NFTRH

Sentiment Picture Becomes Clearer (excerpt)

By Gary Tanashian

Biiwii.blogspot.com

April 12, 2009

Excerpted from the segment 'Sentiment Picture Becomes Clearer' in the April 11 edition of Notes From the Rabbit Hole

In gold, it is business as usual. The metal went too far technically and sentimentally for the current correction not to have come about. Now, as I often write gold is not about price (in nominal dollars), it is about value. Value. VALUE. Have I mentioned that gold is about value? Many gold bugs are simply casino patrons of a different orthodoxy. So leaving aside nominal price – and the target of 680, as mentioned in the article is by no means a done deal and I would not advocate trying to think you can steal some at that level – it is gold’s relation to all the ‘hope’ assets that is important to our ongoing themes. We will look at some of these later in today’s report.

Sentiment is being reset and this has been NFTRH’s theme for months now. What needs to happen is that gold bug sentiment should take a hit and broad market and economic sentiment needs to be floated by hope for a while. This will reset the technically unhealthy gold ratios and prepare us for the next leg up in rational, post-casino thinking and the next leg down in the spirits of those who still adhere to the old system and all of its conventions. The process is coming along nicely now.

In short, Hope ’09 moves forward and this past week has confirmed its existence in the major media. The examples are coming in nicely now; President Obama used the word ‘hopeful’ in summarizing the economy now that they have rigged the interest rates and tax incentives to be more conducive to people getting credit, specifically benefiting that renowned economic engine, the first time home buyers. There was the author/expert interviewed in the Howe Street video I posted on the blog (as part of this post about the bull’s red roof, copper http://tinyurl.com/cd9ozd), coming right out and using the word hope and getting giddy about the banks and commodities. Then there is the Bloomberg headline Dollar Gains Most in Two Months on Optimism Worst of US Crisis is Over.

Here are some alternate headlines.

Obama hopeful more credit aimed at non-productive ends can do what it failed to do last time, avoid stimulating macro Ponzi scheme

Experts hopeful current turnaround predictions to be believed after previous failure to see anything until after the fact

Dollar continues higher in weekly bearish flag designed to get as many offside as possible in belief that worst is over

Yes, sentiment is coming along nicely. There are stories to be manufactured and believed and there are herds to be influenced. While this may be an annoying time to be a financial realist – because after all, hope is going to make an attempt to legitimize itself as it gets the majority offside, it is crucial to have patience and a clear outlook that is not influenced by the manufactured noise.

NFTRH will continue to gauge how well sentiment is coming along for the hopeful as well as for the bears and gold bugs, in the opposite direction. Many of our indicators have made significant strides, as we will see later in the report. In the meantime, we should let things play out and remain confident that we saw this coming, planned for it and are now making plans for what comes next. If I am wrong and the worst truly is over, NFTRH will adjust in due time. But patience is likely to be the most successful commodity over the near term.

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