The Republicans won, spending will be cut!! New austerity to be imposed in America! Obama a lame duck! Muni's imploding! China's tightening!! Commodities are going down you stupid inflationists!!
As speculated in NFTRH of late, the d Boys are let out of the padded room again. Here is the thing... my favored investment (as far as stocks go), the gold stocks, will be far better served by economic contraction than running with the commodity herd. What is happening now is the flushing out of the herd because as we all know, the majority of inflationists see gold as copper as oil as 'hard assets' of all kinds. Not to say there is not a global big picture case for the resource trade - in my opinion, there is - but insofar as we get these nasty corrective deflation events, there is only one sector that benefits.
I'll spare you all the theory until we get a handle on just what is happening here, since HUI, GDX and GDXJ have targets that are lower, assuming they do not hold the targets they currently sit right upon today. The play, if it is an extended and painful deflationary event that visits, is 'gold stocks above all else' after perhaps savage correction. That was not the case two weeks ago. Gold stocks were running with the herd.
Don't ya love this? Hmmm?
