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Wednesday, August 31, 2011








Merkel’s Cabinet Approves Larger Euro-Rescue Fund as Dissent Ebbs

German Chancellor Angela Merkel’s Cabinet ratified expanded measures to combat the euro-area debt crisis as she quells a rebellion among coalition lawmakers that threatened to derail the package.

Senior members of Merkel’s Christian Democrats including finance and economy spokesman, Michael Meister, and floor leader Volker Kauder said this week they are now confident of securing a coalition majority for the proposed changes to the European rescue fund. Merkel yesterday pledged to consult lawmakers as much as they felt necessary to dispel lingering doubts.

Fed Officials Weighed Steps to Boost Growth

Federal Reserve policy makers debated ways to invigorate the recovery and hiring this month, potentially laying the groundwork for action at their next gathering in late September.

Minutes of their closed-door meeting released yesterday in Washington showed that a few members of the Federal Open Market Committee favored a “more substantial move” at the Aug. 9 meeting beyond the pledge adopted by the panel to hold rates at record lows for the next two years.

Monday, August 29, 2011

Gee, who saw that one coming?

I can tell the future: just look what's in your hand. In other words, you don't have to be a seer to read the present. Yet, inexplicably so few financial analysts are able to do this.


A) The Fed will devalue the dollar to the point of instability.

B) Politicians will do only what's most politically expedient to building their own power base.

C) Political pundits will spread hate until they incite riots.

D) The military industrial complex will make sure we remain at war indefinitely.

E) The national debt will grow until we default.

F) The global banking system will implode.

G) Gold will remain the only stable currency and the most reliable store of wealth.

How do I know these things?

Because they are happening. Not because they will happen. Because they are happening.

The number of credible analysts who can see most or all of these things is myriad:

Marc Faber, Richard Russel, John Mauldin, John Williams, Nouriel Roubini: There's several centuries of market experience and brilliant macro calls right there.

The fact that talking heads at Fox, CNBC, Bloomberg, the Wall Street Journal, Merril Lynch, Bank of America, JP Morgan, can spin a positive narrative out of this utterly bleak reality is a testament to what Nietzche regarded as the virtue of all narrative literature: It allows us to look at ourselves through a flattering glass so that we don't die of fright.

Okay, maybe that's a little dramatic. But really, at some point, it pays - quite literally - to see things as they are. Because if you do, you will realize the only credible investment at present - and for the foreseeable future: is gold.

Sunday, August 28, 2011

If you like gold now, wait til the European Banking crisis blows up:

Another crisis of historic proportions (that nobody could have seen coming) is moments away. If you think gold has exploded upward recently, just wait until this next crisis explodes:

From the Daily Telegraph:

Insurance on the debt of several major European banks has now hit historic levels, higher even than those recorded during financial crisis caused by the US financial group's implosion nearly three years ago.

Credit default swaps on the bonds of Royal Bank of Scotland, BNP Paribas, Deutsche Bank and Intesa Sanpaolo, among others, flashed warning signals on Wednesday. Credit default swaps (CDS) on RBS were trading at 343.54 basis points, meaning the annual cost to insure £10m of the state-backed lender's bonds against default is now £343,540.

"I think we are heading for a market shock in September or October that will match anything we have ever seen before," said a senior credit banker at a major European bank.

German Labor Minister, Dr. Ursula von der Leyen had this to say: "Rather than simply hand over further loans to Athens – money many Germans believe they will never see again Berlin should ask for collateral. Gold, preferably."

Of course the Greeks view it differently: "'The Nazis took our gold, they should at least thank us': Greek deputy PM's extraordinary attack on Germany over debt crisis

And this from analyst John Mauldin: "The list of country woes is long in Europe. Massive unemployment in Spain and Portugal. Credit spreads at French banks are blowing out. Deficits everywhere. Voting populations in both creditor and debtor nations are upset.

It is only a matter of time until Europe has a true crisis, which will happen faster – BANG! – than any of us can now imagine. Think Lehman on steroids. The US gave Europe our subprime woes. Europe gets to repay the favor with an even more severe banking crisis that, given that the US is at best at stall speed, will tip us into a long and serious recession.

