Brazilian spring is happening right now.

Amazing things are happening all around the world as the debt Ponzi collapse continues to unfold.  When the credit runs out, the government spending power goes away.  When the government tries to put more burden on the people to make up for this, the herd finally wakes up and shows government who is really in control.  Brazil just tried to raise rates on public transportation in order to make up shortfalls from the collapsing debt Ponzi.  At the same time, the elite were spending billions on their plans to host the World Cup soccer matches.  The combination of this tiny bit of additional austerity thrust upon the people with the audacity of spending money on something that really benefits only the very wealthy's egos when everyone else is tightening their belts was just too much.  The herd revolted on it in unison.  Hundreds of thousands took to the streets.  Importantly, rescinding the additional transportation tariffs did not calm the herd.  The worm has turned.  There will be no easy escape for the con men IMO. 

 

Scroll down to the videos, they are very telling.  The riot police look around, see the people all acting in unison and in common cause. They realize it is a lost cause and actually join the sit-in.  This is absolutely amazing to watch.  Observe how the one lone riot policeman sees his fellows sitting down and giving up.  He is confused but eventually submits to the implied peer pressure and he sits down too. 

http://globaleconomicanalysis.blogspot.com/2013/06/800000-protest-in-brazil-over-10-cent.html

I hope we get it this easy when the mass protest “contagion” finally comes home to roost in the good old USA.  All I can say is that politicians and police will be wise to just give up and join the people instead of trying to fight.  Contrary to what some sheeple think, there is no possible way that government and police and even the US military can possibly control the American people once the herd "goes Brazilian" on them.  Heck, we couldn't even conquer Afghanistan and that is a place where military atrocities could be committed by war criminals like Bush and Obama without knowledge of the American people.  That will not be the case if they try to pull the same crap here.

 

Someone is going to be in charge after things change and smart cops will not go against the will of the people.  Especially those in the US where everyone is armed with high tech military style assault weapons and optics.  It is just a really poor gamble to attack American citizens on our own ground.  I hope the police of this country are looking at what is happening in Brazil and learning from the wisdom of the Brazilian riot police.  The winner of the coming conflict has already been decided in favor of the people.  The only thing we don't know is how many lives will be lost in the process.

JNK, a submarine starting to submerge with all hatches open.

Over the past several weeks I have written several times about JNK which is a junk bond ETF.  Junk bonds are those with low credit ratings.  That means high yield.  They would be absolutely worthless if the coupon (interest rate) goes up too high because the issuer would not be able to roll them over at an affordable rate.  As long as Bernanke is juicing the credit markets with stimulus, people have run into the JNK ETF in search of yields that cannot be found on higher rated debt.  Nobody wants to own junk bonds.  They do it because they have to in order to meet the ridiculous, mathematically un-keepable promises of 7% or 8% payouts on insurance annuities.  They also do it in order to try to make up for massive shortfalls in pension plans.  They think that as long as Bernanke is juicing the markets that the junk debt will be able to be rolled over, thus avoiding default.  The only way to keep this game going is to roll the debt over - once that cannot be done at low enough rates (or at all), the game is over and the junk bonds will collapse to worthlessness as they default en masse.  The JNK ETF is how I will be tracking all of this.

In this post on JNK I likened the ETF to a submarine that was getting ready to dive.  I also overlaid 

the chart on top of a picture of an owl because the double top formed by an ending diagonal reminds me of this illuminati symbol of wisdom.  As you can  see from the recent chart below, the ending diagonal did in fact break down as modeled.  In fact, during the selloff yesterday that hit all markets including stocks and metals, the JNK ETF broke an important support like and it did so with gusto.  I do not think that this support can be recaptured. 

 

I think Bernanke's talk of "tapering" has convinced the market that he will eventually try it. The smart money wants to to exit the Ponzi first. 

