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Gold Stocks are up 1,000% since 2000 and
Oil Stocks 300% since 2003. Yet the public remains conspicuously absent. Not
for long if the Fed has anything to say about it…
Around the end of 2005 a funny thing started
to happen!
Chart 1 - Homebuilders have CRASHED
The once HOT homebuilding stocks failed to
better their highs from earlier in the year and ever so quietly began to roll
over and sink lower.
But the vast public did not notice!
Nope, housing prices were still rising and
markets such as California and Florida were hotter
than ever.
By the beginning of 2007 the housing stocks
had received a fair clip but still nobody seemed worried. Then another funny
thing started to happen:
Chart 2 - Banking Index down +30%
A major beneficiary of the mortgage boom
– the banking establishment – also started rolling over. 2007 was
the year we learnt about CDOs and SIVs.
Fast forward to the present and Retail
Stocks have been on the chopping block, commercial property is slowing and
Friday’s weak ISM manufacturing data provides final confirmation that
the business cycle has turned decisively lower.
Now if this were a normal economic cycle
and the economy did not contain the debt excesses it does, we would get a
natural economic recession to cleanse the system and pave the way for the
next boom.
However this is not your grandmothers
economy!
Excess monetary stimulus has caused speculative bubbles such as the above to
emerge and brought about a situation where a cleansing recession would topple
the debt mountain and sweep us swiftly into a Depression!
So what’s the Feds answer to
preventing a recession? Stimulate more, print more and blow up a bubble
somewhere else. But for heavens sake, don’t let anything go down
(unless it’s the Dollar).
So where will the next object of mania be?
Well we know it won’t be any previous
object of mania since the public has been sufficiently burnt so as to stay
away i.e. tech and real estate.
It probably won’t be an item which
has already been levitated by credit e.g. Fixed Income instruments such as
bonds packaged into leveraged derivatives.
And lastly it’s probably something
that is not currently well distributed or well known so as to create a
potential marketplace.
In our opinion, the next mania will occur
in Commodities. Commodities of all types
agricultural, industrial metals, precious metals & energy.
Our favorites:
Chart 3 - Amex Gold Bugs Index up 1,000% since 2000 but still not widely
recognized
Chart 4 - Amex Oil Index +300% since 2003
But ofcourse you
already know that!
Click here: http://blog.goldandoilstocks.com
_______________________________________________________________________
This article is intended solely for information
purposes. The opinions are those of the author
only. Please conduct further research and consult your financial advisor
before making any investment/trading decision. No responsibility can be
accepted for losses that may result as a consequence of trading on the basis
of this analysis.
Information
contained herein is obtained from sources believed to be reliable, but its
accuracy cannot be guaranteed. It is not intended to constitute individual
investment advice and is not designed to meet your personal financial
situation. The opinions expressed herein are those of the author and are subject to change without notice.
The information herein may become outdated and there is no obligation to
update any such information. The author,
24hGold, entities in which they have an interest, family and associates may
from time to time have positions in the securities or commodities discussed.
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