Things Become More Serious
Posted November 8th, 2007 by manystrom
in
By Michael Nystrom | November 7, 2007
[Editor's note - the title of this piece comes from Chapter VII of John Kenneth Galbraith's excellent account of the 1929 Crash titled The Great Crash, a book well worth reviewing at this critical market juncture.]
Judging from recent market action - oil approaching $100, gold nearing its all time high of $850, and the dollar setting new all-time lows daily - things indeed appear to be getting more serious. I'll start with the Dow simply because it is the headline number, the one that everyone hears about. Even those who know little to nothing about the market in general are familiar with it from news summaries and headlines. But headlines don't tell the whole story:
With today's 360 point drop, the Dow has broken down through shelf and trendline support in the 13,450 area. The last time the Dow's trendline was threatened, the Fed came to the rescue by cutting interest rates. Those cuts put some temporary juice back into the Dow's uptrend, but had the opposite effect on the dollar, which is collapsing rapidly. The US Dollar index broke through its multi-decade shelf support of 80 and hasn't looked back. How low it will go - especially with talk of China diversifying out of dollars - is anyone's guess.
While the Dow may still be up 6% on the year, the unit that it is measured in is down 13% for the year. So much for those gains - they've evaporated into currency losses. At the same time, notice the Fed's rate cut hasn't helped the big banks, which form the backbone of the global financial system. The banking index is plumbing new depths:
Ever since 1987, the Fed has used the same play from the same playbook: When markets get into trouble, slash interest rates aggressively. The result - until now - has always been the same: Markets have risen in unison, giving the appearance that prosperity prevailed and that all was well. But again, appearances can be deceiving, as the following chart shows. Prosperity appeared to reign from 2000 - 2005, based on the growth of housing.
(Chart courtesy EWI Inc, More housing charts in the 10/2007 Elliott Wave Theorist, click here.)
Remember when housing was a sure thing? Time Magazine does (June 5, 2005):
The stock market may be dragging, but home prices are soaring, fueling a national obsession with real estate. Your house is now your piggy bank, ATM and 401(k). House gawking is a hobby; remodeling, both entertainment and an investment. Folks brag about having bought their home in the '90s the way they used to brag about having bought Microsoft in the '80s. . .
The median U.S. home price jumped in April [2005] to $206,000, up a stunning 15% over the past year and 55% over the past five years, according to the National Association of Realtors. The fact that houses are bought for pennies on the dollar magnifies the windfall. Say you put down 20% on a $150,000 house five years ago. At the average gain of 55%, that's an $82,500 gain on a $30,000 outlay, or a 275% return. . .
Those were the days, weren't they? Too bad they didn't last. Of course there were plenty of signs that it was an unsustainable bubble, as the Time article itself mentions before quickly adding, "But who wants to listen to buzz-kill talk?"
Things Become More Serious
When history is written on the waning days of the American Empire, it might very well say that the final decades witnessed a series of increasingly intense temporary booms, driven by steady increases in debt - consumer debt, corporate debt, and government debt. Eventually, the debts simply became unsustainable. The Federal Reserve's trusty old trick of lowering interest rates stopped working. Markets stopped responding. Everything went into reverse. What the Fed failed to grasp is that printed money eventually reverts to its intrinsic value of zero, and that there is a difference between a lack of liquidity and just plain old-fashioned insolvency.
Look at the Banking Index chart again. More interest rate cuts and money printing won't help these banks, and they won't help the housing sector to recover. The Fed's credibility is all but lost. The endgame is upon us.
Let me close this with the words of Galbraith, who captured something timeless. At the beginning of Chapter VII, he recounts a series of unfortunate events in the history of the NYSE - the crashes of 1873 and 1907, and the day a bomb exploded on Wall Street in 1920, killing thirty and injuring 100 more.
He continues:
A common feature of all these earlier troubles was that having happened, they were over. The worst was reasonably recognizable as such.
The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that, there would be still another. In the end, all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains...The bargains then suffered a ruinous fall. Even the man who waited out all of October and all of November, who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks, would see their value drop to a third or a fourth of the purchase price in the next twenty-four months. The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable...
