Monday, October 25, 2004
Economics Rules Monday
The delicate equilibrium in world financial markets may be starting to unravel. The dollar has broken out of its recent range, credit spreads are widening, equities are sagging, and riskless sovereign bonds are well bid. The message is worrisome: For an unbalanced and increasingly vulnerable world economy, the unrelenting rise of oil prices spells mounting risks of global recession in 2005. Financial markets are only just beginning to comprehend this possibility.Stephen Roach's weekly commentary has been a must read by market professionals for some time.
Midas at Le Metropole in his daily commentary says
Here we are approaching 16-year highs and so many potential gold investors are out of the market. What blows me away (it’s SO bullish) is how little interest there is in gold from a public participation level. The small spec open interest, the lack of the usual futures participants at some prominent brokerages, pitiful US gold coin demand, lack of volume in the smaller golds, and the Café Sentiment Indicator, are all a contrarian’s delight. Never has a market had such constructive bullish fundamentals and attracted such an anemic following. Never has there been a three year BULL MARKET like gold which has attracted such ennui.
Some day soon the Gold/Oil price relationship that has existed for years will get back in gear and prices of Gold will soar. I recall back in the '70's and '80's Gold prices were in the market updates that were broadcast on the radio. It's been a long time for the Red Sox. Seems like it has been that long for interest in Gold.
One site I check almost every day is Financial Sense Online. Today there is an excellent article Today's Wrap UP written by Jim Willie CB titled LAST ACID TEST ON ANALYTIC VIEWS in which he discusses the US Dollar, inflation, deflation and the economy. A must read and a must read site. Our institutions do a disservice to the people of this country. Most of us are economically illiterate. No matter who is elected in eight days, the next four years could be very trying.