Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Dow Short-term Trend Analysis - Coronavirus Trigger a Stocks Bear Market? - 24th Feb 20
Sustained Silver Rally Coming? - 24th Feb 20
Should Investors Worry about Repo Market and Buy Gold? - 24th Feb 20
Are FANG Technology Stocks Setting Up For A Market Crash? - 24th Feb 20
Gold Above $1,600 Amid FOMC Minutes and Coronavirus Impact - 24th Feb 20
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Four Stock Market Warnings to Watch

Stock-Markets / Stocks Bear Market Jun 03, 2009 - 01:52 PM GMT

By: Uncommon_Wisdom

Stock-Markets

Best Financial Markets Analysis ArticleTony Sagami writes: The TV experts are breathless again thanks to some triple-digit Dow Jones moves. Like a bunch of thirsty frat boys on a Friday night, the Wall Street crowd is so eager to throw a party that they’ll latch on to any good news as the start of a new bull market.


The bulls assume that since stock prices are moving higher, the economy is improving.

Ha! The economy is as ugly as ever, and instead of looking at what the Dow Jones is doing, investors should be looking at four of the ugliest, most dangerous, and most clear warning signs that are telling me to run for the hills.

Warning Sign #1

Dollar hits 2009 low: The U.S. dollar hit a new low for the year last week. The dollar lost more than 6 percent for the month of May. That’s the biggest monthly fall since 1985.

The pinstripe suits in Manhattan and Washington, D.C., don’t care. The rest of the world, however, thinks we are reckless spendthrifts, and several countries are dumping our dollars as fast as they can.

The dollar’s downward spiral isn’t finished yet either. My Asia Stock Alert subscribers own the Merk Hard Currency Fund (MERKX), and they are sitting on a double-digit gain after holding for only a few months.

And if you expect the dollar to keep falling (and I sure do), this non-dollar currency fund should continue to rise.

Warning Sign #2

Gold nears $1,000 an ounce: Gold hit $980 last week, a three-month high, and is now within shouting distance of $1,000 an ounce.

Gold is within reach of $1,000 an ounce due to both geopolitical  concerns and fears about the global financial system.
Gold is within reach of $1,000 an ounce due to both geopolitical concerns and fears about the global financial system.

The turmoil in North Korea and the Middle East is responsible for some of gold’s move, but the real catalyst behind the move is the growing risk of the global financial system going completely haywire.

The credit crunch is far from over, our government still has trillions of dollars more to spend, housing prices will continue to fall, and inflation is building a launch pad from which to skyrocket.

I believe it is only a matter of time before gold busts through $1,000 … and goes much, much higher.

Warning Sign #3

Oil jumps to $68 a barrel: Oil also hit a 2009 high but also had its largest monthly gain in 10 years in May after it hit $66 a barrel last week. And it’s rising again this week.

The Wall Street crowd likes to crow that rising oil prices indicates a global economic recovery, but what those idiots don’t understand is that oil is rising not because times are good but because times are bad!

Oil prices are going up because it is priced in the rapidly devaluing U.S. dollar, and investors are fleeing paper assets and seeking hard, tangible assets, like oil.

Warning Sign #4

Treasury bond yields skyrocket: Like oil, the yield on 30-year Treasury bonds also hit a 2009 high when they rose to 4.6 percent last week. To put that into perspective, the yield was as low as 2.5 percent six months ago.

Foreign investors may punish the U.S. government for borrowing trillions of dollars too much by refusing to buy its debt until bond prices plunge to much cheaper levels.

The Dow Jones shot up by more than 200 points Monday after some strong manufacturing news came out of China.

But you should be asking yourself how dangerous the above four warning signs really are.

To me, they are four of the clearest, most dangerous signs I’ve seen in my 30-year investment career, and they are ominous enough that I consider them to be the Four Horsemen of the Stock Market Apocalypse.

I don’t know if the tumble — and a mighty big one at that — is coming next week, next month, or even further down the road, but trouble is certainly coming.

Here is what you need to do to protect your assets:

Slash your dollar-denominated assets. It sounds simple, but you don’t want to own dollars when they are going down. You can diversify into currency hedges, such as the Merk Hard Currency Fund, but what I’m really talking about is selling your dollar-denominated paper assets: U.S. stocks and U.S. bonds.

Chop your maturities. One of the biggest losers in an inflationary environment is long-term bond holders. If you own any bonds that go out more than 5 years or any bond mutual funds with an average maturity longer than 5 years, dump them immediately and move into shorter maturities.

Add some tangible assets. That could be gold, oil companies, or other natural resource companies, such as Yanzhou Coal (YZC).   Real assets, not paper assets, will hold their value and perhaps even appreciate when things get ugly. For example, Yanzhou Coal, which my Asia Stock Alert subscribers already own, jumped by 11.4 percent Monday.

Go on the offensive. When it comes to stock investing, one rule trumps all others: Stock prices follow earnings. The one region of the world where corporate earnings are still rising is in Asia and India, so the best place to invest your stock market dollars is across the Pacific Ocean.

Regards,

Tony

This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.

Uncommon Wisdom Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules