At some point, everyone knew this was going to happen. Stocks were so ridiculously overvalued - and have been for many months - that a pullback was inevitable.
The culprits, it appears, are Middle East sovereign despots, losing their grip on their populations which are largely demanding freedom and a democratic voice. But it goes much deeper. Many blame the Federal Reserve, which has fostered a dual policy of federal funds rates approaching zero while simultaneously printing dollars by the billions.
Those cheap dollars flood the markets, causing speculation and inflation, and that's been particularly acute in the poorest nations, where the percentage of income spent on basic survival - food, housing, clothing - is much higher, approaching 100% and often more. Hungry people being angry people, they've taken to the streets in countries where unemployment and government corruption have outpaced the economy, resulting in popular uprisings.
Add to that the declining value of the dollar, as expressed in the rising price of crude oil, and you have today's recipe for disaster. And all of this comes before the morons in congress and the White House and various state capitols attempt to come to some sort of meeting of the minds on their budgets.
The states have to find ways to balance theirs, while the federals fight over how much spending is enough to keep the government just barely functioning, if at all.
If it feels like the United States is running rudderless on fumes, you get the idea and the nervousness has been manifested in trading the past two days. Despite the usual pumping by the Fed, sellers are out in force and it doesn't take much to move stocks hard to the downside. Missing earnings estimates - normally a sin punishable by a few points off the top - has become a mortal wound, such as what happened to Hewlett Packard (HWP), following their quarterly report, released after the close on Tuesday.
Investors scurried out of the stock on Wednesday, propelling a nearly 10% decline. Vloume was five times normal.
Most of the rest of the market didn't fare much better. Holders of gold and silver are grinning ear-to-ear.
Dow 12,105.78, -107.01 (0.88%)
NASDAQ 2,722.99, -33.43 (1.21%)
S&P 500 1,307.40, -8.04 (0.61%)
NYSE Composite 8,292.92, -32.94 (0.40%)
Decliners led advancing issues again, 4470-2093. On the NASDAQ, the flip: there were 54 new lows and only 44 new highs. At the NYSE, 60 new highs and 27 new lows, though it seems the tide has turned, at least for the present. The question now becomes how long will this downturn last before the hoards of money from the Fed overwhelm all fears and make stocks and risk appear palatable again.
Volume, which hit its best levels of the year on Tuesday, topped that on Wednesday, giving a clue that the selling is only gaining momentum.
NASDAQ Volume 2,498,464,250
NYSE Volume 6,623,988,500
Crude oil - specifically WTI (West Texas Intermediate) on the NYMEX hit $100 in midday trading, but backed off to close up a mere $2.68, at $98.10, marking the highest price seen since 2008. Since the US gets most of its oil from Canada and other Western Hemisphere sources, WTI has fallen well behind the pace in Brent Crude, tied mostly to Europe and Asia. Brent prices topped $110. Spot is quoted at $111.83 per barrel.
Gold had another banner day, rising $12.90, to reach $1,414.00, closing in on all-time highs. Silver continues to be the stellar commodity performer, up another 44 cents, to $33.30. Specialists in gold's cousin say this is nothing and $50 per troy ounce is not only possible before the calendar turns over to 2012, but likely. There simply is not enough physical supply to meet growing investor demands, much of which is causing tightness in industrial applications.
If silver demand continues, look for rising prices in many electronic devices, especially cell phones, though the price rise should not be severe since only small amounts of silver go into the overall manufacturing price.
Turmoil and popular revolt in the Middle East and across many states in America over budget issues and union busting don't exactly set up well for smooth sailing on Wall Street. Until the noise quiets, expect fear to have its way with investor confidence. Nobody wants to catch the proverbial falling knife, and with short interest at record lows, a small tumble could easily turn into an overwhelming cascade.
Meanwhile, silver and gold investors are sitting pretty as the strain on fiat currency is being felt worldwide. What nobody wants to talk about in our civil society are the bank runs in South Korea.
Nothing funny about that story.
Wednesday, February 23, 2011
Tuesday, February 22, 2011
Now, That IS Going to Leave a Mark
Investors take note. You are screwed.
Savers and buyers of precious metals, arable land, tools and staples, rejoice! Today our frugality, honesty and disdain for speculation has reaped significant dividends.
On Wall Street, billions of dollars were flushed in a panicked selling frenzy that appears to be just beginning. One should note that other major declines began in the Winter months, specifically, the bursting of the dot-com bubble which reached its peak on March 10, 2000, when the NASDAQ topped out at 5132.52. Within months, the high-flying tech-laden index was off by more than 25%. Within a year, it had been halved.
While this current one-day selling spree may not auger as much ill (though it could be even worse), it was the largest one-day decline on the markets since August of 2010 and unless Mr. Gadaffi (God only knows how to spell his name) changes his mind about dying a martyr on Libyan soil (remember Mubarak said something similar just weeks ago), this malaise coming from Norther Africa and the Middle East is going to hang over equity markets and oil prices for the foreseeable future.
In addition to the popular uprisings in Libya and across the oil-rich nations of the Middle East - and much less reported - was the release of the S&P/Case-Shiller housing survey (full report [PDF] here), which showed home prices declining for a 4th straight month. Essentially, the housing crisis is not over, despite the artificial stimulus of a federal tax credit to the tune of $9000 for home buyers in various parts of 2009 and 2010.
Those buyers were duped into buying overpriced houses, lured by our federal government. There will be years of pain and more defaults to come, for certain. Las Vegas, Miami, Phoenix and Tampa all reached new lows in median prices. Other areas of the country were similarly down, with 18 of 20 major city areas posting declines. Released at 9:00 am, the report put a further chill into an already freezing futures market.
Stocks gaped down, with the Dow off 120 points minutes into the session, and it didn't get any better the remainder of the day.
Dow 12,212.79, -178.46 (1.44%)
NASDAQ 2,756.42, -77.53 (2.74%)
S&P 500 1,315.44, -27.57 (2.05%)
NYSE Composite 8,325.86, -182.04 (2.14%)
Declining issues slaughtered advancing issues, 5707-975, a ratio of nearly 6:1. The measure of new highs to new lows nearly reversed course, with 85 new highs on the NASDAQ, to 39 new lows. The Big Board remained skewed, with 139 new highs to just 14 new lows. Obviously, with such a paltry number of new lows, there is plenty of froth to be blown off this overheated, artificially-stimulated market. Volume was significantly higher than most recent up-day sessions, a notable development.
NASDAQ Volume 2,272,504,500
NYSE Volume 6,243,551,500
Commodities were raging. Crude oil futures on the NYMEX closed at $95.42, officially $5.41 higher, though it should be pointed out that Friday's close was just a shade over $86.
Gold finished at $1,401.10 and silver at $32.86, both having ramped up on Monday, when markets were closed, though trading volumes were very high.
The handwriting is quite clear. Investors are nervous over developments outside the US, and also inside, as the congress weighs passing a temporary, two-week continuing resolution, raising the debt ceiling only a little, and revisiting the issue again in a fortnight. This is the leadership we are offered, which can't get beyond partisan bickering to actually tackle the fundamental problems in the US economy.
Meanwhile, the stalemate continues in Wisconsin, with other states looking squarely at similar budgetary conditions and issues. 38 states have budget shortfalls which need to be addressed and the rhetoric surrounding the differences between public sector employees and those who pay their wages and benefits, the taxpayers.
If, like many, you've been aghast over the continual money-pumping by the Federal Reserve and the antecedent rise in stocks, you may want to pull up a chair and pay attention the next few weeks and months.
It's just starting to get interesting as the grand global Ponzi scheme by central bankers worldwide begins to unravel at a rapid pace.
Savers and buyers of precious metals, arable land, tools and staples, rejoice! Today our frugality, honesty and disdain for speculation has reaped significant dividends.
On Wall Street, billions of dollars were flushed in a panicked selling frenzy that appears to be just beginning. One should note that other major declines began in the Winter months, specifically, the bursting of the dot-com bubble which reached its peak on March 10, 2000, when the NASDAQ topped out at 5132.52. Within months, the high-flying tech-laden index was off by more than 25%. Within a year, it had been halved.
