Silent Archimedes

Q&A on the baseball steroids scandal (FAQ)

Posted by silentarchimedes on February 13, 2009

1. What are steroids?

IUPAC recommended ring (left) and atom numbering (right) of the steroid skeleton. (Courtesy of Wikipedia)

IUPAC recommended ring (left) and atom numbering (right) of the steroid skeleton. (Courtesy of Wikipedia)

There are many types of steroids, and most of them are natural and required by animals, plants and fungi to survive. The scientific definition is a terpenoid lipid characterized by a carbon skeleton with four fused rings, generally arranged in a 6-6-6-5 fashion. Common steroids include estrogen, testosterone, and cholesterol. Technically, cholesterol is a sterol, which is a combination of steroids and alcohol. The former two are in a category called steroid hormones. These steroids include the sex hormones, corticosteroids (topical steroids are used for skin rashes, etc), and anabolic steroids. Anabolic steroids are the ones used by athletes because their main purpose is to increase muscle and bone synthesis. Because they are related to the testosterone sex hormone, they also have effects of maintaining masculine characteristics, such as growth of  vocal chords and body hair. Anabolic steroids were first identified and synthesized in the 1930s.

2. What is the legal status of anabolic steroids?

Most countries classify steroids as controlled substances, which means that they are illegal to produce, distribute, possess and use without written prescriptions from authorized medical officials. These countries include the United States, Argentina, Australia, Brazil, Canada, the Netherlands (NL), and the United Kingdom (UK). However, they are readily available over the counter in Thailand and Mexico. Hence the underground availability of them in the U.S.

However, the status of anabolic steroids is recent considering its 1930s identification. They had no legal status prior to the 1980s and were common in many sports, including football and bodybuilding. It was not until the Ben Johnson controversial Olympic victory that they were placed under the Controlled Substances Act in the United States.

3. When were steroids banned in Major League Baseball?

1991. There is a huge misconception that steroids were not illegal in Major League Baseball (MLB) before 2004. This is completely false. The truth is that they were officially banned in 1991 when Commissioner Fay Vincent sent a memo to all teams and players that illegal drugs, including steroids are illegal. [1][2]

This prohibition applies to all illegal drugs and controlled substances, including steroids or prescription drugs…

The exact same memo was resent by the MLB office in 1997. [3] The reason 2004 is used as the official year was because the rule was not enforced from 1991 until the pressures of Congress forced testing to become official in 2004.

4. Who is responsible for allowing steroids to become a problem from 1991 to 2004?

MLB Commissioner during the Steroid Era

MLB Commissioner during the Steroid Era

This is the ultimate question. Although guilty players have gotten most of the blame for the problem, logically they were only the end result of the problem. The commissioner and owners turned the other way because the lockout of 1994 had caused baseball to drop precipitously in popularity. An historic home run race between Mark McGwire and Sammy Sosa seemed the perfect antidote for low ratings. The players’ union, in trying to protect their players’ privacy and rights, instead seemed like they were protecting cheaters instead of looking out for the interests of innocent players. The players who used were at fault because they cheated and lowered the integrity of the game. However, it is unfair to fully blame players who felt pressured to take PEDs after seeing a culture that created unnatural stars. It seems, at least for the moment, that Arod fell into this camp. Innocent players should also shoulder some of the the blame because almost all chose the silent route when questioned if their was a problem in the game. Instead of looking out for the interests of the game, they chose to stick to union lines and protect cheating players that indirectly hurt themselves. It’s hard to fault fans that wanted to see more offense, especially home runs, simply because baseball without all the hits and runs can be construed as boring. Finally, testing for steroids and especially HGH was simply not at a point yet that MLB was comfortable with.

5. What notable players have been tainted by steroids, HGH or other performance enhancing drugs (PEDs)?

Barry Bonds, Alex Rodriguez, Mark McGwire, Jose Canseco, Roger Clemens, Jason Giambi, Miguel Tejada, Rafael Palmeiro, Andy Pettitte, Benito Santiago, Gary Sheffield, Lenny Dykstra, Chuck Knoblauch, David Justice, Mo Vaughn, Ken Caminiti, Matt Williams.

This is only a list of notable players. Tens of second tier players have also been outed by the Mitchell Report. Another 103 are on the list of 104 anonymous players who tested positive in MLB’s steroids survey in 2003. Alex Rodriguez is the first name to be leaked from that list.

