Sparse hiring has been reportedly thwarting the growth of the American economy which has registered a moderate growth since last November. This was stated in the Beige Book published by the Federal Reserve this Wednesday. And, according to the Wall Street Journal, the story is largely in sync with the present performance of the economy and the way it has been performing over the last couple of years. The most recent signs of growth in 2013 also remain largely subdued.

However, the latest stock market trends do tell a different tale. There was a 12% growth registered by the S&P 500 as 2012 drew to a close. Similarly, Barron’s has reported the biggest can flow in equity funds for the week ending January 9, 2013. This happens to be the largest inflow in 20 years. Therefore, it is clearly becoming more and more difficult for investors to digest such mixed signals coming from the markets. The markets and the economy are clearly not on the same page.

According to analysts like Doug Casey, engaged as the Chairman of the Casey Research, this prevailing trend of the economy being separate from the market is likely to remain for now. According to the statement he gave to The Daily Ticker, several more such bubbles are likely to be created in the stock market on account of the central banks’ money printing spree. And Casey is certainly not the only one extending such judgments. Officials from the Federal Reserve, Ben Bernanke and Esther George have also been expressing similar views in their addresses off late. According to then, lowest interest rates are heating up asset markets, be it farmland or junk bond. And when these unplanned bond purchases are reversed, it could lead to high risks for the markets.

According to Casey, the Great Depression became a reality in 2007 itself. It was quite like a hurricane whose leading edge was braved through 2007-2009. And the creation of currency units has placed us in the hurricane eye, just now. 2013 will force us to pass through the trailing edge. However, this journey is likely to be longer and much worse that what we saw in 2008.

According to some interesting bits of advice that comes from the author of Totally Incorrect: Conversations with Doug Casey, the 2013 phenomenon has been explained with the help of the following facts:

1.    He does not profess a very great liking for the real estate markets. This is because, although the markets have turned cheaper compared to the skyrocketing prices registered a couple of years ago, it finds itself floating amidst stupendous debts. Therefore, according to Casey, when the interest rates appreciate, it would be specifically bad for the real estate markets.
2.    He states that stock prices could in fact move higher on account of the prevailing panic concerning dollars.
3.    According to Casey, bonds are the worst choices in the given scenario although most people are panicking and seeking refuge in them. When the bond bubble explodes, the catastrophe is slated to be bigger than the real estate bust, states Casey. He clearly mentions that owners of bonds are confronted with risks concerning inflation, default and interest rates. He also stated that he has been sticking to this viewpoint for a while and was of the opinion that bond bubble would explode last year itself!

Casey does not pin faith on traditional investments. However, he considers gold to be a bullish choice. He also refers to the reports that stated that the Central Bank of Germany had decided upon repatriation of some of its gold to the New York Fed and the Central Bank of France. He affirms that phenomena such as these have failed to have any impact on the gold markets. Casey also reaffirmed that Platinum, despite its parity with gold, should be considered as an industrial metal and placed in the same class as cobalt, nickel and copper.