Market Maelstroms

Silver technical analysis- key channels and levels

2012-01-25T18:51:00.001-08:00

Dividend Aristocrats performance vs. SPX and others

2012-01-20T22:49:00.001-08:00

Oil Stocks breakout

2012-01-19T21:29:00.000-08:00

Gold holding October 2008 support

2012-01-17T19:04:00.000-08:00

Abbot Labs (ABT) Breakout

2012-01-08T21:49:00.000-08:00

Look at Gold/Dow Ratio instead of Dow/Gold Ratio for Perspective

2012-01-02T21:06:00.000-08:00

Oftentimes people look at the Dow/Gold ratio when determining how much further gold has to run in terms of historical ratios. Many believe that the ratio will approach 1:1 before there is a reversal in the gold bull and dow bear markets. However, a look at the Gold/Dow ratio instead of the Dow/Gold ratio show just how much further upside there is in gold. The Dow/Gold ratio, at this stage in the game, doesn't do a good job of demonstrating this to the naked eye. Long way more before the 1:1 level is reached.

Gold triangle wedge result

2011-12-17T00:25:00.000-08:00

Result was a downside move

Significant breakout from triangle wedge coming in gold

2011-12-05T20:41:00.001-08:00

BPT breaches resistance

2011-12-04T14:02:00.001-08:00

HUI long term floors and resistance

2011-11-17T17:11:00.001-08:00

Nasdaq (QQQ) Resistance at 58

2011-11-08T18:16:00.000-08:00

Eli Lilly (LLY) breakout from ceiling 11/8/11

2011-11-08T16:57:00.000-08:00

Brent Crude Breakout 11/7/11

2011-11-07T19:50:00.000-08:00

Natural Gas upside breakout from downward channel

2011-11-03T09:33:00.000-07:00

Oil breakout from channel?

2011-10-19T18:35:00.001-07:00

HUI Index consolidation followed by breakout/breakdown pattern

2011-10-06T20:05:00.000-07:00

Gold mining senior sector has always shown a pattern of consolidations before up moves/breakdowns. Such a move should follow the current consolidation.

GDX bouncing off support

2011-10-06T16:51:00.000-07:00

Gold hits strong support

2011-10-03T18:29:00.000-07:00

Let's see if the level can be maintained (green line)

Has gold bottomed?

2011-09-27T18:59:00.000-07:00

Oil historically cheap measured in real money (gold)

2011-09-17T20:26:00.000-07:00

Oil has historically found firm support around the 0.03-0.04 ounces/barrel level, which has been considered to deem it "cheap" or "undervalued" compared when measured in gold. An opportunity might be approaching soon for oil to start outperforming gold from these levels.

GDX breakout above 63 level still holds

2011-09-17T20:23:00.000-07:00

GDX BREAKOUT?!

2011-09-07T00:26:00.000-07:00

Very strong chance the large cap miners (GDX) have broken out to the upside of their year long consolidation pattern. If this move is for real, expect an explosive upside move.

SIL, GDX, AGQ

2011-08-15T18:56:00.000-07:00

As of today, buying SIL, GDX, AGQ

Euro triangle wedge formation

2011-08-13T13:35:00.001-07:00

Gold channel broken to the upside

2011-08-10T16:37:00.000-07:00

Updated chart from May. Notice gold has broken above the channel.

When will gold be overvalued?

2011-08-09T19:01:00.000-07:00

Not now. But it will be time to rethink gold when:
1) there is a dot-com style bubble mania
2) Governments get their act together and introduce fiscal and monetary responsibility
3) Gold gets reintroduced into the monetary system

Gold going parabolic?

2011-08-09T16:27:00.001-07:00

Gold 2001-present trendlines

2011-08-08T17:57:00.000-07:00

When to own gold vs. when to own paper assets

2011-07-30T12:07:00.000-07:00

Graph is self explanatory

Bought into Euro call option

2011-07-26T20:28:00.001-07:00

Bought $46 strike FXE (euro ETF) call options expiring September '11. Euro broke out of wedge pattern today (7/26/11)

USD oscillating. Watch for breakout or breakdown

2011-07-20T16:09:00.000-07:00

Bridgewater Associates Ray Dalio quote

2011-07-19T19:57:00.000-07:00

“It’s always a matter of controlling risk. Risky things are not in themselves risky if you understand them and control them. If you do it randomly and you are sloppy about it, it can be very risky.”- Ray Dalio, Bridgewater Associates Hedge Fund

Gold consolidation and explosion patterns over last 7 years

2011-07-18T16:26:00.000-07:00

Pattern repeats continually. Internal energy buildup is reflected in the jagged sideways movements (boxed areas) and is followed by the next leg up.

