Today's sell off in the mining shares dropped this ratio, which has already been collapsing, to levels last seen at the depth of the credit crisis back in 2008. It should be noted that the ratio did recover that month moved up smartly off its worst reading.
This time around however, the ratio is not recovering. It closed last month in February at the lowest CLOSE for a month since May 2001. That is an astonishing TWELVE YEARS AGO. The month of March is still young so the ratio has time to recover but so far it is showing no signs yet of reversing.
Some select shares are either the screaming buy of a lifetime or gold is going to fall further yet. It is unclear just what it is going to take to convince BROADER stock market perma bulls to stop chasing them higher. News that China is attempting to slow its overheating real estate market down was shrugged off like a bad habit in today's session in the US.
I know that many analysts continue to insist that the broader stock market is still cheap. That is their business and their opinion. I believe we are witnessing another speculative mania courtesy of the Federal Reserve. With the Fed having slashed interest rates to practically ZERO and with commodities in general out of favor with hedge funds and other larger investors, stocks are the only game in town to obtain any sort of yield in this insane speculative nirvana that the Fed's policies have created. I suppose the rally in equities will continue until it just doesn't. The tape continues to tell traders to buy the thing.
That of course is not much use as predictions go but these guys are drooling all over their chins while they eagery await any dips in the market to gorge themselves on more equities. Nothing, and I do mean "NOTHING" can disabuse this gang of the current Bullish rage that has seized upon them and will not let them go. Quite frankly, it is stunning to watch this herd mentality grow more virulent with the passing of each and every day.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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