Placer Dome (PDG) is pausing here at multi-year highs and has drawn a narrow-range inside bar. $20 is an ancient “level” in PDG so it’ll be interesting to see if it runs through there quickly or stumbles here. Keep an eye on her.
This morning on WNCW I heard Mark Knopfler’s song, Postcards from Paraguay, and really liked it. If you don’t know Mark Knopfler’s music, I recommend that you give him a listen.
There were two interesting articles in Barron’s this week. The first was an interview with James Turk, of Goldmoney.com:
“My expectation is that as the gold market continues to climb, just as we saw in the 1970s, people are going to come to understand that the credit expansion and the debt bubble that has been created has so debased the dollar they will look to other alternatives, tangible assets of all sorts, but particularly gold and, in a broader sense, commodities.”
“… capital controls [in the US] are a realistic possibility and the way you protect yourself against that possibility is to diversify now. Get out of the dollar now while you can still get out of the dollar. Buy foreign assets now while you can still buy foreign assets. Take advantage of the fact the dollar is still overvalued even though it is down from its peak. It has a lot more purchasing power today than it will a year or two or three down the road.”
The second was Gene Epstein’s book review of “The (Mis)Behavior of Markets” by Benoit Mandelbrot and Richard L. Hudson, which he found “impenetrable.” I think I’ll have better luck than Epstein, and look forward to reading it.
“Mathematician-turned-economist Benoit Mandelbrot argues convincingly that standard financial tools like the Capital Asset Pricing Model and the Black-Scholes model of option pricing are crippled by naive assumptions: that markets are never illiquid, that price moves are always continuous and that price volatility follows the standard bell-curve pattern of freshman statistics.”
Standard financial theories are riddled with naive assumptions? That’s putting it lightly!
Last week the market put in a “whammy” bar (gap down open followed by a close near the high), which has no doubt trapped a lot of folks on the wrong side. We’ll see how much juice this gives the market to go up. The ISE Sentiment Index (top panel of the chart) spiked up on Friday, which is bullish as well. All this in the face of $50 crude.
I post this “sentiment” chart every Monday morning, which shows exactly where I’ve put money to work over the last 12 months.