6. Should players tainted by steroids allegations be allowed into the Hall of Fame?

This question won’t be answered for at least a decade. There’s a reason why retired players have to wait five years before becoming eligible for the Hall of Fame. This is to allow any attachments and emotions to the player to subside before making a more objective decision. However, the criteria for entering the HOF has always changed with the times and generations. As much as people question the statistics of the Steroid Era, baseball has always allowed questionable players into the HOF. Until the whole steroids influence is fully understood, statistics of all players who played during this era cannot be fully appreciated. At this point, the steroids players are simply the ones that have been caught. To assume someone is clean because they haven’t been caught is naive. It is getting to a point that either all players are treated equally in the Steroid Era (whether they were caught or not or were clean) or that no one gets into the HOF. However, this question won’t be answered for a decade and perceptions may change through the years.

7. What paths have players accused of steroids and PEDs taken when ‘outed’?

Ranging from complete silence or denial to complete admittance and regret, players have had a wide range of reactions when cornered by PEDs allegations. The ones that have been most apologetic have had most success in resuming their playing careers, even if it meant a tainted legacy. Those that have shown completely no remorse or have put the blame on non-believable entities have been vilified by the public. The paths taken by the most notable players include, from strongest denial to strongest admittance:

Complete denial and knowledge of taking steroids, even when confronted by overwhelming evidence and federal investigations, continue to stick to their stance (Barry Bonds, Roger Clemens)

Complete silence and avoidance of issue (Mark McGwire)

Complete denial then silence when overwhelming evidence surfaced (Ralphael Palmeiro, Sammy Sosa)

Vague admittance and apology when caught (Jason Giambi)

Full admittance and regret but with excuses such as injury or peer-pressure (Andy Pettitte, Alex Rodriguez)

Full admittance and then assisted officials with information about steroids, suppliers and other players (Jose Canseco, Jason Grimsley)

—–

Notes: This Q&A is not official and is simply my personal interpretation and understanding of the steroids scandal. I will add more questions and answers as they come up. If you would like to see a Q&A added on here, please add it in the comments section and I will gladly update the post.

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Bud Selig – Baseball’s incompetent commissioner

Posted by silentarchimedes on February 9, 2009

On the same vein as my previous article, an argument that greed is the root of the steroids scandal in baseball, the current economic crisis and global warming, there is one other commonality among the three problems, a void of  leadership.  One can even argue that greed becomes rampant only at the behest  or ignorance of the leadership. In the three problems stated, a lack of leadership for years is what has led to the current situations. Let’s look at the steroids scandal in particular.

BUD SELIG – BASEBALL’S INCOMPETENT COMMISSIONER

There is something special about baseball. Through all its scandals (Black Sox, race, recreational drugs, Pete Rose and gambling) it has always ended up doing the right thing and upholding the integrity of the game, even if it meant banning its all-time hits leader, Pete Rose, or several of its top players (Black Sox scandal – Shoeless Joe Jackson) for life. No player or players were above the game, and the commissioners knew this. The commissioners also knew they were not above the game and although they existed at the whim of the owners, they were supposed to put the interests of the game at the top.

MLB Commish - Bud Selig

MLB Commish - Bud Selig

Well, something happened in 1992. An owner (Milwaukee Brewers), Bud Selig, was unanimously picked by the owners to become the ninth commissioner of baseball. Since 1992, he has allowed baseball to fall into a steroid scandal by ignoring the ramifications of performance enhanced statistics on the game. Any stories about players juicing were swept under the rug because of increasing television ratings and attendance due to historical records falling every year. Instead of looking out for the interest and integrity of the game, Selig exchanged it for higher revenues. Even in the past 7 to 8 years when everyone knew of the oncoming collapse, he acted in a very condescending way, as if the problem was not bigger than the game.  (This sounds just like our past  president and administration on the Iraq War and the current economic crisis?) Consider these players that have now been tainted by performance enhancing drugs:

1. All-time leader in home runs in career and in a season, Barry Bonds
2. Expected future all-time leader in home runs and one of the greatest players in history, Alex Rodriguez
3. Considered best pitcher in the past 25 years, Roger Clemens
4. First to break Roger Maris’ decades long single-season home run record, Mark McGwire
5. Most seasons with 60+ home runs, Sammy Sosa
6. Other 400+ home runs, Jose Canseco, Ralphael Palmeiro, Garry Sheffield

The leader always sets the trail for others to follow...

The leader always sets the trail for others to follow...

