Back to the Future, or Forward to the Past?

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The first day of the new quarter brought more of the same to the world's financial scene; anxiety, uncertainty, and disoriented trading patterns. Gold prices traded all over the map during the midweek session but were ultimately, showing basic fatigue and failed to climb back above $900 following yesterday afternoon's post-futures closing huge drop. Most of the gains of the day dissipated by the afternoon in NY the metal fell back to $870 (unchanged) as the dollar turned positive once again.

Small footnote on the 'gold rush' of 2008. Yes, demand is up. Yes, the US Mint is likely to end up selling close to 790,000 ounces of gold before this year draws to a close (based on ytd patterns). But, it is worth noting that the sales it recorded in 1987 totaled 1.250.000 ounces. Also worth noting is the 250,000 ounce sales level that was recorded just four years later, in the recession of 1991. Perspective never hurt.

Today marks the session during which US lawmakers will likely vote on the most important issue that has faced them in recent memory. We thought so the other day as well, but the thumbs down prevailed. Now, the pressure is really on. They are no longer voting on the bailout of Wall Street, or on the future health of Main Street. They are seen as voting on the immediate fate of Global Street - as in Every Street. Such a momentous overtone is not some figment of this writer's imagination. No, the words came from Mr. Trichet this morning, when he said about the upcoming vote that "It has to go, for the sake of the U.S. and for the sake of global finance." Enough said. And now, we must wait until 21:30 NY time to learn what the verdict will be. Advice: eat a light dinner and skip the wine.

Wednesday's stock trading went nowhere fast, as participants waited for the Capitol Hill vote. Nonetheless, slipping investor confidence was manifesting itself once again, despite the major bounce seen in yesterday's Dow values. Perhaps they were looking at a 30% and higher drops in the auto sales at Ford, Chrysler, Toyota, Nissan, etc. Consumer are either frozen in their shopper's tracks or are just simply frozen out...of borrowing. Mr. Buffet lent a helping hand to GE by dipping into his pocket to the tune of $3 billion. Some market observers believe they have just seen a bounce by the world's largest deceased feline.

Others, see a bottom larger than that of a circus clown's pants. Any wonder then, that the September charts for many an asset look like the teeth on an Oregon logger's saw? Looks like today's viewership of the C-Span channel might hit some levels not seen since...ever. Wrapped in the $700 B package is a 'small' measure designed to raise the FDIC deposit insurance to $250,000 per account. A simple inflation-adjusted computation would bring the current $100K coverage to $220K by now, anyway. About time.

New York gold remained decidedly nervous in tone, as participants drove bullion higher at first (safe-haven positioning) then drove them back down after progress stalled at $895.00 per ounce. The dollar was still on the plus side, showing a 0.40 gain at 79.65 on the index, while crude oil lost $1.70 to $98.97 per barrel. Makes sense. Where are the vehicles that will burn that $4 gasoline? Sitting on dealers' sales lots, gathering moss. Silver added 51 cents to $12.57 and even platinum and palladium showed signs of life after so many days of declining, with the former rising $27 to $1025 and the latter advancing $8 to just above the double-century mark.

Where we go from here, is anyone's guess at this point. A chain of events needs to unfold first. A vote, a reaction to same, an analysis of the immediate outcomes -all have to occur first- and then the money flows will start...flowing in the direction deemed most safe and hopefully profitable by the trading crowd. To go out and ask them where that compass now points to, is to get blank stares (if not worse). Thus, we wait. In the interim, we see an ADP report that shows only 8,000 jobs lost in September. We see a contraction in the manufacturing index that does not bode well.

There are immense opportunities for punditry at this juncture. This is the moment where new market gurus are made and born on the same day. Soon, they will attract thousands of followers. Others, whose predictions do not come to pass, will be quickly forgotten and their faithful flock will flee. Thus, we get analyses from names few have heard from in the past, if ever. Let's see what two of them have to say about what the future may hold. Posting an article on Marketwatch this morning, is Thomas Kee, Founder of Investment Rate. Here are excerpts from his contribution:

" The recent downturn in our economy is rooted much deeper than the credit crisis. The mortgage-related mistakes were a near crippling by-product of the greed allowed to compound during the past administration, but they do not provide insight into the future demand for investments. In fact, most people believe, once this credit crisis is behind us, buyers will rush back into the market again and the economy will restore itself. This might cause some people to try to get ahead of this anticipated curve."

"At the end of 2007 the upward sloping cycle which began in 1981 came to an end. A new era began at the end of 2007, an era representing diminishing demand for investments going forward. The Investment Rate identified this in 2002, when it was first offered to the public.