Saturday, July 30, 2011
Wednesday, July 27, 2011
Almost all their blathering stems from a fundamental misunderstanding:
They still don't get that gold is a currency. So here's what they say:
A) Gold is a NON PRODUCTIVE ASSET. They would rather hold stocks. Or bonds (since bonds produce income through interest.
A) So is the Dollar a non productive asset. So is the Swiss France. Currencies don't produce anything. That's not why you hold them. You hold them because they are a STABLE store of wealth.
B) Over Time Gold performs worse than stocks or bonds.
B) NONSENSE. Over time EVERY STOCK goes to ZERO. Over Time EVERY GOVERNMENT DEFAULTS. That's why BONDS pay interest. Because they pay you for the RISK of holding them.
You don't hold an ASSET CLASS. You hold an individual asset within that class. Each Individual Asset is RISKY. During very stable periods - yes - individual risk assets pay off.
During UNSTABLE PERIODS GOLD OUTPERFORMS ALL RISK ASSETS.
Do you think we are in a STABLE, or an UNSTABLE period?
C) Gold has a negative carry, over time it costs you money to hold gold.
C) Your house has a negative carry. It costs way more to keep up your house than to hold gold. Does that stop you from living in it?
(Yes, but over time your house appreciates. Not during unstable periods. Only Gold appreciates during very unstable periods.)
D) Gold has already had a huge move. It must be a bubble about to burst.
D) This is the dumbest argument of all. Gold has had a huge move relative to Paper Currencies. Are paper currencies about to get stronger? Really? With Hundreds of Trillion of dollars of Paper Debt in the system? With trillions of new debt being created every month? And with intractable narcissistic morons (dems, repubs, tea-partiers all) holding the reigns of government?
Gold has not had a huge move relative to other hard assets. Not compared to Diamonds. Not compared to High End Art. Not compared to other Precious Metals. Not compared to Grains. not compared to Oil. Not compared even to real estate after the crash when measured over the last twenty years.
The only argument against gold is this: Fiscal Sanity has been restored to the World Financial System by prudent sober management by the World's Governments and sober responsible behavior by the World's Citizens (especially the banks who control 60 percent of the financial assets). What are the odds of that happening?
Figure it out for yourself. then decide how much gold you should hold. And figure it in Ounces, not Dollar Amounts.
Here's the Lesson: Never substitute Regression to the Mean analysis for good hard analysis of the Current Situation. It's the idiot's substitution. And it will lose you all your money.
Monday, July 25, 2011
Meanwhile during market hours the traders at the 5 largest banks that control 60 percent of all financial assets in this country got together to scream F. U. F. U. at the suckers who dared to trade with them. They did this by front running their every trade and then pushing the low volume markets around in random directions, first running the futures down 120 points before the open, rallying off the open back to even, forcing the suckers to cover and then sending the markets back down in the final 5 minutes of trading. F. U. N.
Other Ex-futures traders like Jeff Koons, not content to F over pension funders, have moved into the Art Market where they've developed a special brand of F.U. Art where they make cheap porcelain statues for 5 bucks and sell them for 5 million to nouveau riche douche bags, and then run back to their galleries and shriek F. U. F. U. into their champagne flutes.
Meanwhile down at the Jersey shore Snooki got wasted again and barfed all over herself. I don't know who that says F. U. to, but definitely somebody.
Sunday, July 24, 2011
The wise men of Government and Punditry are now arguing vehemently over the wisdom of raising the Debt Ceiling.
Do we stick another shot of Debt into the collapsing vein of the economy, or do we let the junky go into withdrawal?
The Banks have advised Democrats and Republicans that the junky will die without his next fix.
The Tea Party freshman say, Nonsense: A little Cold Turkey is healthy in the long run!
If and when they resolve this issue, they will simply have to debate it again - and again - and again each time the junky is ready for the next fix.
There are Two Issues here.
A) What will really happen in the short run?
The answer is that it has nothing to do with the few checks that may or may not get written - although that is all that the Brain Dead Pundits want to talk about.
What will happen is this: The markets will realize that the government is so completely inept that it is capable of defaulting on the debt denominated in the world's reserve currency. This means that everything denominated in that currency: Stocks, Bonds, Oil, Gold, Grains, HAVE BEEN MISPRICED. You will see a massive REPRICING OF RISK.
Repricing of risk means chaos in the markets. Because the markets are predicated on a basic understanding of risk premium. If you don't understand the risk of a given investment - especially the currency risk - chances are you will want to unwind the investment. Whether or not it happens Overnight - it will happen. And the eventual results could be devastating depending on how much faith in the pricing of risk can be restored to the system.
