Tuesday, March 16, 2010

THE GREATEST SHOW ON EARTH updateIII

Welcome to the game. Market is just dead this morning. But guess what isn't? Thats right........Fake out or break out. Guess we will just have to wait and see.

An interesting argument was made in why your longer term hold in gold and miners should be your best bet was made regarding golds performance if interest rates begin to rise. It essentially addresses that the interest rate rise will belie a more serious underlying problem of a world awash in print money that is reflective of an even larger reason to be in gold.

George Soros got it right recently when he said that gold was the ‘ultimate bubble’, that is to say the last asset class in the chain to become a bubble before the whole cycle starts again. For in past financial crises the clear pattern has been bank failures then a bond market crash and a rush into precious metals.

Will this be something that you and I see in the near future? I hope not.... I want to prepare better with more physical gold. Our concern here in the near term are stocks....ie the miners. So this scenario is hopefully at least two years away...I hope. If we are lucky it won't hit until after 2014.

Government intervention on a historic scale has mitigated the bank failures but led to an even greater issuance of government paper, and merely delayed the inevitable bond market crash that will come as – wait for it – interest rates go up.



Gold then becomes the final safe haven asset and the limited supply of gold means that its value will surge to unheard of levels. Dr Marc Faber recently suggested that $1,000 gold might be seen as similar to the Dow crossing 1,000 in 1982.

http://news.goldseek.com/PeterCooper/1268746723.php

UpdateI 1500.....Fed keeping rates unchanged...what I do find interesting is the miners appear along with gold to be breaking out on technical levels. Also within the Fed language was unit labor costs....note the language and the costs to miners...

Labor Costs

Officials may also be concerned about the falling cost of labor, said Marvin Goodfriend, a former research director at the Richmond Fed. Labor costs dropped at a 5.9 percent pace in the fourth quarter, according to a report earlier this month.

“Today we cannot say we’re past the period of risk of deflation in unit labor costs,” said Goodfriend, now a professor at Carnegie Mellon University’s Tepper School of Business in Pittsburgh.

UpdateII In a speech I recently gave at The Empire Club of Toronto , I referred to gold as the "anti-currency." Gold is not and never has been a currency. Gold is something entirely different and far more valuable. It is money.

"If you're holding paper currency, you have to have some kind of trust that the country that issued it is not just going to print its way out of its problems. That's a real concern right now. Gold, on the other hand, has real intrinsic value, unlike a paper currency which can be debased by its government."

– Sacha Tihanyi, currency strategist, Scotia Capital

http://news.goldseek.com/GoldSeek/1268756265.php

Update III Thanks Carol for Nenner link....

http://www.madhedgefundtrader.biz/Charles_Nenner_03_11_201.html

21 comments:

  1. good take on the soros comment.

    I am setting my stops on miners at the open low. going to sell half my JAG +10%

    S is seeing 3.58 being supported

    My guess is the FED dont change anything and it could be a sell the news event.

    ReplyDelete
  2. All,

    FRG is breaking out!

    Joe

    ReplyDelete
  3. JAG on a terror move........big volume

    ReplyDelete
  4. Temo, great call being long of JAG last couple days, that one really ripped it up here. - Analyze.

    ReplyDelete
  5. Labor cost falling.

    Obama taxing soda pop.

    Real inflation out of control.

    Somethings gonna give.

    Ride the wave even if it is a tsunami.

    ReplyDelete
  6. thanks Analyze. SSRI had a good day to. None of my stops were hit and they are trailing nicely.

    S broke down after lunch. Have to watch it tomorrow.

    ReplyDelete
  7. Kli,

    I am a frequent reader of your blog and I thought that you and others would be interested in an interview with Charles Nenner on 3/11/10 on Hedge Fund Radio.

    Carol

    http://www.madhedgefundtrader.biz/Charles_Nenner_03_11_201.html

    ReplyDelete
  8. Miners look good here. One thing to note, I have a danger flag coming up on long side, and will exit all long positions at or before SPX 1173, even earlier if I see the individual positions I am playing start to show fsow. Quite a few factors in play, but it has reversal potential there for a nasty surprise to the downside, and especially if we were to go up to that level directly from here without a retrace first. Watch how positions hold up around that level very carefully. - Analyze.

    ReplyDelete
  9. Analyze I agree which is why I have set trailing stops on all my miners so no matter what I have profits protected.

    ReplyDelete
  10. thnkx carol for the post and analyze longs are getting long in the tooth.....agree

    ReplyDelete
  11. Dave,

    Good to hear from you!

    Joe

    ReplyDelete
  12. Temo,

    Good work, keep making money!

    Joe

    ReplyDelete
  13. Kli you still holding SH? I think a small pos in the next day or 2 might not be a bad idea.

    ReplyDelete
  14. Carol,

    Nenner is former GS, there is no such thing as former GS, once a GS always a GS. I like to see Dow drop to 6000 this yr BUT when it comes from the mouth of the person who is a SPAWN cautious is a wise approach. When you dance with the devil, you do not change the devil, it changes you. Most of these so-called market experts are NOT there to serve the retail traders. Understand the FED especially the central bankers motives and behavior along with politics involved and that will give you better approach to the market.

    Joe

    ReplyDelete
  15. Only FED & GS know what happens to market this yr since this market is COMPLETLY controlled by them and since they are not in the business of announcing the exact direction they are going to take the market, it's best advised to not focus so much on whether there is going to be a crash or not. Trade what market gives you,that's all.

    Joe

    ReplyDelete
  16. Nenner's loyalty is to GS and close clients of GS, that's ALL.

    Joe

    ReplyDelete
  17. As Joe stated its the Devil's job is to confuse.....so understand that Nenner's master is GS.....

    ReplyDelete
  18. "the devil starts by taking away their awareness" "what the devil shows you is easy" "money, power, greed"

    ReplyDelete
  19. entered my SH hedge "again" today temo

    ReplyDelete
  20. kli, read this:

    http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_U/threadview?m=tm&bn=58157&tid=599537&mid=599537&tof=21&frt=2

    ReplyDelete
  21. Gold is looking nice here in the wee hours.

    ReplyDelete