Its no secret to my family and friends that I follow Mike Shedlock (and others) on a daily basis. I'm not shy to say where the various economic pundits have been right and wrong over the past 6 years that I really began studying and following global economic events. Out of all of them, Shedlock or "Mish" as he calls himself, has consistently been correct most of the time and when he turned out to be wrong about something on rare occasion, he quickly admitted it and changed direction.
Mish's great strength, besides having the logical mind of an ex-software developer where "if-then-else" rules and everything else is noise, is his focus on the data. He watches the important data and tries to spot trends. He's pretty good about suggesting that a trend might form based on the data and then only going "all in" with his analysis once he has enough data to fully back it no matter who is asking him the hard questions about his analysis. Its an enviable skill and I have learned a lot from watching him practice it over the years.
At the same time, like any approach, waiting to have all of the data can result in long delays at reaching the right conclusion. In other words, once the conclusion is reached it will have a higher probability of being accurate because it is supported by so much mature data but that comes at the potential cost of being late. Mish has to take the path he took because he is a widely read blogger and you can't get there easily if you write controversial things. The herd simply takes too long to suspend disbelief about things that are otherwise obvious. For example, 95% of the people still seem to think that WTC building 7 collapsed into its own footprint at the speed of gravity on 9-11 as a result of some small office material fires. WTC 7 was never hit by any airplane like the twin towers were. People are so afraid of what others will think about them that they avoid thinking (much less talking) about such controversial things. It's herding 101.
Likewise, Mish must be careful about sounding conspiratorial even in the face of an obvious global economic conspiracy. I have not been shy about writing this. I have also been very clear on perhaps 100 different occasions that the engine of this massive global fraud is fiat currency and fractional reserve banking. Without that basic supporting item it would not matter that people would still want to be corrupt and get something for nothing because they simply would not have the means to accomplish on the current scale. The current global Debt Ponzi is the result where fraud upon fraud is papered over and the status quo maintained. Who is doing it? The military industrial complex warned about by Eisenhower. I've been writing about this since at least 2008 but here is a post from 2011 that states my position clearly. I've also defended real capitalism many times and pointed out that we don't have real capitalism but rather capitalism theater. Finally, I have quoted Lenin many times: in that "fascism is (crony) capitalism in decay". In other words, history shows that when the debt Ponzi begins to collapse, governments use force or threat of force to avoid being held accountable or of incurring regime change.
All of which leads me to Mish's finally putting it all together in one post where he defends capitalism while explaining why the recovery has helped the rich at the expense of the middle class. He writes,"I blame the Fed, fractional reserve lending, political corruption, unions, and the Military Industrial Complex that president Eisenhower warned us about in a Speech in 1961.
In short, the problems we face are not the result of free market capitalism, but rather the results of Fed sponsored corporate and military fascism."
(Scroll to the bottom to see the above quote):
http://globaleconomicanalysis.blogspot.com/2013/04/who-won-93-or-7-why.html
Mish has finally put it all together in one succinct summary of the state of affairs. While I understood the nature of this scam years ago, Mish has finally gathered enough data to plainly state a strong opinion about it. Note that he stopped short of using the word "conspiracy" but that is exactly what he is describing when he blames groups like the "Military Industrial Complex" and "The Fed". Kudos to Mish for finally detailing his views on this. Many in his place would simply clam up on the conclusion in fear of losing readership. Then again, perhaps Mish has his finger on the pulse of the herd and senses that it is ready to listen to straight talk. After all, you can't fool all of the people all of the time and in the end game of any scam you can't fool anyone ever. You have to begin a new scam for that.
Monday, April 29, 2013
Sunday, April 28, 2013
Fast and furious: metals collapse has taken near term risk out of metals purchases
There is a lot of common sense in this Seeking Alpha article:
http://seekingalpha.com/article/1378651-gold-and-silver-speculator-long-positions-wiped-out
The main 2 points I took away were that metals could well "back and fill" during the historically slow summer months in the metals markets. Back and fill is trader talk for "people buying the dips" at this level.
Everyone's eyes are now on the metals markets. By crashing the way they did, all it did was draw more attention to them. Could they go lower? Sure. But now comes the second take away from the article and that is that we just saw "capitulation" style volume on the metals. In other words, panic selling of leveraged positions as can be seen from the chart below. In other words, any weak (AKA leveraged) hands that had to sell did so. Now, that could have been the 3rd of C Elliott wave retracement (big gap down!) and perhaps the big bounce since is a 4th wave. But in my experience, the 3rd wave is where you usually want to make your move especially when dealing with something that has real tangible value because the 5th wave can sneak by you easily.
I think good confirmation that the bottom is in will be had if gold can break through the horizontal blue line that had been support for many months, especially if it occurs with gusto and with news that the Federal Reserve is upping their stimulus in order to try to save the collapsing global debt Ponzi.
Keep in mind that the US is really Germany but on a global scale. Germany is on top of Europe by virtue of its export capacity. Thus when its vendor finance export scam begins to collapse, it is left with the choice of trying to prop it up or admitting that the whole idea of borrowing tons of money in order to create exports for "customers" who can only pay using debt is a massive, corrupt scam. Thus, Germany is left trying to bail out those importers of its exports without whose presence and complicity the scam would collapse.
Likewise the US is on top of the world as a result of having fooled everyone into taking its major export (fiat currency in the form of dollars). Thus when its funny money export scam begins to collapse, it is left with the choice of trying to prop it up or admitting that the whole idea of creating money from thin air and trading it for real goods is a massive, corrupt scam. Thus, the US will be left with trying to bail out those importers (i.e. the world) of its exports (i.e. fake money) without whose presence and complicity the scam would collapse.
In other words, the economic woes of the world are also those of the USA. What could likely end up being the driving factor of the death of the dollar is the printing of them in untold amounts in order to get people to stay in the corrupt dollar based global economy instead of using real money.
