Recently by Bill Bonner: Devil Deals
And here we are at the end of the week and the end of the year.
And were no surer of what is going on than we were at the beginning of it.
The Dow rose 135 points yesterday. But gold kept going down. It is looking more and more like gold intends to make its big correction now Its been down for 6 days in a row.
Weve been waiting for it. Weve been hoping for it. Weve been counting on it.
Is it here yet?
We dont know. Gold is edging down towards $1,500. But it is still solidly ahead for the year! What kind of bull market correction is that?
Who knows? Maybe 2012 will give us a better opportunity to buy more gold We hope so
In the meantime, the markets are fairly quiet. The politicians are keeping their mouths closed too.
Here at The Daily Reckoning Christmas headquarters were drinking eggnog, eating fruitcake and wondering what 2012 will bring. Weve given up trying to actually look into the future. We dont seem to have the knack for it.
Instead, were just trying to figure out what we OUGHT to believe in order to end the coming year in the best possible situation. That is, what belief is least likely to be fatal? Which is most likely to pay off?
Generally, you ought to believe that things will turn out worse than they actually will. Why? Because the danger is on the downside. And this is a dangerous market.
Europe could blow up at any time. Despite what you read in the papers, Europes debtor nations and the banks that hold the debt are just a few basis points from disaster. Traders and speculators are taking it easy over the holidays. Well see what happens when they get back to work in January.
China, too, is a danger zone. Trouble is, we dont know exactly what the danger is. The economy is still growing at more than 5% per year. If the growth rate goes up China will put a big strain on the worlds demand for oil and other commodities which will make it harder for US and European families to make ends meet.
On the other hand, China is also showing signs of a slowdown or even a blow-up. Shanghai property prices are said to be falling fast. And the size of Chinas bad debts may be greater than Americas subprime or European olive country bonds.
Meanwhile, the US is sitting pretty. For now. Money is fleeing China and Europe for the perceived safety of the USA. Whatever else may happen, theres one thing investors can count on. Ben Bernanke and his merry band of price fixers will print the money necessary to pay off bondholders.
But America is dangerous too. It has a doomed currency an out-of-control military and a dysfunctional Congress. Sooner or later, it will blow up too.
We dont know which bomb will go off first. But at least we know to keep our heads down in 2012.
Thats all we have for this week,
Best wishes for the New Year
Bill Bonner is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century and The New Empire of Debt: The Rise Of An Epic Financial Crisis and the co-author with Lila Rajiva of Mobs, Messiahs and Markets (Wiley, 2007). His latest book is Dice Have No Memory. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning.