Gold approaches $1000

Gold is approaching $1000/oz. as I write this, and equity markets are declining. The Dow has fallen below its November low, but the S&P 500 still has a few points left before it too hits a new low. The mood is obviously grim. It's a perfect storm of bad economic and political news.

President Obama's "stimulus" bill contains virtually nothing that is likely to stimulate the economy, yet it will result in the biggest expansion of the federal government in generations and will create deficits as a percent of GDP that are measured in double digits. That in turn will be a millstone around the economy's neck for many years to come, and that's just for openers. On top of that he wants to pump hundreds of billions into the housing market in an attempt to keep prices from falling and families from losing their homes. Instead of boosting incentives to work and invest, he's rewarding those who aren't working and have failed. Instead of trusting the people and the market, he's staking everything on his belief in his own wisdom and the power of government. (As would a community organizer eager to help those who have fallen on bad times.) If the economy recovers it will be in spite of Obama's ministrations.

As for the economy, the good news can be found only if you dig, and only on the margin. If you read the headlines, all you see is doom and gloom.

I'm getting that sick feeling in my stomach that usually comes at market lows. It's time to go take a long walk on the beach.