Keynesians always say that government should provide stimulus during hard times but then make up for it during good times. But when the government has taken over the economy, the very definition of hard times means "government cuts back on spending". And so it has been the case for a couple years now. And it will continue to be the case forever more. There will be a crash anytime the government tries to cut back on stimulus. There is no exit plan from Helicopter Ben's Keynesian wisdom. They knew the day would come some day but they hoped to kick the can down the road for a long time. Unfortunately, the market is wise to them. As soon as the government stops printing money, the markets will collapse and there will be a huge depression globally. It will be unthinkably bad. And so, they will continue to print because as con men and/or intellectual children, they will not know what else to do without getting dragged into the street and killed by angry mobs.
We ain't seen bad yet and I don't know when it will arrive (nobody does), but I do know it's coming.
http://seekingalpha.com/article/1378651-gold-and-silver-speculator-long-positions-wiped-out
The main 2 points I took away were that metals could well "back and fill" during the historically slow summer months in the metals markets. Back and fill is trader talk for "people buying the dips" at this level.
Everyone's eyes are now on the metals markets. By crashing the way they did, all it did was draw more attention to them. Could they go lower? Sure. But now comes the second take away from the article and that is that we just saw "capitulation" style volume on the metals. In other words, panic selling of leveraged positions as can be seen from the chart below. In other words, any weak (AKA leveraged) hands that had to sell did so. Now, that could have been the 3rd of C Elliott wave retracement (big gap down!) and perhaps the big bounce since is a 4th wave. But in my experience, the 3rd wave is where you usually want to make your move especially when dealing with something that has real tangible value because the 5th wave can sneak by you easily.
Keep in mind that the US is really Germany but on a global scale. Germany is on top of Europe by virtue of its export capacity. Thus when its vendor finance export scam begins to collapse, it is left with the choice of trying to prop it up or admitting that the whole idea of borrowing tons of money in order to create exports for "customers" who can only pay using debt is a massive, corrupt scam. Thus, Germany is left trying to bail out those importers of its exports without whose presence and complicity the scam would collapse.
Likewise the US is on top of the world as a result of having fooled everyone into taking its major export (fiat currency in the form of dollars). Thus when its funny money export scam begins to collapse, it is left with the choice of trying to prop it up or admitting that the whole idea of creating money from thin air and trading it for real goods is a massive, corrupt scam. Thus, the US will be left with trying to bail out those importers (i.e. the world) of its exports (i.e. fake money) without whose presence and complicity the scam would collapse.
In other words, the economic woes of the world are also those of the USA. What could likely end up being the driving factor of the death of the dollar is the printing of them in untold amounts in order to get people to stay in the corrupt dollar based global economy instead of using real money.
Keynesians always say that government should provide stimulus during hard times but then make up for it during good times. But when the government has taken over the economy, the very definition of hard times means "government cuts back on spending". And so it has been the case for a couple years now. And it will continue to be the case forever more. There will be a crash anytime the government tries to cut back on stimulus. There is no exit plan from Helicopter Ben's Keynesian wisdom. They knew the day would come some day but they hoped to kick the can down the road for a long time. Unfortunately, the market is wise to them. As soon as the government stops printing money, the markets will collapse and there will be a huge depression globally. It will be unthinkably bad. And so, they will continue to print because as con men and/or intellectual children, they will not know what else to do without getting dragged into the street and killed by angry mobs.
We ain't seen bad yet and I don't know when it will arrive (nobody does), but I do know it's coming.
Monday, April 22, 2013
Is the correction in gold nearly over?
As gold and silver have corrected, buyers of the physical metal have picked up the pace. While that does not necessarily mean a bottom is in, it does make me wonder greatly if people believe that the paper price of gold (the COMEX spot price) is a complete joke and that gold will be very important after the global debt Ponzi collapse finally plays out. So I cannot call a bottom here but I will give one thing for people to look at: the next likely resistance level.
Refer to the chart below. Note that on the way up, the up-sloping diagonal blue line was resistance the entire time until the big break out. Each time the price bumped against this line it would get swatted back down, but with each smack down it would take less and less time to re-test that support line. Then at some point it broke back up through, and then had a massive $500 run up into a big 3rd wave overbought peak.
Now that the price is falling again, we have to figure out if this is still part of the a-b-c retracement from the big 3rd wave OR if the 4th and 5th have already played out as a failed 5th scenario. If the former is the case, then gold already saw an expected 38.2 retracement. The would mean a 4th wave just finished and we might now see the real 5th wave happen. That would be bullish for the metal IMO since it would erase the failed 5th scenario (it would turn the failed 5th into a simple b wave of the a-b-c retracement of the massive 3rd that went to $185 on GLD ETF).
If, however, we just saw a failed 5th then it would require GLD to fall all the way down to $124 in order to hit a real 38.2 % retracement. I think we will have a really good indication soon. When retesting important levels (such as the 38.2% fib of the 3rd wave) from below, if the chart cannot break back through "with gusto" then the failed 5th scenario is more likely. The top of the blue box show that important technical resistance level.
I personally hope that gold goes way down from here because it will give a lot more people the chance to load up for retirement at what I still consider to be low prices. I do not believe that gold will stay low for very long. Not with every single country in the world printing up untold amounts of money in order to stave off economic crises, collapse of their banks, etc.
As usual, I want to tell people that market timing is difficult even for the most informed people out there. Nobody is always right or they would be the richest people in the world. The best bet on gold and silver is not to bet at all. Simply dollar cost average your retirement savings in over many years. Sometimes you will buy the peak, sometimes the dip. But when retirement arrives you will definitely have savings whereas people who trust all of their retirement wealth to pensions and Wall St and government-controlled 401ks will find that they will be robbed in broad daylight simply because the government needs the money and you have the ability to pay. But there is no way to wealth-tax physical gold and silver holders.
