| Surrender: Japan suspends work at stricken nuclear plant Posted: 15 Mar 2011 09:45 PM PDT It is exceptionally difficult to keep up with news that changes by the minute. No sooner than I do a post regarding 50 Brave Heroes are the Only Remaining Defense at the Daiichi Nuclear Power Station than comes the grim news of surrender. Please consider Japan suspends work at stricken nuclear plantJapan suspended operations to keep its stricken nuclear plant from melting down Wednesday after surging radiation made it too dangerous to stay.
Chief Cabinet Secretary Yukio Edano said the workers dousing the reactors in a frantic effort to cool them needed to withdraw.
"The workers cannot carry out even minimal work at the plant now," Edano said. "Because of the radiation risk we are on standby," he said.
Edano said the government expects to ask the U.S. military for help. He did not elaborate. He said the government is still considering whether and how to take up the various offers of help from other countries.
The surge in radiation was apparently the result of a Tuesday explosion in the complex's Unit 4 reactor, according to officials with Japan's nuclear safety agency. That blast is thought to have damaged the reactor's suppression chamber, a water-filled pipe outside the nuclear core that is part of the emergency cooling system. Japan reactor design caused GE engineer to quitLet's backtrack a bit an fill in some missing pieces. Please consider Japan reactor design caused GE engineer to quitA General Electric Co engineer said he resigned 35 years ago over concern about the safety of a nuclear reactor design used in the now crippled Fukushima Daiichi plant in Japan.
Dale Bridenbaugh said the "Mark 1" design had "not yet been designed to withstand the loads" that could be experienced in a large-scale accident.
"At the time, I didn't think the utilities were taking things seriously enough," Bridenbaugh, now retired, said in a phone interview. "I felt some of the plants should have been shut down while the analysis was completed, and GE and the utilities didn't want to do that, so I left."
Bridenbaugh said that to the best of his knowledge, the design flaws he had identified were addressed at the Daiichi plant, requiring "a fairly significant expense."
Bridenbaugh said that after leaving GE he started a firm to advise state governments on safety issues. Like many, he said he is watching closely as events unfold in Japan.
"I feel sorry for the guys over there trying to handle that thing," he said. "On the other hand you can't say the Fukushima situation is a direct result of the Mark 1 containment. It is a direct result of the earthquake, tsunami and the fact the Mark 1 containment is less forgiving than some of the other reactor versions." So far the Nikkei is shrugging off this latest bit of bad news. The Nikkei is up 4% now but was up as much as 6% earlier. Hopefully the worst is behind us even though I fail to see how. Does the market sense something that no one else understands at the moment? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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| 50 Brave Heroes are the Only Remaining Defense at the Fukushima Daiichi Nuclear Power Station; Panic Food Buying in Tokyo Posted: 15 Mar 2011 08:29 PM PDT Whether the troubled reactors at the Fukushima Daiichi Nuclear Power Station in Japan suffer a complete core meltdown now depends on the Last Defense at Troubled Reactors: 50 Japanese WorkersA small crew of technicians, braving radiation and fire, became the only people remaining at the Fukushima Daiichi Nuclear Power Station on Tuesday — and perhaps Japan's last chance of preventing a broader nuclear catastrophe.
They crawl through labyrinths of equipment in utter darkness pierced only by their flashlights, listening for periodic explosions as hydrogen gas escaping from crippled reactors ignites on contact with air.
They breathe through uncomfortable respirators or carry heavy oxygen tanks on their backs. They wear white, full-body jumpsuits with snug-fitting hoods that provide scant protection from the invisible radiation sleeting through their bodies.
They are the faceless 50, the unnamed operators who stayed behind. They have volunteered, or been assigned, to pump seawater on dangerously exposed nuclear fuel, already thought to be partly melting and spewing radioactive material, to prevent full meltdowns that could throw thousands of tons of radioactive dust high into the air and imperil millions of their compatriots.
They struggled on Tuesday and Wednesday to keep hundreds of gallons of seawater a minute flowing through temporary fire pumps into the three stricken reactors, Nos. 1, 2 and 3. Among the many problems they faced was what appeared to be yet another fire at the plant.
The reactor operators face extraordinary risks. Tokyo Electric evacuated 750 emergency staff members from the stricken plant on Tuesday, leaving only about 50, when radiation levels soared. By comparison, standard staffing levels at the three active General Electric reactors on the site would be 10 to 12 people apiece including supervisors — an indication that the small crew left behind is barely larger than the contingent on duty on a quiet day.
