Hey, inflationists! If any of you can explain how we’ll recognize the return of inflation, or perhaps the beginnings of a hyperinflation, I’m all ears. Click here and drop me a line, because I’d really like to know. Will hyperinflation steal up on us in the form of a doubling, then quadrupling, then octupling, of the minimum wage? Will homes in my neighborhood that have been sitting on the market since 2007 start to attract bidders waving freshly banded packets of $10,000 bills? Can we expect to shell out $100,000 at some point for a cart full of groceries? Will it cost $500 to ride the subway? If I hear from anyone whose inflationary logic is both detailed and persuasive, I’ll reprint it here. But let me tell you up front that I’m skeptical -- so skeptical, in fact, that I doubt that we would see hyperinflation even if the Federal Government were to pay off the mortgage of each and every American, or declare a one-year moratorium on income taxes. I will explain why in a commentary that is scheduled to go out over the weekend. I also intend to make clear why I believe that only those who possess physical gold are likely to come out ahead -- relatively speaking -- as deflation crushes all asset values. If you are not a subscriber and want to receive this commentary free via e-mail, click here. Meanwhile, as promised, here’s a letter I received from an erstwhile gold bug who is no longer certain about bullion’s future. The author is Myron P, a Canadian who like myself was once a floor trader. He writes as follows: Let's see if I can get these thoughts across in something less than a thesis. Overall question: Which way for Gold? I think up,
Friday, January 9, 2009
E-Mini S&P (892.75)
– Posted in: Current Touts Free Rick's PicksA Hidden Pivot resistance at 912.00 looks shortable, stp 913.25, but the trade is recommended for night owls only, since the pivot looks too delicate to survive Friday's opening. I have included a chart because the pattern from which the target was derived is idiosyncratic but still compelling. It is attractive mainly because point 'B' poked marginally above the look-to-the-left high. _______ UPDATE: Not long before the opening, the futures turned violently erratic on news of yet another record-breaking leap in unemployment. The initial, brainless spike upward hit 914.75. That target corresponds, not to the one-off low ('aka point 'A') shown in the chart, but to the lowest low, 891.50. Losses on the trade would have been small -- less than $75 -- but I should point out that no action should have been taken to begin with. The idea behind night-owl trades is to leverage promising, sometimes relatively delicate, pivots during the quiet hours of the night. The quiet was bound to have been shattered by the unemployment news, which came 40 or so minutes before the opening bell, and the trade should therefore have been canceled ahead of the announcement.
February Gold (855.40)
– Posted in: Current Touts Free Rick's PicksA thrust today exceeding the 871.40 peak recorded early this week is needed to put the futures in the mood to test October's key high near 940. Incidentally, the chart also shows why 766.60 would be a back-up-the-truck number for buyers. There is nothing to suggest that such a nasty plunge is imminent, but if it did occur, the resulting pattern would point very persuasively to an opportune low at 766.60. That's a "middle-of-nowhere" midpoint pivot with no competing supports to the left of it.
Dollar Index (81.83)
– Posted in: Current Touts Free Rick's PicksHas the dollar bounded from mid-December's lows with such seeming feistiness, only to punk out without taking on the scrawny pocket of supply highlighted in the chart? It certainly looks that way. And although this will not necessarily doom the dollar, it should temper our enthusiasm for the buck in the days, and perhaps weeks, ahead. To negate any suggestion of cowardice, DXY would need to pop above the two peaks etched in the last few days sometime very soon.