Friday, August 26, 2011

More Silly Games

Gold dropped 200 dollars in two days. On the second day it turned around and ran up 70 dollars off the bottom. The next day - today - it jumped another 60 dollars.

Today the stock market dropped 200 dollars then turned around and climbed 337 dollars off the bottom. All because: A) GDP came in 1 tenth point lighter than expected. B) Bernanke didn't announce QE3 - yet. C) Hurrican Irene is on the way. D) The Vix had run up to unsustainable levels and when it came in 5 percent traders jumped on Spiders to ride the inevitable spike on light volume.

Or E) More silly games.

Trading is fun. Especially when you can borrow billions from the Fed and use the cash to run the markets anywhere you want - in the very short run. That's just the way a rigged casino works - for Goldman Sachs and J P Morgan.

It's just astonishing that all the rest of the little guy Hedge Funds and Pension Funds and Investment advisory services are still pretending it's a market.

Several prestigious newletter writers pronounced the Gold bull Dead two days ago because the 100 dollar drop came off of historic highs and ended up below the lows of the previous day: An "Outside Reversal Day."

Several Other prestigious advisory services announced that today marked the beginning of a new upleg in the markets as the Fed is done interfering (yeah sure) and corporations are sitting on record profits and record cash level (not counting their record debt levels).

As if any of that matters in a rigged casino.

Gold may go up 100 dollars Monday - if Hurrican Irene is real bad. Or if blah blah blah. Or it may go down 100 dollars. Rough on you if you're trying to trade it.

The market may go up 300 dollars Monday if Hurricane Irene is just a blip. Or it may go down 300 dollars. Rough on you if you're trying to trade it.

But hear this: Nobody - not the Fed - not Goldman Sachs - NOBODY can change the primary trend of a market over time. Nobody.

And hear this: Primary Trend Gold: UP. Primary Trend Stock Market: Down.

That's all you need to know to make money.

Thursday, August 25, 2011

Gold drops $100 - What up?

Yeah, gold dropped 100 bucks yesterday. And 50 more overnight, though it rebounded for 30 this morning. WHAT'S GOING ON?


You'll hear lots of commentators talking about speculative markets, bubbles, bullion banks covering naked calls and going short when the open interest drops blah blah blah.

These are games played in the Futures Markets by your buddies over at Goldman Sachs, J P Morgan etc. They get billions in "loans" from the Fed and wait til a buying surge plays out, then WHAMMO, they drop a few billion on the futures markets and take out a bunch of little guy Hedge Funds, and littler guy Rambo Day Traders, and run them right out of the market.

Oh, and by the way, as soon as they've run everybody's stops, set off a selling panic, they'll be there on the other end buying up all those deflated contracts.

Unless you're foolish enough to trade anything in a rigged casino this shouldn't concern you at all.

One Little Brained dude (or bold faced liar) on Bloomberg yesterday had this to say: "Gold should bump around the 1300 dollar level over the next 5 years as the US continues to prosper and we pay down our debt." Continues to prosper? Pay down our debt? On what planet?

However, if this seems like a reasonable proposition to you rather than a bizarre delusion, by all means sell all your gold now.

If you can see however that Europe and the US are still drowning in debt while mismanaged by dysfunctional governments then SMILE. This drop in gold is a gift. And keep buying. Gold is on sale thanks to your friends at Goldman Sachs.

In a related note it seems Goldman Sachs lent the Libyan rebels 2 million dollars to put a bounty on Qadaffi's head. Then they shorted the loan while secretly hiding Qaddafi in Loyd Blankfein's basement. Hey, money's money.

Wednesday, August 24, 2011

Why not Gold Stocks?

There are so many shills, gurus, con men, and analysts out there touting the inevitable break out of gold stocks. The logic all has to do with reversion to the mean analysis. The argument - that has not worked for the last ten years - claims that gold stocks have always outperformed the bullion price in every gold bull market. They are lagging now. Therefor, at some point, they most explode upward.

First, let me say that reversion to the mean analysis is sloppy dim witted analysis. Because, as Nassim Taleb has conclusively argued in his seminal "The Black Swan," unpredicted events of massive impact (Black Swans) occur with such regularity in the financial markets that "The Mean" becomes meaningless for investment purposes.

Nevertheless, let's examine the current situation for reasons why gold stocks are losing money while bullion is exploding upward:

First: all stocks involve an enormous amount of trust on the part of the investor.

