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At the end of a letter that took pains to clearly illustrate the state
of the technical and sentiment situation for precious metals, the US stock rally,
commodity and global market opportunities (outside the US and its election
year Treasury yield curve manipulations) came the 'Wrap Up' to this week's NFTRH. It is a segment where I sometimes go off and speak
as 'Gary' and other times put in some of what had not made it into the letter
that came before it. This week, it took the form of a quick snapshot of
sentiment and then got caught up in some of the Fed's data graphs. Excerpted
from NFTRH179:
Wrap Up
Broad sentiment (per sentimentrader.com data) is over bullish. Does it matter?
Gold stock sentiment is extremely pessimistic (bullish). Does it matter?
Hulbert’s gold sentiment index (of newsletter writers) shows
bearishness approaching an extreme even as gold resides well above important
support in the 1570’s.
Broad market corporate insiders continue to dump their stock in relentless
fashion while various dumb money components remain over bullish, although off
the highs after the correction that never really was cleaned out sentiment a
couple weeks ago.
These imbalances will be corrected one day.
Meanwhile…
Inflation is not a problem. See, these graphs are offset by the Velocity of
Money data that the deflation camp continues to argue, and rightly so.
This is a picture of the dreaded beast that the heroic Bernanke continues to
fight. This is a picture of a natural system’s ongoing attempt to
cleanse itself. Policy makers will not let it do so, as they continue to
employ new and unusual methods of trying to trick the public into believing that
natural cycles can be remotely managed to any kind of positive outcome.
Rising money supply with still declining money velocity hints at a future of
the worst kind; continued inflationary price effects in the things of
unlevered value, and price destruction in things lacking unleveraged value.
More items, since I am having fun combing through the St. Louis Fed’s
website…
Case closed, only people who like rising prices like strict fiat monetary
policy systems.
I have to believe that some sort of neo-socialist disaster response program
is behind that flagpole that drove up loans to individual consumers. If they
don’t have job security and they are under water on their home, how
else can money be getting thrown at them so aggressively?
This graph supports a fact we have noted lately that the economy is improving
(to some degree) and sales of big ticket capital equipment (machine tools) is
relatively brisk of late; business loans are indeed on an upswing, post 2008
disaster. The clock on the 7-year span that separated the last two recessions
is now 3 years and counting, with no assurance that it will take 4 more
before the coming recession/depression arrives. In fact, with debt and
leverage piled ever higher than it was in the quaint old days of Greenspan, I
would argue it could come at any time, due to increasing systemic risk.
Target is 2013 to 2014.
Behold the two massive spikes in the unemployment rate. The early 80’s
spike erupted as Paul Volker had committed to taming inflation come hell or
high water. Jobs be damned, his Federal Reserve was going to get the
inflationary beast that had been systematically killing the economy under
control.
The 2008 spike however, came despite years of mostly accommodative and
inflationary policy and the credit bubble it activated. This is what happens
when people try to ‘manage’ the unmanageable. Near total
destruction, which was met by yet more intense inflationary policy. This is
Wonderland, not some normal economy, normal financial system or normal policy
making.
You
see?
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