Contradictions.

Brokerage houses tend to be optimistic. That is perhaps what fueled a letter I got telling me to expect a rally in stocks. Buy, buy, buy is the conclusion. The first graph shows the tea leaves the technicians read. The Market is clearly oversold, so we had a 200 piont rally in the DOW.

The second graph shows what the economists see. While, M3 is no longer published by the government, it can be calculated and M3 is falling at a rate not seen since the Depression. Today's discussion on Seeking Alpha (The Consequences of M3), tells us that government is driving us into economic depression. How is it done? While, the FED pursues a loose money policy on the surface, underneath, a small Agency requires the banks to put up 15% capital as reserve for every loan they make. That, of course, precludes the bank from making any money. So, while the FED pretends to follow a loose moinetary policy, the OCC counters it and is driving the banks into either supporting the regime in buying treasuries or fail.

The consequence is stagflation and eventual collapse if the regime is not removed. The last graph shows the gold price during the 70s and during this decade. It is earily similar. The graph predicts an explosive rise in gold prices to as much as $6,000/oz of gold.