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“Very bullish going forward…..I think we are going to be seeing a lot of financial stresses starting to pop out across the world and gold is one of the places you will want to be when that happens. ~~ Chris Martenson
Indeed I agree with you Chris. Gold remains a fear trade even more than it is an inflation hedge and we should not be surprised to see it rise as stock markets fall. I am not so sure that this equities bull has yet lost its luster though and suspect it still has legs despite taper talk. Momentum continues to favour further rises in the markets as bullish sentiments are currently exteme. Perhaps we have finally seen the bottom in gold. If so it has perhaps come a little early. January may bring a whole new attitude as traders begin to position ahead of the crowd in precious metals.
What do you think about the editorial re: a ten to eleven percent increase in the S&P next year?
There will be no taper this year or next. Moreover, the conventional market will continue to make new highs. What I see for resource sector, the big hedge funds still VERY skeptical of this asset class – now keep in mind, big hedgie money is what drives the sector these days.
There’s a job cut out for Janet Yellen to keep the party going but what I envision (its what SilverFox is good at) – China getting involved in war of some sort. There’s huge itch in communist palm and with 4 trillion dollar in reserves, that is going to get bigger. Also, India is on cusp of major political change which is bullish for its economy – the stocks do great in war scenario and PM class will get out of funk eventually.. we are talking 2017/2018 time frame.
Its not wait and hold market, its TRADERS market. If you want to make money, learn how to trade.
Any tapering will signal the depletion of outstanding mortgage backed securities trash in the open market domain. But I don’t know how they can stop buying treasuries, especially now that our illustrious big government Rs struck a deal with the Ds to ‘reduce the reduction to the increase in spending’ caused by the Sequester.
If the deal stands between the RINOs and the Socialists, than that $trillion in reduction to the increase in spending over 10years called out in the Sequester last Jan is now less than that as over $60B in sequester cuts have been restored to the budget. My guess is that runaway spending will suck the Sequester money out of the law and into government programs prior to the midterm election. The reason(s) are obvious.
Moral of the story: The Rs and Ds are always bipartisan when it come to spending like drunken sailors, but things get a little testy when there is a call from the taxpayers to cut s the projected increases in spending–even though they don’t actually doesn’t cut anything!). Thus, the Fed will be in the game till the bitter end cause the only one’s left to tax are the multinationals, and that ain’t gonna happen! The Fed also may be able to mask an increased buy in treasuries by shifting some of that ‘newly created that was buying MBS over to purchasing US bonds.
In sum, the tapering probably represents the end to the MBS cleanup more than anything else, and an end to the MBS cleanup frees up Bernanke’s funny money to buy more treasuries without alarming the public. …..Or so the theory goes….
Interesting points bj. It sounds like this new budget deal tabled yesterday is lowering the sequester cuts but I have not had time to look closely at the details. One thing is for sure though, the media and backers of the administration are out cheer-leading that they could have a deal done before the finals hours. In my opinion this is another sign that the Fed could use to support a decision to taper a small amount. I would be very surprised if it came as Bernanke is leaving however.
I agree with you that the Fed will be in the game until the bitter end because they have no choice.
Thanks for the comment bj!