What If Recovery Is Actually Bearish? – Seeking Alpha 10-25-12

Salient to Investors:

Mercenary Trader writes:

The routine intervention of the Central Banks, the Greenspan Put transitioning to the Bernanke Put, have underscored the “bad news is good news” phenomenon.

Good news is good news because things are getting better. Mediocre news is good news because it means CBs keep rates near zero. Bad news is good news because it increases the odds of more stimulus. These synthetic gains come at the expense of the middle class through stealth inflation, increased debt leverage, and other long-term stagnation costs.

Rothschild said: Permit me to issue and control the money of a nation, and I care not who makes its laws. Those who recognized that the Fed is the most powerful market and currency manipulator ever have made a mint.

A real recovery is bearish. Markets would have to “detox” from their current stimulus-addicted, central-bank-junk food state. Wages will start rising hurting profit margins, Long-term interest rates will rise as capital flows out of safe havens, further stimulus hopes will evaporate, and inflation concerns will impact equity prices and without helping gold.

Corporate America used the financial crisis as political cover to make bone-deep cuts and ruthlessly pursue efficiencies and help produce record-level profit margins. Record profit margins are now under threat.

A real recovery could be terrible for gold and silver – signs of  US recovery are completely antithetical to the precious metals bull case.

The sheer size and scope of America’s shale potential is a potential game changer via the foundation for manufacturing renaissance.

Read the full article at http://seekingalpha.com/article/950561-what-if-recovery-is-actually-bearish