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BOCA RATON, FL, June 18, 2011 /24-7PressRelease/ -- I take a look at the US stock market and see nothing but the destruction of wealth over the last decade and it sickens me to continue to see an entire society all in and overcommitted into stocks. Are you kidding me? We have just seen The Lost Decade and continue to see nothing but absolute volatility and pressure downward. Whether it is the dot.com bubble bursting to the real estate bubble bursting all the way to the 2008 debacle and destruction of wealth. The last 10 years have been nothing but a short-term trader's market. The buy and hold strategy that has succeeded for so long it is no longer a recipe for success.
I believe that this market came way too far way too fast at the peak of 12,600 on the Dow and the S&P move to 1,360 was not justified. This was just a short term rally and we are about to break the important 1,250 mark if we see this breached a test of 1,150 could approach very quickly on the S&P 500. I am still sticking with 10,500 on the Dow and possibly 11,000 in the short term. Technically speaking the market seems to be breaking down.
The European contagion factor has been spreading and will continue to spread at a steady pace. The entire continent of Europe is in major long-term trouble and the Euro continues to get crushed. Greece is falling apart right before our eyes and the fact that they cannot figure out a game plan is disturbing. We have seen a dead cat bounce off the lows for the Euro but it is absolutely a flawed currency and the downtrend will continue over the long term. I do not see how this can change in the short term and what this has done is create a lack of confidence globally throughout Europe and America. The stock market trades purely off of confidence and to be frank there is none out there. Can you blame anyone for not having confidence after all the years and years of credit expansion, easy money and free spending. What did you expect? We would be able continue to spend and spend at a pace not even imaginable just 20 years back and succeed? Will the policies ever get reeled in? We have chosen to inflate our way out of it and the Federal Reserve is left with no answers except to print more dollars.
The strategy to inflate our way out of the deep recession we are currently in will culminate to the ultimate demise of the US Treasury market and the US dollar. Large investment flows have been flooding into the dollar but we all know this is a short-term move. This rally is over and we will see the dollar get demolished in the long term. Rick Santelli said it best: it is the tallest midget in the room.
Now let's look into Gold. We have seen all-time highs in every major currency throughout the entire world weekly. This market is an absolute bull market and has been for 10 years now. The talk of a bubble is absolutely false. If you look back to all of the bubbles that have popped what you see is extreme volatility when the top is hit. We have yet to see any volatility in gold and it has done nothing but built an impressive base technically for 10 years with higher highs and higher lows alongside heavy volume. A short term move to the downside is possible to 1462/oz but there aren't any sellers on any level in gold. Whenever it dips 10-15 dollars we see more buying right away. So until we break the 10 year uptrend I am no way selling my gold. I am a long-term investor and always have been. If we are able to retest and break 1575/oz I believe 1600/oz will be hit very quickly. Ultimately 1850/oz will be breached by year's end and over the long term 12-24 months 2500/oz gold will be breached with ease. Central Banks globally have switched from being net sellers to net buyers of gold which is a huge change historically and very bullish. The production globally cannot keep up with the demand just take a look at the South African Rand Refinery which has seen an increase of 50% in coin demand last month alone alongside an 86 year low in production this is just another bullish case for the yellow metal.
The most important reason why I believe gold will continue to trend higher is the lack of faith in fiat currencies. The Dollar has been going down for the last decade and has gone down by about 30% since its high. The euro is in a major down trend due to the European contagion spreading and has just begun. Gold is the currency of kings and has weathered every single economic storm known to man. It has survived every major war and will always be a store of value to protect your wealth. If you look back in history you will see that every paper currency in the history of mankind has ultimately devalued to nothing and gone to zero. So what I'm trying to say is protect your wealth and buy gold. The enormous web of uncertainty permeating throughout the world will continue to drive gold higher and ultimately lead to tremendous gains in your portfolio.
Written by Anthony J Pulieri, Chief Investment Strategist at Joseph Glenn Commodities.
June 16th 2011
Joseph Glenn Commodities, LLC is an independent commodities firm with a major focus on precious and industrial metals. Current economic conditions require owning hard assets as part of every investor's portfolio. With our extensive experience throughout all of the different avenues of investing, we can provide you with a safe and profitable way to invest in the metals markets.
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