Global economic momentum improving, but don’t ignore disconnect between stocks and Doctor Copper

07 January 2014

Global economic momentum is improving and looks set to surprise on the upside in 2014. However, Doctor Copper should not be ignored. Copper has frequently been dubbed the metal “with a Ph.D. in economics” for its uncanny ability at forecasting the global economic cycle. When the global economy expands, industrial output increases and demand for copper pushes its price up. The converse happens when the global economy contracts.

The two charts below show the 5-year weekly copper price and the MSCI World (Stock) Index for the same period respectively.



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U.S. stock market: due for a correction

05 January 2014

Regardless of how the economy performs this year, I suspect the U.S. stock market is due for a correction, perhaps as soon as the first quarter of 2014. Sentiment is very bullish and fund managers have piled into the market en masse to avoid under-performing their peers or their benchmarks. People generally believe the Federal Reserve has managed to rescue the economy. The market has moved straight up for one year with at most very shallow pullbacks. I believe the time is ripe for the market to rattle some nerves.

The first chart below shows the 10 and 30-day moving averages for the NYSE Advance/Decline line. The 10-day (blue) is a short term indicator, while the 30-day (red) is an intermediate term indicator. The second chart is the weekly S&P 500 chart for the same period.



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Will 2014 be a decisive year for the United States regarding Middle Eastern affairs?


05 January 2014

According to STRATFOR, the year 2014 might be a decisive year for the U.S. in its involvement in Middle Eastern geopolitics.

STRATFOR’s latest geopolitical diary makes the case that working toward a nuclear settlement with Iran will take centre stage in U.S. strategy, with other hot spots like Syria and Israel/Palestine playing a peripheral but supportive role.

The Obama Administration is likely to manage Syrian negotiations and the Israeli-Palestinian talks in such a way that they reinforce the U.S. negotiating position with Iran. The ultimate goal, however, will be to pursue a settlement with Iran that points the way toward restoring a balance of power in the region, and in so doing, secure America’s geopolitical position with regard to the Middle East.

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Giraffes invade Facebook as netizens search for answer to elusive riddle


29 October 2013

Images and avatars of giraffes stormed Facebook walls on Monday night and Tuesday morning as one netizen after another conceded feat in attempting to solve a deceptively simple puzzle.

The puzzle reads as follows: “I’ve changed my profile to a giraffe. I tried to answer a riddle and got it wrong. Try the great giraffe challenge! The deal is I give you a riddle. You get it right you get to keep your profile pic. You get it wrong and you change your profile pic to a Giraffe for the next 3 days. MESSAGE ME ONLY SO YOU DON’T GIVE OUT THE ANSWER.

Here is the riddle: 3:00 am, the doorbell rings and you wake up. Unexpected visitors, It’s your parents and they are there for breakfast. You have strawberry jam, honey, wine, bread and cheese. What is the first thing you open?

Remember… message me only. If you get it right I’ll post your name here. If you get it wrong change your profile pic.”

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Has the secular bull market in gold ended? (Part Two – Bearish arguments for gold)

22 April 2013

Bullish arguments in favour of a continuation of the secular bull market in gold were laid out in this post.

This post will lay out the bear case. But first, some charts to consider and form the backdrop of our discussion. The first set of charts are 3-year weekly charts of gold, silver, and the ETFs GDX (gold miners) and SIL (silver miners).

3 year chart of gold (weekly)

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Bretton Woods, Gold, and the current monetary system

17 April 2013

In the next post, I intend to describe what I personally deem to be bearish arguments against gold, and make out a case why the secular bull market that began in 2001 probably ended in September 2011. Undoubtedly, there will be many believers in gold who will vehemently disagree. My bullish arguments FOR gold are laid out in this post (but as my next post will explain, I think the bear case outweighs the bull case).

First however, I will need to devote one post to describing a little bit of history to set the context for the discussion. We need to understand how the current monetary system evolved, as well as its flaws.

Post World War II, the Bretton Woods system fixed global exchanged rates to the US dollar, and the USD was in turn pegged to gold at a price of $35 per ounce. The US Federal Reserve guaranteed USD-gold interconvertibility between central banks at this rate, and the free market for gold was naturally tied down by this arrangement.

