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Tuesday, September 22, 2009

Executive Summary

Tracking the housing market helps us see where the economy is headed.  Two categories of data that are useful to focus on are house prices and housing supply.

House Prices

Measuring the value of housing is critical, because the amount of foreclosures and the economic fallout from them are both tightly linked to the difference between the current value of a house and the mortgage held on it.

Housing Supply

To appreciate housing supply, there are three things we need to track:

• Total number of existing homes for sale (expressed in either a raw number or in “month’s supply,” which takes the raw number and divides it by the current sales pace)
• Total number of new homes for sale (expressed the same as above)
• Amount of “shadow inventory,” which are homes that are on the books of the banks but have not been released into the market for sale

This is Part I of a two-part report.

Monday, September 14, 2009

Executive Summary

• Gold had the highest weekly close ever
• UN calls dollar trading a “confidence game”
• US fiscal deficit breaks all records, keeps accelerating
• Brazil, Russia, India, & China (BRICs) have dollar concerns
• China promotes owning gold to its citizens
• Examining US dollar reserve currency status (again)

Normally I like to switch up my analyses each week, but last week’s look at gold already needs some updating, due to a few important occurrences.  There was a blistering array of developments and cross currents this past week that make me suspect we may be entering a new inning of this game.

The first of these is that gold just had its highest weekly close ever:

Monday, September 7, 2009

Executive Summary

• Gold had a techncial breakout this week to the upside.
• Fundamental support for gold is also strong at this time.
• Swiss vaults are full.
• Gold is accumulating to strong hands.
• Hong Kong “recalls” gold reserves.
• China changing the game?

Because it rose during both down days and up days for the stock market, gold has been acting in a fairly unusual way these past few weeks.  What’s going on?  I follow gold very closely, and here is what I am thinking at this time.

Before I begin, let me reiterate this:  Every portfolio, no matter how large or how small, should have a core position of physical gold in it.  Not paper gold (mining shares, ETFs, futures, etc).  I am talking about hard, physical gold that is either in your possession or in a vault.  If you have the means, you should have some in a vault outside of your resident country as well as within it.  

Gold’s Technical Breakout

From a purely technical standpoint, gold broke out with conviction from a triangle this week (see chart below).  The next usual step to this process would be a back test of the breakout.