Friday, May 31, 2013

Silver smack down now in the final stages

It's no secret that metals, including silver, have been under pressure for some time now.  Having said that, I think there is good evidence to show that the main thing under attack is the paper price of metals.  Try to buy physical metals and you will encounter much higher prices than you would have thought given the spot price.  You will also encounter long waits for delivery.  Regardless of the volatility, at least we know for sure that silver will never become worthless like stocks and bonds can (and eventually will) become. 

Because of recently reduced prices, people all over the world are accelerating their hoarding of the physical metals.  That which was designed to scare them out of their metals (as it has done so many times in the past) is now having the opposite effect.  Like I have writting on many occasions, when the Ponzi is in the collapse stage, you suddenly can't fool anyone.  Of course the con men really have no choice but to play their steely eyed, bold faced game of chicked with the herd.  They will do it until horns of the herd gore them the kicking feet of the herd crash into them.  That time draws quite near IMO.  The lions are waiting for the herd to get distracted as it always seems to do but this time the herd has unusual resolve.  As a result I believe that the COMEX and/or the LME will default and the paper price of metals will rapidly diverge from the physical price.  Things that used to work all the time will stop working and things that should have been happening all along but didn't will suddenly come into play again.

And so while waiting for this all to happen I find it entertaining to watch the charts, practicing my Elliott wave modeling skills looking to predict the exact bottom (at which time I plan to make another major purchase of physical metal).  Below is the high level chart which I believe is in the middle of an A-B-C pullback from it's nearly $50 high.  That high point @ $50 formed a high degree wave 1 ("big 1").  Now, per Elliott wave rules, the A-B-C pullback appears to be forming a "big" wave 2.  When this massive wave 2 is complete I expect an absolutely shocking wave 3 upward to form in which the metals exchanges will likely default on delivery and a huge degree of fraud in the metals markets will be exposed.  Smart people, IMVHO, will want to be heavily invested in PHYSICAL metal for that 3rd wave.

Waves A and B of "big 2" have already formed IMO and are labeled below in large red font. 

Thus, wave C should be forming right now.  C should be formed of 5 downward trending steps where steps 1,3, and 5 of it should each in turn break down into 5 downward trending waves while 2 and 4 of C are a-b-c upward trending rallies in the otherwise downward overarching trend.  Again, this is just standard Elliott wave modeling, I have not done anything fancy with the labeling here.

So let's look at the C wave that I think it now in progress.  It starts from the B wave and consumes the right 1/3 of the chart above.  It starts off with 5 obvious steps downward into 1 and then rallies into 2. By Elliott wave modeling rules, the next wave should be 3 of C.  Elliott wave principle states that C waves are like 3 waves - never the shortest of the 5 and generally the most powerful.  So when you get 3rd of 3rd waves playing out, the result is often dramatic and it shows up as gaps in the chart (which I like to refer to as "cliff diving" if the trend is down).  The 3rd of C is highlighted within the blue box above and, true to model expectations, a massive plunge/gap is seen during 3 of 3 of C.  That plunge serves as a good indication that my wave count is correct.
Because I can easily count 5 waves down in it, I think wave 3 of C is now complete.  That means there should be a nice "vee"style rally into wave 4 of C.  My target price for that is somewhere in the $23 range as you can see from the zoom-in of the 5th of C wave shown below (basically a zoom in of the blue box from the above chart).  This level of detail really shows the power of 3rd waves and more specifically, the power of a 3rd of a 3rd of a C.   Major cliff diving!!
So, after the 4th wave rally plays out then all that should be left is the 5th of the 5th of the C in order to complete the "big 2" pullback.  The red lines model my expected bottom points but in general they usually either occur in the middle of the channel or they dip down very momentarily (and generally on high volume) to touch the lower channel line that connects the 1st and 3 waves (shown in grey below).  If we see the 5th of C bottom in the middle of the channel it will result in a failed 5th wave and an inclining double bottom.  That would be the most bullish scenario as it would mean that hedge fund gamblers could not wait for the wave to finish before jumping in.  In any case, we are talking about $3-$5 more downside here, tops IMO.  The is quite a bit in percentage terms anymore but it will seem like mice nuts once the 3rd wave up kicks in because I expect "big 3" to propel silver to $75
The fundamentals which should propel metals into a 3rd wave are forming right this very minute.  After years of being in decline, US interest rates are now beginning to rise again despite Bernanke buying all of the debt offerings. 
The reason for rising US interest rates is that others in the world are beginning to dump their treasuries, thus adding to supply.  They are either giving up on trusting us to repay the debt in like kind or they simply cannot live with nearly 0% interest return on their vast dollar holdings because their own economies are crumbling.  Everyone is dying for lack of yield.  They could buy wheat and corn but buying commodities only increases the prices of these items, thus making life harder on their poor people due to rising cost of food.  Starving people will take you into the street and kill you if they can so it is to be avoided at all costs.  As a result, we are now starting to see the dollar holders slowing beginning to buy US assets with the cash (like Smithfield foods). 

As long as the US Government allows it, this cash infusion is going to chase prices upwards IMO while the associated treasury sales required to raise cash for the purchases will increase interest rates and cause a housing sell off.  However, I can envision a day where government begins telling foreign companies, especially the Chinese, that they cannot buy our companies and our US assets "for reasons of national security".  In other words, "you idiots took our worthless green paper in trade for your goods and we do not want the worthless paper back now.  You are stuck with it".  Clearly the Chinese and others will not be happy about this but the alternative is to accept and accelerate the long term unavoidable outcome of massive inflation or even hyperinflation in the US.

In any case, I think it is a smart move to continue dollar cost averaging into metals and to expect volatility.  But never believe that a lower spot price for your metals means the metal has lost value!  The paper price is the patsy price.  It is meaningless in the big scheme of things and in the long run (retirement).  Metals should be the bulk of anyone's retirement holdings as they are the only real money in the world.  After governments screw everything up everywhere, gold and silver will still be good money in everyone's eyes.

In closing I will remind the reader that, as usual, my views are presented in the name of financial entertainment and worth not one thin dime more than you paid to read them!

Wednesday, May 29, 2013

What's next for solar? [SPWR]

In this post I called nearly the exact bottom for the photovoltaic solar panel manufacturers.  In that post I wrote: "I generally avoid discussing particular sectors or stocks on this blog but I just have to point out that solar is a screaming, flaming buy.  It is now exactly at the levels that Prechter predicted many if not all stocks would go: down to about 5% of their real worth.  One of my favorites for the coming big bounce is Sunpower (SPWR)." At the time of that writing, SPWR was trading at $3.77.  Today it closed at $19.64.  Not bad at all!

