The recent gold sell-off has spurred an avalanche of commentary on the merits of including the precious metal in one’s investment portfolio and, not surprisingly, there has been a fair amount of gloating by those who never thought much of the idea in the first place.
A plunge of over $200 an ounce in just two days and a gold price that is now almost 30 percent below its 2011 record high has many pundits declaring victory over a metal that, aside from jewelry and limited industrial use, has little value.
Little value, that is, aside from functioning as money and a store of value for thousands of years.
The fact that, to some extent, gold is in competition with current day money gets little attention from the yellow metal’s detractors.
Rather, most who now kick gold while it’s down (after 13 years of impressive gains) focus on the world’s economy and global financial system having sufficiently healed after the multiple crises of a few years ago as reason not to be fearful any longer.
Fear, they say, is the reason that people buy gold and, now that things are looking up, there is little reason to own it.
A lot of investors seem to have come to that same conclusion.
David Stockman’s book tour appears to be going quite well as he continues to get lots of press for such views as his characterization of the Federal Reserve as a serial bubble blowing machine and the U.S. economy being a giant Ponzi scheme. His ongoing feud with Nobel Laureate economist Paul Krugman has likely boosted book sales as well and he talked to Bill Maher on Friday about government spending as shown below.
Also see this clip of Stockman on the Neil Cavuto show last week where, presumably, he felt as though he was in friendly confines and really let loose on the Bernanke Fed.
CNBC’s Maria Bartiromo begins “This market just does not want to quit…” before talking to perma-bear David Rosenberg of Gluskin Sheff and real estate investor Sam Zell who, surprisingly, makes Rosenberg sound bullish about equity markets.
You gotta love Maria’s response to Rosenberg’s first comment about “the mother of all liquidity driven rallies” in both the U.S. and Japan - “And it’s continuing, meaning, you have to be there. You don’t want to fight the Fed is what you’re saying.”
Zell plays the wet blanket at just over the two minute mark, culminating with this exchange:
Zell: This feels like the housing market of 2006. Everybody can’t afford to miss it.
Bartiromo: Uh oh….
Bartiromo: Well, I have to say, Sam Zell telling me that this stock market feels like the housing market of 2006 is a scary comment.
Zell: Why? Every single day it goes up. Every day in 2006, the housing market went up. What was the number one headline every day? Housing prices going up. What are you talking about every day now? New high on the stock market.
After reading last week’s commentary by John Hussman (he’s got another good one today), I went looking for margin debt/stock price data and stumbled across this item from Doug Short that included the graphic below:
Of course, since this chart was prepared about a month ago, things are probably much worse (or, better, depending upon how you view this sort of thing) today…
Tomorrow’s monthly labor report has suddenly become much more interesting as the Labor Department reported a short time ago that weekly jobless claims rose to a four-month high, up 28,000 to 385,000 for the week ending March 30th.
Seasonal adjustments related to an early Easter holiday are said to have affected the data, however, the Labor Department didn’t mention this in their report and it’s important to note that claims have now risen sharply two weeks in a row as shown above.
Excluding the Superstorm Sandy spike last fall, this was one of the worst readings in over a year and comes after yesterday’s ADP report showed the weakest job growth in five months.