The Fed’s “All-In” move may keep the house of cards from folding until 2013 and greatly help Obama limp over the finish line, but it shall prove to be the last silver bullet before a long period of economic, social, political and spiritual upheaval grips America for years to come.
While the junior resource market left egg on my face this year, I’m very pleased with how I approached the rest of the markets I follow. Here’s a quick update on them.
US stock market – It’s worth repeating my constant cry that many times it’s not what you make but what you don’t lose that makes you a winner over time. Despite numerous questioning on why I still won’t short the US stock market and almost daily emails showing me why such a decision shall prove wrong, the fact is the market has reached highs not seen in years.
The marginal new high I spoke of is well within reach now. But as it has been since day one, such a feat would be the completion of the greatest bear market rally in a secular bear market that can eventually retest the lows made in early 2009. It shall have to endure a long period of economic, social and political upheaval that shall be longer and harder than most could ever imagine.
Such a period is still months or even a year or so away but starting to plan for it while the “Don’t Worry, Be Happy” crowd runs wild with the Fed’s “All-In” is strongly suggested.
US bonds – The very fact that many in the last 18 hours or so expressed a belief that bonds can’t lose during this “All-In” phase is the icing on the cake I desired for fulfilling my “worst investment for the next 10 years” belief of bonds. There’s no rush to establish a short position but the closer the 10-year T-Bond drops towards a 1.25% yield, the more I would want to be short. When the dark days come (and in my book it’s a question of when, not if), rates shall rise like they did through Europe the last couple of years despite overall weak economics.
U.S. dollar – Direction? Go and see how many people dare suggest the euro could see a major short covering rally well over $1.25 just a couple of weeks ago. Try to understand how almost 96% bulls on the US dollar in the currency futures markets are now getting crushed
Gold – While we can see a period of consolidation on either side of $1,800, the upside remains wide open. Go back and look and see what was being said when gold was in the low $1,500’s. Bears were running wild and the vast, vast, vast majority of gold commentators had turned very cautious, if not outright bearish. Let it not be said that at a critical point, yours truly was willing to bet $2 million reasons why gold was going over $2,000.
Any and all excess was washed out in the almost year-long correction/consolidation so it shall likely be a long period before we get seriously overbought again. The perma-bears have never grasped the earth-shattering changes to the gold market and much of the financial media shall continue to follow these pied-pipers over the cliff as gold marches towards and over $2,000
Oil and natural gas – no changes here.
And finally, the junior resource market has seen its horrific lows and while it can work higher for the balance of the year, the wounds are deep and the need to finance great. This shall limit the rebound but once we get near years-end, the rebound can gather a longer-lasting head of steam and help 2013 make 2012 just a bad memory. Remember, I never said to assign anything more than capital that you’re mentally and financially prepared to lose part or all of. These vicious bear markets in a business where failure is the norm always ends up showing most didn’t meet this requirement. How do I know this? A sampling of the hate mail does it all the time. I just wish my wife stop writing-lol
Peter Grandich will present an education workshop on “Why failure is the norm in junior resource stocks” on Friday during the Chicago Hard Assets Investment Conference.