This is way more serious than a few seniors dying, or a few service men starving. It means the 401 K's of the Tea Party babies could get wiped out. Then they'll be leading the charge for MORE DEBT.
B) What will happen in the long run?
In the long run the junkey's vein will collapse no matter how much new junk/debt we shoot into it's arm. Because more junk is obviously not a cure for too much junk.
Then see above.
Friday, July 22, 2011
Yesterday it was Risk ON! Europe fashioned a multi billion dollar bailout for Greece, so the dow rallied 150 and the safe haven of gold dropped 15.
That was the absurd story being peddled everywhere from Fox to CNBC to even Bloomberg: More printed money fixed Too Much Printed Money.
And suckers everywhere bought it. Except the traders at the 5 largest banks that own over 60 percent of the GDP of this country.
They don't have to buy it. They create it.
They trade in such enormous volume, they have such fantastic control of both the flow of money and the flow of information that they can create any short term move in any market on any day, and supply any reason for it.
And everyone buys it. Because right now the financial markets are Sucker Central.
But if that were so wouldn't they know they'll eventually drive everyone out of the market, and they'll ruin their own cash cow?
Sure, but they're not supermen. Or super smart. They're just as myopic as everyone else. They just happen to control mechanisms of money creation.
You'd do the same in their position. You know you would.
But unless you're in their position, you'll eventually lose all you have to them.
You'll lose everything by trading against the house. The house controls the creation of money, so that they can issue themselves unlimited amounts of money thus diluting all your cash. And they control the markets with unlimited volume and high frequency trading thus confiscating all your gambling (what you call investing) money.
The only thing they can't control is Hard Assets. They can drive up the dollar price by creating more dollars, but they can't devalue them by selling them short. Except temporarily on the pretend (futures) exchanges. But they can't get their hands on the real assets to sell them short.
Unless you build a portfolio of hard assets that is stable enough to wait them out, you'll eventually lose it all. That means bullion - gold, some silver. And High End commodities. Things that have already stood the test of time and retained their value for centuries.
That's it. There's still time. The 5 banks that own 60 percent of everything will keep the game going for years, in all likelihood, During this time they will control the direction of everything - except bullion and high end commodities.
Wednesday, July 20, 2011
Is this really what moved the markets? George Soros doesn't think so. He's moving to cash. Because even he can't compete with the World's Central Banks and their proxy Member Banks who are moving these markets wherever they want to. IN THE SHORT RUN. Because that's all they can effect. THE SHORT RUN.
Listen, if SOROS, the world's greatest capitalist, can't trade this market maybe you shouldn't try either. BUY BULLION and sit it out. Or you'll get killed
Soros funds moving to cash on lack of information from Fed and Treasury
Monday, July 18, 2011
48 HOURS TO SAVE THE EURO AS GREECE DEAL STALLS
Saturday July 16,2011
EXPERTS last night warned Europe has only 48 hours to save the single currency (euro) amid concern over the failure to seal a new rescue plan for debt-laden Greece.
The inability of politicians to agree a solution to the financial crisis threatening Europe sparked market jitters as continued uncertainty threatened to undermine the eurozone. One City executive said: “We need to come in on Monday morning and see something happening, otherwise I fear the worst.”
There are concerns that Italy and Spain could follow Greece, Portugal and Ireland in going broke and needing bailouts from richer countries to keep afloat.
Republicans’ Budget Balance Short on Details
Congressional Republicans are clear in their demand for a constitutional amendment forcing the government to balance its budget. What they’re not offering is clarity on how to get there.
It’s politically popular to line up behind such an amendment; laying out specific cuts is less appealing.
LONDON (MarketWatch) — Gold futures rallied above $1,600 an ounce in electronic trading on Monday, as concerns about the euro-zone debt crisis and the lack of agreement on raising the U.S. debt ceiling prompted investors to seek a safe haven in the precious metal.
And of course, the Lame Stream's own Fox News: 3 articles about what a dope Obama is, an how inconsequential the debt ceiling problem is. Thank Gold somebody gets it:
President Obama Doesn't Know the First Thing About Economics
Published July 16, 2011
Published July 17, 2011
Saturday, July 16, 2011
From the chart above you can see gold making new all time dollar highs - though the inflation adjusted price is still sell below the 1980 peak of about $2350.
Who cares? The dollar price is irrelevant. As long as we're talking about a "dollar price" we're conceding the obvious fact that everything of value is currently priced in dollars.
This is why there is no panic. There is no panic in the US markets. There is no panic in the commodity markets. There is no panic in the gold market.