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Has the secular bull market in gold ended? (Part One – Bullish arguments for gold)

16 April 2013

The honest answer to the above question is “I Don’t Know”. The most I can do is to list out the long-term factors for or against gold, and evaluate the probabilities accordingly.

Factors favouring a continuation of secular bull in gold

1. Central bank money printing

Central banks continue to print money and expand their balance sheets in order to fend off what they perceive as deflationary forces and prop up the economy. There is even talk of the US central bank headed by Ben Bernanke moving to a single mandate — combating unemployment.

While the money printing is not immediately inflationary due to the deleveraging process still underway, the slow velocity of money, and global excess capacity, money printing eventually leads to distorted asset prices, and should ultimately be beneficial for gold as people start to find ways to defend against the depreciation of purchasing power of fiat money.

Many in fact have argued that the current stock market rally especially in the United States has been a result of money printing.

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Gold and silver decisively break multi-year support

16 April 2013

In a previous blog post last month, I ascribed a greater than 50% chance that gold and silver will break down below long term support. This prediction has come to pass.

Take a look at the short and intermediate term charts of gold and silver respectively.

One year (daily) and Three year (weekly) charts of Gold



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Long term gold and silver charts revisited

02 March 2013

Let us revisit the long term charts of gold and silver. I contend that since the early stages of the secular bull market, both precious metals clearly exhibited an alternating pattern of 6-9 month upswings followed by 15-18 month consolidation phases.


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Gold and Silver — At critical support

01 March 2013 Gold and silver are at critical multi-month support. Attached below are the 3-Year Weekly charts for both the gold and silver spot price. As can be seen from the charts, gold is near the critical support band of 1540-1560 per ounce, … [Continue reading]

Thoughts on the End Game

John Mauldin, 23 Jan 2010 When I was at Rice University, so many decades ago, I played a lot of bridge. I was only mediocre, but enjoyed it. We had a professor, Dr. Culbertson, who was a bridge Life Master at an early age. He was single and lived … [Continue reading]

Contrarianism is the New Consensus

By Paul Kedrosky It rarely pays to be contrarian. For the most part trends go in the same direction for some time – that’s why they’re called “trends”.  Whether it’s real estate prices, credit card debt, Treasury issuance, or Croc sales, they can … [Continue reading]

Don’t Just Watch the Parade Go By

By Arne Alsin Contributor 11/9/2009 11:30 AM EST URL: Count on it. For the next several years, the stock market belongs to the bulls. You're going to see periodic pullbacks, … [Continue reading]

The PAP story, blemishes and all

Source: ST, 09 Sept 2009 What is Men In White all about? How different is it from previous books on Singapore's ruling political party? Let me clarify what the book is not. It is not a re-telling of Singapore's transformation from Third … [Continue reading]

Friends and foes under one roof

Source: ST, 09 Sept 2009 IT WAS a historic moment with friends and foes gathered together under the same roof where they last met more than four decades ago - at the Old Parliament House. The occasion was the launch of a new book on the … [Continue reading]

Another bit of history

Source: ST, 09 Sept 2009 MORE than one for the album, this was a picture for the history books. If not for the numerous photographs capturing the moment, many would have scarcely believed what took place yesterday in the Old Parliament House - … [Continue reading]

Whither Temasek’s industry nurturing role?

Source: Straits Times, 08 Sept 2009 A COLLEAGUE remarked to me the other day that something had struck him as he read Temasek Holdings' updated charter released last month: Nowhere in the 200-word document is there a mention of Singapore. There … [Continue reading]

Inflation hits poorest 20% twice as hard

Source: Straits Times, 25 Aug 2009 This group was affected most by food and housing prices in first six months By Joyce Teo SINGAPORE's poorest 20 per cent were hit twice as hard by inflation than better off households during the first half … [Continue reading]

How HDB keeps it affordable

ST Letter by Ignatius Lourdesamy, 31 Aug 2009 WE REFER to the letters, 'High HDB prices: Squeezed even harder' and 'Two shortcomings: Public housing too correlated to private market, and HDB has not regulated supply' (both Aug 22); and 'Flat … [Continue reading]