Financial Sense Blog

It was only a few days ago when everyone was commenting on the head and shoulder topping pattern and expecting a decline in the S&P 500 to the low 800s. CNBC anchors who know nothing of technical analysis were even commenting on it as the financial media were all abuzz with the pattern, with Google Trends key word search showing a dramatic increase in Internet search and news reference volume highlighting the frenzy behind the pattern.

To write a popular song is a trick, perhaps even an accident; for who really knows what will tickle the public? Why is one song a hit while another goes unnoticed? What makes for popularity? Is it truth, beauty or perfection? If so, then classical music would not be losing support with secular society, inch by inch.

In late April, a Chinese sovereign wealth fund, the State Administration of Foreign Exchange, announced that China had purchased 454 metric tons of gold over the past six years.

Today’s article is a follow up to last week’s piece entitled, “Commodity Bubble Revisited.” The premise of last week’s article was to make the case that commodities were not in a bubble in the last bull market that ended in 2008 with a climatic top.

Green, Yellow, and Red. Those are the colors of an American traffic light. Green means go. Yellow means caution because the red light is about to appear. Stop if you can do so safely. Red means Stop. Currently, the markets are signaling a yellow light which again, means caution. It means take a step back and review your homework. Are your hypotheses proving correct in this market environment?

In 1969 a sixteen-year-old boy wrote to conservative columnist William F. Buckley, Jr., “to discover just what, in God’s name, the phrase ‘to immanentize the eschaton’ means.” Buckley replied: “Eschaton means, roughly, the final things in the order of time; immanentize means, roughly, to cause to inhere in time.

Today’s article will be the first part of a two part series addressing whether commodities represented a bubble this decade with the benefit of hindsight to look at the correction in commodities over the past year.

We hear so much about democracy, about “people power” and “public opinion” that we forget how everything depends on the right leadership. We fool ourselves that “the people” rule, that the majority decides, that “the public” is something that has an existence independent of pollsters, opinion-makers, and media manipulation.

The clock is ticking on the U.S. dollar, and there is no time to waste. If we are as determined to destroy our currency as it appears, let’s at least build a productive infrastructure while we still can. We cannot afford to blow the stimulus money on political patronage and transfer payments. Those are the traditional political remedies to insure re-election. However, this time re-election may just mean taking the blame for a rapidly-declining empire.

Imagine you are on the Titanic, and the ship is sinking after sideswiping an iceberg. Does it matter if you need a haircut? Should you be worrying about your investments? Under life-and-death circumstances, only life seems to matter.