The Bear Will Return in 2011

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It’s almost
impossible to find anyone who is long term bearish on the stock
market or economy at this time. In the recent Barron’s poll every
single analyst expected a rise in stock prices next year and continued
economic expansion.

I think they
are all going to be wrong, horribly wrong. I believe next year the
stock market will begin the third leg down in the secular bear market.
And the global economy will tip over into the next recession that
will be much worse than the last one.

I’ve gone over
the 3 year cycle in the dollar index many times. The dip down into
the next 3 year cycle low this spring should drive the final leg
up in gold’s massive C-wave. What I haven’t talked much about is
what happens after the dollar bottoms.

I actually
expect this three year cycle in the dollar to play out almost exactly
like it did during the last three year cycle. When the dollar collapses
this spring it will not only drive the price of gold to a final
C-wave top, it will drive virtually all commodity prices through
the roof, the most important being energy and to some extent food.

It was the
sudden massive spike in energy that drove the global economy over
the edge into recession in late ’07 and early ’08. The implosion
of the credit markets just exacerbated the problem. You can see
on the following chart just as soon as Bernanke drove the dollar
below long term historical support (80) oil took off on its parabolic
move to $147.

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28, 2010

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