Gold Mining is Counter Cyclical

The following is the opening segment of this week’s Notes From the Rabbit Hole, NFTRH 276:

Somewhere along the road from the 2000 bottom in gold stocks to the 2008 flame out of inflationary hysteria, the gold stock sector went from counter cyclical first mover to ‘inflation trade’ also ran.  Gold stocks put in a secular bear market bottom in 2000 just as the US and many global economies were topping out.

Then came the era that NFTRH has labeled ‘Inflation onDemand’ (IoD).  The economy was successfully* inflated by Alan Greenspan early in the decade as easy monetary policy fomented an epic credit bubble, which took over and did the heavy lifting for a cyclical bull market and buoyant economy that terminated hard in 2007/2008.

During this time of IoD ‘inflation bulls’ and commodity bulls who had all the answers for a newly inflation-phobic public emerged and took center stage.  Misperceptions were formed, cemented and driven home.  Nowhere were the misperceptions more intensely and dangerously embedded than the gold stock sector, which at its core is different than most commodity sectors and indeed, most stock sectors.  Introducing another one of our ‘busy’ charts to illustrate…

Okay, article over… the chart says it all.  No more words necessary! Continue reading "Gold Mining is Counter Cyclical"

Wall Street to the Rescue?

By Gary Tanashian

The story goes that our friends on Wall Street wink winked and nudge nudged with Alan Greenspan to cook up a massive bubble in credit and derived vehicles that eventually became malignant and spread toxic finance throughout the world.  That is not a pretty picture.

Fast forward to summer, 2012 and we find Wall Street strategists wildly bullish on T bonds (in opposition to the Federal Reserve's desire to buy them) and seemingly standing in way of the great and powerful Fed's Twist operation.  Are the Wall Street banks doing the public a service by showing the way to safety or are they simply holding up T bonds for the ransom of even higher prices than those denoted by today's record low interest rates? Continue reading "Wall Street to the Rescue?"

Sector Updates

By Gary Tanashian

The NFTRH bullish stance (Dumb Money Sold in May and Went Away) from late May has proven correct.  I write that even as I confess to having had moments of doubt about my own analysis in a noisy June that saw US and global policy maker jawbones (and actions) going into hyper drive.

I had been responding to the Ticker Sense blogger sentiment poll (with respect to the market's status over the coming 30 days) as 'Biiwii, Bullish' for several weeks in a row until this week, when the response down-shifted to 'neutral' due to several gathering indicators that imply at least a short term top, coming soon.  I lean toward this being little more than a healthy correction in an overall constructive market for most of the balance of 2012.  That is just a 'lean' at this juncture.

But it is a lazy summer holiday week, and what better time to drop the nuts and bolts macro market analysis in favor of some simple sector updates?  This post will be uncharacteristically light by biiwii standards, which I think can sometimes feel like they are bashing readers over the head with hard core ratios and macro interpretations. Continue reading "Sector Updates"

Obsession With Central Bank Action is Unhealthy, But Typical

By Gary Tanashian

June 18, 2012

The great question revolving around Greece is now answered.  It remained unanswered when the opening segment of NFTRH192 was written.  Here is how one writer was trying to deal with these and other questions over the weekend:

Obsession With Central Bank Action is Unhealthy, But Typical

"We’re seeing some positive sentiment return on account of a few things: the prospect of coordinated intervention in the event of a sloppy Greek election, or outright victory of an anti austerity party," such as Syriza, said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. –MarketWatch Continue reading "Obsession With Central Bank Action is Unhealthy, But Typical"

Don't Personalize the Markets

By Gary Tanashian

A few articles I have written lately have elicited some responses that have been less than complimentary.  This generally comes with the 'public writer' territory, but negative feedback seems to come more intensely when the market is at critical junctures where its fortunes are potentially near a point of change.

It goes both ways as I routinely hear from bulls, bears and even gold bugs when I write something that looks "dumb" because it is out of alignment with a current trend, but is actually looking for Continue reading "Don't Personalize the Markets"