Financial Sense Blog

Here I am, back from a three-week hiatus. You may recall from my last newsletter prior to that hiatus I urged all my long term investors to stay in cash while possibly allocating some portion of their portfolio to biotechs.

Ahhh, the curves life throws at you sometimes still amaze me! I’d worked all summer in anticipation of taking a two week vacation...now. I was set to sail through the fabled Northwest Passage on a luxury icebreaker but six hours to the northern “port, if you can call it that, of Kugluktuk the ship ran aground on a large uncharted rock.

As far as economic advisers are concerned: The best of the worst is gone. We are left with the worst. The government can lead, follow - or in this case - just get in the way. David Walker was right: Our biggest deficit is our leadership deficit.

One road to wealth is to only own those assets for which the price is rising. That seems to be a rule that equity investors have forgotten. In any event, a great market technician once suggested only looking at those things with prices making new 52-week highs. His reasoning was that for the price of something to rise it must eventually make a new high. Well, based on the above chart, that technician would be all over Agri-Food commodities and associated investments. Our Agri-Food Price Index recently made a new high!

Of late there has been a lot of attention on the Hindenburg Omen and the excessive number of 90% volume days. I’ve been receiving e-mails and phone calls asking me about this and how it affects my work. In short, it doesn’t. Here’s why.

I’ve done a number of interviews on gold recently and the number one question I get most from reporters is—can gold prices go higher?

As I dug deeper into the inner workings of the economy I became convinced that most of it was – like the housing industry – a house of cards. Diversification for me boiled down to just a few things that I can have faith in. I'm not alone in this camp, I've heard Eric Sprott speak about this as well. I always look for what could break my basket of eggs. Today I found one thing I’m fearful of.

Were this week's few encouraging economic reports really enough to even offset the week's negative reports, let alone the deluge of negative reports from previous weeks?

The Investment Company Institute (ici.org) compiles statistics on mutual funds and publishes them monthly. (There is a one month delay between the end of the month being reported and publication.) Decision Point has been collecting these data for almost five years, and we finally have enough to start charting it. Amounts shown on the charts are in billions.

BIG PICTURE – Global stock markets are in a multi-year bull-market and nominal prices are likely to appreciate for several more months. In our view, we are currently amidst a normal multi-week consolidation phase and most stock markets are likely to stage a sharp year-end advance.