Friday, May 6, 2011
UST Monthly Chart & a Mini Screed
Then you have the touts who come in during the latter stages of the trend and begin cheering and reinforcing perceptions. In silver's case, we were hit over the head again and again about the above ground shortages, as apparently Grandma is keeping her dinner ware as her own little central bank instead of burping it up into the market. No, she's not. She's been selling the hell out of it. I know several people personally who sold silver recently. Meanwhile, I hold my bag because I want to come out the other end eventually, with egg money.
Gold? Ha ha ha... it is doing exactly what it should be doing and real investors, long term NON casino patrons, are just sleeping soundly and awaiting coming opportunities. The gold-oil ratio looks like it is finally making its move, lagging the gold-silver ratio. Gold-GYX looks very constructive and gold-SPX, while getting clobbered yesterday, is constructive now for further upside.
In short, unlike the touts cheering the 'resource sector' or the 'commodity complex' or the 'death of the US dollar' or other such trend following, my ongoing big picture plan ultimately depends on the deflation case coming to the fore (periodically), the T bond 'continuum' remaining intact and the herds getting whipsawed every few years to ping one hysterical extreme or the other.
The gold sector is different folks. It's fundamentals are reinforced during the counter-cycle. Too bad the focus is now likely to shift from the blogs, websites and news sources that promote inflation 24/7 to those promoting deflation once again when really, we have both conditions, which must be integrated. We have inflation as an ongoing structure and periodic deflationary bouts, as the system desperately tries to rid itself of the toxic policy that came before. Then? More policy poison... and on and on until one day, the end of the current system.