Next Stop: $2,000 Gold

Source:

...Casual observers might be forgiven for interpreting the bear market rally, representative more of short covers and delusional optimists than of relative strength, for signs that the crisis is over, the market has bottomed, and business as usual is imminent...

Last week has to be one of the most stunning in the history of financial markets.

It started with the weekend sale of venerable Bear Stearns (BSC) to JP Morgan (JPM) for the laughably low price of $2 a share, setting the tone for what will be remembered as a prophetic event for the week that followed, and ultimately, for the months that will follow...

So what has happened, is the Fed is exercising its right to print money with renewed abandon, comforted by the short term validation of its strategy afforded by the Dow's responsive surge. Casual observers might be forgiven for interpreting the bear market rally, representative more of short covers and delusional optimists than of relative strength, for signs that the crisis is over, the market has bottomed, and business as usual is imminent.

But hold the phone. Is this the bottom of the well, or merely a ledge hit on the plummet to resume shortly?

Bet on number 2. Though both gold and oil have taken a near 10% hit during the last few sessions, and sure the Dow has piled on 400+ points in two sessions in the last two weeks, there is much, much more to come...Next stop: $2,000 gold.

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