But now I see a possible setup in SPWR that I want to discuss.  It is not a 100% given but we will know within a couple weeks if I am right or wrong about this.  First off, the current chart for SPWR is shown below.  As you can see, a potential double top has formed.  If the shares go more than a couple bucks higher than the last peak of nearly 24 (back in mid 2011), I'll reconsider what I am about to write immediately.  However, I see 5 waves up and so I think it's probably time for buyers to pause and probably take some profits.  That means I expect a pretty sizeable pullback to occur reasonably soon (within weeks).

Let's say I'm right about that.  Let's say the momentum moves elsewhere in the market for the hot, leveraged money that Bernanke is driving into the market (or there is a broad pullback for some reason).  If that happens, I do not see a full smack down of SPWR back to $3 or $4.  Neither do I see a rapid "vee" style pull back.  Instead, I think the shares will pull back as shown (hand drawn into the chart and pointed to by ????).  In other words, A fairly quick $3 retracement and then a more gradual continuation pull back to the $12-$13 range that forms a curve as shown.  It could also form a down sloping channel at about 30 degrees down and to the right.

You don't know how many times I have seen this before but trust me, if it happens like this, it will be very bullish for the shares.  What that pattern below represents is a so called Cup With Handle formation.  In Elliott wave parlance, the right side of the cup "wall" is actually a wave 1 up.  Then the "handle" portion of the formation is a sideways wave 2 retracement, probably only to the 38.2 fib.  What I expect to see if we get a cup with handle is an eventual breakout into a 3rd wave whose height will be the depth of the cup at least.  In other words, the stock will go from $12 or $13 to $3o or $35.

A couple of things should be crystal clear in any case: the solar market is clearing itself out right now.  Bankruptcies and consolidations are happening.  The US is playing the protectionism game (massive tarrifs on Chinese solar panels) and that will be positive for First Solar and Sunpower.  Inflation is going to happen and it will certainly push up electricity prices.  Residential solar installations should really take off in the next 3 years and Sunpower is going to get a huge economic infusion as a result.  This is when not if IMO. I will be waiting for that dip and watching the volume to determine if it matches up to the cup with handle model very well.  Trust me, if this looks like a C+H in 6 months to a year then you definitely want to be on board when that 3rd wave up hits.

Of course, all bets are off if a world war breaks out or if the COMEX defaults or if they catch Obama's cronies doing more dasterdly illegal $hit or if Japan's interest rates begin to signal a slip into hyperinflation or someone sets a dirty bomb off on Wall St. or one of many other things that are very possible given the complete disfunctional state of global finance...

Tuesday, May 28, 2013

My counterintuitive prediction about [IBM]

Today if you mention the name of IBM, it will be acknowledged by all as a corporate leader.  It is trading near an all time high and is universally respected.  It has kept itself out of public scandals for many years and Wall Street loves it.   Today is May 28 2013.  I mention these things not for you reading this post today because you already know them to be true, but rather for the benefit of those reading it in 5 years.  I believe it will be important context at that time.

Despite the title of this post and despite the few words above on the state of IBM today, the purpose of this post is really less about IBM and more about the valuation of equities in general.  It is also an opportunity to test the value of the Elliott wave modeling in a completely unbiased way which can only be done by discussing the direction of events before they happen.  Applying models to things that have already happened has value but is also prone to being gamed.  But using them to predict future events and then measuring the results against predictions should be instructive for everyone, not the least of which will be me.

So I repeat.  Right now, there is not one glimmer of bad news for IBM and their share price reflects that.  In fact, quite the contrary.  It was only a couple years ago that their computer, deep blue, beat the world chess champion.  And it was even more recent that their next generation AI computer, Watson, handily beat the best of the world's best human players at the question based knowledge game of Jeopardy.  Even more recently, IBM showed its prowess at manipulation of matter at the atomic level by releasing the fantastic YouTube, "A Boy And His Atom".  These advances are all fantastic in nature, true science fiction.

But despite all of that I am calling for a massive collapse in the price of IBM shares.  I am doing this as the S+P 500 has been hitting new highs nearly every week.  The basis of my prediction has nothing to do with the so called fundamentals of the shares.  Fundamentals are, for the most part, nothing but sales materials for Wall St. stock peddlers.  So don't ask me what the PE, PS, PB, growth, etc. is because I specifically have avoided reviewing these things before making this post.

The reason for this seemingly reckless behavior is to prove a long standing point of mine: stocks have no real value.  Corporations exist primarily for the benefit of the employees, not shareholders.  In fact it only makes sense that those doing the work will be the ones rewarded for their effort.  The main reason I am now calling for a massive correction to begin within a year is my interpretation of the Elliott wave model as applied to the IBM chart.  Referring to the chart below, check out the main, multi-decade ascension of IBM's chart with its rise to 1, decline to 2, parabolic (i.e. 3rd wave style) rise to 3, massive vee style a-b-c collapse to 4 and now the building of what I interpret to be the 5th of 5.

Notice also the Elliott wave perfection of a sideways retracement from 1 to 2 and then a vee type retracement from 3 to 4.  This is known as alternation in Elliott wave parlance.  In short, if the last correction was vee the next will be sideways and vice-versa.  Also note how a line between 1 and 3 is almost exactly parallel to a line between 2 and 4.  This formation of parallel lines is classic Elliott wave modeling.  Note how 3 went exponential, again classic EW thinking and also how 3 of 5 has been the strongest wave of that impulse.  Now, I could be a little premature here, I will agree.  The chart could still be working on 3 of 5 instead of 5 of 5 as I'm claiming it to be.  But the 5th wave often stops at the resistance line formed by 1 and 3 and so I think it is a good time to start talking about a massive a-b-c pullback to the prior 4th which is down near $50.

While I do not know what the fundamentals of the company are at this instance there are a couple of fundamentals that I am aware of that also give me confidence to write something so seemingly crazy as this post.  The first is that I think IBM shareholders will be a victim of herding nature.  Since IBM is so true blue and so trusted, retirement fund managers will all have invested in it by now; it is considered perfectly safe.  But no stock is safe from wild price swings.  Retirees will be asking for their money back in the coming 5-10 years so that they can pay bills during retirement and that means fund redemptions must necessarily increase.  This means shares must be sold.  Unfortunately, there is no new crop of young people with good jobs to buy up the shares.  In other words lots of sellers and few buyers.  Even Bernanke will run out of funny money to buy shares with at some point.  That means lots of supply and little demand.

