Wednesday, September 21, 2011

September 21, 2011 Edition of the Stateside Report


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1 comment:

Worldly Trader said...

I agree with you, Vince, that only the only thing that has changed about most junior mining and energy stocks is the market's attitude towards them. I find this is a Bipolar market. The junior mining companies with great assets have everything going for them. There are historic highs and demands in the commodities markets, world wide shortages of most essential commodities, and a rising world population with an increasing demand for commodities.

What has changed since March high in the juniors is the market's attitude toward resource stocks. It seems the market cannot make up its mind. Does it want financial stocks with dubious intrinsic value? I mean does any one know who far in debt or insolvent is the Bank of America, the Royal Bank of Scotland, or BNP Paribas? Does anyone agree on the value of the loans, mortgages, credit default swaps, or bonds that are make up the assets of these banks? It is great to see the lack of common sense in the markets. Resource companies have as their asset base natural resources that have been around for millions of years and that are not going anywhere. This is totally different situation from the financial stocks that are continually being proped up by bailout after bailout. Pretty soon the bailout the banks strategy will run out of gas and it will back to the business of making and producing goods the world needs for everyday life.

My personal theory is 2011 is the year of divergence. This is the beginning of the breakaway trend for these stocks. Unlike 2008 or 2009 the resource stocks won't get dragged down in the next market down turn. We are seeing a glimmer of that now. While most stocks and market averages are getting trashed many gold stocks such as Pretium Resources (PVG), Goldcorp (G), Newmont Mining (NMC) and Kinross Gold Corporation (K) are at or near their 52 week highs.

I think we will see that most blue chip stocks will be ground down in value year after year. Bob Chapman, author of the International Forecaster newsletter has predicted that in three years the Dow Jones Industrial and the New Stock Exchange will lose 90% of its value and drop to 3,000 points in a decline similar to the 1930s stock market crash. I feel this will not happen all at once. It may be that the DJIA drops by 30% year after year until it bottoms at 3,000 points.

On the flip side of this we could expect to see precious metal bullion, coins, and shares counter this trend and move up in value year after year. Eric Janszen, author of the iTulip.com website wrote an excellent article “The Next Crash - Part 1 How the First Bounce of the Debt Deflation Market Ends “ that forecasts a drop in the DJIA to 5,000 points as a multi-year process not just a single one time event. The article is at this link http://www.itulip.com/forums/showthread.php/15363-The-Next-Crash-Part-I-How-the-First-Bounce-of-the-Debt-Deflation-Bear-Market-Ends?p=159533

His recent article “Illusion of Recovery – Part 1: Print and pray has officially failed” is also a great read. I think this is the one of the best parts of the article:

“They tell us that an epochal shift in the gold market started in 2001 and has continued, with periods of volatility, at more or less the same trend rate ever since.

My theory since 2001 is that the rising gold price trend traces the gradual dissolution of the US$ Treasury system punctuated by crisis and temporary resolution.

It will eventually end with a Sudden Stop crisis that I have since 1999 called Ka-Poom Theory, possibly mitigated by a re-opening of the gold window. “

This article is here http://www.itulip.com/forums/showthread.php/20308-Illusion-of-Recovery-%C2%96-Part-I-Print-and-pray-has-officially-failed-Eric-Janszen?p=207877#post207877

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