Refer to the chart below. Note that on the way up, the up-sloping diagonal blue line was resistance the entire time until the big break out. Each time the price bumped against this line it would get swatted back down, but with each smack down it would take less and less time to re-test that support line. Then at some point it broke back up through, and then had a massive $500 run up into a big 3rd wave overbought peak.
Now that the price is falling again, we have to figure out if this is still part of the a-b-c retracement from the big 3rd wave OR if the 4th and 5th have already played out as a failed 5th scenario. If the former is the case, then gold already saw an expected 38.2 retracement. The would mean a 4th wave just finished and we might now see the real 5th wave happen. That would be bullish for the metal IMO since it would erase the failed 5th scenario (it would turn the failed 5th into a simple b wave of the a-b-c retracement of the massive 3rd that went to $185 on GLD ETF).
If, however, we just saw a failed 5th then it would require GLD to fall all the way down to $124 in order to hit a real 38.2 % retracement. I think we will have a really good indication soon. When retesting important levels (such as the 38.2% fib of the 3rd wave) from below, if the chart cannot break back through "with gusto" then the failed 5th scenario is more likely. The top of the blue box show that important technical resistance level.
I personally hope that gold goes way down from here because it will give a lot more people the chance to load up for retirement at what I still consider to be low prices. I do not believe that gold will stay low for very long. Not with every single country in the world printing up untold amounts of money in order to stave off economic crises, collapse of their banks, etc.
As usual, I want to tell people that market timing is difficult even for the most informed people out there. Nobody is always right or they would be the richest people in the world. The best bet on gold and silver is not to bet at all. Simply dollar cost average your retirement savings in over many years. Sometimes you will buy the peak, sometimes the dip. But when retirement arrives you will definitely have savings whereas people who trust all of their retirement wealth to pensions and Wall St and government-controlled 401ks will find that they will be robbed in broad daylight simply because the government needs the money and you have the ability to pay. But there is no way to wealth-tax physical gold and silver holders.
The economic world is literally re-forming itelf, right here, right now.
I was traveling to Taipei during the big gold and silver pullback last week and work there kept me too occupied to do anything but comment quickly on what was happening. But now that I'm back I simply must comment on some major things that I am seeing.
First, what if they gave a gold and silver crash but nobody believed it? In other words, what if the plummeting spot price of gold and silver was no longer being seen as a reason to run away but rather as the pause that refreshes? I can't say how far the paper price (i.e. "spot price") of gold and silver will retrace on the open market but I can say this: they will never be worthless whereas stocks always go worthless given enough time. Physical silver and gold can never go out of style like commodities. They can never rot or be eaten by rats as can corn or wheat in a silo. Properly stored physical gold and silver WILL be there for you in your retirement, period.
I am astounded at how little effect the silver price collapse has had on ebay coin sales. In looking at the completed auctions for silver Philharmonics (a bullion coin with no numismatic value) are hovering around $33 per coin with the overall range being $30-$35 each (shipping included). This is happening at a time when spot silver is going for $23.24/oz. That is a huge premium of physical silver over paper silver. Time will tell if it holds but it is exactly what I predicted would happen as part and parcel of the collapse of the global debt Ponzi: the price of paper versions of gold will diverge from the price of the physical form of gold. The COMEX will end up defaulting because of this divergence.
In the link above I use the GLD ETF as the placeholder for paper gold and the spot price of gold as the physical price. The real comparison I wanted to make was the EBay or Craigslist price of gold vs. either the spot price or the GLD ETF price because both of those are paper gold trading vehicles and thus they are both fractionally reserved. But I knew of no easy way to match the "real" (i.e. physical) price of gold to either of these trading vehicles so I instead pitted the stronger, larger COMEX spot price over the more marginal (and thus likely to fail sooner and worse) GLD ETF price. If you check out the prior link, the trend line for divergence between the two paper gold trading tools was 10.251:1. Fast forward to today and that divergence ratio trend has risen to 10.380:1
Also, most of the divergences seem to be on the high side of the graph. That is to say, the trend line should not be confused with an average. If a lot of high volume activity occurs on one side of the line but then the activity is returned to the trend line on low volume on the other side of the line, the casual observer will be tricked into thinking the divergence is slow. But clearly a lot of spot trading volumes are occurring at higher prices than the GLD ETF.
What really matters is not the instantaneous price but rather how much has been traded at what price. The effort to always bring the ratio back to some controlled (i.e. non-scary or perhaps even imperceptible to the herd) rate smacks of manipulation. Manipulation never lasts. It's goal is not to conceal the truth forever but rather only until the insiders have a chance to get positioned. Then it is in their best interest to fully expose the manipulation in a grand way thus causing the herd to pile in and drive the prices up rapidly. Banks will need much higher gold prices in the future, there is no question of that. A few hundred dollars swing today means little in the bigger picture where the move will be thousands of dollars higher after the deflation plays out and the Great Inflation must be reckoned with.
Second, a long time ago I predicted that one of the signs of the ending of the Ponzi is when insiders begin whistle blowing on each other. Recently I came across a YouTube where a professor of economics named Jeffrey Sachs from Colombia University (read "respected authority") gave both barrels to the con game/Ponzi being run by Wall St. He even called Congress corrupt and complicit and began to name names. Paulson was called out by name as a criminal and others were named too. He even questioned the validity and utility of fractional reserve banking!!! WOAH! This has to be listened to in its entirety.
Trust me, all this time has gone by without criminal charges against the banking elite because people were afraid that bringing down the banksters would affect growth too much. They shielded the con men from prosecution "for the good of the public". But it is now clear that this mess is not going to get cleaned up on its own and so unless we want to sign up for decades of slow growth like Japan did, we need to come clean and heads need to roll. When academians who have known the truth of what is going on finally begin talking like this in public, it spreads across the herd like wildfire. People stop thinking that everything is a "conspiracy theory" and finally figure that that we opened ourselves to conspiracies and so, in complete alignment with the nature of man, real conspiracies did happen, and not just here and there. Listen to this guy talk! The whole system is corrupt and now respected, main stream people are talking about it because they figured out there is no escape.