IBM is also an international company which will suffer more than US-specific companies as the global debt Ponzi collapse escalates.  How can IBM continue to do well when Europe and the Euro are at grave risk of break up and collapse respectively in the next 2 years?  I also think that IBM will one day be subjected to "success attacks" a-la-Apple where the government, which is dying a slow death, begins to demand more taxes from the internationals like IBM.  IBM has clearly avoided repatriation of revenues (like any intelligent multinational should) and kept that money in tax havens.  The increasingly desperate government will start clawing away at anyone within range and I'm pretty sure they are already jealous of IBM's wealth and looking for ways to steal it from them.  Government will vilify the likes of IBM when IBM resists the theft.

Bottom line, I think IBM is an easy short sell on the first sign of high volume sell off.  In other words, all you have to do is listen for the rumble of hooves running away from the shares and it will likely be pretty low risk to bet against the continued ascension of IBM shares.  I'm sure the jackals of the financial world are out there right now looking for any sign of weakness that would signal that a low risk attack is possible.

Again, the point of this post is not to recommend any kind of investment but rather to further test my views of how financial markets really work in this world.  I wish IBM all the success in the world not only because of the amazing technology that they have been developing but also given that I worked there for 10 years and am vested in their pension program as a result.

Sunday, May 26, 2013

JNK Update - ready to break down?

In this recent post I suggested that the JNK ETF was at significant resistance point and a lot hinged on its ability to break out.  In that same post I reminded people that JNK is thought by some of the great technical analysts such as Bob Prechter to be a complacency indicator.  Basically, JNK is full of junk bonds which pay higher interest rates but which will lose value quickly if the government ever stops propping up the economy OR (and this is the part that will catch most traders by surprise) the herd stops reacting positively to more stimulus.  In other words, the theory is that stimulus will first have diminishing returns and then it will eventually have negative economic returns as increasing prices for food and necessities impact the poor people to the degree that it outweighs stock market benefits for the rich.  In other word, the rich stop getting richer to the degree that enough crumbs fall off their table to support the poor who are trying to survive on the crumbs.

As long as JNK is being pumped up it means that investors have confidence that the current system of doing things will not result in a loss of confidence in the economy.  As soon as that loss occurs, people will run out of risky assets like JNK and into cash (with gold and silver probably serving as cash for many people this time around).  In this way, JNK is treated as a complacency indicator.  The higher JNK goes, the more
complacent people are.  I think JNK is a good shorting candidate since it could not break out.  More evidence will be seen next week when the ETF tests the next support level.  I believe that there is an 80% chance that the support will not hold.  It will likely mean a correction for stocks.
If I'm right about this, the fall could be significant.  If JNK is, as I believe it to be, completing a so called ending diagonal then a significant reversal, complete with so called cliff diving, gaps and massive breakdowns on high volume is in the cards.

Here is a description of ending diagonals:

Liberty activist Adam Kokesh is one of the bulls in the herd.

In case you have not heard about the exploits of Adam Kokesh yet, I think he is well worth watching.  Here is his latest move: taunting police by virtue of his simple presence at a marijuana smoke out protest into arresting him:

In short, he is an in-their-face activist who has put himself at legal risk several time with the government and continues to do so in the name of libertarian/constitutional values.  Each time they try to charge him with bogus charges that carry very severe penalties (i.e. decades in jail).  Each time there is enough video evidence to call the police lying scum bags who are using their jackboot tactics and abuse of authority to try to intimidate people into submission.  They bandy "felony" charges about like it was nothing.  It is clearly abuse of power, a clear constitutional violation.  Yet when the charges don't stick, nobody gets busted for false arrest. 

Kokesh is what they think of as a "hard case", a nail that needs to be hammered down.  For years they have gotten away with doing this sort of thing and few people cared.  Government enforcers focus overwhelming force onto a single individual and serve him up as an example to anyone else who would speak up for their (OUR) rights.  But the mood of the herd has certainly changed.  Congress recently showed that they picked up on this by finally slapping Eric the gun running con man Holder with contempt charges.   Congress didn't do this because it was the right thing to do.  They did it because they knew the herd is watching.  The herd is no longer docile.  Leadership members of the herd will no longer just sit there while government rips us all off.  Their actions will incite others to resist.

Just like the lions vs. the water buffalo video that I think is so instructive, the herd will become bolder and bolder in its own defense going forward.  The momentum is obvious.  The best bet for government would be to, right here, right now, back off and wave the white flag and ask "can't we all just get along" and "give" us some of our freedoms and privacies back.  After all, they can resume their corrupt activities after the herd calms down a bit.  But those running the show are like the core team of lions in the video.  They are steely eyed.  They do not believe they can lose.  They think they hold all of the cards.  They have significantly discounted the herd's ability to organize and to strike back.  They think the herd is perpetually stupid and/or docile.  They have discounted the power of the Internet in spreading the word which can whip up the herd to action.

The government can no longer win with Kokesh.  Each time they arrest him for trumped up felony this or that they risk that he will be acquitted.  Each time he is acquitted it becomes part of a growing pattern that shows he is being targeted.  Each time the herd observes this happening he looks like less of a crazy loon and more like someone who is really on to something with all of his claims about government abuse.

There are only 3 choices now:
  1. leave him alone and risk him telling everyone that he beat the government.  That is a real risk at this point due to the gross mishandling of him that has occurred so far.
  2. continue arresting him and pushing his buttons in the hopes that he will make a mistake and open himself up to provable felony bull$shit charges.
  3. kill him either overtly in the course of "doing their job" or covertly.

Kokesh is not going to give up until he wins or until he is dead.  That is the most dangerous kind of enemy a government can have.  One who cannot be intimidated even by threat of imprisonment, physical harm or death.  Government has put itself in a no win situation here.  Their best option is #1 and even to apologize and to punish some of the centurions who falsely arrested him.  Government should extend the olive branch even if they can only do it disingenuously.   #2 just gives him a safe location (prison) to run his anti-government campaign.  And #3 could kick off civil war, guns and all.  I know that sounds far fetched and indeed it is not high on the Gaussian distribution of likely outcomes but history has shown time and again that a butterfly flapping its wings or one extra straw is all it takes to trigger a reaction that has been boiling under the surface for a long time.  

I believe that government fears that some catalyst will eventually do just that.  Why else go to such extremes to limit the supply of ammunition on the open market for the people?  Of course, it's nothing more than a stalling tactic.  The ammo manufacturers will eventually fill the recent government orders for a billion plus bullets and then the manufacturers will have plenty of capacity for the people again.  Fear of this event might press government into another false flag operation which they might use to disarm people.  I think this would be a giant miscalculation on the part of government.  This is not the time for another shock and awe power grab from the people.  Nobody will give up their guns this time as they did when their front doors were kicked in by the cops during Katrina.  My read of the herd is that the people will fight back this time if that's what it comes to.  If government doesn't show signs of backing down soon I think there are a lot of people out there, regardless of whether or not they are misguided in their beliefs, that will decide to stand their ground and fight for their rights using all means available instead of being bullied into submission.