Silver call options

2011-07-15T20:28:00.001-07:00

Bought some SLV calls expiring January 2012 with $45 strike today. Pattern looks like a firm bottom with strong possibility of an up-move

Bert Seligman words of wisdom

2011-07-15T16:08:00.000-07:00

“Men who can be both right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make the big money.”- Bert Seligman

Clorox- Classic example of a breakout through firm ceiling

2011-07-15T15:57:00.000-07:00

A three year ceiling at $60 resulted in a sharp breakout propelling CLX from 60 to 75 in just over a year

GDX and GDXJ consolidation

2011-07-15T00:42:00.001-07:00

Consolidations and base-building like this have generally been a precursor to a breakout move. The most recent base-building, in relation to the prior one, is long and drawn out, which typically would signify a very strong breakout when it happens.

Bought back into silver, gold, senior and junior miners yesterday 7/12/11

2011-07-13T19:26:00.000-07:00

A turnaround and possible breakout from the consolidation seems very possible.

Shanghai Composite- break of 5 year support will be significant

2011-07-12T15:58:00.000-07:00

HUI index possibly turning around, bouncing off firm support

2011-07-05T16:53:00.001-07:00

Gold uptrend October 2008 channel intact

2011-07-03T21:59:00.000-07:00

Silver uptrend intact- Firm support at $34

2011-05-31T17:18:00.000-07:00

Jim Sinclair Post- Gold Price + US International Balance Sheet

2011-05-26T17:31:00.001-07:00

Little by little, I am passing on ALL that I have learned from Jesse through Bert and Bert's knowledge to those that read here, every day, in thanks for your support of me and mine. --JEBS (James Edwin Bertram Sinclair)

Assumption:

Because gold is held by many central banks, once as a reserve currency but now as an inventory currency, it functions as a swing asset to balance the International Balance sheet of the US.

Central banks are sellers of dollars but still hold, by default, large dollar inventories.

China has hedged its dollar position 50% through commitments to long term dollar commercial agreements, pay in, mineral, and energy deals internationally. That is an act of pure genius.

We can assume other central banks still hold 90% of their reported dollar positions, on average unhedged by commercial obligation positions.

In crisis times, the US dollar price of gold ALWAYS seeks to balance the International Balance Sheet of the USA.

Therefore:

Take 90% of international US dollar debt less China and then add 50% of the US debt owned by China. Then divide that number by the ounces supposed to be owned by the US Treasury. The result is where gold wants to go.

In 1974 this gave me $900 gold. Now you do your homework, and submit your analysis to me. Do this, and I will give you Angels going to that price by a little known technique of Jesse Livermore that only works on gold after it has broken to a new high above all resistance.

Little by little I am passing on all that I have learned from Jesse through Bert to those that read every day in thanks for your support of me and mine.

Jim

Very strong signs of a bottom in gold, silver, gold miners both junior and seninor today

2011-05-24T20:24:00.000-07:00

Will put up some charts showing why soon but would go long today. Consensus has become negative enough.

Gold February uptrend intact

2011-05-23T18:52:00.001-07:00

No signs of correction. Still long

Jim Grant quote

2011-05-23T17:01:00.000-07:00

"We never actually pay the rate of interest that we might be expected to pay -- the real rate of interest -- on Treasury debts. It's great for now that we're paying 2.5 percent or whatever on our public debt. But wouldn't it be better if there were an accurate price signal that was telling us that we're borrowing too much?"

GDX Support at 54 holding

2011-05-21T09:07:00.001-07:00

Greatest Trader in the world Jesse Livermore quote:

2011-05-19T16:22:00.000-07:00

"After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!"

Support levels tested and some broken

2011-05-11T16:15:00.000-07:00

Good article to understand why silver is not overblown by long term standards

2011-05-05T18:26:00.000-07:00

Pay particular attention to the rate of change chart
Link here

GDX Break or Bounce #2?

2011-05-05T18:23:00.001-07:00

Watch for a bounce off of or break below trendline

Silver collapses past two support lines. Will it be survive primary support line?

2011-05-04T19:56:00.000-07:00

Watch for possible reaction at primary trend line (blue line)

Food for thought in silver

2011-05-04T16:33:00.000-07:00

17 days of gains wiped out in 4 days. This is a good lesson of why one must be extraordinarily cautious during parabolic phases if one is to lock in profits.