While this current one-day selling spree may not auger as much ill (though it could be even worse), it was the largest one-day decline on the markets since August of 2010 and unless Mr. Gadaffi (God only knows how to spell his name) changes his mind about dying a martyr on Libyan soil (remember Mubarak said something similar just weeks ago), this malaise coming from Norther Africa and the Middle East is going to hang over equity markets and oil prices for the foreseeable future.
In addition to the popular uprisings in Libya and across the oil-rich nations of the Middle East - and much less reported - was the release of the S&P/Case-Shiller housing survey (full report [PDF] here), which showed home prices declining for a 4th straight month. Essentially, the housing crisis is not over, despite the artificial stimulus of a federal tax credit to the tune of $9000 for home buyers in various parts of 2009 and 2010.
Those buyers were duped into buying overpriced houses, lured by our federal government. There will be years of pain and more defaults to come, for certain. Las Vegas, Miami, Phoenix and Tampa all reached new lows in median prices. Other areas of the country were similarly down, with 18 of 20 major city areas posting declines. Released at 9:00 am, the report put a further chill into an already freezing futures market.
Stocks gaped down, with the Dow off 120 points minutes into the session, and it didn't get any better the remainder of the day.
Dow 12,212.79, -178.46 (1.44%)
NASDAQ 2,756.42, -77.53 (2.74%)
S&P 500 1,315.44, -27.57 (2.05%)
NYSE Composite 8,325.86, -182.04 (2.14%)
Declining issues slaughtered advancing issues, 5707-975, a ratio of nearly 6:1. The measure of new highs to new lows nearly reversed course, with 85 new highs on the NASDAQ, to 39 new lows. The Big Board remained skewed, with 139 new highs to just 14 new lows. Obviously, with such a paltry number of new lows, there is plenty of froth to be blown off this overheated, artificially-stimulated market. Volume was significantly higher than most recent up-day sessions, a notable development.
NASDAQ Volume 2,272,504,500
NYSE Volume 6,243,551,500
Commodities were raging. Crude oil futures on the NYMEX closed at $95.42, officially $5.41 higher, though it should be pointed out that Friday's close was just a shade over $86.
Gold finished at $1,401.10 and silver at $32.86, both having ramped up on Monday, when markets were closed, though trading volumes were very high.
The handwriting is quite clear. Investors are nervous over developments outside the US, and also inside, as the congress weighs passing a temporary, two-week continuing resolution, raising the debt ceiling only a little, and revisiting the issue again in a fortnight. This is the leadership we are offered, which can't get beyond partisan bickering to actually tackle the fundamental problems in the US economy.
Meanwhile, the stalemate continues in Wisconsin, with other states looking squarely at similar budgetary conditions and issues. 38 states have budget shortfalls which need to be addressed and the rhetoric surrounding the differences between public sector employees and those who pay their wages and benefits, the taxpayers.
If, like many, you've been aghast over the continual money-pumping by the Federal Reserve and the antecedent rise in stocks, you may want to pull up a chair and pay attention the next few weeks and months.
It's just starting to get interesting as the grand global Ponzi scheme by central bankers worldwide begins to unravel at a rapid pace.
Monday, February 21, 2011
Unhappy President's Day?
Just because the markets in the US are closed, doesn't mean there's no economic news from the rest of the world, and there's plenty.
Due to violence in Lybia, where President Moammar Gadhafi - via a videotaped message by his son - vows to fight the insurrection against his 42 years of tyranny, "until the last man standing," oil prices have gone ballistic, with WTI (crude oil on the NYMEX) has shot through $90/barrel and is fast approaching $100.
Americans may awaken from their three-day weekend with sticker shock when they go to fill up their cars, vans and SUVs with petrol.
Elsewhere, precious metals have also taken notice that the global situation has become extremely unstable. Gold is pricing right now at $1,406.70, up a whopping $18.10 just today. But the real story is silver, which spiked on Friday, but is putting that move to shame taday with a nearly 5% move higher, to $33.88, up $1.58! That's quite a rocket ship, there and it's more than just short covering. US investors will likely send both gold and silver higher as congress takes a week off, just prior to the most important vote of the new congress: whether or not to raise the debt ceiling.
