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Correction in Gold Near End

by Jim Willie, CB. Editor, Hat Trick Letter | May 15, 2008

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"...The springtime corrections are really about done. They have gone on for a couple of months. The extent of the pullbacks have been tested and retested. The long-term trends are just about ready to asset themselves again. Grand deceptions have resumed to attempt to fool the public and the investment community that the worst is over for banks, housing, and mortgage bonds. That is not even remotely true. The deeply wounded banks, the sharply corrected home prices, and the badly damaged mortgage bonds have much more pain ahead. Nothing has been fixed. Many mortgage resets have yet to take place. The New Resolution Trust Corp to facilitate secondary mortgages, to bury dead mortgage bonds, and to renegotiate home loans is not even agreed upon, let alone installed. Its operation will be sometime in 2009 at the earliest. Until then, the system burns as foreclosures mount, inventory bloats, and home prices come down much more, guaranteeing another ugly storm of bank losses in mortgage bonds. The ultimate determining factor right now is home prices, which are accelerating down. Wall Street seems unwilling even to mention home prices, preferring to talk about bank liquidity concerns having been addressed. Except that bank capital is still negative. Let’s take a whirlwind tour of relevant charts, to see that the progress of the corrections is in its last stages. Sentiment is not good for gold, but it never is when the next upleg begins, the nature of the beast. Only the mentally tough, the well informed, and the unshakable types are loaded with gold & silver when the uplegs begin. The bull market in metals and bear market in US$-based paper is ready to resume."