Tokyo Electric has refused to release the names or any other information about the 50 workers who stayed behind, nor have utility executives said anything about how they are being relieved as they become tired or ill.
Some of those battling flames and spraying water at reactors at Daiichi are members of Japan's Self-Defense Force, police officers or firefighters. Others are contractors sent to the plant. Please see the article for more details. Good luck and best wishes to the 50 who remain. Panic Food Buying in TokyoBloomberg reports Tokyo Store Urges Calm as Nuclear Fears Spark Panic BuyingTokyo residents emptied store shelves of food, water and batteries and filled car tanks with gasoline as workers at the crippled Fukushima nuclear facility struggled to avert the risk of a meltdown. Hoarders may make it more difficult to send goods to the millions of people affected by the 7-meter (23- foot) tsunami that engulfed Japan's northeast coast, according to Agriculture Minister Michihiko Kano.
 At left: A woman shops at Seven & I Holdings Co.'s Ito-Yokado supermarket in Tokyo. Photographer: Haruyoshi Yamaguchi
Seven & I Holdings Co., Japan's biggest retailer, said its Ito-Yokado supermarkets and 7-Eleven convenience stores in Tokyo are emptied of necessities as soon as fresh supplies arrive. "Every day the stores provide a certain amount, but as soon as a shop opens, the products disappear," Hirotake Henmi, a spokesman for Seven & I, said in a phone interview.
Shoppers at 7-Eleven stores are emptying them of rice balls referred to as Onigiri, batteries and tissue paper, Henmi said. Seven & I, which owns 7-Eleven, has 13,219 of the convenience stores in Japan.
In Tokyo's Kachidoki area, more than 20 people lined up to buy tissue and toilet paper as boxes were unpacked at one of Matsumotokiyoshi Holdings Co.'s Papasu drug stores.
"Food, water and paper products are in high demand," said Tetsuya Ishigami, a 40-year-old salesman sent from company headquarters to help. "Bottled water disappears quickly. Customers also come to us for things the victims would need although they can't ship them there yet." Please don't hoard. It only hurts those who need help the most. Addendum:Surrender: Japan suspends work at stricken nuclear plantIt is exceptionally difficult to keep up with news that changes by the minute. No sooner than I finish the above post than comes the grim news of surrender. Please consider Japan suspends work at stricken nuclear plantJapan suspended operations to keep its stricken nuclear plant from melting down Wednesday after surging radiation made it too dangerous to stay.
Chief Cabinet Secretary Yukio Edano said the workers dousing the reactors in a frantic effort to cool them needed to withdraw.
"The workers cannot carry out even minimal work at the plant now," Edano said. "Because of the radiation risk we are on standby," he said.
Edano said the government expects to ask the U.S. military for help. He did not elaborate. He said the government is still considering whether and how to take up the various offers of help from other countries.
The surge in radiation was apparently the result of a Tuesday explosion in the complex's Unit 4 reactor, according to officials with Japan's nuclear safety agency. That blast is thought to have damaged the reactor's suppression chamber, a water-filled pipe outside the nuclear core that is part of the emergency cooling system. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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| Roubini Calls for IMF-Led "Marshal Plan" for Mideast, I Say Nonsense Posted: 15 Mar 2011 05:59 PM PDT In an interview posted on Al Jazeera, Nouriel Roubini Calls for "Marshal Plan" for Mideast. Please consider Global stakes of Mideast turmoil We don't know yet whether political contagion in the Middle East will spread to other countries. The turmoil may yet be contained and recede, sending oil prices back to lower levels. But there is a serious chance that the uprisings will spread, destabilizing Bahrain, Algeria, Oman, Jordan, Yemen, and eventually even Saudi Arabia.
Even before the recent Middle East political shocks, oil prices had risen above $80-$90 a barrel, an increase driven not only by energy-thirsty emerging-market economies, but also by non-fundamental factors: a wall of liquidity chasing assets and commodities in emerging markets, owing to near-zero interest rates and quantitative easing in advanced economies; momentum and herding behavior; and limited and inelastic oil supplies. If the threat of supply disruptions spreads beyond Libya, even the mere risk of lower output may sharply increase the "fear premium" via precautionary stockpiling of oil by investors and final users.
