Yesterday, it was buy stocks, sell gold till your head caves in. What a bizarre inversion of reality — a gusher of pent-up stupidity! Next thing you know, there will be a huge stampede out of U.S. Treasurys. That would sound the “All clear!” right around the time nuclear-tipped inbounds start showing up on the Fed’s Erector-set radar. The exuberance that greeted yesterday’s 379-point surge in the Dow recalls the frolicking of Munchkins after Dorothy’s house dropped on the Wicked Witch of the East. As you may recall, they celebrated for all of about ten minutes before the even Wickeder Witch of the West showed up.
We give this short squeeze another day or two, ending just as CNBC’s benighted minions start piling into such oversold value plays as GM at $2 a share, Fannie Mae at 50 cents, and Goldman Sachs at $90. Investors will be loaded for bear at that point, only to find the forest inhabited by nothing larger than squirrels, skunks and rabbits. Incidentally, the rally was not difficult to foresee, as indeed we did with this tout sent out to subscribers Monday night: “Monday’s chat room buzz had it that a strong rally could erupt at any moment. Perhaps, but there’s no use cluttering our minds with such ugly speculation unless the futures pop through the three peaks show in the chart without drawing a breath.” As it happened, the futures popped through those three peaks, allowing us to capture a fair piece of the rally with some timely trading guidance in the chat room 30 minutes into the session.
Comex Gold Target
Nor had the weakness in Gold been unanticipated. We’d forecast a $35 drop in Comex April Gold, to around $881-$885, and the futures got about 60% of the way there with Tuesday’s selloff. That’s about as bad as we can see for now, although we’d need to take another look if the selling takes the futures below 875.70 by week’s end. At $881, though, Gold will have fallen 12.5 percent from its recent high near $1007. That’s the kind of selling we should like to see: nervous nellies dumping gold into strong hands. One day soon, when the latter make their move, you can bet they’ll thank the sellers with a vengeance.
Rick,
There is plently of insanity among the world’s teeming humanity, that is for sure.
Within the range of definitions of the malady is: -‘ being out of touch with reality’. There are so few today gifted with a sound reasoning mind that it is a human resource rarer than any precious metal.
The inability to apply reason and logic inhibits the rejection of a good 99% of the around the clock, ubiquitous. force fed. mind food that is churned out by today’s all pervasive. and persuasive, media.
We are not what we ‘eat’, unless it is mind food, we are what we ‘think’. The expert psychologists who direct our media content know this only too well.
Change is reality, in fact life is one of constant change. The peculiarities of change is that it requires an alert, analytical mind to understand, and evaluate it at the time it is being personally experienced. It also comes at different speeds.
Today, since the start of the Industrial Revolution, change is more rapid, and at times overwhelming, and it has been moving apace. We are now in an age of instant gratification. We want it ‘yesterday’. Consequently ‘speculation’ has taken over from ‘investment’.
Participants in the markets are now ‘traders’, either , day. weekly, or monthly, but 12 months seems like an eternity to today’s eager beavers.
The markets have, with technology, quickly adapted to this. One thing reacts upon another and so it grows. There is still a considerable amount of money sloshing around armed with trading data, and proliferation of’ advice looking for the next opportunity, the next ‘good thing’.
Trades can be made while sat at home with a computer, and as quick as the finger can touch the send button. The computer also permits a quick switch from your Stock Market on line broker, to the Forex broker and the currencies.
The Financial Markets today, irrespective of their founding principles, exist to redistribute money from the many, to the few. And they do a successful job. What is not understood is that an element of ‘the few’ have the information to know where the ‘bets’ are falling. They can then rig the system to their advantage. All aided by subtle media influence.
So, when the ‘punters’ move to the precious metal, the opposing force moves to the Dow. When the money moves to the dollar, the opposing force moves to the Euro, or wherever.
It all follows Newton’s first law of motion (not Sir Isaac’s but Ray Newton, ‘moi’) ‘A stock price will trend in one direction and continue that trend until acted upon by an equal, or unbalanced, force.
Having said all this, and to bring this to a speedy close, the greatest
illustration of the ‘insanity’ which abounds is the failure of the masses to
understand the full meaning of the words of a man who headed the government of the most powerful nation in the world around a hundred and fifty years ago.
He was Benjamin Disraeli, prime minister of Great Britiain when she had the most powerful navy that ever sailed the high seas, and controlled an Empire upon which the sun literally never set.
His words were clear, and concise for he had an excellent command of English. He said:
‘This world is run by far different personages than is believed by those not on the ‘inside’.
Understanding those few simple words removes all the confused and muddled
thinking, and conjecture as to why those whom we elected under the guise of ‘democracy’. appear so often to behave in ways that are at variance to our nation’s interests. In fact it explains so many imponderables.
The truth really does set one free – free from muddled thinking and doubt.