That list is too remarkable to ignore. The leader must be held accountable. Selig has been commissioner or acting commissioner since 1992, about the time hints began about steroids usage. Although he might not be the cause of the problem, he allowed it to fester and grow and grow.  Players that would not have used steroids were eventually compelled to use it due to lesser skilled players on par with them now because of PEDs. This is simply human nature. It is now a scandal that won’t go away. As much as the players need to be held accountable for their actions, the leader also needs to be responsible for his lack of action.In any other institution where people are held accountable, the leaders are replaced by the board. The board of the United States, the citizens, overwhelmingly voted the Republicans out of office in the past elections. Even in corporations, strong board of directors have been known to push incompetent CEOs out. However, similarly to baseball, when the board is closely tied to the leader, this almost occurs too late. In baseball, when the owners overwhelmingly approve of an incompetent commissioner that was once an owner himself, then the checks and balance system fails. In my previous article, Baseball as America’s Pastime continues to fall further into the past, the popularity of baseball has decreased more and more as society’s attention has shortened. To compensate for such pressures, Selig’s actions were always for short-term gain (ie interleague play) at the expense of long-term interests.

Rickey Henderson

Rickey Henderson

It is time baseball cleaned itself by removing its commissioner and the players that have cheated. It is apparent that without the pressures of Congress, Selig would not have voluntarily instituted stringent drug testing. Even to this day he acts as if nothing is wrong and that history will view him as a good commissioner that brought baseball back from its dark lockout days (Sound familiar?) As a big baseball fan, until there is strong leadership that is interested in cleaning up the game, then the game itself has lost its allure, the allure that I used to have as a kid in the 1980s watching Rickey Henderson, Don Mattingly and Dave Winfield…

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The need for greed. And they all fall. What Arod, recession and global warming have in common.

Posted by silentarchimedes on February 7, 2009

Alex Rodriguez

Alex Rodriguez

What is going on with the world today? Many of the institutions and systems we grew up with and believed in have crumbled faster than a crumb cake in front of Santa Claus. This morning sports fans were shockingly (or not) met with news that one of the few remaining baseball superstars to not be tainted by the steroids scandal, Alex Rodriguez, failed an MLB steroids test in 2003. Considering that this news was corroborated by four independent sources, and based on past evidence of such news, this story likely has meat behind it. As the Barry Bonds’, baseball’s all-time home run king, steroids perjury trial heads to court, we wonder if there is anything sacred anymore in sportsmanship and fair play. The list now includes Bonds, Arod, Marc McGwire, Sammy Sosa, Roger Clemens and Raphael Palmeiro. All were heroes and idols to millions and millions of kids and sports fans.

Bear Stearns

Bear Stearns

Sports is nothing, however, compared to the deepening economic crisis affecting the country. But, then again we need to ask ourselves how did this country fall into such a dire situation in the first place? With news of unemployment reaching 7.6%, worst since 1982, most Americans are sensing a pessimism in the country and its leadership they have never felt before. Corporations that have long been stalwarts have wilted after years of trustworthy service. Fannie Mae, Freddie Mac, Bear Stearns, Lehman Brothers and AIG, just to name a few. Even General Electric has fallen on tough times due to untrustworthy leadership expectations and financial exposure. Then there are the frauds of individuals, such Bernie Madoff, and corporations, such as Enron and Global Crossing.

Polar bear cub

Polar bear cub

Then there is the global warming and energy crises. Due to the  irresponsible and rampant use of oil and other natural resources, and the irresponsible output of chemicals into the air, river and ground, the natural balance of Earth has come under question. Dire predictions of sea levels, global temperatures, forestation, glacial coverage, droughts and diseases have left us wondering is there any hope left? Will there exist a viable Earth in 100 to 200 years?

It is truly amazing that all three of these problems have one major thing in common. Greed. Greed. Greed. What is most disturbing is that the situations did not become problems until the ultimate greed kicked in. Arod was already a once in a generation baseball player back in high school. It is fair to say that he did not do steroids as a teenager as his body structure was simply too small. Bonds was a skinny player with the Pirates but was already a five tool player on the path to the Hall of Fame. McGwire  was an amazingly talented rookie with the Oakland Athletics. Why did they feel the need to use steroids and become even better than they already were? Why risk already amazing career trajectories with such greed?

Similarly, the financial companies that have gone bankrupt or bought up were very viable and successful companies (some for over a hundred years) before the ARMs and hedge funds became en vogue. Why the greed to do such risky investments in order to raise the bottom line and stock price?  Was it all due to increasing stock compensation packages of executives? Was it all worth it? To dupe millions of unknowing citizens just for more personal money? What about Madoff? An already well-respected and wealthy investor; what caused him to risk everyone’s money (including hundreds of other wealthy individuals and companies), just to make more money for his firm?

Finally, the earth has remained relatively stable ever since the existence of man. However, since the Industrial Revolution and especially since the widespread use of combustible engines, there has been this disregard for the side effects of using such resources. Coupled with research in biochemistry and synthetic compounds, the effects of pesticides, mercury, lead and carbons have led to a precarious global balance. Millions of animal species extinct or on the brink of survival.

Progress?

Progress?

