What’s the difference between an ostrich and a Wall Street analyst? An ostrich occasionally takes its head out of the sand.

Despite a flurry of signs that the economy is slowing, stock analysts — nearly every single one — have remained bullish on stocks. Greece may be hurtling toward default, the U.S. unemployment rate remains high, and house prices are still declining. But the hundreds of pros paid to tell us when to buy and sell stocks have barely touched their call for fast growth in corporate sales and profits for the next several quarters.

“There’s a lot of optimism here,” says Howard Silverblatt, chief index analyst at Standard & Poor’s. “They’re predicting the second half of the year will be the best ever for profits. Do you feel that way?”

Of course, no one can predict with certainty whether the economy will slow to a crawl or even fall into another recession. But what’s startling is the near unanimity among these prognosticators. They believe that the economy won’t get much worse and say we’d be foolish to sell stocks despite a near-doubling in prices in the past two years.

Among the 9,015 analyst recommendations on S&P 500 stocks available today, only 300 are to sell, or 3.3 percent, according to data provider FactSet. That’s the same proportion from a month earlier when the economy was considered to be in better shape. All else being equal, you want to sell if you think profit growth could slow.

Analysts work for banks, brokerages and research firms. To form their opinions on stocks, they pore over the financials of companies, visit their offices and factories and grill their executives. Then they churn out voluminous reports backing those opinions. Those are widely read — even by professional investors who like to poke fun at their relentless bullishness.

Some analyst predictions that might make you scratch your head:

– Profits will leap in the second quarter. For April through June, analysts expect that companies in the S&P 500 index will post $ 23.90 in operating profits per share, four pennies less than their estimate at the end of May, according to an S&P survey. If that happens, companies will earn 15 percent more than in last year’s second quarter.

– Record profits next quarter. For the three months ending Sept. 30, S&P says analysts see operating profits hitting $ 25.09 per share. That would be a higher than any quarter yet, beating results from the second quarter of 2007. Back then the economy was growing twice as fast and the unemployment rate was half what it is today.

– A blockbuster year, followed by another. For all four quarters of 2011, analysts estimate that S&P 500 profits will hit a record $ 97.86 per share, surpassing by $ 10 the previous record for any year, set in 2006. Then, they insist, profits will jump another 14 percent to $ 111.82 per share in 2012.

S&P’s Silverblatt thinks many analysts will eventually lower their estimates. He notes that most prefer to wait for corporate executives to hint that they should cut estimates before doing it. But many companies appear to be waiting until they announce second quarter earnings to guide estimates down. That won’t be until at least mid-July.

Nicholas Colas, chief market strategist at broker ConvergEx Group, says the upcoming reporting season will be the most important since the Great Recession ended eight quarters ago. If companies suggest that estimates are too high, earnings revisions will fly, he believes.

For the average investor, that could mean danger ahead. Stocks already have fallen nearly 7 percent since their April peak. That’s not far from the 10 percent mark that signals a correction. Suddenly gloomy analysts could push it the rest of the way.

One stock to watch: Apple Inc. The i-everything maker is expected to report in mid-July. The stock could fall if the economy continues to slow and consumers cut spending on its products. Apple products are generally considered recession-proof. Still, after a stock climb of 22 percent in the past year, you’d think there’d be a few doubters about its ability to rise further. Not exactly. Among the 45 analysts covering the company, only one is suggesting you sell, according to FactSet. If Apple’s revenue or profits come in low, not only would that make analysts look flatfooted, it could spread jitters among investors. That, in turn, could pull other stocks down.

The uniform optimism among analysts might be laughable if it didn’t matter so much. When ordinary investors hear bullish TV pundits talking about how stocks are “reasonably valued,” those investors are being swayed by analysts even if they’ve never read their reports. Pundits who talk this way are often referring to the so-called price-earnings ratio, a figure they get from analyst estimates of a company’s earnings. That P/E ratio for the S&P 500 currently stands at 12.9 times estimated operating earnings for the coming year — cheap compared with the long-term value of 15 or 16 times.

The problem is, that 12.9 ratio could be wrong. If earnings come in lower than expected, the P/E ratio for the S&P 500 will shoot up. Stocks would no longer seem “reasonably valued” and might fall sharply. This scenario has happened before.

In June 2007, near the end of a five-year bull market, stocks were trading at 16 times estimated operating earnings for the next 12 months. But the estimates turned out to be too high as the economy slowed and then dropped into recession. In fact, stocks were trading at 22 times the operating earnings that companies delivered over those 12 months. As those lower earnings came in, stocks fell 15 percent over the next year while the analysts played catch-up.

Now analysts want you to believe that nearly every stock should be bought.

After the dot-com bust, politicians and prosecutors thought the reason analysts got it wrong was sinister. They noted that analysts working for the research arms of a bank are reluctant to criticize a company that the banks are courting as a client for other parts of their business. But the real cause may be more difficult to root out because it’s so human: self-delusion.

“You’re married to an industry, and you want to feel that what you’re following is special — that it can buck the trend,” says ConvergEx strategist Colas, who was an auto industry analyst for nine years and admits he fell into that trap. “You want to feel the companies are run by smart people and the fundamentals are good.”