A quote often attributed to Churchill is that "You can always count on Americans to do the right thing - after they have tried everything else". Fiat currency and fractional reserve banking are the biggest scams ever to have been played on people. Those who used this system to their advantage will come to feel the heat. The people will move into the anger stage of the Kubler-Ross grief cycle soon. They know they are screwed, that the economy is screwed for years to come. Hope is fading that Obamanomincs and Bernanke printing presses will save everyone from what is coming. Note from the chart below that the anger phase is marked by an active emotional response. The public will soon be demanding criminal charges against those who caused this mess and politicians will begin to sacrifice their fellow criminals in order to divert attention from themselves.
A new world order is indeed coming but it is not the one envisioned by the original con men. The world of fake paper, fractionally reserved everything is going to collapse and when it does people will again understand the value of real things held in hand as opposed to paper wealth kept only on accounting books or in a computer somewhere. Most of the perceived wealth in the world is really debt and when the debt collapses then it will not get repaid. Fractional reserve lending will collapse as well. This will be very healthy for the world even if it means taking some harsh medicine before we get there.
First, what if they gave a gold and silver crash but nobody believed it? In other words, what if the plummeting spot price of gold and silver was no longer being seen as a reason to run away but rather as the pause that refreshes? I can't say how far the paper price (i.e. "spot price") of gold and silver will retrace on the open market but I can say this: they will never be worthless whereas stocks always go worthless given enough time. Physical silver and gold can never go out of style like commodities. They can never rot or be eaten by rats as can corn or wheat in a silo. Properly stored physical gold and silver WILL be there for you in your retirement, period.
I am astounded at how little effect the silver price collapse has had on ebay coin sales. In looking at the completed auctions for silver Philharmonics (a bullion coin with no numismatic value) are hovering around $33 per coin with the overall range being $30-$35 each (shipping included). This is happening at a time when spot silver is going for $23.24/oz. That is a huge premium of physical silver over paper silver. Time will tell if it holds but it is exactly what I predicted would happen as part and parcel of the collapse of the global debt Ponzi: the price of paper versions of gold will diverge from the price of the physical form of gold. The COMEX will end up defaulting because of this divergence.
In the link above I use the GLD ETF as the placeholder for paper gold and the spot price of gold as the physical price. The real comparison I wanted to make was the EBay or Craigslist price of gold vs. either the spot price or the GLD ETF price because both of those are paper gold trading vehicles and thus they are both fractionally reserved. But I knew of no easy way to match the "real" (i.e. physical) price of gold to either of these trading vehicles so I instead pitted the stronger, larger COMEX spot price over the more marginal (and thus likely to fail sooner and worse) GLD ETF price. If you check out the prior link, the trend line for divergence between the two paper gold trading tools was 10.251:1. Fast forward to today and that divergence ratio trend has risen to 10.380:1
What really matters is not the instantaneous price but rather how much has been traded at what price. The effort to always bring the ratio back to some controlled (i.e. non-scary or perhaps even imperceptible to the herd) rate smacks of manipulation. Manipulation never lasts. It's goal is not to conceal the truth forever but rather only until the insiders have a chance to get positioned. Then it is in their best interest to fully expose the manipulation in a grand way thus causing the herd to pile in and drive the prices up rapidly. Banks will need much higher gold prices in the future, there is no question of that. A few hundred dollars swing today means little in the bigger picture where the move will be thousands of dollars higher after the deflation plays out and the Great Inflation must be reckoned with.
Second, a long time ago I predicted that one of the signs of the ending of the Ponzi is when insiders begin whistle blowing on each other. Recently I came across a YouTube where a professor of economics named Jeffrey Sachs from Colombia University (read "respected authority") gave both barrels to the con game/Ponzi being run by Wall St. He even called Congress corrupt and complicit and began to name names. Paulson was called out by name as a criminal and others were named too. He even questioned the validity and utility of fractional reserve banking!!! WOAH! This has to be listened to in its entirety.
Trust me, all this time has gone by without criminal charges against the banking elite because people were afraid that bringing down the banksters would affect growth too much. They shielded the con men from prosecution "for the good of the public". But it is now clear that this mess is not going to get cleaned up on its own and so unless we want to sign up for decades of slow growth like Japan did, we need to come clean and heads need to roll. When academians who have known the truth of what is going on finally begin talking like this in public, it spreads across the herd like wildfire. People stop thinking that everything is a "conspiracy theory" and finally figure that that we opened ourselves to conspiracies and so, in complete alignment with the nature of man, real conspiracies did happen, and not just here and there. Listen to this guy talk! The whole system is corrupt and now respected, main stream people are talking about it because they figured out there is no escape.
A quote often attributed to Churchill is that "You can always count on Americans to do the right thing - after they have tried everything else". Fiat currency and fractional reserve banking are the biggest scams ever to have been played on people. Those who used this system to their advantage will come to feel the heat. The people will move into the anger stage of the Kubler-Ross grief cycle soon. They know they are screwed, that the economy is screwed for years to come. Hope is fading that Obamanomincs and Bernanke printing presses will save everyone from what is coming. Note from the chart below that the anger phase is marked by an active emotional response. The public will soon be demanding criminal charges against those who caused this mess and politicians will begin to sacrifice their fellow criminals in order to divert attention from themselves.
A new world order is indeed coming but it is not the one envisioned by the original con men. The world of fake paper, fractionally reserved everything is going to collapse and when it does people will again understand the value of real things held in hand as opposed to paper wealth kept only on accounting books or in a computer somewhere. Most of the perceived wealth in the world is really debt and when the debt collapses then it will not get repaid. Fractional reserve lending will collapse as well. This will be very healthy for the world even if it means taking some harsh medicine before we get there.
