Financial Sense Blog

The dollar, chart patterns, and seasonal strength are all pointing towards a golden opportunity in precious metal mining stocks. The January correction flushed out weak hands and reset momentum and sentiment indicators. The January correction, February rally, and weak March correction have set up a variety of bullish patterns on the charts.

The Fed's forecast, published last month, has inflation reaching the threshold of concern only in 2012/2013 (see Table 1) based on the personal consumption expenditure price index and a little later if the core personal consumption expenditure price index, which excludes food and energy, is the preferred price measure.

Here's a simple test of whether the economic recovery is self-sustaining or not: cut Federal spending back to 2007 levels (a $1 trillion reduction) and cancel all Fed intervention such as quantitative easing.

I recall vividly watching the PR nightmare cascade out of control on the nightly news. It was 1968, and Mayor Daley had intended to use his city's hosting of the Democratic National Convention to showcase Chicago’s progress.

Often lost in the discussion of the monthly employment situation is real earnings. The standard for measuring hourly earnings is the Bureau of Labor Statistics series called: Average Hourly Earnings of Production & Nonsupervisory Employees – Seasonally Adjusted. We start with a table that summarizes nominal and real earnings for the last three months and from one year ago.

The disaster in Japan has reignited the ongoing debate over nuclear energy, its safety, and costs. As different groups argue over the issues, everyone seems to be missing one very important solution, and it happens to be right in front of our faces.

It's very difficult for a trader to stick to a plan and not let news events dictate decisions. But every once in awhile there are news items that come along and attempt to trip investors up, forcing some to take their eye off the big picture. Many of us understand the long-term potential of precious metals and commodities, but the emotions -- either unbridled enthusiasm or gloom and doom -- of the herd often affect our decisions negatively at short-term turning points.

In my previous missive I concluded that investors should stay true to the principles that have always guided (and should always guide) sensible investment, but I left readers hanging as to what I believe those principles might actually be. So, now, for the moment of truth, I present a set of principles that together form what I call The Seven Immutable Laws of Investing.

Explaining factors that contribute to volatility and uncertainty in markets.

The great earthquake/tsunami/nuclear meltdown of 2011 will result in more quantitative easing in Japan and the U.S. This will result in even more inflation than we are experiencing today. Once the inflation genie is out of the bottle, the race to the bottom will accelerate. Gold will decide who wins the race. It has been a neck and neck race since 2001. I'm not sure it is a race anyone wants to win. But the destination is certain.