First, You must trust the management. You must trust they are honest and not stealing from the company in any number of ways. You must trust the numbers they deliver to the markets. You must trust that they understand their business well enough to take into account difficult to predict events of massive impact that could affect their production capacity.

Second, You must trust your government and how they will tax your gains from holding stocks, and how well they will regulate the industry you will invest in.

Third: you must trust the governments of the countries in which the company is doing business.

Fourth: you must trust the currency in which the stocks are traded. Is it stable? Is it strong? Is it appreciating?

Finally, you must understand that stocks trade at arbitrary multiples of earnings. As trust in the markets erode: MULTIPLES CONTRACT.

Slow-witted - or Dishonest - reversion to the mean analysts will argue based on suspect earnings projections that multiples may be at historic lows. But multiples can contract to any level depending on the level of TRUST currently in the markets.

How much trust do you have right now in corporate America? How much trust do you have in our government? How much trust do you have in our currency?

That's how well gold stocks will do versus gold bullion.

Tuesday, August 23, 2011

How to get rich

If you're looking for ways to get rich in this market, punch yourself in the head. Hard.

There's no way to get rich in this market. If you're looking to get rich in this market you're a moron. If anybody's advising you of ways to get rich in this market they're crooks. Or morons. This is not a market. It's a rigged casino.

If you're the one rigging it - then, yes, you can get rich. If the Fed is lending you billions at zero percent that you can gamble as you see fit, you're bound to get rich. At least on paper. If not, you're the sucker at the table.

So, be smart. Preserve your capital.

How to preserve your capital: Buy gold bullion regularly. Put it away. Don't worry about the price of gold. As things deteriorate it will go up proportionately. You won't get rich. But you'll preserve your capital. That's the best you can do.

Gold is down 60 dollars today. What a gift. Buy some gold cheap. If it goes down, buy some more. If it pops back up, buy some more. Regularly, in a disciplined way. In five years you'll be so so pleased.

The market is up 300 right now. If you don't think this is a sucker's rally, you're the definition of a sucker. It might be up 300 again tomorrow. So what. In six months it will be way lower than it is now. And all those chasing paper profits will be looking for new ways to get rich with their last little strips of colored paper.

As Richard Russel likes to point out: in markets like this, he who loses least, wins.

Monday, August 22, 2011

Real gold passes $2000 per ounce as Venezuela demands 200 tonnes back from Western Banks

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Chavez Emptying Bank of England Vault as Venezuela Brings Back Gold Hoard.

In all, Venezuela has 365.8 metric tons of gold reserves, according to the World Gold Council. Photographer: Kerem Uzel/Bloomberg

Venezuelan President Hugo Chavez ordered the central bankto repatriate $11 billion of gold reserves held in developed nations’ institutions such as the Bank of England as prices for the metal rise to a record.

Venezuela, which holds 211 tons of its 365 tons of gold reserves in U.S., European, Canadian and Swiss banks, will progressively return the bars to its central bank’s vault, Chavez said yesterday. JPMorgan Chase & Co. (JPM), Barclays Plc (BARC), and Standard Chartered Plc (STAN) also hold Venezuelan gold, he said.


Wall Street Aristocracy Got $1.2 Trillion in Fed Loans

Aug. 22 (Bloomberg) -- The Federal Reserve's unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money. The largest borrower, Morgan Stanley, got as much as $107.3 billion, while Citigroup Inc. took $99.5 billion and Bank of America Corp. $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress. Erik Schatzker and Sara Eisen report on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

Citigroup Inc. (C) and Bank of America Corp. (BAC) were the reigning champions of finance in 2006 as home prices peaked, leading the 10 biggest U.S. banks and brokerage firms to their best year ever with $104 billion of profits.

By 2008, the housing market’s collapse forced those companies to take more than six times as much, $669 billion, in emergency loans from the U.S. Federal Reserve. The loans dwarfed the $160 billion in public bailouts the top 10 got from the U.S. Treasury, yet until now the full amounts have remained secret.

Saturday, August 20, 2011

Gold versus Market Gambling

Gold has run up several hundred dollars as the stock markets have run down. What's going on? Will it continue? What to do?

