Mark Hulbert's observations on the quickness with which Gold Bug Newsletters become bearish is informative.
Why? Because Bearishness is a sign of strengh for the gold market.
Remember when everyone was a true-believer in the Dot-Coms and the New Economy?
Then, the bullishness lasted until the last man was broke!
Not so with the Gold Bugs. Alas, after years in the financial wilderness the Gold Bugs seem to have aquired a Groucho Marx-Woody Allen Syndrome with their thinking.
Basically they believe: ANYTHING THATANYBODY SAYS BAD ABOUT THEM IS THE ABSOLUTE TRUTH! No questions asked.
Most GoldBugs are so used to being abused and mistreated that when the markets finally did come over to their side----THEY PANICED! AND "TOOK PROFITS!"
It may take a while for the GoldBugs to get used to being the PROM QUEENS;
And not the perennial WALL FLOWERS OF WALL STREET!
BUT IT WILL HAPPEN sooner or later......PERHAPS, EVEN IN 2005?
THE GOLDBUGS ARE NOW SITTING IN THE RIGHT SPOT AT THE RIGHT TIME.
THE US ECONOMY AND THE DOLLAR ARE SICK AND GETTING SICKER EVERYDAY.
What could change all this?
1. MASSIVE INCREASES IN US INTEREST RATES THAT CREATE A "GIANT SUCKING SOUND" AS FOREIGN MONEY RUSHES INTO US FIXED INCOME
INSTRUMENTS. NOT GOOD FOR THE US ECONOMY AND REAL ESTATE BUBBLE
THOUGH.
2. THE CHINESE BUSINESS ELITES GO SHOPPING IN AMERICA: BIG TIME.
THEY START BUYING UP US COMPANIES--EN MASSE! AFTER ALL THE CHINESE
ELITES HAVE THE CASH ON HAND, AND THEY WANT THE CACHE OF "US BRANDS," LIKE IMB, AMONG OTHERS. A LOT OF AMERICAN WORKERS ARE GOING TO HAVE CHINESE BOSSES BEFORE THIS "ANNUS HORRIBLIS" IS OVER! BET ON IT.... THIS WOULD OF COURSE SUPPORT THE DOLLAR, BUT IN THE WORST POSSIBLE WAY: WITH A FOREIGN TAKE OVER OF THE US ECONOMY!
3. THE DISCOVERY THAT THE MOON IS MADE OF GOLD, AND NOT GREEN CHEESE AS PRIVIOUSLY THOUGHT! AFTER ALL WE'VE "BEEN THERE, DONE THAT!"
4. ALL OF THE ABOVE OR ANY COMBINATION THEREOF.
It should be noted that ALL OF THE ABOVE are in some way DISASTERS for the American Economy and the American Public LONGER TERM, (Boo, Hiss, Longer-term? Fuggetabotit! Wad-R-U a Commie!).
BUT THEN AGAIN; A RISE IN GOLD IS NOT EXACTLY A HEALTHY SIGN FOR THE
US EITHER.
BUT WITH THESE "DUALING DISASTER" SCENARIOS---THE BEARISH CASE FOR
STOCKS IS ON SOLID GROUND FOR THE REST OF 2005.
GOLD WANTS AND NEEDS TO BE ABOVE $500---NOW.
AND THEN? .............Well, ....stay tuned.