Re-reading this passage, I wonder if a similar fate awaits us as well? We've already been reassured that the worst is behind us, but many have the feeling that it is still yet to come.
Galbraith's account of 1929 is something to keep in mind over the coming weeks and months as the temptation to "buy the dip" increases. For the last 20 years, investors have been conditioned to understand, to believe and simply to know from experience that market dips, especially when accompanied by Federal Reserve rate cuts are buying opportunities, always and without exception. But as those ubiquitous mutual fund disclaimers say, "past returns are no guarantee of future performance. . ."
Maybe I should just stop there. After all, I think you get the picture. If you want more buzz kill talk, check out the latest Elliott Wave Theorist.
Bookmark/Search this post with:
- New charts, news and financial links -- both the bull and the not bull -- updated each day on the homepage.
- For more articles like this, please see the Archive
- If you would like to be notified of updates, and new articles, subscribe to my low volume announcement list
Market Updates:
The end of the world...
...in practice is an individualized phenomenon, rather than a group event. Market commentators subject to Freud's principle of Thanatos will always see an imminence of impending doom for humankind, in aggregate. On the other hand, those subject to the principle of Eros cannot but expect only the rosiest of outcomes. Experience tells us that following a more moderate course than either of the extremes is more personally satisfying, over time.
Since markets continually discount the future, and events cannot be discounted more than once (unless there are further, significant developments), market "news," as reported, must be generally taken with a grain of salt. Hysterical alarms for an approaching "perfect storm" or some absolute finality are usually of little importance and are largely forgotten as soon as some new hazard is identified. While rocky days may be ahead as all of the present crises are being sorted out, I feel that we are very far from the end of the world, or of Western civilization, as we know it.
Immediate weakness in the SPX (P&F 3x0.5% analysis) was indicated by two high pole reversals (in Oct & Nov) signifying distribution. Also, a bearish, triple bottom formation (which soon morphed to four) was set up over the same period, with an action point of 1488 or below. Downside price objectives from several horizontal counts are 1480, 1394, and 1003 (this last number being derived under the assumption that all of the price action between May07 and the present constitutes a single distribution area). My proprietary econometric indicator suggests that a major, bear market inflexion point for the SPX is 1425 and below, and that a buying zone will not present itself until somewhere around Apr08. To make matters worse, the year-over-year change of the SPX to nominal GDP ratio has turned negative from a seriously overbought level. Since this ratio is a second wave failure, the ensuing market decline could prove to be very nasty, indeed.
Presently, none of the INDU, COMPQ, UTIL, and SPX indices have given a major-term sell signal. However, the TRAN is in process of breaking down from the strain of persistent, elevated fuel prices. Because of the current technical position of the above indices (excluding TRAN), it is possible that there may be another short-term attempt at new highs for the SPX. If that happens, it would likely be more suitable to sell into rallies and ignore the dips. No long positions in this index should be held upon a break of the 1425 level.
Even though a hard winter may come, a refreshing spring is never far distant. Major market declines afford the best opportunities for major profits. It is at these times when we can truly buy low -- which is one-half of the time honored, successful equation!
mostly i agree
except that, if the market breaks down here, there will not be a low of any significance until the fall of 2010. we will be in the same position as we were in late '99 early '00 in the markets, ie, a peak in the 4 year cycle. in which case, we're in for some bad times.. not sure it will be as severe as 2000-2002 drop in the sp500.. but, think of something in that degree.
For the curious about Nestor
For those of you new comers to the site who are wondering who Nestor is: He's a friend & sharp market watcher who checks in from time to time. In the spring he sent me his forecasts, that you can check out here:
http://www.bullnotbull.com/archive/nestor-1.html
and here
http://www.bullnotbull.com/archive/nestor-2.html
There is also a discussion here:
http://www.bullnotbull.com/blog/?p=116
(Note: Even though it looks like you still can add comments on that thread, it is closed. Sorry - it is a software glitch. Come back here to add comments if you'd like)
From my observations and interactions with Nestor, he knows his stuff and is worth listening to.
