Thursday, November 5, 2009
McAlvany Weekly Commentary
“An Interview with Gregory Weldon: A Macro/Technical-Perspective on the Markets”
November 4th, 2009
< href="http://www.mcalvany.com/podcast/#" onclick="javascript: podPressShowHidePlayer('1','http://www.mcalvany.com/podcast/wp-content/uploads/ica2009-1104.mp3',300,30,'true'); return false;">Hide Player | Play in Popup | Download Mp3Gold Market Reaching The Breaking Point
China is increasing its gold reserves, and India has just bought 200 tons of gold from the IMF. Russia had publicly stated its intention to increase its ratio of gold reserves from 2% to 10%, and Brazil is also considering IMF purchases. Gold inflows into central bank vaults are increasing.
It has been more than 40 years since governments and individuals concerned themselves about physically holding gold, but confidence in the dollar is falling and investors are being “dragged kicking and screaming into the bullish camp” as gold continues to break to the upside. (more)
Gold: It's All About the Dollar and (Yes Dr. Roubini), Inflation
Gold prices surged to a new high Tuesday on news that India's central bank bought $6.7 billion worth of gold from the International Monetary Fund (IMF). December gold jumped as high as $1,087, before settling at $1,084.90 an ounce on the NYMEX breaking the previous record of $1,072 an ounce on Oct. 14. Prices are now up 22.7% for the year heading for a ninth straight annual increase.Unusual Correlation Historically, gold moves in an opposite direction to stocks because of bullion’s traditional role as a safe haven in times of crises. But gold has recently climbed in tandem with rising equities. For example, the Dow Jones Industrial Average, a bet on the economic recovery, is up about 15% this year. (more)
Profit `Not Satanic,’ Barclays Says, After Goldman Invokes Jesus
Barclays Plc Chief Executive Officer John Varley stood at the wooden lectern in St. Martin-in-the- Fields on London’s Trafalgar Square last night and told the packed pews of the church that “profit is not satanic.” The 53-year-old head of Britain’s second-biggest bank said banks are the “backbone” of the economy. Rewarding high- performing bankers with more pay doesn’t conflict with Christian values, he said. Varley was paid 1.08 million pounds ($1.77 million) and no bonus in 2008.
“Talent is highly mobile,” Varley, a Catholic, said. “If we fail to pay or are constrained from paying competitive rates then that talent will move to another employer.” (more)
Mother of Carry Trades Will Lead to Asset Bust
Nouriel Roubini warns using cheap US$ to invest in riskier higher-return assets will quickly reverse once the US$ strengthens... foresees the Fed keeping interest rates low, weakening the US$ for a long time, making the unwinding all the more painful... "It's going to eventually occur but it's going to be six months from now, a year from now... In the meanwhile the bubble's going to become bigger globally and the bigger the bubble the bigger is going to be the crash."
SECRET PLAN FOR EURO INCOME TAX
SECRET plans to seize more than £4billion a year from Britain and make its citizens pay taxes direct to Europe emerged last night.
The leaked proposals, seen by the Daily Express, state that Britain should lose the billions of pounds in rebate that was agreed by Margaret Thatcher 25 years ago.
The plans – with a foreword by European Union Commissioner Jose Manuel Barroso – would cost every British family at least £155 a year.
They would also mean Brussels being given the power to dip straight into taxpayers’ pockets.
The proposals prompted fury last night. (more)
Gold Spells Trouble for Greenback: Charts
Gold made new highs Wednesday and “looks like it’s going further up,” he told CNBC.
“The question is what really does gold tell us,” he said, adding that gold’s strength is “a sign that the dollar is going to weaken earlier or later in the next few days already, and the stock markets turn around again.” (more)
Economic Crisis Hits States and Municipalities
Crises expose the system's irrationalities and wasteful resource allocations. For example, Madoff and his many, smaller imitators reveal the tips of corruption icebergs. More important, the crisis-induced fiscal emergencies looming in most of the 50 states demonstrate several absurdities in our economic system. The Center on Budget and Policy Priorities (CBPP) in Washington, DC monitors and calculates the gap between the fifty states' tax revenues and expenditures. The following recent CBPP chart compares the total state budget shortfalls in both the last recession and the current one. Today's record shortfalls measure how many billions states will need to raise in additional taxes or cut their expenditures (or combinations of both) in this and coming years. (more)
Marc Faber: I Am Long the Dollar
The U.S. dollar may appreciate well over 10 percent against the euro during the next quarter, says Marc Faber, the economist known as “Doctor Doom” to investors.
Faber has long predicted the dollar’s complete collapse, so the dollar rally for him is an interesting turn of events.
“Maybe the dollar has made a turn; it can easily rebound by 10 percent,” Faber told Bloomberg News.
“It may have started already since the asset markets started to go down 10 days ago.” (more)
S&P 500 Video
In our last video on the S&P 500 (10/27), we indicated that this market may have topped out for the year. Today's action puts in place a weekly "Trade Triangle" which indicates that a temporary or a permanent top is now in place for this market.In this latest video, I share with you some of the ideas that I think could potentially come into play for this market. Not only do I have some downside targets in mind, but I also see a pattern that could evolve in the next several weeks which will confirm that we've made a serious high in this market.
click here to watch