Saturday, April 20, 2013

Whither we goest

Whew! What a week. The question is what does it mean and where do we go from here. Here is my take on recent events. 
GOLD
While the huge multi day drop in gold was a staged event the truth of the matter is gold has been weak and in a declining mode since last November. I was so sure QE4 was going to lead to inflation I ignored the obvious and that is we are entering a period of deflation. Gold was merely anticipating that. Whether this is the actual bottom or we have a little more downside we are close to the bottom. Gold usually collapses 3-6 months before a stock market correction.
OIL: 
Oil was reading the same tea leaves as gold and oil has been in a declining mode now since the first of the year. Softness in the price of crude is a good measure of demand and demand has been falling for months. Demand for crude usually falls off 3-6 months before a stock market correction. 
CRB. 
The CRB index of commodities has been falling for months. Copper is almost in a melt down mode and the price of copper is the best weather gauge we have going for the general health of the economy. Copper is predicting a big decline in the months ahead.
Bonds:
Bonds are rising which means rates are falling which means people are parking their money in bonds anticipating a weaker economy and deflaton.
The Rest Of The world:
Europe is in recession and will only get worse. Japan has hit the panic button and will be printing money trying to stem the tsunami of deflation headed for it's shores. China is in the final stages of a monstrous real estate bubble and when it bursts it will be the mother of all messes to clean up. 
All the tea leaves, to me, are predicting a late summer/fall correction in the stock market. I hate to be a pessimist but this could be the big one that wipes out everything. Buy guns, canned food, find a good well and batten down the hatches. As usual I will keep you posted.      

No comments:

Post a Comment