Sunday, May 19, 2013

IS WEAKNESS PRICE OF GOLD A CANARY IN THE GOLD MINE excerpt from Noland's "Financial Euphoria article linked to"

 "These days, the dynamic of over-issued, mispriced finance is a global phenomenon – the U.S., Europe, Japan, China, Asia and the “developing” economies. The perception that central bankers will ensure ongoing asset inflation is an unprecedented global phenomenon. The collapse in yields and risk premiums in debt markets across the globe is unlike anything I’ve ever witnessed or studied historically. These days, asset inflation, speculation and Bubbles prevail virtually everywhere. Moreover, the gulfs between inflating assets and weakening economic fundamentals seemingly widen everywhere, as Financial Euphoria engulfs debt and equity securities markets around the world. As noted this week by the great market watcher and historian Art Cashin: This market is unlike anything we’ve ever experienced."

My take on gold etc.

Gold initially has responded (its march to $1,900) to CB monetary inflation, the attempt to devalue world currencies, how will it respond to the END GAME, or are we already seeing that? IS the price of gold warning of a coming major top in world stock markets? Too hard to argue for deflation over inflation, so I won't do that, but in the end, when it all collapses, It is my feeling that debts will be crushed, defaulted on a massive scale.....the QE has only expanded and gone viral...with Japan now pumping $100B in equiv currency...yet Gold falters....interesting in the least

I have NEVER seen such complacency as it relates to what I hear, as I drive around most days, what people tell me (many of them financial professionals) and nowhere do I hear much worry. And I do hear "harder" to find value, but they keep looking and none of them are close to more "defensive" measures. Most say, "we are VALUE investors, if the shares fall, then further from underlying values then we will buy more". In the long run that probably works, in the ST to IT can cause lots of pain, when the PAIN gets too much to bear, weak hands succumb and we get the panic selling to create bottoms, like in 2008-2009 etc.

5 YEARS into 0% rate policies, and NO sign nor signal when it might end. Last 2 times maybe the FED remembers that as things got better they began to INCH rates backup, as they did that stocks topped. Now THIS TIME an even LONGER more AGGRESSIVE monetary easing and stoking of speculative juices, which have helped risky assets/stocks reach new all time highs.....this is not just a US phenom, it is now as Noland suggested this week a "worldwide affair" instead of a TECH BUBBLE, a FINANCE BUBBLE, etc..we now are in the midst, near the end? of a WORLDWIDE BUBBLE. (synchronized QE)

Many, like myself, preaching warnings....and not going along for the ride are ridiculed and made to look like the fool. We are all to smart to know that you cannot print your way to prosperity. If the current strategy, given the highs in markets around the world, has not given those responsible what they wanted....then what will??

And if the intensity of "digital" printing cannot propel Gold to NEW highs as it has paper assets, IMHO.....the current weakness in GOLD is the proverbial CANARY IN THE COAL MINE. I have a SIMPLE but proprietary measure of extremes, highest prior level at THE TOP was 138 (2007), we are north of 133 and the angle is straight up. IMHO we are in the latter stages of the final melt up in world equities.....and surely it could go higher than one would think.....and a TOP could melt down slowly at first so those who love the ADV/DECLINE signals will get theirs too. Riding the lows (post 2009), even as fundies were awful provided low risk to reward....not anymore.

And the weakness in the Gold sector, is screaming something is horribly wrong as the printing presses are kicking into another gear...

1 comment:

Anonymous said...

No you are screaming somethings wrong. The louder you scream, the higher we go. Thanks