Andy’s wife Zhanna went to the Super Bowl with two of her girl friends. They attended the game, partied all night long on Saturday and Sunday and had a ball. That’s Zhanna in the middle, with her girl friends.
For the next 10- days we will be entertaining out of town friends, so for the next several days, my writing will be hit and miss.
I want to comment on two articles written by Larry Edelson. The way I see it, they are at odds with each other – unless we experience hyperinflation, which he does not think is in our future.
As I have been saying now for some time, the U.S. will not suffer hyperinflation. Higher inflation, yes. But hyperinflation, no.
The dollar will lose its reserve status, but it will survive as our sovereign currency.
–Money and Markets, December 30, 2013
On November 25th, Larry published his predictions for gold. He wrote:
The momentum in gold remains negative, with a bearish bias heading into year-end.
And now, gold has fallen below the top of the 2014 trend range at $1,268.30. This tells you that the daily cycles are now overpowering the weekly cycles, setting up gold for a January 2014 low, at much lower prices.
All of this is also why I urge you to pay very close attention to the gold market now … to everything I write and send you … and be ready to act on a moment’s notice.
Gold is reaching its most important inflexion point since its major bottom back in 1999. And if you let the wild action throw you off course, you will miss the next big leg up that will take gold to well over $5,000 an ounce.
On January 6th he wrote:
We have to listen carefully to what the markets are telling us. And right now, gold and silver could be in the process of forming a cycle inversion, that if continued, may delay the final bottom until their next major cyclical turning point, which is in May.
Larry expects gold to bottom in May to well below $1,100, maybe as low as $1,000. Gold will then rebound and the next major bullish cycle will commence, and gold will top out at a minimum of $5,000 and possibly much higher.
On Monday, Larry wrote about the stock market.
What to Do Before the Real Bull Market in Stocks Begins (Moneyandmarkets.com)
Monday, February 3, 2014 at 7:30 am
The U.S. equity markets and, for that matter, most equity markets around the world, have topped.
They are now in a severe bear trend, one that will look at times like the end of the world is upon us.
You will hear all the die-hard bears come out of the woods. “Dow 5,000,” they will scream, or even lower. Another real estate crash. Plunging asset values. An emerging market crisis. Bank failures. Systemic crashes. And more.
But mark my words, the bear market that is beginning in equities is merely a temporary correction, one that will set the stage for the Dow Industrials to launch much higher, to over 31,000 in the years ahead.
I have been warning that there would be a sharp, sudden pullback in the stock markets before the real bull market begins. It’s here. It started last week. It’s going to be ugly at times. And it’s going to end later this year with almost everyone throwing in the towel, which of course, will be the time for you to back up the truck and buy big.
Continue reading on MoneyandMarkets.com.
Kira Brecht (Kitco) shares our view that a falling stock market is good for gold. For the last two and a half years, the stock market has been in a bull market (Richard Russell says this is just a bullish correction in a primary bear market) – and gold and silver have been smashed.
As you know, we are in the camp that believes that gold and silver should be much higher, but the markets are highly manipulated. But the manipulation would not be possible without lots of hot money, courtesy of the Fed, that has attracted to the gains in the stock market.
With low interest rates and gold and silver in retreat, the stock market was the “only game in town.” Once the stock market retreats in earnest, the hot money will look for a new home and gold will be one of the destinations.
Larry is certain that the stock market is about to suffer a major pull back, so gold should move UP. But he says gold won’t bottom until May, at $1,000 or $1,100. Then he says gold will resume its cyclical bull market move up, toward $5,000 or much higher. Rising gold normally accompanies a bear market in the stock market – but he says no, stocks are going up too.
Larry, I don’t think you can have it both ways. Unless hyperinflation levitates both gold and stocks, which could occur and in fact is exactly what John Williams predicts for 2014, his timing of stocks and gold is not in sync. He is using TA for his timing and TA does not factor in JPMorgan’s highly concentrated positions on COMEX, and the front-running, naked shorting and high frequency trading that bully gold and silver around with impunity.
His predictions may be correct, and we will find out soon enough, but normal market behavior does not predict a bull market in stocks AND gold and silver. Without hyperinflation it is unlikely to play out that way. And that is the last thing we need!
Here is what Kira Brecht wrote about this subject yesterday:
Friday January 31, 2014 13:58
You’ve probably already heard of the Stock Trader’s Almanac’s famous “January Barometer.” The indicator simply states: as the S&P goes in January, so goes the year.
Well, 2014 has gotten off to a bumpy start for U.S. equities and financial markets in general. Through Jan. 30, the S&P registered a 2.9% decline (and is unlikely to make it back to positive territory). The Dow Jones Industrials shaved 4.4% off their starting point for the year and global equities have been tanking as well. The Brazilian stock index is down 8.3% for the year, Hong Kong’s Hang Seng has slid 5.5% and Japan’s Nikkei has plunged 7.9% during January.
According to that January Barometer the odds favor U.S. stocks posting a down year in 2014. Overall, Stock Trader’s Almanac says the indicator has seen only seven major errors since 1950, which translates into an 88.9% accuracy rate. Not bad.
So, what does this have to do with gold? Let’s take a look back at the two most recent bear markets in U.S. stocks —the first from early 2000 to late 2002 and the second from October 2007 to the March 2009 low.
Continue reading on Kitco.com.