Monday, April 15, 2013

Hussman Weekly Market Comment: Increasingly Immediate Impulses to Buy the Dip (or, How to Blow a Bubble)

This particular excerpt is probably more true this morning: That said, we certainly view the present gold/XAU ratio over 12.5 as indicative of a significant margin for error – looking over a horizon of several years – even in the event of a further decline in the price of physical gold. Gold shares are among the only asset classes for which we can comfortably use the phrase “margin for error.”

For more on gold sentiment, even before the recent sell-off, see Fred Hickey's March "The High-Tech Strategist" newsletter, if it is still available for download HERE.

Mark Twain wrote “Let me make the superstitions of a nation, and I care not who makes its laws.” In recent years, investors have somehow allowed themselves to be convinced that alchemy – exchanging outstanding government debt for zero-interest monetary liabilities despite what are already trillions in excess monetary liabilities – is capable having real, stimulative, and beneficial effects for the economy. Make no mistake – the faith that quantitative easing will produce anything other than temporary and ultimately calamitous financial distortion is superstition.