Analysts on top of the situation feel the government needs to act by March 4th in order to avert a federal government shutdown, which leaves the congress just five days - after they return from their vacation - to work out their differences, and there are many.
One option is to raise the ceiling gradually, enough to fund the government for another month, and revisit the issue again, and, if necessary, again and again. This could be the kind of circus we get from our "leaders" - an endless game of chicken and "gotcha" while the Republic burns.
Nero would be proud.
Make note to grab as much cash out of your bank account as possible within the next two weeks. There could be fireworks dead ahead, and I'm not talking about the 4th of July variety. If the government does shut down, there could be a bank holiday right on its heels, and even without a work stoppage in Washington, the number of bank failures in the US is already up to 22 and we're not even through February yet. Four more went down on Friday; two in California and two more in Georgia, the bank failure capitol.
There were 157 bank failures nationwide in 2010, 140 in 2009 and 25 in 2008. Smaller banks have suffered the most, but the biggest - the ones bailed out by the US taxpayer - are still not immune.
Due to violence in Lybia, where President Moammar Gadhafi - via a videotaped message by his son - vows to fight the insurrection against his 42 years of tyranny, "until the last man standing," oil prices have gone ballistic, with WTI (crude oil on the NYMEX) has shot through $90/barrel and is fast approaching $100.
Americans may awaken from their three-day weekend with sticker shock when they go to fill up their cars, vans and SUVs with petrol.
Elsewhere, precious metals have also taken notice that the global situation has become extremely unstable. Gold is pricing right now at $1,406.70, up a whopping $18.10 just today. But the real story is silver, which spiked on Friday, but is putting that move to shame taday with a nearly 5% move higher, to $33.88, up $1.58! That's quite a rocket ship, there and it's more than just short covering. US investors will likely send both gold and silver higher as congress takes a week off, just prior to the most important vote of the new congress: whether or not to raise the debt ceiling.
Analysts on top of the situation feel the government needs to act by March 4th in order to avert a federal government shutdown, which leaves the congress just five days - after they return from their vacation - to work out their differences, and there are many.
One option is to raise the ceiling gradually, enough to fund the government for another month, and revisit the issue again, and, if necessary, again and again. This could be the kind of circus we get from our "leaders" - an endless game of chicken and "gotcha" while the Republic burns.
Nero would be proud.
Make note to grab as much cash out of your bank account as possible within the next two weeks. There could be fireworks dead ahead, and I'm not talking about the 4th of July variety. If the government does shut down, there could be a bank holiday right on its heels, and even without a work stoppage in Washington, the number of bank failures in the US is already up to 22 and we're not even through February yet. Four more went down on Friday; two in California and two more in Georgia, the bank failure capitol.
There were 157 bank failures nationwide in 2010, 140 in 2009 and 25 in 2008. Smaller banks have suffered the most, but the biggest - the ones bailed out by the US taxpayer - are still not immune.
Friday, February 18, 2011
Silver, 10-Year Note Are New Safety Plays
Let's dispense with the general recap right away:
The first thing that jumps out is how absurdly out of step the major indices are, with the Dow plowing ahead by nearly 6/10 of 1% and the other indices flat. This is as it has been for many months. There are extreme inequities in equities, to coin a phrase and it is a certain sign of manipulation and flights of both fancy and safety.
Dow 12,391.25, +73.11 (0.59%)
NASDAQ 2,833.95, +2.37 (0.08%)
S&P 500 1,343.01, +2.58 (0.19%)
NYSE Composite 8,507.90, +10.49 (0.12%)
Advancers finished ahead of decliners, 3600-2902. On the NASDAQ there were 248 new highs, 14 new lows. On the NYSE, new highs led new lows, 350-8. Volume was well short of being exciting.
NASDAQ Volume 2,123,685,000
NYSE Volume 4,421,542,500
As the Middle East becomes ever more the hotbed of revolution, with uprisings in nearly every country across North Africa and the Persian Gulf, investors are seeking safety and finding a comfortable place to park their money in commodities in general, but silver in particular.
