We noted early this month that small traders were overpopulating the gold market and that commercial traders had begun viewing this market as significantly over valued. Several factors this week have pushed this market well into bubble territory and the risks can be seen both fundamentally and technically.
China’s rapid increase in public debt issuance through the Hong Kong financial markets is one more step in China’s ascendancy towards economic super power status. The fact they just finished their largest Bond auction in history does not bode well for European markets desperately trying to raise operating capital.
The Great Recession is not ending in a meltdown similar to 2008. Many of the problems here in the U.S. are being dealt with. The important thing is to recognize the differences and understand how we can take advantage of the current opportunities. We suggest selling S&P 500 options as a way generate a 10% and sticking with our commodity investment thesis.
Commercial traders have become increasingly wary of the stock market. Their defensive action actions can be seen in the Treasury, Dollar and gold markets. Some of these markets are experiencing record internal behavior including low open interest and record small speculator participation.
Raising the debt ceiling may provide the tailwind for the final stages of a bear market rally. We are rapidly approaching the tail end of a bear market rally within the context of a secular bear market. This is the plan I will put in place to sell stock index futures when we get the bear market debt ceiling rally.
There are prices we accept in life as absolutes. We accept that gold is more expensive than silver or that a Mercedes is more than a Chevrolet. Sometimes, things change.
Remember when diesel fuel was cheaper than gasoline? Not only is diesel more expensive, it has maintained its premium for more than ten years now. Recently, another market relationship has been
called into question – the relationship between corn and wheat.
Historically, wheat futures trade at a premium to corn futures. In fact, over the …
The sugar futures market may be the one food commodity that is over valued. Commercial sugar traded are expecting a surplus in this year’s crop and according to the Commitment of Traders reports have been selling sugar futures.
The corn futures market was facing unprecedented demand heading into this year’s planting season. The tightest supplies since 1937 and the governmentally mandated ethanol
program’s consumption of 40% of this year’s crop put extra pressure on Mother Nature to produce a record crop. We all know that this spring broke the 100-year-old record for rainfall. When we
combined this with cold temperatures, flooding along the Mississippi and a southwestern drought, it became obvious that corn acreage would suffer as farmers would be forced to wait for the fields
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The strongest currency in the world carries no debt and guarantees its future supply. This currency is not bound by banking authorities and no middlemen fees are added to any transactions. Bitcoin may be the most forward thinking and libertarian store of value yet developed.
American banks have gone from the sub-prime mortgage debacle and taken it to a whole new level with their sub-prime sovereign nation funding. American banks have profited by selling a product destined to fail. The end result is they paid record bonuses in 2010 while American taxpayers may be bailing them out again in 2011-2012.