While the case for JNK ETF collapse is pretty clear, most people will not extend this thinking to the broader markets but the reason to watch JNK is as a fear indicator/fear proxy for the broader markets.  From the JNK chart it seems that the herd has become fearful again as expected.  There will be a stampede for sure.  All of the stock markets are way over valued simply based on the largess of Bernanke.  Nobody is in it because they believe in free market principles or the value of these assets on their own anymore.  Bernanke has ruined the stock and bond markets as a price determination mechanism which they are supposed to be.  Prices are now subsidized with Bernanke bux.  When that stimulus ends, so will broad market participation.  In short, the con has finally exposed itself for what it is and the people have lost faith in the market con.  In addition, people have stopped talking about the foolishness of conspiracy theorists and have themselves become conspiracy believers.  People have lost faith in government.

All of this is interrelated.  As Prechter says, "It's all one market".  My take on that is that it's all one big con.  Prechter puts gold and silver in the same pot and so far gold and silver have led the way down.  But their pullback was predictable (and predicted) by Elliott waves and at least my read of the EW tea leaves says we are finished with 3 of 5 of C and now have one last capitulation smack down in metals before they bottom.  At that point I think people will begin to fear government takeover of the money supply from the central bank a-la-Japan in order to counter all of the plummeting markets.  When that happens you will want to be in gold and silver IMO.  

Central bankers are con men but they are educated con artists.  They know how to run the long con.  Politicians?  Not so much.  They do things to benefit their chances of winning the next election.  They don't care a hoot about what comes after that.  Thus, they are likely to show less restraint than central bankers.  When politicians (or their appointed puppets) get control of the currency supply, the currency is on the road to massive (if not hyper) inflation.

In any case, if JNK doesn't retake that red support-turned -resistance line on the likely back test then it will be the famous "goodbye kiss" and the junky submarine will go under will all the hatches open.  This time there will be no saving it.  Most of its "assets" will show their true value of zero before it stops falling.  It will go sub $5 and perhaps even go to zero or be closed down.  The broader markets like the DJIA, S+P500, NASDAQ, etc. will also collapse.

Silver - the value of dollar cost averaging.

Silver and gold are getting hit again today in an obvious attempt to shake the tree at the very bottom.  In this recent post I speculated that the long standing support line would be broken and it would take the power of a 3rd wave to do so.  I was planning on waiting for the high volume capitulation selloff that oftentimes is required in order to put in a sustainable long term bottom. 

At the same time, calling the very bottom is difficult and there was a good chance that the long term support line would hold.  In that case we could see a very violent vee bottom bounce into the next bull market and I wanted to make sure I caught a good price on that bounce.  So in this post I revealed that I bought 1/3 of my intended tranche of silver metal.  I presented a charting case for my move but like all charting, it is nothing more than the odds of trying to predict chaos (at least chaos to our simple minds; it's unlikely to be chaos at some level of omniscience).

Today the market rewarded me for my impatience with another big step down.  As I had originally thought, it took the power of a 3rd wave to do this.  In fact, the 3rd of a 3rd of a 3rd to do this as the following chart will show (click on it to get a clearer image).  IMO this action is chaotic but not coincidental.  The market had to make a decision at that support line and it pondered on it long and hard and it eventually decided that there were more suckers to fleece (and they were right).  I suspect a lot of stops were taken out by this move.  The logical thing now for markets to do would be to head fake back up and then go down one more time to see if any other sellers can be found.

I, of course, am of the mind that this is the time to be looking to buy, not sell.  I think there is perhaps $2 to the downside and $50 to the upside on this issue.  By the way, green 5 hand drawn in below also corresponds to a very large C and the end of the metals pullback.

Gold is also looking like it could be very near a bottom.  It is flirting with the 38.2 fib right now.  A case could be made for saying it is tracing out a 3rd of 5 of C right now as well.  Of course nobody knows for sure what the herd will do in a panic which is why I am dollar cost averaging into what I strongly suspect is a long term bottom. 

I'm also mindful that the eventual retracement could turn out to be the 61.8% fib or even that this could turn out to be not a C wave but a 3rd wave!  That would mean years more of pain for metals
 holders, pretty much in line with what Bob Prechter expects.  It is never smart to completely ignore Prechter but I am not trading.  I am accumulating for retirement.  I am confident that by the time I retire this retirement metals fund will be in very good shape.  Obama is saying that Bernanke wants out and that he has been in there longer than he wanted to be.  I read this as saying Obama wants Bernanke out because he is not doing enough to prop up the collapsing debt Ponzi.  One day in the not too distant future, the US will have a Shinzo Abe moment - an event marked by the government takeover of the Federal Reserve and the installation of a puppet chairman of it.  There will be a mandate to inflate.  This has been my long standing "super nova economy" view: first big deflation and then massive inflation and perhaps hyperinflation.  It will take years to play out.

