To continue from the last post, here's an earlier interview (dated Sept '10) before the broadcast at King World News that I posted earlier. Though this is 4 months delayed news, you can still learn quite a bit from Robins Griffith.
In it, Robin Griffiths touches on several issues.
On the Best Sept and What's Keeping the U.S. Equity Market Afloat
00:30 : One of the things keeping markets afloat "is something called Permanent Open Market Operation ... (POMO) ... what happens is the Fed buys treasuries off the banks pushing the money into the banks. The bank pushes the money into the market. They do about US$6billion a day when they do this."
00:50 : "That amount of money turns the algorithms up. Then all the algorithmic trading hits the market. Real life human investment managers are not doing this buying. They know that after the rally that we've had, we're back to where we were first in 1998."
01:07 : "Equities are for losers and if you're priced in dollars, you're down 30% over that period."
01:12 : "So real life equity market [investors] still don't want to buy the S&P. Is still being affectively goosed up by what we used to call the Plunge Protection Team. Well they can keep doing this for a bit longer but I'd only be completely wrong if they do it so much that they take out the April high. According to me, that April high will not break and we are going to inevitably go down."
The U.S. Economy, the Recession and What's In Store
01:40 : "Last week we heard the president say in clear words that although we had ... an economic institution saying the recession was over 9 months ago he accepted that for many Americans the recession is still an ongoing reality. And secondly all of those Keynesian stimulus didn't work. We're changing the entire game plan and what's going to happen is the Fed is going to be printing money and pumping it into the economy to try and let it down slowly.
On Bonds and Bubbles
02:12 : On 30yr bonds, "the yield is going to go down. Now if you buy the 30yr treasury bonds as the yield goes down, you make money."
02:23 : "There's an old saying that goes don't fight the Fed. Well now the Fed is going to guarantee that your bonds go up."
02:42: "They've backed up. They had to back up. If you missed when the yield was approaching 4%, you aren't going to double your money as it approaches 2%. But even now you should be buying bonds and not equities. And it's not a bubble."
02:57 : "It will be a bubble when your viewers all write in and say we've all got bonds what do we do now?"
03:03 : "And the bubbles never burst when wise heads in media tell you its a bubble that's going to burst. It burst when they've given up on that and tell you ah this time it's different. So you should in fact be in bonds and not in Western equities."
On the Bovespa and Emerging Markets
03:29 : "These are the markets you should have been in. Where the American market has gone virtually nowhere for the last decade, the [Brazilian] Bovespa has been up 1000%."
03:37 : "Including China and India ... these are where you should be putting your money."
03:50 : "This is the real deal where people have been working hard to take themselves out of poverty, succeeding, and we can back them and we can invest in them. These are equity markets that are real bull markets and that are making all time highs where the ... Western markets aren't going to do that."
04:13: "The Bovespa "is rising at a rate of a 1000% per decade."
Check out the video below for the complete interview, most of which I've already transcribed here. =)
That said, this is the current chart of the S&P500:
I've marked the resistance back in April'10 and we can clearly see that stock prices have gone way beyond that. So was Mr. Griffiths "completely wrong" as he put it in his interview?
That remains to be seen.
I'm of the opinion that although he may have been wrong in his prediction about the stock market not breaking its April high, if his explanation on why the equity market is propped up is correct and with all the printing of currency, then this still is bad news for the future with the debasement of purchasing power. And to me, the way to protect that it is in physical assets. However, I'm not suggesting you to go all in into physical assets -- no no -- as the future is so unpredictable and we can never be certain who is right and who isn't until the event is over. However, it is recommended that one has about 5 - 10% of his/her portfolio in precious metals and to rebalance every yearly or two.
Having said that, this video below shows that some of the most well-renowned investors are still piling into gold - Jim Rogers being the most famous. It also explains why gold is still a viable investment asset and why it is still demanded in today's society. As Gold Core Limited is a company, they may have a bias to promote the metal. As such, it is best viewed with an open mind and like attempting a jigsaw puzzle, you have to piece the different parts together to make your own conclusion.
Check it out:
Cheers,
~K