Silver rocketed again today in price as buyers piled in prior to the three-day weekend, pushing the price up to $32.30, a gain of 73 cents, and even higher after the close in New York. By the time markets open in the US on Tuesday, silver could be selling for $35/ounce, so powerful is the short-covering move and subsequent break-out. Gold is closing in on all-time highs again, gaining $3.50 today, to finish at $1,388.60 in NY. Oddly enough, oil futures were down on the day, losing 16 cents, to $86.20, seemingly wanting to settle somewhere between $80 and $85 per barrel, a price with which most - both suppliers and buyers - can live.
The other area receiving an inordinate amount of attention, as Chairman Bernanke nukes the dollar, is the 10-year note, which continued to rally today, pushing yields down to 3.58% at the close. The price of the 10-year is still 100 basis points higher than it was during the summer, thanks to the inflationary effect of the Fed's ZIRP and QE2. Still, money has to go somewhere and the smart money is peeling out of overpriced stocks and into the relative safety of bonds.
For our money, silver still looks like the very best raw investment, bar none. One should be looking for deals on autos and machinery these days, before inflation gets out of control.
A three-day weekend means not having to listen to the talking heads on CNBC for an entire 72 hours. Bliss!
The first thing that jumps out is how absurdly out of step the major indices are, with the Dow plowing ahead by nearly 6/10 of 1% and the other indices flat. This is as it has been for many months. There are extreme inequities in equities, to coin a phrase and it is a certain sign of manipulation and flights of both fancy and safety.
Dow 12,391.25, +73.11 (0.59%)
NASDAQ 2,833.95, +2.37 (0.08%)
S&P 500 1,343.01, +2.58 (0.19%)
NYSE Composite 8,507.90, +10.49 (0.12%)
Advancers finished ahead of decliners, 3600-2902. On the NASDAQ there were 248 new highs, 14 new lows. On the NYSE, new highs led new lows, 350-8. Volume was well short of being exciting.
NASDAQ Volume 2,123,685,000
NYSE Volume 4,421,542,500
As the Middle East becomes ever more the hotbed of revolution, with uprisings in nearly every country across North Africa and the Persian Gulf, investors are seeking safety and finding a comfortable place to park their money in commodities in general, but silver in particular.
Silver rocketed again today in price as buyers piled in prior to the three-day weekend, pushing the price up to $32.30, a gain of 73 cents, and even higher after the close in New York. By the time markets open in the US on Tuesday, silver could be selling for $35/ounce, so powerful is the short-covering move and subsequent break-out. Gold is closing in on all-time highs again, gaining $3.50 today, to finish at $1,388.60 in NY. Oddly enough, oil futures were down on the day, losing 16 cents, to $86.20, seemingly wanting to settle somewhere between $80 and $85 per barrel, a price with which most - both suppliers and buyers - can live.
The other area receiving an inordinate amount of attention, as Chairman Bernanke nukes the dollar, is the 10-year note, which continued to rally today, pushing yields down to 3.58% at the close. The price of the 10-year is still 100 basis points higher than it was during the summer, thanks to the inflationary effect of the Fed's ZIRP and QE2. Still, money has to go somewhere and the smart money is peeling out of overpriced stocks and into the relative safety of bonds.
For our money, silver still looks like the very best raw investment, bar none. One should be looking for deals on autos and machinery these days, before inflation gets out of control.
A three-day weekend means not having to listen to the talking heads on CNBC for an entire 72 hours. Bliss!
Thursday, February 17, 2011
Stocks Up; Silver at 30-Year High
All attempts to slander, deride or talk down the precious metals as the ultimate store of value have failed. Trillions of Benji Bucks, delivered to market participants by the Federal Reserve and sparking an equity and commodity boom the likes of which the world has never seen has finally defeated the forces holding down the value of gold and silver.
In what can only be characterized as a massive short squeeze, silver spiked to fresh 30-year highs, while gold surge to a one-month high. There is little to hold them back now save the massive short silver positions held by JP Morgan Chase, and they are being buried under frenzied buying.
