Gold shows signs of topping, sticks are tired, oil demand slacks, recession is here but there is a positive side to it
Sam Adelton
Dec. 9, 2006

Gold has been creating a long-term top for a long time. The inflation expectation and budget deficit does not allow a hefty gold price right now. The gold bulls out number the bears in a 100 to 1 ratio – something never seen before. Although gold has a potential of reaching $2000 an ounce, it cannot happen when all bulls are fully invested.

In January 2007, the stocks will collapse. The money will leave the gold pit from hedge funds to accumulate cheaper stocks. The gold and stocks both will collapse in 2007-2008 for different reasons. The stocks will decline because of recession and a stage in economy where stagflation is challenged by deflation. During deflation cash is the king. The gold will also fall because the fear of inflation is replaced by the fear of deflation.

The economy is falling into a stealth depression from the stealth recession. People in the main street can feel it. People in Wall Street specially the financial main stream media deny it with hopes of getting more tax cut from favorable Government.

All is not that gloom and doom. US economy is transforming into high tech service industry. While in coming years, financial services sector will get wiped out through the use of Internet; the technical and engineering service sector will rise. It will not be the iPods and Microsoft’s childish software that will dominate. The days of kiddy high tech entrepreneurs are gone. It will be replaced by advanced business intelligence service sectors and engineering innovations. Boeing for example is showing first sighs what engineering innovation can do to the American economy.

While the world will manufacture and consume, America will be busy designing and researching next generation technologies. New entrepreneurs who will refuse to work for large companies will lead the technical and engineering service sector. The small business innovation will not be in sectors like mortgage and stock brokering. It will be biotechnologies, operations research, material science, mechanical and aerospace engineering and more. Software, computers and typical high tech sectors will lose their lectures while fundamental scientific research will gain momentum again.

Gold shows signs of topping, sticks are tired, oil demand slacks, recession is here but there is a positive side to it
Sam Adelton
It will not be the iPods and Microsoft’s childish software that will dominate. The days of kiddy high tech entrepreneurs are gone. It will be replaced by advanced business intelligence service sectors and engineering innovations.
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Fed will raise rates twice starting March 2007 – bullish for dollar bearish for stocks
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Next year, there is more than 68% probability in a high confidence level that Fed will raise rates two times starting in March to cope up with inflation. Then they will pause again. That will be very bearish for stocks.
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Economy in the middle of a tug-of-war between lower home prices, increasing stock market and lower gas prices – where does consumer stand?
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The stock market has lost touch with the real world – the grass root economy. Last that happened was in 1928-29. A severe depression followed that in 1929-33. 1928 Christmas was great for the Wall Street.
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