Bear's Lair

Bear Markets always follow Bull markets and a severe stock market correction is long overdue. Bears Lair will spot, monitor and analyze the stock market correction as it develops.

 

As expected the gold price was taken lower to the $1,100 level right on cue.

Neither the US financial press nor the US bank leaders take the sovereign debt crisis seriously.

I have been Banging the Drum in these letters about an eminent major economic and stock market crash since early 2007: A time when Barron's Round Table Gurus were predicting the continuation of the Goldilock

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.

Last week was strong with stocks and commodities moving up sharply. As nice as it was to see a rally, I still have my doubts whether this move has legs behind it.

Now that we are in the thick of earnings season for miners.



GLD - on buy signal.

Ladies and Gentlemen:

After surging 11.9% higher in just 7 trading days, the flagship HUI gold-stock index is starting to recapture traders' attention.

Stick with me on this one. Last night I was reading a 2,300 year old economics book.

The subprime debt issue of 2007 blossomed into a global credit crisis. Likewise, the Dubai sovereign debt issue will blossom into a global sovereign debt crisis in similar pathogenesis.

This report is a mix of both current market action and educational material on how stocks and commodities trend (move).

The past week has seen the convergence of a variety of factors that together point to a powerful rally in gold soon. Thus it appears that we have been too cautious in the recent past.

As the world's athletes gather in beautiful British Columbia for this Olympic Games they are all focused on but one thing, the Gold. As investors we should also be focused on the Gold at the moment.



GLD - on sell signal.

In recent months, the US dollar has been surging higher. This impressive strength is a radical change from last year's relentless grind lower.

Gold performed as predicted in the last update, rallying up to the top of its Descending Triangle before reversing and crashing support at the bottom of the Triangle on Thursday.

Last week was an incredible week for trading the intraday charts. With rising volume and volatility prices began to move up or down for extended periods of time allowing traders to profit from these powerful short term price swings.

Starting a journey into the future with dollars is no better than setting off into the desert with a camel that has no hump

The information revealed this past week suggests that the US's problems are slowing and possibly about to take a turn for the better. At least that's what the establishment would have you believe.

GLD - on sell signal.



Over the last couple weeks, gold and silver stocks have been clobbered. The flagship index that tracks this sector, the HUI, hemorrhaged nearly a sixth of its value in just 8 trading days!

Stocks and metals have been on a steady rise this week. The US Dollar drifting lower has helped to add fuel to the oversold bounce in equities and metals we are seeing.



Stocks - NYSE 65 Minute Chart

A great disconnect exists in the gold market between the exchange futures contract price (the paper price) and the gold bullion paid price for transactions (the physical price).

Price is what you pay...value is what you get
Warren Buffet                      

The past two months have been tough on the precious metals sector. We saw precious metals lead the market higher all of last year until December 2009 when prices plummeted as the US Dollar started to bounce.

In this Gold Market update we are going to "cast our net wide" and consider the outlook not just for gold and PM stocks but also the dollar, other commodities and the the broad US stockmarket.

THE ELITE AND THEIR PART

Let's ponder for a minute. What is money? Looking at an older 1986 copy of The World Book Encyclopedia tells me that money is three things. A medium of exchange. A medium of account.

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The Federal Reserve Bank of New York holds the world's largest accumulation of monetary gold.