Quote of the day: [There is] the hint of a possible very sharp rally given how quick and forceful some
technical traders entered the long side of the gold market on Monday’s
[March 26th] rally.
Before we get into today's feature (well, actually it's a summary - with a link to some recommendations), here is some analysis of what happened today in the US markets.
Notice that while the Dow has continued its march to new highs relative to last October's highest point, the Transportation Average has not confirmed the moves. This doesn't discount the moves the Dow is making, but it's a clear warning that the weakness seen in the Transportation Average could eventually show up in the Dow. In a broader real-world sense, we are today seeing the effects of the power that the Fed has over the markets. Despite the fact that Europe is not out of the woods, and when every factor is considered real inflation and jobs numbers in the US are menacing at best, the Fed continues frame their outlook positively and consequently is failing to address (or even mention) the
real challenge facing the US economy - $15.6 TRILLION dollars of DEBT
and climbing!
Below are real inflation and real unemployment charts from John Williams' Shadow Stats (I know what you may be thinking - he's not the composer ... although it would be spiff-tacular if he was!).
Utilizing a comprehensive set of data (and not just the select data that the 'official' number uses) gives a much more 'on the ground' perspective of real unemployment. To read more, visit
www.shadowstats.com. For whatever reason, the market simply reacts to whatever comes out of the Fed's newsroom, which perhaps demonstrates the unwillingness of people to think critically in lieu of chasing the sacred cow of (increasingly devalued) cash.
So, if something happens that sends the markets into a tail spin (no matter the duration, depth, or the cause), we should not be surprised at all. The key to getting an early warning at this point will be to pay attention to Fed releases, and to look for the Transportation average to hit a new intermediate or absolute high that is not confirmed by the Dow. That will be warning #2 that something serious is brewing on the horizon. By the time warning # 2 hits, however, we may have already lost a good deal of profit - so stay sharp!
For now, it looks like the bull run remains in tact. Still, the advice given by Shai Gilani in our feature article is well worth considering along with your financial or investment adviser.
In Gold and Silver, we are definitely seeing a deflationary move again today, with some of the best players down 2%, 3% and ever 5%... and the metals themselves have taken a hit on the heels of the FED announcement that more QE may not be on the table due to a stronger looking US economy. In our view, the statements made by the Fed were hopeful, but bordering on wishful thinking. The debt burden facing the west is too gargantuan not to QE our way out of. In other words, growing out of our debt is increasingly not an option. Notice that I said "increasingly" ... not "absolutely" ... it is possible that something could catalyze new insane levels of real, warranted currency creation in the West (and the US in particular).
Maybe .... but not likely.
The most likely situation we can figure is that the trillions of dollars being held in reserve by banks across the world (released to them by Central banks through various QE programs) will simply make their way into the real economy at some point, which will give the illusion of a grand recovery (and we'll be there to profit from that) while bringing the reality of insane inflation, followed by an epic deflation (we'll be there to profit from that as well!). Going forward, Gold and Silver are still our best vehicles for preservation and speculation.
To be fair, some of this could be years ahead ... so right now, we have to contend with increasing volatility and systemic problems [read: sovereign debt] that just won't seem to "make bye-bye".
Summary of Shai's Article:
- Apple has been a driving force behind the 2012 stock market bull run.
- Europe may start market tremors again. A potential exiting of Greece from the euro currency is still a reality worth watching and weighing, and Spain's bond yields have been slowly rising behind the scenes.
- It looks as if the Chinese will ease up monetary policy and push
growth again, despite having said pretty much the exact opposite a few weeks ago. Perhaps this will stem fears of a hard landing.
To get Shai's recommendations, please continue reading here:
http://moneymorning.com/2012/04/03/wall-of-worry-its-time-to-make-these-two-adjustments/
