Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
This Dividend Aristocrat Is Leading the 5G Revolution - 22nd July 19
What the World Doesn’t Need Now is Lower Interest Rates - 22nd July 19
My Biggest 'Fear' For Silver - 22nd July 19
Reasons to Buy Pre-Owned Luxury Car from a Certified Dealer - 22nd July 19
Stock Market Increasing Technical Weakness - 22nd July 19
What Could The Next Gold Rally Look Like? - 22nd July 19
Stock Markets Setting Up For A Volatility Explosion – Are You Ready? - 22nd July 19
Anatomy of an Impulse Move in Gold and Silver Precious Metals - 22nd July 19
What you Really need to Know about the Stock Market - 22nd July 19
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Stock Market Last Gasp, Gold Vs Paper

Commodities / Gold and Silver 2012 Jan 30, 2012 - 03:48 AM GMT

By: Adam_Brochert

Commodities

Best Financial Markets Analysis ArticleI am speaking of the intermediate term move in paper assets versus hard assets, affectionately referred to as "Gold versus paper" around here. Paperbugs had their moment in the sun these past few months and I hope they enjoyed it. The reversal in fortunes has begun.


This reversal of fortunes is on a relative basis of course, as the sea of electronic money created out of thin air in the last few months is enough to make Rudolf von Havenstein blush. When the currency units around the globe are dissolving in front of our collective (and dismayed) eyes, relative wealth becomes a more meaningful concept than to contemplate what a quadrillion means.

Bernanke decided to help the US Dollar along last week by extending a monetary policy of insanity, approved by Keynesian clowns everywhere, namely that of further destroying the value of savings and the average person's ability to keep up with the costs of living. In the absence of reason or checks on the power of centralized monetary authorities, debasement of currency can always be achieved in a paper monetary system. And a Gold standard simply means that the Gold standard can be suspended in times of trouble. Easy money, baby. It's almost as old as the concept of money itself.

In the later stages of a monetary system, speculation runs rampant as a means to try to keep up with the ravages of inflation. We are there now and I am one of the many pied pipers claiming to have the answers to establish gains in excess of this pernicious and global monetary catastrophe unfolding at an uncomfortably rapid pace. I believe physical Gold (and silver) held outside the banking system are the easiest and most conservative means of preserving wealth in the current secular cycle (which is far from over), but I also like to speculate with a portion of my capital.

Currently, the charts to me are unambiguous. It is time for hard assets to trump paper once again. First, the chart nearest and dearest to my heart, the Dow to Gold ratio ($INDU:$GOLD). Here is a 7 year log scale ratio chart of $INDU:$GOLD thru Friday's close:



And here is a chart of the S&P 500 index divided by the price of commodities using the CCI Commodities Index (i.e., $SPX:$CCI), employing the same 7 year weekly format thru Friday's close:



In the short-term, I believe both the precious metals sector as well as other risk assets like commodities and common stocks are set to decline for a few weeks. After that, however, my subscribers and I will be looking to go long again in the precious metals sector after closing out trading positions on Friday for big gains. I don't advocate speculation, as it is riskier than buying and holding physical precious metals to profit from the further gains that lie ahead in the secular precious metals bull market.

However, for those who are interested in speculating with a portion of their savings, I offer a low-cost subscription trading service that focuses on the precious metals sector but also looks for opportunities in common stocks, commodities, currencies and bonds. I believe there is a significant amount of money to be made trading in the PM sector over the next few months (and, of course, beyond).

Adam Brochert
abrochert@yahoo.com
http://goldversuspaper.blogspot.com

BIO: Markets and cycles are my new hobby. I've seen the writing on the wall for the U.S. and the global economy and I am seeking financial salvation for myself (and anyone else who cares to listen) while Rome burns around us.

© 2012 Copyright Adam Brochert - 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 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