Some Charts and a Bit of Editorializing
This week we again present some charts and a bit of editorializing:
Gold's five year bull market has been quite powerful and yet Joe Public remains rooted in convention. The pig, er, Dow is in auto-levitation mode yet again, and tech stocks are leading the paper rally. Nope, no problems what so ever in mainstream finance. While we expect the metal to encounter some turbulence here around the psych-500 mark, it is also expected to shine a light of truth upon the broad markets every step of the way, and that truth is that assets are rising in an inflationary impulse through debt and currency debasement and folks, that ain't healthy no matter how much spin CNBC puts on it.
See what we mean? Dow measured in gold shows a rather limp "bull" market. This farce would be laughable if so many people weren't going to be hurt by it simply because they believed conventional financial establishment sources that make their living forcing more and more paper down people's throats and more and more risk into their portfolios.
We warned perma-bears about 500 points ago that this was likely to happen. If you're going to make continued attempts to short this mess, at least do so while maintaining a long position in gold. We are in uncharted territory here with inflation our primary national product. How does one quantify that and turn it into a reliable timing signal to short? With Dr. Bernanke at the Fed helm, we may go even further out on the limb of this economic experiment. How about if we narrow it down to a target for the next 3 years? Say, Dow 3,000 to Dow 15,000? And if hyperinflation is in the offing, get ready for that Dow 36,000 that the "bubbleonians" and new paradigmers predict. But all those stocks will be denominated in a worthless currency, so it's all really just a zero sum game, isn't it?
But Bernanke can only fulfill his raison d'être against a backdrop of contracting liquidity, so don't rule out a deflation scare first. Confusing, isn't it? Dow 3000 or Dow 36,000? This is the kind of discord that makes perfect sense in a remotely managed economic system.