In an article I published last week, I documented and claimed that sentiment trumps everything. I showed that both the stock market and the gold market were at EXTREMES of bearish sentiment and claimed that they were ready to enter a very bullish phase. And for the moment, anyway, it appears I may have been correct.
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Some readers have suggested to me that the stock market is about to unrattle and fall apart. I guess they don't think much of my sentiment analysis. LOL
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But perhaps this information regarding global liquidity will open their eyes. This chart is definitely not my finest presentation, but for those interested and motivated to see something enlightening, the information is all there waiting for their consideration.
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To cut to the chase, the chart shows that Central Banks, worldwide, are back to printing money right now and at a furious pace. So far, this behavior has led to tremendous rallies in the SP-500. I believe it is contributing to our current rally. i.e. the stock markets are not going to be allowed to fall.
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But this behavior does come with a price tag, as it is an insane attempt to get something for nothing. The price tag, ultimately, will be that nations default and go bankrupt. Currencies are devalued and then devalued even more......including the US Dollar. And commodities, like gold and silver, will continue to appreciate in price as they are "things" that are not paper (like money).
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The two reasons the stock market will continue higher are sentiment and liquidity.
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Click on the chart to ENLARGE
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yea ur right john,
ReplyDeletestocks will increase in value in $ terms but not in nominal terms...
ultimately the US and other countries will experience high levels of inflation
with the US stock market, i never can see it totally collapsing because u have the bernanke "put"
jack foley
I heard from an exchange administrator in Zimbabwe that their market finally collapsed due to a settlement gridlock when the indices were:
ReplyDeleteIndustrials - 5 796 819 025 619 380 000
Minings - 6 892 435 840 435 660 000
We're all gonna be RICH, no wait, that's like 20 bucks.
Oh, and the "people" spent their days digging and panning for gold because that was the only thing that was accepted in exchange for food. Zimbabwe was a very prosperous country just about 30 years ago. The management of their currency along with political corruption turned the country into a basket case. This is not a freak occurrence, it is the fate of fiat currency when government decides there can be no deflation.
ReplyDeletei never can see it totally collapsing because u have the bernanke "put"
ReplyDelete"Da Boyz" the PPT can prop-up the S&P500 but a currency collapse is a totally different market one that can lose confidence overnight with no warning, when GS is on the correct side of the trade just as they shorted the Euro$ and went long the US$ as the media spun the PIGGS issue.... when ready they will pull the plug on the $ and make Billions knowing the upcoming trade in FX....and they like the Central Bankers will be long gold as the ultimate devaluing US$ trade, the sift has picked up speed these past couple years as the CB's were net sellers of Gold now buyers!