Gold
Today the numerous warnings about "a gold correction" have become almost deafening. Now we have a crowd of "experts" telling us to take profits in gold because "gold is in a parabolic rise." The problem is that these experts don't know whether we're in the first 10% of the parabolic rise or the last 10% -- or in the middle.
Today the numerous warnings about "a gold correction" have become almost deafening. Now we have a crowd of "experts" telling us to take profits in gold because "gold is in a parabolic rise." The problem is that these experts don't know whether we're in the first 10% of the parabolic rise or the last 10% -- or in the middle.
In the big picture, I'm betting that the bull market in gold has much further to go. I base this on a number of items, but here are a few of them.
The US public hasn't bought any gold at all. It doesn't even know what a gold coin looks like.
The central banks of the world are continuing to create oceans of junk paper money.
The US is continuing to generate multi-billions of dollars of credit and debt.
The Iraq and Afghanistan wars are now costing $10 billion a month. The wars, among other things, are wrecking what's left of the US budget.
The US is spending more on its military than the military spending of the rest of the world combined.
The US has $50 billion in unfunded liabilities in Social Security, Medicaid and Medicare. Great quantities of new paper will have to be created to cover these costs.
To address the current account deficit, the US wants the dollar lower by 25%. This will intensify the war of competitive devaluations.
George W. Bush has wracked up more in debt than the combined debts accumulated by all the previous presidents in US history. And incredibly, Bush has yet to veto a single spending bill.
The US's creditors have been financing the US current account deficits to the tune of over $2 billion a day. Now they are starting to worry about the viability of the US dollar. In fact, some of the US's creditors are beginning to "diversify." To the extent that the US is "owned" by its creditors, to that extent the US loses control over its own finances. There's no way this can last. In time, our creditors will pull back, take their losses, and let the dollar go.
The rest of the world increasingly resents the Bush administration's arrogance and saber-rattling. At some point they will unload their trove of US assets, sending the dollar reeling.
Thus, it's clear that much of the strength in gold stems from gold discounting a declining dollar.
I count gold closing up 15 out of the last 18 days which is technically ridiculous and super-extreme. Yet gold is up in the aftermarket this afternoon, but it's hard to believe that gold won't correct, at least slightly, over the next few days. Gold now outperforming silver. Gold shorts getting their Baptism of Fire.
Today the numerous warnings about "a gold correction" have become almost deafening. Now we have a crowd of "experts" telling us to take profits in gold because "gold is in a parabolic rise." The problem is that these experts don't know whether we're in the first 10% of the parabolic rise or the last 10% -- or in the middle.
In the big picture, I'm betting that the bull market in gold has much further to go. I base this on a number of items, but here are a few of them.
The US public hasn't bought any gold at all. It doesn't even know what a gold coin looks like.
The central banks of the world are continuing to create oceans of junk paper money.
The US is continuing to generate multi-billions of dollars of credit and debt.
The Iraq and Afghanistan wars are now costing $10 billion a month. The wars, among other things, are wrecking what's left of the US budget.
The US is spending more on its military than the military spending of the rest of the world combined.
The US has $50 billion in unfunded liabilities in Social Security, Medicaid and Medicare. Great quantities of new paper will have to be created to cover these costs.
To address the current account deficit, the US wants the dollar lower by 25%. This will intensify the war of competitive devaluations.
George W. Bush has wracked up more in debt than the combined debts accumulated by all the previous presidents in US history. And incredibly, Bush has yet to veto a single spending bill.
The US's creditors have been financing the US current account deficits to the tune of over $2 billion a day. Now they are starting to worry about the viability of the US dollar. In fact, some of the US's creditors are beginning to "diversify." To the extent that the US is "owned" by its creditors, to that extent the US loses control over its own finances. There's no way this can last. In time, our creditors will pull back, take their losses, and let the dollar go.
The rest of the world increasingly resents the Bush administration's arrogance and saber-rattling. At some point they will unload their trove of US assets, sending the dollar reeling.
Thus, it's clear that much of the strength in gold stems from gold discounting a declining dollar.
I count gold closing up 15 out of the last 18 days which is technically ridiculous and super-extreme. Yet gold is up in the aftermarket this afternoon, but it's hard to believe that gold won't correct, at least slightly, over the next few days. Gold now outperforming silver. Gold shorts getting their Baptism of Fire.
posted by Dr. Jeff Lazarus MD at 11:12 PM
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