Wednesday, March 10, 2010

GENTLEMEN...START YOUR ENGINES

Guest on Fast Money is shedding his gold bullion so be aware. I fully expect some short term selling here. But have maintained and traded around my core. I may take a beating but will happily hold this over any other long in this nasty pig of ponzi or POP. The POP needs some air out of it and this time miners may correct to the 200dma....or even a poke under. Gold support is 1070 short term. But lets get back to a macro discussion and events that are still unfolding. The question out there is obvious and that is how to deal with the sovereign debt problem with the country like the PIIGS that can't print their own money. Here is a nice read....

The problem remains in that uncompetitive countries such as Greece are unable to either devalue or print money to inflate their way out of their respective debt crisis as a consequence of the huge public spending deficits of as much as 12% of GDP. That is the REAL reason for crisis deepening amongst the PIIGS, and NOT because of financial speculators that are being perceived as being responsible for driving up Greek bond yields and credit default spreads (insurance), when all that is happening is that the market is pricing the bonds on the basis of the risks posed as a consequence of the government debt to GDP ratio and the ongoing public sector deficit which ensures a continuous stream of new debt issuance.

The rise in the yield demanded to finance Greek debt is a direct consequence of Greece lying to European Union, markets and their electorate as to the true extent of the outstanding debt and the annual budget deficit for many years. Which amounts to fraud, but instead of a criminal investigation into the epic fraud, the Greek and other Socialistic politicians are attempting to ms-direct public anger to the markets / speculators for selling debt that is high risk.

Greece presents a greater risk of default precisely because of the fact that the preceding Greek Government were a bunch of liars that hid the real extent of Greek debt for many years, where instead of limiting deficits to 3%, Greece had been running deficits of as much as 10% per annum, and therefore instead of having a debt to GDP ratio below the 60% limit, Greek debt stands at approx 135% GDP. It is this that is resulting in the markets demanding a higher yield for the higher risk of a country that cannot control government spending, which ultimately sows the seeds of a Greek debt default to some degree.

Greece's current situation of not being able to print money or devalue whilst being forced by the market to pay high interest rates is DEFLATIONARY, and it is not something that the Greek government can sustain i.e. the Greek government would collapse in a deflationary environment, which ultimately implies that something has to give, and that is for Greece to enact an inflationary policy which can only occur if a. Greece devalues its currency (which it can't), b. Greece defaults on its debts (which it might) and c. Greece goes on an money printing spree (which it can't),

As the in depth analysis contained in the Inflation Mega-Trend ebook indicates, ultimately governments will not allow for deflation and the easiest way to ensure this is by printing money, therefore the Eurozone will print money that will be handed to Greece, a policy which will ultimately be applied to the other PIIGS and even the likes of France (debt at 80% of GDP), which ensures higher future inflation, in advance of which the Euro is already depreciating against other major currencies

http://www.walayatstreet.com/

22 comments:

  1. Which guest is shedding his bullion? Sure he's not pulling a Soros?

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  2. IMO it is typical of the fiat effort to "talk down" the gold trade....that contingent is losing and losing badly...but that does not negate the continued effort to portray gold as a "bubble" and no the guest was speaking for a subsidiary hedge fund of his investment group that was selling...and yes very nebulous and very suspicious. So what else is new?

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  3. The Eurozone is just finding an excuse in Greece, which they have known for quite some time, for competitive devaluation of the Euro to alleviate the soaring unemployment situation over there. Guess where they plan to shift some of their unemployment problem by the upcoming devaluation? US dollar will continue to get a bid even with the soaring spending deficits for the near term, which will also limit upside on the US indices.

    Gold is different, seems everybody is trying to talk it down while physically accumulating or securing 1st drawing rights on the physical in some proposed ETFs like PHYS and GLD. For people playing these physically backed etfs, they are strictly trading vehicles, should the time come when everybody is pulling the physical from the vaults of these ETFs, the small investors will be left with a worthless claim on these Ponzis.

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  4. RED you have pounded the ETFs like a drum being a ponzi. I have to give you credit on this and a double exclamation. If you think there will be one ounce of gold in these when the chit hits the fan I am afraid you will be sadly mistaken...trade them if you wish but in this case actual miner stocks should serve you better. At least you might own the mine....hehehe

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  5. So AUY is just above 10.00 on the AH. Joe you think it has upside potential if we're trading over 10 tomorrow?

    I picked it up just to hold but I always love to see a position go up after I buy it so the 4+% haircut so far is frown-inducing.

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  6. Morla....joe's waiting to see evidence that AUY is at a bottom and the big boys are through shorting it....he thinks that today's action indicates they may not be through....evidence they are finished will be a high volume up day when overall market is down. Pay attention for that. It will confirm the bottom

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  7. Not in any disagreement with you Kli. We might be reduced to panning for gold from the local streams after the algos get done with us. It's just a matter of time until they go after the gap and swing traders when they pick the others clean. Just noticing the timing of successful trade windows getting tighter, and the subsequent conseqence of a chinese water torture no bid market that could take another 1.5 to 2.5 years to drip out. Sustained higher oil will have a slight dampening effect on miners in the short term as the cost of operations increases.

