With today's surge in the markets, many bulls will not doubt feel vindicated.
However, our fundamental problems have not vanished after a good nights sleep, they linger just under the surface like some large, scaly, reptile lying in wait for prey to devour.
Consider the gold to bond ratio:
It just broke through the 11 to 1 ratio and has strong upward momentum as MACD and Slow STO indicate. As we have mentioned in the past, any ratio above 10 signals extreme market stress.
Consider a chart on the Euro:
It rose today but slammed to a halt against the 200 day MA.
Consider the US 30 year bond price:
It just broke through the 200 day MA which means long term interest rates are going up!
This will not help housing prices in the United States or anywhere else.
Consider the performance of gold in Euros:
Up 30% in the past year.
From Kitco:
Note that the S&P managed a year to date gain of 9%.
What does all this mean?
The market appears to be losing confidence in central banks and politicians to "manage" the economy. The market wants a currency without a government - and that currency is gold.
However, our fundamental problems have not vanished after a good nights sleep, they linger just under the surface like some large, scaly, reptile lying in wait for prey to devour.
Consider the gold to bond ratio:
It just broke through the 11 to 1 ratio and has strong upward momentum as MACD and Slow STO indicate. As we have mentioned in the past, any ratio above 10 signals extreme market stress.
Consider a chart on the Euro:
It rose today but slammed to a halt against the 200 day MA.
Consider the US 30 year bond price:
It just broke through the 200 day MA which means long term interest rates are going up!
This will not help housing prices in the United States or anywhere else.
Consider the performance of gold in Euros:
Up 30% in the past year.
From Kitco:
Note that the S&P managed a year to date gain of 9%.
What does all this mean?
The market appears to be losing confidence in central banks and politicians to "manage" the economy. The market wants a currency without a government - and that currency is gold.
Good news, I cut a deal with Breakpoint Trades they are allowing me to post the full-on not watered down version of their stock market newsletter.
ReplyDeleteYou get it for free, visit Hawaii Trading for the link!
http://oahutrading.blogspot.com/2010/12/full-paid-newsletter-for-free-from.html
Great analysis as usual PW. I am thinking we will be seeing $100 dollar average movement days in Gold the months ahead, all leading/building up too what I consider a Hyper-inflationary crash, but that is my opinion. The Fed monies being pumped into the system is phenomenal at this point, and I consider Gold as well as Silver a bargain at this stage.
ReplyDeleteThank you for your input Bill.
ReplyDeleteYou may very well be correct with the idea that gold will make some large upward moves in the near future.
While I believe a severe inflationary event is possible in the longer term, I believe we will continue to see deflationary pressures prevail as the supply of credit is steadily eroded.
I too believe that even at current prices gold and silver are very good stores of value in the context of fiat currency printing central banks with accommodative interest rate policies.
And another very interesting Link as a follow up PW.
ReplyDeletehttp://www.businessinsider.com/chinese-gold-imports-surge-2010-12
Be well
Bill