 Hype Machine Ignores Gold & Silver
Todd Stein & Steven McIntyre
The Texas Hedge Report
April 5, 2006
Courtesy of www.texashedge.com
CNBC is not in the news business;
rather, they are all about high ratings. Their highest rated
show these days is none other than Mad Money, which is
basically one hour of Jim Cramer screaming at viewers to buy
this and sell that. Mad Money reminds us of those 3am
sports betting forecast shows where so-called experts give you
their predictions on the week's games. Hearing Jim Cramer scream
"Buy Google" isn't much different than Matthew McConaughey's
character in Two for the Money telling clients
to take the Lions over the Packers.
Cramer is just one of many
cogs in the mainstream media's hype machine. The others include
cover stories in Barron's, puff pieces in BusinessWeek
and television interviews with so-called market "experts"
who happen to be bullish 99% of the time. Add to that an establishment
of cheerleading government bureaucrats at Treasury, Labor and
the Fed, and we can see why most Americans have no idea that
our financial system faces turbulent times ahead. Smart people
such as Warren Buffett, Paul Volcker and Sir John Templeton have
all warned of the systemic risk that exists today, but CNBC and
the rest of the press chooses to drown out such warnings by presenting
these opinions in the context of a bull/bear debate. And in
these days of fair and balanced reporting, anytime a bearish
view is presented, CNBC has to trot out the resident bullish
hacks such as Larry Kudlow or John Rutledge to tell us to buy
stocks.
CNBC is owned by General Electric,
a company that seeks to make profits for its shareholders. CNBC
will do whatever they can to keep their ratings up, which means
their coverage will coincide with the universe of momentum investors.
Viewers want to hear stories about a "hot stock" or
"hot sector", not about the wisdom of buying distressed
assets or keeping money on the sidelines. When the market happens
to be down across all sectors, CNBC and Wall Street cooperate
in promoting a specific industry by informing the world of various
upgrades. When tech runs, the hype machine trots out biotech.
When biotech starts to get choppy, the machine trots out financials.
And on and on it goes. If a bear market stays around for a
while and none of these stories get any traction, the ratings
start to fall. This is what happened in 2001 and 2002. We can
remember the jealousy expressed by the Wall Street media when
stocks were losing their luster and real estate became a national
infatuation.
As we assess the world in early
2006, it looks like real estate is cooling off and stocks are
trying to make new highs. The giddiness is back among the Wall
Street media. Analyst upgrades are headline news again. M&A
activity is starting to remind us of 1999 and 2000. The one
thing that is different this time is that Wall Street has embraced
commodities whereas, in 2000, commodities were dead. Jim Cramer
has been a huge bull on various energy stocks over the last two
years. He has even been an occasional proponent of owning a
few gold and silver stocks, something that has been taboo on
Wall Street for a generation.
The rest of the media establishment,
however, seems to have retained its bias against gold and silver.
Just take a look at the various major investment banks' price
targets for gold & silver all near or below the current price.
Compare this to escalating price targets for crude oil, copper
and non-precious metal commodity stocks, and the discrimination
is apparent. This shouldn't surprise anyone as gold and silver
are the enemies of paper assets. Gold and silver is real money,
and neither the government nor Wall Street can profit from manufacturing
or distributing it, which is why the bias exists in the first
place.
Eventually the hype machine
will be forced to reckon with gold and silver. It took almost
a decade for the financial establishment to buy into the Internet,
but when they did, anything associated with it took off. When
Howe Street in Vancouver becomes a choice destination for MBAs
and financial conferences, you know things will have changed.
Eventually the mainstream will wake up to gold and silver, but
by then, it may be time to sell.
April 5, 2006
Todd Stein & Steven McIntyre
Archives
Texas Hedge Report
Todd Stein
& Steven McIntyre
email: admin@texashedge.com
For more information, go to http://www.texashedge.com.
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