Hope on a Rope
Gary Tanashian
Markets
For
my part, I am primarily an investor in a bullish sector - continuing
to add quality gold miners on the buying opportunities. I also
hold, as usual, short term US Treasury vehicles for relatively
safe liquidity. A couple nicely beaten down uranium stocks
have been added recently and I have been successfully trading
market ETF's and stocks such as FTEK and SIMG, mentioned previously in this
letter and/or on the
Chart of the Week. But
again, look at the chart above. The market has changed and if
you are not prepared to watch it closely, you should be mitigating
risk because any rally that comes is likely to face the hang man
sooner or later. Hope will only float so long. As for
gold and silver, they are over bought, no question. But not so
for the majority of their miners. I will not go further into
this sector in this letter because nothing has changed. I will
continue accumulating during corrections. The fundamentals
remain intact for reasons already covered repeatedly and I expect
our targets of 560 for HUI and 230 for XAU to be hit at some point
in the not too distant future. This would be in the face of
near endless hysterics that I hear personally - from some pretty
smart people - that deflation is here.
Think
it's just the US, with its bloated, stinking credit markets melting
down that is in trouble? Not so. The British, French and
Japanese markets have also lost trend. The German DAX is
attempting to hang in there (no pun intended) but is destined to
join its compatriots. The Chinese market is a different
animal, falling hard from its bubble highs in the initial leg down
but holding trend. In fact, the Hang Seng looks like it could
be a buy at the trend line from 2003. As with the US markets,
there is room in many global markets for a rally to test
the breakdowns.
Commentary
Back
in the USA it is clear that the majority are still steeped in
convention and are being spoon fed - like babies in a high chair - the
standard fare served up by the major media, both in finance and
politics. Our guy, Ron Paul is all but buried alive and it
looks like we will get a good dose of Feelgooditis with our likely
election of Barack Obama. I have been a Ron Paul supporter
because he is an economist and of the Austrian school at that.
But I am hopeful that Barack's 'change', if he is indeed elected will embody
something of substance and value. I believe he could be a fine
choice for president from an inspirational standpoint, but we will
need to get the economics nailed down here (see post script
below). Thus far however, he has not said
anything to make me think he is any more astute on sound monetary
and economic policy than his competitors, save Paul. As the
more astute financial commentators have noted, we are likely to get
more of the same 'easy' policies and short term fixes that got us
into this ever-expanding macro mess in the first place. Wash,
rinse, repeat as it seems I end up writing in nearly every
commentary. My personal belief, which played a big role in the
formation of the website in 2004, is that economics is at the root
of all social and political machination. If we screw economics
up how can we expect to get anything
right? No matter who wins in 2008, he or she looks dead set on
enabling more of the same feel-good poison that got us where we are
today.
A final
note; the major media are doing a fine job of telling us how bad
things are - although I'd ask where the hell they were for the many
years that it took for unhealthy yet readily obvious (to those
willing to look) components of this ill-fated Ponzinomic construct
to be built. But is it really that bad? Is it all
darkness and Armageddon financially speaking? To the guilty
funny munny that gamed this thing to the hilt it certainly seems to
be and to the horror of the average American who bothers to open his
or her eyes (late though it is), this funny munny included supposedly respectable mutual
funds, pension funds, investment banks and other fine
institutions. There are yet layers of non-productive financial
engineers left to be destroyed going forward and I have no doubt
they will be, either systematically or in a final burst of
liquidation in the wake of a macro 'accident'. But while the
media is switching back to scapegoat mode - focusing on cartoon-like
negatives as is their charter - there remain many highly productive
and resourceful ventures on the economic landscape. I expect
capital -so well enabled by the Fed - to beat a hasty bee line
toward this productive capability. US manufacturing is not
nearly dead. Nor of course is technology. Going forward
it will be important to discriminate in the way one invests and in
the way one lives one's life. I would hope biiwii.com
can focus on some of the positives now that the negatives we have
harped upon so often are front and center and scaring the daylights
out of the public. The world ain't ending. It's just
that if you were a naughty player in naughty games it sure
feels that way.
Post
Script: In keeping with the theme that things are not all
negative and all is not lost, here is a link to a heroic man; the US
General Accounting Office's David M. Walker. Much as Ron
Paul has been a lonely voice in congress holding Greenspan's and
Bernanke's feet to the fire over topics his peers barely seem to
comprehend, there has been David Walker heading the GAO and issuing
sane advice and commentary all the while. In fact, Mr. Walker
was yet another inspiration for biiwii.com. He has announced
early departure (see the PDF file announcement at the top of the
page) from the GAO in part because "As Comptroller General
of the United States and head of the GAO there are real limitations
on what I can do and say" and "My new position will
provide me with the ability and resources to more aggressively
address a range of current and emerging challenges facing our
country..." Even as the cartoon-like Republican vs.
Democrat (as opposed to real conservative vs. real liberal) public
debate rages on, there are serious and respectable people doing
their part to reverse this mess. The country seems prepared
for change and people like Mr. Walker can help ensure that the
change will have some real economic direction by lending their
voices to the debate.
Gary Tanashian
www.biiwii.com
www.biiwii.blogspot.com
gary@biiwii.com
26 February 2008
Disclaimer: biiwii.com does not recommend that any trading or investment positions be taken based on views expressed on this site. If you speculate or invest it is suggested that you consult a financial advisor qualified in your area of interest.
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