Michael
thanks for the kind words Michael
just looking at the currency charts, pretty good calls on all of them, with the loonie and AZ$ being the strongest. correct on gold, but the market consolidation i though would happen didn't occur. though, with the abrupt drops we saw in Aug, it was probably prudent to have been out.
Too much gloom and doom, bro.....
It's a little over the top. If you really believe all this, show me your short positions on a real brokerage statement. Put your money where your mouth is, bro.
We've had a bubble, it popped. Citi and Merrill and the others made some pretty big mistakes. Why they had those mortgages I'll never figure out. I didn't own any. But they'll survive.
Look on the bright side....you can buy that house soon, at a price you can afford.
You want some good advice. Buy oil, iron, copper and nickle. The dollar is dropping to put us back in the game. That's the plan. Just avoid taking European vacations.
Jeff Kassel
the dollar dropping..
"The dollar is dropping to put us back in the game. That's the plan. Just avoid taking European vacations."
is going to put you OUT of the game, and into the poor house. best of luck if you think a declining currency is good for your country. it's the quickest way to the 3rd world.
The Super Global Depression
Actually history really does repeat itself. The reason so many of us who go to this site have our heads screwed on straight is because we bother to view historical graphs and historical financial turning points in history.
Let us not forget that the Federal Reserve is neither federal or a reserve. In fact they are a private corporation with a private stock. When you see them get into trouble with their own (Citigroup) you know things are bad.
The mainstream media, Fed's and Whitehouse spokespeople and others continuosly want consumers to not be alarmed. They spin the truth and tell flat out lies claiming that the economy is somehow going to rebound or that we have seen the worse, or it will not get much worse. Let's put out some heavy truth here.
The same criminal elements of our government who allowed Pearl Harbor to happen, killed President Kennedy, orchestrated the attacks of September 11th, 2001 and numerous other things are still in power. They work behind the scenes and you and I should realize that they are the ones who created this current financial situation by using their mass propaganda tools (mainstream news) and loose lending to propel the American people to absolute doom. While some may not agree with the above first sentences I think we should be aware of the following facts:
1.) Americans owe more money than ever before, more than even before the Great Depression and the peak of it.
2.) American savings account rates are negative, and have been, for the first time since the Great Depression.
3.) The average year to year income is actually falling.
4.) The real rate of inflation is 13.6% conservatively.
5.) Precious metals is serious undervalued.
6.) The Canadian dollar recently rose to its all time high to the US dollar.
7.) Globalization has sucked out most of our good paying-good benefits jobs.
8.) Many Americans are working multiple jobs to make ends meet.
9.) A good deal of Americans have their credit nearly or completely maxed out. Quite a few are unable to pay their bills on time.
10.) Foreclosures are up and housing starts are down.
Major homebuilders have an average of a 50% cancellation rate on homes that were supposed to go up. Taxes are on the rise and many small businesses can no longer make it. In many areas of the country, especially Michigan, jobs are scarce and becomming low paying do to increased competition. What do we have going for us in this economy?
Nothing...
All signs point to a disaster that will make the Great Depression look like a walk in the park. We are in serious trouble and I don't believe that we or the Fed can stop it. The longer before it explodes into turmoil the harder we are going to crash.
Why would they allow this to happen?
Well many internet-savvy Americans have come to the conclusion that 9/11 was an inside job or at the least that there are many unanswered questions. If you would consider for a moment the results or outcome of those attacks and other things that have taken place in the past several years.
1.) Our Constitutional rights will be suspended if a National Emergency is declared. (i.e. martial law)
2.) Congress has no continuality of government if a National Emergency is declared. (That's right, we have a dictator running the country.)
3.) Cameras, RFID, checkpoints, many security measures, increased police force, very large private army force, prison camps, new laws (Patriot Act, Military Comissions Act, John Werner Defense Authorization Act) are in place and could easily be used against ordinary citizens.