Gold reaching upper trading band

2011-05-03T17:54:00.001-07:00

A convincing break above the upper band could signal a breakout of the trading range and a new plateau.

Silver's increasing upward trajectory- nearing parabolic intermediate top + caution for bulls

2011-04-20T16:36:00.001-07:00

Silver is showing classic signs of a move that will soon end in a parabolic top, which will likely result in a long consolidation period, prior to resuming its long term ride. Note the increasing upward trajectory of the current astonishing move that has see it rise from $17 to $45 in 8 months. Generally the near vertical rise as seen in the last few days signify a nearing of the end of this explosive move. The longer this near parabolic phase continues, the longer silver will take to consolidate and re-fuel for its next leg up. So silver bulls should not be too exuberant with the current run, because silver MUST rest and recover sooner rather than later if it is to see a long term continuation of its bull market. However this current move is a microcosm of the greater bull market in silver. Once this bull market ends, silver will be jumping several dollars each day (as opposed to several dozen cents now) and will end well past $150 per ounce.

Crude at upper end of trading channel

2011-04-09T10:32:00.000-07:00

Breakthrough above resistance could signal a run towards new highs

Updated charts + Gold breakout

2011-04-06T21:14:00.000-07:00

Here are the GDX and GDXJ charts posted a couple of days ago, updated as of today. Note the strong breakout from their consolidation patterns.

The Gold chart too has shown a textbook breakout from its consolidation pattern.

Mr. Gold Speaks + Gold/Silver blastoff

2011-04-05T16:37:00.001-07:00

1) Get ready for take off. All resistance levels on the juniors, seniors, and bullion have been shattered today, most likely signifying that the next blast off to new highs is here. Gold at record high!

2) Mr. Gold Jim Sinclair released the following report today.

Dear Friends,

I am writing to you from the Irving Farm Coffee and Internet cafe in Millerton NY. Our internet carrier went down today and is showing no promise of revival in the near future. I have a great coffee and a raisin bran muffin by my side so overall I have no grounds to complain.

Gold linked to the dollar today certainly has taken down $1444 for the count on three taps. That lights up Angel $1521 as the next to be captured.

Expect the Round Number Effect at $1500 for gold, but less severe than the battle at $1400. Angel $1650 is quickly coming into focus.

If we have learned one thing, it is not to get short term focused on this market. Stay focused on what is important and not the noise.

Think for a moment if Armstrong and Alf are right on gold. That would mean the following prices are coming:

$1650
$3000
$5000
$12,500

Those prices are possible because the balance sheets of the entire western world financial entities are based on false assumptions yielding valuation that pass auditing (FASB) but will never come to fruition. It is the mark to maturity method that not only used the BIS but other institutions that give comfort to the masses that are not looking at self protection here and now.

The financial system of the entire western world is FUBAR and there is no intention anywhere of fixing the problems at the level of its cause, OTC derivatives. The EU outlawed naked credit default swaps which is a clear comment on their ability to work if put under pressure. This is regardless of whether they were margin or naked in my opinion.

To say this is it is to be very late to the game.

Realize that the system has already failed.
Realize that there is no champion in a power position with the will to fix it.
Realize that even if there was a true fixer there are absolutely no tools to apply that would not in a short time cause more severe pressure than before applied.
Realize then that there is no PRACTICAL means to get the western world financial economy back on its feet
Realize that since the entire western world financial entities are based in sand there can be no sustainable economic recovery anywhere in that group.
Realize that a third war of any degree is madness.
Realize that our actions in the Middle East will cause increased hatred of the West.
Realize that the problems in the Middle East are not pro West or pro democracy.
Realize that gold is going to some degree make my long term price objective, given you ten years ago, look so low it will be silly.

Hold on to your insurance because you need it now. Pity the anti gold hedge funds short gold and gold shares based on, in my opinion, egomania, for they are very short lived now.

It is not a question of if we will prevail. We have already prevailed. Now our holdings are on the march to discount the hyper-inflation that is already written for history books to come.

Respect the fact that the same forces driving gold have historically driven equity market in past similar historical situations.

Respectfully yours,
Jim

Possible inverted head and shoulders in GDX

2011-04-04T16:41:00.001-07:00

GDXJ resistance at 40.

