Can Bernanke Contain Inflation?

Ben Bernanke has stated publicly that he can contain inflation in 15 minutes by raising interest rates. He thinks he can go the route of Volcker, but I have serious doubts over whether Bernanke can get away with raising interest rates under the present circumstances. The number one constraint on Bernanke’s ability to contain inflation is the U.S. government bond market. I consistently say that what you should fear is…

Common Sense in Investing

One of the things I love about investing is that it is a pure meritocracy. The markets don’t care what kind of degrees you have or what kind of work experience you have in finance. The markets reward clear thinking, period. This is the kind of thinking that, quite honestly, is very rare. The easiest kind of analysis is the sort you see out of the mainstream financial media. Lower…

Homes Lose $1.7 Trillion in Value, Crisis in States Intact

The double dip in housing continues to be confirmed by multiple sources. The research group Zillow just came out with a report that says homes are on pace to lose $1.7 trillion in value this year. To put this number in perspective, homes lost $1 trillion in value in 2009. If anything, the decline in real estate is accelerating, especially since most of the gains in home prices earlier this…

How Far Will The Gold Correction Go?

Gold is taking us on a roller coaster ride that I’m sure has many people concerned. However, long-term gold bulls can rest assured that this is not the type of price action typical of bubbles; when bubbles pop, they don’t retest highs for many, many years. Gold on the other hand is making new highs, correcting, then making new highs. If anything, the price action suggests a big thrust upward…

The Fed’s Ongoing Failed Experiment

Following a record day in gold, it appears we are seeing some profit-taking. Today’s correction was fairly severe with gold tagging $1401 on the downside. Based on current price action, I plan on lightening up if we breach $1400. All in all, I am not too concerned about a steep correction here since I will just continue to add to my position. Gold will do fine partly because Fed Chairman…

Unemployment Rate Rises to 9.8%, Gold Explodes

The big news this morning is that the unemployment rate rose from 9.6% to 9.8%. Nonfarm payrolls rose only 39,000 last month, which was far below estimates of 150,000. This is a very bearish report. The Employment-Population ratio fell to 58.2%, which matches the low for this recession. The unemployment rate has now hovered above 9% for a record 19 straight months. The number of discourage workers rose to a…

Is the Bond Breakdown Here Yet?

I sense a lot of people are hesitant to buy and hold gold at these levels, which is great as far as I’m concerned. For the most part, the “right” trades are not the “easy” trades. When it is time to buy into a sell-off, that’s when you’ll get the most people predicting a monster collapse. When it is time to hold on for dear life, that’s when you’ll see gold…

Stocks, Gold, and the U.S. Dollar

 Today’s post is going to be a little on the short side because I have a plane to catch. But just wanted to make some points about the current price action in the dollar, gold, and stocks. U.S. Dollar The dollar has rallied substantially from oversold levels, which is something I was warning of even as one of the bigger dollar bears. Assets never fall in a sustained fashion unless it is…

Gold and Precious Metals

Gold Bubble?

As gold pushes to new highs, expect widespread skepticism from the mainstream media. The mainstream media is notoriously late in recognizing trends, and the gold bull market will be no different. From CNN Money, Beware the Gold Bubble: In 1933, when gold traded at $32 an ounce, the Dow bottomed out at 50 in February. In 1980 gold climbed to its high of $850 on Jan. 21, when the Dow…

Gold to New Highs- Now What?

The move I’ve been expecting for months now looks like it may have finally arrived. Gold has pushed above resistance at $1020 and is forging ahead to new highs. The dollar refuses to put in its long awaited correction. See this post. What does this mean? It means the biggest moves in markets are misread by the greatest number of people. A lot of investors will misread this gold bull…

Gold Breaking Out?

In the overnight market, gold has been able to bust through what has been heavy resistance at $1,020. This could be the breakout gold bugs have been waiting for. News that countries are in talks to bypass dollar in trade of oil has put pressure on the dollar and supported gold prices. In the coming months and years, there will be a wave of gold positive news that will boost…

Gold Signaling Trouble Ahead?

Whenever I want to get a barometer of the true state of the economy, I take a look at the price of gold. While Ben Bernanke lies through his teeth to a gullible public, gold stands firm as a purveyor of truth. Even in the face of likely manipulation by central banks and deflation (according to the government), gold has managed to hold the $1,000 level for about a month….