Financial Sense Blog

A meme is now circulating that gold is in a bubble and that it's time for the wise investor to sell. To me, that’s a ridiculous notion. Certainly a premature one.

In raw numbers, in February of this year, households received $2.3 trillion in income support from unemployment benefits, Social Security, disability insurance, Medicare, Medicaid, veterans' benefits, education assistance and other cash transfers of government funds to individuals. The same month, households paid $2.2 trillion in income, payroll, and other taxes. The difference was nearly $100 billion, or around 1% of personal income.

The increasing number of Commentators who claim that Fed Money Printing (e.g. QE) and Credit Policies are The Main Cause of recent Rampant Food and Energy Price Inflation are correct.

While we don't often cover silver, it is worth noticing that it is about 6% below its all-time highs of 48 (closing basis) and moving up quickly. Technicians will assume that there is probably strong long-term overhead resistance at 48, and, considering that silver is in the vertical phase of a parabolic advance, there could be serious problems when the resistance is reached. Perhaps that is true, but I think there are other considerations.

Unlike other commodities that have skyrocketed and crashed, the climb in gold has been very orderly. It is the only commodity whose long-term trendline is long and unbroken. Gold could take a substantial hit, just as it did in 2008 and still keep its long-term trendline intact. Why is that?

There are two economies--the real one, which is in decline, and the "let's pretend" one touted by the State and corporate propaganda machines. Children love to play "let's pretend." Let's pretend the economy is "recovering."Why does this "recovery" remind me of an addict who's conning his caseworker? (Yes, I'm really in recovery--those aren't tracks, they're insect bites....)

Dr. Steve Keen, the ever-insightful Australian economist who runs the Debt Deflation website, wrote an excellent piece in March of 2009 entitled Bailing out the Titanic with a Thimble. It essentially argued that the U.S. government's fiscal stimulus and the Fed's liquidity injections would be wholly insufficient to restart growth in the private credit markets, and so far this analysis has been spot on.

There are a spooky number of conditions and situations that are similar to a year ago today. That’s uncomfortable because exactly a year ago today, in the similar excitement over first-quarter earnings reports, the stock market was just three trading days from topping out into the scary April-July correction of last year.

Chairman Bernanke has placed himself in a box. It is not a box of his choosing, but rather the result of his misguided economic beliefs, use of flawed statistical data, geo-political events occurring during his watch, poor decisions and a penchant for political pandering. Some of these may be requirements for academia success but not for leading global financial markets during turbulent times.

You are out at a family function and forced to miss the big game, so you record the game and will watch it well after the game has been decided. You spend the next few hours trying not to get updates of heaven forbid, learn of the final score. Ultimately, the charade lasts for much of the afternoon, but you are inadvertently told of the final score – blowing your enjoyment of the game as you now know the final score. The analogy being drawn today is that of earnings season. The game being played is the number of “beats” or how many companies are able to beat estimates providing investors a reason to buy the stock under the impression that things are getting better. However, the “game” has already been rigged in many cases as companies talk down guidance throughout the quarter to a point they know can be beat at quarter end. Just look at the percentage of companies beating estimates (from Bloomberg)