2011-04-03T13:21:00.000-07:00

Junior miners need a break above 40 to start the new leg up

Posco breakout

2011-03-29T21:10:00.000-07:00

Breakout of multi-month triangle wedge

Further downside in USD likely

2011-03-19T13:03:00.000-07:00

USD has broken to the downside of its downward wedge

GDX to uptrend or break support?

2011-03-17T18:48:00.000-07:00

Gold 2001-present support and resistance levels

2011-03-15T06:31:00.000-07:00

Note the increasing upward trajectory as well

Japan meltdown

2011-03-15T06:28:00.000-07:00

Nuclear meltdown, tsunami and earthquake has collapsed the Nikkei by 18% in 3 days. Japan is currently undergoing a massive catastrophe in terms of human life and the economy.

Watching Posco

2011-03-14T17:40:00.000-07:00

Currently watching Posco's strong wedge formation. A break from this 1 year + pattern should be significant

Pension money and gold

2011-03-09T20:22:00.000-08:00

Great article from Casey Research talking about the impact that the gigantic pool of pension fund money can have on the relatively tiny gold market. See article here

Some more twisted theory from Fed Birdbrain Lockhartt

2011-03-07T16:50:00.000-08:00

To those who understand Austrain Monetary Economics (the only true school of monetary economics) it is obvious that QE1 and QE2 lead to the current spike in commodities including crude oil. However, the birdbrained policy makers once again fail to grasp this obvious concept, and to add insult to injury, are suggesting that more stimulus and monetary loosening (ie. dollar destruction) will be needed if oil goes higher. INCREDIBLE!!
http://finance.yahoo.com/news/Federal-Reserves-Lockhart-Oil-cnnm-3164680201.html?x=0&sec=topStories&pos=9&asset=&ccode=

Gold Price Targets

2011-03-07T16:41:00.000-08:00

Either of these three targets are backed by very logical and rational reasoning.

Courtesey of www.goldswitzerland.com

In the 1971 to 1980 gold cycle, gold went from $35 per ounce to $850 or up over 24 times. If we were to see the same increase in this cycle, gold would rise to over $6,000.
The gold peak at $850 in 1980 corresponds to over $7,000 today adjusted for real inflation based on the inflation rate as calculated by John William’s Government Shadow Statistics (shadowstats.com)
Gold and gold mining shares were an average of around 25% of world financial asset between 1921 and 1981. Today, gold and mining shares are only 0.9% of world financial assets. If gold and mining shares were to go to 25% of financial assets, gold would go to over $31,000. But even if we assume that world financial asset would go down by 2/3^rds from here that would put gold at over $10,000.

The three historical comparisons above (and see chart below) would put gold anywhere from $6,000 to $10,000 and this is without inflation, or more likely hyperinflation. In a hyperinflationary environment, the price gold will go to is really irrelevant since it depends on how much money is printed. In the Weimar Republic for example gold went to the equivalent of DM 100 trillion (Papiermark). What is more important is that gold is likely to go up at least 5 times from today without inflation and with hyperinflation gold will protect investors against the total destruction of paper money and many other assets.

2010 Spending Breakdown

2011-03-07T16:38:00.000-08:00

Defense, Medicare, Medicaid and Social Security- the 4 toxic programs that are in need of major restructuring if the US is to ever get its spiraling debt woes under control

TIME FOR SOME CHARTS

2011-03-06T19:21:00.001-08:00

Here are some charts of critical indices. ie. Indices/markets whos movements can have a significant impact on the overall general economic conditions. I've written a brief explanation of the situation inside chart diagram

Think Silver has gone up too high? Think again. Chart speaks a thousand words

2011-03-01T21:23:00.001-08:00

After 2010's spectacular 100+% move in silver, many believe the metal is looking 'bubbly' 'and a crash is imminent. However, in such situations, it is always important to take a step back and examine the bigger picture. The obvious 'bigger picture' is that silver is nowhere near its all time non-inflation-adjusted peak of $50 (inflation adjusted peak is well above $100). Take a look at the following three charts. They speak a thousand words and lay to rest any suspicion of a peak.

Silver from 1971-1978: prices move up more than 400%. One would think of this move as massive and get terrified at the 'parabolic' nature of the move. However, few would imagine that this would be just the beginning.

In just the following 2 years, the silver price rose a further 800%- a monster move in a short period of time.

