More thoughts about stocks and gold: when and how might they diverge.

Right now, gold is up with stocks and gold is down with stocks.  I want to have at least this short post in place to mark this single thought: what could be the cause of the coming divergence that the charts suggest to me is coming?  In other words, why would stocks go down while gold (and miners) go up?  This is related to my long standing thesis that gold and the dollar will at some point an for a time reverse their long standing relationship of dollar up gold down and gold down, dollar up.

We all look at all the printing that the fed is doing and all the debt based government that we have been running and it makes some people worry about immediate hyperinflation. I do not see that happening.  I think that low interest rates in the dollar and easy lending policies aided by government corruption have enabled others to borrow dollars cheaply and go invest in 3rd world nations.  That borrowing was effectively a naked short of the dollar and as those bad investments collapse, including many in Euroland and Japan and in China, the dollar will have a period of strengthening.

A stronger dollar means that less of them should buy the same amount of stocks.  In other words, much lower share prices.  But it is also supposed to lead to lower gold prices.  Right now the gold and silver charts do not support that outcome.  That could change but for now, it is what it is.  So something geopolitically important would have to occur in order to get people to care more about gold and to effectively remonify gold.  And this would happen while the dollar is gaining strength against the likes of the Euro, the Yen, the Ruble and the Aussie dollar.

The one geopolitical event that will boost gold under these circumstances is war.  I hope the jerks who makes these decisions all die in their sleep before they decide to go to war, but we will likely not be so lucky.  Bankers always push politicians into war when their debt Ponzi is collapsing because the destruction of economic productivity done by bullets and bombs means that lots of bank loans will have to be taken out after the war to rebuild. It is the elitist concept of Creative Destruction and the sheeple, who have no idea what is really going on in the world or why, always seem so ready to go die for the bankers.

If this sounds like hyperbole, forget not the famous words of Maj. Gen. Smedley Butler who warned us repeatedly, clearly and in the writings of a first hand participant that war is a racket.  Who runs a racket?  ORGANIZED CRIME.  War is just another criminal operation of the organized crime cartel known as BIG GOVERNMENT.

If a major war breaks out, buy gold and the miners, period.  Oh, and hide your children. They will be coming for your children.  Don't let them get their hooks into your children because we are warned far in advance that WW3 will be a doozy.

"I do not know how the Third World War will be fought, but I can tell you what they will use in the Fourth — rocks!"
---Albert Einstein, in an interview with Alfred Werner, Liberal Judaism 16 (April-May 1949), 12. Einstein Archive 30-1104, as sourced in The New Quotable Einstein by Alice Calaprice (2005), p. 173.