Friday, May 24, 2013

Recent volume spike in GLD is perfect technical setup for a reversal.

Gold and silver went up like crazy into a 3rd wave which peaked in Sept 2011.  I think what followed was a so called failed 5th wave.  I warned that this might turn out to be the case back on April 14th based on my interpretation of the Elliott wave model for the GLD ETF.  I wrote, "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. "  I also wrote that other upside possibilities that I mentioned were negated if GLD could not hold $150.

Well, GLD did continue to pull back and now I think it is time to comment again because we are at the first potential decision making threshold that I mentioned above: the 38.2% fib retracement.  You can see today's chart below. 

Beside the pullback to the 38.2 % fib, I want to point out that this pullback was accompanied by a huge volume spike that was only exceeded slightly by the volume spike of the peak of the 3rd wave.   Volume spikes like this generally point to conditions of maximum greed on the upside and maximum fear on the downside.  I also want to point out that the last few days might have just put in a double tap (double bottom) on the 38.2 as shown below.

While all of this is good evidence that a bottom is in (and perhaps even worth making a long side bet on if you are a trader), I will also point out that this low is coming off of a so called declining double top that took significant time to build.  Declining double tops indicate significant weakness and in fact would drive me to think that a 50% fib retracement is actually more likely than a 38.2% retracement.  But I also cannot ignore the massive volume spike at the 38.2% fib either.  If I had to wager I would say it is 70-30 in favor of us having just seen a significant bottom put in.  I would quickly remove these odds if the 38.2 fib cannot hold.  In that case, the 50% fib would be the next major support IMO.

Keep in mind that I think we just saw a massive 7 year long 1st wave finish in Aug of 2012.  That means we are into the a-b-c retrace portion of the model which will lead to a large 2nd wave retracement.  When that 2nd wave finishes, I expect a 3rd wave to unfold which will dwarf the 1st wave that ran from 2005-2012.  I believe that the coming, multiyear 3rd wave is what will make everyone in the world remember that gold is money and nothing else is.  Large aspects of the global monetary system (i.e. the global debt Ponzi) will collapse which is what will support increases in the dollar price of gold.  I expect the COMEX to basically collapse and to admit as Nixon did in 1971 that they do not have the gold on hand to pay back to those who have bought and stored it there.  I expect corporations to start listing gold as an asset on their balance sheets, something that nobody does today and that nobody in any of the financial press or blogs is calling for.  This will be strong proof that the re-monetization of gold has occurred and it will be a sign that it might be a good time to move out of money (i.e. gold and silver) and into income producing assets (like rental property).

If you are considering buying some gold and silver, watch GLD and if it cannot hold the 38.2 then wait.  Otherwise, I would not hesitate to buy physical gold because the only lever that the global governments have in slowing the crash (so they think) is printing massive amounts of money.  As one government prints so must they all.  It is a completely interconnected scam and both the US and Japan are now printing up 85 billion per month with no limit.  They will continue until they get the results they desire or until people lose confidence in them completely.   I'm convinced we will see the latter and not the former.

Increasing private repatriation of gold is being met with delays.

I'm seeing a rapidly increasing number of reports in the news sources that I follow which indicate that bullion banks might not have the gold on hand that they say they do.   This of course comes as no shock to me.  If you look at what it costs to build, staff, and run a secure facility for the storage of gold and then you look at the cost of storing your gold there, something doesn't add up.  Gold vaults need, well, vaults!  Those don't come cheap.  They also need computers and security systems and people to do paperwork and to sell the services, etc.  If the true cost of all this was put to those wanting to store their gold in the facility then I'm sure it would not be cost effective.  It would cost 5-10% of the value of the gold per annum.  Anyone paying that would have no value left after only a few years of "safe" storage.  In other words, it is an extreme luxury to have this. 

Yet many bullion banks do exist and many people store their gold in them.  The only way this can possibly work is if the bullion banks are using the gold on account to gamble with.  The gambling can take the form of loaning the gold out to other businesses in order to generate a revenue stream that pays the cost of the storage and then some.   With Bernanke's zero interest rate manipulations virtually guaranteeing prosperity to gamblers, gamblers will go to any length to find money to gamble with.  So they go to the bullion bank, borrow some gold and then sell it on the open market.  They then use the funds in order to invest in paper assets using high leverage.   The game is to pile debt upon debt, leverage upon leverage.  If you don't do it someone else will.  This is the recipe for a mania. 

It all seems good until there are no more good bets to make with the borrowed money.  That's when the bad bets are made because the gambler is used to the cash flow from gambling.  And so lots of bad "hail Mary" bets are made, many of which fail to pay off.  At some point the people who made deposits in the bullion bank begin to get worried about the safety of their gold and so they begin to ask to see it and/or ask for it to be returned from them.  But the bullion bank no longer has the gold.  It has been loaned out to gamblers who sold it off and then lost the money they used to gamble with.  Besides, this has been happening for years even back to when gold was $800/ozt. or less and so to buy the gold back and pay off the debt to the bullion bank is now impossible.  Too much of the fiat currency that the gold was traded for has been lost.

Thus begins the stalling and the excuses.  First it's "no you can't look at it for security reasons".  Then it's "well, the Queen can have a peek but she doesn't know $hit from shinola and so gold colored bars can be set up for her to view.  Then it's, "well you can only withdraw so much gold per unit time" using excuses like "we need to do this in order to stop money laundering operations".  Later on it's "well look, you can have dollars back but we will no longer settle accounts in actual metal like we said we would".   Folks, we are already at this point.  Swiss banks are making excuses about why they are delaying the return of gold to those who are asking.  And some experts are now predicting that the COMEX will soon begin forcing traders to settle in cash.

This is zero different from the US default on gold convertibility of the dollar except that it will involve businesses instead of the government.  Such an event would have the effect of collapsing confidence in the con game across the board and would likely wake the American people up enough to demand a full and impartial 3rd party accounting of the gold held in trust for the American people by the US government.  There is good evidence that the US is exporting more gold than we are producing.  I believe the reason for this is that the US is sending gold to those areas of the world whose leveraged gold Ponzis are collapsing: The UK, Switzerland, and Hong Kong.  This is where all of the gold banks are located, this is where all of the highly leveraged gold loaning has been done.  

If these guys collapse it could set off a chain reaction that would collapse US run Ponzis.  This is no different than the US sending dollars to everyone and their brother during the collapse of 2008.  The Federal Reserve is trying to play "shock absorber" for the global economy.  At some point they will fail.  They will simply run out of resources to send into the fight and they will have to stop.  When that happens, the economic tide will go out in a historic way and we will really know who has been skinny dipping all this time.  When that happens I hope the US has the good sense to fill the jails with the financial "robber barons" that have run our economy into the dirt.  It is economic terrorism on a massive scale and all of it has been enabled by the con game of fiat currency and fractional reserve banking.