To be fair, analysts have been right in their optimism in the recovery so far. Investors who followed their advice and bought stocks last summer amid somber economic news have been rewarded. This fits a pattern, according to a recent McKinsey & Co. report that otherwise lambasted analysts for overestimating earnings growth by nearly double, on average. During economic recoveries when recession-depressed stocks are most likely to rise, analysts look like geniuses. If you’re counting, that’s four times over the past 30 years.

It’s the rest of the time investors should worry about.

Gerald Celente : Greece is a tiny player in this game and they can’t solve that problem wait until you see Spain go and then Italy . The IMF are the loan sharks of the last resort , they either rape people or rape countries . To me America’s public enemy number one is Ossama Ben Bernanke says Gerald Celente, the politicians are the front men for the crime gang they get paid they call it campaign contributions , Gerald Celente does not give any financial advice but he invests most of his money in Gold and in the Swiss francs cause the Swiss are the money cockroaches of the world , when the world economy goes into crisis money will search for a safe heaven and Switzerland seems very well placed for that . trends masters Gerald Celente also calls for direct democracy at the Swiss model , if you can bank online you can vote online he says . America is murder Inc.

Iceland is free. And it will remain so, so long as her people wish to remain autonomous of the foreign domination of her would-be masters — in this case, international bankers.

On April 9, the fiercely independent people of island-nation defeated a referendum that would have bailed out the UK and the Netherlands who had covered the deposits of British and Dutch investors who had lost funds in Icesave bank in 2008.

At the time of the bank’s failure, Iceland refused to cover the losses. But the UK and Netherlands nonetheless have demanded that Iceland repay them for the “loan” as a condition for admission into the European Union.

In response, the Icelandic people have told Europe to go pound sand. The final vote was 103,207 to 69,462, or 58.9 percent to 39.7 percent. “Taxpayers should not be responsible for paying the debts of a private institution,” said Sigriur Andersen, a spokeswoman for the Advice group that opposed the bailout.

A similar referendum in 2009 on the issue, although with harsher terms, found 93.2 percent of the Icelandic electorate rejecting a proposal to guarantee the deposits of foreign investors who had funds in the Icelandic bank. The referendum was invoked when President Olafur Ragnur Grimmson vetoed legislation the Althingi, Iceland’s parliament, had passed to pay back the British and Dutch.

Under the terms of the agreement, Iceland would have had to pay £2.35 billion to the UK, and €1.32 billion to the Netherlands by 2046 at a 3 percent interest rate. Its rejection for the second time by Iceland is a testament to its people, who feel they should bear no responsibility for the losses of foreigners endured in the financial crisis.

That opposition to bailouts led to Iceland’s decision to allow the bank to fail in 2008. Not that the taxpayers there could have afforded to. As noted by Bloomberg News, at the time the crisis hit in 2008, “the banks had debts equal to 10 times Iceland’s $ 12 billion GDP.”

“These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks,” Iceland President Olafur Grimsson told Bloomberg Television.

The voters’ rejection came despite threats to isolate Iceland from funding in international financial institutions. Iceland’s national debt has already been downgraded by credit rating agencies, and now those same agencies have promised to do so once again as punishment for defying the will of international bankers.

This is just the latest in the long drama since 2008 of global institutions refusing to take losses in the financial crisis. Threats of a global economic depression and claims of being “too big to fail” have equated to a loaded gun to the heads of representative governments in the U.S. and Europe. Iceland is of particular interest because it did not bail out its banks like Ireland did, or foreign ones like the U.S. did.

If that fervor catches on amongst taxpayers worldwide, as it has in Iceland and with the tea party movement in America, the banks would have something to fear; that is, the inability to draw from limitless amounts of funding from gullible government officials and central banks. It appears that the root cause is government guarantees, whether explicit or implicit, on risk-taking by the banks.

Ultimately, such guarantees are not necessary to maintain full employment or even prop up an economy with growth, they are simply designed to allow these international institutions to overleverage and increase their profit margins in good times — and to avoid catastrophic losses in bad times.

The lesson here is instructive across the pond, but it is a chilling one. If the U.S. — or any sovereign for that matter — attempts to restructure their debts, or to force private investors to take a haircut on their own foolish gambles, these international institutions have promised the equivalent of economic war in response. However, the alternative is for representative governments to sacrifice their independence to a cadre of faceless bankers who share no allegiance to any nation.

It is the conflict that has already defined the beginning of the 21^st Century. The question is whether free peoples will choose to remain free, as Iceland has, or to submit.

After watching silver’s wild and relentless climb since last August, some high-profile investors have started taking profits. That’s caused silver prices to correct about 20%, down from $ 48.70 to $ 39.05 intraday yesterday (Wednesday).

Does that mean the silver bull market has peaked?

In a word: No.

Don’t misunderstand: We could still see additional declines in the price of silver. After that, however, we can bank on the silver bull resuming for the very simple reason that we can identify the three specific factors that have caused silver prices to fall. And all three of those factors are as rational as they are finite.