The latest increases in oil prices - and the related increases in other commodity prices, especially food - imply several unfortunate consequences (even leaving aside the risk of severe civil unrest).
First, inflationary pressure will grow in already-overheating emerging market economies, where oil and food prices represent up to two-thirds of the consumption basket. Given weak demand in slow-growing advanced economies, rising commodity prices may lead only to a small first-round effect on headline inflation there, with little second-round impact on core inflation. But advanced countries will not emerge unscathed.
Indeed, the second risk posed by higher oil prices - a terms-of-trade and disposable income shock to all energy and commodity importers - will hit advanced economies especially hard, as they have barely emerged from recession and are still experiencing an anemic recovery.
The third risk is that rising oil prices reduce investor confidence and increase risk aversion, leading to stock-market corrections that have negative wealth effects on consumption and capital spending. Business and consumer confidence are also likely to take a hit, further undermining demand.
If oil prices rise much further - towards the peaks of 2008 – the advanced economies will slow sharply; many might even slip back into recession. And, even if prices remain at current levels for most of the year, global growth will slow and inflation will rise.
Over time - but this could take years - consumers could invest in alternative energy sources and reduce demand for fossil fuels via carbon taxes and new technologies. Because energy and food security are matters of economic as well as social and political stability, policies that reduce commodity-price volatility should be in the interest of producers and consumers.
But the time to act is now. The transition from autocracy to democracy in the Middle East is likely to be bumpy and unstable, at best. In countries with pent-up demand for higher income and welfare, democratic fervor could lead to large budget deficits, excessive wage demands, and high inflation, ultimately resulting in severe economic crises.
So a bold new assistance program should be designed for the region, modeled on the Marshall Plan in Western Europe after WWII, or on the support offered to Eastern Europe after the collapse of the Berlin Wall. Financing should come from the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development, as well as from bilateral support provided by the US, the European Union, China, and the Gulf states. The goal should be to stabilize these countries' economies as they undertake their delicate political transitions.
The stakes are high. Unstable political transitions could lead to high levels of social disorder, organized violence, and/or civil war, fueling further economic and political turmoil. Given the current risk-sensitivity of oil prices, the pain would not be confined to the Middle East. Horrendous Track RecordThe US has a horrendous track record of negative benefits when meddling in the affairs of other countries. - Our CIA trained Bin Laden.
- We supported Hussein under the ridiculous theory "the enemy of my enemy is my friend", supplying him with chemical weapons he used in a war against Iran.
- We supported a corrupt Shah of Iran, overthrown in the Iranian Revolution.
- We failed to see even days before they happened, recent event is Tunisia, Egypt, Libya, Yemen, and other countries.
- The War in Vietnam was a disaster.
- The war in Iraq caused massive destruction but did nothing but make more enemies.
- The current war in Afghanistan is an ongoing disaster.
Yet, somehow Roubini thinks we can butt in here successfully. Funding From Where?Roubini calls for funding from the IMF with "bilateral" support from the US and others. That is a backdoor way of saying US taxpayers. If a Marshall Plan for the Mideast is needed, let Saudi Arabia, Iran, and Iraq fund it entirely. For starters it's their region and their oil. They have the oil revenues, not us. Moreover, our offers of "assistance" typically come with strings attached that inevitably cause further ill from someone. There is no need to go down that path again. The IMF's track record is as bad if not worse. History clearly shows that countries that take "assistance" from the IMF live to regret it. Even if we did have the money (which we don't), we have no business telling Mideast countries how to run their economies. What the US does have is a budget deficit of $1.4 trillion and blood from butting in our noses where we do not belong. I propose a more sensible action: cut all US funding for the IMF and its economic terrorist policies that have wrecked numerous economies, the latest victim being Ireland. Roubini needs to stick with economic and risk analysis where his analysis is generally quite good, and away from socialistic and interventionist solutions that are repeatedly and hopelessly off the mark. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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| Germany to Shut Down Seven Pre-1980 Reactors; 23 U.S. Reactors Have GE Designs "More Susceptible to Failure in an Emergency" Posted: 15 Mar 2011 01:23 PM PDT The industry push to use more nuclear power is under attack in many places as a result of the disaster in Japan. For example Germany to shut down seven reactors and may mothball them entirely. Germany will shut down its seven oldest nuclear power reactors and may not restart them, German Chancellor Angela Merkel said Tuesday.