If you don't own gold in your physical possession, you don't own it at all.  Physical possession is 9/10ths of the law in every collapse in history.  Once things collapse and so many people are owed there is no way everyone can collect.   It is part and parcel of the Global Debt Ponzi.

And now I return you to your evening while I continue buying parts for my AR-15.

Check out Ballard Power

I don't often talk about individual stocks but I am constantly watching the stocks that I identified long ago as those to snap up when I thought they had bottomed. 

Using my EW chart model I bought into BLDP at 85 cents just a few weeks ago.   I think they have hit a long term bottom.   They have a lot of IP and products in the fuel cell space but I view them as a natural gas play for transportation and distributed energy generation.   Fuel cells convert hydrogen into electricity with about 60% efficiency.  But hydrogen is not a commodity in our economy so natural gas is "reformed" into hydrogen on the vehicle with approximately 80% efficiency.  That means that you have a 45-50% efficient conversion of natural gas into electricity which is pretty good if that is what you want to use it for.  If your goal is to power a vehicle, electric motors used for cars are 90+% efficient.  Bottom line, natural gas efficiency for use in transportation is .80 x .45 x .90 =  ~.32 or 32% efficient.  Compare that to internal combustion engine efficiency of 19-25%.
The US has trillions of cubic feet of natural gas that are easy to get to.  In fact, we have so much of it that the price is very low right now and we are just burning it off as a waste product from the Bakken oil fields because it is not economical for them to bring it to market at current prices (what a shame...).
I believe that what will cause Ballard to really take off again is when we start using all of our natural gas reserves as transportation and electricity generation fuel instead of mainly for heating and cooking.  I think the advent of the electric car will eventually drive that.  Tesla Motors is proving that electric cars don’t have to be punishment vehicles.  By having paid back their federal loan they are proving that they are not a flash in the pan.  Tesla electric cars are real.  But their current flagship car only has a range of 200 miles and that is when it’s brand new.  Battery technology is such that it will only have 120 mile range in a couple years and need a battery pack replacement in 5-6 years. 
I suspect that a major drivers of the rethink about using fuel cell based vehicles will be (listed in order of importance):
  1. the lack of longevity of battery packs.  People need their drive trains to last 10+ years with the real possibility of 15 years or more, not the guaranteed need of battery replacement in 6-8 years with rapidly declining performance (read driving range) in the last 25% of life.
  2. the fragility of the battery packs.  Using them in high heat areas like AZ and TX significantly reduces their output and their longevity.  We are seeing data that show significant degradation in as little as 2 years with complete failure in 4 years in high heat environments.  Battery packs HATE heat.
  3. The cost of battery pack replacement is far higher than changing an internal combustion engine.  There is also the real threat of being assessed an environmental impact charge to dispose of the battery when it is spent.
  4. The driving range of battery packs and refueling times relative to natural gas based refueling of fuel cells.
  5. Green house gas (GHG) generation.  Per the chart below, the fuel cell vehicle is the best option for this.  Not that I think that human based GHG emission is causing global warming.  I don't.  I think the Earth goes through natural cycles that are probably more related to activity within the Earth's core or due to changes in the sun.  But government wants to key in on GHG as a taxation mechanism with the sale of so called "carbon credits".  This is coming because government is greedy, relentless and manipulative.  It needs more taxation in order to maintain its ridiculous size and power.  So I think this has to be factored into the equation. 

instead of a simple battery pack replacement, many of these cars could receive fuel cell stacks and be converted to natural gas operation using onboard natural gas to hydrogen converters (call "reformers"). 

Make no mistake, this is an attempt to bottom fish the market.  All of the speculative value of this stock has been wrung out of it.  Anyone looking for the quick trade has already left this stock.  But that's
when I think it makes sense to buy anymore.  Look at AAPL, everyone's darling.  It touched $700 and now it's $445.  The government is distorting all markets so true price discovery is difficult.  Government has everyone chasing momentum stocks and using high leverage to do it.  That game will end soon enough (as soon as US treasury rates begin to rise despite Bernanke buying up most of them).  When it does, the money will go seeking value and that means viable companies who are doing needed things that are unappreciated.  I think Ballard falls into that category.
Having said all that, this is a small money play IMVHO.  It's a good place to think about parking $500 or $1000 and then watching the chart for good exit points.  In this crazy market that could take 6 months or 3 years. 
As usual, this blog post is provided in the name of financial entertainment only and it is worth exactly what you paid to read it.  Do your own research and make your own decisions.

Thursday, May 23, 2013

Schism between paper metals and real metals increases; the herd is awakened.

While the con men running the show try to fool everyone into losing confidence in the metals markets, it seems that they are only affecting the paper representation of metals.  Prove it to yourself by searching eBay for recent, real gold and silver sales.  Here is an example, an auction that just now ended:

In it, a 1oz silver phil just went for $32.20.  Ebay is the ultimate market for physical metals with immediate delivery.  There is no such thing as “cash settlement” or “I own it but you store it for me” with Ebay.  No games.  Cash and carry.  And despite the recent metals takedown, Ebay sales of bullion coins are still very strong and they are maintaining their prices.  I see this as strong evidence that the paper price of metals is being manipulated downward in order to scare the herd but that the herd is beginning to stare down the lions.  By continuing to buy silver at the former, higher price, the herd is saying “we don’t believe you” to the paper peddlers.  This is another sign that the con game collapse is intensifying because the herd never voluntarily overpays for anything.  The herd is cheap, cheap, cheap.  The con men who are watching this go down should be getting nervous because of this.  I don’t think for one second that they are missing this fact.   

I am not surprised to see this schism happening between spot silver (the paper price of wholesale silver) and real silver or the similar but less dramatic difference between spot gold and physical gold.   I have written on several occasions that it would eventually come to this: a crisis of confidence in the con game leading to an increasing gap between the value of fake paper promises and real money.  The herd is no longer docile.  It is questioning everything now, including the real value of physical gold and silver vs. paper assets.    

