I am predicting a crash this year. P/E ratios are too high. There needs to be some correction. Superannuation funds and investment banks are pushing up share price too high.
Australia's super contributions add around $10 billion to $15 billion per year to the funds each year. Around 50% of that is invested in the market. That has the effect of inflating share prices and overheating the market. This leads to the asx top 200 being over priced.
The financial buying power of superannuation funds gives them the power to manipulate asx companies. They push for higher returns and it's causing inflation. This will crash the economy. We are being milked dry.
The reserve bank last week was unwilling to raise rates, fearful of a market slowdown/recession.
The high cost of commodities is a good indicator, along with the extent that gold is being used as an inflation hedge.
Before the last crash I noticed the gold price was high. It crossed my mind that a crash was very close. An identical set of circumstances exist now.
I still see gold as a long term investment. The only basis for staying in a gold stock is that you entered very cheaply and can hold for it 2 to 3yrs. The crash is coming.
The news last night of an interest rate rise talks hurt U.S. confidence. This indicates the world is only suviving on cheap credit. Sounds familiar!!!
Just the possiblity of an interest rate rise created a sharp drop in oil and gold. In other words it effected energy, the building block and the gold price which is chinas inflation gauge. This implies that the thought of the US going backwards will cause China or the inventment banks to dump gold.
If gold is a hedge against the US dollar being devalued, why would the end of quatitive easing cause gold to fall. This is why I argue that the gold price has risen against Chinese inflation and not U.S. quantative easing(printing money).
The falling gold price indicates there is a perception the US could get worst and slow Chinas economy.
The expectation of an interest rate rise created in the U.S. is probably the reserve stress testing the market to see if the economy has real strength.
If I draw a parall between the U.S. and Australia, the super contributions is going to have a similar effect on Australias economy that the U.S< quatative easing does in the U.S and market crash I am predicting a crash this year. P/E ratios are too high. There needs to be some correction. Superannuation funds and investment banks are pushing up share price too high.
Austrialia's super contributions add around $10 billion to $15 billion per year to the funds each year. Around 50% of that is invested in the market. That has the effect of inflating share prices and overheating the market. This leads to the asx top 200 being over priced.
The financial buying power of superannuation funds gives them the power to manipulate asx companies. They push for higher returns and it's causing inflation. This will crash the economy. We are being milked dry.
The reserve bank last week was unwilling to raise rates, fearful of a market slowdown/recession.
The high cost of commodities is a good indicator, along with the extent that gold is being used as an inflation hedge.
Before the last crash I noticed the gold price was high. It crossed my mind that a crash was very close. An identical set of circumstances exist now.
I still see gold as a long term investment. The only basis for staying in a gold stock is that you entered very cheaply and can hold for it 2 to 3yrs. The crash is coming.
The news last night of an interest rate rise talks hurt U.S. confidence. This indicates the world is only suviving on cheap credit. Sounds familiar!!!
Just the possiblity of an interest rate rise created a sharp drop in oil and gold. In other words it effected energy, the building block and the gold price which is chinas inflation gauge. This implies that the thought of the US going backwards will cause China or the inventment banks to dump gold.
"A trader with a major bank said much of the selling, which was mirrored in base and precious metals, could be attributed to fund managers pulling out of commodities as the end of the second round of quantitative easing in the U.S. loomed."
If gold is a hedge against the US dollar being devalued, why would the end of quatitive easing cause gold to fall. This is why I argue that the gold price has risen against Chinese inflation and not U.S. quantative easing(printing money).
The falling gold price indicates there is a perception the US could get worst and slow Chinas economy.
The expectation of an interest rate rise created in the U.S. is probably the reserve stress testing the market to see if the economy has real strength.
There is a comparison between th the effect of easing on the U.S. and the effect of superannuantion contributions in the Austrialian market. The main effects are over heating, cheap credit, inflation and asset bubbles.
I have taken out all copyrighted material hopefully this is acceptable. Everything above in my own words.
