In this article, I'm dishing on bull markets, excess cash, why the world's most precious metal is getting less precious, and -- last but not least -- the most outrageous economic stimulus plan ever conceived.
Death Cross? Say It Isn't So
Fibonacci retracement. McClellan oscillator. Parabolic stop and reversal.
I shudder at the thought of putting much stock, if any at all, in such technical indicators. Lately, though, traders can't stop wetting themselves in fear about the increasing likelihood of a "death cross" taking shape in gold prices. They're convinced it's a clear sign that prices could be headed much lower.
But could it be that the precious metal is dropping in price -- down about 8% year to date -- because of a more fundamental reason? Like, say, a drop in demand?
According to a new report from the World Gold Council, global gold demand fell 4% in 2012. So is the recent price drop all about the fundamentals, or is it technical? I vote for the former. But feel free to debate that amongst yourselves in cyberspace.
It's Déjà Vu All Over Again, Yogi Berra
Last week, I proved that stocks had not run too far, too fast in 2013. Since then, I've done some more number crunching. And it turns out that stocks are off to their slowest start in the last three years.
Of course, stocks are rallying for the third consecutive year. So I'm not about to bemoan the repeat, repeat performance.
Forget the Mattresses, Stuff It in the Bank
While we're talking about bull markets, don't you dare think that there's nothing left to drive prices even higher.
Because investors and corporations have been hoarding cash. In the fourth quarter, "deposits went nuts," according to Bill Moreland of bank research firm Bankregdata.com. He's not exaggerating, either. A record $312 billion poured into bank accounts.
I'm sorry, but capital ultimately flows to where it's treated best. With the average money market fund yielding a measly 0.7%, compared to a 2.1% yield for the average stock in the S&P 500 Index -- with soaring prices to boot -- it's only a matter of time before that cash gets reallocated.
Giddy up, bull market!
Be Lazy, Help the Economy
Consider this the most alternative economic stimulus plan out there: Americans with jobs should stop working so hard, so Americans without jobs can finally get one. Why? Because new research out of Deutsche Bank demonstrates that declines in productivity do, indeed, lead to hiring booms.
So go ahead and take an extra-long lunch break in the name of economic stimulus. I'm totally kidding, of course.
My hope is that such a ridiculous suggestion might actually inspire politicians to resolve the budget impasse. That way, corporations can stop worrying about policy in Washington and get back to hiring. Now that's a novel idea, isn't it?