Are humans, the supposedly most “intelligent” species with opposable thumbs, in fact, the dumbest species ever? Just imagine outsiders writing about the history of man and what they would write about, especially the past 150 years. Just imagine what they would write about western civilization. Just imagine what they would say about the population numbers. Or about technology and medical research? Is this the final goal of evolution? We have reached the ultimate in special survival… our only enemy is ourselves? The whole purpose of natural selection is the survival of the strong. However, part of natural selection is natural balance. A species never wants to become too powerful because then their food sources and natural enemies would disappear. Humans have, in essence, overcome both these natural laws. Through natural selection (our brains and opposable thumbs) we are far and beyond the most powerful species. In a relatively short time, our population and power increased beyond control. Humans have no more natural enemies. The machines we have created are unmatched and only destructible amongst ourselves. So what does this all mean?

The human world does not have a checks and balance system. Nature and other species have always acted as the equalizers. The closest thing that comes to that is the United Nations, and everyone knows how ineffective it is. Additionally, idealistic political systems such as communism and socialism have proven futile. Even checks and balance systems, such as the one in the United States, has a limited efficacy, as witnessed by the politics, lobbyism and other issues. Nature is having a difficult time balancing the effects of human greed and power. Diseases and natural disasters are becoming minimal in damage due to medical research and better disaster predictions. Without any natural enemies, we are left to govern ourselves and our future. As exciting of a possibility that is, the track record of that has been phenomenally pathetic.

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Citi Field no more? Politics or bad use of taxpayer money?

Posted by silentarchimedes on February 4, 2009

Citi Field Rendering

Rendering of Citi Field

Due to the economic crisis affecting financial companies, the big corporations that have taken money from the federal Troubled Asset Relief Program (TARP) have come under scrutiny for their use of capital and list of expenditures. The latest salvo was by several politicians, U.S. Reps. Dennis Kucinich (D-Ohio) and Ted Poe (R-Texas), who are questioning Citigroup’s $400 million stadium naming rights and marketing deal with the New York Mets. The deal includes calling the stadium Citi Field for twenty years. Citigroup, like many other financially strapped companies, has taken out about $45 billion from TARP.

At first glance, the concerns of Kucinich and Poe make sense. A company that is taking valuable taxpayers’ money because of its financial situation should not be spending $400M simply to put their name on a baseball stadium. However, is this politics as usual? There are several issues here that show that public perception is not always reality.

New York Mets

New York Mets

The obvious issue here is that the marketing deal is a legal binding agreement between two corporations. How can politicians force a company to renege on a legal business deal? Does giving $45B equate to complete scrutiny of the said company? Doesn’t the company still have some independence in fulfilling previous agreements and decisions? What about the Mets? They have made other business decisions since then based on having that revenue stream. Is it fair that politics might force a legal deal to be reneged?

The second issue here is marketing. As financially strapped as companies are, they still need to spend a portion of their budget on marketing. This is the case even if they are receiving money from the federal government. What do the politicians expect them to do? Use 100% of their budget on selling loans and improving the credit crisis? That’s unreasonable because marketing helps increase the financial business. Maybe Citigroup continues to decide that Citi Field will in fact have a positive effect on its financial business.

Citigroup

Citigroup

A third issue is the actual effect of the $400M. The number seems large but it is over the course of twenty years. That amounts to $20M a year. Now we know (at least with very high probability) that the economy won’t be in the doldrums for the next twenty years. That means the deal, as affected by the economic crisis, is in the range of $20-$60 million. This is chump change for a large corporation like Citigroup. More specifically, it is 0.04% to 0.13% of the $45B in assistance! When you look at the fact that Citigroup has revenues of over $19 billion and has a cash/debt ratio of $763B/691B then you start wondering is this worth the time to criticize over?

This reminds me of the grilling that the auto industry received last fall when they tried to get some assistance from Congress. The amount was tiny compared to the bailout received by the financial industry. Yet, politicians were focusing on politics as usual. They focused on these tiny expenditures that have bad public perception (such as private airplanes by executives) instead of worrying about reality and where the real money is going. The auto industry did not cause this mess. The auto industry also employs millions of hard working Americans. The financial industry and politicians caused this mess, and instead of them getting grilled, the politicians gave the financial industry a massive bailout without any public hearings. Talk about fairness. Now we have more politicans worrying about a stadium marketing deal that although has a bad public perception, when analyzed in further detail really has no financial bearing on the situation. It’s absurd and once again, politics at its best.

