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Tags: stock | market | gold | Iraq

Markets Fooled By Uneasy Calm — Caveat Emptor

By    |   Wednesday, 25 June 2014 07:43 AM

I do not know if the stock market participants are asleep or just completely befuddled.

We have a virtual repeat of the massive crisis that engulfed the United States in Iraq today. The United States lost a few trillion dollars in Iraq and came away with nothing to show for it. We spent nearly a decade in Iraq, lost thousands of young and able-bodied men, crushed thousands of children's dreams by snatching away their mothers and fathers and what do we have to show for that?

The sectarian violence is just about as bad today as it was 10 years ago. The two warring factions of Iraq are at each other's throats. Our friend in Iraq, the prime minister, seems like a defeated leader.

Yet fascinatingly enough oil is only up about $10 to $15 per barrel. Almost seems like the world does not believe that there will be any escalation of war in Iraq.

Gold has seen better days recently, but it is up only about $75 since the escalation of tensions. I would not call that a rush to safety as far as the investing community is concerned.

At the start of the trading week, the headline on several financial websites was: Will the Dow cross the 17,000 mark? The markets and the "Buy Stocks" pundits seemed to completely ignore any rumblings anywhere and continue to chant the only one mantra they know, "Buy Stocks, Buy Stocks . . . "

As one of my favorite editors put it: "With a VIX [CBOE Volatility Index] reading of just around 11, a remarkable tranquility has settled over the markets — like the calm seas in the North Atlantic when the Titanic set sail.

"'Not even God Himself can sink this ship,' said its architect. In this case, the ship was sunk by an iceberg.
God claimed no credit nor took any blame."

The markets had ignored Russia wanting to take over Ukraine. While it may not have happened yet, and it seems like Russia is backing down, that region is still simmering and can boil over anytime.

Syria continues to defy logic and smolder with frequent flare-ups. The recent Islamic State in Iraq and Syria (ISIS) terrorist group is an offshoot of the festering wounds of Syria.

Thailand is under martial law after the military carried out a coup. Malaysia and Indonesia are almost always a stone's throw away from the next crisis.

China is flexing its muscle when it feels like and it is only a matter of time before it aggressively crushes someone under the guise of defending itself or some group.

Egypt is a tinderbox. We just blew half a billion there Monday. We went in with a peace offering of money. In return, the coup leader who has imposed himself under the pretext of an election ended up jailing journalists to crush any freedom of speech there.

All of this and the stock markets continue to rise as if nothing is wrong with the world.

Buy Stocks, Buy Stocks . . .

I am not sure what will need to happen before the world realizes that we have some serious problems. A serious concerned market would have gold skyrocketing and the stock markets plummeting.

I would warn all those who are still in the stock markets to be prepared to reduce their holdings and buy some gold before the markets catch on to the geopolitical risks and push gold up to where it deserves to be.

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I do not know if the stock market participants are asleep or just completely befuddled.
stock, market, gold, Iraq
Wednesday, 25 June 2014 07:43 AM
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