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14 March 06 Optimism - The Contrarian Gold Standard... The Dow nears a multiyear high... the S and P nears a multiyear high... the terminal Fractal pattern sits like a Great Sphinx, expressionless for 2000 years saying nothing and... knowing ...and revealing - for perhaps those who quietly observe.... everything..... Is the terminal pattern following a natural evolution pattern or a terminal blow off pattern? The market will do what it will do with the available credit it has available producing the optimal fractal evolution. Like the cryptic sphinx it cares not what people believe it will do. It will do what it mechanistically and causally and deterministically must do. Like the human condition, there is no free will in the macroeconomic complex debt-money-asset system. Inspite - inspite of the increasing interest rates of 3 month treasuries - the resilient long bonds currently yielding 4.5 - 5 percent, courtesy of our Asian 'trading' business partners are historically both extraordinarily low and speculatively accommodating. Nevertheless, the macroeconomic feedback mechanism of high cost assets, overproduced assets, high debt load, and inadequate US entry level service worker wages has been slowly and persistently, working with the certainty of dripping water on a forehead, its operative action on the unbalanced global economy. Gold stocks and gold have surprisingly suffered the most in the beginning of the great deflationary evolution. This phenomena is both counterintuitive and yet most probably very predicative of the future course of events. How is it with the billions of Yuan created and the Asian predilection for the base yellow metal... how is it that equities have recently outperformed the precious metals and their correlative mining equities over the last 35 trading days? The answer may come from the long term fractal evolution of gold and gold equity charts which suggests a devolution lasting ten to eleven more years. What is more valuable a house protective against the elements or a lump of, albeit finite metal, that can be readily confiscated by any agent with a small caliber weapon? Gold which normally leads the way out of the chaos that is the post bubble period may suffer a protracted Waterloo until 2015.The US dollar backed by real and unquestionable weapons of mass destruction and by ongoing asset deflation may do paradoxically incredibly - incredibly well. The ironclad prediction remains........unaltered. Before the consuming fire storm in the aging forest, one last poorly constructed wooden shed of X/2.5X/2.5X has been constructed. The sphinx... knowing all and laws of the universe...with its countenance unaltered for 2000 years... smiles an internal and uneasy hidden smile.... Expect the unexpected..... Gary Lammert |