Friday, June 18, 2010

GOLD : The Bull Market continues

Gold has continued to ''shine'' as a store of value and an excellent portfolio hedge in a volatile and uncertain global economy.

Sovereign debt worries and an ever increasing supply of paper currencies continue to provide fuel for the ongoing gold bull market.

At this stage it's worth pointing out, that gold could correct substantially (yes even to $1000) without breaching any crucial long term support (green line in chart).

In the second half of 2010, I expect a correction in the equity markets.
Markets have been far too optimistic of earnings estimates and are thus likely to be disappointed with earnings numbers when they come out.

As David Rosenberg says, the aftermath of a credit bubble collapse is '' no garden variety recession.''

At that point in time, gold may correct along with the markets, thus providing an excellent buying opportunity.

It's so surprising how experts and brokers continue to push stocks, while totally ignoring Gold - the best performing asset class of the last decade.

Sunday, June 13, 2010


Equity markets have been crazily volatile recently. Volatile intraday swings have been a daily occurance!

Here's David Rosenberg on market volatility

Friday, June 4, 2010

U.S. Federal Government Debt - Total Public Debt

Take a look at the graph below.

Up until the year 2000, the total public debt was less than $6Trillion (yes that's TRILLION!!!).

Look at the rate at which it accelerates from the year 2000. The year 2005 onwards and subsequently post the Lehman crisis, the graph just spiked upwards.

In 10 years time, the total public debt has doubled to just over $12 Trillion.

As the world rushes into the safety of the USD, and everyone is busy criticizing the 'PIIGS' nations and the EURO as a flawed currency, it's time that we take a closer look at the debt situation in the US.

With interest rates at record lows, the U.S. continues to add onto its debt burden.

The GSEs are still bleeding, and the FED continues to add more MBS to its Balance Sheet.

Accumulating and refinancing debt may not be an issue in the short run, but over the longer run debt servicing issues are going to resurface and the market will demand a higher rate of interest on US Government debt.

Watch this space!

Thursday, June 3, 2010

China leads global equity market downward - AGAIN !!!

Once again, the Chinese Equity market seems to be leading the ongoing correction in global equity markets.

The Chinese Equity market topped out in July 2009.
The S&P 500 hit its 'bear market' rally / recovery highs in April 2010 !

Markets have been as volatile as ever, and fundamentals have shown no significant improvement.
We are moving from an individual & corporate debt crisis to a sovereign debt crisis.
The so called '' sub prime '' sovereign debt of countries like the PIIGS is already starting to stress out global bond markets.

How will the already weakened PIIG nations cope with the austerity measures, and still continue to support the global economic recovery?

Meanwhile, the Chinese government has been tightening liquidity as it tries to cool down a bubbling real estate market in urban China.This could mean tougher business conditions in the industrial metals and ores sector if the Chinese economy starts to slow down.

The rally is clearly getting rather long in the tooth, and may be running out of fuel!!!!