May 18, 2006
The Fed's Dilemma - Gold or Housing
In a nutshell - here are his thoughts on the current situation:
The fed has a dilemma and two charts explain it - Gold and Homebuilding. One (gold) is too hot, the other (housing) cold (could get real cold). The market has started to pinch the Fed, a harsh reminder that NO ONE (Fed Included) is bigger than economic laws (the sound ones). More tightening to rein in gold and housing is likely to cascade in our view. A pause to pacify the liquidity restarints in housing, and GOLD WILL BE $1,200 IN OUR VIEW.
As Fonzarelli used to say - Whoaaaaaaaa!
For a guy that has to write EVERY day, he is good. Sometimes he just nails the issue in a paragraph and he really bangs the table. I think he has pretty much nailed the current dilemma. I can tell he has strong conviction and he is not going out on the limb here people.
I recently posted that The Fed and the bankers had created a stew that is boiling and they are way over their heads. It has not been in their interest to tell you the truth, but now the markets are taking over.