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Holmes catch, Steelers win not comparable to Tyree’s catch, Giants win

Posted by silentarchimedes on February 3, 2009

Holmes catch

Steeler's Santonio Holmes' TD catch

There shouldn’t even be a debate about which catch was better, the Santonio Holmes back corner dragging the feet touchdown catch to give the Steelers the lead or the David Tyree high in the air helmet catch to keep the underdog Giants alive against the vaunted New England Patriots. The only reason the Holmes catch is great is because it just looks so damn beautiful. Roethlisberger lasering the ball past three or four Cardinals defenders as Holmes catches and barely has room to drag his feet. The problem with the catch is that it is not unique; the dragging the feet catch is all too common in the NFL. Whether it’s in between the goal lines or in the endzone, many receivers have had one of those types of catches in their careers. Amani Toomer of the Giants had several of those just this past season and even in the playoffs last year. It’s just cool because it still looks so beautiful. However, the Eli Manning scramble to David Tyree catch is not something you see every season, let alone every decade. It is a play that you rewind and replay over and over again and still be in complete amazement that the play unfolded all the way through. Here is a list of reasons why it is such a better catch:

1. Uniqueness – Players practice the Holmes catch in practice. They practice the diving and dragging of feet to stay in bounds catch during the week. And you see this catch almost every week in some game during the season. There is no way to practice the Tyree on the helmet getting tackled holding the ball catch. That just happens in real-time… once in a blue moon.

Giants' David Tyree's catch (courtesy of Andrew Mills/The Star-Ledger)

Giants' David Tyree's catch (courtesy of Andrew Mills/The Star-Ledger)

2. Step by Step Drama – The Manning-Tyree catch had at least 3 instances in which the play should have died but somehow stayed alive. One, Eli was engulfed in a sea of pass rushers almost instantly as the play began. Two, as he tried to navigate out of the pile, some defender grabbed Eli’s jersey. Yet he managed to break free. Three, Tyree leapt to grab a catch that was almost over his head but he was able to get his hands on it. Four, Harrison had his arm inside Tyree’s arms and could have easily broken the play up. Five, somehow Tyree was able to keep the ball one inch from the ground as Harrison tackled him with their arms tangled. Wow. The Roethlisberger-Holmes didn’t have this same step by step drama. Roethlisberger had several seconds of safety before the pass rushers closed in, yet he didn’t feel the pressure that Eli felt. He lasered it to the back corner and luckily went through three defenders into Holmes hands. Great play but not too much drama.

3. Pressure situation – The Steelers and Roethlisberger had just won a Super Bowl a few years ago. Everyone expected them to win this one. Instead they let the Cardinals come back to take the lead in the fourth quarter. That means they finally played to their expectations on that last drive. However, the Giants were massive underdogs at the Super Bowl. They were playing against history, a vaunted team on the verge of going 19-0. Manning was a mediocre player before the playoffs and he stepped up majorly on that last drive. Plus, it was third down and without making that long play, the game was pretty much over. The Holmes catch was only second down, and even with a miss there, the Steelers still had two downs to laser it into the end zone.

4. Caliber of receivers – If you follow the Steelers, you have heard Holmes many times before. Although he’s the third receiver, he has been known to make some big plays before. He is easily a number two receiver on many teams. However, Tyree has only been known to be a good special teams player. He was way down on the receiver chart of the Giants and didn’t even play this year for the Giants (pseudo-injured reserve). He was definitely not the guy you’d expect to make such a big catch in the Super Bowl.

5. Where and when the play occurred – The Steelers were at the 6-yard line of the Cardinals. It was second down. Cardinal fans were already somewhat resigned to the fact that the chances were the Steelers would score a TD there. However, the Giants were in desperation mode. It was third and long and they were near midfield. As a Patriots fan, you’re tentatively happy at that situation that the chances of Eli making a first down there was against the Giants.

When you look at these four reasons, they not only validate that Tyree’s catch was more remarkable but that the Giants-Patriots Super Bowl was better than the Steelers-Cardinals game this year. Last year was completely David and Goliath, fighting against history. While this year, albeit a great game, was not a greatly played game. Cardinals should have had the lead at halftime, if not for that stupid intercepted pass, can’t tackle for 100 yards play. As a Cardinals fan, you gotta be pretty upset that you played so well against the Steelers except for that halftime play and the last drive. As a Steelers fan, you gotta be relieved that you were able to pull it out on that last drive after losing a big lead in the fourth quarter. All in all a great game to watch, but it still didn’t compare to all that last year’s game signified and the suspense and excitement of it.

As a disclaimer, I am a Giants fan. However, my second favorite team is the Steelers, so this article is not that biased. It was a great game, and the Steelers proved how great and respected the franchise is. They deserve to be called “America’s Team” instead of those sorry Cowboys. The Super Bowl should have been Steelers-Giants. Now that would have been an amazing game!

