I sent an email to my friend, Trader David R last evening. I wrote, “Looks to me like New York is back into gold and silver.”
His reply – “ Yup, long gold, short equities now.” Remember, it’s the traders that move the paper gold and silver markets and the hedgies are starting to reverse their strategies. That may be the most significant thing for our readers to come out of Obama’s re-election.
I don’t know if I’m imagining it, I really haven’t kept track, but it seems every time I check the price of gold at the end of the day, it ends up right around half-way between the day’s lows (usually early in the morning) and the highs (usually late afternoon). For example, today the low was $1702.30 and the high was $1734.20. The mid-point is $1718. Gold closed at $1717.30. It’s not just today, it seems to be the case whenever I bother to check. This has to be the result of computer driven algo, but then the entire paper market is driven by computer-generated algos. (And you thought the movie The Terminator was far-fetched. Computers run our lives and our markets. All that’s missing is their “evolution,” and at the rate that computing power grows, doubling each year, we may see functional “thinking” robots in our lifetimes.)
Here are some facts you should be aware of. Remember, our greatness and prosperity was due to our middle class (information sourced from SeekingAlpha).
- Back in the 1970s, the American middle class earned 62% of the nation’s income.
- Today, the middle class accounts for only 45% of the total income of Americans.
- An important 2012 study found that 85% of the middle class say it is now more difficult than a decade ago to maintain their standard of living.
- The U.S. middle class has seen a decline of 28% in their net worth over 10 years—from $129,000 in 2001 to $93,000 in 2011.
- The net worth of lower income families fell a steeper 45%!
If the economy is indeed growing as some politicians and economists say, then why are the majority of Americans still suffering the after-effects of the recession?
More importantly, why are millions of people unemployed in the U.S. and why are millions being pushed into poverty?
The statistics seem to indicate that the U.S. middle class is on the verge of collapse, and along with it, America’s “greatness.”
I do understand why a lot of gold “bulls” are getting anxious. Gold finally reached Sinclair’s $1,650 “pillar” in late spring, 2011, a year and a half ago, and here we are, back to where we started. This has been one of the most frustrating periods of the entire decade-plus bull market. Bull markets are not linear events and gold, in the real world doesn’t always go up, but due to the election, gold’s performance has either puzzled or disappointed a lot of its followers. It doesn’t help when people like Larry Edelson keep writing that you should beware of a larger pullback and gold could drop back to the $1,450s. I say that is hogwash!
Recently I suggested that gold should hold up around $1675-$1,690. As I write this, gold is $1,724.70. I say the pullback is done. Odds are we can hit $1800 by Christmas. The truth is the bull market is far from over, and that in pure dollar terms (not in percentage), the bull market will reward you with more profit than it has so far, starting at $252. And it will only take from one to four years to happen, whereas the profit to date took a full decade.