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Friday, June 3, 2011


One thing I know for sure is that most people are worried. Whether or not you feel you have a grasp on what's happening in the economy you're probably feeling somewhere between uneasy and anxious.

As we approach the end of Quantitative Easing - which is the government program in which they print money to give to the banks to support all risk assets such as the stock market, the bond market, the housing market and the commodities markets - all economic indicators are pointing towards a stalling economy.

Factory orders are declining. Manufacturing is declining. Retail sales are declining. Personal income adjusted for inflation is negative. Employment is double dipping. We get the employment report later this morning. It it's weak - look out below in the risk markets.

The effect of diving risk markets is to wipe out massive amounts of wealth forthe average American - who keeps his and her money largely in risk assets.

What is not a risk asset?


Because gold is a currency - and one that can not be printed. It's supply is finite and known. Only the demand can change. Thus the price can fluctuate but in a much less volatile way than other currencies where the supply can be abused for political purposes - ie to create debt.

Yes the futures market is thin and volatile. But the underlying physical market for large quantities of gold is already separating itself from the futures market. It's wise to buy real physical gold and ignore the vagaries of manipulated paper.

Look at the chart above. (click on it). You can see gold can fall a long way (about 100 dollars) and still not even violate the 1 year chart support line. It's not likely to even fall that far on a deleveraging correction.


Because Central Banks are accumulating and will put a floor under and fall. Hopefully we get one over the next few day.

If we're so lucky: buy it. I will.

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