Update; S&P500 down 1.83% through vital 1500 barrier. Slide commencing? Feb 25th.
"I hope they believe you, I have been saying it for months .. House of cards, thanks
. I pulled out / put the $ toward my mortgage, learned my lesson .. owe very little, banks, insurance companies in everyone's pocket .. few months all paid up .. drop the red tape
I think events have moved further since you wrote them as the Fed seems to be moving to ,or rather there is an indication from them, of tightening and and end or diminution of the money printing/bond buying. China ditto, which has spooked the market and CNBC financial commentators advising the situation has now changed and best to get out of shares. If the major downturn comes the 1500 on the S&P500 will be the golden rule it seems-interesting times.
NB I don't think runaway inflation is possible nowadays with the Fed having major tightening mechanisms and the will to use them unlike previous examples in history e.g. the German post WW1 experience, or even the Volker deflation."
The interesting aspect of all this is exactly what relevance charting has. Here we have a classic instance of a resistance point (this one now at 1500 on the S&P 500 index) being reached twice in the past with subsequent massive collapses. The usual line is "past performance is no guarantor of future performance".
As the chart shows we are at a triple top, basically bumping up against resistance. A triple top is rare, and a 50/50 proposition unlike a head and shoulders formation which indicates weakness in the shoulders and no follow through with the head having broken above the first shoulder.
If there is a breakout to the upside with of a triple top, which there very well could be with the Fed pumping QE3, stocks could explode exponentially which would indicate runaway inflation. Gold will benefit in this environment.
Should stocks turn down and head for the 2008 low of 666, gold will sell off as fast as stocks as the markets will be forcing us to bite the bullet and will overwhelm the Fed's pump-priming tomfoolery which has artificially sustained used to this point.
This will indicate the long-wave deflationary cycle has re-asserted itself and no amount of money printing will matter. This is a recipe or a result of war.
this presages the S&P will take out its 2008 low of 666 -- adjusted for inflation. If this happens it will be the bottom of the most vicious deflationary cycle in history and will cut the gold price in half if not more. No one will have any money and will have to liquidate metals to survive. The only thing of true value will be land on which one can survive while the barbarous hoards of city dwellers do what they must to survive.
"The Market Oracle" Financial site is the go-to site
AT THIS LINK for gold bugs and, as a necessary compliment to that to doom and gloomers par excellence.
It makes fun reading for those not heavily invested in the share market and especially for those not influenced by commentators with a barrow to push.
That said there are times when one is brought up with a start with what is irrefutable evidence in the way of historical statistics.
I have learned that as irrefutable as these statistics may be the lesson is that "past events do not necessarily predict future ones" and that is no matter how often in the past that past events actually did predict future ones.
Financial commentator Clive Maund AT THIS LINK has an article up entitled
What Will Happen to Gold and Silver Stocks if the Stock Market Tanks?which in one sentence basically encapsulates all the cautionary comments I made at the start of this post.
Maund states that it is possible that not only will speculators who have been riding the stock market in search of income as the Fed has kept interest rates artificially low be hurt (i.e. Mom and Pop) but the bull market speculators will be "annihilated"
His twenty year Standard & Poors 500 index chart which shows a top at 1500 followed by a massive downturn happening twice before and our being-yes, at exactly the same spot is, frankly scary. Bloomberg updates the chart daily AT THIS LINK
He advises that there will be a high again at some point and looking at his chart it would seem that buying in (if you have any money left) around 600 would be rewarding. That is if the marauding mobs haven't done you in by then of course.
Well, we will see if history repeats for a third time. My reading of the charts looks like it takes up to a year from hitting the resistance level, to the start of the downturn. Lets hope this doesn't come to pass unless cleaning house, and the election of a female "common sense conservative" is the end result, in which case the bitter pill may have a sweet after-taste.
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