Saturday, August 6, 2011

Another Crash?

Well, as predicted the week of Aug.2  was indeed very interesting.  I'm guessing that since the US' downgrade in credit rating a lot of big banks found themselves in possession of large amounts of now increasingly illiquid bond/treasuries.    If that's the case then this sell off in the stock market comes as no surprise for the banks now need a source of liquid cash to stay in business.  Best way to raise cash is sell off your assets on the market, both the good and bad until you have enough cash to stay in business.  I wonder how much of a hit precious metals will take this time?  Will it be like in 2008 where financial institutions were chucking out everything and the kitchen sink?   If so, then that presents a rather golden buying opportunity.   Monetary debasement ultimately does not make prices of real assets cheaper after the dust settles and we just got more debasement the second Congress decided to raise the debt ceiling.  Fear and panic do lower prices though and that's only transitory.  My guess is that this sell off may last another 6-9 months and once again the Fed will be called upon to dump cash into the system via Q3. I wonder if this fear and panic will put the brakes on industries that were barely trying to get up off the ground for a few years?  In any case, the dollar is about to crash even further thanks to the raising of the debt ceiling and lack of fixing the debt related to social security and medicare/medcaid..  Interest rates are going to finally rise which will crush the bond market soon.  Actually, I think it started about a week ago already. Eh, that's just my thoughts.   Looks like it's going to be another wild ride again over the next 9 months.  I'm going to stick my neck out here and make a prediction.  I predict further stock market crashing over the next 6-9 months followed by a huge rally that may rival 2009's stock market rally and a giant rally in precious metals once again.  Let's see if I'm right or not.



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