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The Dow Hit 13,000… Things Are Finally Back!!!
The Dow has hit the 13,000 threshold once again which is definitely going to be a celebrating point for those interested parties who will take the credit for rising securities prices. What is blowing our minds is that Wall Street is in such a disconnect from main street and regardless of whether people have jobs and are spending, the market is going to do what the market is going to do. It’s important to understand that over the last 4 years, nearly $7 trillion dollars have been pumped into the global markets which has barely been able to give people the illusion of a recovery in nominal numbers.
Because of the inflation factor that we see playing out for the next few years, commodities are a place where we see great potential because commodities tend to be finite and all priced against a paper currency that we are not optimistic about. Today, commodities were up with some nice gains. Crude oil was up 1.5% to $105.15 per barrel and gold was up 1.7% to $1,755 per ounce. Look for gold, silver, and crude oil to be setting much higher in the near future. Oil will be an economic wildcard and unfortunately could be the crushing point for many individuals and families who are already living paycheck to paycheck. Many are talking about 5 dollar gas by the summer which could mean diminishing profits for companies and change of lifestyles for many who are accustomed to the present day prices. If further outbreaks of oil disruptions occur in the Middle East, 5 dollar gas could be seen within weeks.
Much of this hype on Wall Street is a knee jerk positive reaction to the mess that Europe is in and their decision to bail Greece out with 130 billion euros which equates to 172 billion dollars. Their goal is that by going into more debt now, Greece will be able to stabilize themselves and be able to crawl out an even deeper hole. Needless to say, this seems very unlikely.
It’s easy to look at Europe and be so judgmental about what they are doing there across the Atlantic, however, over here within our own borders, we’ve just added $32 billion to our net debt which takes it up to $15.413 trillion. What’s even more relevant and noteworthy is that the U.S. is now at a record high for debt to GDP ratio which is now at 101%. It is uncontrollably high and the only way that payments to investors and bondholders will inevitably be made is through more money printing creating more and more inflation.
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