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Thursday, January 31, 2013
So does it go up or down from here?
Status at present: gold stocks getting hammered, S&P 500 fighting it out at 1500 and within 4% of its pre-crash high.
If it's one thing that's obvious, it's that there's one hell of a lot of opinion going around out there as to which way those two markets go from here.
But it seems to me that every goldbug I read, as well as their fellow-travelers the Doomers, all agree that the S&P goes down from here.
That is enough to make me think they're wrong. Because the S&P hitting an all-time high invalidates the theoretical basis for goldbuggery, doesn't it?
It doesn't invalidate my thesis, but it invalidates theirs. They have an interest in ensuring their dream of catastrophic dystopia comes to pass. And so they'll hold tightly to the narrative, even more so when they're wrestling at the brink against a world where a black guy in the White House is a good thing.
No wonder the goldbuggers are always fondling their dicks over the latest doomy pronouncements by Faber, Cashin, El-Arian, (checking ZeroHedge for the latest hagiographies) Schiff, Casey, Singer, Rogoff, and Santelli (who?).
So from now on I'm going to ignore any and all goldbugger assertions about the S&P 500 and the broad US market.
As for the charts:
Yeah, everyone sees the triple top in the S&P500. (Though the S&P Equal Weight is at an all time high.) Everyone also sees the higher low triple-bottom in the GDX, can draw a line, and can see it within a hair of failing.
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I am a goldbugger but I don't think that way. I see stocks going up. To me, it is all about the bond and currencies market. It is still the big dog with stocks and precious metals being just the tail. If the bond market really starts rolling over or currencies collapse, the money will flow into stocks and precious metals. Where else can it go? Real estate? Maybe but I doubt it. With the demographics I don't see a lot of young people flipping burgers snapping up vacation property from the old folks moving into retirement homes.
ReplyDeleteYeah, but there's also cash.
DeleteSooner or later you need to get a yield higher than inflation. I am a firm believer in higher gold prices over the long term but I am not in love with gold. To me it is just another form of cash/money that is superior than other forms of cash because it can't be diddled with....
ReplyDeleteSo my point is you can be a goldbug AND believe in higher stock prices. Not all goldbugs are tin-foil hat whacko conspiracy theorists. They just seem to be the ones that get in the press.
Cheers, your blog always makes me think. I better go have a lie-down now :)
OK, so there is at least one goldbug who's not a wackaloon. I can handle that. But you must feel awfully uncomfortable at goldbug parties!
DeleteSooner or later yields need to be higher than inflation? I guess when that time comes, the stock market takes off, eh? But at that point you also need the EMs to get beaten down, to reduce inflationary pressures, I'd assume.