Reserve “as the world’s biggest junk investor,” and to Chairman Ben S. Bernanke as “helicopter Ben,” Yu said the Fed has dropped “tons of money from the sky since the subprime crisis.”

“The balance sheet of the Federal Reserve not only has expanded like mad but is also ridden with ‘rubbish’ assets,” he said.

Further criticism about the monetary policy of Western central banks was outed by German chancellor Angela Merkel. She warned the central banks that aggressive moves may be laying the groundwork for the next financial blowup.

“I view with great skepticism the powers of the Fed, for example, and also how, within Europe, the Bank of England has carved out its own small line,” Ms. Merkel said in a speech in Berlin. “We must return together to an independent central-bank policy and to a policy of reason, otherwise we will be in exactly the same situation in 10 years’ time.” (Read excerpts of the speech.)

Another interesting thing I just came across is a recent report by Thomas Chaize about the oil market, he has taken a look at the evolution of oil prices over the last 150 years. His inflation-adjusted chart reveals the price of oil has hit $100 a barrel three times in history, the first time was in 1864 when old technology was unable to meet the high demand for oil. The second time oil (almost) hit $100 was 116 years later with the conflict in the Middle-East and the last time was in 2008, but that’s still fresh in everyone’s memory.

A German company named TG-Gold-Super-Markt.de plans to set up 500 gold-dispensing ATMs in Germany, Austria and Switzerland. Each of these machines will dispense 1g, 5g and 10g gold bars made by Belgian precious metal recycling company Umicore as well as the popular South African 1 oz Krugerrand gold coin.

“In absolute numbers, the demand for physical gold is still tiny in Germany,” Geissler said. “But in relative terms, the growth is explosive, inquiries have been doubling every six weeks,” Geissler said of the trend in recent months.

TG-Gold-Super-Mark.de’s main precious metals business idea is based on online commerce.

The gold ATMs to be set up at central locations such as airports, railway stations and shopping malls are intended to gradually accustom people to the idea of investing in physical gold, Geissler said.

It’s a pretty interesting concept as it gives people an accessible way to acquire a bit of non-fiat money but the costs seem pretty very high.Last week one of the gold ATMs was on display at Frankfurt’s main railway station for a one-day marketing test, the Reuters article says one gram pieces of gold were sold for 31 euros. Priced in troy ounces that’s about 964EUR, a premium of more than 40 percent over the spot price which was around 680EUR that day.

The article doesn’t mention the prices of the larger gold pieces but unless they are a lot cheaper I don’t think these gold ATMs will be successful. It’s very normal to pay a premium when buying physical gold, but 40 percent is way too much. For comparison, the price of a Krugerrand or Maple Leaf coin is around 730EUR in Brussel, that’s a premium of 7.14 percent and the premium on bars and less popular coins is significantly lower than that.

Over the last couple of weeks the dollar made a huge rally, it recovered from a low of around 1.6 dollar per EUR in April and Juli to 1.285 dollar per EUR right now – a gain of almost 25 percent in just 3-4 months time. I’m pretty happy about this as I earn most of my income in dollars and because I opened a savings account in dollars a half year ago. A lot of the income I earned then, when the dollar was trading between 1.5 and 1.6 dollar per EUR, remained on the dollar account as I was expecting a rebound of the dollar.

I was pretty surprised by how fast the dollar gained on the euro and as I didn’t know where it would be heading next I converted about half of my dollars to euros two weeks ago when the dollar was trading around 1.35 dollar per EUR.

Today the dollar reached one of its highest levels since late 2006, it was briefly trading at 1.2737 dollar per EUR.  The reason why the dollar is doing so much better now isn’t because the US is doing well – the economy in the US is slowing down, the trade deficit remains huge and the US government is adding billions to their debt everyday. The reason why the dollar is soaring seems to be a combination of the following points:

• The EU and the rest of the world (including the BRICs) are doing a lot worse then expected. Banks are getting bailed out everywhere and even some countries (Iceland being the most prominent example) are in deep shit.
• Large financial institutions are dumping euro assets to get more $ cash
• US Treasury Bonds are seen as a saveheaven by investors worldwide
• …

Here’s a chart of the US dollar to Euro currency exchange rate since 2000. It’s a bit out of date though, the chart misses data from Monday and Tuesday so the blue line should be even lower.