Deficit Reduction, Austerity, and Deflation
Try as the market pundits try, and try as the trading speculators try, long gold does not fit into the scenario that is now being debated. All the choices are negative on gold. I suppose that you could try to buy gold when a rocket is fired in the middle east but be sure to keep your finger on the sell button as it lands.
Regardless of what asset you are watching, unless there are supply problems, prices of stocks and commodities are under pressure and will in my opinion stay under pressure for an extended period going forward. This is due to the fact that all the options in Washington will give us Deficit Reduction, Austerity, and Deflation, just some more than others. We watch three layers of macro-trends on various markets. Back in September the shortest duration trends topped out and have turned down. The two longer term macro’s are still positive since the 2009 lows and are what keep hope alive. For me defense seems the safer bet.