You should realized by now that there is a serious threat of the US attacking Iran. Under what pretext could they have to attack Iran? Perhaps another false flag event (like 9/11)??? If so, they could blame the terror attack on the total collaspe of the economy instead of the policies of Alan Greenspan and the Federal Reserve. This would allow them to be our saviours and come out with the Amero, paperless currency (like the Visa commercials) and roll us into the North American Union while stopping the one last thing in the New World Order's way, the republic of the United States of America.
You see America, in my opinion, seems to be the final piece in a game of chess. We are the last move they have to make before having the entire world under their control. They are about ready to checkmate America and we will not be rebounding. Instead the police state that has been funded by our tax dollars will now enslave us. Remember the new bankruptcy laws that was passed recently? How long before owing money and not paying becomes a crime? Slave labor is ahead, indeed.
It is not too late as of this writing to investigate each and every claim made in this blog posting. You can, and should, investigate and not take my word for any of it. I posted no links for a reason, if you are really going to take action on something you will most likely not be a lazy person and will verify the contents of this posting. If then, after reaching your own conclusions, you agree with my posting for the most part then you will activate a plan. Otherwise by posting links to back all of this up, and wasting over an hour of my time, will do no good. Those who wouldn't check in further to see if what I said is true would most likely not take action. Sorry about that rant but I want to make myself clear that this is my personal conclusion to our current crisis, now here is my personal advice, take it or leave it.
I would first recommend relocating to another country and do at least secure your second citizenship and home quickly. However, most people cannot afford or have the means to relocate so for everyone else:
1.) Stock up on things you will need, absolutely need. (Clothing, food, water, etc.)
2.) Diversify your savings and retirement moneys well. Keep a reasonable amount in hard assets (gold, silver, etc.)
3.) Warn your friends and family, don't let them find out the hard way. They might be able to help you out in the near future.
4.) Try to pay off all of your debt. Don't risk a debtor's prison or mandatory service.
5.) Sell unimportant items if you come up short on cash.
6.) AND MOST IMPORTANT: Accept Jesus Christ as your personal Savior. Truly repent and believe, read the bible and pray, live a righteous and holy life, do what you know is right.
The Super Global Depression
I agree with just about every statement and conclusion in this post. However, I have one question....if the Illuminati plot is for World Dominion.... how would relocating to another country help? Won't it be the same everywhere? Aren't the chemtrails being spread everywhere? The food supply poisoned everywhere?
I would add one more suggestion to those savvy folks who know it's coming. Learn how to grow your own food. If you don't have land, learn how to grow food in containers - learn how to compost your waste (whether in containers or in piles in your backyard, so that you can renew your own soil without benefit of chemical enhancements. The original concept of Tithing was actually about keeping the soil rich in nutrients. The growers were to leave 10% of their crops on the ground to rot back into the ground and replenish the soil.
Another suggestion, don't give up your guns. You'll need them to protect yourselves & your food.
Finally - Pray. Pray for your enemies, pray for families, pray for enlightenment for all.
Lets not forget that Peak
Lets not forget that Peak Oil is happening now or will be happening in the next few years. That will turn this "storm" into a "perfect storm"
The Super Global Depression
Well it depends on how you look at it. Yes when the economy finally fails the whole world, under the NWO, will be affected. However will the police state be as bad in the first couple of years in another country? Eventually it will overtake everywhere but I think America is in for more than just a financially collaspe, more like a repeat of Nazi Germany on steroids.
Wake up Americans and speak truth. Ignore mass media and go to the alternative.
the situation today is completely different
Michael, excellent piece which I completely agree with. And, even though I'm not an economist, I've seen the writing on the wall for about 4 years now (I was late to realize how severe a situation we're about to enter).
Nestor, here's something that might sway your opinion -- things just aren't the same as they have been in the past.
Possibly More Good News for Gold Bugs: Sentiment Remains Lukewarm
(...)
