Monday, May 24, 2010

Part 5: European Dominos: Global Cascade?

"Precious metals will reign", according to Leo Isaak at www.minyanville.com : "Currency debasement will continue to push gold (and silver) as it becomes the reserve currency it was hundreds of years ago...So what does all this mean for the markets?...[Europe's] decline is well on its way.  If things move as fast as they have on other issues this year, it means that we could see declines of perhaps 15-25% in the second half [of 2010] alone.  850 on the S&P is roughly 25% down from here....the economy is, in fact, not doing that well....It's obvious to me that the public won't tolerate more indebtedness by the government.  For the last two weeks, I've been slowly selling my long positions, or hedging them while opening new short positions in line with the macro thesis I've laid out here.  I think it's possible we try to make one more stab at 1150 or 1200 (though we may have just seen it...), but any move higher is an opportunity to sell....To me, there's no reason to be in stocks right now.  You will get another opportunity, but that opportunity won't be there if you're out of capital.  I certainly hope that I'm wrong, but I'm incredibly bearish over the intermediate term (with no real opinion short term).  Without drastic and immediate changes in fiscal policy both domestically and abroad, we're in for a heap of trouble."  I encourage you to read the original article at www.minyanville.com.