First: understand what is happening.

The Stock Market is a form of gambling.

Gambling can be an addiction just like drugs, or sex, or video games. Each addiction is different. In gambling, unlike drugging, there is certainly an array of skill levels that give the illusion of control over the addiction. But all addictions are similar in the element that comes to own you: the thrill of the risk of loss and the rush of gain.

If you're addicted you will constantly raise the risk level to achieve the thrill. And once addicted the PUSHERS will find ways of constantly raising the risk levels to keep you coming back until you're soaked dry.

The STOCK MARKET is a institutionalized gambling parlor catering to a nation of addicts.

Yes, IN THEORY it's a valid way for companies that employ people and create products to raise money. Yes, it's an investment in those companies. IN THEORY.

And according to this theory, the companies listed on the stock exchange should form the industrial base of the economy, and as the economy grows at say 4% the stock in those companies should keep pace and also grow at about 4% per year. And once upon a time this was considered a good sound investment. And once upon a time this was the basis of capitalism: the efficient use of capital as directed through public markets.

But where's the thrill in making 4 percent?

And how does it make sense when the MONEY used to buy and sell the stocks is losing value at a rate greater than 4 percent a year?

If you understand this single point, you understand why, over time, the markets will keep diving until everyone loses everything - except the PUSHERS who are operating the game.

What point?

Let me repeat: The MONEY used to buy and sell stocks is owned and printed by the HOUSE. It's funny money that retains it's value only through the frequency it's turned over in the Gambling Parlors/markets.

It's printed in enormous quantities and then "LOANED" to the public so that they can keep gambling in the markets. The game goes on until enough people are soaked by the House that they lose confidence in the game.

And when that happens they also lose confidence in the funny Money printed by the house.

We are now on the irreversible downward slide towards that point.

At what point did this country become a nation of thrill seeking gamblers? In about 1980 restrictions and regulations were lifted off the markets so that real smart guys who used to go work for the industrial base realized they could turn the markets into a legalized casino. But that's an essay for another time. (See the last post it: gives a thumb nail chronicle.)

And sure, there were always gamblers gaming the markets. The most famous gambler in the early 1900's was Jesse Livermore who wrote the seminal "Confessions of a Stock Operator." He is widely considered the greatest stock gambler of his era. He died by shooting himself in the head after going broke for the third time.

And even now there are MATH GENIUSES with tremendous gambling instincts, great historical economic education and tremendous financial skills willing to work 24 hours a day for years on end who can game the markets and make billions. Think George Soros.

But is that you? If not, you're just the shlub who will give all your money to the House. There is no in between. So if you still have assets, get out now before you lose them all.

And where does GOLD fit in?

Gold is real money. It is sound money. It can not be printed. And it has been so for 5000 years of recorded human history. Maybe that seems arbitrary. Maybe that seems odd. Get over it. Because when paper loses it's value, gold goes up in proportion. And when people lose confidence in paper they naturally flock to gold.

This will continue until the gambling addiction is wrung from the system. I don't know when that will be. But generally speaking a vicious addiction is not cured until then addict hits rock bottom.

We're not there yet.

Sunday, August 14, 2011

How Did We Get Here?

We've been hurtling towards this particular Abyss since 1972. (Or 1918 - but 1972 will do.)

We got here by abdicating the responsibility to think.

There are simple logical fallacies with each proposition that fooled us, that everybody with the equivalent of a grade school education in Greece Circe 300 BC, would have been able to see in a second.

1972. Nixon takes us of the Gold standard Theory: Without the limitations of gold the US could print money and inflate away the debts accrued in the Viet Nam folly. Fallacy: This would result in terrible global distortions through the systematic debasement of the world's reserve currency. In fact, many people saw this but just didn't care since they realized that at first these distortions should benefit us.

1980 Ronald Regan adopts Art Laffer's academic theory of Supply Side Economics in which there is Good Debt and Bad Debt. Theory: Good Debt - through the process of unlimited money printing - "as long as it is allocated properly" is thought to unlock the potential of an economy and smooth over natural business cycles. Fallacy: when bankers are enriched by both good and bad debt, there is no natural incentive to distinguish - assuming they're even bright enough to do so. So all forms of debt are embraced. And money is inevitably allocated inefficiently. Fallacy 2: this new Debt/Capital results in a temporary boom derived through financial distortions that stupid people mistake for good policy.

