Every time I feel deflated... every time I question my stance (which is not gold bullish so much as gold bullish V. everything else but short term Uncle Buck) I snap myself out of it with an internal reminder; gold-oil? gold-gyx? gold-human hopes for prosperity? All ratios bullish and contributing to the gold miners' bottom lines as I type. The gold-oil chart I showed in NFTRH this week should make sense in its correlation to the dollar.
Every time I feel deflated I think that this is how I am supposed to feel. The news is terrible in that the banks are hoarding the taxpayers' gift (at gunpoint) of cash. Oh and one other little detail... the deflationists are becoming a bit strident, and they are simply coming out of the woodwork! For the longest time there was Prechter. There was Shilling. Along came Mish and Panzner. But now they are everywhere and they have got a big fat 'I told you so!' waiting for any casino patrons still twitching out there.
Today gold stocks, and markets in general are up big. This could be another hope bounce on the way to dispirited hopelessness. Or the downside mania could simply have worn itself out and expired. My guess - and it's just a guess - is that this is not the real rally. But I hope I am wrong because I continue to hold to my gold stock fundamental underpinning noted above because THE DAMN THING HAS NOT CHANGED with this deflation impulse. It has only improved.
What inspired this post is a comment that appeared on Seeking Alpha's reprint of my article 'Epic' where a deflationist misinterpreted me as saying the price of gold was going to experience epic gains. That is because SA retitles commentary and they titled it 'Expecting Epic Gains in Gold' (since corrected) even though there was nothing in there about gold. The epic gains, if my fundas are correct will be in the gold miners due to said ratios.
Anyway, the deflationists are coming out of the woodwork and I cannot change who I am and who I am is someone who gets mighty suspicious of manic things like the 2003-2007 commodity bull featuring hysterical peak oil and China stories. I am now mighty suspicious of the deflation story as a long term structural thing. I am usually early to the party and yeh, I thought the gold miners would do better in the deflation impulse, but everything has gone to hell in a handbasket in a forced liquidation frenzy. So, deflation is here. All it has done is improve the operations of gold mining businesses. On that alone I expect that the current downside has been over done to epic proportions. And if we ever get the herd back to thinking inflation is even remotely possible?
These idiot wizards in Washington screwed up by giving the funny munny to the banks without directive. What happens if they start injecting it directly into the economy? Last I heard there were already operations in progress to fund non financial (AKA productive) companies. Bernanke told us in 2002 why 'IT' will never happen here and he is going to keep 'IT' from happening or crash his helicopter trying.
We may get a deflationary depression, but the longer this manic down phase continues unabated, the more I doubt it. BTW, just in the duration of this post the markets have absolutely flipped their lids. Will I need to revisit my reservations about a bottom being in?
