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Incoming data has turned me solidly bearish on gold again. I share your doubts James. My original thesis that gold must fall far and deep before there will be a genuine recovery is now more compelling than before. I will again reiterate that Silver already went parabolic and gold cannot possibly be ready for a major breakout until this major corrective cycle is complete. We are NOT in a bull market for metals anymore.
I wouldn’t agree with that yet.
I’m with you, Al. The bull market I$ intact. Nothing has changed that might credibly suggest otherwise. I agree with Rick Rule’s words to Eric King today:
“So the prices are a lot cheaper, but if the set of circumstances that determines value is the same, and the price is less, that’s not called a bear market, it’s called a sale.”
Yes it certainly will be, The Greater!
Bird man – not sure what incoming data you are talking about that turned you bearish. To me only the price is bearish. Things can change in a hurry…
James, I really like what I am seeing technically. We could see the HUI (senior gold stock index) advance another 10-12% before it corrects about 8% sometime in August. Then, a move to 400 by the end of the year looks likely to me.
Update from expected returns:
The markets are relatively quiet, which is normal before volatility appears. I am quite sure we will see upheavals in the market by the end of the year, perhaps before the summer is over. We saw the beginning of municipal defaults with Detroit. This is going to be a major problem across the country. At the end of the day, cities can not guarantee pensions when bonds return 2% and assumptions are in the 8% range. When bonds rates rise, they will in fact become the worst possible investment, so money can’t really park there without going up in smoke. There is no real option except default.
There are so many problems up ahead that are beyond belief. We will see commercial real estate crash as everything is moving to the internet right now. Banks are in huge trouble, and I expect massive job losses akin to 2008 in this sector. When rates rise, banks no longer have a historically high spread to work with; they will have to lend and take on risk that they are unwilling to take now. The velocity of money is about to take a huge nosedive, and this is big trouble for small businesses as Obama goes crazy with higher taxes.
The trap the government is falling into is thinking they can pull back on stimulus because the economy is “recovering” and budget deficits are falling. Well this is faulty planning because higher interest rates alone will push budget deficits higher at the same time the government eases back on stimulus. That’s a recipe for disaster.
Our economy is in a shift that occurs once every couple of generations. The internet is changing everything, so we are likely to see a Great Depression-type adjustment period. College graduates are already realizing their diplomas are worthless. There is really no escape from this except by lowering taxes and allowing the internet, which is really the next frontier, to fully mature. Of course our leaders are taking the opposite approach and trying to tax everything on the internet. It appears we will have to grow through some major pain before things look up.
I’m telling you, major events are coming very soon. Rates will rise to the moon and everyone will be searching for answers. Defaults will create a flight to safety probably to the dollar first, and then gold. Treasuries will not be a flight to safety in the long run. We are in crisis times, and there is a certain temperament required to succeed in times like these. What made people successful the past 50 years or so is an old model. You need to be adaptable, you need to think outside the box, and you pretty much need to disregard all the bs from government.
Disclaimer: 1. This newsletter is for informational purposes only. I am not a registered investment advisor and I am not responsible for any actions taken by subscribers.
The Fed will release their minutes this week and the markets are holding their breath waiting for something magical to come out. It will just be the same bs that QE will continue until there is strong enough recovery. What they won’t say is QE has to continue forever just to maintain a barely positive GDP. Without QE the economy just tanks and that was mentioned in the last meeting.
Paul, you’re correct. That’s why the Fed will be a non-event this week. More important will be the GDP and job numbers. I can’t see GDP surprising to the upside but the job numbers could be a market moving event.
Dr Doom sees things differently….
http://www.mining.com/roubine-expects-blowout-week-for-gold-26402/
Yeah, this guy also said that gold was in a bubble when it hit $1200 in 2009. He then recommended gold just before its peak in 2011! The shill should be ignored.
Jim Rogers said it best when he said: “Mr. Roubini has never been right about anything.”
Watch here (starting at 3:13):
http://www.youtube.com/watch?v=v0sWPX49lgA
Dollar is spiking up and gold seems to be gaining strength at the same time. A good sign possibly. I bought some NEM yesterday and on the dip today.
Extremely large short covering yesterday again on Intel yesterday after hours. It is continuing the move up at steady and slow.
this week will be another key week for gold. by Friday we might be in a very different place. I do think if gold turns around and goes up it could go up quickly, it does not ave to be a slow grind. reason being if after this week it becomes clear tapering was a fantasy and gdp and jobs dissappoint bets could turn in a hurry. I am not saying gold is going up quickly. right now gold is dead. all i am saying is if gold goes up (big if) then it could go up quickly, by quickly I mean could get back to $1480 fairly quickly. interesting week on tap…