The eventual takeover of the central bank by the government is why I'm into the metals as a store of value for the long term.  Until that happens, I'm hoping for lower prices so I can buy on the cheap!  This is the difference in mind set between someone who buys physical metals for retirement and someone who trades the paper based metals funds like GLD and SLV.

Charles Nenner on the stock market and on metals

I first saw Nenner on CNBC back in 2008 and to be honest I wrote him off as a crank.  The reason for this was that he would make predictions without explaining any reason for it except "cycles".  He would talk in very vague terms and give no information that could be used for back testing his system.  To be blunt, the way he described it sounded a bit like Jewish Kabbalistic mysticism and numerology.  This is in sharp contrast to something like Elliott waves the theory behind and "rules" of which are clearly documented all over the web.

Despite my skepticism, I have watched him over the past few years and I have to admit that his calls have been pretty good.  Also, he is right up front saying he doesn't know why the system works, just that it seems to be built into the fabric of things somehow.  The more I hear him speak, the more he seems to be describing herding movements.  One of his recent calls was regarding a bottoming in crude oil.  You can watch the video here.  That happened on April 18th of 2013.  So how'd he do?  You be the judge:

While a move from $31 to $34 is not definitive proof of the start of a bull market, he did call the very day of the low.  Also, the chart has broken through the top resistance line and that should speak volumes.   I would guess by looking at this chart that oil will move up in a rapid 3rd of 3rd wave movement soon.

In any case I have been calling for stocks to go down while gold and silver go up and that is what his company is now saying.  In fact, I just recently made a "possible if not likely that the bottom is in" call on silver and today I see that his company is saying "bottom in gold very soon".  Here is a head honcho from Nenner's company discussing commodities and gold and the stock market. 
http://www.hardassetsinvestor.com/videos/4834-video-charles-nenner-researchs-managing-director-says-stocks-will-drop-more-than-60-over-next-7-years.html
If he is right, gold will surprise everyone to the upside because everyone has been trained into thinking it is a commodity like copper when in fact it is a fear safe haven.  He thinks the stock market will plummet and so do I.

Side note: because of the above video where Nenner says natural gas will peak and then re-test lows again, I will dump my Ballard Power shares ASAP since that was supposed to be a nat gas play.  Since I'm up more than 100% from my buy price already I won't be too disappointed if I don't catch the whole run.  But Nenner's view is that nat gas will test the bottom again and that means a double bottom could occur.  If so, I'll be back into Ballard or some other nat gas play.

Why I started buying physical silver metal today.

In the past couple weeks I have been on increasingly rising silver bottom watch.  The sentiment on the metals and the miners is in the dirt because of the big pullback they have been experiencing since early 2011.  At the same time, the fed has been buying stocks and bonds trying to get everyone into that Ponzi again.  So it would seem that Bernanke is winning blah blah blah.  Balderdash.  Bernanke has already lost but he's so stubborn that he is willing to risk the security and the sanity of the entire country trying to prop up the status quo.  Everyone thinks he's a hero when in fact he was never anything more than a confidence operator, a high priced carney in the global debt Ponzi.  Words do not convey the contempt that I have for him.  He has caused global suffering with his money games and we still haven't seen the bad stuff yet.

Well, today I started buying again.  It might go lower but I decided to pick up the first 1/3rd of my intended tranche.  So, why now?  Why not wait a bit longer?  Well, I was going to do that originally even though I know that I sometimes have trouble reading the 5th of the 5th of the 5th very well.  But then it struck me - I could possibly find some independent verification in ZSL which is the 2x leveraged short fund.  These leveraged shorts move the chart faster and can thus pull out details in the movements and make them a bit easier to read.  Of course, in the case of ZSL, all the charts are inverted.  So if SLV must be near a bottom, ZSL should be near a top.