The plants will be closed for at least three months under a moratorium imposed in response to the Japanese nuclear crisis, she said.
"Power plants that went into operation before the end of 1980 will be shut down for the period of the moratorium," Merkel said.
The moratorium shelves a decision to extend the lifetime of Germany's 17 reactors by an average of 12 years. Nuclear power supplies nearly one-fifth of Germany's electricity and it's an integral part of the European energy mix. Reactor Design in Japan Has Long Been QuestionedInquiring minds are reading Reactor Design in Japan Has Long Been QuestionedThe warnings were stark and issued repeatedly as far back as 1972: If the cooling systems ever failed at a Mark 1 nuclear reactor, the primary containment vessel surrounding the reactor would probably burst as the fuel rods inside overheated. Dangerous radiation would spew into the environment.
Now, with one Mark 1 containment vessel damaged at the embattled Fukushima Daiichi nuclear plant and other vessels there under severe strain, the weaknesses of the design — developed in the 1960s by General Electric — could be contributing to the unfolding catastrophe.
When the ability to cool a reactor is compromised, the containment vessel is the last line of defense. Typically made of steel and concrete, it is designed to prevent — for a time — melting fuel rods from spewing radiation into the environment if cooling efforts completely fail.
In some reactors, known as pressurized water reactors, the system is sealed inside a thick, steel-and-cement tomb. Most nuclear reactors around the world are of this type.
But the type of containment vessel and pressure suppression system used in the failing reactors at Japan's Fukushima Daiichi plant — and in 23 American reactors at 16 plants — is physically less robust, and it has long been thought to be more susceptible to failure in an emergency than competing designs.
G.E. began making the Mark 1 boiling water reactors in the 1960s, marketing them as cheaper and easier to build — in part because they used a comparatively smaller and less expensive containment structure.
American regulators began identifying weaknesses very early on.
In 1972, Stephen H. Hanauer, then a safety official with the Atomic Energy Commission, recommended in a memo that the sort of "pressure-suppression" system used in G.E.'s Mark 1 plants presented unacceptable safety risks and that it should be discontinued. Among his concerns were that the smaller containment design was more susceptible to explosion and rupture from a buildup in hydrogen — a situation that may have unfolded at the Fukushima Daiichi plant.
"What are the safety advantages of pressure suppression, apart from the cost saving?" Mr. Hanauer asked in the 1972 memo.
Questions about the G.E. reactor design escalated in the mid-1980s, when Harold Denton, an official with the N.R.C., asserted that Mark 1 reactors had a 90 percent probability of bursting should the fuel rods overheat and melt in an accident. A follow-up report from a study group convened by the commission concluded that "Mark 1 failure within the first few hours following core melt would appear rather likely."
Michael Tetuan, a spokesman for G.E.'s water and power division, staunchly defended the technology this week, calling it "the industry's workhorse with a proven track record of safety and reliability for more than 40 years."
Mr. Tetuan said there are currently 32 Mark 1 boiling water reactors operating safely around the globe. "There has never been a breach of a Mark 1 containment system," he said.
Several utilities and plant operators also threatened to sue G.E. in the late 1980s after the disclosure of internal company documents dating back to 1975 that suggested the containment vessel designs were either insufficiently tested or had flaws that could compromise safety.
In the late 1980s, all Mark 1 reactors in the United States were also ordered to be retrofitted with venting systems to help reduce pressure in an overheating situation, rather than allow it to build up in a containment system that regulators were concerned could not take it.
It is not clear precisely what modifications were made to the Japanese boiling water reactors now failing, but James Klapproth, the chief nuclear engineer for General Electric Hitachi, said a venting system was in place at the Fukushima plants to help relieve pressure.
What role the specifics of the G.E. design is playing in the rapid deterioration of control at the Fukushima plant is likely to be a matter of debate, and it is possible that any reactor design could succumb to the one-two punch of an earthquake and tsunami like those that unfolded last week in Japan. Record of Safety in QuestionGE relies on a "record of safety". However, questions abound. - The question is what level of safety should be required?
- How much of GE's "record of safety" is attributable to design flaws corrected after implementation?
- What tradeoffs in cost vs. safety are acceptable, even if there have been no accidents to date?
