1.30.08 Today's interest rate cut is a tragedy!
6:15PM:
Let me start off by saying... Ben Bernanke has no idea what he is doing and Jim Cramer has no idea what he is talking about when he speaks.
Today's interest rate cut of 50 basis points is a complete and total tragedy for our economy!
However, today's interest rate cut is good for Lebed.biz members who have invested into Gold.
As soon as the interest rate cut was announced... Gold prices soared to a new all time high of $935.50 per oz.
No matter how much the FED lowers interest rates... it will NOT save the housing market. In my opinion, NOTHING will prevent housing prices from falling by at least another 40%. However, high interest rates will cause HUGE inflation...
Earlier today two of the largest food companies, Kraft (KFT) and Kellogg (K), both released their earnings.
Kraft (KFT) announced that their fourth-quarter profit slid 6.3% to $585 million... despite their revenues increasing by 11% to $10.4 billion. This was because their operating margin fell to 11.4% from 14.2% due to unprecedented dairy costs.
Kellogg (K) announced that their fourth-quarter profit slid 3.3% to $176 million... despite their revenues increasing by 8% to $2.8 billion. This was because their operating margin fell to 12.8% from 13.4% due to rising costs of wheat, edible oils, corn, packaging, and more.
Both Kraft and Kellogg are now planning to raise their wholesale prices substantially. This comes after both Hershey and Tyson Foods announced earlier in the week they are raising their wholesale prices substantially. McDonald's even announced they are removing the Double Cheeseburger from the $1 menu!
If all of these companies are already being negatively affected by inflation... and being forced to raise food prices... imagine what will happen now that interest rates have been cut by 125 basis points in just the past week!
It will soon cost $500 to fill your refrigerator with food... and housing prices will still crash anyway.
Therefore... I believe the safest place to put your money is Gold.
As Gold soars towards $1,000 per oz... some of these so-called experts on CNBC will finally jump on the bandwagon, while others will call it a "bubble".
Adjusted for inflation, Gold's high of $850 in 1980 equals over $2,200 in today's dollar. I believe Gold could easily surpass $2,200 per oz within the next couple of years.
I have been predicting all of this for nearly three years now. I don't know anybody on Wall Street who has been as accurate as me.
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