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
Gold Price Closely Tracks Debt-to-GDP Ratio - 9th Apr 20
Gold, Silver and Rigged Market Socialism - 9th Apr 20
Going to School in Lockdown Britain, Dobcroft Sheffield - 9th Apr 20
Amazon Face Masks to Protect Against Covid-19 Viral Particles N95, FPP2, PM2.5, for Kids and Adults - 9th Apr 20
Is Natural Gas Price Ready For An April Rally? - 8th Apr 20
Market Predictions And The Business Implications - 8th Apr 20
When Will UK Coronavirus Crisis Imrpove - Infections and Deaths Trend Trajectory Analysis - 8th Apr 20
BBC Newsnight Focuses on Tory Leadership Whilst Boris Johnson Fights for his Life! - 8th Apr 20
The Big Short Guides us to What is Next for the Stock Market - 8th Apr 20
USD Index Sheds Light on the Upcoming Gold Move - 8th Apr 20
The Post CoronaVirus New Normal - 8th Apr 20
US Coronavirus Trend Trajectory Forecast Current State - 7th Apr 20
Boris Johnson Fighting for his Life In Intensive Care - UK Coronavirus Crisis - 7th Apr 20
Precious Metals Are About To Reset Like In 2008 – Gold Bugs, Buckle Up! - 7th Apr 20
Crude Oil's 2020 Crash: See What Helped (Some) Traders Pivot Just in Time - 7th Apr 20
Was the Fed Just Nationalized? - 7th Apr 20
Gold & Silver Mines Closed as Physical Silver Becomes “Most Undervalued Asset” - 7th Apr 20
US Coronavirus Blacktop Politics - 7th Apr 20
Coronavirus is America's "Pearl Harbour" Moment, There Will be a Reckoning With China - 6th Apr 20
Coronavirus Crisis Exposes Consequences of Fed Policy: Americans Have No Savings - 6th Apr 20
The Stock Market Is Not a Magic Money Machine - 6th Apr 20
Gold Stocks Crash, V-Bounce! - 6th Apr 20
How Can Writing Business Essay Help You In Business Analytics Skills - 6th Apr 20
PAYPAL WARNING - Your Stimulus Funds Are at Risk of Being Frozen for 6 Months! - 5th Apr 20
Stocks Hanging By the Fingernails? - 5th Apr 20
US Federal Budget Deficits: To $30 Trillion and Beyond - 5th Apr 20
The Lucrative Profitability Of A Move To Negative Interest Rates - Pandemic Edition - 5th Apr 20
Visa Denials: How to avoid it and what to do if your Visa is denied? - 5th Apr 20 - Uday Tank
WARNING PAYPAL Making a Grab for US $1200 Stimulus Payments - 4th Apr 20
US COVID-19 Death Toll Higher Than China’s Now. Will Gold Rally? - 4th Apr 20
Concerned That Asia Could Blow A Hole In Future Economic Recovery - 4th Apr 20
Bracing for Europe’s Coronavirus Contractionand Debt Crisis - 4th Apr 20
Stocks: When Grass Looks Greener on the Other Side of the ... Pond - 3rd Apr 20
How the C-Factor Could Decimate 2020 Global Gold and Silver Production - 3rd Apr 20
US Between Scylla and Charybdis Covid-19 - 3rd Apr 20
Covid19 What's Your Risk of Death Analysis by Age, Gender, Comorbidities and BMI - 3rd Apr 20
US Coronavirus Infections & Deaths Trend Trajectory - How Bad Will it Get? - 2nd Apr 20
Silver Looks Bearish Short to Medium Term - 2nd Apr 20
Mickey Fulp: 'Never Let a Good Crisis Go to Waste' - 2nd Apr 20
Stock Market Selloff Structure Explained – Fibonacci On Deck - 2nd Apr 20
COVID-19 FINANCIAL LOCKDOWN: Can PAYPAL Be Trusted to Handle US $1200 Stimulus Payments? - 2nd Apr 20
Day in the Life of Coronavirus LOCKDOWN - Sheffield, UK - 2nd Apr 20
UK Coronavirus Infections and Deaths Trend Trajectory - Deviation Against Forecast - 1st Apr 20
Huge Unemployment Is Coming. Will It Push Gold Prices Up? - 1st Apr 20
Gold Powerful 2008 Lessons That Apply Today - 1st Apr 20
US Coronavirus Infections and Deaths Projections Trend Forecast - Video - 1st Apr 20
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20

Market Oracle FREE Newsletter


The Financial Crash, U.S. Dollar, Cash and Gold

Stock-Markets / Financial Markets 2009 Sep 16, 2009 - 09:21 AM GMT

By: Tarek_Saab


Best Financial Markets Analysis ArticleWith the Dow continuing its steady climb into September, economists are giddy with enthusiasm as they usher forth a stream of emotional pontification throughout the news media. Calls for a new bull market and an end to the recession are increasing with the rising levels of optimism (see: MarketWatch). How anyone can be bullish on stocks despite the innumerable economic warning signs is beyond my comprehension.