Here is a large chart from 1960-2002 showing the big picture in a snapshot

All time high but move just beginning

2011-03-01T16:18:00.000-08:00

Gold today broke out to a new all time high of $1433. However, as of today, it has only just broken above its 4 month trading range referred to in the earlier post. This alone is a very bullish sign. Further adding to its bullish stance is that fact that today's big up move of $22 occurred in the face of a sharp sell-off in the general equities market. All in all, today may be the start of a big move up, with gold finally breakout out very strongly from its 4 month hibernation. Currently (as of 2/1/11) long UGL, AGQ, GDXJ. Took a short position in EEM on 2/27/11. Also went long bonds (TMF) on 2/28/11

Gold accumulation pattern

2011-02-17T16:46:00.000-08:00

Gold is at the same level it was back in mid-October of 2010. A 4 month sideways trending pattern is something to keep a close eye on. Generally this type of accumulation is setting the stage for a significant move. Considering the fundamentals of gold, I am guessing the move would be a powerful one to the upside very soon. Technical indicators flashed a buy as of last 2/12/2011.

Silver technicals have maintained their bullishness right through the recent rally. As of today silver broke to new high of $31.74. Keep in mind James Turk's view that silver only recently begun phase 2 of its bull market, whereas gold is already in phase 3. Silver therefore has a long way to go and its performance in the years to come should be truly spectacular and easily dwarf that of gold.

Note on egypt revolution

2011-02-05T22:37:00.000-08:00

The revolution currently taking place in Egypt is truly spectacular. The implications of its result will have a significant impact on so many different aspects from geopolitical strategy, global economy, islamic fundamentalism, US interests, and the destiny of the entire Middle East. Autocrats, corrupt Middle Eastern dictators, and Mullahs must be keeping a close eye on this. As must as they like to pretend they support the Egyptian protesters in their 'right' to fight against the pro-US Mubarak, they must know deep inside their hearts that a triumph for the demonstrators will mean a green light for all pro-democracy and pro-freedom activists throughout the Middle East. It will set an important precedent. It will be a signal to the suppressed, disillusioned, and disadvantaged populace of the Middle East that they too have a shot at actively campaigning for a change in their destiny no matter how suppressive their leaders may be.

Some Notes from Martin Armstrong's reports

2011-02-05T22:30:00.001-08:00

I highly recommend those who seek a true and clear view of the markets to read the writing of jailed cycles expert Martin Armstrong. I will provide more of an in depth opinion and summary of his writing and beliefs, but I just want to mention one important point that he made in one of his recent reports. Markets are very logical. They needn't be efficient, but their movements are complete logical. The problem is with us observers of the market, who fail to interpret market movements. The problem is our interpretation. Markets movements are a reflection of capital movements. Capital is super intelligent. It is able to allocate itself effectively and efficiently, to reflect the most appropriate foundation for future events. Market movements are simply a reflection of this capital allocation. Capital will always move intelligently into an area where it will work best.

GDX + bullish reversal = bullish outlook for gold/silver

2011-01-26T17:51:00.001-08:00

GDX bounced off its long term trend line today. I was watching it very carefully, and knew that any breaking of this support line would be someone worrying. Further, gold and silver experienced a textbook intraday reversal. The candlestick formation today was very bullish, rising from a negative base and ending sharply higher for the day. Lets see how things play out. This could be the end of the correction that began at the turn of the year.

Derivatives dangers 101

2011-01-23T18:16:00.000-08:00

Am almost done reading Fiasco. The author is a derivatives expert and formerly worked in the coveted Derivatives Products Group (DPG) at Morgan Stanley during the derivative heydays of the 1990's. The book is a true eye opener into the dangers inherent in the derivatives market. In a nutshell, derivatives are a black box which can camouflage the riskiest and most unstable investment and make it look like a AAA government guaranteed bond. Here are a couple of examples Partnoy talks about, regarding specific dirty derivative products that were shuffled by Morgan Stanley at the time.
1) A structured product that was created in such a way as to look like a safe investment. MS managed to get the AAA stamp on it (thus making it more attractive and marketable to investors) and hide the risky aspects of the instrument. It essentially was an investment who's safety was dependent on the horribly unstable Philippines national power company (NPC) that was poorly managed and in terrible financial condition. But the security was painted in a way to look like a safe, highly rated bond. Little did investors (many of whom were public entities such as state pension funds and small time insurance companies) know that they were essentially betting on the survival of a nearly bust corporation thousands of miles away in a developing country.
2) Another structured product Partnoy talks about was one which was marketed as a municipal investment in a US turnpike. Municipal bonds were considered safe investments. In reality, it was nothing of the sort. The instrument was actually a bet on interest rates in the UK.

