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