What now?

What a difference two weeks make. My last two posts on the economy, gold and the Stock Market touched on the topics of the increasingly grim looking European debt, predicting a breakout of gold past 1162 and topping out of the Stock Market.

So, what happened? Gold broke out and set new highs, the debt crisis identified and the Stock Market is teetering again.

What else has happened? While, gold set new records (1284), gold mining stocks lagged the increase in gold price. That suggested a drop back in gold price was coming and sure enough: gold dropped back to 1175 and finished the week at 1176. That sets up a powerful buying opportunity.

What about the economy and the Stock Market? The economy continues to sputter, but IMO it is early to expect a crash. It is like there is an evil spirit that continues to give the Obama regime advice to do the wrong thing. To be sure, the regime welcomes the crises it creates, these crises are excuses to grow the government and destroy Capitalism. Also, economic stagnation is hoped to deter inflation.

The Obama regime sounds like the Greek officials in the early stages of their boondoggle, when they trumpeted that they could borrow all they wanted to borrow at 3% interest. At some point though, that changed and changed all of a sudden. As the Obama regime prints money and kites checks to pay for the deficit and the takeover of business, it is setting the stage for the destruction of the dollar. All these trends will keep sending gold higher. At present, the failure of the Euro drives Europeans into dollars, but the FED opening the dollar window for European banks in fact ties the dollar to the Euro.

Investors are nervous and are selling equity. Interestingly, gold mining stocks have stopped falling, perhaps anticipating a new rally in gold.

How far will the DOW fall this round? Will it settle for a 10% correction to 10,000 or continue toward a 31% correction, back to 8,000? Will it touch 12,000 before it sinks back and leaving the smaller stocks to flounder? We might get an inkling next week.