Gold, Silver and Stocks: What does the New Year Hold?

Do precious metal prices reflect economic fundamentals or perceptions of price trend prospects? Silver sells around $30 an ounce and is near a 30-year high. Gold sells for more than $1,400 an ounce. Can gold and silver double from here, with silver already selling for more than five times typical producer costs? (Yes, the prices can double, but not likely.) Just what were J.P. Morgan analysts thinking in June 2010 when, with silver around $18 an ounce, they gave a long-term silver price forecast of $13 an ounce? Were they trying to turn the market?

What Does The Return Of Dow 10,000 Really Mean?


It pays to look at where we’ve been if we’re to understand where we’re going. The U.S. stock market bottomed in the first week of March 2009, beginning a vigorous bounce in the month’s second week. By late March a breeching of the midterm downtrend line suggested significant changes in store. Nevertheless, most members of the general public thought the March rally was nothing more than a dead cat bounce.

Short Covering to Drive Stock Prices Higher


Will the current bounce last? Will analysts keep setting the bar low to help stocks rise? Will beating bad numbers remain the game by which stocks are priced? The future level of stock market indices cannot be predicted because the calculations that will go into future market manipulations are yet unmade.

The DJIA Down 40% at 8,378: Where To From Here?


What a week! The Dow Jones Industrial Average closed the week at 8,378, down 40% from its 52 week high. The NYSE index, a broader measure of stock market pain closed on Friday at 5,247, a numbing 47% devaluation from its 52 week high. Likewise, the S&P 500 is off some 43% from its 52 week high. Regardless of the stock mix in the indexes, the numbers are sobering. What should Americans make of the situation? Is this a time to buy? Hold? Or sell?

Contrarian Theory: Are Americans Ready to Capitulate?


Some may find it ironic that when stock market capitulation occurs in the current bust cycle, even Mark Hulbert will not know except in his rear view mirror — so he claims. Meanwhile, he is helping the American investor understand better than before just what capitulation is, and is not. There is a certain value in this, at least to the practitioners of long cycle contrarian investing.

Americans Angered Over Paulson Bailout Plan


The Paulson bailout plan incensed millions of Americans. Financially responsible individuals were dismayed at the prospect of paying for the speculative improprieties of Wall Street. Some people decided to close stock accounts. Others sent redemption notices to mutual fund companies. As MarketWatch chief economist Irwin Kellner points out, a portion of the exodus reflects “capitulation” — the agony of Americans who cannot afford to lose more money if a market recovery is prolonged.

The Market's Upturn Awaits the Public's Capitulation


The essence of the contrarian position that Mark Hulbert advances is that elitist short players on Wall Street will not relinquish their short trades until the advisors for Mom & Pop investors advise them to capitulate and accept their losses. When millions of working class Americans sell their stocks in a desperate panic, that is when the markets will turn, says Hulbert. By design, Ponzi-style markets turn under these conditions because this is the moment where exploitation is maximized for elites.

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