The following is the text of an e-mail I sent today to Subscribers of StockResearchPortal.com. StockResearchPortal.com is a research website that provides coverage on the approximate 1,600 Mining and Oil & Gas stocks listed on the Toronto and Toronto Venture Stock Exchanges.

*          *          *          *          *

U.S. Thanksgiving

First, I would like to wish all our U.S. Subscribers and friends a ‘very Happy Thanksgiving’. On a personal note, my wife and I spend 3 months each year in North Carolina, and currently are in Pinehurst. Good friends here have invited us to share their Thanksgiving celebration and we are looking forward to our 2nd Thanksgiving dinner of the year later today. To explain, my wife and I are Canadian residents. Canadians celebrate Thanksgiving in early October each year, where Thanksgiving is an important ‘family day’ but not seen as nearly as important a holiday as it is here in the United States.

As I am sure readers know, tomorrow is referred to in the U.S. as ‘Black Friday’. Historically Black Friday has been, and again this year almost certainly will be, the biggest shopping day of the year in the U.S. It is the day that begins the U.S. Thanksgiving - Christmas ‘purchasing season’ that in the past has taken many U.S. retailers from being ‘in the red’ to being ‘in the black’ (i.e. going from a ‘year-to-date loss’ to a ‘profit for the year’. I suggest you carefully watch the retail sales numbers that are (usually) reported tomorrow (Friday) night. I think they could have a large psychological impact on both the U.S.$ and U.S. equity markets next week - which if I am right may have a (perhaps significant) near-term impact on the gold price.

The Circus Rider & The Markets

Two evenings ago my wife and I had dinner with good friends. Both are investment advisors, have ‘good brains’ and common sense, are highly entreprenurial, and (in my view very importantly) care deeply for the financial well-being of their clients. As usual these days, the discussion turned to the U.S. economy, the rise in the equity markets since last March, and in particular the rapidly rising price of gold over past weeks.

When able to ‘get a word in edgewise’ - our friends will laugh if they read this - I said that I thought the physical gold market and the equity markets where out of sync. I compared them to the circus performance you likely all are familiar with - the one where a rider stands atop two horses with one of his/her feet on the back of each and parades them around the circus ring. In order for the rider to do that successfully, he/she must coordinate two animals each far more powerful than they, control both at the same time, while themselves performing a difficult ‘balancing act’ - quite a feat when you think about it. If one likens one of those horses to the physical gold market, and one to the equity markets, it strikes me one ought currently to see a significant dichotomy between the two. One can postulate that the physical gold market has been telling us every day lately that the U.S. dollar (read the U.S. economy) is in a downward spiral that is likely to continue, while concurrently the equity markets are telling us the U.S. economy is in a recovery that is significant in economic terms and is going to continue. Pity the poor rider trying to ride both horses simultaneously. Chances are as a minimum they would hit the floor of the circus ring hard, and as a maximum could be trampled and killed. It seems logical to me that if you are an American circus performer and you think your two horses are likely to go in different directions, it is sensible to pick only one to ride and not both - or simply elect to sit at home today and enjoy your Thanksgiving dinner.

That said, tomorrow and the next weeks and months are of course a different story. For what it is worth, on a second personal note I continuously think about what I see as dichotomous gold and equity market conditions, and currently am being far more cautious than I normally am in what I see as very uncertain and volatile markets. Once again, I can’t over-emphasize what I consider to be the importance of ‘thinking for yourself’ and being in constant contact with your investment advisors in these, and what I see as likely prospective, market conditions.

Research Gold Stocks

See Blog Legal Disclaimer

Email this Post to a Friend.

Trackback URI | Comments RSS