Mad Max Here We Come
Last March (2014) I wrote to Patrick and Andrew that gold, which at that time was $1375, for the rest of 2014 would have a range between $1130 to $1440. The rest of the year brought a high of $1390 and then the low before the Swiss vote of $1132. For years I have been on this show saying gold would not hit its major low until Sept. 2015. We’re getting closer to that time and now people need to be watching the outperformance of gold vs. all the Components of the USD index. This is important going forward as I remain very bullish on the Dollar. Presently gold is ripe for a selloff, but selling waves will continue to see big demand step up. PATIENCE.
During the October stock market selloff I said that we have a short term selling climax and then the stock market would go to new record highs, but those new highs won’t last long. And the selloff after those new highs could be quite serious. That has panned out, so what’s likely now. As I’ve stated repeatedly we are in a major stock bull market, but we will see several huge down waves. Those claiming a stock bubble and crash are out once more, but they’ll be wrong once again. However, after a short term rally starting soon, there is currently a lot of downside risk for stocks – 20 to 25% starting this summer.
By this fall the complacency about the massive global debt binge will begin to be shattered, as peripheral European Debt – Greece, Spain, etc. will begin to crack. And Junk Bonds will implode, which leads me to the last item – OIL. I am astounded by the continued complacency about oil. Oil is not remotely close in time nor in price to any major bottom. What is happening in oil will have huge global ramifications – Middle East, emerging market debt, US employment, Texas, Oklahoma and the use of leverage in Shale Oil which will hit the huge junk bond market eventually destroying Wall Street banks once again. I will emphatically state that oil has much further to fall – $35/barrel minimum. And this will drag on for years.
The next economic blow up will dwarf 2008. Mad Max here we come.