The Calm Before the Debt Crisis Storm

It’s axiomatic that the government makes problems worse, especially problems they didn’t see coming. The government didn’t foresee this debt crisis, so they sure as hell don’t know how to get out of it. Just think of programs like the homebuyer tax credit and “cash for clunkers” that did not have the intended effect. Our government leaders don’t have real world experience dealing with economic issues. They need to keep…

Will Gold Rally Into 2012?

The gold market has been volatile to say the least with no clear direction. All this volatility is within a range, which suggests another retest of highs is possible in the months ahead. Although gold corrected today, it bounced off $1600, which is a small victory for bulls; as long as this level holds, the outlook for gold is bullish in the short to intermediate term. As I’ve said before,…

The Bond Crisis Looms

Financial crises happen all the time and we get over them. People panic and stocks crash, then we move on. However, bond crises are different because this is the source of capital formation. Following a bond collapse, the economy doesn’t recover for many, many years. This is what we should be preparing for. In the grand scheme of things the stock market is immaterial. The bond market is where all…

Occupy Wall Street: Right or Wrong?

After a couple of weeks of rallying, stocks have finally taken a breather. The battle line continues to be drawn at the 75-day moving average, and I am neutral on stocks until we move decisively in either direction. A lot is happening in the world, including the spreading of the Occupy Wall Street movement globally. I’m seeing the movement develop and I’m not exactly sure I’m on board. Protesters parked…

Stocks Approach Critical Levels

I’m sure most of you recognize that once market sentiment gets extremely bearish, we rally powerfully. Well this is just the way markets work; they tend to revert to the mean. The S&P downgrades U.S. debt and people think the world is ending. Of course after markets rally people totally forget how fearful they were when the downgrade news came out. The S&P totally blew the housing crisis and their…

The Paradox of Investing

Investing is filled with paradoxes. For example, there is a big difference between the domestic and foreign exchange of real estate. When real estate changes hands domestically, it is not necessarily inflationary because we are talking about internal transfers from one bank account to another. If foreign capital comes to America, it is effectively new money that is inflationary. I am making a bet on real estate in part because I believe…

Stocks Rally Powerfully

This continues to be a range-bound market, although we are in the midst of a powerful rally fueled by hopes that the European crisis will be addressed. Well these hopes are misguided because fundamentally a single currency needs a single debt. Until European leaders figure this out, nothing will change. The 50-day moving average was breached today, which is a constructive. However, I wouldn’t feel too comfortable about the sustainability…

Civil Unrest and Investments

The debt crisis in America is intensifying as civil unrest has finally entered the equation. The Occupy Wall Street movement has spread throughout the country and it will grow even without media coverage because of the tech savvy youth. Believe me, this is why Obama passed legislation to shut down the internet in the case of “weapons of mass disruption”, or internet terrorism. I have been very consistent in my…

Gold and Precious Metals

The Declining Confidence of Americans

I account for the real possibility of civil unrest when I make investment decisions. Civil unrest is one of those things that will have an inordinate effect on the gold price. If gold has come this far from good old government mismanagement alone, imagine how high it can go if Americans protest. It has been quite some time since protests due to a weak economy were even a remote possibility….

The Future Gold Price

What the future holds for the price of gold is anyone’s guess, but it’s worth a try. There are those who call gold a bubble, but they have been proven wrong time and time again. Gold has corrected and consolidated before rallying throughout this bull market, yet people still have the nerve to call it a bubble. This betrays a total lack of understanding of markets in general. The way…

Record Job Cuts in States

In further evidence that our economy is in the process of slowing, states are projected to make record job cuts in the 3rd quarter. As I’ve said before, states in the U.S. are indistinguishable from Greece. The arguments that the U.S. won’t suffer a huge crisis since we own the reserve currency and can print our way out of this just do not apply to the states. States need to balance…

Disagreeing With Deflationists

The ability to change your position at the blink of an eye is very important in investing. While you all know I am a gold bug, I would turn bearish on gold if we found a mounumental gold mine that quintupled the supply of gold. Yes gold will still be an anti-government trade. Yes gold will still be a currency. However, the massive supply spike in gold will probably counteract…