As the political world suffers through a very long denial, it is cathartic to hear someone call “bullshit” on proposed paths. Nigel Farage, leader of the UK Independence Party (UKIP) and member of the European Parliament, is good at it. Here he was a few days ago. Here is the direct link.
The gold company index (XGD) is free-falling. If the Bernank gives some more QE hopium this week, the sector might find some support. But then not necessarily: even with all the QE out of the US and LTRO out of the ECB the past 3 years, the gold company index is today back where it was in April 2009.
Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.
The big picture Canadian TSX 60 largest companies, has now fallen below its May 2010 level as captured in the below chart. We know that QE efforts have not succeeded in reinvigorating growth in the real economy, but they have also failed to bring any lasting gains to asset markets. We are living in a distorted world of disconnects thanks to constant Central Banker intervention. One very obvious example is that oil prices were goosed on liquidity and levered trading the past 3 years even as global demand continues to weaken. At the same time, energy companies have proven a poor investment notwithstanding triple digit oil prices. In just the past 12 months the Canadian energy index has fallen about 20%, with many of the most popular picks down much more (Suncor and Canadian Natural Resources down more than 25%, Canadian Oil Sands more than 30%.) Not surprisingly, some of the biggest commodity advocates have also lost heavily again (Sprott Inc. is back below $5.00, more than 50% below its new issue price of $10 in May 2008).
Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.
