U.S. Stocks On The Retreat

Unfortunately the very best day to own stocks in May was actually in the very first day of this month. Since then stocks were significantly down more than 6%. If you managed to sell at the beginning of the month and purchase today, you would have picked up some shares at a pretty significant discount. Of course the problem still remains in that now you own those shares again.


If stocks last month were over priced with the situation across the globe, realistically they aren’t in much better shape at a 6% discount. Purchasing them today actually puts everyone in the same ugly scenario in that you now own the same shares in the same horrible market. 


Spain and On-Going Euro Problem


Yields on the Spanish Debt are sky-rocketing while the economy is falling into a deeper recession. Instability in the markets around the world are on everybody’s mind and we can’t help but wonder what will happen here in the states when more severe cuts and blows to the European nations happen. Does Spain need a bailout? According to Keynesian school of thought, the injections are ready for action. The EU has already completed a quantitative easing program, effectively printing more money worth £325 billion and this may be extended again.


Let’s wait and see what will happen short-term between the euro and the dollar. The euro hit a two-year low against the dollar today and forex strategists say there is a growing possibility that the single currency could fall to parity if Greece were to exit the euro zone. CrushTheStreet.com believes the opposite would be true. If Greece continues to bring down the euro zone, then the euro will continue to decline. What is certain though is when things begin to fall apart, investors and debt holders will begin to panic. Anticipating a moment where we see a major blow to the markets on some major headline news is imminent in our opinion.


Silver Is Due For A Bounce


Let us repeat that again, silver is OVERDUE for a bounce. It has been consolidating for the past 13 months and is down by almost 50%. The gold-silver ratio is running into strong resistance at 59:1. This indicates that all the fast money has sold silver and investor sentiment is bearish. This 59:1 ratio is unreal and does not reflect historical and actual market valuations. Not to sit here and bash on gold, but gold is being mined and added to our global supply, silver is being consumed and is getting long overdue for an upwards correction in the price reflecting the mere supply and demand issue. Longer term, we are still in a world where every country is printing money and piling on debt…


Inflation Vs. Deflation


The argument for deflation vs. inflation are both there. The idea that there are some short-term deflationary forces coming in the form of a market crash or something similar is definitely something that might be in the cards. Long-term though, our views are pretty strong that inflation will come inevitably. You can watch this podcast here where the topic is discussed.

Robert Prechter of Elliott Wave International discusses inflation and deflation with GoldMoney’s James Turk in this podcast. Both agree that gold is a safe haven even in both conclusions. Click the link below to watch this podcast.