[[wysiwyg_imageupload:2255:]]By JW Jones
The price action in precious metals and oil this past week has been breathtaking. The last time we have seen this much volatility in commodity prices was amidst the financial crisis in 2008 and the early part of 2009. Does this mean we are at the brink and risk assets are going to decline precipitously? Obviously that question cannot be answered with any certainty, but the underlying price action in the S&P 500 has been relatively strong compared to gold, silver, and oil.
Talking heads everywhere are predicting the commodity bubble has burst and pointing fingers at excessive speculation in silver and oil. Margin requirement changes in silver futures have been fingered as the primary catalyst for the nasty sell off. Silver had gotten way ahead of itself in terms of price and parabolic moves higher are usually followed by parabolic moves lower. For silver buyers on Friday, April 29 a painful lesson has been learned as their investment has declined more than 30% in 5 days.
[[wysiwyg_imageupload:2255:]]By JW Jones
[[wysiwyg_imageupload:2246:]]By Axel Merk
It's payback time for Ben Bernanke, the chairman of the Federal Reserve (Fed). In some ways, this should neither surprise, nor scare anyone. Unfortunately, however, it might do both.
[[wysiwyg_imageupload:2248:]]By Gary Dorsch
One year ago, few traders were expecting a pullback of any significant degree, with the Dow Jones Industrials perched above the 11,000-level. Traders had become complacent after a year long advance, in which the Dow Industrials had risen +70% above its bear market low, while retreating only twice for minor pullbacks. Traders stopped thinking about potential dangers, and started believing the risk of another bear market had vanished. Yet simmering beneath the surface was the specter of a sovereign debt default, rivaling the size of Lehman Brothers', and threatening the world economy with a "double-dip" recession.
By Richard Mills
When looking for a dominant investment theme the approach I take involves looking at global or big picture conditions. I study trends, read the news, basically watch and listen to what’s going on in the world. What I’m looking for is something so powerful, so dominant, it’s going to be my guide to where I invest – I focus on the factors that I think will drive headlines going forward.
[[wysiwyg_imageupload:2227:]]By John Mauldin
I have written repeatedly about the Endgame in the weekly letter, as well as in a New York Times best-seller on the same topic. By Endgame I mean the period of time in which many of the developed economies of the world will either willingly deleverage or be forced to do so. This age of deleveraging will produce a fundamentally different economic environment, which the McKinsey study referenced below suggests will last anywhere from 4-6 years. Now, whether this deleveraging is orderly, as now appears to be the case in Britain, or more resembles what I have long predicted will be a violent default in Greece, it will create a profoundly different economic world from the one we have lived in for 60 years. This makes sense, in that the prior world was defined by ever-increasing amounts of leverage. Outright reductions in leverage or even a significant slowing of the rate of growth is a whole new ballgame, economically speaking.
[[wysiwyg_imageupload:2220:]]By Brian Pretti
In recent discussions we've highlighted the fact that for the average US consumer, the cost of living is clearly rising. Without question, we know the Fed has been hell bent on "reflating" the US economy. In the globalized financial markets of today, Federal Reserve actions no longer primarily influence the US alone, but rather have consequences across worldwide asset markets. Certainly a part of the Fed's focus on reflating the US economy has been to overtly debase the US dollar via unprecedented money printing. And if dollar debasement is a proper measure of Fed monetary policy success, then they've hit it out of the park with this one as the dollar has recently been flirting with all time lows. That might be great for US export driven companies, and has been as per their earnings growth, but for the average US consumer so far US Federal Reserve policy has driven up the cost of household energy and food necessities while wage growth stateside has languished.