The US debt is out of control. The world debt is out of control. The US government is totally out of control. Narcissistic Dull Normals of brazen appetites and situational ethics have seized control of all facets of world government.
Nobody anywhere is even looking for a solution to the intractable problems of a world economy built on a mountain of debt.
Still - No Panic.
Why? Because the Banks are firmly in control. They control the issue and flow of dollars throughout the world. They control the governments that run on this flow of dollars. They control the flow of dollars to the armies that re-enforce the power of the US regime.
You and I can rail all we want against the monolithic power of the US Banking System. It is precisely that power that has led to this crisis. And it is also that power that is currently holding a dysfunctional system together. It is that power that is preventing panic.
Because it is easy to have faith in Monolithic Power - no matter how self serving and destructive it may be. It is difficult to rock that faith no matter what the conditions are on the ground. Greece is rocked because they lack that power. Italy, Portugal, Spain, Ireland are all following.
There is panic developing in all those countries because they rely on the US Banking system which funds the IMF - that controls their fate. And they are beginning to realize that the banks will impose whatever controls they want regardless of the fate of their countries in order to keep the US banks strong.
But the US banks can not survive if the US goes down the same road. Yet the banks have no solution - other than to manage the crisis so that the end game is a slow steady deterioration of the lifestyle and standard of living that is barely perceptible in the minute to minute sensibility that dominates the western mentality.
Let's hope they prevail.
Keep the faith. Because as long as you do there will be no panic.
Thursday, July 14, 2011
What's really going on here? What's the fighting all about over the deficit and the debt ceiling?
The US (and Europe) has a serious debt problem: http://www.usdebtclock.org/
With a Federal deficit at 100 percent of GDP, and a total debt market at 350 percent of GDP, there is not an economist\financial historian or business leader that doesn't understand that this burden is causing the economy to implode.
GDP is currently officially running at under 2 percent which is considered stall speed. If you compute inflation the same way we did under Reagan, GDP has been flat to negative for over ten years. Yes, negative.
Obviously it's way too late to sit around pointing fingers. Cutting little bits of spending at the fringes or raising taxes marginally on the wealthy will do NOTHING. Unfortunately that's what all the arguing is about in Washington.
So what can be done?
A) Throw out the 10,000 page tax code the ensures big corporation pay nothing because of loopholes while strangling small and middle sized companies so that they all go out of business, and stultifying start ups who can't deal with it. At best, institute a flat tax, or at least lower corporate taxes while closing all the loopholes.
B) End the Four Current Wars and close the 1100 military bases we have around the world outside the US.
C) Cut Medicaire benefits in half. (Sorry Tea Partiers, it's your freeloading that's killing the economy).
That's it. That's where the bleeding is. That's where the bleeding must be stopped. Cleaning the little drops that fall on the floor just won't do anything.
Everybody knows this has to be done.
Why can't it get done? Because the military industrial complex (who benefit from the wars), the fortune 500 (who benefit from the tax code), and the AARP/Tea Party Lobby (who benefit from Medicaire) don't want it done.
So meanwhile we sit around arguing about NOTHING.
Wednesday, July 13, 2011
The American Public is once again a huge winner as the enormously popular Debt Ceiling Show enters an exciting new phase.
Reality Star Barack Obama has threatened to starve veterans and the elderly if he doesn't get new taxes on the super rich.
Top Republican Contestants John Boehner and Mitch McConnel have pledged to trash the nation's credit rating if Obama raise taxes by one red cent.
Tea Party Hottie Michele Bachman has pledged not to cooperate with anyone unless the nation's entire Health Care System gets overhauled along with the Tax Code and the Budget - all by August 2.
What will happen?
For all the fun and games the market has already figured it out. Gold is up and the stock market is mulling around in a range just off the recent highs. What does this mean? It means Gold knows nothing substantive will ever be done about the debt. And the market knows that the Republicans will all cave in at the last second.
How does the market know this? Because Republicans and Democrats alike take their orders from the banks who control the markets. They don't dare upset their masters.
But wait, wouldn't the banks want deficit reduction? Of course not. Deficit reduction means credit contraction and that's the last thing the banks want.
But don't despair. There's plenty of good television left in this fun if predictable dramedy.
EMCEE BERNANKE PROMISES QE3.
Debt Ceiling Game Show Host Ben Bernanke promised the markets QE3 today - should the need arise. But then of course he went on to imply the need was already arising as the "recovery" is slower than "anyone" could have anticipated. Surprise!
