An interesting day, for sure. But a surprise? It shouldn’t have been, since even the Guvvamint’s statisticians and spinmeisters seem to have noticed that The Great Recession is back with a vengeance. Under the circumstances, anyone so stupid as to be loaded to the gills with stocks deserved the full brunt of yesterday’s devastation. The stock market’s collapse surely didn’t take us by surprise. The night before, under the headline “This Rally Is….Doomed!” we’d disseminated the following alert to subscribers: “The strong bounce off yesterday’s apparently oversold low is a fraud, and it is doomed, so we’ll have a very strong incentive to short every… rally target we can find…” We’d also made the following declaration in commentary published here yesterday: “Lest any of our own readers be shrouded by the fog of the Mainstream Media’s coverage of the financial markets and global economy, we’ll state for the record that the technical evidence is overwhelming that the Mother of All Bear Rallies begun in March of 2009 is over.”
If we sound pleased that the market appears, finally, to be having a massive heart attack, it’s because stocks for too long have been the captive of quasi-criminal forces that could charitably be described as pond scum. The good news is that when the Dow is trading 10,000 points lower in a few years, no longer doing the bidding of high-frequency traders, mountebanks, thimble-riggers, Murphy men and arse bandits, that will set the stage for a true bull market that will run for a generation. At that point, with “money” no longer available interest-free and in practically unlimited quantities for rampant speculation, stocks will rise once again on their individual merits, savings will have a purpose, and capital will seek out its most productive uses. We hope we’re around when all of this comes to pass, as it eventually will.
What About Gold?
Meanwhile, the implosion of stocks that seems under way raises the question of whether deflation has finally overwhelmed the central banks’ prodigious but increasingly desperate efforts to resuscitate the economy. We think the answer is yes and that deflation will rule for the foreseeable future, asphyxiating not only the economy but nearly all investable assets. A related question is whether gold and silver have made their final top. Although this is certainly possible, we strongly doubt it, since billions of people in this world have yet to understand that the paper money in their wallets, as well as the digital money in their bank accounts, is fundamentally worthless. When this epiphany finally hits it will trigger a hyperinflation that could send bullion prices soaring to perhaps unimagined heights. In the meantime, hard cash, intrinsically worthless though it be, actually will be king in the absence of easy credit. Credit will be available in theory, but at usurious real rates and only with adequate collateral. Just what will pass muster as “adequate” collateral is a question still to be answered, but assets that qualify are certain to be far less valuable than real estate that’s already been hocked a dozen times over. Whatever happens, Rick’s Picks will continue to track gold and silver diligently, since forecasting bullion correctly is something that we absolutely must get right. You can follow our forecasts, which are updated round-the-clock, by taking a free trial subscription to Rick’s Picks. It will also give you access to the 24/7 chat room, to detailed trading “touts,” and to impromptu online trading-strategy sessions like the one held (and recorded: Staying Ahead of the Crash) yesterday.
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Why dont the politicians get the economy going by direct fiscal stimulus, spend on infrasttucture projects, this will create jobs and will ramp up the economic cycle. They can increase taxes in the future to pAy for it.