Rocky noticed that his friends see bubbles in bonds, in gold, in stocks, in cotton, sugar and grain prices. In fact, his friends see bubbles EVERYWHERE!
It appears that there may be a bubble in bubbles. And a look at “Google Trends” confirms this bubble. However, this bubble-in-bubbles popped early in 2010 — on the 50th Anniversary of Bubble Wrap!
[Disclosure: Rocky never gives investment advice. When asked if or when the current “bubbles” will burst, he started foaming at the mouth.]
Rocky’s eye for market trends is often sharper than his eye for fashion trends. Yet, as cotton prices reach record highs, he speculates that reasonably-priced polyester may soon come back into vogue.
Fortunately, Rocky’s wash-and-wear polyester leisure suit remains crisply pressed in the back of his closet — next to the pink ruffled tuxedo shirt which last saw action at his high school prom. (Which coincidentally was a time when gold was spiking too.) Moths find old wool suits irresistable, but just like a Hostess Twinkie, a leisure suit can remain “fresh” for thousands of years.
[Disclosure: When Rocky experiences a Saturday night fever, he takes an aspirin and goes to bed early.]
Rocky found some fool’s gold buried in today’s Producer Price Index data.
The year-over-year change in “Karat Gold Jewelry Prices” was 12.1% Whereas the year-over-year change in “Costume Jewelry Prices” was a modest 0.9%.
According to Wikipedia, “Costume jewelry (also called fashion jewelry, junk jewelry, fake jewelry, or fallalery) is jewelry manufactured as ornamentation to complement a particular fashionable costume or garment.”
Since the Government sees fit to include the “all important” costume jewelry price in the PPI, Rocky smells an arbitrage for an upcoming Trophy Wife birthday present.
Rocky currently owns gold in his investment portfolio, but this price discrepancy suggests that he should consider a “short gold / long fake gold” swap for Trophy Wife’s jewelry box portfolio.
[Disclosure: As they say on TV: “We’re trained professionals. Don’t try this yourselves at home!]
The crisp chill of autumn fills the air.
The deer are rutting. The squirrels are gaining weight. And Rocky went shopping for a new pair of bedroom slippers.
In past years, Rocky’s slippers slipped into the same black hole as his missing unpaired socks and ballpoint pens. This year, Rocky tried a new tack. A tacky tack. A pair of slippers so thoroughly ugly — that they would not be borrowed; could not be misplaced; and will not be stolen.
Did Rocky mention that they were $3.24 at Target? (Thank you, China!)
[Disclosures: Rocky believes that the “S-S” refers to Syracuse University, and these slippers are not WWII surplus. Also, upon viewing Rocky’s new footsie-tootsie, Trophy Wife was left speechless. The small white dot on the right slipper are the stubborn remains of a price tag, and it does not interfere with comfort or functionality.]
As regular readers know, Rocky has held a bullish speculative position in gold for many months. If today’s behavior continues for a few more days, Rocky believes that gold may be finally entering the Manic Parabolic Blow-Off Phase “MPBOP.”
The MPBOP is the most profitable phase of any bull market, and despite what experts on CNBC say, it’s impossible to know how long it will last — nor how high prices can go during the terminal stages of a MPBOP. Rocky speaks from experience having been on the wrong side of the internet MPBOP. (He was an avowed hater of the Pets.Com puppet, but he got revenge when the stock eventually went to zero.) This experience means Rocky wouldn’t scoff at $1500/oz or even $1800/oz gold by year-end.
Sadly, after the parabolic blow-off phase comes the “gravity still exists” phase, where people re-discover that gold is just a shiny piece of metal that makes an excellent dental crown. Which means prices will decline. By a lot.
Many people party on New Year’s Eve without worrying about how they feel on New Year’s Day. But not Rocky! Rocky remains long gold, but he’s beginning to think about his ultimate exit strategy. Parachutes? Ejection seats? Hari Kari? Here’s his latest thinking (posted on the blog Daily Speculations): http://www.dailyspeculations.com/wordpress/?p=5344
[Disclosures: Rocky really has no clue what gold prices will do tomorrow or the days after tomorrow and his ruminations are not investment advice. He does, however, believe in the Laws of Gravity and the First Law of Rocky: In every “macro market” (indices, bonds, commodities), all prices WILL be seen at least twice. The only unknowns are: (1) how long it takes and (2) how far prices go, before the price is re-visited. Additionally, while Rocky currently remains long gold, he also owns hedges against the proven risk that he’s more-than-occasionally wrong.]