Uprisings in Middle Eastern countries from Bahrain to Syria to Lybia to Algeria to Saudi Arabia, in the aftermath of the Egyptian triumph over tyranny, have been set off by upward global food price price pressure, the lack of stable employment and corruption in government. If those themes sound familiar to people in the more "developed" world such as the USA and Europe, it is because we are beset on all sides by corruption and inflation, a deadly combination for anyone who seeks to hold positions of political power.
Thus, the Federal Reserve has sparked rebellions overseas and maybe tipped the flobal community past the point of no return. Only the dole in England, food stamps in America and deeply-ingrained socialism in most of the EU has kept the people of these countries from "going Egyptian" on their political masters.
The Westernized nations certainly have a great deal to gripe about, though the impact of the Fed's policies of zero interest rate and quantitative easing are being felt first in the rest of the world. They will no doubt be visiting the shores of Europe and the United States at some as yet determined date. Runaway inflation, high unemployment, dissatisfaction with government policies and widespread fraud should result in tumult of the highest order just in time for the presidential elections in 2012, should the nation still be intact by then.
But, I digress. The most important signpost of the day was the spike in silver, without a doubt. It was, in warrior terminology, a shot across the bows of the ships of states printing fiat money, backed, laughably, by "good faith and cradit" of the issuer. In the case of the United States, unbeknownst to the rulers-at-large, all faith has been shattered and our national credit card has been tapped out. We loan mostly to ourselves, from ourselves, by ourselves, in a Ponzi scheme so deliciously evil that it would make Bernie Madoff look like a boy scout.
Dow 12,318.14, +29.97 (0.24%)
NASDAQ 2,831.58, +6.02 (0.21%)
S&P 500 1,340.43, +4.11 (0.31%)
NYSE Composite 8,497.41, +43.65 (0.52%)
Advancing issues beat decliners, 4118-2402. NASDAQ recorded 212 new highs and 22 new lows. On the NYSE, new highs topped new lows, 361-9, a number so ridiculously out of balance that only Ben Bernanke could love it. There is no downside risk to owning stocks and until there is, one should load up with tight stops on the underside. Volume was back into the abyss of the past two years.
NASDAQ Volume 1,952,032,375
NYSE Volume 4,178,143,000
Oil was up another $1.37, to $86.36 on conflicting reports that Iran was about to send warships through the Suez Canal. Israel is worried and called the act "provocative," while countries all around it are undergoing spasms of freedom and expressions of liberty. The smart money has already left Zion. A couple of Palestinaians were shot and killed by Israeli soldiers on the border of the Gaza strip.
Gold gained $10.00, to $1,385.10, and silver was up more than 2% at the close in New York, higher by 94 cents, to $31.57. Silver, said to be rarer than gold by some accounts, has jumped $5 dollars US in just over a month. Today's final push to new highs marks the beginning of a second phase in the bull rally that has slowly limped behind gold, but has recently outstripped nearly every other asset class, gaining 87% in 2010 alone.
Estimates for how high silver can go and in what time frame range from the reasoned to the impossible, though in today's upside-down economic world, the impossible - such as the S&P 500 doubling in just the past two years - is now possible. A reasonable guess is that silver will reach $50 by the end of the year, which would be "only" a 67% gain in an asset that has no counterparty risk if one holds physical metal and is deeply undervalued by almost every metric.
Now that buying stocks is a risk-less play, expect some surprises in the next downturn, such as it coming out of nowhere, for no particular reason and to be deep and quick. The sheep will surely get sheared once again as gold bugs and silver sleuths sit back and gloat.
Yes, and real estate in selected markets is cheap, but will be cheaper later this year, even cheaper in 2012 and practically fire-sale prices in 2013. Save your silver. In three years time, you'll be able to buy a reasonable three-bedroom home in a decent community for about 200 ounces of silver. I would not kid you about that. Of course, you may not be able to afford the property taxes, especially if the house is in New York, New Jersey, Massachusetts or California.
And, BTW, the banks are dead. They just won't admit it.
In what can only be characterized as a massive short squeeze, silver spiked to fresh 30-year highs, while gold surge to a one-month high. There is little to hold them back now save the massive short silver positions held by JP Morgan Chase, and they are being buried under frenzied buying.
