-- Posted Tuesday, 8 January 2008 | Digg This Article | Source: GoldSeek.com
Gold Stocks are up 1,000% since 2000 and Oil Stocks 300% since 2003. Yet the public remains conspicuously absent. Not for long if the Fed has anything to say about it…
Around the end of 2005 a funny thing started to happen!
Chart 1 - Homebuilders have CRASHED
The once HOT homebuilding stocks failed to better their highs from earlier in the year and ever so quietly began to roll over and sink lower.
But the vast public did not notice!
Nope, housing prices were still rising and markets such as California and Florida were hotter than ever.
By the beginning of 2007 the housing stocks had received a fair clip but still nobody seemed worried. Then another funny thing started to happen:
Chart 2 - Banking Index down +30%
A major beneficiary of the mortgage boom – the banking establishment – also started rolling over. 2007 was the year we learnt about CDOs and SIVs.
Fast forward to the present and Retail Stocks have been on the chopping block, commercial property is slowing and Friday’s weak ISM manufacturing data provides final confirmation that the business cycle has turned decisively lower.
Now if this were a normal economic cycle and the economy did not contain the debt excesses it does, we would get a natural economic recession to cleanse the system and pave the way for the next boom.
However this is not your grandmothers economy!
Excess monetary stimulus has caused speculative bubbles such as the above to emerge and brought about a situation where a cleansing recession would topple the debt mountain and sweep us swiftly into a Depression!
So what’s the Feds answer to preventing a recession? Stimulate more, print more and blow up a bubble somewhere else. But for heavens sake, don’t let anything go down (unless it’s the Dollar).
So where will the next object of mania be?
Well we know it won’t be any previous object of mania since the public has been sufficiently burnt so as to stay away i.e. tech and real estate.
It probably won’t be an item which has already been levitated by credit e.g. Fixed Income instruments such as bonds packaged into leveraged derivatives.
And lastly it’s probably something that is not currently well distributed or well known so as to create a potential marketplace.
In our opinion, the next mania will occur in Commodities. Commodities of all types agricultural, industrial metals, precious metals & energy.
Our favorites:
Chart 3 - Amex Gold Bugs Index up 1,000% since 2000 but still not widely recognized
Chart 4 - Amex Oil Index +300% since 2003
But ofcourse you already know that!
More commentary and stock picks follow for subscribers…
This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.
The content on this site is protected
by U.S. and international copyright laws and is the property of GoldSeek.com
and/or the providers of the content under license. By "content" we mean any
information, mode of expression, or other materials and services found on GoldSeek.com.
This includes editorials, news, our writings, graphics, and any and all other
features found on the site. Please contact
us for any further information.
Disclaimer
The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy
or completeness of the information (including news, editorials, prices, statistics,
analyses and the like) provided through its service. Any copying, reproduction
and/or redistribution of any of the documents, data, content or materials contained
on or within this website, without the express written consent of GoldSeek.com,
is strictly prohibited. In no event shall GoldSeek.com or its affiliates be
liable to any person for any decision made or action taken in reliance upon
the information provided herein.
OilSeek.com
