Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
How to Capitalise on the Robots - 20th June 24
Bitcoin, Gold, and Copper Paint a Coherent Picture - 20th June 24
Why a Dow Stock Market Peak Will Boost Silver - 20th June 24
QI Group: Leading With Integrity and Impactful Initiatives - 20th June 24
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24
Bitcoin Trend Forecast, Crypto's Exit Strategy - 31st May 24
Zimbabwe Officials Already Looking to Inflate New Gold-Backed Currency - 31st May 24
India Silver Imports Have Already Topped 2023 Total - 31st May 24
Gold Has Done Its Job – Isn’t That Enough? - 31st May 24
Gold Stocks Catching Up - 31st May 24
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Four Stock Market Warnings to Watch

Stock-Markets / Stocks Bear Market Jun 03, 2009 - 01:52 PM GMT

By: Uncommon_Wisdom


Best Financial Markets Analysis ArticleTony Sagami writes: The TV experts are breathless again thanks to some triple-digit Dow Jones moves. Like a bunch of thirsty frat boys on a Friday night, the Wall Street crowd is so eager to throw a party that they’ll latch on to any good news as the start of a new bull market.

The bulls assume that since stock prices are moving higher, the economy is improving.

Ha! The economy is as ugly as ever, and instead of looking at what the Dow Jones is doing, investors should be looking at four of the ugliest, most dangerous, and most clear warning signs that are telling me to run for the hills.

Warning Sign #1

Dollar hits 2009 low: The U.S. dollar hit a new low for the year last week. The dollar lost more than 6 percent for the month of May. That’s the biggest monthly fall since 1985.

The pinstripe suits in Manhattan and Washington, D.C., don’t care. The rest of the world, however, thinks we are reckless spendthrifts, and several countries are dumping our dollars as fast as they can.

The dollar’s downward spiral isn’t finished yet either. My Asia Stock Alert subscribers own the Merk Hard Currency Fund (MERKX), and they are sitting on a double-digit gain after holding for only a few months.

And if you expect the dollar to keep falling (and I sure do), this non-dollar currency fund should continue to rise.

Warning Sign #2

Gold nears $1,000 an ounce: Gold hit $980 last week, a three-month high, and is now within shouting distance of $1,000 an ounce.

Gold is within reach of $1,000 an ounce due to both geopolitical  concerns and fears about the global financial system.
Gold is within reach of $1,000 an ounce due to both geopolitical concerns and fears about the global financial system.

The turmoil in North Korea and the Middle East is responsible for some of gold’s move, but the real catalyst behind the move is the growing risk of the global financial system going completely haywire.

The credit crunch is far from over, our government still has trillions of dollars more to spend, housing prices will continue to fall, and inflation is building a launch pad from which to skyrocket.

I believe it is only a matter of time before gold busts through $1,000 … and goes much, much higher.

Warning Sign #3

Oil jumps to $68 a barrel: Oil also hit a 2009 high but also had its largest monthly gain in 10 years in May after it hit $66 a barrel last week. And it’s rising again this week.

The Wall Street crowd likes to crow that rising oil prices indicates a global economic recovery, but what those idiots don’t understand is that oil is rising not because times are good but because times are bad!

Oil prices are going up because it is priced in the rapidly devaluing U.S. dollar, and investors are fleeing paper assets and seeking hard, tangible assets, like oil.

Warning Sign #4

Treasury bond yields skyrocket: Like oil, the yield on 30-year Treasury bonds also hit a 2009 high when they rose to 4.6 percent last week. To put that into perspective, the yield was as low as 2.5 percent six months ago.

Foreign investors may punish the U.S. government for borrowing trillions of dollars too much by refusing to buy its debt until bond prices plunge to much cheaper levels.

The Dow Jones shot up by more than 200 points Monday after some strong manufacturing news came out of China.

But you should be asking yourself how dangerous the above four warning signs really are.

To me, they are four of the clearest, most dangerous signs I’ve seen in my 30-year investment career, and they are ominous enough that I consider them to be the Four Horsemen of the Stock Market Apocalypse.

I don’t know if the tumble — and a mighty big one at that — is coming next week, next month, or even further down the road, but trouble is certainly coming.

Here is what you need to do to protect your assets:

Slash your dollar-denominated assets. It sounds simple, but you don’t want to own dollars when they are going down. You can diversify into currency hedges, such as the Merk Hard Currency Fund, but what I’m really talking about is selling your dollar-denominated paper assets: U.S. stocks and U.S. bonds.

Chop your maturities. One of the biggest losers in an inflationary environment is long-term bond holders. If you own any bonds that go out more than 5 years or any bond mutual funds with an average maturity longer than 5 years, dump them immediately and move into shorter maturities.

Add some tangible assets. That could be gold, oil companies, or other natural resource companies, such as Yanzhou Coal (YZC).   Real assets, not paper assets, will hold their value and perhaps even appreciate when things get ugly. For example, Yanzhou Coal, which my Asia Stock Alert subscribers already own, jumped by 11.4 percent Monday.

Go on the offensive. When it comes to stock investing, one rule trumps all others: Stock prices follow earnings. The one region of the world where corporate earnings are still rising is in Asia and India, so the best place to invest your stock market dollars is across the Pacific Ocean.



This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit

Uncommon Wisdom Archive

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in