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Saturday, August 22, 2009
Six Important Gold Price Indicators
Here are six things I'm personally keeping an eye on to gauge the direction of the price of gold: 1. COT report. This report shows that commercial traders -- generally believed to be "smart money" traders involved in day-to-day operations of the commodity in question -- are short gold. The commercial traders are increasingly short while others are increasingly long; in such a scenario, when the non-commercials run out of fuel in their trend, they will start liquidating, and the commercials can see this as an opportunity to add to their short positions and push the market further down.
Below is the chart that illustrates. (more)
Monetization of USTreasurys In Isolation
Every few months a chart comes along that needs almost no follow-on paragraphs to make the point of the issue. The chart provided by CIGA Eric covers several important types of US$-based bonds, their inflow and outflow, and the aggregate GrandNet. The financial data is publicly available from the USGovt TIC Reports. The messages are clear. Inflows of foreign funds are dwindling. In the case of USAgency Mortgage Bonds and USCorp Bonds, the nation is witnessing something unprecedented, the net outflow of funds. This is outright rejection. This chart exposes the isolation problem of the USDollar in the bond world, clearly the most important market beneath the currency market. The printing press is the last option. (more)
A Flock of Black Swans
From the battle lines in Extremistan, the time is growing near for these birds to swarm together as the seasons change once again. So what happens if there is one more than Black Swan event in a compressed period of time? Let’s see what could threaten this little bubble of joy and happiness that our friends in Bubblevisionland live in and what could trigger the Messiah taking that course of action that Vice-President Biden warned about before his regime took power. 1. Swine Flu Disaster - The vaccine is only partially effective and due to the economic situation, fewer people go to the Doctor, work more and spread the disease rapidly throughout the public in North America. This kills the Christmas retail season, possibly hundreds of thousands of citizens, and turns whatever projected positive GDP numbers into a sinking nightmare. (more)
Days Away From Economic Chaos?
America is just a few days away from a possible day of reckoning. I again call attention to this day, August 25, when the Federal Deposit Insurance Corporation issues its 2nd Quarter report for 2009 on the state of health of American banks. It has not particularly alarmed Americans that its growth and prosperity have been built upon debt. The American public is a bit desensitized, particularly since the Y2K threat fizzled. We must wait and see how Americans respond to the upcoming FDIC report.
The following charts tell the story. There are roughly 8400 American banks that set aside a small portion of their profits to aggregately insure bank depositors should their local bank fail. A plethora of bank failures has depleted the FDIC reserve fund from $52.8 billion in 2008 to $13 billion in the 1st Quarter of 2009. (See chart below) (more)
Even Warren Buffett Is Now Saying Bonds Could Crack!
I’ve made no secret about my view on U.S. bonds and the U.S. dollar …
I’ve minced no words, and cut no corners …
Instead, I have given you specific, consistent guidance on those fronts: Namely stay the heck away from long-term Treasuries and hedge yourself against the government’s unofficial policy of trashing the greenback.
It started last year in my December 5 Money and Markets column, when I issued the most strident warning I’ve EVER released on bond prices. I labeled long-term Treasuries “the biggest bubble of all” and warned you that … (more)
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