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Is gold ready to break out after today’s rise?

Posted by silentarchimedes on January 23, 2009

What’s going on with gold today? Gold prices touched above $900/oz today and by mid-noon was trading over $40 higher to $899 an ounce on February deliveries. The highest levels since October of 2008. As of 12:52pm, the SPDR GLD is up over $4.00 to above $88 (4.00+%). The volume of 24 million at 1pm is already twice as much as the average daily volume of 12 million. What is also surprising is that the EURO to Dollar index is dropping today, signifying a strengthening US Dollar. In most cases, these two measures should move inversely proportional to each other (Well, technically, gold rises when the EURUSD=X also rises). So what to make of this move today?

One, it’s easy to say that the huge movement up is all due to the stream of negative economic news. Most daunting was the release of Britain’s GDP, showing the country’s most severe contraction in nearly 29 years. Which also officially pulled the UK into a recession. Additionally, bad earnings from a stream of companies have made today a safe-haven buying day, which lends credence to why both the gold and silver prices are rising, and why the US Dollar is also rising, due to an influx in US Treasuries buying.

However, there are two technical signals that are also resonating quite nicely with the tech gold bugs. Let’s first look at the trading band GLD has been trading in since it’s low back in Nov 2008. I have drawn in the magenta bottom trading boundary which GLD prices essentially hit three times (11/08, 12/08 and 01/09). I have also drawn in the magenta top trading boundary which GLD prices hit twice (end of 11/08, 12/08). In order to keep within this linear rising trading band, GLD would have had to make a move to the upside in the next week or two. Today’s rise only keeps GLD within this trading band and does not signify a breakout. However, because it is a rising trading band, then that bodes well that GLD will continue to rise in the coming weeks. Should it break above the top trading band, we might see a very strong move upwards and well past $100/share. If it breaks below the bottom trading band, then the fundamental breaks and we can see GLD once again test its lows in Nov 2008. Because there is strong buying interest today, this bodes well for GLD.

GLD trading band since Nov 2008 low

GLD trading band since Nov 2008 low

The second bullish signal might prove stronger than the above signal. Let’s look at the 50-day EMA and the 200-day EMA for GLD since 2005. Something is happening here that hasn’t been seen since September of 2005 when gold began it’s next bullish leg up from the $400s/oz to $1000/oz. The 50-day EMA breaking above the 200-day EMA. Although the below chart does not show it, today’s bounce up definitely will push the 50-EMA above the 200-EMA. This is a strong signal and it is coupled with strong volume, which shows buying conviction on the upside. When two long EMAs cross each other they signal long-term trends. You can see that when the 50-EMA crossed under the 200-EMA back in Sept of 2008, GLD dropped for a few months. This break back above 200-EMA could signal strong upside for GLD prices. Coupled with the trading band shown in the first chart, and we major bullish signals for gold in the next few weeks. As in my 2009 Predictions in my previous post, I expect gold to top $1000/oz at some point this year, possibly in February.

Have fun!

GLD 50-EMA ready to pass 200-EMA

GLD 50-EMA ready to pass 200-EMA

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My 2009 Predictions

Posted by silentarchimedes on January 22, 2009

Here are my 2009 predictions. None that are too far out there. Just a basic assessment of what I think might happen in 2009.

POLITICS

Barack the Celebrity

Barack the Celebrity

Obama’s approval ratings remain historically high but lower than the inauguration euphoria – Obama’s ability to inspire change and leadership at such a dour time in America gives him public leeway not seen since, well, 9/11. However, Obama’s pragmatism will help him keep the country on course and inspired throughout 2009. He has already made key changes in ethics regulations and state diplomacy in his first days in office. The only thing that will stop him will be… Congress.

Don’t expect much from Congress – Congress had lower approval ratings than President Bush in 2008, even with the Democratic majority and push for change. Expect the same from Pelosi and Reid, who are not strong leaders and have plenty of personal ambitions to prove Congressional strength to the Executive strength. Couple with the Republicans fight for relevancy, expect a 2009 of posturing and tit-for-tats. 2010 seems like a better year for Congress because the public will side with Obama over the frustrating bureaucracy in Congress in 2009.

ECONOMICS

The market moves sideways – There will be strong forces pulling the economy from both the recession side and the growth side. It is what I call the economic paradox. As the economy falls, oil prices drop and the US Dollar rises (somewhat surprisingly). However, as global growth resumes, oil demand and  commodity prices rise again and the US Dollar falls (since investors will begin investing in riskier assets instead of US Treasuries). Both are problems for America. Obama seems focused on passing bills and bailouts that will help light a fire under the economy, especially job market. However, the more he does the more inflation becomes a risk. Expect several major rises and several major slides, but by the end of 2009, the Dow Jones will still be in the 7500-9000 range.