In any case, here is the ZSL chart.  What I saw when I looked at it made me wonder greatly if the 5th of C hadn't already been put in.  First off, wave 1 is a pretty easy read.  There are 5 clear wave thrusts with 3 going up and 2 being pull backs.  Wave 2 was pretty clearly a sideways correction.  Per the EW model, I should then get a violently upward 3rd wave followed by a big, vee style pullback (since 2 was sideways, 4 should be a vee per the EW rule of alternation.).  In addition, a line between 1 and 3 should be roughly parallel to a line between 2 and 4.  In fact, the chart seems to have done exactly that.  So now the big question is, is the next peak the 5th and final wave of the series or is it just wave 1 of 5 with waves 2 of 5, 3 of 5, 4 of 5 and 5 of 5 to complete before big red 5 is complete.

I was originally thinking that it could be just 1 of 5.  In fact, it still might be just that.  But it suspiciously hit the top line (the one that goes through 1 and 3).  That's what a 5th wave is supposed to do.  Now the chart is struggling to hold lower support.  If it breaks down it will probably be with gusto because it will be a 3rd wave in the downward direction for ZSL (as silver breaks out to the upside).  In addition, I noticed that the vertical distance from 4 to "5???" really isn't much different than the vertical distance from the start of red 1 to the peak of red 1.  Sure, the recent wave made its move much faster than the red 1 wave played out but the amplitudes are similar, just as one would expect between a 1st and 5th wave.  

Finally, I remembered that the SLV chart was sitting on a support line going all the way back to 2008 (see chart below).  I think it would be quite difficult to break that long standing support line.  I could always be wrong about this but I currently believe it would take a 3rd of a 3rd wave to have enough power to break down through it in a meaningful way.  I'm not convinced that a 3rd of a 5th wave could do it.
Given all of this I think there is a technical case to be made for the immediate bottoming (if not just recently bottomed already) for the SLV chart.  That means the odds are enough in favor of going long right now that I bought 1/3 of my intended allocation for this cycle.  If it goes lower then I will be very happy and buy a lot more.  But if it begins to break out I will also buy more. 

Bernanke will be checkmated soon by the monster market that he helped create.  It will demand increasing amounts of stimulus or it will have a tantrum and this is happening when Bernanke is trying to talk up the unworkable idea of "tapering" off the stimulus.  Pulling off the stimulus will invite deflation.  At the first sign of it, the fund managers will pull their money from the scam and run with it.  The result will be lower stock prices, commodity prices, etc.  But I think this time that gold and silver will go up, not down with because what is anyone to do with the cash they raise by selling stocks?  If it goes into commodities it will cause an Arab spring in Main St. USA.  Government will intervene and anyone foolish enough to have money in it will get robbed by price controls.  Metals are the only safe hiding place.

If anyone has questions on how to buy metals, send leave a comment on the blog or send me email if you are family or friends.  I just checked the prices at Monex vs Apmex and Monex edged out Apmex and Apmex refused to make up the difference so Monex it was.  The price for silver US Eagles (decided to try them instead of the Philharmonics that I usually get) was $25.46 per coin delivered to my doorstep.

Bottom watch on Silver.

For my recent views on silver, please check out my last post.  Pay particular attention to the short term prediction which is charted near the end of the post.  Below is today's silver chart (click on it to get a more detailed image).  I can honestly say that it seems to have followed my EW model prediction fairly well.  The formation came very close to the right side of the channel after forming a triangle.

Given that triangles are always supposed to be the second to last waves, we should have 1 more wave after the 4th wave break down.  You can see that the 4th wave broke down with gusto and then the 1st of 5 of C stopped at the orange support line and then rebounded into 2 of 5 of C.

What followed 2 of 5 of C was another wave down which had a gap in it but it could not break down and stay down below the orange support line and so I think 3 of 5 of C will be an extended wave, itself made up of 5 distinct waves.  I think what we just saw was 1 of 3 and 2 of 3.  If I'm right about this wave count (this view of the wave model), the next wave down will be 3 of 3 of 5.  That means it will be a 3rd of a 3rd and that means cliff diving is to be expected.  If we get this type of gap down behavior it will not be time to panic but time to scrape up your spare cash and start buying. 