Via: Seeking Alpha:
John Dizard, writing in the FT Monday, (’Treading the foothills of a gold bull market’ ) outlined why he believes that we remain in the early stages of the gold bull market with a long way to go yet. Primarily this is because the mass of investors have yet to partake in the gold bull market and because the Fed is going to have to reinflate further which will be bearish for the dollar and as gold remains an important monetary instrument it will be bullish for gold. “So, even at about $800 an ounce, the real gold bull market has not begun.”
Despite gold reaching new record 28 year highs above $800 the sentiment towards gold remains lukewarm at best. Most of the UK, Irish and international financial press and media barely covered or ignored this significant development at the weekend. This, and the fact that the investment public remain unaware of the gold price and the merits of investing in gold are classic contrarian indicators which show that gold remains in the early stages of its bull market. When gold is covered as headline news in newspapers on a daily basis and articles appear regularly about the merits of investing in gold and how to invest in gold, then it will be the later stages of the bull market and an indicator that it may be time to sell. When stockbrokers start telling their clients and the wider investment public to buy the gold ETFs, it will be time to sell. When there are gold and commodities supplements alongside property supplements in major newspapers it will be the time to sell. When the topic du jour on the dinner party circuit is “how great my gold investments are performing,” it will definitely be time to sell.
Bull markets end in mass participation and mania and we are a long way from there yet. Besides this obvious lack of animal spirits and wholesale bullishness towards gold, it is also important to remember that gold remains undervalued. Gold will have to at least reach its inflation adjusted high of $2,200 per ounce (as oil and many other commodities have already done) before it could be considered fair valued or over valued.
Boris Sobolev of the Resource Stock Guide wrote perceptively: “What if, however, we are wrong and gold is now, in fact, making a final spike to its all time high of $850 or higher. The aftermath, as after the top in 1980, could be severe and it would be time to sell? Is this a real possibility?”
No, the situation today is completely different:
• In August 1979, Paul Volcker became the chair of the Federal Reserve and started to fight inflation by radically raising interest rates. Today, Chairman B. Bernanke, in an effort alleviate the pain in the ailing banking system, is aggressively lowering interest rates. • 28 years ago, the United States was the biggest creditor nation in the world. Now, the opposite is the case – U.S. is the largest debtor. This, along with the Fed policy, is causing the dollar to fall to historic lows.
• Gold may appear to be overextended but this is not the case in real terms. In fact, gold should be around $3,000/oz in order to reach its inflation adjusted highs. Only then will there be a real reason to worry about a possible end of the gold bull market. We reiterate that the gold bull market has a long way to go. Don’t be afraid to miss the boat – there are many opportunities ahead. Hold your positions and buy the dips.
HUH?
Nester...WTF?? Are you paying attention??
Michael. your right this time.
Last year, when i first ran into your site, and posted, i was very critical. I was sure the market was going higher, and maybe was blunt about my views. I stated, that the earliest the market could peak, would be in one year.
I'm going to make a few predictions.
1. the stock market today, is in the same place it was at the end of '99, early 2000. at a PEAK. we're going to get 3 years of weak markets now. there has been too much damage to housing, banks, the dollar, etc etc. all signs point to a US recession, if not already under way, then by spring it will be very obvious. the DOW will go back to re-test 10.000, if not lower by Oct 2010.
2. after being bullish on gold, and oil, and bearish on the USD... i think those trends will reverse. the universe is now BULLISH on gold, BULLISH on oil, and BEARISH on the USd.. i think we're at a point where gold will now drop, to the $600 range, Oil will back down to $60-70, and the USDX will rebound to the low 80's. this will take approximately 2 years.
best of luck everyone.
