Thursday, July 22, 2010
Friday, July 16, 2010
GURUS: what about the $ and Au?
The guru I follow predicted gold to move between 1182 and 1215 for about a week and then go up again. No sooner did I read this prediction then the dollar dropped to 1182. How about the dollar? The prediction there is a further drop, then a recovery then a serious drop.
The Euro has stopped dropping as sovereign debts have been papered over temporarily. The US, however, continues on the destructive path initiated by the FED and Obama and deficits are growing at a very rapid rate. China's rating agency has already downgraded the creditworthiness of the US. Strangely, China is still propping up the Obama regime by further purchases of Treasuries.
The Stock Market continues to be volatile and gives every indication of a drop coming. Guru #1 predicts a restart of the Bull Market, because all equities will be repriced in the cheaper dollar.
The Euro has stopped dropping as sovereign debts have been papered over temporarily. The US, however, continues on the destructive path initiated by the FED and Obama and deficits are growing at a very rapid rate. China's rating agency has already downgraded the creditworthiness of the US. Strangely, China is still propping up the Obama regime by further purchases of Treasuries.
The Stock Market continues to be volatile and gives every indication of a drop coming. Guru #1 predicts a restart of the Bull Market, because all equities will be repriced in the cheaper dollar.
Friday, July 9, 2010
Economic and market update.
Ronald Reagan used to say that the economy of the US was like a huge ocean liner; it would take a considerable time to turn it around. And so it is now, when the Obama regime is putting its prescriptions into effect. So, here are the economic factors and their consequences as they appear today:
1. Fiat currency creation.
Businesses are scrambling to move every penny of income into this year, before taxes go up. Even so, tax revenue continues low. The last two months saw the highest monthly deficits in history. How is this being financed? By Quantitative Easing? Such a nice name for printing money. Or, are there more Treasury bills being sold to gullible buyers?
2. Treasury yields are dropping and gold itself dropped. Ominous signs of stagnation.
If there were a real recovery, Treasury yields would be rising as the FED acts to stop inflation from getting hold. What we see are signs of stagnation as the regime continues to promote deflation. The deflation keeps price inflation down.
3. Gold prices and the dollar.
Gold prices were predicted to fall in the short term (not my prediction) and maybe rebound at 1182. Support levels at higher level were breached. The dollar is rallying once again as gold dropped. Gold prices traditionally drop some in the Summer and the next serious rally may not show till September. Deflation rules for now until Quantitative Easing pushes inflation. The prediction of 1350 for gold is still in place.
4. The Stock Market is rallying once again. A move to 12,000 may occur as fiat currency will flood the system.
Basic investment rec's have not changed.
1. Fiat currency creation.
Businesses are scrambling to move every penny of income into this year, before taxes go up. Even so, tax revenue continues low. The last two months saw the highest monthly deficits in history. How is this being financed? By Quantitative Easing? Such a nice name for printing money. Or, are there more Treasury bills being sold to gullible buyers?
2. Treasury yields are dropping and gold itself dropped. Ominous signs of stagnation.
If there were a real recovery, Treasury yields would be rising as the FED acts to stop inflation from getting hold. What we see are signs of stagnation as the regime continues to promote deflation. The deflation keeps price inflation down.
3. Gold prices and the dollar.
Gold prices were predicted to fall in the short term (not my prediction) and maybe rebound at 1182. Support levels at higher level were breached. The dollar is rallying once again as gold dropped. Gold prices traditionally drop some in the Summer and the next serious rally may not show till September. Deflation rules for now until Quantitative Easing pushes inflation. The prediction of 1350 for gold is still in place.
4. The Stock Market is rallying once again. A move to 12,000 may occur as fiat currency will flood the system.
Basic investment rec's have not changed.
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