Tuesday, April 16, 2013
Fairly amazing activity on EBay - silver and gold bullion coins are still trading at pre-crash prices.
It might be a tad earlier to get too cocky about it but something amazing is happening in the common man's silver and gold market. Silver coins are still going for about $33 shipped and gold coins are still going for north of $1700 shipped. People are still bidding on these even though spot silver and the fake paper trading funds called SLV and GLD have gotten whacked but good by the recent panic sell off in metals.
So it seems that the panic is really, at least for now, in paper assets, not in real, physical assets. I've never seen this happen in the years I have been following the markets but I always predicted, and many times in these very pages, that some day the price of physical gold and paper traded gold (and silver) would diverge massively. No telling if we just saw the tipping point on this but hear me now and believe me later: either the con men who are running the paper price of gold and silver down wake up and reverse their smack down pretty quickly or the market will take notice of the massive divergence between elite traded paper products and real metal held in the hands of the common man. If that happens then I believe it could start a major run on the COMEX which is already in deep sheep dip from a reserves standpoint. If the COMEX begins to fail to deliver, the paper based market house of cards could easily unravel around it. The speed of collapse could truly be historic.
All of this is happening as America sees a middle eastern style bomb terrorism attack at the Boston Marathon. I don't know if this was a false flag attack by government to distract us from the collapsing economy or if the collapsing economy caused some a$$ to think he had nothing to lose and so he "lost it" as Gerald Celente has been predicting. Either way it is not unexpected. Like Celente, I have also believed that the collapsing scam of fiat currency and fractional reserve banking would come home to roost in the form of civil unrest of all forms, domestic terrorism included.
We failed to elect a fair and honest government such as the one that Ron Paul would have provided. Now we get to live with the consequences. As Patrick Swayze said in "Next of Kin", "You ain't seen bad yet but its coming".
Monday, April 15, 2013
Killer 3rd of C move downward in gold right here
Look at my last post and you will know that this is not an unexpected move. I didn't say I knew the timing, only that it was expected to happen sooner or later. This is NOT the time to sell anything. This is the time to be patient and wait for the suckers to dump their gold cheap and then just keep dollar cost averaging into physical metal held in your hot little hands at these lower prices.
Let me make a few observations about the chart below. First, the failed 5th with declining double top spelled short term weakness for sure. See the owl forming? But also keep in mind that the dramatic sell offs of things of real value are not to be confused with dramatic sell offs of things of no value. If Lexus cars suddenly became priced at $5000 each, would you turn your nose up at them when just a few weeks before you wanted one badly but didn't have the $50+k? You have to know what has enduring value and what is a fad. Gold has been around longer than recorded history. That is no fad. The fad is paper money.
Patience is recommended here but at the rate this is dropping it could find the bottom of the C wave in a very short time. It could be done as quickly as 1-2 trading days or even sooner. That's how dramatic this panic sell off has become. As a matter of fact, it is already at the 38.2 fib retracement of the move that started in July 2005.
I think it is cool that after the failed 5th we see exactly 5 waves down into an "a" wave and then a small rally into a "b" wave and now a massive, rapid paper gold holder capitulation collapse into a 3rd of C. Of course it can go lower and in fact a failed 5th suggests (but does not require) that the 50% fib or the 61.8% fib is more likely as a pullback target than the current 38.2% fib level. But physical gold holders are not selling here because it takes longer than this to sell the physical metal. This is ALL paper trading action and China has got to be loving it because it means more metal for them at cheaper prices.
I'm hoping for a really dramatic pullback -61.8% fib- because while I don't suggest to others to market time, that's the main reason I have taken up Elliott wave chart analysis. Personally, I don't think it will pull back that far. If someone had no gold at all I would tell them to buy 1/3 of their intended dollar value purchase right here and now and then wait. If this turns out to be the bottom then they got a good buy price. If it goes down further they still have 66% of their buying power and they can average down nicely.
All I know is that when this happens to a stock you have to wonder if it is going to go bankrupt and lose all your money for you. But when it happens to gold, it's just giving you a better buy price. Gold will never be worthless. It cannot go bankrupt like pretty much everything else can.
Let me make a few observations about the chart below. First, the failed 5th with declining double top spelled short term weakness for sure. See the owl forming? But also keep in mind that the dramatic sell offs of things of real value are not to be confused with dramatic sell offs of things of no value. If Lexus cars suddenly became priced at $5000 each, would you turn your nose up at them when just a few weeks before you wanted one badly but didn't have the $50+k? You have to know what has enduring value and what is a fad. Gold has been around longer than recorded history. That is no fad. The fad is paper money.
Patience is recommended here but at the rate this is dropping it could find the bottom of the C wave in a very short time. It could be done as quickly as 1-2 trading days or even sooner. That's how dramatic this panic sell off has become. As a matter of fact, it is already at the 38.2 fib retracement of the move that started in July 2005.
I think it is cool that after the failed 5th we see exactly 5 waves down into an "a" wave and then a small rally into a "b" wave and now a massive, rapid paper gold holder capitulation collapse into a 3rd of C. Of course it can go lower and in fact a failed 5th suggests (but does not require) that the 50% fib or the 61.8% fib is more likely as a pullback target than the current 38.2% fib level. But physical gold holders are not selling here because it takes longer than this to sell the physical metal. This is ALL paper trading action and China has got to be loving it because it means more metal for them at cheaper prices.
I'm hoping for a really dramatic pullback -61.8% fib- because while I don't suggest to others to market time, that's the main reason I have taken up Elliott wave chart analysis. Personally, I don't think it will pull back that far. If someone had no gold at all I would tell them to buy 1/3 of their intended dollar value purchase right here and now and then wait. If this turns out to be the bottom then they got a good buy price. If it goes down further they still have 66% of their buying power and they can average down nicely.
All I know is that when this happens to a stock you have to wonder if it is going to go bankrupt and lose all your money for you. But when it happens to gold, it's just giving you a better buy price. Gold will never be worthless. It cannot go bankrupt like pretty much everything else can.