Uprisings in Middle Eastern countries from Bahrain to Syria to Lybia to Algeria to Saudi Arabia, in the aftermath of the Egyptian triumph over tyranny, have been set off by upward global food price price pressure, the lack of stable employment and corruption in government. If those themes sound familiar to people in the more "developed" world such as the USA and Europe, it is because we are beset on all sides by corruption and inflation, a deadly combination for anyone who seeks to hold positions of political power.
Thus, the Federal Reserve has sparked rebellions overseas and maybe tipped the flobal community past the point of no return. Only the dole in England, food stamps in America and deeply-ingrained socialism in most of the EU has kept the people of these countries from "going Egyptian" on their political masters.
The Westernized nations certainly have a great deal to gripe about, though the impact of the Fed's policies of zero interest rate and quantitative easing are being felt first in the rest of the world. They will no doubt be visiting the shores of Europe and the United States at some as yet determined date. Runaway inflation, high unemployment, dissatisfaction with government policies and widespread fraud should result in tumult of the highest order just in time for the presidential elections in 2012, should the nation still be intact by then.
But, I digress. The most important signpost of the day was the spike in silver, without a doubt. It was, in warrior terminology, a shot across the bows of the ships of states printing fiat money, backed, laughably, by "good faith and cradit" of the issuer. In the case of the United States, unbeknownst to the rulers-at-large, all faith has been shattered and our national credit card has been tapped out. We loan mostly to ourselves, from ourselves, by ourselves, in a Ponzi scheme so deliciously evil that it would make Bernie Madoff look like a boy scout.
Dow 12,318.14, +29.97 (0.24%)
NASDAQ 2,831.58, +6.02 (0.21%)
S&P 500 1,340.43, +4.11 (0.31%)
NYSE Composite 8,497.41, +43.65 (0.52%)
Advancing issues beat decliners, 4118-2402. NASDAQ recorded 212 new highs and 22 new lows. On the NYSE, new highs topped new lows, 361-9, a number so ridiculously out of balance that only Ben Bernanke could love it. There is no downside risk to owning stocks and until there is, one should load up with tight stops on the underside. Volume was back into the abyss of the past two years.
NASDAQ Volume 1,952,032,375
NYSE Volume 4,178,143,000
Oil was up another $1.37, to $86.36 on conflicting reports that Iran was about to send warships through the Suez Canal. Israel is worried and called the act "provocative," while countries all around it are undergoing spasms of freedom and expressions of liberty. The smart money has already left Zion. A couple of Palestinaians were shot and killed by Israeli soldiers on the border of the Gaza strip.
Gold gained $10.00, to $1,385.10, and silver was up more than 2% at the close in New York, higher by 94 cents, to $31.57. Silver, said to be rarer than gold by some accounts, has jumped $5 dollars US in just over a month. Today's final push to new highs marks the beginning of a second phase in the bull rally that has slowly limped behind gold, but has recently outstripped nearly every other asset class, gaining 87% in 2010 alone.
Estimates for how high silver can go and in what time frame range from the reasoned to the impossible, though in today's upside-down economic world, the impossible - such as the S&P 500 doubling in just the past two years - is now possible. A reasonable guess is that silver will reach $50 by the end of the year, which would be "only" a 67% gain in an asset that has no counterparty risk if one holds physical metal and is deeply undervalued by almost every metric.
Now that buying stocks is a risk-less play, expect some surprises in the next downturn, such as it coming out of nowhere, for no particular reason and to be deep and quick. The sheep will surely get sheared once again as gold bugs and silver sleuths sit back and gloat.
Yes, and real estate in selected markets is cheap, but will be cheaper later this year, even cheaper in 2012 and practically fire-sale prices in 2013. Save your silver. In three years time, you'll be able to buy a reasonable three-bedroom home in a decent community for about 200 ounces of silver. I would not kid you about that. Of course, you may not be able to afford the property taxes, especially if the house is in New York, New Jersey, Massachusetts or California.
And, BTW, the banks are dead. They just won't admit it.
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