1988 Clinton hires Goldman Sachs chairman Robert Rubin to run the economy and he immediately trashes Glass-Steagal which separates by law the activities of Investment Banks and Commercial Banks. The law exists because Commercial Banks are given money by the Central Bank (that they own) that they must lend to the public. Investment Banks must raise money through the capital markets that they can legally gamble in any way they see fit. Now all banks can get money from the Fed and gamble it to their heart's content. Theory: Less regulation leads to greater business innovation. Fallacy 1: In a world without regulation "innovation" can be used to allocate capital directly into a banker's own pocket. Fallacy 2: Institutions become "too big to fail" So Profits from gambling are kept private, while losses are socialized.

1996 George Bush institutes a policy of tearing down the regulatory system that monitors all banking activities. Theory: Less regulation leads to innovation. Fallacy: (again really?) Okay: without oversight of what amount to extreme gambling activities the gamblers at the banks were free to rev up their debt to equity levels from 12-1, to 17-1 to 100-1 to 1000 to 1. This means that if the markets moved against them they would collapse.

2001 After an unfortunate incident where a building was destroyed and 3000 American killed, George Bush initiated a policy of Interminable War at the cost of 3-6 trillion dollars depending on how costs are calculated over time. Theory: War makes us safe. Fallacy: Dumping trillions into wars only weakens us if it destroys our economy. It necessarily destroys our economy unless we can steal the natural resources (like oil) of the countries we attack to pay for the war. Otherwise we pay for it with DEBT.

2008 The banking system collapses when bets levered at close to 1000-1 on the housing industry turn against the banks. All the major banks are wiped out. George Bush hires Goldman Sachs Chairman Paulsen to take 6 trillion more of tax payer money and give it to the Banks in what turns out to be the greatest transfer of wealth in human history. Theory: Our economy will collapse if we allow banks to fail. Fallacy: Robbing the public to pay off bankers will make the economy collapse eventually anyway. Fallacy 2: Since no oversight had/has been restored to then banking system, the banks were/are free to gamble this new capital and steal as much as they like in the form of "Bonuses." Which they did/are doing, digging the debt hole ever deeper.

2010 Cyncial but Stupid, War-Weary Americans elect a complete novice with no government experience to clean up a Financial and Military mess he can't possibly begin to understand. Theory: Yes, he can do it. Fallacy: if you can't understand a mess it's not possible to clean it up. He makes the mess worse by starting a third war, while ignoring the banking mess, and instituting a confused and expensive policy of National Health Care.

2012 Political and Media Hate Monger from both Parties decide the best way to deal with this massive Economic/Military mess is to destroy Trust in Government in the hopes that the public will blame their political enemies. Theory: If the public gets angry enough they'll vote out the OTHER SIDE for ever. Fallacy of Fallacies: When the public loses trust in Government the entire economic system collapses as TRUST ultimately is the lifeblood that enables any economic system to live.

Please read this last sentence over and over: Trust is the lifeblood of any economy; once lost, the economy dies.


Saturday, August 13, 2011

How to lose a country

The problems facing our economy are complicated, but not nearly so complicated, say, as solving the problem of unified field theory, or let's say solving Fermat's last theorem, or solving the Rosetta stone - all of which we (as the collective human race) have accomplished (or quite nearly so with unified field theory.)

There are plenty of people out there who know exactly how to solve our economic problems, who have seen them developing over the last twenty years, and who have been loudly warning anyone who would listen.

The problem is not that we can't figure out what to do. The problem is that Americans - and Europeans - conservative and liberals all - have become such whiny snot nosed little brats that they'd rather die as long as they can take their enemies down with them. Obama has pointed this out about Republicans. Rush Limbaugh has pointed this out about Democrats. They're bother right.

Unfortunately neither can see the exact same trait in themselves. They all want to spend borrowed money ad infinitum - on their own priorities. Republicans on war, and courts and prisons to legislate domestic and world morality at a cost of trillions a year, and Democrats on Social Programs to legislate domestic morality at a cost of trillions a year. '

They're so similar that they hate each other to death. And everyone else unlucky enough to be caught in the middle. Which is pretty much everyone else in the world.

