23 APRIL

- What they do have to worry about is the pool comprising all existing and potential borrowers becoming unwilling, or unable, to increase its debt burden at a fast enough pace to bring enough new money into existence to pay the interest on current debts. When this happens the money supply stops growing or even begins to contract. And once the money-supply stops growing it becomes impossible for many borrowers to get hold of enough money to pay their debts, with the result that they lose a lot of what they worked hard to accumulate.

- Although the stock market has been falling for 3 years and although the most recent rally in the S&P500 Index is yet to exceed even the minor peak made early this year, by some measures sentiment is now as bullish as it was at the bubble peak in early-September 2000. Right now, even the bears are bullish.

- Those who think that the attempts of the Fed and the US financial establishment to maintain a 'healthy' level of liquidity have been futile should take a look at this chart. Despite everything that has happened over the past few years the Bank Index is presently only about 10% below where it was in March of 2000.

- A reasonable target range for the SF once it breaks above its short-term downtrend is shown on the below weekly chart. A move up to important resistance in the 76-79 range would complete a base that has been 5 years in the making and would set the stage for a major SF advance (a major US$ decline) over the next few years. However, an upside breakout from this base is unlikely to occur until after the SF has experienced a lengthy (3-6 month) consolidation.

- Here is an updated version of the above-mentioned chart revealing that the gold price in euros has, to date, held its long-term uptrend. However, we are yet to see a significant bounce. 325 is a reasonable target for the euro gold price over the next 2 months, while a drop below the channel bottom would cause us to re-think our short-term bullish view on gold.


posted by Dil at 12:06 PM