The loss of confidence and the new “staring down” is not limited to the metals markets by any means.  As evidence of this claim, check out the recent IRS debacle.  The herd is demanding jail time, not retraining, apologies, hand slaps, suspensions, etc. as the con men would normally have been able to get away with.   We will soon see the con men rolling over on each other.  There will be initial resistance, of course, in the hopes that the herd will get tired of chasing and give up like it always seems to do.  The predators count on this.  It is part of their strategy.  But when the herd is finally pissed and fully awake, it suddenly changes modes.  It becomes an attack system, well organized and not easily put off.  I think we have finally reached that stage. 
In the IRS scandal, Lois Lerner of the IRS recently took the 5th before Congress.  Guilty is as guilty does.  While she repeated several times that she had broken no rules and committed no crimes, she did not say that she did not think others had done so.  That is the question that she does not want to perjure herself for.  Obama himself said that the only people who don’t want to disclose the truth are those with something to hide.  If that logic is good for the public then it should be good for the government.  Because that logic was crammed down the people’s throats, it will be applied to government.  As arms are twisted, the con men will begin to squeal like the pigs that they are and there will be disclosures which some will find shocking.  The main reason for the shock will be because most of the herd does not understand that our government is one big mass of competing organized crime families, all trying to figure out how to screw the American people in their own ways.  We’ve given them powers that are far beyond the limited government defined by the constitution and so, true to human form, they have abused it in order to get something for nothing from their fellow man. 

These are not normal times.  With the funny money system headed for collapse, the herd is going to have its revenge.  It will not be pretty.  The main issue here will be how hard the con men try to fight their fate.  If they get really desperate (and I think they might), they could even cause another big 911 style false flag operation.  That would be a huge, huge mistake.  They think they got away with it on 911 but they really didn’t.  Too many people know the truth and are just waiting for their chance at payback.  If they play that card again there will be a full investigation this time and it will not be swept under the carpet like the 911 false flag operation was.  If they try it again, even the most trusting of the herd will finally figure out what is going on and when they do they will be even more pissed than those of us who figured out the first time was a scam operation by government against the people.  Again, I think it’s coming and it will coincide with the collapse of the fake global monetary system.  After the collapse the main things that we need to achieve are a return to limited, constitutional government and the elimination of fiat currency and fractional reserve banking.  If we get that, we will deserve the next 200 years of prosperity that are ours for the taking.

Monday, May 13, 2013

You can't fool all the people all the time...

As the old saying goes, you can fool some of the people all of the time and all of the people some of the time but you can't fool all of the people all of the time.  My long standing corollary to this is that during the collapse phase of a scam you can't fool anyone ever.  In other words, the herd is eventually transformed by events from being a bunch of gullible fools that stare like cows at a passing train into sharp eyed hawks who see the big picture in fine detail.  Their observations are in turn passed on to newly awakened sly foxes who can read between the lines and intelligent coyotes who begin to adopt a near paranoid posture because that is the only way you can survive when literally surrounded and inundated by a scam of historic size and complexity.

Early on in the collapse of the scam, hundreds of millions of observers saw building WTC7 collapse even though no airplane hit it on 9-11.   Even after obvious facts and simple logic emerged that its collapse was not a natural act, the herd for the most part remained slack jawed, docile and outwardly in agreement with the government story about it.  I'm not talking about just stupid losers here missing it.  I'm talking about people who are world class intelligent, leaders in their fields and many with technical minds that could easily recognize the truth if they would only suspend disbelief.  In talking with people I found that many of these folks don't even know that 3 buildings collapsed that day, not just the twin towers.  The powers that be have studied how the human mind works.  They have inundated us with false facts to the degree that what went into the ears and eyes got stored in our collective brains without the proper analysis or filtering.  It was spoken into reality, literally.

When I explain this to people, they never believe that they could be susceptible to this form of mind control but the evidence from street scammers is conclusive.  The human mind can easily be lulled into an easily controlled state and it is how the individual brain works, not the intelligence level, that determines if someone will be duped by it or not.  Memory is a chemical process.  Thus, words and sights do have the power to physically change a person's mind. My favorite proof is to tell a person that they should do their best to not listen to what I'm about to say and that if they remember my words the next day after only hearing them once that they have to consider the fact that something had been implanted into their minds without their permission.  Then I tell them 3 times in 3 different ways that the magic color is purple.  After that, they invariably remember the next day what I told them even though the challenge was to filter it out in the first place.  Mind control is a well researched technology and government has paid for much of that research.

 I don't think people are born with a resistance to this kind of programming.  I think resistance is learned.  I believe that my many years spent day trading stocks built up this resistance in my own mind.  After observing the fake news releases, the pump and dump, the complete corruption that occurs in stock trading markets over a matter of years I built up an immunity to automatic trust and belief in "the system".  My processing chain was modified to include a bull$hit detector stage that is not a normal part of the thinking experience.  This stage tends to slow me down a bit in processing info in real time which is why I don't do as well as others in "winging it".  But let me sit and digest the facts and I will hold my own against good players when it comes to decoding the truth.

I also believe that while few people were willing to publicly disagree with the official 9-11 story, I think a lot of them had internal doubts which were repressed and were thus processed slowly over time by their subconscious mind.  All of the clues began adding up.  There were just too many incident and accidents, hints and allegations for something not to be going on below the surface.  At some point the "do the right thing" instinct overpowers the self preservation instinct.  This is the result in nature:

Look at that herding behavior shown in the video.  First the herd was scattered and splintered.  A calf was taken by the brazen attackers who counted on shock and awe tactics to confuse and panic the herd into doing what they wanted them to do.  But then the lions made a mistake.  They all focused on the forthcoming dinner instead of continuing to harass and scare the herd.  They let the herd settle down, reorganize and think a little bit.  They let the fear subside in the victims.  This allowed the slower thinking and moving herd to regain its composure.  You can see how daring the lions are.   Even after one of their number is flipped into the air on the horns of a bull, others hunker down with the calf trying to kill it right in front of the herd.  They cannot be stared down for that is their game and they are the masters of it.  The attackers did not retreat until each of them was directly counterattacked, gored and or kicked.  That is the way of nature's herding beasts and those who predate upon them.  It is no different in the human species for we are a herding species.

