Gold fights to nearly even on the day, ‘happy hour in America’ about to end


Gold fought its way back to nearly even on the day after briefly dipping below the $1340 level and finishing at $1348. Silver had a positive day closing up 10¢ at $16.80.

Lingering concerns about the stock market helped push gold higher. Morgan Stanley issued a report saying that “happy hour in America” was about to end.  Yesterday, famed analyst Mark Mobius told Financial News that a 30% drop in stock values was a possibility.  “The market looks to me to be waiting for a trigger,” he said.

He then put the spotlight on a lingering concern of our own.  “ETFs,” he said, “represent so much of the market that they would make matters worse once markets start to tumble. You have computers and algorithms working 24/7 and that would basically create a snowball effect. There is no safety valve to prevent further falls, and that fall could escalate very quickly.”  Most investors are aware of Charles Mackay’s writings about the madness of crowds.  One day we will be reading about the madness of machines.

All of which serves as an appropriate introduction to our . . . . .

Quote of the Day
“Reflect on what happens when a terrible winter blizzard strikes. You hear the weather warning but probably fail to act on it. The sky darkens. Then the storm hits with full fury, and the air is a howling whiteness. One by one, your links to the machine age break down. Electricity flickers out, cutting off the TV. Batteries fade, cutting off the radio. Phones go dead. Roads become impassible, and cars get stuck. Food supplies dwindle. Day to day vestiges of modern civilization – bank machines, mutual funds, mass retailers, computers, satellites, airplanes, governments – all recede into irrelevance.

Picture yourself and your loved ones in the midst of a howling blizzard that lasts several years. Think about what you would need, who could help you, and why your fate might matter to anybody other than yourself. That is how to plan for a saecular winter. Don’t think you can escape the Fourth Turning. History warns that a Crisis will reshape the basic social and economic environment that you now take for granted.” – Strauss & Howe – The Fourth Turning (With thanks to James Quinn of The Burning Platform for the reminder.)

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