the end of the bull run for rms, page-47

Very good point.

I have crunched a lot of number and looked at the market reaction.

1. When the asx was at 5000 I believed the market was overvalued, the pe ratios were high considering that world was still in a lot of debt.

Australia realestate is more expensive than hongkong and newyork. Households are smothered with debt. The level of debt means that house hold disposable income is tied up and causing the economy to slow. This will effect profits and cause a market correction. I thought the market should be around 4200 but did predict a crash to 3600 as the worst case.

2 When the market did crash metals followed. I found that odd because the high metal prices are due to a devalued usd so technically speaking they are already cheap although they looked high.
I view the metal prices falling an indicator of very bad economic conditions.

3 The market response to Greece defalting is amazing. In the bigger picture Greece didnt seem more than a cold.

4 Europe is in debt 100% of GDP and has a service sector that which is 70% of its economy. I cant see how Europe will get out of debt.

5 Greece is buying gold which indicates they must lack confidence in the euro.

6 The us has around 5 tillion more losses to come out of the banking sector. Manny of the loans over the last 10yrs are invalid due to robo signing, at the very least 10%.

7 The 3.5 trillion USD proposed to bail out Europe will need to be paid back. It will signiciantly devalue the euro and could spark a currency war.

http://www.businessinsider.com/european-central-banker-competitive-currency-devaluations-would-be-fatal-for-the-global-economy-2010-10

When there is sentiment the market will crash every thing falls at lightening speed including gold.

When people liquidate they sell everything including gold.