Bernanke Rolls The Dice (Cont)…

Fact #2: With zero to historic low interest rates in the US, the dollar is going to come under tremendous pressure. I expected that we will see a continued erosion in this currency until such time as interest rates begin to bounce back.

Fact #3: As dollar goes south, look for gold to move higher. How much higher will depend on how much money is printed. Gold could in fact move significantly higher as it is seen as a store of value in inflationary times. I’ve heard people say that gold could go to over $2,000 an ounce as investors and consumers look to put the money into something that they can believe in again.

Fact #4: I expected stock prices will languish and I do not expect to see a move on the upside anytime soon. We’re still in the midst of a major bear market and I expect this bear market to continue through 2009.

Right now we are waiting for the dice to come to a stop. Will it come up as snake eyes, or will it the U.S. have the heavy stack? Nobody knows at this point in time, including the FED and Chairman Bernanke.  Just remember, there is no free lunch in the markets, someone always pay the bill one way or another.

What concerns me most is that the people who got us into the problem are responsible for getting us out. For example, Alan Greenspan has continued his efforts to keep interest rates low and to fuel the rapid growth in housing prices. This astronomical growth created the bubble …. which ultimately popped. Now homeowners are living in houses which are upside down on their mortgages.

Then you have people like Christopher Cox of the SEC who helped to remove the Uptick Rule which inturn destroyed th U.S. equity markets. If you hav not seen our video on the Uptick Rule that we made last year, I’d strongly recommend that you take a look at this video. The removal of the Uptick Rule was basically a blueprint hedge funds to loot and plunder viable companies.

So forgive me for not getting too excited about FED latest blind call. It seems to me as if they went “all-in” without even looking at their cards.

I have a feeling that regardless of the FED’s move, consumers are not ready to the stores and buy, buy, buy. Anytime soon, unemployment will climb over 10% and the consumer will be very, very cautious about spending money in these uncertain economic times.

Lastly, as we go into the waning trading days of 2008, we have the new administration to look forward to in 2009. Hopefully this administration will inspire confidence in the consumer to once again believe in America and believe in the American dream.

Let’s hope that this is in fact what will happen.

As always the markets themselves will show the way. As I said earlier, we are in a bear market and bear markets sometimes take a while to turn around. Until that happens, I expect the markets to languish and even go lower from current levels, as that is the direction of the major trend as I write this posting.

Every success in the markets and in the coming new year,

Adam Hewison
President, INO.com
Co-Creator, MarketClub