So why can't we vote these murderous hate mongers out of office ?

Because the US public has become terminally stupid. Sorry, but there it is. We vote for these clowns because we can't think this through ourselves. It's easier to just get angry and join one hateful side or the other and feel morally superior for doing so.

The solution is simple: Stop spending on ALL this crap, and reform the absurd tax code.

But until Americans learn how to learn again, it won't happen. (which won't be soon as long as public schools are a joke, and the cost of private school through college is about half a million dollars a child). And until it does the only thing that will benefit is GOLD.

Wednesday, August 10, 2011

How to lose money

The entire modern "Science" of investing is built around reversion-to-the mean models. This model claims that over time markets will trade in simple reliable channels that even idiots can understand and predict. Especially idiots with pipes, nice suits, and soothing voices who will assure you that Now is always the right time to invest - according to their models.

Unfortunately for you - if you listen to them - these idiots have never learned the difference between correlation and causality. And their models are all built on correlations.

Ancient Greeks understood this confusion between causality and correlation and built a syllabus of logic that they taught to school children. They called it "syllogism." The famous false syllogism purposely confuses the fact Plato drinks water, and horses drink water, so Plato must be a Horse. That's about as sensible as saying that markets always bottom, PE's have been around 12 when markets bottom, PE's are around 12, the market must have bottomed.

In both cases the best you can say is Maybe. But much more information is needed to conclude causality.

See if you can find the fallacies with these other false syllogisms in current favor:

1) Stocks have gone up when dividend yields are above the yield on the 10 year note. Dividend yields are above the ten year note. Stocks will go up.

2) Stocks have gone up when the yield curve is positively sloped. The yield curve is positively sloped. Stocks will go up.

3) Gold stocks have performed well during depressions. We're going into a depression. Gold stocks will do well.

4) Stocks are a good buy when corporations have a lot of cash on their balance sheets. Corporations are holding 3 trillion dollars in cash. Stocks should do well.

Hint for number 4: But what about if the same corporations are also holding 11 trillion dollars of debt?

Every correlation will have dozens of mitigating and contradicting factors. You should be able to find many for all of the false syllogisms above.

If, however, you can't find the fallacies, you shouldn't be in the markets. And if you can, right now, you wouldn't want to be.

Tuesday, August 9, 2011

It's a fun game

It's a fun game to these clowns pictured above:

The harder and faster the economy tanks the more fuel to add to the partisan political fire: the better the ratings: the more money for their networks, the more money for the Pundit/Clowns: the greater the anger of the masses.

The greater the anger of the masses: the more fuel for to add to the partisan political fire: the greater the loss of confidence in the political system: the more the economy tanks.

The more the economy tanks, the greater the anger of the masses, the more fuel to add to the partisan political fire, the more money and popularity for the Pundit/Clowns.

The more money and popularity for the Pundit/Clowns: the louder and harsher the political rhetoric, the greater the anger of the masses, the faster the loss of confidence in the political system, the faster the economy tanks.
The faster the economy tanks, the greater the anger of the masses, the harsher and more caustic the political rhetoric, the more money and popularity for the Pundit/Clowns.

The more money and popularity for the Pundit/Clowns, the harsher the political rhetoric, the greater the anger of the masses....'

Well, you get the idea.

Buy gold.

The faster the economy tanks: the more...

Sunday, August 7, 2011


Everyone is touting their favorite get rich quick scheme with gold right now. Leveraged funds. Options on futures. Junior Gold Stocks. Here's a word of advice: all of those trades involve gambling with paper. Don't do it.

The whole reason you buy gold is to protect yourself against the rest of the world gambling compulsively and furiously with paper. To do that with your gold investment is the height of stupidity.

Here's a clue. Is someone predicting TRIPLE DIGIT RETURNS? That person is a crook, a liar or a moron. Or all three. Look, if anybody knew a way of getting triple digit returns without taking on triple digit risk do you think they'd be sharing it with you?

Here another clue: if you're looking for triple digit returns go to Las Vegas. You have much better odds than gambling your money on junior gold stocks. Why? Because the financial markets are filled with crooks, gamblers, liars and schills.

