Financial Sense Blog

There’s an old adage about not seeing the forest for the trees. It means getting wrapped up in the details of a circumstance and losing appreciation for the big picture. Sometimes we need to step back and look at things from a different perspective. Consider the extraordinary situation that currently exists in the silver market. We have the unprecedented circumstance of great numbers of investors and observers openly complaining to market regulators about an active manipulation in silver.

Some investors are afraid the Dow may go to 5,000. That would be bad but what really scares me is the Dow going to 50,000. Let me explain.

In my December 1, 2009 issue I identified the Haynesville shale in Louisiana and Texas as one of the few areas in North America likely to grow natural gas production over the following 19 months. While the Haynesville may continue to grow from its current level of production of approximately 1.80 billion cubic feet per day (bcf/d) (this figure is the estimated combined production from the Haynesville in both Louisiana and Texas), it now appears that production growth from the play has stalled.

Over the years we have seen the stock market make some pretty exciting moves for share holders. This year alone there have been some interesting events unfold causing wild market swings which most of us did not think could happen.

As anyone that has bought and sold a house in the past few years can attest, value is indeed neither fixed nor necessary reliable. Valuing a house, or any other asset, is as much science as carving up a chicken in the moon light at midnight with precision surgical instruments. The tools, such as present value, are precise mathematical calculations. However, the inputs border on being sorcery.

As an asset class, gold stirs the passions. Some folks love it, and others despise it. Be wary of those who will never own gold. As I write this note to you on Friday, fingers flying over keys like the flickering quotes on my screens, Pink Floyd's "Learning to Fly" is playing on my speakers.

Gold closed at a new all-time high: $1256.60 (continuous contract). GLD made a new high of 122.83 for a weekly gain of 2.35%. The daily chart below shows GLD breaking above resistance from its May – June highs and forging ahead for another all-time high. Gold’s performance has been nothing short of spectacular.

It’s now official, Gold has broken it’s perfect cup and handle formation. It’s heading much higher here and now, with a very high degree of confidence. To buy or not to buy is the question. I’ve always liked to buy on weakness. Gold is not weak right now.

This is another tough week for me. On the one hand, two of my favorite sources for handicapping the market trend -- Market Edge and Investors Business Daily -- support the existence of a new bullish uptrend in the market based primarily on technical indicators.

Copper is often referred to as the metal with a Ph-D in macro-Economics, since it finds its way into so many industrial applications, including automobiles, appliances, airplanes, pipes, wires, and even computer chips, to mention just a few of its uses. As such, it acts as a top forecaster of where the global economy is heading next, especially China, Asia’s economic locomotive. Copper is a favorite tool for speculators in the commodities markets, given its cyclical nature and volatility.