Friday, November 20, 2009

A Hint Of Trouble Ahead



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We must admit we are somewhat surprised but more so impressed with the performance of Gold this week. Even as the US Dollar held its recent lows and even on days of Dollar strength the price of Gold maintained its daily trend performance.

The last leg up from the October 28 low has been a steep upswing and while the Dollar came in strongly bid this morning and stayed higher for the day all day, Gold was able to make an impressive rally adding $8.50 or more to the previous close by the end of its day.

We are wondering if something is in the wind. Gold continued strong late week but the stock indices were making signs that a correction is at hand. And what we also find rather curious is that 3 month T-Bills fell to a negative yield according to sources. What we fear this may mean is fear itself. Are the markets about to reenter a BEAR phase much like was seen during 2008. There are inklings of this. Some of the financial media was actually heard discussing deflation today. Several if not many of our nation’s states are in deep budgetary crisis. Tax revenues are falling off a cliff and the Municipal Bond market may be ready for a new rude awakening.

The chances that there is something to be made from all this we believe are better than fifty fifty. We could be in for rocky times. Fortunately there is a way to approach such times that futures contracts provide. First of all there is a myriad of products. But also there is the liquidity and the ease of entering and maintaining short positions afforded by the futures markets. This we believe is a rarely heralded blessing.

Good trading to all.


Jeff
CB&S


Futures and options trading contain substantial risk of loss and may not be suitable for all investors.

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