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Monday, January 13, 2014

Gold about to break up, india continues to lighten resitrctions

Gold is set to break out to the upside finally this week.
I can't tell right now if it has, but as of Sunday night gold is moving up.
Lets take a look at a longer term Gold chart.

This is good for gold bugs, and if I can ignore the global economy, it in itself is not bad.
It is simply one resource going up, about to possibly break up changing a down trend to an up trend.
Nothing spectacular, but a time to be on the right side of a trade, if it can break out upwards.

Lets look at some other assets, like Oil
Oil has outright flatlined, which is fantastic for every american, and the western world.
The vast majority of this is from fracking, which is an environmental disaster, but has catapulted USA production. Unfortunately the half life of fracking is crazy short compared to normal oil wells.  Which means when all the easy fracking is done, the pressure should shoot oil up, sealing the deal on the next leg down.  I cant tell if thats next month, or 5 years from now, but it will happen.  Anyway in near term, nothing to see here.

Lets take a look at overall S&P 500.

Holly heck batman, thats a great run up,  Lets project forward this run, and see where this goes.

Now here is the rub, there is absolutely no reason why we CANT have the nice multi year rally in stocks for next 3 years, resulting in a 35% gain from here, at about 10% per year.

Really, I mean that, there is no reason why this can't happen or do even better!
But here is the rub, we have a few facts that causes concern.

1) USA and global banks are based on a debt based system.  Japan is by far leading in this debt.  Until Japan falls, the thought is America is OK.  Japan  is the canary in the coal mine.  Again, America could run into troubles BEFORE Jaapan, just conventional wisdom says Japan is first on the critical list.

2) USA investors are at a 27 year high for bullish outlook.  Again, there is no reason why we can't get to 100 year bullish outlook among investors. But a 27 year high on bullish outlook is starting to stretch the statistical envelope.
3) Jobs just simply....suck.  This is a strange one. I think in 20 years there will be 50% unemployment.  Sure there maybe many considered employed reducing this number, but many will be jobs the government 'creates' through BS work.  Think of person a digging a ditch, person b filling in a ditch, alternating days.  While this may seem like work, its really just non-vent work.  In immediate future, there is no denying, new jobs blow for average pay and overall full time employment.
4) Federal reserve bank chair has changed to Yeltsin.  Make no mistake, I think the fed will always ease money constraints to promote growth.  But Yeltsin is new, before her decade reign can begin, she may need to 'show toughness'.  The parabolic growth in stocks probably needs a good punch in the gut to show she means business.  Not long after that happens and she is reamed through the press, she will step in line with bernanke and resume the growth.  Bottom line is we have no clue if/how the fed changes, but we do know there is a new sheriff in town.
5) USD may be in trouble...but not yet!
The doom of USD has been in the air since nixon pulled off gold standard.  Its pretty easy to say that doom of USD is over-hyped.  But that's not to say USD can't have trouble ahead.  While ther is no clear direciton, USD is looking like at a cross roads soon.

What I can tell from facts above is gold is POSSIBLY about to break up.  The overall market is looking toppish, both from graph and from a new sheriff in town, yeltsin.

India is lifting restrictions on gold, I think that will pop gold up.

Anything in marijuana stocks may explode up as USA starts to legalize drugs.  The stocks rallied and since crashed, may be a good time to buy some lottery tickets.

I REALLY Do not like stocks like Priceline, Amazon, and a bunch of other stocks with a 4 year drive straight up here.  Proceed with caution.

this is shaping up to be an interesting week. Good luck to you.

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