Monday, June 7, 2010
Long Gold, Short Stocks
Which is why I rather enjoyed today. Gold won the clash of the titans and looked strong and rather shiny. Stocks look sick and I am keeping my crash helmet on (and all of my puts) for now. I think it's going to take quite a bit more to wake people up to the fact that the bear market has returned. Nothing like opening the first leg down with a bang to get the message across.
Do you remember the "4 gaps of the paperbug apocalypse"? If not, check the last chart towards the end of this rant. I bring you the next gap in the Dow to Gold ratio:
Greece is plunging deeply into the abyss below the March 2009 lows (16 month daily chart of $GRDOW thru today's lows):
This means Spain, Portugal and Italy are headed the same direction and the rest of the world won't be far behind. Ignore the message of the Greek stock market at your own paperbug peril. As I have been harping on and on about, this stock plunge in Greece is happening while the Euro Index is falling off a cliff! Currency depreciation does not mean stocks go up, just as the last few months prove that a rising U.S. Dollar Index does not mean Gold goes down.
Things look ominous and I think a stock market crash looks quite feasible here. The copper to Gold ratio is already crashing, volume has been heavy on down days, and the TED spread continues its relentless rise:
Anything you read that explains these charts away as no big deal was almost certainly written by someone who said not to panic in August of 2008 because the fed and Treasury had everything under control and they wouldn't let the markets fall further. HAHAHAHAHAHAHHHHHH! We're going down hard in my opinion. I remain black bile bearish on everything right now except physical Gold held outside the financial system.