Innocent and gullible investors who was sucked into the sales pitch of supposedly knowledgeable MS salespeople was holding severely risky investments disguised as safe products that would guarantee a return annually.

The derivatives problem has only magnified over the last couple of decades and notional value now exceeds a quadrillion dollars (far more than the smoke-and-mirrors estimate of the Bank of International Settlment of $500 trillion).

As Jim Sinclair says, the heart of the meltdown in 2008 was based on the derivatives dominoes imploding. The house of cards was saved by massive government intervention. But as the saying goes, what can go wrong will go wrong. So it is only a matter of time before this behemoth of derivatives comes crashing down and obliterating the Western financial system.

Some images to soothe the eyes

2011-01-16T14:09:00.000-08:00

France, Faroe Islands, and Germany

Silver at another decisive test of uptrend line

2010-12-17T08:42:00.000-08:00

Silver is today testing it's powerful uptrend line that has been intact since August 23rd. It has hit it five different times, going on 6. Let's see if it hold. A failure to hold will mean a relatively strong move to the downside in the next few days

The moto of Western economies today

2010-12-15T20:49:00.001-08:00

Gold in 1980 vs. today

2010-12-13T20:16:00.000-08:00

Pink lines = today's bull market
Green lines = 1970's bull market

If the close resemblance continues, a major blast off could be fast approaching

An attempt at creating a photogenic homemade meal

2010-12-11T22:28:00.000-08:00

Pan fried pork chop, toasted potatoes with chipotle sauce, sweet black eyes peas with onions, and salad.

Jim Sinclair quote

2010-12-08T19:07:00.001-08:00

Jim Sinclair’s Commentary
You know what respect I have for Martin Armstrong as a broad market trend timer.
He is simply the best in modern times. Yes, he is a tad self-destructive but that does not detract from his genius. I have known MartinArmstrong since the late 60s and have yet to see him seriously wrong.

In Martin Armstrong’s last writing he said the following about gold. His history of accuracy demands that we all listen carefully to him, myself included.

“I have given a number for gold $5,000 that is very conservative. If we take U.S. gold reserves at 252 million ounces and we divide that amount into the national debt of 14 trillion that yields a staggering amount of $53,639 per ounce. Even taking the world official gold reserves divided into the US debt of 14 trillion we still get $15,873 per ounce.”

This makes my eight year price objective of $1,650 in January of 2011 look pitifully on the low side. Assuming Armstrong is right (as he has been for 40 years), the shorts of gold and gold shares are going to be destroyed.

Watch crude

2010-12-01T18:57:00.001-08:00

Crude looks like it's ready to make another ATTEMPT at breaking through its key overhead resistance which stands now at the $90. Any convincing break above this will signal new highs in gas and oil prices

Roubini speaks

2010-11-19T15:04:00.001-08:00

Roubini today spoke about the sovereign debt crisis road map going forward. To a great extent I agree with him. One point I think he fails to embrace is the propensity of troubled governments to engage in as much quantitative easing as it takes to keep this wretched system afloat for as long as possible. Regardless, you can read his piece here

Summary:
Many PIIGS states are in trouble. Super sovereign entities such as the IMF and ECB will attempt to 'socialize the losses' by bailing them out. This can have severe repercussions because the risk is then transferred to these super sovereign entities, and the can is only kicked down the road. Once the day of reckoning comes and its time to pay the piper, theses entities go bust as they become insolvent. Necessary austerity measures will prove extremely difficult to implement if the riots in France are any indication of what the consequences can look like. Spain is too big to fail and too big to bail.

My take: Europe is doomed.

A couple of thoughts for today

2010-11-17T20:02:00.000-08:00

1) Moving forward through the perilous waters in the next 6 years, those who survive and prosper will be those who understand how markets truly work. As much as it saddens me to say this, I believe the only way to not get slaughtered by the oncoming tsunami is to know how to trade the markets. This is the pathetic situation the Federal Reserve and US policy makers has put us into. Honest, hard working people will suffer as they see their wealth contract. Those who know how to shuffle stocks will prosper.

2) To become a true sage of the markets, one must become "one with the markets". Understand what the markets are saying. Every move has a message. It is not the markets that are irrational- it is us who are incapable of interpreting the message that the market is sending. Just because one doesn't speak the language of the market does not mean the market is wrong.

