Monday Feb 18 2013
Mort Zuckerman outlines the grim jobs picture. I cannot tell if the link will work for all since I subscribe to the WSJ, But the highlights are
12.3 million fully unemployed (there's a rhetorical flourish for you)
48 million on food stamps 15% of the population compared to 7.9% in year 2000
11 million on SS Disability, half those have signed on since Obama became President
a drop of 6.4 million jobs since 2007
I note this not to be political but to make the case that this is happening at new market highs. As our scenario plays out the next three years one can only imagine the strain on the social safety net as lay offs grow
A look Back at What to Expect
Oil Gold Silver 2007-20008
The end of bull markets during are marked by highs in commodity prices. These high prices also bring about the eventual collapse. Here the main panel is crude oi. Gold is at top and silver is overlaid with oil.
A top of some significance occurred that July.
Oil Stocks Gold
We substituted the SPX for silver, SPX in green. Stocks peaked first
Then gold peaked
Then oil peaked
Once oil peaked the downturn in all three began with a venegance.
As the markets topped at different times, most observers did not notice the transition. I am not so sure we wil have a collapse this time, seems more like a melt ala 1973-74 but we shall be open to various scenarios.
Now let's move forward five years with the SPX oil gold
So far oil and stocks have pretty much moved together. Gold is lagging and has not participated yet. Regrettably we are not able to extend the chart to Dec 2013 which would be of considerable help.
However we can update the realtionships to track possible tops. This suggests oil and gold have a long way to go.
US Markets are closed today. Gold is quoted in Asia at 1608. At least it did not tumble another $50 last night. I suspect last week was a concerted effort by banks to run gold bulls out of the market. The air pocket drop by gold on Friday looks like a typical bull market correction which is to say furious. Recall the stock market correction of 1987, same idea.
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