- Germany does not have the same risks as Japan, but does it matter and if so how?
I do not have the answer to those questions but I can point out that when dealing with nuclear reactors, a track record of safety is good up until the first failure. Bear in mind there were many design failures in Japan including a very poor decision to put emergency power generators at a level susceptible to flooding. Certainly the decision to extend the life of those reactors looks like a poor decision, especially in earthquake prone Japan. One thing is for sure, older style reactors as well as reactors using "MOX" are going to come under intense scrutiny everywhere. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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| Corn, Soybeans, Oats Finish Limit Down Posted: 15 Mar 2011 11:49 AM PDT Fundamentally, the crisis in Japan has changed nothing in regards to the need for agricultural commodities. Yet, they too participated in the bloodbath. Please consider the following chart.  Corn, Soybeans, Oats, and Canola all finished limit down. The fundamental need for grains did not change with the events in Japan, but the desire to speculate in commodities may have. Whether this is the start of a lasting trend change remains to be seen, but arguably most commodities are in a bubble. Please see Anatomy of Bubbles; Negative Returns for a Decade Revisited; Is Gold in a Bubble? for a discussion. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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| Anatomy of Bubbles; Negative Returns for a Decade Revisited; Is Gold in a Bubble? Posted: 15 Mar 2011 03:54 AM PDT John Hussman is is once again exploring the topic of valuations and expected future returns. Please consider this snip from Anatomy of a BubbleWhen valuations are reasonable, investors can expect satisfactory long-term returns simply on the basis of the stream of cash flows they receive over time. But once valuations are elevated, investors become increasingly reliant on pure increases in prices and valuations in order to achieve satisfactory returns. This is easily seen in historical data for the S&P 500.
The chart below is based on post-war U.S. data, and illustrates the interaction between valuation levels and valuation changes in producing long-term total returns for the S&P 500, and expands on some of Mike Shedlock's recent observations on valuations and prospective returns.
As I've frequently noted, Depression-era data is far more hostile than post-war data, as is data surrounding other historical and international credit crises, so investors would have needed more stringent valuation criteria in order to accept market risk during these periods. Still, post-war data is sufficient to convey some important ideas.
The first two columns below reflect the Shiller P/E (also known as the "cyclically adjusted" price/earnings ratio), and the frequency of various P/E ranges in historical data. The next two columns show the average annual total return of the S&P 500 Index, based on whether the Shiller P/E rose to a higher level during the 10- or 5-year horizon, or whether it fell to a lower level by the end of that horizon. The next column is the percentage of observations where the P/E was higher at the end of the horizon, and the last column is the weighted average return for each level of Shiller P/Es.
Notice that regardless of whether P/E ratios rose or fell during these investment periods, subsequent returns were substantially higher from low valuations than from high ones. Of course, subsequent returns were higher for horizons where the P/E increased than for those where the P/E fell.
Since data is available for 5-year returns through 2006, but only through 2001 for 10-year returns, the two tables cover slightly different horizons since 1940. Notably, the frequency of Shiller P/Es greater than 24 is 15.3% in 5-year data but only 9.3% in 10-year data. This is because extreme valuations have been the norm in recent years (where the P/E has exceeded 24 over half the time, interrupted only briefly by the recent plunge and rebound).
Presently, the Shiller P/E stands at 24. Be careful how you interpret the data in the table for Shiller P/E's above 24, since these levels were almost never observed in data prior to the late-1990's market bubble. You can see the odd effect of the bubble on the P/E categories above 20. The recent tendency for high valuations to move even higher over the short-term, coupled with the rapid recovery of much of the 2008-2009 loss, creates a "hump" in the 5-year profile - average returns first decline as valuations increase, and then actually improve for the 20-24 bracket. This is an artifact of recent years, and appears neither in pre-1995 data nor in 10-year return data.
