馬田大師
The chaos in gold is typical. Already, the hate mail has begun.
“Stop the Bullshit”
one said because demand in Shanghai is at record highs.It takes far
more than one country to make a bull market. Others just blame me for
the decline because they just listen to those who always say buy. The
New York institutional press would
NEVER dare quote me
because I stand up and expose their favorite sons – the NY bankers. The
Goldbugs do their best to make sure their press does not quote me since
they only have a litany of people who say
buy – buy – buy! So why is it always me?
People are so married to this idea of the entire world collapsing and
only gold will rise it is truly astonishing. What is the problem? Why
must gold be the exception to everything? This is not a religion. It is a
market. I hate to tell you but everything on a timing level was on the
mark. The collapse in the stock market during the Great Depression was
34 months. The rally in gold was 34 months. These are reoccurring timing
frequencies in times of crisis. This is about making money and
surviving – not punishing the world because you are not on the top of
the food chain. I am not selling anything. I am not soliciting funds for
management. It always is what it is. Nothing more!
People have been sold pure nonsense on so many fronts. The talking
heads claim lower interest rates are bullish for stocks. Just do the
correlation and you will see that when rates plummet as during the Great
Depression or after 2007, stocks fell. So precisely where does this
nonsense emerge? Who writes this bullshit for the talking heads?
The precious-metals investors have been sold the similar nonsense –
all hype and no substance that gold will rise because the Fed increases
the money supply. A very simple one-dimensional relationship that
NEVER works because we live in a
DYNAMIC world economy. Bull markets
ONLY take place when that object is rising in terms of
ALL
currencies. They have also been sold the nonsense that gold rises with
inflation. That was a great sales pitch, but it is time to do the
REAL
correlation. When you do the analysis rather than preaching dogma and
chanting mantras laced with rhetoric, strangely what emerges is
NOT that gold rallies with inflation, but it rallies when people
DO NOT TRUST the government! Just do the correlation and you may be surprised.
The release of the January meeting minutes of the Federal Reserve’s
policy committee show that members of the Fed were concerned that it
might be hard to reel in all this liquidity. Keep in mind, that very
concern assumes power to reverse such trends. Even Herbert Hoover point
out in his memoirs that proved to be yet another false assumption. The
Fed policy committee recognized that the liquidity itself may end up
contributing to instability in financial markets. Why? They see the Dow
off to test the 2007 highs. They are afraid there could be a bubble, yet
at the same time they are confronted by a contracting economy. They are
clueless as to what is going on. When asked what was their contingency
plan in case the Euro broke apart, they said that would never happen so
there was no plan. That is like putting up a building without fire exits
because you clearly had no intention of setting the building on fire.
Consequently, the irony confronting the precious-metals investors is
that this may mean the Fed will curb its expansionary monetary policy
SOONER than expected. Thus, gold plummeted for the sales pitch became the mover in reverse – buy for inflation, sell for deflation.
This may be the fundamental that shakes the weak longs out of the
tree, and melts the icing off the cake. Nonetheless, it is
just rhetoric. Gold will rise
NOT because of hyperinflation that will
NEVER take place. Gold will rise as the
Sovereign Debt Crisis unfolds. Understanding the difference prevents losses like today.
It is
NOT the inflation that we need to be concerned with long-term, it is the implosion of
DEFLATION. Unfortunately, when you are in a
Sovereign Debt Crisis
as took place in 1931, capital contracts and hoards because people are
confused and they will spend barely nothing until the sort out what is
really unfolding.
Gold will rise
NOT because of hyperinflation, but because of the
Sovereign Debt Crisis and the lack of a place to put money. The dollar is rising because you have
NO
place to put big money. Europe has no federal bond issue. Japan is a
basket case, and China has no bond market of any size. Thus, the US bond
market remains it. This is why 30 year mortgages have just dropped
below 4% and banks are now trying to lend mortgages as they see
liquidity increase (not from the Fed but capital inflows).
It is so important to understand the global fundamentals for
NO market, not even gold, is ever driven by a single fundamental or a single country. It is at all times a global affair.
Armstrongeconomics.com
