“Gold rallied to a new all-time high this morning as worried investors continue to pile in to the precious metal,” said Rajesh Patel, head trader at financial betting firm Spread Co.
“We are seeing continued signs of stress in the financial markets and investors, novice to expert are looking at gold now as a hedge against further turmoil.” Gold is viewed as a safe-haven investment in times of economic trouble.
THIS is why *I* fear inflation is coming.
*I am not a fortune teller (aka an economist or financial consultant.)
See related story, “If Cash is King then Gold is — forgive me — G*d”
In 2000, Bob Prechter published a book called “Conquering the Crash” in which he accurately predicted the current financial markets meltdown right down to the bank failures and futile “bailout” actions on the part of the Fed.
This past October, Prechter was asked if we could expect to see a “bottom” any time soon. In other words, the end of the declines and the beginning of the rebuilding of share values.
He quite confidently said the equivalent of “no way!”
That was over four months ago and so far he’s right on the money.
Prechter is a highly respected analyst on Wall Street as demonstrated by his frequent appearances on Bloomberg TV.
Unfortunately, his message is not getting to the “average” investor who is being told to “hold steady.”
Holding steady is a period of dramatic deflation is a great formula for going broke.
hat tip: George Washington blog.
The biggest gold bugs have said for years that the price of gold usually mirrors the Dow Jones stock market index, and that it will eventually end up there again. For example, Peter Cooper recently wrote:
The Dow Jones Index will plunge again, way beyond the 7,000 limit target I suggested long ago for 2008, and head to 4-5,000, while at the same time the price per ounce of the yellow metal will tip the $4-5,000 an ounce level, way above the $2,000 now predicted by Citigroup
Before moving on to the main topic allow me to point out that Timmy Geitner (our new Treasury Secretary) wasted no time getting up to speed as the new ring-leader for the Plunge Protection Team (PPT). As you can see in the DOW chart below, the PPT fingerprints were all over the markets yesterday… Just take a close look at the last hour of trading – at precisely one hour before close the markets were massively pumped – free market society my @$$!
Moving On… Is this 1930 all over again?
The Great Depression started with the stock market crash of 1929, but the markets didn’t bottom out until 1933. Along the way there were several major rallies, yet the overall trend was bearish in nature and new lows were periodically made after these bear market rallies faltered.
Anyway, much like today – where many “experts” advise that the markets are ripe for a re-entry point and our economy will soon turn around – pundits and leaders of the depression era were consistently telling folks “The Bottom is in”… Those who took this “expert” advice did so at their own peril – and ultimately most were creamed as the markets continued to fall into the abyss for several years.
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