Nestor
Nestor----What is the basis
Nestor----What is the basis for your #2 prediction?
well..
you see extreme bullishness in gold and oil, and extreme pessimism in the dollar. i think now, everyone is on the bandwagon with the current trends. back in April, when Michael posted some of my work, there were people laughing at the analysis. but right now, i think everyone believes that these trends will continue. just today, i got an e-mail from someone i know, who scoffed at me re my gold and dollar predictions, telling me that I was right, and the melt down in here and now. someone who was completely against those ideas months ago, has converted. and look at the previous article Michael posed, the analyst, for the first time in his life, turned bullish on gold. Gold has gone from $240 to $840 in 6 years, and NOW, this analyst is telling his clients that they should buy gold.
technically all these markets are extremely over-stretched, gold, oil, the dollar they have all travelled a great deal, in a short period of time recently, after moving in their current directions since '99/'01. price spikes and extreme pessimism (in the dollar)/extreme bullishness (in gold,oil) come at the end of long moves. cyclically, gold has an 8 year cycle, which began in 2001. Gold has made momentum lows every 2 years, and that's what happened back in Aug. I now believe, that should gold turn down from here, we will have a peak in the 8 year cycle, and see gold have the biggest correction since the move began 6 years ago. the same with oil here (different cycles). and if this occurs in gold/oil, then the trend in the dollar must reverse.
granted. i still believe that gold will be higher 5 years from now (and silver and oil, and the USD lower). I would consider what is about to happen, and counter trend moves.. corrective moves against the larger trend.
BUT... i'm not going to sit here, holding gold/oil stocks, and watch gold drop to $600 (area of support where i think is logical to reach), or oil down to $60.
finally, i think the US will be clearly in recession next year. this talk of 3.9% gdp growth for the last quarter is a joke. housing has collapsed, oil is nearly at 100$, gold at 850$, the USD at decades lows against pretty much every currency, the US banks and brokers getting absolutely decimated, and the US stock market topping out, and about to tank.
N
Intriguing line of thought from Nestor
Nestor, you're making an intriguing point on gold going back to $600 (and oil back to $60 with the USDX moving up to the lower 80s, but I'll leave that aside). In an earlier comment you made here (on Oct 25, below A Time To Conserve, Part I, here on BnB) you went even as low as $300 for gold. Now, I'm not mentioning that differnce for the apparent inconsistency (there may be good reasons why you changed your mind), but rather for the concept behind it, which I think deserves some serious consideration - I for one hadn't read it before. To quote your earlier comment:
"Consider that in 1910 (pre Federal Reserve), the average house price was $7000 or so. Gold was $20/troy oz. That's 350 oz of gold to buy a house. [... Nowadays,] I think housing is worth maybe $90K nationwide and gold is worth $300 - $320."
You didn't mention what landed you on those particular two price levels, but my guess would be you assumed an overall average historical economic growth of 2,5% real growth per year (which would seem to be a reasonable assumption, as per one quick reference I found at http://econ161.berkeley.edu/macro_online/ms/ch5/Chapter_5.pdf, page 14).
Interestingly, if a sustained 2,5% growth is the assumption, then that works out into 1200% after 100 years.
And pronto: 1200% x $7000 equals $84.000, so roughly your $90.000 house, whereas 1200% x $20 equals $240, which perhaps very, very roughly equals your $300 gold.
Now, what I wonder (even if the 2,5% wasn't the idea behind your $90.000 / $300 at all) is whether this starting off and interpolating of the 1910-$7000/$20 base is a valid line of reasoning in order to establish what the price of gold and of a house should 'really' be today? (I.e. if it hadn't been for the Fed and all the mess & inflation it has created since it came into being in 1913.)
IF the idea is valid, that would have pretty horrific consequences. It would imply the upcoming crisis would end in deflation on a massive scale, including a bloodbath among those who thought they would be safe with their gold stacked up to the ceiling. (Yes, me included.)
Yet, moving to the current situation of $220.000 average house and $830 gold (updating your previous goldprice of $760), the house is now set at 265 oz. But if the 1910 situation of 350 oz is the 'natural' ratio for the two, then either the house is currently too cheap - seems unlikely, given the current housing slump. Or, eh, gold is currently way overpriced - seems unlikely too, given it has been manipulated to lag inflation for the last 10-15 year. So either way this line of thought doesn't add up, but I don't see just where exactly the catch is hiding. Was $20 gold in 1910 artificial as well??