Sunday, April 14, 2013
Back on Feb 17th, a friend emailed me wondering if the pullback in gold that had started then was the significant (albeit short term) pull back that I had been suggesting via emails to friends and family for several quarters eventually would come about. Instead of responding to him directly, I sent the following email to my friends and family list. I think now is a good time to share it on my blog. The full text of that email is below and then some analysis from today follows.
~~~~~~~~~~~~~~~~~~~~~~~ Start of friends and family email~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Wow, gold is $1610, is this the pullback you predicted?
xxxxxxxxx
Hey xxxxxxxx,
As you know, the whims of the herd are impossible to predict. This is why I don’t advise market timing. But if you want my EW based model opinion which is, of course, for the purposes of financial entertainment only, I think the last peak was the end of a 3rd wave. Means we should see a 4th and then a 5th before the big pullback.
1. …just saw the entire 5th wave transpire with the peak to $175 on the GLD ETF chard. This is possible, would be called a so called “failed 5th”. Failed 5th waves are a sign of weakness and the basis of the declining double top that I like to call “owl ears”. It could lead to a dramatic decline. If this breaks below the low of the 4th wave, EW computers that assume failed 5th will assume that we have an a-b-c decline to at least 38.2, perhaps 50 and possibly 61.8 fib. Those levels are marked on the chart below. OR:
2. …just saw wave 1 of the final 5th wave has just completed and this is only a “vee” pullback into wave 2 of 5 that will rebound dramatically into a 3rd wave upward that leads to an all-time high. This possibility will be negated under EW rules if the suspected wave 2 goes below the starting point for it (i.e. around 150 in the chart below).
In either scenario, sellers will pile on if the GLD price goes below 150. Keep in mind that right now, the vast majority of the gold market is fake. It’s all paper trading with very little real gold changing hands. That means gold will be volatile like any other paper assets until the paper scheme finally dies, probably as a result of the collapse of the COMEX due to failure to deliver gold when gamblers demand it instead of settling in dollars. As long as there is a paper market for gold, it is open to government manipulation based on very high leverage. That means that true market driving fundamentals can be obscured/overpowered for a time. As soon as the paper market for gold collapses, which probably only can happen in conjunction with some major political and social upheaval, gold will skyrocket far beyond what anyone thinks is possible. The more they manipulate it down with paper contracts and derivatives, the higher it will skyrocket when the paper scam collapses.
If you are intent on trying to time the market, which again I think is not for most people, wait to see what happen with the required support at $150 on GLD. If it cannot hold, lower prices are expected. When those lower prices come, China will be accumulating along with other foreign governments looking to get out from underneath the economic tyranny of the fraudulent USD. So all of this manipulation of gold prices sows the seeds and accelerates the growth of the destruction of the status quo.
~~~~~~~~~~~~~~~~~~~~~~~ End of friends and family email ~~~~~~~~~~~~~~~~~~~~~~~~~~
Fast forward to today.
Fast forward to today.
The Internet is full of increasingly dire news about the state of the collapsing Euroscam. The most recent tidbit is that the powerful members of the con (Germany) want the weaker ones to sell their gold to pay their debt even though such sales will not even think about putting a dent in their bill given the low price of gold relative to paper obligations that exist. Enter the Cypridiots. The rumor is that they will sell their (somewhat tiny) stock of gold in order to pay their debts. While Cyprus doesn't have much gold, the fear is that success in pressuring Cyprus into such a ridiculous move would force other weaker players to throw their gold away at cheap prices as well and that the result of all this sudden selling will crater the gold price. Here is a snippet from this article to that effect: "The price of gold fell to its lowest level in more than 18 months on Friday night amid fears that sales of the precious metal forced on Cyprus by its desperate financial plight would lead to wholesale dumping by hard-pressed countries in the coming months."
Well, let me say a few things about that. Cypridiot leaders may indeed sell their people down the economic river in order to stay in power a few months longer. But they better be careful because hyperinflation is an ugly thing and since selling their gold will come nowhere near being able to pay off their debts, Cyprus will eventually leave the EU by hook or by crook. When they do leave, they will need their gold to back their historical money, the Cyprus Pound. Without that backing, hyperinflation is assured . I wonder what those "leaders" will be thinking when the angry crowd finally figures out how it got screwed by these con men. I wonder how many public executions, Qaddafi style, that we will see as a result. History should serve as fair warning to rogue leaders who are in league with foreign powers: the people will not be kind to you. Not kind at all.
In any case, there are a lot of people playing every paper market that exists and they are doing it on high leverage. Afraid of their margin risk and upon hearing this news, some of them have decided to take some paper leverage off the table. As a result, the paper price of gold and silver are getting whacked. A quick look at the GLD chart (which is of course a paper gold trading fund) shows that technical support has been broken. The chances for a further pullback are quite high in the face of all of this.
Per my original email, I think that GLD's Elliott wave chart has now revealed itself: that the last peak was actually a failed 5th wave. That means the next action should be a good sized a-b-c type pullback. It could also be that this is all part of an ongoing a-b-c pullback from the 3rd wave peak in mid 2011. That would be unusual because it's all happening outside of the prior channel but it would not be the first time I've seen it. The support could happen at the 38.2 fib as circled in orange or it could take a 61.8% retrace as shown in the orange oblong. But either way I think it has to be seen as a short term buying opportunity and not a reason to sell.
Also, look at the fundamentals. The fake paper money system of the world is collapsing left and right. At the end of the day we will all default Argentina style like the old guard from Portugal is now saying about Portugal. We will be damned lucky if the con men running the show don't take us all to war over it when in fact that would only be a ploy for them to retain power while we the citizens of the Earth get to die on the battlefield over it.
