Short Term Market Predictions

I agree with most of what Marc Faber says in this recent clip.

Marc Faber 21/11/08 Strong Rebound Coming: Dr. Doom
http://www.youtube.com/watch?v=ETnVPXudvDs

The Patriot Radio News Hour show on Friday was really good. It was just Joe doing the show (eric took the day off) so he got through a lot of news because there wasn't anyone to joke around and waste time with.

http://patriotarchives.blogspot.com/

direct link to friday's show:

http://allamericangold.com/ptg21nov08.mp3

I would with most of what this guy says in his video with respect to the markets over the next week, but this is directed only to short term traders, not long term investors.

http://www.youtube.com/watch?v=37lsmHRtffs

I think the stock markets are in a short term bottom. It is possible this is the bottom in some foreign markets. I think oil will stop falling and remain around $50. I think there will be rallies in almost all sectors in markets around the world. There are a lot of people who are very bearish right now... lots of people saying that the DOW is going to 6400. But Jim Rogers and Marc Faber think that the markets are over sold and there will be a rally for a few months. But most people think we're still going lower. Of course no one knows for sure, but i was looking for a bottom around $50 oil, and i think we got there. I think US stocks are overvalued but oversold. I think foreign stocks are undervalued and oversold. So i think there will be big rallies in the foreign stocks. The one thing Marc Faber warned against is the possibility that some people who were seeking protection in gold, might sell their gold now to buy cheap stocks. But there's so much bullish news for gold, that i still think gold is in good shape. The Perth Mint stopped selling gold which is a pretty big deal. Also, the date where you have to state whether you want COMEX delivery is Nov. 28th, so there could be a big short covering rally coming up as all the shorts scramble to buy gold to cover physical delivery. Also, gold entered something called backwardation, which is very rare, and means that people are willing to pay more for gold in the present, than in the future. Apparently, backwardation only happens if there is a risk that the exchange will default or there will be a currency crisis. This is obviously just a guess... but I could see the DOW fall maybe 300 points on Monday, followed by a few weeks of rallying. The DOW could easily go back up to 10,000, but certainly will not make any new highs until the currency collapse occurs. Even stocks like Citigroup, could go from $4 up to $8, which would be a 100% gain... followed by a move down to $0. So I expect a lot of things to rally in the next maybe 6 weeks... i think the dollar will fall a bit... foreign stocks will have big gains... oil will remain at around $50, but some oil sector stocks may still rally. If oil goes up to $60, i think it will fall back to $50 again. I expect a huge move in the price of silver. I think gold could make a run up to $1000 before the end of the year, and silver could go up to $15, which would be a 50% increase.

The currency crisis is setting up to occur sometime in 2009. China may use its US dollar reserves to fund its stimulus plan, meaning they would become a net seller of treasuries. The OPEC countries will be struggling with the low oil price, and they may need to sell their dollar reserves to keep their economies running since they built their economies on the assumption of higher oil prices. So the Middle East could also turn into a net seller of US treasuries. And with all the spending that the US government is doing, they will be trying to sell more Treasury Bonds than ever before at a time when all their biggest customers are also trying to unload. This could bankrupt the United States, completely destroy the value of the dollar, and lead to a situation very similar to what Iceland experienced. I think the speculative trade going forward to profit from this dollar devaluation is to short the long term Treasury Bonds. I think there is a lot of smart money speculating with stocks such as TBT, which looks like it is very close to making a bottom and is a simple way for individual investors to profit from the rise in long term US bond yields. This looks like one of the last bubbles to burst. Many people made a lot of money by speculating first with the collapse of the sub prime market, then with the collapse of the financial institutions, and i think shorting the long term bonds is the next big trade, which always winds up looking obvious in hindsight.