Americans are more pessimistic about the state of the country and less confident in President Barack Obama’s leadership than at any point since Mr. Obama entered the White House, according to a new Wall Street Journal/NBC News poll.
The survey also shows grave and growing concerns about the Gulf oil spill, with overwhelming majorities of adults favoring stronger regulation of the oil industry and believing that the spill will affect the nation’s economy and environment.Sixty-two percent of adults in the survey feel the country is on the wrong track, the highest level since before the 2008 election. Just one-third think the economy will get better over the next year, a 7-point drop from a month ago and the low point of Mr. Obama’s tenure.
Now let’s consider how waning public confidence relates to the economy. People without confidence are less prone to borrow money long term and buy a house since it is the most leveraged bet the average person can make. People without confidence are more likely to allocate a portion of their savings to forms of insurance, such as gold. People without confidence are one catalyst away from sending us into a self-reinforcing inflationary spiral that will be difficult to curtail.
The prime beneficiary of this irreversible trend is gold. Gold is consolidating for a move that will be so monsterish that mainstream reporters will be at a loss to explain it. They will look at CPI data that shows negative month over month prints and assume the gold market is overheated. They are stuck in one mode of thought and cannot reframe their beliefs to align with reality. This is why they will continue to be befuddled by gold’s upward thrust.
The market is always relaying messages that are decipherable if you step back and open your eyes. Last year gold prices were making record highs at the same time everyone was jumping on the economic recovery bandwagon. Something was wrong: either the opinion of economists or the market. Guess what? It wasn’t the market. With record low new home sales, falling stock prices, and persistently high unemployment, the economic recovery thesis is now as believeable as the Easter Bunny.
The time to prepare for what is coming is now. Most people, of course, love inertia. It is only when gold is trading hundreds of dollars from today’s levels that people will open their eyes. This suits me just fine. I have been adding aggressively since February in anticipation of a move that will leave little doubt in people’s minds about the strength of this bull market.