Banks are bankrupt (negative book value), and some may fail
soon, so be careful. They only wrote down 5% of the junk they
really have. This is much worse than S&L crisis,
our entire banking system is showing significant cracks.
Banks/brokers are usually leading the market, not the other
way around. The World stock markets have not even started to
catch up with the crisis. At first subprime was irrelevant.
Now that it is spreading to prime and corporate bonds, everyone
is talking about it. This is the recognition phase, rather
than the bottom. Watch 89-90 for BKX. This is a strong support,
but we bounced from it many times already, and there is a vacuum below all the way to 2002-2003 lows.
You may be right, and if we get into a global recession,
commodities will drop. Gold is a different animal, though,
it is debt-free money and a hedge against a meltdown. Thus,
the banking crisis could push it much higher. Gold is a
commodity only during its secular bear market phase. In a bull
market it recovers its monetary role. |