As Money Morning readers are well aware, I’m as much of a silver bull as anyone. But when I look at the 20% decline silver prices have experienced in the past several days, I can attribute the drop to the following three reasons:

• Silver prices rose a long way in a very short time, making them vulnerable to downward pressure from other catalysts.
• The exchange on which silver trades made it tougher for traders by boosting margin requirements several times starting last week.
• And several high-profile investors have reportedly sold silver, exacerbating investor nervousness.

Let’s look at each of the three.

Silver Prices: A Long Run in a Short Time

I’m more aware of this than anyone. I put a “Strong Buy” on silver for our readers back in late August when the white metal was trading at $ 19.40 an ounce. It was at $ 48.70 on Friday, meaning that investors who took this advice pocketed a profit of as much as 150% in just eight months.

Even after the sell-off, those readers are sitting on a double.

In a follow-up article that appeared last week, I warned that a near-term correction was possible, but noted that the long-term outlook for silver was highly bullish.

Whenever a financial asset makes such a stunning advance in such a short time, it is much more vulnerable to a correction or consolidation. So this isn’t a surprise to me, and it isn’t a worry.

Comex Raises Silver Margins – Again

The Comex division of the New York Mercantile Exchange – where silver futures are traded [(both of which are part of the CME Group Inc. (Nasdaq: (CME)] – on Monday decided to raise the margin requirements on silver by 12% (the increase went into effect the next day). That came on the heels of two previous increases – of 9% and 10%, respectively – that were implemented last week.

Last week’s increases in the margin requirements for silver failed to quell the exuberant trading. But Tuesday’s 12% increase may have done it.

You see, the precious metal gold is purchased and held predominantly by big institutional investors, investment funds and even central banks. But silver is actually dominated by individual investors. And when the exchange increased the requirements for trading silver-futures contracts, a number of those individual investors were forced to liquidate their holdings. Yet something, perhaps even more significant, also took place recently.

Smart Money Takes Profits, Reinvests

In recent days, a number of high-profile silver investors have sold the metal – further unsettling already worried individual investors holding silver.

The fact that the “well-heeled” were exiting silver “put fears in people’s minds,” Adam Klopfenstein, a senior market strategist with Lind-Waldockin Chicago, told MarketWatch.com. The Wall Street Journal reported late Tuesday that such well-known investors as George Soros and John Burbank have been selling off their gold and silver holdings recently. Those sales have contributed to the recent price declines for these precious metals, and could threaten the nine-month rally gold and silver have experienced.

And Soros and Burbank weren’t alone in their decision to sell. Eric Sprott, of Canada’s Sprott Asset Management LP – which has a total of $ 8.5 billion under management, and which is also one of the biggest silver bulls -cashed in $ 35 million of his own Sprott Physical Silver Trust ETF (NYSEArca: PSLV).

It’s likely this news hit the silver market, too, exacerbating the sell-off. Why would Sprott do this? Remember, he’s a seasoned and astute investor.

In an interview with Toronto’s Globe and Mail newspaper, Sprott explained that he’s still very bullish on silver. He told the business daily that “Every dollar of money that was raised by selling shares of [the Trust] … was reinvested in silver or silver equities.”

What’s more, PSLV was trading at a 16% premium to its net asset value (NAV). So right near an interim top, Sprott recognized the relative value (versus his own silver ETF) in both physical silver and silver equities.

The trade by this savvy investor – cashing in the overvalued to reinvest in the undervalued – is a perfect example of how the smart money behaves, and why the contrarian investor often comes out on top.

Sprott also indicated that he’s not ditching his trust, and that he continues to own 25% of PSLV, allocated between his various investment funds and charity.

The Silver Bull Lives

Even though such investors as Soros, Burbank, and Sprott have sold silver and silver-related holdings, a number of other experts continue to favor gold and silver. We mention gold because silver remains the “yellow metal’s” crazy cousin.

Hedge-fund legend John A. Paulson – who solidified his place in investing lore by shorting the subprime mortgage market -continues to believe in gold and silver.

And Paulson is far from being the only one. In a column published just yesterday, for example, Brett Arends, who writes for both MarketWatchand The Journal, made a highly compelling case that gold has yet to top out – and could actually ” go vertical” from here. Arends made a compelling case, as did some of the institutional players he spoke to.

If gold were to skyrocket, silver would move as well. Other investorshave made similar prognostications. So my advice is to watch silver closely for signs of a bottom before taking a position. And then buckle up and enjoy the (wild) ride.

If you’re looking to emulate Eric Sprott, of Canada’s Sprott Asset Management LP, consider the Global X Silver Miners Exchange-Traded Fund (NYSE: SIL). As Sprott himself recognized, silver shares, which normally offer good leverage on the metal’s price, have underperformed silver in its run up since late last summer.

This ETF is a great way to obtain instant diversification amongst a group of 25 silver miners, refiners, and explorers. Total expenses only run 0.65% and volume is a respectable 1 million shares of daily trading.
Before you make your move, closely watch silver for signs of a bottom. Then buckle up and wait for liftoff.