The Golden Truth - So you know....

From two top of the line sources, The Golden Truth blog and former Reagan OMB Director David Stockman. Both have solid takes on where we stand economically and where we may be headed. Something you will not find on your local or national MSM news outlet.

The Golden Truth:

"Market-wise, I think we will drift sideways for awhile, until the conundrum of how the U.S. Government will fund the extra $2 trillion in debt that Congress will enable it to issue before the end of the summer.  Of course, we all know that the white elephant in the room that no one wants to acknowledge is called 'more money printing.'

Until the Fed blinks, I think the risk of a big accident in the stock market grows each day.  In case you missed it, the FT Blog ran this article - LINK http://ftalphaville.ft.com/blog/2011/06/24/605331/behold-the-high-yield-exodus/ - about the massive flight of capital out of the high yield market.  When I was a high yield trader, typically the direction of the big flows of capital into or out of the high yield market were a precursor to the next directional move in the general equity markets.  It's not a perfect barometer but it's worth paying attention to.  Please note that near-negative yield in 1 month Treasuries is always a signal of a big liquidity problem in the markets, as big money pays up to insure the return OF their capital vs. the return ON their capital."

I do believe, however, that if the equity markets take a big tumble, we will see a surprise rally in the metals, as capital begins to truly appreciate the historical flight-to-quality characteristics of gold and silver. Take a look at your intra-day charts on gold/silver/mining stocks on May 6, 2010 when the Dow had an intra-day drop of 1000 points. Gold actually traded up sharply as that was occurring, until the Fed stepped in to prop up the markets. I believe we'll see that again.

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David Stockman: Ben Bernanke is finished!

Jun 23 2011 MSNBC The Dylan Ratigan Show -- Former CBO director David Stockman and panel taks about the Federals Reserves acknowledgement of dissapointing growth, higher inflation and a weakening labor market.