Just some of my market observations.
1. Let's start with the easier ones. Time to sell gold? NO WAY. In fact, I will be buying more if there is a 50% pullback from any short-term high that is being established. I didn't buy more nor sell my positions. My patience is certainly paying off.
2. Stock markets continue to be very strong. The technical picture just doesn't match up with the fundamentals. Many people believe that stock market is a predictor of the economy. Quite often that is true, but correlation simply does not mean causation. If the stock market is that smart, then we wouldn't have a sudden fall from financial crisis at all, almost coincident along with the actual economy. The fact is that stock market is our joint front-running guesses. I expect the stock market to eventually "catch down" with the actual economy. But there are more hopeless optimists than I can ever beat up. My hedges from short positions are heavily in red, bringing 2% substantial losses of my net worth. However, I continue to hold my hedges (but may terminate hedges at any time).
3. US dollar is breaking support. If 77/76 is broken, then it would visit 70, most likely. This is probably the most crucial indicators for both gold and stock markets. Based on euro, and gold/silver ratio, it appears that this is probably what will unfold (which means that gold will go much higher, while stock markets will continue to go up). I kind of refuse to believe it, but markets know better.
4. natural gas has fallen some 80% from peak of $13.69 down to $2.41. It reflected an over-supply and a weak economy. If the economy is turning around, natural gas must go up. So far natural gas has NOT confirmed an economic turn-around. Regardless, one thing is for sure. It won't go down to zero. Is it a good time to buy UNG or natural gas producers or natural gas futures? I won't bet on it, but I think the risk should be relatively low.
I continue to be investing fairly conservatively (probably over-conservatively by any measure). The uncertainties in the stock markets are still too great for any long term investment. And the worst potential volatility actually comes from currency markets. One should continue to stay extremely alert. Stop loss orders are advisable.