The implication of this data for long-term returns is clear. With the Shiller P/E presently at 24, we observe about the same implications for 10-year S&P 500 total returns as we obtain from our broader valuation methods (expected total returns averaging about 3.5% annually). Still, the actual course of total returns will depend on whether valuations become even more extended over the next 5-10 years, or if they contract instead. Even if one includes data from the late-1990's bubble, the probability of rising P/E multiples from these levels is less than 1-in-5. The post of mine John Hussman referred to is Negative Annualized Stock Market Returns for the Next 10 Years or Longer? It's Far More Likely Than You ThinkThanks John, I appreciate the mention. Here is another chart I would like everyone to consider.  click on chart for sharper imageThe above chart was produced by an associate of mine, JJ Abodeely. Please see his post Expensive Markets Mean Low or Negative Prospective Return for additional charts and commentary including a chart showing "real" inflation-adjusted returns. Data for the charts is from Robert Shiller. The chart above shows the frequency distribution of 10-year annualized gains (dividends reinvested) when the starting PE was in the range 22-24. Frequency represents the number of occurrences, totaling 66 as opposed to a percentage that would total 100%. There have been 66 monthly occurrences of PEs in the range 22-24 since 1881. The 10-Year annualized returns were only hugely positive a grand total of 6 of those 66 times, and all of those occurrences happened between 1995 and 2005. This is what Hussman referred to when he said " Be careful how you interpret the data in the table for Shiller P/E's above 24, since these levels were almost never observed in data prior to the late-1990's market bubble." There are 33 occurrences 1% and below, and 33 occurrences 2% and above. The average nominal annualized return is 1.2% On that basis I think Hussman is likely a bit high with his estimate of 3.5% annualized returns for the next 10 years. However, rather than picking a precise number, I propose a range of -2% to +3%, with a skew to the downside for the next 5 years or so. Meanwhile, pension plan assumptions are 7.5-8.5% everywhere you look. Odds of that are minuscule in my opinion. Commodity BubbleLet's return to Hussman for a look at the bubbles. In the stock market, I believe that there is indeed a "bubble" component in current prices, but it is not nearly as large as we observed in the approach to the 2000 peak, nor as extreme as we observed on the approach to the 2007 peak. My hope is that investors have learned something. That's not entirely clear, but we'll be as flexible as we can while also being mindful of the risks.
While my view is that bubble components can come and go in the markets, they sometimes become so large and well-defined that they take on a very distinct profile. Such bubbles included the advance to the 2000 stock market peak, the housing bubble, the advance in oil prices to their peak in 2008, the advance in the Nikkei in the late 1980's, and other clearly parabolic advances.
On that note, it's clear to me that we're seeing classic bubbles in a variety of commodities. It is very unlikely that this is simply due to global demand growth. Even with an exhaustible resource, it is a well-known economic result (Hotelling's rule) that the optimal extraction rule is one where the price rises at a rate not much different from the interest rate. What we've seen lately is commodity hoarding, predictably resulting from negative real interest rates provoked by the Fed's policy of quantitative easing.
Fortunately for the world's poor, the speculative dynamic that has created a massive surge in commodity prices appears very close to running its course, as we see very similar "microdynamics" in agricultural commodities as we saw with oil in 2008. That's not to say that we have a good idea of precisely how high prices will move over the short term. The blowoff phase of a bubble tends to be steep, but so short-lived that it affords little opportunity to exit. As prices advance in an uncorrected parabola, the one-sided nature of the speculation typically gives way to a frantic effort of speculators to exit simultaneously. Crashes are always a reflection of illiquidity in two-sided trading - the inability of sellers to find eager buyers at nearby prices.
On the subject of commodities, it's a natural question whether gold falls into the same category as agricultural commodities. After all, gold and other hard assets have an important role as an alternative to money to store value, and it appears clear that the world is monetizing in a way that is unlikely to be fully reversed even if policy makers wish to do so down the road.
In my view, it's not clear that gold is in a bubble here, but it will be important to watch for the earmarks of a classic bubble. Below, I've plotted the price of gold against a "canonical" log-periodic bubble. Already, we're seeing some behavior that is characteristic of a bubble-type advance. A Sornette-type analysis generates a finite-time singularity as early as April, but there are other fits that are consistent with a more sustained advance. If we observe a virtually uncorrected advance toward about 1500 in the next several weeks, the steep and uncorrected advance would imply an increasing hazard probability. Is Gold in a Bubble?Please see Hussman's article for the charts he mentions. I agree with Hussman about the bubble in commodities not only because of the speculation angle but also because of unsustainable growth in China. When China stalls, it will likely take commodities and the commodity producing countries down with it, notably Australia and Canada. Finally, gold is acting more like a currency than a natural-resource commodity (because that is what it is). It may or may not be immune to a commodity-related selloff, and much depends on the actions of central banks down the road. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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