Monday, June 25, 2012

Buffett Buys, Oil to Double, Gold to Fly, Bernanke Twists

Wealth Daily's Weekend Edition

Saturday, June 23rd, 2012

We had a busy week on Wall Street.
The great Ben Bernanke told us things were bad — and getting worse.
Chinese manufacturing is slowing... Home sales dipped in May... The people of Greece voted for the austerity/pro-euro party... The debt crisis then moved on to Spain, who is now paying more than 5% for 18-month paper (this despite the fact that Spanish banks recently got a $100 billion euro bailout).
But the news isn't all bad.
The Fed chief told us he would continue the “Twist” for the rest of the year.
This is a card trick in which Ben sells short-term debt and uses the proceeds to buy long-term debt in an effort to push down mortgage rates.
It's working. Mortgage rates are at 3.63%, surely as cheap as I've ever seen them...
Though I do remember my grandfather once telling me they were 2% during the Great Depression — only no one could get a loan then.
Buffett Bullish
We wrote on Thursday that Warren Buffett is buying up housing on value. And because Bernanke did not invoke QE3, the market has sold dollar-denominated assets like gold and oil... which in turn, as Brian Hicks tells, has China buying up all the cheap oil it can gets its hands on.
Your humble editor detailed (in full below) how, if we used the money supply/gold price as an indicator, gold would be at $8,500/ounce today.
You should be looking for entry points on this dip.

Here is your dollar/gold chart:
When the greenback goes up, gold (and oil) go down.
Will the dollar continue to rise as the euro falls... or will we get QE3 in August, which will drive the dollar down?

No comments:

Post a Comment