Wednesday, June 23, 2010

Deja Vu and Rule Changes

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More fractal chart porn. We're back at the 1000 range in the S&P 500 and looking all "head and shoulder-y":

So, perhaps we're due for this, courtesy of the 2000-2003 bear market in U.S. equities (daily chart of some action in the 2001-2 time frame for the $SPX follows):

Could it be deja vu all over again? We'll see.

On an unrelated note, I loved Denninger's rant over at Market Ticker related to Fannie and Freddie getting tough with "strategic defaulters." He says it better than I could. Why is this important/relevant?

Because it shows how governments change the rules at a whim. This is what will happen with our monetary system. Savers who hold paper currency will be screwed by decree one day out of the blue. Only the timing is in question. In this scenario, paper Gold holders would likely get royally screwed. It isn't fair, but c'est la vie.

Hold some actual physical metal as a hedge against insanity and the inevitable outcome that characterizes all monetary systems gone awry throughout history. The U.S. has already changed the monetary rules twice in the last century and we're due for another rule change in the next five years or so if the 40 year cycle holds up as I suspect it will.

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