Well first off it looks like the metals may have finally bottomed at yesterday's lows of gold @1628 and silver @31.20. Daily indicators are turning up, and we have had a strong rally since then. Keeping my fingers crossed for a good rally here.
Ok now into the not so good news. Stock market recently hit new 52 week highs, but as in 2008 the market was not a very good indicator of underlying economic issues. And with our disastrous highly inflationary monetary policy, along with record low volumes, more than likely the market will drift higher until it just doesn't. So don't let this fool you, bad things are brewing under the surface.
11 out of 13 economic indicators have missed expectations, and the two indicators that beat expectations are questionable at best. They were jobs and car sales. Well you should know by now of the manipulation, and the massaging of the jobs numbers. Remember that this is an election year, and things must look rosy until November for Obama's re-election campaign. And car sales are up due to channel stuffing. Whenever a car is shipped from the manufacturing plant to the dealer it is considered a sale(I know, doesn't make much sense does it?). So when actual sales are looking bleak, dealerships boost inventory to get this number to rise. This is a perfect example of why you must look into the details of government's statistics and indicators vs. taking them for face value. Under the surface, another bailout of GM is in the rumor mill.
http://www.zerohedge.com/news/bursting-permabullish-bubble-11-out-13-economic-indicators-have-missed
13 month lows in January for the new home sales MoM(month over month) change, and the largest downward 'reality' revision since March 2009. New home sales make it 12 out of 14 economic misses. As I have said before, this housing thing still has a ways to go. I was talking to my buddy Chris that grew up in my hometown of Port St. John, and told him it was possible that home prices could see 1980's levels due to an over-correction, from an extreme over-valuation from last decade. Sure enough, he looked it up and the house his Father bought in 1984 for $74k is now worth a staggering $76k. Prices will remain stagnant to slightly down for the next few years at best. And these are at record low interest rates, with 3% down FHA mortgage offerings. Just wait until interest rates rise....
And although Europe and Greece was just bailed out again by their central bank this month, the charts are looking no bueno for the short to medium term. Bailout number 3 was being talked about as the 2nd deal was being wrapped up. Kind of silly isn't it. Eh, forget about the fundamental problem, let's just throw some more money at it, and see if we can't grow(print) our way out of the mess. Leverage in the Euro banking system is still huge, and debt to GDP levels are growing exponentially.
Every time you print a trillion dollars, the effects it has over the broader economy decrease. So eventually as debts grow, and you print money to cover your deficit, the stimulus side of it turns to nada. And when inflation increases sharply without wage growth doing the same, more citizens turn to the government for aid, increasing government expenditures. This inflation in turn causes squeezed margins in businesses, forcing them to close shop or send more jobs overseas. Sending more people to the government for handouts, causing government revenues to fall, and expenditures to rise once again. This is called an inflationary death spiral. It's simple math really. If everyone could just print their way to prosperity, everyone would be doing it! But alas, the ones who have tried(most recently Zimbabwe) have destroyed their currency in the process. Well we are well on our way, and we are about to enter another major war to help speed up the process! So this is why I so strongly believe in opting out of the system, and I rely on the four G's, and NOT on the government. Those four are God, Gold, Guns, and Grub. If you have those, you should come out alright. Have a great weekend!