Monday, July 11, 2011
It's like they're all watching a Hollywood movie and betting on whether or not the dirty bomb will be detonated or whether Batman and James Bond will dismantle it in time.
Here are the cold hard facts:
There's about $500 Billion ($474 Billion) in Treasuries that will come due next month. And every month. The Treasury Dept, will roll these bonds over, take the new proceeds to pay off the old ones plus interest. That's how it works. Every damned month, that's what we owe to the world, on top of what we need to borrow to keep the government running.
It all runs fine, for now, as long as there are buyers of the rolled over debt. And then you have to add in the "new debt" that has to financed.
Here's the thing: the auctions have been under-subscribed lately. And that's with the Fed being openly involved as a buyer of last resort - courtesy of QE2.
Now, if we don't raise the debt ceiling it means that A) it's not clear we are guaranteeing that we will pay future interest on this debt. B) It's not clear the Fed can legally step in to buy the debt if others fail to do so. C) The debt stands in real danger of being Downgraded by S and P as they've said that is what they will do.
And so D) If The Chinese then don't show up with their truck to load it up with Treasuries, then there will be a default!
And E) That means that the world's supposedly safest investment is not safe at all. That means there will be a massive repricing of risk.
What happens then is anybody's guess. It hasn't happened in hundreds of years, so nobody knows.
This is not speculation. This has nothing to do with dirty bombs, secret agents or blowhard pundits sticking their fingers up their butts.
But I'll tell you what, if it does happen I wouldn't want to be long anything at all. Except gold - over time.
Friday, July 8, 2011
Now, you'll recall there is also the Household Employment Survey that often is touted as far more reliable - when the numbers are good. So how did that go? Gee, glad you asked, actually: The household survey, (which also generates the unemployment rate), showed a month-to-month seasonally-adjusted employment plunge of 445,000 jobs for June 2011. What? Did you say a plunge of 445,000 jobs? No way! Way! So how come nobody on the Financial News networks is mentioning that today? I don't know. It's a mystery!
(The household survey measures the number of people who are employed; the payroll survey measures the number of nonfarm jobs - reflecting a count of individuals that is duplicated for those who hold multiple jobs).
Who think QE3 is right around the corner? I guess maybe the markets do because gold shot up on the news.
Meanwhile in related news:
July 8, 2011, 4:12 a.m. EDT
Swiss Parliament to discuss gold franc
Right-wing party seeks way back to gold standardZURICH (MarketWatch) — The Swiss Parliament is expected later this year to discuss the creation of a gold franc — a parallel currency to the official Swiss franc, with the fringe initiative likely triggering a broader debate about the role of the precious metal in the Alpine nation.
The initiative is part of “Healthy Currency,” a campaign sponsored by politicians from the right-wing Swiss People’s Party (SVP) — the country’s biggest — that is seeking to capitalize on popular fears about global financial turmoil and inflation to reverse the government’s current policy on gold.
Thursday, July 7, 2011
Top celebrities from both the Republican and Democrat parties came together last night in a closed door meeting and were able to agree that the Budget Impasse made for great TV.
What with stiff competition from the white trash chick in Florida who chloroformed her baby to death, and the Frenchy from the IMF who raped the black Muslim hotel maid/hooker, as well as the usual screwing, drinking and barfing on all the current reality shows it takes quite an extreme spectacle to grab and hold the US Television audience.
But with the country set to default on trillions of dollars of debt which could send the entire world economy into a depression celebrities from both parties are relishing the chance to bask in the spotlight.
"Maybe we haven't raped anybody lately," quipped Republican Dick Durbin, "But you'd have to rape and kill a lot of people to compete with the threat of worldwide chaos and depression."
The sentiment was gleefully echoed by everyone from the President on down to rabidly excited commentators on Fox, CNBC, Bloomberg, and the ABC radio network.
Wednesday, July 6, 2011
Your views on gold are directly dependent on your views on the world economy - which are directly dependent on your views on life in general.
Take the image above. Let's say this is a representation of the permanent state of a world economy built on debt. The tight rope represents the debt issued by the countries of the world in order to pay the expenses of the world governments: roads, war, safety nets, postal systems, schools, defense systems, police etc. etc. The Tight Rope walker represents the financial system: banks, corporations, workers, etc.
Let's say this tight rope walker has been walking over the tight rope for fifty years. He is able to take short brakes to sleep, eat, and relieve himself. But other than that he must keep walking. For fifty years he has not fallen, though he's come close many times.
A) Would you say that because he has never fallen, in all likelihood his skills will increase over time and he will always manage to successfully walk the tight rope?
