Dollar bottoming, everything else topping, including Gold and Silver, most commodities, equities — the deflation trade to resume sooner than most believe

This is a follow up on the post I published a few days ago: Dollar bottoming, Gold and Silver topping, and equities probably topping too — the deflation trade to resume sooner than most believe.

Regarding gold, silver and the dollar, there are many very powerful contrarian indicators in place:

First, Mister-T is talking gold on Bloomberg. Isn't that crazy? Signs of a mania? It is.

Second, Contrarian-Indicator Carl Futia predicts that the dollar index is going to drop another 15% (yes, 15%!!) and that the S&P will reach 1500 in the next 9 months. Nothing is certain, but believe me, when perma-bull Carl Futia comes up with such a forecast, after such a massive drop in the USD and a 80% raise in the S&P over two years, it's worth taking it into consideration:
More liquidity in the U.S. economy means a lower dollar and a higher - much higher- stock market. You may not agree with the Fed policy, but if it is implemented you can expect to see the dollar index at 66 (currently 77) and the S&P at 1500 (currently 1170) within the next 9 months.
Bullishness is extreme on the equities, commodities, FX markets even when the markets is still lower than the top achieved in April and hence has gone nowhere for 6 months!
Even Mish, who normally is extremely rational and spot on almost any topics is now fantasizing about gold (more on a separate post).

Everybody is bullish on gold: inflationists — gold is protection against inflation, it's going to soar because of the Fed — deflationists — gold is money, it's going to soar during deflations. Anonymous ignorants — I heard two persons in the lift this week talking about buying gold miners shares because gold is going to soar.

With DSI on gold at 98% bullish, about 2% bullish on the USD, you can understand that a major major reversal is at hand.

Lately, the hit count on my posts about gold have been extremely high. This is another proof that gold is become a bit too mainstream again.

I personally have liquidated my paper gold just below $1,200. Could have waited more indeed. But I'm still a gold bug and have lots of physical gold stored in vault that I do not intend to sell at any price (or almost). But I'm trying to see things as they are here. Unfortunately, those who buy the hype will be sure to regret it.


Dave said...


IMO, no.

Short term top, followed by a pullback, consolidation and then a move higher?

IMO, yes.

The mania will be marked by a stampede by the herd, and we aren't anywhere near that - In fact, only the first few extremely nervous animals on the edge have begun to perk their ears and sniff the air.

pej said...

good point Dave: I'm not sure what's on the deck for the the longer term. Short term, we're way to complacent, overbullish, overvalued.

NMMM.NU said...

Mr.T is old gold bull - it does not surprice me at all. Anyone know what Crammer say?

pej said...

NMMM.NU, good point. But, the fact that Mr. T is an old gold bull really matters in quite a different way that what you just mentioned: if he's an old gold bull, why do we just see him now?

That's my point: he's getting mainstream now because there's such a bullish sentiment around gold.