The recent figures in the Daily Sentiment Index reporting that traders are 89-90% bullish is a testament to human emotion as a market mover and the efficacy of state-run propaganda. Do economists really believe in the power of green shoots? Incidentally, the college term "green shoot" represents a different kind of stimulus. Maybe that explains it.

But one man's bull market is another man's gilded rally, as the mania always peaks at the end.

This mania has been especially intriguing to observe among gold bugs, at the present time vindicated by gold's heroic push into four-figure territory. Some claim gold is "finally" on the verge of breaking out, as though the yellow metal hasn't spent the entire decade breaking out.

But the dollar price of gold, while important, is only a secondary consideration to its value against all other assets, hence the reason that many, like me, favor a strong gold position in a deflationary or hyperinflationary environment. Since gold is true money, and intrinsically, fiat currency is hardly worth the paper it is written on, then the value of assets in terms of gold is a better barometer of gold's performance than its price in dollars. While gold's push above $1,000 has been exciting for many, it is worth noting, as a rudimentary comparison, that gold has actually lost ground to the Dow in the last six months.

However, when measured over a wider swath of time, we see a clearer picture of gold's formidableness. Gold's performance lays waste to the notion that the economy is "strengthening" or in "recovery," and manifests the stark, decade-long decline of our nation's economy. I have included only three comparisons below to prevent redundancy because all of the comparisons against gold look the same. The US economy is clearly in a depression when measured against real money.

(Bureau of Labor Statistics, US City national average composite of prices: Pasta, Flour, Bread, Ground Beef, Turkey, Milk, Butter, Cheddar Cheese, Apples, Bananas, Potatoes, Lettuce, Broccoli, Sugar)

This silent crash, among other things, is the reason business is a-boomin' for those in the doomsday market. And that is a terrible thing. Surf the web long enough and you will uncover a mini-catalog of downer books like Crash Proof, Conquer the Crash, How to Survive the Collapse of Civilization, and How to Survive the End of the World As We Know It, among many others. You will invariably encounter writers predicting some specie of the Great, Greater, or Greatest Depression. (Yes, that would include me.)

Everywhere we hear of well-meaning citizens prepping with the four "G"s: guns, gold, groceries, and God.
Or the four "F"s: food, funds, firearms, and faith.
Or the four "B"s: beans, bullion, bullets, and Bible.

There exists a stark polarization in mood between the powers-that-be and their "bosses" - the American public. Emerging from the cold war and into the gold war, many patriotic Americans have shifted their panic from foreign to domestic enemies. What does it say about the empire when, in fear of the government, a good segment of its citizens have hunkered down with food and ammo, or when millions of "taxpayers" march on Washington? Is there any way this ends well?

Meanwhile, the US dollar is in need of a new PR firm. According to the Daily Sentiment Index, only 3-4% of traders are bullish on the dollar, meaning a historic number are bearish. Well, dollar bears beware: Those are leading indicators of an imminent change in direction. The sentiment is actually worse than in March of '08 when 5% were bulls. As for a reversal, history speaks for itself.

Contrary to popular belief, the US dollar, that black sheep of international currency, may once again strengthen its power grip under deflationary pressure - at least in the near term. Now wouldn't that come as a shock the investment world? One might even be inclined to invest in the dollar if one could actually trust the dollar. The threat of debt defaults, the proliferation of SDRs, the loss of reserve currency status - all remain ominous possibilities, and all render that king of deflation to be largely precarious.

We are left with gold. Whether your camp is hyperinflation or deflation (or any of the 'flations), gold is king, regardless of spot price.

'Til next time, that's my Saab Story.

By Tarek Saab

Tarek Saab is a former finalist on NBC's "The Apprentice" with Donald Trump. He is an international speaker, syndicated author, entrepreneur, and the President of Gold&SilverNow. His website is

© 2009 Copyright Tarek Saab is - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - 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