Yes, sure, some junior gold stocks will hit it big. Most will go under even if gold goes to 10,000 dollars an ounce. Why? Because they're run by crooks, gamblers, liars and schills. And if someone is swearing to you in print that some particular stock is ready to explode you can be sure that someone has loaded up and is looking to pyramid out on the backs of some greater fools.

Don't be that greater fool. I've been following the gold market for ten years and in that time not a month has gone by when some guru hasn't predicted the imminent explosion of junior gold stocks. It hasn't happened. For a good reason. And there's a good reason that GDXJ - the junior gold stock index - has gone nowhere while bullion shoots up. Because junior gold stocks and GDXJ represent and investment in paper.

If your interested in gold don't buy paper.

If you're interested in gold: buy bullion. Buy it regularly in a disciplined way regardless of price fluctuations, regardless of timing, and regardless of what some moronic pundits are saying about seasonally-adjusted-reversion-to-the-mean-historical-inflation-adjusted-blah-blah-blah metrics.

Don't buy gold to get rich. Buy gold to protect your wealth from the crooks, gamblers, liars and schills that have come to dominate the US financial markets - and, unfortunately, the US Government.


European Stocks Resume Decline, Miners Retreat

That's right, Gold bullion is up 50 dollars. Integrated miners? Down heavy. Pure gold miners? Up marginally. Juniors? GDXJ, which was issued at 25 three years ago is back up to 32. Wow. And check out where it is at 4:00 if the market sells off heavy.

WELL, WELL 4:00 UPDATE: GOLD UP 70 DOLLARS, GDXJ UP 16 cents. What do you know about that?

Friday, August 5, 2011

"It's not the end of the world"

Barton Biggs appeared on CNBC this morning, one of a long line of strategists who are attempting to calm investor fears by stating confidently that "It's not the end of the world. The Global Economy is not going to implode."

I would say that's setting the bar pretty low for conditions that would foster a stock market rally. It's not the end of the world either if you get mugged and beaten on the street corner. Still, it's not a reason to engage in a massive celebration.

I'm not sure it would take the End of the World to bring the market back to normal bear market Price to Earnings ratios of around 6-8, which generally occur at the end of de-leveraging periods. And if you can't see we're in a massive de-leveraging period you shouldn't be in the markets at all. (Leverage mean debt - de-leveraging means working off overhanging debt)

As normal de-leveraging continues down to a 6-8 percent PE - you're looking at about Dow 5000. And that doesn't count in the fact that earnings are now extremely low quality as accounting standards have been systematically distressed in order to boost nominal earnings.

That doesn't stop the top Wall Street Strategists from predicting a tremendous celebratory Wall Street Party by the end of the year:

Strategists Sticking With 17% S&P 500 Gain on Higher Profit

Wall Street has never been more sure that the Standard & Poor’s 500 Index will rally in 2011, even after speculation the U.S. economy is heading for a recession prompted the biggest plunge since the bull market began. Photographer:

Wall Street has never been more sure that the Standard & Poor’s 500 Index will rally in 2011, even after speculation the U.S. economy is heading for a recession prompted the biggest plunge since the bull market began.

Chief strategists at 13 banks from Barclays Plc (BARC) to UBS AG (UBSN) see the benchmark measure of American equity surging 17 percent through Dec. 31, the average estimate in a Bloomberg survey. Their projection that the index will reach 1,401 hasn’t budged in four weeks, while mounting concern U.S. growth is slowing drove the S&P 500 down 11 percent since July 22, including yesterday’s 4.8 percent tumble.

Wednesday, August 3, 2011

The Fed gives out 16 trillion of your tax dollars:

Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts


The first ever GAO(Government Accountability Office) audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill(HR1207), so that a complete audit would not be carried out. Ben Bernanke(pictured to the left), Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve’s nearly 100 year history were posted on Senator Sander’s webpage earlier this morning:

What was revealed in the audit was startling: $16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious — the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.

Tuesday, August 2, 2011

Gold Surges another 40 dollars today

SEOUL | Tue Aug 2,

(Reuters) - South Korea spent more than a billion dollars in its first gold purchase in more than a decade, as uncertainty about global growth and sovereign debt push central banks around the world to diversify foreign reserves.

In March: Utah repealed its capital gains tax on gold and silver coins it will recognize as legal tender. Twelve other states are considering similar legislation.