Gold surpasses $1000/oz again – Because of the economic paradox, gold will continue to maintain its safe haven status in 2009. One of these days, gold will surpass $1000/oz again. In looking at the GLD chart, gold hit a low in mid-Nov 08 and has since built a nice rising linear resistance that it bounded in early Dec 08 and mid Jan 09. If gold breaks the upper linear resistance of $900/oz expect $1000/oz in Feb 09. If it does not expect a pullback. Aside from the technicals, 2009 is still a year of unforeseen economic strife and that will keep the price of gold high. Depending on where the economic paradox is at the end of 2009, gold will either be well above $1000/oz or testing it’s multi-year lows of $700/oz again.

Gold (GLD) prices from Jan 2008 to Jan 2009

Gold (GLD) prices from Jan 2008 to Jan 2009 (12-EMA green, 50-EMA red)

There will only be one viable American automaker by year’s end – The Big Three is already, in essence, the Small Two. Chrysler’s recent gift of 35% stake to Fiat for its access to technology and services is a desperation move to prove to the U.S. government that it has a viable plan to survive. However, the U.S. government is not going to perpetually support a half-foreign owned company at taxpayers expense. As for GM and Ford, 2009 will still be a very tough market. Any uptick by buyers will simply be for fuel efficient cars built by Toyota, Honda and even Hyundai. GM is effectively surviving on federal assistance, which runs out every few months. A radical solution has to found soon. Don’t fret though, because of the uniqueness of this market, hopes abound for small automakers that can make a difference in “green” vehicles.

SPORTS

yankeesYankees back in business – Sorry non-Yankees fans, but 2009 is appearing to be the Year of the Yankees. A new stadium, a team salary in excess of $200 million, a re-focused Arod with Mark Texeira pushing him, injury free Posada, Matsui and Chamberlain? It’s gonna be a great three-team AL East battle all summer. Yankees will win the division and make it to the World Series once again.

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Did anyone realize it’s 2009!?! A short look back at the first decade of the 21st century.

Posted by silentarchimedes on January 16, 2009

Happy 2009!

Happy 2009!

The year is now 2009! Just ten years ago, the country was at the height of the dot com era. I was in my last year of my undergraduate years and very eager to graduate and join the exciting dot com workforce. It seemed like paradise at the time. I remember getting about ten job interviews and declining several others. I remember the offers that came in from startup companies to established corporations. I also remember gasoline in Pittsburgh being around 90 cents because it was the only semester I had a car with me. The only thing that scared people in 1999? The Y2K problem. I also remember people being relieved that the Clinton presidency was coming to an end because of the Lewinsky embarrassment. That was ten years ago…

Now it’s 2009. A lot has happened the past ten years; the first decade of the 21st century. The decade that I grew up, age wise, at least. It is a different country now. A more sober country. A battle-tested country and a depressed and pessimistic country. Although most people heaved a sigh of relief when the Y2K problem never materialized, it wasn’t long before the country would begin a string of events that has led to the current depressed state. 9/11 occurred. The dot com bubble busted. The telecom industry collapsed. The Afghanistan War began. The Patriot Act was passed. The country went into and out of a recession. The Iraq War began. The energy crisis began. Hurricane Katrina happened. The housing bubble inflated and popped. The credit bubble inflated and popped. The country went into another recession. And not to mention the Yankees haven’t won a World Series since 2000. It has been a very trying decade.

However, the country and myself are in the same situation as we were ten years ago. I will be finishing my studies and looking to enter the workforce once again. The country is full of hope again that a new presidency can bring much needed change. Although the hope and environment are different this time around, we must draw strength from what we have endured and learned in the past ten years. Personally, I am a much more patient, practical and, believe it or not, optimistic person than I was ten years ago. Although I was more energetic and sharper back in my early twenties, the experiences I have gone through in my twenties has made me a much more balanced person that cherishes even the simple things in life. I believe this country is similarly in the same state. During the dot com era, the country seemed to move about with reckless abandon, as if the paradise would last forever. Now after ten years of hardship, the country must learn from these experiences and come together as one country to come out of this recession stronger and more optimistic.We have to because we have plenty more challenges to face in the second decade of this century.

I am excited at what the last year of the first decade of the 21st century brings.  I am excited at the future of America. The 2008 elections were one of the most exciting ever and to see Americans rise up and meet the challenge was very refreshing. 2009 marks the end of an era and the beginning of another, for this country and for myself…

Happy new year!

