Prieur’s Readings (August 10, 2012) – Get ready for gold rebound, says Auerback

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As part of my daily routine, I publish all my reading (including snippets from other well-known commentators) in an Internet newspaper, “Investment Postcards Daily”. I publish the paper even when traveling for extended periods when blogging takes a backseat. This is therefore a sure way of staying in touch.

The paper is published additionally to the normal blog posts. Click here to read the latest edition of the paper, including the Auerback article on gold.

The newspaper’s subscription is separate from that of the “Investment Postcards from Cape Town” blog. To ensure you receive daily alerts of the updated paper, click here and then subscribe for free by clicking on “Subscribe” (top right of newspaper, just below my photo) or by following me on twitter (click here).

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Marc Faber: Obama, Romney are “undesirable” candidates for fixing the economy

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Marc Faber, the Thailand-based author of the Gloom, Boom & Doom Report, says that neither candidate in the upcoming U.S. Presidential election is worth voting for, at least if the goal is fixing the economy. “Well, I mean to tell you the truth, if you put a gun on my head and you tell me you must choose either Mr Obama or Mr Romney, I’d say please shoot,” he said.

Source: Yahoo! Finance – The Daily Ticker, August 8, 2012.

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Laugh out Loud: Economic recovery – no medals

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Source: Henry Payne, Townhall.com, August 8, 2012.

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Keep an eye on May stock market peaks, says Richard Russell

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Richard Russell, 88-year-old writer of the Dow Theory Letters, called a bear market for U.S. stocks a few months ago. An update on his latest thinking is reported below.

Question: Richard, everybody has emotions. So where are your emotions regarding this market? From an emotional standpoint, be honest, are you really bullish or bearish?

Answer: If the Averages confirm that this is truly a bear market, I’ll have mixed emotions. On the one hand I will have been proven right on my bear market call, and that will be a boost to my ego. But I can’t say I’d be happy we’re in a primary bear market.

But if the Averages close above their May peaks, and all my charts point to a bull market, I’ll have been proven wrong on my bear market call, and that will be a bruise to my ego.

Source: StockCharts.com

Nevertheless, I’d much rather be living through a bull market than a bear market – a bull market would be far better for me and my kids and for my business. So call it strange, but from an emotional standpoint I’d prefer to have been wrong on my bear market call, and I’d prefer that we’re in a re-confirmed bull market.

Therefore, instead of confusing my subscribers with a lot of ego-boosting baloney, I’m just going to call this market the way I see it, being as honest and unemotional as I can possibly be.

If we are truly in a primary bear market, I have an intuition that it could turn out to be the worst bear market in history – and that’s another reason why I secretly hope I have been wrong on my bear market call.

Another intuition – we will know the final answer as to whether we’re in a bull or bear market by October.

[PduP: Yesterday’s closing levels of the benchmark U.S. indices were within reach of the May peaks: Dow Jones Industrial Average – 13,176 vs 13,279 and S&P 500 Index – 1,402 vs 1,419.]

Source: Dow Theory Letters, August 7, 2012.

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Prieur’s Readings (August 9, 2012) – Greece prints its own euros to stay afloat!

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As part of my daily routine, I publish all my reading (including snippets from other well-known commentators) in an Internet newspaper, “Investment Postcards Daily”. I publish the paper even when traveling for extended periods when blogging takes a backseat. This is therefore a sure way of staying in touch.

The paper is published additionally to the normal blog posts. Click here to read the latest edition of the paper.

The newspaper’s subscription is separate from that of the “Investment Postcards from Cape Town” blog. To ensure you receive daily alerts of the updated paper, click here and then subscribe for free by clicking on “Subscribe” (top right of newspaper, just below my photo) or by following me on twitter (click here).

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.

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Time to take on more investment risk?

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“An improvement in the global economic outlook is the key fundamental reason to take on more risk in an investment portfolio,” said BCA Research in a recent commentary. “The U.S. payroll report was positive relative to expectations, but rather weak in absolute terms. Moreover, last week’s Fed and ECB meetings did little to lift our optimism. Several indicators continue to suggest it is too early to add to pro-cyclical currency trades.

  • For example, the global leading economic indicator is still pointing down. More importantly, with no new stimulus measures announced this week, it is difficult to see the global LEIs inflect upwards.
  • In addition, gold is a real-time monetary indicator and the peak in March 2008 correctly warned that deflation risks were escalating. Gold’s recovery in early 2009 (ahead of the bottom in equities) then accurately indicated that reflationary policies were finally gaining traction. Gold prices slipped back below $1,600/oz following this week’s Fed and ECB meetings. This suggests that major central banks are still behind the curve.  As in early 2009, a sustained rally in gold will signal that the forces of reflation are starting to win out.
  • Finally, an uptrend in Chinese stocks and an acceleration in Chinese money supply growth will be bullish signs for Chinese growth and the commodity complex.”

BCA Research concludes that “it will take further proof that the global economy is stabilizing before augmenting a pro-cyclical currency investment stance.”

 Source: BCA Research, August 7, 2012.

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