Quote of a true idiot

2010-11-15T20:27:00.000-08:00

Daniel Sadek was a renowned subprime loan pusher- who made millions on selling worthless mortgages to gullible California home buyers. This is what he had to say in defense of his business and his loans (it really shows the incompetence and stupidity of certain people, especially those who use 'Wall Street' as a measure of credibility)

"If my loans were so bad, why did Wall Street keep buying them to securitize?''

Jim Sinclair quote

2010-11-14T13:54:00.001-08:00

"My approach is and the truth is Bert’s (Seligman) and Jesse’s (Livermore) was you don’t have to make it all. If you can knock off the middle 50% or 80% of the move, you’ve hit the jackpot. But the guys who want bragging rights buying bottoms and selling tops go broke."

Happy Birthday to me + Great Bond Bubble!

2010-11-05T20:30:00.001-07:00

Thought the bubble days ended with the bursting of the housing bubble? Think again. The gigantic US bond bubble is here. Mark my words. This is the next mega monster to short the heck out of. All faith in the US government and trust in their ability to manage their finances and debt have been thrown into the garbage bin. Higher yields and lower bond prices are fast approaching.

Today's quote

2010-11-03T17:38:00.000-07:00

"A bull market's job is to throw you off and your job is to hang on"

Listening to opposing viewpoints

2010-11-01T19:50:00.000-07:00

Have the courage to expose yourself to counterarguments no matter how strong the temptation to only bombard yourself with commentary that falls in line with your own personal view. To be able to debate and counter the opposing viewpoint is the true test of one's conviction in an investment, or any belief for that matter.

Heads I win, Tails you lose!

2010-10-30T09:48:00.000-07:00

Watch the charts. Turn off the financial news because it is only unnecessary noise. Financial media's attempts to rationalize price action is akin to a new born trying to explain the meaning of life. How else can you explain some sort of rationalization they try to make of every micro move in price action everyday? If the dollar strengthens, it is because of a strengthening economy because "investors have confidence in the US". If the dollar weakens the next day, it is also a sign of strength in the US economy because people are choosing "to embrace risk assets". It is absolute rubbish and it is dumbfounding that this game of "heads I win, tails you lose" can go on like this.

Jim Sinclair said it best when he coined the acronym "MOPE" - Management of Perspective Economics.

Martin Armstrong on smart money

2010-10-26T20:50:00.000-07:00

Have gotten hooked onto the writings on "#1 political prisoner" Martin Armstrong. I have always wondered why people point to a rising gold price as a "warning signal". The reason for this, as laid out by Armstrong, is that smart money always forms the primary trend through its very acute sense of forecasting what is to come. It piles into 'quality' assets that will ultimately be the most appropriate investment for what is to come. So the argument goes that gold is rising because it is foretelling a major crisis ahead of us.

Then what, one might ask, can we discern from gold rising right before it peaks? If the economy were the start rebuilding right after gold peaks, are we to assume that the last parabolic phase in gold failed to foretell this in spite of a rising gold price? No! The reason for the last phase of gold's rise is the dumb money. They are the last to arrive and the first to get slaughtered. Their piling in will help drive the price to the moon, but it is too late, for the smart money, that got in and started the trend when gold begun its rise from $250, was the original and early forecaster of what was to come.

Interesting times

2010-10-26T20:40:00.001-07:00

To say we live in interesting times is an understatement. With US politicians and mainstream economists refusing to give up their blind optimism about the 'hope and change' that is coming in the economy, the economy continues its decent into the abyss. The below video about the '99ers'- those millions of Americans whose unemployment checks will soon dry up after the fast approaching 99th week - is truly eye opening. The people in the video are a representation of the great "American Dream" that Alan Greenspan, the Fed in general, and past US administrations have given the American people. It is a result of flawed economic theory and a lack of responsibility on the part of policy makers, whose sole purpose is to get reelected and live for the moment by keeping the party going for as long as it can (ie. kicking the debt can down the road).

Link to 60 minutes video- The 99ers

Unemployment is currently closer to 20%, far higher than the government's 10% figure that they would rather have you believe. The same goes for the rate of inflation. In spite of helicopter Ben Bernanke's repeatedly using the "low inflation" as an excuse to stimulate and print trillions in more money, the cost of everything from food to health insurance to transportation costs continues to rise- all this in the midst of a collapsing economy, ever rising unemployment, and stagnant wages.