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Mad props to Arizona’s Larry Fitzgerald – Leaping Larry’s amazing catches

Posted by silentarchimedes on January 11, 2009

Wow, another amazing leaping catch by Larry Fitzgerald of the Arizona Cardinals. Another amazing leaping catch between two close defenders.  There’s a reason they call him Leaping Larry. I’ve always been a fan of Fitzgerald because he played ball at Pitt. I usually root for Pitt because they are in the same city as the one I went to for college.  I don’t remember where but I saw some report about how Dennis Green, the Cardinals’ coach back in 2004 was a close friend of Fitzgerald because Larry was the Vikings’ ball boy back when Green was a coach in Minnesota. Green stated that he would probably draft him third in the first round. Well, that and the fact that Fitzgerald has a good head on his shoulders and is an amazing wide receiver. All he has done since coming into the NFL five years ago is have three years of 1400+ yards receiving. You never hear him complain, especially playing second fiddle to Anquan Boldin sometimes. You never hear him do stupid things. He is one of the reasons the Cardinals are doing well in the playoffs.

The two catches he has in this playoffs have been simply amazing.

TD catch against the Falcons – Wild Card Round, Jan 2009

TD catch against the Panthers – Divisional Round, Jan 2009

Well, Larry has been making unbelievable catches since he was a freshman at Pitt. Check some of these older catches by Fitzgerald:

Larry Fitzgerald insane catch – Insight Bowl, freshman year

Behind the head catch

And here’s a great compilation video that YouTube’s TheFreakShow81 made of Larry’s catches.

Larry Fitzgerald catch highlights

It’s amazing because most of the catches occur against multiple defenders in really tight coverage. This guy has crazy sticky hands, amazing body control and awesome speed. And you’ll never see him celebrate too much. When does he become a free agent so the Giants can sign him to replace Burress? (Larry signed a 4 year $40 million contract after the 2007 season, so looks like he won’t be a free-agent until after 2011. Oh well…)

Mad props…

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Opinion: It’s time for Dick Cheney to just leave quietly

Posted by silentarchimedes on January 8, 2009

The VP and P

The VP and P

Another story from the arrogance and incompetence of the Bush administration. Today, Vice President Dick Cheney was quoted in an AP interview,

In an interview with The Associated Press, Cheney also said that Bush has no need to apologize for not foreseeing the economic crisis.

“I don’t think he needs to apologize. I think what he needed to do is take bold, aggressive action and he has,” Cheney said. “I don’t think anybody saw it coming.”

The last part is what really got me mad. A LOT, and I mean A LOT of people saw this economic crisis coming. Let’s take a quick look at some of the groups of people that saw this coming:

1. Gold bugs – Gold investors have been preparing for this economic crisis since the crash of the dot com era. Gold has steadily risen from the mid $200s/oz to a high of $1000/oz, and now at ~$850/oz today.

2. Currency investors – The euro to dollar ratio was at 0.85 at the beginning of the dot-com crash in 2001. Since then it has flipped and risen so quickly to 1.60 in early 2008. Most people familiar with the dollar index, fiat currencies and supply/demand saw this as a huge omen of future economic turmoil. It was only a matter of when.

3. Housing investors – The term housing bubble was surmised to be occurring well before the height of the housing bubble. Many people burned by the dot-com era and became fiscally responsible saw the non-stop rise in housing prices as a major deja vu.

4. Economists – There have been so many books written on this exact economic crisis in the past ten years, of which two have been reviewed on this blog (Crash Proof, The Coming Economic Collapse). Anyone who has read one of these books realized that the American economic system has been living on borrowed time and money.

5. Historians – History comes in cycles because the leaders don’t learn from history. The Iraq War and the recession afterwards first played in the first Bush administration. Instead of learning from it, the younger Bush repeated the exact same historical events.

6. Most sane people – I saw this economic crisis coming a few years ago when I started reading about the US economic system. A lot of my friends saw it coming. A lot of people knew that we only got out of the tiny recession after the dot-com crash and 9/11 because Greenspan and the Feds loosened the credit spigot and money-printing machine. What ensued was the housing bubble and more mortgaging of America’s future.

If all these people, including lots and lots of Americans saw the economic crisis coming, you are telling me the Feds and the economists that govern this country didn’t see it coming? Please… They just chose to look the other way. Why not? They are rich. There is no accountability. Leave it to the next administration or future generations to clean up the mess.

It’s really absurd that Dick Cheney deflects the Bush administration’s responsibilities by claiming that NO ONE SAW IT COMING. To put it nicely, the arrogance, narrow-mindedness and stupidity of the outgoing administration continues. The Bush administration continues to hope that in time history will judge them nicely, but I believe this second recession under their watch pretty much locks in their incompetence regardless of how well Iraq or Afghanistan turn out.

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