Then, in June: Senators Jim DeMint (R-S.C.), Mike Lee (R-Utah) and Rand Paul (R-Ky.) introduced the Sound Money Promotion Act that would remove the 28% federal tax on gains realized in the use of gold or silver coins recognized as legal tender for use within a state.

Now, in Switzerland, efforts are underway to create an official Gold Swiss franc (GSF) with a set of coins, each with a fixed content of gold. The proposed constitutional change would permit private institutions to issue an unlimited number of coins whose appearance, content and weight of gold, and definition would be under the supervision of the Swiss government.

Gold Swiss franc bank notes are conceivable, as are GSF bank deposits, but they would have to be 100% backed by gold held by the issuing institution. Credit transactions would be legal, but fractional reserve credit would be forbidden under Swiss law.

Within the next few weeks, signatures will be collected to launch an initial referendum that would require the Swiss National Bank to repatriate all of its gold holdings to within the borders of Switzerland, prohibit it from selling any more of its gold, and require a minimum 20% of its assets be gold.

Where all this legislation will lead remains to be seen. But remember: it rests on 3000 years of precedent.

Monday, August 1, 2011

A Field Guide to Poli-Speak terminology

Our politicians have long since forgotten how to speak English. Rather, they now use a Political Gibberish Patois that employs a combination of pompous filler phrases with misused invective.

Designed on the principles of vagueness, imprecision, verbosity and outrage, this dialect still uses the English Language as a jumping off point, so their sentences still have some meaning, intentional or otherwise.

This should help to unravel some of the mysteries of Political Speak.

Some overused Polispeak terms:

Communism. Polispeak meaning: F*ing jerks. Real meaning: workers control the means of production. Historical precedent: None. In reality this is a theoretical term that describes a dream state that has never occurred and will never occur. Countries like China describe themselves as Communist. But they are a Central Bank run Oligopoly just like the United States.

Free market capitalism. Polispeak meaning: Awesomely cool. Real Meaning: An equal access to capital for all citizens to use in entering any and all businesses without barrier. Historical Precedent: None. In reality this is a theoretical term that describes a dream state that has never occurred and never will occur. Countries like the United States describe themselves as Free Market. But they are a Central Bank run Oligopoly just like China.

Fascism: Polispeak meaning: F*ing scary. So scary, in fact, that term is rarely used. Real meaning: Central Bank run Oligopoly.

Deficit Spending: Polispeak meaning: Evil waste. Real meaning: The manner in which the Central Bank and member banks create and control the flow of money.

Balance the Budget: Polispeak meaning: Saving America. Real meaning: fiddle with the meaningless edges of the budget so that excluding OFF BALANCE SHEET ITEMS like the 3 wars, the 100 trillion off balance sheet hole of unfunded liabilities, and the enormous Fed Slush Fund that feeds the banks, we can feel like we're slowing down spending - without, of course, raising any revenue.

Waste, Pork: Polispeak meaning: Washington excess. Real meaning: The spending other people do in other districts.

Class Warfare: Polispeak meaning: Mentioning, referencing or even noticing that there are poor people, rich people and middle class people in this country. Real meaning: there is no real meaning in a country where "subversive" is a tagline for a TV show.

Business Friendly, Less Regulation: Polispeak meaning: Doing Good Stuff for America. Real meaning: laying off the 5 Banks that own 60 percent of the assets in this country and control the flow and creation of money - because they'll be angry if we don't.

Other than these and a few other meaningless phrases, sentences are filled with Filler phrases that have absolutely no meaning other than to suggest "I'm really smart even if I sound like a rambling idiot." These include:

Let's be honest...
If I can be perfectly honest...
If you will...
If I may...
I must tell you....
Let me be perfectly clear...
I believe I've been very clear about this...
As I've been saying for months now...
Our side has been consistent all along....
If they're not willing to come to the table...
It's time for all sides to come to the table...
We've put forth a clear plan, it's time for them to put forth a plan...
The American people are clear about this...
The American people have spoken...
This is what I've been sent here to do....
I only answer to the American people...
Let's do it for our Children...
Let's do it for our Grandchildren...
Let's do it for generations to come....
And let's not forget: America is still the greatest country on God's Green Earth.