The Big Oopsie

If it wasn't pathetic and hadn't affected tens of millions of people, the Institute Of Supply Management's bungling of their own statistics today would be funny.

But their mistake revealed a lot of information to gold traders.

When the ISM report on new orders was first issued, the index shrank to 53.2, but after discovering that the institute had not taken into account seasonal factors, it was shown to have risen to almost 55.4, a more robust reading that shows very good growth for the U.S.

So, what's the big deal aside from some eggheads with egg on their faces?

Well, for us, gold was already headed down when the index figure showed shrinkage.

And then gold was down when the index figure rose.

While fumbling a ball once in a while isn't anything to lose our minds over, the aftereffects certainly are.

No matter what happens, gold is being put through the wringer by analyses and forces that seem - one way or another, depending on which figure you believe - to have no grounding in reality.

Further, those who trade equities seem to have forgotten basics when buying stocks. There actually is a notion called "the P&L." There is a forward-looking projection of income on publicly held companies' books. There is a mad speculation that should be warning people off a new round of irrational exuberance.

But, none of those is clanging an alarm bell. The S&P keeps hitting new highs. The Dow is close behind. NASDAQ gets hit by some jitters or profit-taking, but resumes its march up.

We are witnessing the Amazon-ing of the entire equities market. (Amazon's P/E is 483x). But many companies considered incredibly wonderful, like eBay and Google are much more respectable, they still have P/E's in the upper 20s. And, like it or not, those names lead the markets in some strange fashion.

What is riskier? Buying gold or buying Amazon? Well... depends on how long you have to hold it.

But the stock market reminds us of the late 1920s when stocks climbed astronomically almost by the minute. There is a great couple of chapters about stock fever in the '20s in a wonderful book called Only Yesterday. It makes for great reading and should be mandatory for anyone trying to understand cyclical markets.

It's by Frederick Lewis Allen. He describes the period's zeitgeist, which at least was a lot less dour than the spirit of our own times.

You can buy it on Amazon. Might help them along.

As always, wishing you good trading,