I will not buy the SLV fund, I think it is fractionally reserved and therefore fraudulent.  I will only buy real metal.  But I will be buying as everyone else is freaking out.  In any case the 3rd wave should play out strongly and then an a-b-c rebound as shown in blue and then the 5th of 5 of C will be done.  That will be the bottom of this selloff.  I cannot say for sure what price that will happen at but when the waves are all counted out (or if we face the prospect of a failed 5th with an inclining double bottom) then I'm going to buy a bunch of metal. 

If I'm wrong, if this Elliott wave modeling turns out to be a bunch of hoodoo voodoo then I'll buy even more silver if the price goes lower.  Without margin or leverage or any worry whatsoever that silver will ever go bankrupt I will not lose any sleep and in fact would enjoy lower prices.  But before you write the EW modeling off too quickly as hocus pocus, go check out my calls on silver as it hit its big 3rd wave up (I was not optimistic).  More recently, check out my call on Sunpower (SPWR).  My view of the EW model was accurate there.  More recently still, check out my post on Ballard Power.  I actually did buy some of BLDP having modeled the bottom pretty well. 

Again, keep in mind that all stocks are just gambling.  If Wall St got a dirty bomb dropped on it and nobody could work there for 1000 years as a result, stocks would all be worthless overnight because there would be no greater fool to sell them to because there would be no marketplace to sell them in.  Do you think you could sell them to your neighbor even if you had the certificates if you needed food?  Really?  Now consider the fate of silver and gold, metal in hand, under these same conditions.  It's value would not evaporate.  Just the opposite.  Silver and gold would skyrocket.  Now think of any bad condition and consider if it happened: would silver and gold go worthless?  I think not!  Even in civil war it would be the money of the people.  Heck, even if aliens landed and took over the planet people would value silver and gold as money. This is why buying silver and gold for retirement are never bad ideas and can be downright good ideas if you can catch them when the herd has been tricked into being afraid of them (like right now).

Note: this is not investment advice.  Don't be an idiot in thinking you should listen to some guy on a blog.  If you can't see the logic for yourself and make the decision for yourself then I can not save you.  In fact, I will be lucky to even save myself.  So just save yourself...  (kudos if you know the song that came from ;  ). 

JNK update: lookouts below, dive! dive! dive!

Around the first of the year I suspected that the JNK ETF (Junk Bonds) was in the process of topping out as it created a chart formation known as a double top. 

I wrote about it here.  At left is the chart I posted at that time. The owl, of course, normally symbolizes wisdom to the elite but with the lighthouse getting dim (check the long standing photo on my blog's front page), I think it's more like the owl being the sign of death.

Why so? Well the JNK bond fund went into a massive nose dive as a result of the near collapse of the global financial system a few years ago.  Now, due to unprecedented government intervention in all markets, it has completed an ending diagonal formation (which I suspected would be the case on many occasions prior within the pages of this blog).  I wrote that a breakdown of this sucker bounce formation would result in a rapid plunge of these shares and that the entire market would collapse in a chain reaction over time.  In all of these charting models the breakdowns come by degrees.  They have to go through "gates" so to speak because that is the way the herd operates.

These gates are called technical resistance and support levels.  In an update post discussing the JNK ETF, I suggested again that the JNK ETF was ready to break down.  The annotated chart at left was taken from that post.  You can see how the long green line at bottom was support on the way up but then it broke down and could not break back up through from below.
It tried and tried and even reached a new high but when faced with the intersection of two strong resistance levels, it broke down.  Since that post, the chart has gotten even worse.  Here is what it looks like now (zoomed out significantly):

From this it is clear that the chart touched that resistance point like it was an electric wire and jumped back down.  It is now tracing out a 3rd wave (see the gap?).  I expect a final smallish bounce upward off the long term support line (red).  I expect that the actual touching of that line will be the 1st wave down.  Then wave 2 will probably be a big bounce back up, vee style. 

