Financial Sense Blog

Both banks and foreign central banks (FCBs) have normal buying cycles, and this week’s evidence suggests that both are just past the peak of those cycles. In addition, because of Japan’s predicament, FCB buying is for the foreseeable future likely to be well below the necessary levels to keep levitating stocks. Add to that the loss of the 2 month long, $25 billion weekly stipend from the Treasury on March 24, and we have the conditions for a rough patch.

Many Republicans have embraced Paul Ryan's proposal to balance the budget. I can't embrace his plan because it will do no such thing. I questioned the idea in Government Shutdown Battle to Be Followed by Bigger Fight; GOP wants $4 Trillion in Cuts Over Next Decade; Is that Enough?

Like many in the White House before him, President Barack Obama charted out a plan last week to reduce America’s dependence on foreign oil. And like his predecessors, his road map to cut U.S. oil imports by one-third over the next decade comes against the backdrop of sharply rising oil prices and supply disruptions from an increasingly volatile Middle East.

On his way to a presidential bid congressman Paul Ryan came forward with a blockbuster budget. The suggestion is that we can trim (get this) $6.2 Trillion out of future budgets. The result of this will be that we get back to long-term fiscal balance. Gosh that sounds good! Actually, it's bad. We will never see the savings that Mr. Ryan has projected. We will (economically) die first. The Ryan plan just kicks the can down the road for a decade.

The U.S. transformed into consumer economy that is exquisitely sensitive to debt and the costs of servicing credit. In other words: the bill is finally due, Baby.

Gold has surged to new record highs above 1450.00 as the political circus over the budget and debt limit ramps-up ahead of a potential government shutdown

A few weeks ago, stories came out about Utah's legislation enabling gold and silver as legal tender for state debts. The story excited hard money advocates and those favoring alternative currencies to the currently floundering US dollar. For those who wanted to maintain their purchasing power through hard money and avoiding the constant devaluation of fiat money issued by the federal government, the Utah legislation seemed like a long-awaited first step in that direction.

In the last BullBear Market Report, I called for a bottom to the Middle East/Japan panic selloff while at the same time laying out the parameters for a bearish turn in the markets. The bearish conditions did not come to fruition and BullBear Traders were able to catch the exact bottom of the move after having lightened their positions at the exact top. I emphasized an overweight position in BRIC and Emerging Markets and that has proven to be an accurate call as well. We also jumped on bottoms in Grains and Agriculture as well as a long term breakout in Clean/Alternative Energy.

It’s no secret that the silver market is red hot. As I write, silver American Eagles and Canadian Maple Leafs are sold out at their respective mints. Buying in India has gone through the roof, especially noteworthy among a people with a strong historical preference for gold. Demand in China continues unabated. Silver stocks have screamed upward.

The main message from the minutes of the March 15 FOMC meeting is that policy making will be contentious as the members of the FOMC hold different opinions about inflation and the need to continue the exceptional financial accommodation that is underway. Although all members agree that the recovery is on a "firmer footing" and the housing sector remains in a slump, their views about inflation were significantly different.