Any funny money loaned has already been lost. Their paper based accounts are just accountings of the fraud. Meanwhile, normal people seem to be paying full price for retail amounts of silver coins. Check out this recently ended EBay auction:
As you can see, today 2 coins went for $33.83 each, shipped. Meanwhile, spot silver is trading at $25.79. One might think that spot silver dropped so rapidly that the bidders on this auction bid early and got "caught" by the move in metal price. Well perhaps it is true but if so, then why were they still bidding the metal up today into the close of the auction?
Perhaps people are figuring out that the spot metals price is a paper price, not a delivered metals price. Oh sure, if you buy wholesale levels of metals then the spot price has certainly lowered your buy cost of the real metal but how long will it take to get delivered? There is also the increasing risk of failure to deliver.
I promise you that one day they will stop delivering the physical metal, declare Force MajEUre ; ) and send you your money back due to insufficient metal stock in hand. They will only do that probably after having held onto your money for a long time leaving you without access to it. See my earlier posts on metals depletion at the COMEX.
The smart money will be buying metal and taking delivery on it at these artificially lower prices as long idiots are willing to sell it here because anyone with a brain knows that the paper money system in place on this planet is swirling the toilet bowl. There is no such thing as limited default! Once Portugal and Spain throw in the towel instead of trying jump through hoops for more rollover loans at usurious terms in order to avoid default, the truth will spread like wildfire that the whole damned system is bankrupt.
Here is the bottom line truth of it: gold is money and nothing else is. If debts were made in funny money then they should be paid back using funny money or defaulted on. Paying off inflated funny money debts using real money like gold (OK silver too) is analogous to being taken as a slave in an on-line fantasy war game and then having that be used as the basis for you to sign yourself over as a slave to the other player in real life. You don't repay a loan of fake labor with real labor. You don't repay a loan of rotten cabbage made to you when you are starving with a kingly feast as soon as you have two nickels to rub together.
Like a fantasy game, fiat currency might seem real but only to those all caught up in it. But the creators of the game, they know what is real life and what is fantasy. They want us to live in a fantasy world while they enjoy real life. There is no possible way that the entire gold reserve of the US is only worth ~$385 billion but that is today's market price of it if you go by $1475 per T. Oz. How can that make any sense at all when our national debt is over $16 trillion and unfunded liabilities are many multiples of that? The answer is simple and clear: the dollar is a promise to pay NOTHING. It is a con by the elite. They play it boldly, right in front of our noses. We used to have this. Now we have this. The latter is just like the former but without the promise to pay anything. Technology might have changed a lot of things on this planet but it has not changed math and it has not changed human nature. The human nature of the elite is to use math and logic as weapons against the people in order to steal their labor.
Smart people will just let the games play out and continue to accumulate gold and silver in the sure and certain knowledge that the entire global economic system is now in the collapse phase of a debt Ponzi of historical magnitude and that paper money that is unbacked by anything at all will some day be understood to be completely worthless. Don't ask me when it will happen, that is a childish question akin to asking "are we there yet" from the back seat as daddy drives to the vacation home. Simply know that we will get there even if it takes longer than some people have patience for. The math, logic and history of this situation will afford no other final outcome.
Here is the bottom line truth of it: gold is money and nothing else is. If debts were made in funny money then they should be paid back using funny money or defaulted on. Paying off inflated funny money debts using real money like gold (OK silver too) is analogous to being taken as a slave in an on-line fantasy war game and then having that be used as the basis for you to sign yourself over as a slave to the other player in real life. You don't repay a loan of fake labor with real labor. You don't repay a loan of rotten cabbage made to you when you are starving with a kingly feast as soon as you have two nickels to rub together.
Like a fantasy game, fiat currency might seem real but only to those all caught up in it. But the creators of the game, they know what is real life and what is fantasy. They want us to live in a fantasy world while they enjoy real life. There is no possible way that the entire gold reserve of the US is only worth ~$385 billion but that is today's market price of it if you go by $1475 per T. Oz. How can that make any sense at all when our national debt is over $16 trillion and unfunded liabilities are many multiples of that? The answer is simple and clear: the dollar is a promise to pay NOTHING. It is a con by the elite. They play it boldly, right in front of our noses. We used to have this. Now we have this. The latter is just like the former but without the promise to pay anything. Technology might have changed a lot of things on this planet but it has not changed math and it has not changed human nature. The human nature of the elite is to use math and logic as weapons against the people in order to steal their labor.
Smart people will just let the games play out and continue to accumulate gold and silver in the sure and certain knowledge that the entire global economic system is now in the collapse phase of a debt Ponzi of historical magnitude and that paper money that is unbacked by anything at all will some day be understood to be completely worthless. Don't ask me when it will happen, that is a childish question akin to asking "are we there yet" from the back seat as daddy drives to the vacation home. Simply know that we will get there even if it takes longer than some people have patience for. The math, logic and history of this situation will afford no other final outcome.
Tuesday, April 9, 2013
Comex gold inventories collapsing - looks like a 3rd wave down
Today's GATA email linked to this story which points out a very interesting chart. The gold colored line at top
is of course the gold price. The dark and light green charts below it represent the physical metal on hand at the COMEX (Commodities Exchange) warehouses of the NY Mercantile Exchange. COMEX is the major metals market place in the US if not the entire world.
In the news we have been hearing about the repatriation of gold by everyone from Argentina to Germany to the state of Texas. What you are seeing in this chart is the repatriation of physical gold by the banking and investment community. The significance of this could turn out to be of historic degree. If this trend continues (and from the looks of the double top, and declining double top charts, it looks like it very easily could), it would mean that people are really losing confidence in having others hold onto their property.
is of course the gold price. The dark and light green charts below it represent the physical metal on hand at the COMEX (Commodities Exchange) warehouses of the NY Mercantile Exchange. COMEX is the major metals market place in the US if not the entire world.
