Has it begun?

Good weathermen are said to perform one more check before forecasting local weather: a quick look outside the window. No point forecasting fair weather if it is raining, knowledge of weather pattern notwithstanding. So it goes with forecasting financial developments.

So, I collected the most-watched financial numbers: the DJI (first graph), the US Dollar (second graph), gold (third graph), GG (the second largest gold miner in the world, fourth graph) and finally, 20 year treasury (last graph). Some of the numbers are quite surprising.

The DOW is nearing a top and no question about it. Stocks of small companies have been savaged now for a month or two and the rise in the DOW is almost flat. The current drop in stock prices is either a final correction before the top or signifies that we have passed the top.

What is astonishing is the continued rise in the value of the dollar, even in the face of rising gold prices. The fall in the value of GG is expected if we are at or near the top of the Stock Market Cycle, but the rapid rise in the value of Treasury Bills defies economic laws. Or does it?

For a while, the Obama regime has dampened inflation by causing a widespread destruction of financial institutions via the use of the 'mark to market' accounting system. The usefulness of this method ran out as the price of gold and oil began to rise. The regime can not raise interest rates without crashing the economy, so it does the only other alternative it has left: buying Treasury Bills. This is called "monetizing" the debt. Essentially, the Treasury can pay itself what it wants to "buy" Treasury Bills. This would explain the quite irrational rise in the price of Treasury Bills, which in turn takes up the value of the US dollar. The purpose of this illusion is to delay inflation and another economic slump till after the election.

The unraveling of Eurosocialism is under way. Well, at least their currency is unraveling. So far, the Greek left is unwilling to accept the conditions to rescue Greece financially and the revaluing of sovereign debt is still under way in Europe. In the US, States are broke and the country's economic troubles continue.

Will stocks now destruct? The volatility indicates that some kind of correction is under way. Whether gold stocks will give up their gain while gold prices rise IS the question. I am going to hold on to mine.