Here we are at the end of another week, which means it is time for five items for your consideration. Let's go.
- Allan Meltzer writes a compelling op-ed in today's Wall Street Journal: "As long ago as the 1960s, then French President Charles de Gaulle complained that the U.S. had the "exorbitant privilege" of financing its budget deficit by issuing more dollars. Massive purchases of dollar debt by foreigners can of course delay the crisis, but today most countries have their own deficits to finance. It is unwise to expect them, mainly China, to continue financing up to half of ours for the next 10 or more years. Our current and projected deficits are too large relative to current and prospective world saving to rely on that outcome."
- I came across this Canadian radio interview with the director of the Institute for Research on Unlimited Love, founded with seed money by John Templeton and the Templeton Foundation. It aired on the death of Sir John in 2008. This blog can't get enough of John Templeton, and I hope you find the interview enlightening and well worth a few minutes of your time.
- Scott Payton examines gold in The Spectator: Whatever happens to the gold price during the months and years ahead, John Doody, editor of Gold Stock Analyst, a fortnightly investment newsletter published in Florida, has a method for making a profit: investing in undervalued gold companies. ‘If the gold price goes up, we’ve got two ways to win. But if the gold price does nothing, we can still win on the undervalued aspect of our investments,’ he says. By September, Doody’s top ten gold stock picks were up 96 per cent since the beginning of the year. ‘With gold companies, everybody makes the same stuff and they can sell as much of it as they can produce, at the market price. So when picking gold stocks, you have to work your way back to cash [production] costs. If a company has a cash cost of $800 an ounce, it might not be worth much. But if it has a cash cost of $400 an ounce, it may be worth a lot. The market is not efficient. It does not value every company properly.’
- Staying with The Spectator, Edie Lush looks at Islamic finance: "The requirements of Islamic finance — lower proportions of debt to equity, a condition that the lender share profits and losses with the borrower, and a focus on transactions based on tangible assets — mean that Islamic banks have not become entangled in the toxic debt instruments that sideswiped Western banking giants. And while most of the West’s banks were in crisis, Islamic finance continued to grow — by about 15 to 20 per cent in each of the last four years."
- The finalists have been announced for the Cundill International Prize, founded by now-retired Peter Cundill, the legendary value investor. The winner gets the world's largest non-fiction historical literature award: "The prize, now in its second year, will be awarded to an author who has published a book determined to have a profound literary, social and academic impact on the subject. The university will grant the equivalent of one full prize of $75,000 U.S. and two “Recognition of Excellence” awards of $10,000 U.S."
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