Today, the market is up nearly 100 points (at the time of writing). Who would have thought a Greek referendum could have such an influence on the Aussie market?
But as we’ve said many times before, such market volatility is not a sign of strength – it’s a sign of extreme fragility. For traders, this is a time for stomach ulcers and night sweats. If you’re lucky, you might make money.
For investors, it’s a time to ignore all the noise and focus on the big picture. In a world of sound monetary policy – which we don’t have – prices give off reliable signals. In a world of crazy fiat money systems controlled by increasingly desperate central bankers, prices tell lies. Today’s big rally (assuming it holds) tells you no more than the sell-off earlier this week. It only communicates confusion.
The big picture is this: The world’s monetary system is buckling under the pressure of excessive debt. Attempts to prop it up create even more debt, market distortions and disincentives to create wealth.
The capitalist system is being twisted beyond all recognition. Consumption is preferred to saving, speculation preferred to investment. Under this scenario, wealth preservation takes precedence over wealth creation. Guard what you have!
for Markets and Money