Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Coronavirus Infection Spread and Deaths Forecast 2020 - Video - 28th Jan 20
Is an Accommodative Fed Bullish for the Stock Market? - 28th Jan 20
Trillion-Dollar Stock Market Cap Club - 28th Jan 20
Corona Virus Wuhan Global Pandemic 2020 Deaths Forecast and Market Consequences - 28th Jan 20
Palladium Surges above $2,400. Is It Sustainable? - 27th Jan 20
THIS ONE THING Will Tell Us When the Bubble Economy Is Bursting… - 27th Jan 20
Stock Market, Gold Black Swan Event Begins - 27th Jan 20
This Will Signal A Massive Gold Stocks Rally - 27th Jan 20
US Presidential Cycle Stock Market Trend Forecast 2020 - 27th Jan 20
Stock Market Correction Review - 26th Jan 20
The Wuhan Wipeout – Could It Happen? - 26th Jan 20
JOHNSON & JOHNSON (JNJ) Big Pharama AI Mega-trend Investing 2020 - 25th Jan 20
Experts See Opportunity in Ratios of Gold to Silver and Platinum - 25th Jan 20
Gold/Silver Ratio, SPX, Yield Curve and a Story to Tell - 25th Jan 20
Germany Starts War on Gold  - 25th Jan 20
Gold Mining Stocks Valuations - 25th Jan 20
Three Upside and One Downside Risk for Gold - 25th Jan 20
A Lesson About Gold – How Bullish Can It Be? - 24th Jan 20
Stock Market January 2018 Repeats in 2020 – Yikes! - 24th Jan 20
Gold Report from the Two Besieged Cities - 24th Jan 20
Stock Market Elliott Waves Trend Forecast 2020 - Video - 24th Jan 20
AMD Multi-cores vs INTEL Turbo Cores - Best Gaming CPUs 2020 - 3900x, 3950x, 9900K, or 9900KS - 24th Jan 20
Choosing the Best Garage Floor Containment Mats - 23rd Jan 20
Understanding the Benefits of Cannabis Tea - 23rd Jan 20
The Next Catalyst for Gold - 23rd Jan 20
5 Cyber-security considerations for 2020 - 23rd Jan 20
Car insurance: what the latest modifications could mean for your premiums - 23rd Jan 20
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Stock Market Bounce looks like a Bear Trap, Gold Thoughts

Commodities / Financial Markets Mar 13, 2007 - 09:50 AM GMT

By: Ned_W_Schmidt

Commodities

GOLD THOUGHTS : Equity markets have begun a demonstration of long known fact, even a dead cat bounces when thrown into the air. Market corrections can certainly include days of temporary relief. A possible end to the correction is being called by some. More likely it is a bear market trap. Such commentators, having failed to anticipate end of liquidity driven rally, now have ability to identify bottoms. Real ability or expectational biases?

Even Mark Hulbert, with his dubious analysis of newsletters, has suddenly been able to find statistics suggesting end of equity correction may be near. Common characteristic of these gurus is that they have something to sell you, something that failed to suggest extracting your money from paper equity markets before the slide.


With economic momentum model now in negative territory, U.S. economy is entering a recession. Collapsing factory orders are simply further confirmation of inherent weakness in U.S. economy. And, the implosion of mortgage mountain is only in early stages. For some time the fantasy forecasters have contended that no one will be hurt by housing slide. Well folks, someone owns the $23+ billion debt of New Century Financial(NEW), and someone is going to pay a price for that ownership. NEW rose by more than 25% at one point on Tuesday. Is that a rational response or a dead cast bounce?

With Japan in economic recovery and U.S. sliding into recession, a small bounce in the yen must be viewed as a transitory event. That giant elephant, the yen carry trade loans, has not suddenly disappeared one Tuesday morning never to be seen again. For 2007 to date, yen carry trade loans invested in U.S. equities have had a negative return. That kind of return does not pay the partners' salaries. Given the size of this elephant, the yen is going a lot higher over time.

The real investment stories for the year will be the massive losses of hedge funds in mortgage debt and yen-to-equity trades. A good office pool might be on how many hedge funds disappear before year end as return attrition takes hold. Perhaps a good investment idea out of all this is to short or buy puts on WB. 

Market volatility always provides investment opportunities for those looking forward. In the past week, short-term buy signals have been triggered for US$Gold, CN$Gold, –ĄGold, £Gold and the GDM. Latter is the index used to create the GDX, a Gold stock ETF trading on the Amex. If Hillary Clinton, not a practicing economist as far as we know, can understand the risk facing the U.S. dollar, the rest of us should be able to do so. Gold's sympathetic slide is an opportunity to invest in Gold before the super cycle pushes it to ultimately more than US$1,400.

By Ned W Schimdt
Editor of THE VALUE VIEW GOLD REPORT

Copyright © 2007 Ned W. Schmidt - All Rights Reserved
Ned W. Schmidt,CFA,CEBS is publisher of THE VALUE VIEW GOLD REPORT and author of "$1,265 GOLD" , published in 2003. A weekly message, TRADING THOUGHTS , is also available to electronic subscribers. You can obtain a copy of the last issue of THE VALUE VIEW GOLD REPORT at http://home.att.net/~nwschmidt/Send_Last_Report.html Ned welcomes your comments and questions, and tries to answer most all. His mission in life is to rescue investors from the abyss of financial assets and the coming collapse of the U.S. dollar. He can be contacted at nwschmidt@earthlink.net.


© 2005-2019 http://www.MarketOracle.co.uk - 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

6 Critical Money Making Rules