B) Or would you say that as he get older and weaker, and the rope get more frayed - or maybe a big gust of wind comes along that he's just not ready for - and the likelihood increases every day that he will fall?
If you, like 95 percent of respondents, answer A, you might want to get about 2-3 percent of your liquid assets into gold - just in case. It probably won't hurt much in any event. Buy on dips and Consider it part of the "asset allocation" that your investment adviser touts.
If, like me, would answer B, the answer is you should get as much of your assets into gold as you can without affecting your immediate lifestyle. You need to pay your bills in dollars - for now. Otherwise Gold bullion, and other types of high end commodities should comprise the bulk of your estate. Diamonds, Old Master Paintings, Farm Land, Historical medals and documents, Rare coins, whatever you understand and are comfortable with.
And in buying gold the last thing your worry about is price. What you want is ounces. Count your ounces. Price is for those who subscribe to scenario A.
Tuesday, July 5, 2011
The "Gold community" (or nuts who invest more than the industry proscribed 2-5 percent of their liquid assets in gold) is often accused of being full of "conspiracy nuts."
To "Gold bugs" markets are manipulated, governments are self-interested, and the banking system is corrupt. Can you imagine a more absurd world view?
How about the world view that dictates that those with the power to manipulate markets refrain from a sense of moral obligation; governments are primarily interested in the welfare of their constituents; and the banking system though imperfect is by and large an honest service industry devoted to the welfare of the public.
Which sounds crazier?
Now, I know that at this point it's tremendously tempting to put your pipe in your mouth, rub your chin, and calmly say "Well, my friend, the truth, as always, lies somewhere in the middle."
Really? You mean that those who are in a position to legally (in the sense that they will not ever be prosecuted) take advantage of the system only do so to some reasonable extent - all the while keeping the public welfare in mind. Is that any less crazy?
The fact is that most forms of market manipulation are perfectly legal: high frequency trading, market makers that trade their own book, self-dealing auctions, collusion between underwriters and analysts, collusion between funds and investment advisers and of course the government's own, Working Group on Financial Markets or the "Plunge Protection Team" whose job it is legally to manipulate the markets in any way they see fit.
The fact is that the Federal Reserve Bank of the United States is a private bank - owned by J.P. Morgan Bank and others - that has complete autonomous banking power, with no government oversight - and nothing it does can ever be examined or audited.
The fact is all the best scams are legal.
The fact is that the financial markets are so vast and complex that it has become impossible to regulate them. Nobody with half a brain goes into the regulation business which pays miserably. All the smart guys go into the manipulation business which pays handsomely. So most everything they do is technically legal - as long as the smartest lawyers in the world agree that they can get away with it - and if by some miracle they get called on it they can always argue rings around the imbeciles working for the government.
And what about the politicians that are supposed to be looking out for their constituents in all this? If you happen to see a lot of upstanding honest politicians out there - then good for you. There's not much I can say but - WHO? Obama? Bachman? Palin? Romney? Trump? Pelosi?
Which one of those guys is really interested in Public Service over Personal Power?
Or do you take the Middle View that those two things can sometimes be in alignment?
Which sounds crazier?
Saturday, July 2, 2011
— U.S. stocks surged Friday after an upbeat reading of a key measure of U.S. manufacturing helped Wall Street cap its best week in nearly two years.
The catalyst for the gains was the Institute for Supply Management’s index of manufacturing activity, which climbed to 55.3% in June from 53.5% the prior month. The gauge had fallen sharply in May.
The ISM report “suggests that manufacturing has indeed picked up — it just did so in the latter half of June rather than its beginning,” said Dan Greenhaus, chief global strategist at BTIG LLC.
Separately, the Thomson Reuters/University of Michigan consumer-sentiment survey worsened in June, falling to a reading of 71.5 from 74.3 in May.
U.S. construction spending fell 0.6% in May from a revised 0.6% drop in April.
OH, I GET IT NOW!
The pick up in manufacturing activity rose from 53.5 to 55.3 (within the margin of statistical insignificance) and that completely overshadowed a drop in consumer sentiment, construction spending - and not to mention a contraction in real disposable income and retail sales, as noted below.
So, let's see if I get this. Manufacturing comprises about 14 percent of our economy. Consumer spending comprises about 70 percent of the economy.
Yet, according to Market Watch, a tiny rise in manufacturing statistics vastly overshadowed a plunge in Consumer Spending, Consumer Income, Consumer sentiment and a rise in all major inflation gauges.
Analysis Behind and Beyond Government Economic Reporting:
• New Action to Depress Officially Reported Inflation.
June 16, 2011