Got Paper?

By: Gary Tanashian | Wed, Nov 15, 2006
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You know, now that I have thankfully put aside the idea of charging for market analysis (after 2 months of doing it in pre-subscription mode and realizing it is a grind I am not prepared for :-) I feel more free to just speak on the blog; say what's on my mind. And what's on my mind at the moment is paper. Stocks, bonds, USD.....the whole shootin' match.

Even as my charts below have been warning us to prepare for $605 gold and 310 HUI, I can't help having the human feelings that something is going on here; that the fix is in. I don't like thinking that way because it is not a path to making Federal Reserve Notes (what some people call money). Maybe I should just stay away from the Prudent Bear forum (I am not a member but I lurk there a couple times a week to take sentiment) because I sometimes come away with the feeling that "they've" won. That Goldman Sachs (Treasury's Paulson), other major Wall St. houses and the Fed are all well-coordinated and still powerful in their efforts to steer all things (USD denominated) paper ever higher. After all, the Dollar is indisputably intrinsically worthless. We all know that. $Trillions in debt says so. It is a pricing vehicle and we have long since severed ties with the concept of productivity = prosperity. Instead we collectively accept things as they are; the idea that electronic digits can say whatever we want them to say and who is going to stand in the way of that? Gold bugz? Gimme a break. This line of thought says that the gold bugs are there for one purpose; to believe in a heart felt manner in honest money and then get blown up. It is why I have always said that holders of physical metal sleep soundly, because they know what long-term means. But for the purposes of this blog and trading in general, worrying about near term drops to 600 or HUI pulling back to perceived support before hopefully heading higher is all just noise. And more and more I think someone is controlling the short term noise. BTW, I realize I sound like a contrary indicator here.

Anyway, above is a chart of the 10 Year Treasury Note along with some strange short-term correlations between the USD and the $TNX (10 year yield). Not being a paid guru, I can tell you that I find this confusing and have not made sense of it beyond the idea that the dollar could end its correlation with $TNX at any time and proceed north along with bonds, which could concurrently add liquidity to the system and denominate stocks in an appreciating currency. Net result in this horror scenario? How 'bout Dow 13K, USD 95, Yield Spread dug to China, new golden era of Goldilocks and the barbarous relic trading in the mid-500's or lower. How's that sound? Just a particularly nasty manifestation of some blogger's wild imagination? Probably. But there it is anyway.

PS: I continue to hold all my gold miners. ;-)



Gary Tanashian

Author: Gary Tanashian

Gary Tanashian

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