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This week for Subscribers: Implications of first Use

Gold Dropping: Selling the News

"Bulls make money, Bears make money, but Pigs get slaughtered" - Old Wall St. saying.

Well, once again, I lucked into another trade worked out yesterday - I sold my gold positions (with the intent of buying them back at $10 or more lower prices) about 1 PM Eastern yesterday.  Sure enough, this morning, the market is hammering gold, and is has become more volatile, ranging from upwards of $390 down to 369 in the overnight trading.

Right now it looks like some of the speculators (people who trade like me, but aren't as reasonable...oh, OK, maybe I am one too) were playing a "sell the news" game with Powell's U.N. speech yesterday.

If you look at how markets in general have been reacting to news lately, it has almost all been "sell the news".  I'll show you what I mean.

Watch Costco, Pier 1, and Urban Outfitters today.  All three reporting sales up...but if my hunch is right, they seem likely to decline today as the markets have been selling the news pretty regularly.  Just like happened with gold.

Are we still headed for war?  Sure - and not just one.  North Korea this morning is threatening preemptive action over its nuclear program.

So what would I look for now?

Well, unless I read the tea leaves wrong, the decline will continue until we touch (or take out) the old lows of last year.  If those are pierced, that sets up a trip to my long forecast 5800 Dow level.

In the meantime, there are stocks that are looking pretty interesting.  I know you will get sick of me mentioning RJR, but paying a 9.12% dividend now as the stock has declined, having $2.2B in cash on $6.2B of sales and a book value over $78 a share, their 41.65 recent price sure is impressive.  Unfortunately, they are a "death stock" so if there's anything to Karma, there's not enough money in the world to buy them.  Smoke breaks or not, the company has an operating profit of 12.5% and a profit margin of 6.7%.  Pending lawsuit settlements aside, the sin stocks may bear some additional research to see how they did in the last Depression.

Although this Depression is slowly opening up in front of us, people's behaviors tend to be similar given similar situations.  No reason to think sin stocks will fare any different this year than last.

Brother can you spare a dime?  The Federal government is right up against its debt ceiling limit in the next two weeks.  What to watch a Keystone Cops comedy?  Pay attention to this one.  It's the ugly baby that neither the Spendpublicans or the Demogogs want to claim, but both were parents.

For subscribers this weekend: Fallout from renouncing military retirement commitments.

OK, that's it for this morning...been banging my head against an ugly data conversion from ACT! to Access (as an intermediate step to migrating into a CRM system) at the office...so back to the problem... If you are expert on such things, drop me a note by clicking here. 

Remember:

A conservative is a liberal who's been mugged;

A liberal is a conservative who's been arrested.

A libertarian is someone who's been through both experiences.

and write when you get rich...

George Ure

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All contents (c) 1998-2001 by George A. Ure, MBA, except authors as linked or noted