When Americans Can't Afford A Dollar

You know things are bad when the American consumer is so tapped out they can't even shop at dollar stores.

http://www.zerohedge.com/news/2013-01-03/when-americans-cant-afford-dollar

Goldcorp profit jumps on higher prices, production

http://www.reuters.com/article/2011/02/24/goldcorp-idUSN2429040320110224

Goldcorp (G.TO) reported better than expected quarterly earnings on Thursday, as profits surged due to higher gold and silver prices and increased bullion production, sending its shares up more than 2 percent in after-hours trade.

Vancouver-based Goldcorp, the world's second largest gold miner by market capitalization, also raised its full year dividend payout by 11 percent to 40 cents a share and outlined plans to develop two major gold projects in Canada.

See disclaimers in the side bar.

Disclosure:  no position in Goldcorp.

ARNA 4th quarter earnings

http://www.reuters.com/article/idCNN1225473220100312?rpc=44

Arena Pharmaceuticals Inc (ARNA.O) expects to launch sales of its weight loss drug -- alone or with a partner -- within 12 weeks of U.S. regulatory approval, according to the company.

Shares are up 10% today.

Disclosure: long ARNA shares.

More Unthinkables

The proverbial "other shoe" is dropping. Citigroup shares dipped below $2 and Bank of America shares are headed toward $3 amongst fears of bank nationalization, which completely wipes out shareholders (instead of just essentially wiping out shareholders). As financials are leading indicators, this does not bode well for the broader averages. The Dow Jones Industrial Average dipped and closed below November 20, 2008 lows, which means that support level now serves as resistance. The charts are basically breaking down toward their 2002 levels, as the technicals are deteriorating faster than you can say "Ponzi".

Gold touched above $1000 an ounce for the 2nd time in history since last spring, before retreating. Gold mining shares have essentially doubled since their November lows and still surging. I've been expecting pullbacks, looking for opportunities to add to my current positions, but the market just hasn't allowed me to. I'll just hold on and see if we penetrate the $1030 all-time high. If that occurs, then all bets are off and we could see a buying mania which would signal an opportunity to take some profits off the table. Long-term, the chart for gold still looks bullish, but locking in some profits just seems prudent to me, considering last year's stunning rise and subsequent collapse in gold.

Eastern European defaults are a huge concern, which would cascade toward western European banks with heavy exposure to the emerging countries in the Baltics. And with European banks even more leveraged than their US counterparts, this is analogous to the US subprime mortgage crisis--only worse and much larger in scope.

Unemployment is soaring with no end in sight, corporate earnings eroding, and consumer confidence shattered, markets are braced for the next shock, with the realization that this is not your garden-variety recession--this is an outright worldwide Depression, with no country spared.

The Dow/Gold ratio is at 7.5 and dropping, and that ratio usually dips below 5 and all the way to 2 at extreme recessionary lows. Hypothetically, gold at $1200 an ounce, and the Dow Jones Industrials at 6000 would yield a DJIA/gold ratio of 5. This is another indicator which has scary implications going forward.

The Volatility Index is climbing once again above 50, so hold on to your hat.