Dow 8,000, Gold 1,500?

Now you say! We’ve already been convinced for months that the Dow had a fat chance of falling below its 2003 Bear low or at least meeting it. But now we see that CNBC is on the same band-wagon. How do we reconcile?

First of all, it is interesting to note that as markets progress from peak to trough, the analysis tends to become both, more conservative and more fundamentally-driven. As oppose to excess optimism and Momentum-driven.

Needless to say, Momentum is far more speculative than Fundamentals. Thus, so long as CNBC and the media pundits continue to use sane, rational analysis to predict further price decreases, then they have my vote of approval.

“Contrarianism” is then translated as he who struggles to think for himself as oppose to along with others, be they minority, or majority. In other words at this point in time I agree with CNBC simply because they have finally gotten it right. However, when panic and capitulation come, and they will, I reckon the media will once again jump onto the Momentum-driven base forgetting all logical reasoning for a matter which only seems far-fetched.

Secondly though, the article has its time frame out of proportion. For instance, it calls for Dow 8,000 – in a month! Now I’m not sure who exactly the “pros” of reference are but highly doubt someone can be so pessimistic as to predict a 28% decline in one month.

Similarly with gold, higher prices, at least to the extent of 1,500/oz will be in order possibly next year. And we may even see a tripling of prices, to the 2,500-3000 area, before this bear market is out.

Once again, you can’t possibly publish an article that is read the world over and expect it to occur, the same way you can’t bet your friend what he’ll do next. He’ll specifically do something different!


I have covered some of my short position as stocks struggle in the red. I am now Short-term Neutral and Medium-term Bearish on stocks.


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