If I am right, that 2nd wave will soon tire and then it will turn downward and re-test that long term red support line.  I suspect this will unfold with great power - a 3rd wave that will smash down through the red line using the power that only a 3rd wave could ever hope to offer.

IF (cough, cough, when) that happens, Mr. Market will become suddenly nervous.  After all, stocks and bonds (and any other paper based assets) are essentially worthless unless you can find a greater fool than you to sell them to.  Fail to believe that economic truism at your own fiat-currency-is-the-new-tulip-mania peril.

Of course, there is an element of apparent chaos to everything.  Apparent chaos (it only appears so to the limited mind of man) is an architected feature of the very fabric of the universe. The decision point/trigger point for my technical analysis of this chart will be tested very soon now; we will soon know whether my 90% certain breakdown prediction materializes or whether the 10% manages to hold on a bit longer.  A breakdown below that red support line without a very, very rapid retaking of it to the upside will mean the herd is throwing in the towel and that no amount of government promises will cause it to look back.

What you are really witnessing here is a chart in confidence of the government to control things.  It is no coincidence that the chart lost support at about the same time that Obama started getting media scrutiny and derision for Benghazi, the IRS targeting, felony phone tapping and illegal reading of emails of news reporters looking for leaks, etc.  Obama's enemies were quiet on Fast and Furious gun running operation but now even that is being dredged back up.  I'm going to repeat it because it sounds just so conspiratorial and crazy today that I want it in writing as nobody will believe it if I just say it later on: It will not be too many more years until we finally see people, en masse and without batting an eye, accusing and proving government of complicity in the 911 terrorism.  It was obviously (to me at least) a false flag power grab over the sleepy sheeple. 

In other words, the herd is losing confidence in the con game and when the con is finally understood, the herd is going to be livid.

So how does loss of confidence lead to a financial collapse?  Simply because the stock market, banks and a large portion of the economy is a massive con as well.  Lots of people are doing jobs that nobody wants done.  Too many government employees doing nothing useful!  Also, the entire herd is now crowded (herded) into the stock and paper asset markets thinking Obe Ben Bernanke can  use the power of the dark side of the force in order to continue staving off global economic collapse.  He has huffed and puffed and he has thrown the kitchen sink at the situation but nothing is working.  Global manufacturing is in contraction.  Real wages are down.  Real employment is still elusive for the rank and file.  Massive numbers of people are on handouts - welfare, food stamps, disability, and yes I will throw social security and pensions in there too because people want far more out of those programs than they ever paid in and they don't understand that it is mathematically impossible to occur. 

Everyone thinks their little promise is sacred.  Screw everyone else over, they think, if you must.  But I want what's coming to me!  And I don't care if the value has already been stolen out the back door.  I want government to force someone else to work to get it so that it can be handed to me.  After all, I "earned" it.  Sound familiar?  If you think this way, you might be a sheeple.

Here is a little secret for you.  The Obama government's slogan has always been, "If we see something, we'll take something".  "We are going to spread the money around a bit".  Most people thought that they would be on the receiving end of that bull$hit.  I suggest that they will be on the receiving end of it too - but it will be like looking down the barrel of a gun.  If you have a pension promised to you, even if you are in the military, it will be "haircutted" to pay for the debt Ponzi.  And let me tell you something else: you will have no say in it and in fact (please forgive me for the truth I am about to tell you), you deserve to lose it.   Why?  Because you allowed the scam of fiat currency and fractional reserve banking to blind you to the reality of the situation.  You let the fun and frolic of the Grand Illusion fool you.  You voted for this government.  You didn't lift a finger to stop all the abuses.  You probably even ridiculed those who saw it coming (like Ron Paul).  Well, buddy, the wages for ignorance in this matter are to be patsified in this grand scam.  Don't get angry, you and me and we the people as a whole begged for it for decades.

 Please don't count on someone else to take care of you or to save you.  They can't even save themselves.  So just save yourself!  Before this collapse is over we will discover a whole new meaning for "Stabbing Westward" (Dear FBI and offiz ub der fadderland fer monkitering ub de Internetvolk, that was not a threat but rather the name of the band on the Youtube link - get a JOB!).

Buy silver and gold over time and leave Bernanke and the con men in the dust.