-- Posted Wednesday, 25 February 2009 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Wednesday, February 25, 2009
“Phenomenally accurate forecasts”
For a few shining hours yesterday, anyone monitoring the markets might have believed that all was right with the world. Shares were sharply and broadly higher, precious-metal bulls were getting savagely rebuked, and the Fed Chairman was acting as though he’s got everything under control. Bernanke in fact predicted the recession would end this year and give way to a recovery in 2010 if actions taken by the government lead to some stabilization in financial markets. But as the Wall Street Journal noted online, that’s a mighty big ‘if.” Earlier, we had classified as lunatics anyone professing to see light at the end of the tunnel in 2009. We’ll be more charitable toward Mr. Bernanke, however, since it is his job, as it was Mr. Greenspan’s before him, to obscure the true state of the economy even in relatively good times.
So what of yesterday’s ostentatious attack on bullion? Although a few respected technicians evidently believe it could be the beginning of a serious correction, we don’t see it that way. In fact, we’d be surprised if the selling went any lower than 905.60, the halfway point of the rally from $803 that began in mid-January. That rally was no haphazard thrust, either; rather, it was purposeful and constructive to the extent it peaked slightly above an important high at 1005 recorded last July. That makes the entire rally “impulsive,” which by definition means that it has refreshed the still-dominant long-term bull. If this is indeed so, the weakness we saw yesterday should prove to be corrective rather than the start of a downtrend lasting more than a week or two, if that long.
New York and San Francisco
Meanwhile, and assurances from Bernanke aside, we don’t see even a glimmer of hope that the recession will end this year. If there is one event alone that argues against a return to economic normalcy any time soon, it is the looming collapse of real estate in New York City and San Francisco. Property values in both cities have held up relatively well so far, but this cannot last. If and when these key markets begin to unravel, it will be profoundly unsettling for the U.S. economy as a whole. Looking at an even bigger picture, the global anxieties that have stirred up gold are unlikely to abate. While it was predictable that the central banks would try to hammer bullion down as soon as it poked above $1000, we doubt they can restrain prices for long. Bernanke’s timing helped, since the stock market was extremely oversold and ripe for a short-squeeze rally. But don’t mistake yesterday’s action – stocks up, gold down – for a new reality. It is still the same troubled world, and what we are seeing at the moment is just a little comic relief.
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Rick's Picks publishes a daily trading newsletter for gold, stock, commodity, and mini-index traders 240 times per year. Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers' initials will be used unless express written permission has been granted to the contrary. All Contents © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Wednesday, 25 February 2009 | Digg This Article | Source: GoldSeek.com
