Weird Market Action? Sit on your bullion.

Gold-stater. Confused by the market? Don't be it's simple according to Market Watch.

NEW YORK (MarketWatch):

— U.S. stocks surged Friday after an upbeat reading of a key measure of U.S. manufacturing helped Wall Street cap its best week in nearly two years.

The catalyst for the gains was the Institute for Supply Management’s index of manufacturing activity, which climbed to 55.3% in June from 53.5% the prior month. The gauge had fallen sharply in May.

The ISM report “suggests that manufacturing has indeed picked up — it just did so in the latter half of June rather than its beginning,” said Dan Greenhaus, chief global strategist at BTIG LLC.

Separately, the Thomson Reuters/University of Michigan consumer-sentiment survey worsened in June, falling to a reading of 71.5 from 74.3 in May.

U.S. construction spending fell 0.6% in May from a revised 0.6% drop in April.

OH, I GET IT NOW!

The pick up in manufacturing activity rose from 53.5 to 55.3 (within the margin of statistical insignificance) and that completely overshadowed a drop in consumer sentiment, construction spending - and not to mention a contraction in real disposable income and retail sales, as noted below.

So, let's see if I get this. Manufacturing comprises about 14 percent of our economy. Consumer spending comprises about 70 percent of the economy.

Yet, according to Market Watch, a tiny rise in manufacturing statistics vastly overshadowed a plunge in Consumer Spending, Consumer Income, Consumer sentiment and a rise in all major inflation gauges.

Shadow Government Statistics
Analysis Behind and Beyond Government Economic Reporting:

June, 30th, 2011

• Real Disposable Income on Track for Second-Quarter Contraction
• New Action to Depress Officially Reported Inflation.

June, 24th, 2011

Major Downside Revisions to GDP Revisions Loom As Economy Slowly Slides into a Double-Dip

June 16, 2011

Housing Starts Remain in Downhill Bottom-Bouncing

June 15th 2011

Economy Falters as Inflation Surges

May’s Annual Consumer Inflation: 3.6% (CPI-U), 4.1% (CPI-W), 11.2% (SGS)

Real Retail Sales Contracted in Both April and May

Stalled Industrial Production Continued

Yet the Market did soar this week. And gold got hammered.

Do you know why? Because in the very short run the high frequency, high volume trading at the Big Banks can push the markets anywhere they want. Over time the markets will end up where the fundamentals dictate. But in the short run the Banks will have their fun. That's why to survive a bull market in Gold you need most of your core holdings in bullion.