Dystopia Now

daliThe big story of the last week has been 2 nasty sessions for gold and silver. That gold hadn't done much since an outside reversal month down in Sep. of 2011 was not heavily covered. In the 19 months since the peak, a plethora of "Central banks printing money" reasoning had been offered out as reason to own. The fear story oscillated between huge amounts of debts and massive efforts to paper them over. If one didn't scare you the other should. When equity prices rose, instability had to be perking up. We attempted to promote a contrarian "calm down" approach. Pundits advocating 'all cash" at Thanksgiving have been forced in. Any market wiggle comes with a case of the heebie-jeebies, not comfortable being in but more scared they are missing out. Everything that happens gives you the willies.
We suggest that the dystopian future that is the destination of all this fear mongering is, in fact, already here. That market positions oriented toward the bleak horizon were (are) pervasive and have proved unprofitable provides no succor. The owners of those positions, anonymous now, cannot be encouraged by what they see. The optimistic pedestrian view is that "fear" is finally exiting the market. Our opinion is fear is making new highs. Let's look at the headlines;
China slowing. Bird Flu spreading. Unemployment high, government support massive. North Korea pushing buttons. But you're supposed to freak because gold came off.
Long time readers know we like to say, "You can't have a crisis where everyone is looking." The memory of the credit super cycle apex is - as Dali saw - persistent and droopy. A crisis incubated, nurtured and unleashed on humanity purely by the financial markets was a rare historical event. People continue to look for markets to tell us where the trouble is. Much more common, and more probable is markets reacting to an outside event.
Someday, maybe soon, something bad will happen somewhere. In fact, it already is. This is your dystopian future. The core of your anxiety is its nothing like you thought it would be.

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