Right now, the first signs of revolt are happening.
  • An entire web site run and supported by architects and engineers has been devoted to the impossible structural collapses that occurred on 911:
  •  Columbia University professor Jeffrey Sachs recently called Wall St and the government which supports them pathological criminals and questioned the value of fractional reserve banking.
  • People are even questioning the recent Sandy Hook shooting.  In the past, such privately done documentaries (see youtube link below) have been lame to say the least.  All they did was convince the viewer that the person making the documentary had issues.  But better minds are now deeply questioning all the internal shock and awe that seems to be happening to our nation of late and their work is not so easy to laugh off if you are really interested in the truth. Not everyone has 30 minutes to invest in understanding the real state of our nation.  If you are someone who needs overwhelming evidence that something strange happened at Sandy Hook, check this out:  Huffpost lists Emilie parker as one of the victims:  Ah, the poor family of 6 year old Emilie!!  They must be mired in grief still.  They must have been devastated beyond words the day of the shooting and for at least 1-2 weeks afterwards.  And I mean, "can't eat, can't sleep, can't smile, can't think straight" type devastated.  Would you not agree??  At least that is how it would be for me.  Now just fast forward to 8 minutes and 10 seconds into the video where her dad, is laughing and smiling like a cocky ass just 1 day after the incident before getting into character for a bad grief-acting job on camera  I don't claim to know what it means but I can't just ignore it either.  Something is wrong with this.
  • Many similar strangenesses have been caught on film regarding the Boston marathon bombing.  Do a little research on Youtube.  Some of it is questionable to say the least but there are several cases where you can see fake blood containers on the ground and the blood spills are like they came from a cheap high school production.  There are many inconsistencies from the official story to say the least.  And the police have taken a "shoot first and ask questions never" approach to everything these days.  I guess the point is that more and more people are peering deeper and deeper into every single thing the government says these days. 
  • You have more evidence of this with the Benghazi deal where the official word during the elections is that it wasn't terrorism but now the evidence suggests that everyone knew that it was and covered it up for some reason.  Some say it was to maintain appearance of having won out over terrorism in order to help Obama get reelected.  Others think it was to cover up for Syrian gun running that our ambassador was purportedly engaged in for Obama.  Again, I don't claim to know the truth.  I am merely pointing out that the people are now questioning every damned thing the government says.  The days of "free passes" are over.  The herd is stirring.  The predators better take notice and be prepared for conflict.
  • Even the IRS got busted for illegally targeting people who stand up for their rights.  This is not a conspiracy theory, it's just a plain old conspiracy.  They admitted they did it and even apologized for it publicly because they had a lot to lose, were left with no other choice, and decided it was safer to just cut and run.  Remember the video of the lions vs. the water buffalos linked to above?  Go back and watch the part just after the buffalos go on the offensive.  You will see the weakest member of the pride runs away at the first sign of danger.  That is analogous to the IRS admission.
    What's most remarkable to me is the new involvement by academics on the side of the "conspiracy theorists".  The academics generally just shut up and take their outsized pay and benefits even if something smells wrong.  If they do say something, it is usually to back the establishment.  But now we have academics like Jeffrey Sachs (recall from above) and James Tracy / James Tracy who are becoming very outspoken about their beliefs. 

Again, the point is not whether I think they are right or wrong.  The point is that, like the buffalos and the lions in Africa, some of the herd members are becoming more bold and they are challenging their attackers.  The IRS just got a horn in the groin delivered to them by the Tea Party and it sent the IRS packing with apologies.  This will only embolden the herd to deliver more stomping attacks.  I predict that something major will be uncovered and possibly admitted to this year.  Something that shows just how deep the corruption of the unholy alliance of military-government-industry (AKA fascist elements) really goes. 

The primary basis for making this admittedly bold prediction is my clear understanding that humans are a herding species, not much different in our core instincts than water buffalo or other herding species and that faced with either too many attacks or not enough attacks per unit time, the herd begins to re-assemble and defend itself.  In other words, there is an acceptable loss for the herd but if you push it too far too quickly then the herd will suddenly convert from stupid gullible fools into strong, brave and vigilant defenders.  The secondary basis for my prediction is based on how organized crime syndicates begin to decay after they have gotten too big and there is not enough easy money to go around anymore.  They turn on each other and start sacrificing limbs so that the core of "the outfit" might be able to morph and survive.  Government is now formed of internally battling crime syndicates, all individually vying for ways to rip off the herd.  Let this working model be your guide in decoding the coming events and I'll warrant that your analysis will be much more accurate than if you take mainstream media headlines at face value.

All of these things are part and parcel of the ongoing collapse of the global debt Ponzi.  The old saying goes that if you want to know what's going on, follow the money.  Everything else is basically noise and distraction.  Obama can cry all the fake donkey tears he wants to on TV but all he cares about is power, control and moneySame was true with Bush and all presidents leading at least back to JFK (who was no saint either).  The government is in power only because it has the power to seemingly provide something for nothing.  It uses this power to buy votes and temporary loyalty.  It does this by printing money from thin air and by creating credit from thin air which it passes off as money.  In other words, the people are supposed to be the power over government but as a result of falling victim to fiat currency and fractional reserve banking, the government now has control over the people.  

As the funny money system collapses, the problems, outrage, government sponsored terrorism, false flag operations, militarized police actions, etc. will likely only get (much) worse because they are in fact related to the economic decline associated with the collapse of the global debt Ponzi.  This is why Lenin famously wrote, "fascism is capitalism in decay/crisis".   Note that Lenin should have written "crony capitalism in decay" but he probably thought that as long as man is in charge of something then it will obviously be overrun by cronyism and corruption.  This is why it's important to have an honest money supply that cannot be gamed by the few against the masses.  It takes money to pay cronies and if you have to earn the money honestly the cronyism is self-limiting as a result of the high cost of supporting it.

When governments can no longer bribe the people to do their bidding using fake money, they will use physical force in order to get us to do their bidding.  Government's ability to create more money and more debt from thin air is 100% related to the interest rates that the debt is sold for.  When the interest rates begin to rise (and they MUST at some point), government will not be able to service the existing debt. 

At first they will try to do so by stealing what they can from the people.  Unfortunately for the powers that be, the people of the US are well armed and they are no longer docile.  So this strategy, unlike in most countries which have been disarmed though their own stupidity, is VERY risky for the con men to undertake.  Despite federal attempts to disarm the people, state and local laws are actually enabling more people to buy and carry arms in more places.  Gun control sheeple need to read the recent Texas gun news and weep for their lost cause in the Great State of Texas.  Freedom loving people LOVE their guns.

Big government believes we are owned property and that they are the livestock herders.  During hard times you have to expect the rancher to cull a few animals, and perhaps most of them, in order for the ranchers to survive.  They say they are there to serve us but they don't mention that by "serve" they refer to the main course at their dinner table.  Government cares nothing for the people.  Government con men are in it to win it for themselves.  This is not going to end any time soon and when it does come to a head it will not be a pretty sight for our nation.  But I think we have to go through it in order to deserve the next 200 years of prosperity that lie ahead of us once we put down the fake money and untenable socialist agenda that has infected our fair country.