This is clearly a depression. And gold- the only hedge against government insanity and mismanagement- continues to be shunned by the general public and financial managers. The wall street-government complex has so far been successful in brainwashing the people into believing a bottom in the economy is just around the corner. But the smart money currently moving into gold tells a different story.

What the Dow/Gold ratio means for the stock market and gold

2010-07-14T17:19:00.000-07:00

Dow/Gold ratio will ultimately reach 1:1. Dow is currently around 10,000. Gold is around $1200.
This would mean either:
1) if gold goes no where from here, an ultimate collapse in the Dow by 90%
OR
2) if the Dow goes nowhere from here, an ultimate rise in the price of gold by 900%.

Clearly, gold would be the preferable asset class in whichever scenario unfolds in the future.

Obama's debt commission warns of fiscal 'cancer'

2010-07-12T21:29:00.000-07:00

From http://www.washingtonpost.com/wp-dyn/content/article/2010/07/11/AR2010071101956.html

Obama's debt commission warns of fiscal 'cancer'
By Dan Balz
Washington Post Staff Writer
Monday, July 12, 2010; A02
BOSTON -- The co-chairmen of President Obama's debt and deficit commission offered an ominous assessment of the nation's fiscal future here Sunday, calling current budgetary trends a cancer "that will destroy the country from within" unless checked by tough action in Washington.

The two leaders -- former Republican senator Alan Simpson of Wyoming and Erskine Bowles, White House chief of staff under President Bill Clinton -- sought to build support for the work of the commission, whose recommendations due later this year are likely to spark a fierce debate in Congress.

"There are many who hope we fail," Simpson said at the closing session of the National Governors Association annual meeting. He called the 18-member commission "good people with deep, deep differences" who know the odds of success "are rather harrowing."

(Graphic: President Obama's proposed 2011 budget explained)
Bowles said that unlike the current economic crisis, which was largely unforeseen before it hit in fall 2008, the coming fiscal calamity is staring the country in the face. "This one is as clear as a bell," he said. "This debt is like a cancer."

The commission leaders said that, at present, federal revenue is fully consumed by three programs: Social Security, Medicare and Medicaid. "The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans -- the whole rest of the discretionary budget is being financed by China and other countries," Simpson said.

"We can't grow our way out of this," Bowles said. "We could have decades of double-digit growth and not grow our way out of this enormous debt problem. We can't tax our way out. . . . The reality is we've got to do exactly what you all do every day as governors. We've got to cut spending or increase revenues or do some combination of that."

Bowles pointed to steps taken recently by the new coalition government in Britain, which also faces an acute budgetary problem, as a guide to what the commission might use in its recommendations. That would mean about three-quarters of the deficit reduction would be accomplished through spending cuts, and the remainder with additional revenue.

Most Republicans in Congress are opposed to any tax increases, which has made the work of the commission far more difficult. Bowles and Simpson appealed for support to the governors, who have been forced by their states' constitutions to balance their budgets with deep spending cuts and, in many cases, tax increases.

Bowles and Simpson said the commission would have had a stronger hand politically had it been created by Congress, rather than through an executive order. Simpson was pointed in his criticism of seven Republicans who once co-sponsored such a measure but who helped block it in the Senate.

"As far as I can discern, it was to stick it to the president," Simpson said. "That's where we are in Washington." He later added that all seven "have now come to us to say, 'We're ready to help.' "

The presentation by Simpson and Bowles, which included repeated statements of determination to produce a bipartisan set of recommendations, drew praise from the governors.

"I don't know that I've every heard a gloomier picture painted that created more hope for me," said Arkansas Gov. Mike Beebe (D).

Washington Gov. Chris Gregoire (D) said that many governors fear that the commission's recommendations will result in more demands on the states.

Bowles, who noted that the 1997 balanced-budget agreement between the Clinton White House and the Republican-controlled Congress included many provisions that put more burdens on the states, said that wasn't likely.

"I don't think you're going to see a lot of devolution coming from us because the states are all broke," he said.
Simpson also warned that the November elections could add another wild card to the work of the commission. "I have no idea what's going to happen on Election Day but it's going to be disruptive . . .," he said. "It's going to be a big wake-up call around the whole United States. I have no idea where it's going, but thank heaven we have a month then to work through the wreckage."

Jon Stewart on US government promises to end dependency on foreign oil

2010-06-30T19:55:00.000-07:00

See video here

Big move up in gold mining stocks appears in the making

2010-06-20T17:35:00.000-07:00

All technical indicators flashing buy signs. Let's see what happens