Tags: stocks | bull market | trap | gold

Beware the Bull Market Trap

By    |   Wednesday, 19 March 2014 07:21 AM

The insanity of the stock markets befuddles me!

Crimea has been annexed, on cue as I had said it would be last week. The Polish zloty has strengthened while the Hungarian forint has budged just a tad bit. While my predictions are not sparing quite just yet, they are moving in the right direction.

The challenge is what has happened or is unfolding along with the annexation that concerns me.

Editor’s Note: These 38 Dates Are Key to Bagging $313,038

On one hand, we have Russian President Vladimir Putin making ominous gestures of sending troops into regions of Ukraine. He has welcomed Crimea and started incorporating it into Russia as if it had never left.

He is getting desperate for further attention as he restarts the USSR, while the world also is tracking the missing Malaysia Airlines Flight 370. He puts his best foot forward while the world is distracted by an aviation mystery. I suspect he will raise the rhetoric to get world attention focused back on his antics.

Meanwhile, global investor sentiment seems to be improving rapidly, and global investors are trying hard to put the Ukraine crisis behind them. But I would be a lot more cautious. After the U.S. and EU sanctions already announced, there could well be another round of sanctions in the future. We need to keep an eye on the headlines and wait before we sound the all-clear.

The traditional assets that do go up in times of uncertainty are in decline now. Gold was down  about $15 Tuesday and only rose modestly during the past month when war rhetoric was high. Oil was flat Tuesday and fell 4 percent in the past month.

Stocks have been volatile but have risen for two days in a row. The Dow rose 182 points on Monday (the day after Crimea was annexed) and another 88 points Tuesday.

The U.S. dollar has continued to fall as the euro rose above 1.39 again Tuesday and shows very little sign of turning back down.

The whole market dynamic seems upside down. The end will come — sooner or later — for the big bull market in U.S. stocks — and for the debt bubble.

The end did not come yesterday. It did not come today, Will it come tomorrow?

While I don't know that, all I know is that you should be prepared. Unlike bonds, gold has no counterparty risk.

The history of the financial markets cannot be ignored and we will see gold continue to soar this year and next.

I would consider buying physical gold on such dips rather than selling into spikes.

Editor’s Note: These 38 Dates Are Key to Bagging $313,038

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The insanity of the stock markets befuddles me!
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Wednesday, 19 March 2014 07:21 AM
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