The reason you mentioned yourself for gold going back to $300-600 -too many bulls, time to go contrarian- seems unlikely to me. The latest $640-830 uptick isn't everybody and his goat being bullish (if it was the end phase of the bull your average stupid nephew would be talking gold now - and really, he isn't). Instead, it's the permashorts beeing squeezed out by the big money (Chinese, Russian??) who probably also hold the record december gold option calls positions and who have been bidding up the goldprice to get themselves 'in the money', or rather into doubling up their bought gold on the cheap - through options rather than buying at the spot market.
Finally, back to what I left aside at the beginning: why would the dollar suddenly become everyone's favorite again as long as the Fed is jokingly inflating its endless supply over and over and over? The dollar will first have to become (relatively) scarce again before it will be able to rise again.
i don't think i've ever said $300 gold
and i went back, to take a look. i think you've got me confused.
as far as what i think, if gold drops to $550-600, it's a pullback withing a continuing uptrend, and will be a gift to anyone if that happens.
my fear, is that gold will run to $1000+ here and now. (not because i'm not long gold and gold stocks, but because of what it implies for the economy, markets and the usd)
Sorry, it wasn't Nestor's line
Nestor, you're right. The quote I attributed to you in my text above was (the first comment on the Oct, 25 piece) by someone else who didn't enter his/her name. The +second+ comment was yours. Sorry!
But regardless of that mistake, I was interested on reactions on the intriguing point made by 'non-Nestor' (a.k.a. 'NN'...), and pursued further by me in my above commments.
Long way down
I don't pretend yo be a stock guru,but if your not a yuppie spouting numbers about past performance and trends you need to understand this:either get out or buy gold,or any other stock that will go up inversely as the market goes down.I'm not recomending particular stocks,but i did this about 2 months ago and the results have been extraordinary.Again,I,m no expert,but feel this could happen until it collapses completely,which i believe it will.Good Luck Folks.We need it.
dollar
one for the fox, one for the crow, one to rot, and one to grow.
My stocks are up today on a down day. I expect them to gain in the future, no matter what the DOW does.
The price of gold merely reflects the weak dollar. The dollar index was at a low of 72 in the early nineties. It is not at a record low.
I bought a small farmstead for cash; a tractor and couple of implements to go with it. I plan on agrobotics for greater efficiency. Electricity and coal are good investments. Buy utilities.
Big farming is out of the picture. Get away from the city.
The dollar will come back. Investing in gold is useless.
Gold
I'm looking for the link. I'll find it. I will post it when I do.
Here is where gold is at:
"Sometime in the year 1637, a Dutch farmer was in the market for a tulip. Upon finding a bloemist who carried the specific variety of flower that he desired, the farmer entered into negotiations with the flower-seller. When an agreement had been reached, the farmer acquired his flower-bulb. The purchase price that the farmer apparently deemed reasonable for a single tulip-bulb of the Viceroy variety included “two [loads] of wheat and four of rye, four fat oxen, eight pigs, a dozen sheep, two oxheads of wine, four tons of butter, a thousand pounds of cheese, a bed, some clothing and a silver beaker.”1 Such a high price, estimated at approximately 2,500 guilders, for a single tulip was not unusual. During the height of the Dutch ‘tulip mania’ in the seventeenth century, a Semper Augustus, considered to be even more precious than the Viceroy tulip, could bring in close to 6,000 guilders. In fact, tulip prices and the practice of tulip speculation became so excessive and frenzied that in 1637 the States of Holland passed a statute curbing such extremes."
http://bell.lib.umn.edu/Products/tulips.html
one for the fox, one for the crow, one to rot, and one to grow
the dollar index is at an all time low
i don't know what chart you're looking at, but, the dollar index is at the lowest level ever. http://www.mrci.com/pdf/dxc.pdf
Warren Buffet on currency
http://www.freerepublic.com/focus/f-news/1053684/posts
http://www.forbes.com/free_forbes/2005/0110/036.html
correction
one for the fox, one for the crow, one to rot, and one to grow
It was the euro/dollar low in the early nineties. It is now lower.
The US dollar index is at its lowest ever. Thank you.