Daily Updates

1. Introduction 
2. Guilt without atonement? Excessive structural debt suggests further appreciation of gold
3. Negative real interest rates continue to provide gold with a perfect environment 11
4. The law of diminishing marginal returns indicates that the level of debt has                 reached a saturation point

My old boss, Ross Perot (yes, it’s true), used to say that giant sucking sound you hear is
the sound of jobs leaving the country thanks to NAFTA.  Despite all the criticism from the free-market mantra clowns on the right, Perot was indeed proved correct, regardless of what you may think of the man.  I would say now, that giant ticking sound you now hear isn’t a clock, but a time bomb about to explode, aka the Chinese credit bubble.  

So is it really a bull market? I think it is. Then shouldn’t we be up to our necks in stocks? I choose not to be, mainly because I don’t like the values. Dividend yields are low in my estimate, and I’m in no hurry to rush into the arms of an anxious and waiting Wall Street.

I know that the potential for great and safe profits in the stock market are created when one buys stocks when they’re on the “bargain counter.” When the Dow’s’ dividends are below 3%, then historically the Dow is far away from the bargain counter.

Sure the Dow and stocks can rally from here. But like the batter who is facing a gifted and clever pitcher, I prefer not to swing on this pitch. So be it, I guess I’m just a stubborn old fool who has too much respect for RISK and values.

Today QE2 ends, and supposedly the Fed steps back. The Treasuries are now on their own, and the Fed has stopped buying. The smart boys are sticking to this scenario. With the Fed no longer buying Treasuries, the Treasuries start falling while interest rates rise. This tends to throw the economy into the dumps. The Fed will watch for a while as the edge is taken off inflation. But as the economy worsens, the Fed will be forced to stimulate again. Once stimulation is back, the precious metals will boom. That’s the line and scenario that I hear.

The Russell reaction — It bothers me that it’s all so pat and so widely accepted. So far, the Treasuries are acting according to script and so is gold. The stock market is acting as if something better is riding on the winds of the future. Could something be amiss with the accepted scenario? Could Bennie Bernanke have it right? And why is Treasury Secretary Geithner ready to say “bye” to the administration? What can he see ahead that he doesn’t like? Geithner’s been Obama’s leading economic confidant. Certainly, an unusual time to exit.”

 

LONDON (Commodity Online): Global economic analyst and commodities forecaster Marc Faber says any commodity that is dependent on China is not reliable these days. He also said the current corrections in Gold are short-term, and if the gold price goes to $1400, it would be the best time to buy the yellow metal.

by Dennis Gartman:

There is talk in the market that the US Treasury and/or the IRS may soon announce some sort of amnesty regarding profits that have been retained abroad by US corporations and that shall force the dollar to trade higher. We are not certain how valid are those rumours, but they are there and they are being discussed and as the old aphorism goes, “Where there’s smoke….”

by Don Vialoux:

The Bottom Line

Technical, fundamental and seasonal influences are not for the faint-of-heart at this time of year. Selected sectors with favourable seasonal influences (e.g. agriculture and gold equities) have “clicked in” as expected and remain good candidates for accumulation on weakness following gains recorded during the past two weeks. However, most investors rightfully are reluctant to add to positions at current prices given strength in equity markets during the past two weeks. Cash and cash equivalents are preferred investments for those who have not committed to the Independence Day trade.

…read Don’s July 4th post and view 45 Charts HERE

….read Don’s July 5th article: Equities to come on strong by Q4

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