Monday, May 6, 2013

Solar is breaking out [FSLR] [SPWR]

As I believed would be the case, solar has finally put in a serious bottom and is now breaking out across the board.  FSLR is now at $48 and SPWR is pushing $16 again.  In this post I called nearly the exact bottom for Sunpower (and solar in general).  Of course, such calls are for financial entertainment only.  However, it was not a random call.  The main reason I thought SPWR was bottoming was that it looked like the 5th of a 5th wave down.  In other words, everyone who was going to sell (or go short) had already done so.  The price back then was $3.77.  The current 52 week range is $3.71- $16.04 so I missed it by 6 cents.  Of course there is a lot of luck involved in getting that close, but anyone lucky enought to have bought at that price is now showing paper gains of several hundred percent and I think the shares will go much higher from here over time.  The solar industry needed to shake out the weaker players.  And the smaller guys did get shaken hard. 

While solar is not going to replace fossil fuels anytime soon, there is something very elegant about the silent energy producing sentinals that I have always found compelling.  Clean, renewable, self-generated (and thus self controlled) electricity is never going to go out of style.  It not only lowers or eliminates your monthly electrical bill but, done right, it leaves you with lights and air conditioning while everyone else on the grid is threatened with rolling brownouts.  In fact, news articles are circulating in central Texas about that right now.  We are being told that we have almost no capacity margin to handle peak loads.  This is coming at a time when they are putting in smart meters.

Anyone who is paying attention should be able to see the setup coming.  First they keep electricity rates lower than they should be in order to get everyone accustomed to overconsuming.  Then, once everyone is hooked on gobs of cheap electricity, they stop increasing the capacity and then they put in the means to start billing based not only upon how much usage occurs but also when the usage occurs.  As soon as the economy gets better they will be talking carbon tax again.  Tax, tax, tax.  That's all these a$$holes know.  I can pretty much guarantee you that they are planning to stick it to the middle-upper middle class with high electricity rates over the next decade.  When that finally happens, the cost of solar will be affordable again on a relative basis with grid provided electricity and all of the subsidies will go away.  Poor people will just have to live with the heat like people used to do in the region before air conditioning.

In recognition of what I think is a foregone conclusion, I recently moved forward with a purchase of 15.3 kW of solar panels.  These are excellent quality Q-Cell 225 watt panels.  Sure, they don't have the power density of the new 260 or 280 watt units, but how does 59.7 cents per kW delivered to my back yard sound?  To me it sounds like a 30-50% savings or more.  I plan to pair these up with Enphase M215 inverters.  There is still a nice $1.20 per Watt subsidy ($10k max) from Encore and of course the federal government is giving free money away on these programs as well, up to 1/3 of the cost ($10k max) delivered as a tax credit.  So in other words, if you pay taxes you get to keep some more of your money.

The system will have a 25 year guarantee on solar panels and 25 years on the M215 inverters.  I'm working with a local solar installer who will basically be buying the inverters and doing the install for the cost of the rebates I will be receiving.  The first 10kW will go in at about $1 per watt.  I'm still trying to figure out if I really need the other 5.3kW so if it goes in it will be a 2nd phase.  I think that total cost of solar installations still has some downward room to fall, perhaps quite a bit.  Inverters are probably the main place where additional competition will bring prices down.  When I first started gathering materials, the Enphase was $150 + shipping.  Now, just a couple months later (and before I have actually purchased any) I am finding them on the web for $130 + free shipping.  That's a pretty rapid decline and so I suspect that new competition is going to drive these below $100 in the next 12 months.  Unfortunately, I probably can't delay the install for more than a few more months so I will probably have to over pay for inverters a bit in order to finish this project up.  Our biggest challenge right now on this is fighting the HOA Nazis who don't want any solar but who are up against a Texas law that disallows them from banning it.  So they are paper hanging us with requests for a bunch of stuff that ultimately won't matter.  We will have solar installed this year.

Wednesday, May 1, 2013

Bernanke looks like a begging dog

The Federal reserve is supposed to be independent from the government such that politics cannot control monetary policy.  Of course, that is just marketing bull$hit for morons who believe that the government is not completely corrupt.  It's well understood that the President selects the Fed chairman, a much coveted position where lack honesty and morals is considered a virtue.

Knowing all of this, when I saw the recent Wall St Journal photo of Bernanke fawning all over Obama it was all I could do not to yak my lunch.  Here is the orginal.  Look at Bernanke's face.  Look at him beam his beamiest smile at Dear Leader.  I'm sure he thinks Obama is an idiot but from his face you would think he wanted to start a bromance.  I'm not just saying this because Obama is a dem. It has nothing to do with dem vs gop.  They are both in bed with the money powers that be.  It is all one big interconnected debt Ponzi:

All I could think of when I saw that picture was Bernanke begging like a dog for more leeway in manipulating the heck out of the global economy.  And of course, Obama will be willing to do it as long as he gets what he wants in the deal.  The corruption is so thick that the whole government should be prosecuted under the RICO statues.

Two complacency indicators, one now at a technical decision point

Have a look at 2 charts which are tracked by many as indicators of complacency.  The first is the so called "VIX" (Volatility Indicator).  It is really a measure of options purchases.  When people don't purchase options for insurance against short term volatility, it means they think everything is in hand, no need to worry.  Right now, with the VIX at such low levels, complacency is high.

Of course, that's when Mr. Market does most of his most unusual moves.  Low or high values on the VIX indicate a crowded trade.  In this case, everyone and their dog is long the market with the sure and certain knowledge that Bernanke can and will print endlessly.  Debasing the dollar, they think, should be bullish for equity prices.   And so it has been since 2009.  But now that everyone is long, the only way to make money will be to crash the market somehow after first selling out.  We just had the Boston bombing and the market didn't even flinch.  I guess they will need something bigger in order to get the herd moving into panic.  Perhaps another 911?  No, that probably won't do it.  The patsies have already seen that trick before...

The next complacency indicator is the JNK ETF.  JNK is a junk bond (i.e. high risk debt) fund.  People think that endless printing is going to cause inflation that will enable the perpetually indebted to pay off their debt with worthless dollars.   This chart is interesting because it formed a so called ending diagonal with 5 waves up that broke down below the lower support line and is now testing the junction of the lower and upper support lines.

This could of course go either way.  If it breaks above those resistance lines, inflation is likely winning the battle for now.  But if it cannot break out and if it in fact instead breaks down, especially if "with gusto" then I think it will be a sign that the next wave of global deflation is upon us.  In this case it would form a double top and the damage is likely to be severe.  But JNK will not break down in a vacuum.  If JNK goes down, everything is likely to go down including stocks, bonds (with rising interest rates) and perhaps even metals.  Even though metals might go down, their buying power will remain because corn, wheat, oil and other commodities will certainly go down in a deflationary move.  Metals, as I have always said, are not intended for "making money".  Their only value is the preservation of your buying power.  The main difference between metals and stocks here is that stocks can and will go bankrupt with a value of zero in a massive deflationary crash.  Gold and silver never will be considered worthless.

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