Morning Market Report: Gold to hit $12,500

  

Jim Sinclair – Gold to Exceed $12,500 to Balance US Debt.

   

He’s been right all along about gold. I take this man very seriously.

  

Goldbugs shouldn’t rejoice over such a prediction, which is likely to come true considering where this 12.5k price target is originating from. Gold at $12,500 means that our world will not be a very pleasant place to reside in. Gold at these levels, would mean the financial system as we know it today will have gone kaput. Even those who are now wisely accumulating gold, will have a tough time in a post dollar hegemony world given the likelihood for social unrest amidst hyperinflation, the failure of various municipal services and supply lines we take for granted now to say nothing of the potential for a very real threat to national security. Very few are prepared for this sort of stuff. Only a small number of people have given thought to the notion that one day the dollars in their wallets might become as useful as the old Saddam Iraqi currency is today (obsolete). The chaos and disorder will be epic (though at least the metals holders of the future will have something valuable to eventually trade with once the dust settles) should they survive such a future cataclysm. 

  

Can you imagine where silver might go if it goes to a conservative ratio with gold even in the 20:1 range? Save those pre 65 quarters and dimes! lol.   

  

Having said all of that about gold, here’s a strange side note: Bitcoin is the Economic Singularity http://bit.ly/ljgWnQ An interesting fiat currency alternative that I am keeping an eye on. 

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With apologies to a true showman, Sammy Davis Jr…. 

The problem for the stock market on Tuesday was that Big Ben (Bernanke) didn’t bring any candy for the market during his late afternoon speech in lovely Atlanta. I vaguely recall noting yesterday morning that Bernanke had the potential to disappoint because it seems just a bit too early for the Fed to begin a jawboning exercise to signal the imminent need for new market candy, or QE3. Yes, I think QE3 will eventually happen, and be bigger than ever, but at the present time, the Fed is in INaction mode.

  

This apparent inaction mode sent stocks from a 70 point intraday Dow gain to a 19 point loss. In other words, the Dow swooned 90 points from its high of the day to its closing point largely in the span of about 20 minutes before the close. I’m still expecting that the market sees S&P 1250 first, before any sort of possible future rally back to 1350. 1297 are remains resistance on any type of oversold bounce attempt.

  

Bernanke was as confusing as ever, by the way. On the one hand he wants to take credit for QE2 helping to lift his good boats like stocks and for keeping interest rates low, but denies QE2 also lifted commodities prices and debased the dollar. Perhaps being called Bernank-ochio would better suit him.

  

European markets have been weaker this morning on this news: German industrial production slumps in April: German industrial production slumped in April unexpectedly by 0.6%… http://bit.ly/iTpmd0.

  

CNBC>>> Sterling Falls as Moody’s Warns on UK Economy http://bit.ly/l8UuqV.

  

This may not bode well for the restaurant group: McDonald’s May Sales Rise 3.1%, Missing Analysts’ Estimates – BusinessWeek #restaurants #news http://buswk.co/m0Jhvs

  

Of course, the solutions to the problems with the economy don’t lie in the need for more monetary stimulus (though the Fed has boxed itself into a corner where they will have to continue to pump the system with magic money). Completely missed by the Washington insiders is the onerous register of regulations foisted up small business in particular. Witness the talk about a likely 30% of companies and their plans to cut heath insurance once Obama-care fully kicks in. Stuart Varney on the Fox Business channel has come up with a good analog for the gap between academia and the real world.
 

With the job market sending the unemployment rate upwards, Pres Obama today unveils program that he feels will reverse the trend. He delivers a speech at 1130am/EDT at Northern Virginia Community College. This could be another market downer, though I expect more a neutral reaction since his plan will entail lengthy worker retraining. All feel good sort of stuff.