Has Anything Changed?

I thought not. The Dow/Gold ratio kept falling from 12 to 7.5, while the Gold/Silver ratio fell from the 80s to the high 60s. So long as you owned more silver than gold or stocks you were on the right side of that trade. We kept buying Silver below our value thresholds, along with some Silver equity interests, and covered our Dow Short position at 8,000, with no intention of buying stocks until fundamental, technical as well as sentimental odds are squarely in our favor.

“If it’s not another depression, then you should be buying” they tell us. And we have reasons to believe that although the recession will be severe, pricing in a full blown 36-month decline is another story altogether.

But then we get a reason. Reuters reported Friday “Soros sees no bottom for world financial collapse. Now here’s what worries me. This is not a man who uses his words lightly, once betting over a Billion dollars on the fall of the British currency.

He claimed that the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis. He cited that turbulence is actually more severe than during the Great Depression, and compared the current situation to the demise of the Soviet Union.

That’s downright freaky to consider! We’re talking the possibility of a Dow at 1,400, the Dollar being essentially worthless, not to mention what could happen to Europe, Japan, smaller dependent countries and their currencies.

Nevertheless, the general sentiment seems frustrated, yet unbelievably calm, possibly due to the extent of the government’s intervention/irresponsible “stimulus”.

Gold hasn’t “blasted” to $1000, but has gradually and calmly risen, showing more level-headed investment buying than reckless speculative parabola. So if people aren’t panicking yet, what would do it? Dow 5500? Gold 2000?

One thing we have seen rhythmically throughout every major market cycle: Euphoria at the Top… and Panic at the Bottom.

Could this be the end of the financial system as we know it? Of a world once dominated primarily by the interests of the United States? Maybe. But markets have not recommended that as a possibility, even in the slightest degree, for if they did, we would have to back up the truck and buy!

People still seem far more greedy than fearful, and that makes us fearful. We have a long way to go!


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