Gold is in a Bull Market, Stocks are in a bear market

Gold is in a bull market. Stocks are in a bear market.

That is all ye know…and all ye need to know.

Stocks are being driven down by the market, in a natural, ordinary, inevitable correction.

And gold is being driven up by the central banks’ attempts to stop it.

Buy gold on dips. Sell stocks on rallies.

Simple enough, don’t you think?

No guarantees, though. Mr. Market can do what he wants. And if he wants to set off in the opposite direction, there is nothing we can do, here at Markets and Money headquarters, to stop him.

All we can do is look out the window and see what direction he is heading now.

But what’s this? Is he doing the moonwalk? What bedevils so many investors and commentators is that it’s hard to tell which way he’s going. Mr. Market is clearly marching towards deflation – notably in the prices of houses and stocks. But the feds have a line on him. They’re pulling him in the opposite direction – inflating gold, oil and food prices. Which is it – boom or bust? Inflation or deflation? Prosperity or poverty? The combination of opposing ideas seems to rattle most observers. They can’t tell whether Mr. Market is coming or going. But here at Markets and Money , we take ambiguity as comfortably as gin.

To the question: what’s it going to be, boom or bust? We answer: Yes. Both.

On the bust side, Martin Feldstein, says the coming recession could be “nasty,” unless the feds take decisive action. He wants “aggressive” rate cuts backed by fiscal policy too – say, a tax rebate – to stimulate consumer spending.

Forget it, says Forbes . By the time the feds figure out what to do the recession will be already upon us. It will be too late to stop it.

The BBC says the United States is already in recession. And Congress is out of session for the holidays.

But suppose the pols were already in Washington, with their fat derrieres in their comfy leather chairs and their pudgy, payola-stained fingers at this very moment ready to vote for more zany, FDR-style relief. What exactly could they do?

Well, they could give taxpayers back some of their money…thereby increasing consumer purchases. Well, yes, they could do that, couldn’t they? And they could get Ben Bernanke on the phone and pressure him to cut rates…and open up the central bank vaults so that the voters had more money and credit. Yes, they could do that too. And what would be the effect of all this new money and credit (created ‘out of thin air,’ for there is nowhere else it could come from)? Would it not create an even greater sense of urgency among gold buyers?

But our guess is that Forbes is right in the first place. The feds can’t stop a slump. All they can do is react to it. And their reactions are likely to lead to higher inflation levels.

Meanwhile, a bear market in stocks is underway. Whether it is an entirely new phenomenon…or the long-awaited continuation of the aborted bear market that began eight years ago…we don’t know. But stocks are going down.

Maybe – if the feds were able to inflate fast enough – the bear market in stocks could still be turned around. And maybe – if the economy goes bust fast enough – the bull market in gold could be arrested. But one way or another, with Mr. Market pushing so hard in one direction…and the feds pulling so hard in the other, either gold is going up…or stocks are going down.

One or the other…something’s gotta give…probably both.

Bill Bonner
for Markets and Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.
Bill Bonner

Latest posts by Bill Bonner (see all)

Leave a Reply

3 Comments on "Gold is in a Bull Market, Stocks are in a bear market"

Notify of
Sort by:   newest | oldest | most voted

while mr.banker cat is busy picking burrs out of his tail….the liddle mice are eating the cheese……as long as credit woes mesmer’ise bankers….gold price suppression will have to take a back burner…..for now…..

There’s something missing in the formula to date , and that’s the Aussie dollar . After frollicking about around 43 cents , it’s slowly ablbeit grudgingly , moved it’s austere backside , there’s something in that drop to 43 cents . Ockhams razor would have us think it’s the carry trade , that would be convenient in my opinion . It look more like one final swing at growth . But that is only an assumption for my part . If we are still thinking down the lines of revisiting history for a retest of the last imperial prices .… Read more »

I’ve seldom read such a load of rubbish that gives opinions such as ” This might happen if that happens”
If you know nothing why bother with the above claptrap.

Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
If you would prefer to email the editor, you can do so by sending an email to