Financial Sense Blog

With $Gold clearly in a parabolic formation, investors may need to realistically appraise their investing activities. $Gold is likely to suffer inevitable consequences of disappointment that follows from a parabolic move. Investors may want to direct their investment flows elsewhere. With Agri-Food prices marching higher, that sector of investment world is an attractive offensive alternative.

The United States is facing both a structural and demand problem - it is not the cyclical recessionary business cycle or the fallout of a credit supply crisis which the Washington spin would have you believe.

Booms and busts happen also under the gold standard like we had in the 19th century various railroad and canal booms, and we also had real estate booms, first on the east coast in Chicago, then, at end of the century, in California.

(Bloomberg) Confidence among U.S. consumers unexpectedly fell in September to a one-year low, a sign Americans will be less inclined to ramp up spending. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment dropped to 66.6 following a reading of 68.9 in August, the group said today. Economists forecast the measure would rise to 70, according to the median estimate in a Bloomberg News survey.

It’s no secret that we’re long-term bullish on commodities. Our boiled-down viewpoint: there will likely be short-term volatility in the sector, but we believe the enduring strength of the global growth story being led by China and other key emerging markets will be a powerful demand driver in the years ahead.

Today another long-term buy signal was generated when the S&P 500 Index 50-EMA crossed up through the 200-EMA. Normally, we have high confidence in these signals, but, unfortunately, the long-term model has generated four, count 'em, four "long-term" signals in less than three months. On the chart below the red arrows mark the sell signals and the green arrows the buy signals. Prices have entered a trading range and, as you can see, they move just far enough in one direction to trigger a signal, then they reverse and go just far enough in the opposite direction to trigger the reverse signal.

This past week I received an e-mail blasting Dow theory. The allegation was that Dow theory no longer works and that it is completely irrelevant. The reason sited for Dow theory allegedly being wrong was that following the so-called Dow theory “sell signal” in late June, the market has rallied and continues to do so. Therefore, the question was, “How can Dow theory be valid?”

For the last few years silver has moved in relative tandem with the gold price up to now. We called it the 'long shadow of gold' because it would rise further and fall further than gold, but they did move together.

CNBS will, no doubt have a republican on and a democrat on and treat their diminishing viewership like boobalings. The two go at it - a five minute shout fest, complete with stunning charts, ominous sounds and distracting tickers.

This week, after the Japanese yen had surged to a fifteen-year high against the US dollar, the Japanese government decided to intervene in the foreign exchange market. To great fanfare, the Bank of Japan initiated a vigorous campaign to buy US dollars, thereby stemming the rise of the yen and pulling up the greenback. The effects were immediate, with the yen falling an astonishing 3% on the day of the announcement.