Gold's recent nasty fall took many investors by surprise. But it seems to be recovering well after dropping to a very specific technical level – the 144-day moving average. Dominic Frisby explains.
In his most recent newsletter, Jim Stack—someone I have the utmost respect for—made some comments on gold that I believe are worth looking into.
We are all quite aware of the fact that heightened volatility has become a short term norm in the financial markets as of late. Not surprisingly, we’re seeing the same thing in a number of recent economic surveys.
Greece was the poster child for Keynesianism. The idea was simple. No one would really have to work. Everyone could retire after a few years of work on a full government pension. Pay taxes? Not required.
It seems to me that we may be reaching “Limits to Growth,” as foretold in the book by the same name in 1972. The book modeled the consequences of a rapidly growing world population and finite resource supplies.
Around here we like to track things from the outside in, as the initial movements at the periphery tend to give us an early warning of when things might go wrong at the center. It is always the marginal country, weakest stock in a sector, or fringe population that gives us the early warning that trouble is afoot.
As Europe grinds out yet another doomed banking system rescue plan, it might be helpful to examine the underlying assumption, which is that we need these big banks.
Right now, there are planes full of travelers heading to Vegas with dreams of striking it rich. These starry-eyed gamblers would greatly improve their odds by learning how to count cards. Yet, as we learned in the movie 21, where six MIT students team with Micky Rosa to become expert card counters and “bring down the house,” this technique carries some severe consequences such as being banned from the casino for life.
There have been many "economic miracles" throughout history, which, ironically enough, have all been based on a similar investment growth strategy. This model, first invented by the French in the early 1800s, always proceeds along the same lines and, as explained, is no different for China currently.
In short, no, but the macro backdrop is clearly improving. Earnings season so far has held up nicely with 106 of the 500 S&P 500 companies reporting and of those, 78 showing positive earnings surprises for roughly a 74% positive surprise rate.