Many Roads Lead to Gold

Yesterday's post critiquing Cisco's earnings may have resonated on the Street. CSCO opened up but then turned tail the rest of the day. Unlike Big Finance, at least CSCO makes products that help people and businesses, that work as advertised, and that have allowed the company to amass a large cash position without selling stock. Unfortunately, CSCO is big, is losing market share, promotes its stock too much, etc., so EBR is not in love with it as an investment, either; but at least it is not a fraud.

Re the whole bubble, there is a nice summary of free-market, Austrian economics thinking re where we have been and where the current President wants to take us. It's not groundbreaking research, but it's worth a read as a review of a coherent position to which EBR is sympathetic.
See "Beware of Obamanomics" (which is not partisan, despite its title; it skewers many).

TrimTabs continues to report almost nil insider buying. If stocks were cheap at Dow 8400, there should be lots of insider buying. EBR likes this trend not at all.

Courtesy of Zero Hedge, the Fed has released statistical report G.19, which demonstrates steady declines this year in the quantity of consumer credit. People simply don't want/can't afford debt. In this regard the people are wiser than their overlords.

Also in Zero Hedge, "The Reverse Engineering of Greenspan Continues" demonstrates some extraordinary overpricing of mortgage-backed debt vs. Treasuries, as well as providing an interesting long term look at that relationship.

The combination of heavily bearish sentiment on Treasuries, falling consumer credit, overcapacity in goods and services everywhere the eye can see, the Big Lie that Big Finance is healthy (thank you, PPIP!), and the undervaluation of Treasuries vs. mortgage-backed securities would appear to make long Treasuries an interesting speculation. Anywhere from 10-30 year yields are interesting, as they are at or within support ranging from the Bear, Stearns fiasco (the 10 year) to the prior cycle (the 30 year).

Nonetheless, despite an uninspiring chart, of Treasuries, the S&P 500, and gold, guess which asset that Econblog Review continually speaks well of is up on the year. Only gold, which is also outperforming cash. Gold was up in price 8 years in a row before 2009. Will it end with a blowoff upside peak, a la 1979 or the NASDAQ in 1999? Treasuries may be a good trade, but gold can be forever.

Copyright (C) Long Lake LLC 2009