In the news we have been hearing about the repatriation of gold by everyone from Argentina to Germany to the state of Texas. What you are seeing in this chart is the repatriation of physical gold by the banking and investment community. The significance of this could turn out to be of historic degree. If this trend continues (and from the looks of the double top, and declining double top charts, it looks like it very easily could), it would mean that people are really losing confidence in having others hold onto their property.
In these blog pages I have reminded readers many times that one sign of
the Ponzi collapse will be the mass recognition that possession is 9/10ths of
the law. Importantly, you can see that the COMEX gold
withdrawals began even before the Cyprus bank grab. So the rich and powerful already knew what
was going to happen – what had to happen – as the debt Ponzi continued to
spiral downward out of control. Their reaction
was and continues to be to grab their gold and head for the door. They are now more concerned with return of their capital than about return on their gold investment (for what is COMEX to these people other than a place to loan out their gold trying to make a interest fee based profit from its ownership?).
The collapse of a Ponzi is not recognized by the market participants
until enough of the players pull out of the game leaving nothing for the
remaining suckers to have. There is no
doubt that COMEX has sold far more gold than it has on hand. It is certainly a fractionally reserved scam,
just like our entire global banking system is.
People think they have value stored in the system when in fact there are
more outstanding promises than goods to pay off the promises with.
Thanks again to GATA for calling these things out so that the public can know that these things are happening. I'm quite sure the money elite already fully understand what is going on, where it has to lead and what the likely consequences of it will have to be. Meanwhile, the average person is just living day to day, oblivious that all of this is happening and completely unaware that someday it will affect all of us in a very significant way.
Wednesday, April 3, 2013
Reagan's ex-budget director hasn't been reading my blog....
…but he’s now writing pretty much the same thing I have been
writing for years. Of course, he has
credentials where I only have math, logic and history to support my views. David A. Stockman is a former Republican congressman
from Michigan, President Ronald Reagan’s
budget director from 1981
to 1985
and the author,
most recently, of “The Great Deformation: The Corruption of Capitalism in
America.” You might want to read his latest article since it's getting so many eyes upon it due to being in the New York Times:
To recap some of the most important points (but not all of them):
- The stock market recovery has been bought by the Federal Reserve by scooping up assets at full price and putting them on its books in the hope of holding them off the market (and therefore not subject to deflation) for the term of the underlying loans. The fed used to hold only 500bn of safe assets on its books. Now it has 3.2 trillion of crap assets. If it ever has to sell some of them (and eventually it will), the prices of these assets will fall through the floor because there will be no greater fool (con man) than the fed to buy them.
- The argument for buying these crap assets was to support confidence which would cause people to borrow even more money and thus grow the economy (errrrr, Ponzi). But for all the fed’s buying the economy has been growing at the slowest rate since the civil war. Real median family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent. The real net worth (buying power) of the “bottom” 90 percent has dropped by one-fourth. The number of food stamp and disability aid recipients has more than doubled, to 59 million, about one in five Americans. Bottom line, Keynesianism appears to work for a while just like a Ponzi scheme appears to work for a while. But both are confidence games that collapse when the people lose confidence in them.
- The fed is the lender of last resort in the debt Ponzi. When the fed is no longer able to convince more people to take on US debt with nearly 0% interest returns, there will be no “next step” or “backup plan” or anything else. The Ponzi will collapse. The longer we wait for this to happen, the bigger the bubble will get and the more dramatic the collapse will be. Don’t think we can’t make it worse. Things can always be made worse.
- “We’ve been living on borrowed time — and spending Asians’ borrowed dimes”.
- The real 10 year forward looking deficit (AKA additional debt) in the coming years will far exceed the CBO’s $7.5 trillion estimate. As I have written many times, the growth has to be exponential (on average) else the Ponzi will collapse. Stockman sees a $30 trillion debt by 2023. Without any change in our productive output, that would put us at a debt:gdp ratio of 150% which is where 3rd world nations generally get cut off from more loans by the IMF. That, of course, discounts the coming drop in GDP that will occur when government runs out of free money to spend into the economy. Before this is over, the debt to GDP will be 400% IMO. Nobody and I mean nobody is predicting that right now even though it is more than obvious to anyone who can do math. Since debt was used to goose the GDP, when we can no longer goose the GDP using debt, the GDP must collapse. But the debt will remain. This is the nature of the so called debt death spiral that marks the final days of the collapse of the debt Ponzi.
While Stockman gets closer to the truth than perhaps any
article I have read to date, he still never makes the final step to reach the
most important conclusion that the culprit of all of this is none other than
fiat currency and fractional reserve banking.
It is a scam of such ridiculous proportion and of such far reaching
consequence that those pushing it upon the peoples of the world are in fact
mass murders, traitors and economic war criminals. Yeah, it sounds ridiculous to say so now, I
know. Too much of my stuff tends to sound like that to normal, hard working people who have not had time in their busy lives to do their homework.
But don’t let that fool you. The elite know where this is going and they are preparing. They have already robbed us silly on paper. Soon they will steal us blind in actual life and then when we start to protest they will keep us in check with 1.7 billion bullets and 3000 MRAPs (just the start). At some point they worry that even with the application of military force on the people that we will stop being scared of their "military training exercise" fear tactics.
Of course, the problems will not just be between US government and US citizens. This is a global debt Ponzi, not a localized US one. Whole countries will end up getting screwed out of many years worth of labor. When the ensuing $hit storm gets too big they plan to abandon us. In the words of Men At Work, "They've built castles underground for the rich, politically". In the US we call them D.U.M.Bs (Deep Underground Military Bases). Yes, they exist. No, you are not invited. Yes, they are using your money right now to stockpile supplies in them. No this is not a theory of any kind. Yes this is what I would do if I were a scum bag con man who had conned the world into a pile of debt whose collapse carries the significant possibility of global war being used to settle accounts. It doesn't mean it will certainly happen, only that there is enough of a chance of it happening that those who don't have to work for a living are preparing their golden parachute. Similar "end of the world" activities are happening all over the world. Some are hidden, some are in plain sight.