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  8. gld is just another ponzi. good for a day or swing trade but only physical is for holding.

    if gold goes to 1070 I will be in Chinatown maxing out my credit cards to load up on gold.

    I was thinking yesterday that the way to keep the confusion going would be for the SPX to not hit 1150 but stop at 1148. Then drop back to 1135 for the run to break 1150.

    Bulls and Bears are watching 1150 so what better way to mess up their heads than to stop short and then drop to just above support and then launch it higher.

    still holding JAG, SLW and SSRI and will buy any pullback.

    win lose or draw I will close my TZA by the end of the week.

    futures right now not looking so good but we all know that can be easily changed.

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  9. Temo, what gives more credence to that premise you mention, is that the high on the futures in January was 1148, lower than on the cash index, so you already have an equal high from today, and the ponzi trades to the futures for targets not the cash index. Slop chop downside target of 1132 if the melt continues, then just like January, the Joe method of tape reading works best, since there is no semblance of logic to what will ramp in a logical order. I have also noticed the pattern across all positions you mention, it is either the algos or people anticipating entries, but rarely does something go to an obvious trendline or support before ramping, so the volume analysis is key. Also the support buy is the entry, not the breakout since it often leaves one with limited upside. - Analyze.

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  10. Red,

    "It's just a matter of time until they go after the gap and swing traders when they pick the others clean. Just noticing the timing of successful trade windows getting tighter"

    In the short term ( for couple of months) if S&P and Dow trade in a tighter range & Gold and oil also remain in tighter range THEN what you mentioned will be correct, how ever and this the juice of the matter, great swing & gap traders will still do well THIS yr since the trading range WILL NOT STAY TIGHT for more than couple of months. There is still 9 months left before yr is done. Less experienced traders will be discouraged if they take a beating for couple of months, but TOUGH & EXPERIENCED mthr fckers will do well since trading range will not stay tight.

    Joe

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  11. Analyze the good thing about the low volumes is it makes identifying the break out/down easier.

    Another thing I have noticed is historical data or paterns do not give much of a clue but recent patterns seem to be working well.

    on a lighter note I asked a friend what the largest amount of gold he has taken out of Thailand and back to the US.

    There is a $10k limit on cash but since gold is not a currency he said he took out as much out as he could wear. hehehe

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  12. LOL, there must be a lot of people that look like rappers getting on to planes over there, huge gold chains, gold teeth etc, even their children wearing it too. - Analyze.

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  13. Red,

    By tough and experienced mthrfckers, I was mainly refering to KLI, nothing discourages that son of a gun.

    Joe

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  14. hehe....yeh ...sure. I do want to say that I have NO delusions about my potential to be destroyed by this ponzi so I own physical gold and have no debt. The market is just that a "game". I try to reduce my risk by concentrating on narrow areas that I feel I can hold when the trade goes wickedly against me. That may not be in Hoyle.....but fk it ....I am not sure WHOSE rules really apply anymore. There are a lot of ways to make money in this market. The problem is there are more ways to lose it. So I try to adapt when its necessary. I think that very soon we will get a yank down and some Vix action....gots my cash and ready.....core of miners may take an azz wippin ....ok.. lets do it.

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  15. Kli,

    Everything you just said PROVED MY POINT ABOUT YOU which is, " nothing discourages that son of a gun", heheeeeee!

    Joe

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  16. Should be interesting if GLD can get back to the 200 EMA. Went through the 50 EMA today. I am hoping a drop to the 200 EMA. Will add to GFI and AUY at GLD of 104-105 and add more at 200 EMA. With stops set if GLD drops below 95ish. Thought on this trading idea. What was up with oil today. Inventory numbers were somewhat bearish. Short squeeze?? NASDAQ looked like it did in 2000 buy the bad news and BUY BUY BUY BUY the good news. I think it will come to an end soon.
    Jeff

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  17. WTG Kli!! winners never quit and quitters never win.

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  18. I will put it another way...I am a good "general practitioner" in this market. Definitely NOT a PRO. Being scared of this serves you well. But I also know that you have to be in the game with a strategy. Mine is simple. Joe is in a position to take out the weak members of the "herd" when he spots them. Mine has been directed to maneuvering in on a kill without losing whats left of my ass. Its pretty obvious that this year will be treacherous...but unless you believe they are going to crush the market and send us into depression this year....then i believe we are in a consolidation phase for the miners near term....gl

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  19. Temo,

    Kli will never quit, win or lose, tight range or wide range, market up or down. It makes no difference, he needs his FIX just like an addict. Deep inside he enjoys this ponzi of all ponzi games.

    Joe

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  20. Jeff Oil is in a range and no breakout will be tolerated for any length of time this year....its important for a number of reasons not to let it stay above 85 any length of time. could they spike it to 100 ...sure ...but the psychological damage to the consumer psyche would be enormous....not to mention political damage....so I don't see it. play the range both ways....but you decide which in the longer run is the safer conservative trades and I can't put oil in that category....unless it hits 100...hehehe. Then short that shit to hell......

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  21. I agree it is range bound. I also agree oil at 100 would be the final nail for the consumer as if that hasn't already happened. Oil at 85ish is very dangerous I think. Just watched it go up about 2 bucks and then drop back 2 bucks in a matter of hours. Didn't know if there was some info out there on why. But of course this market doesn't need a reason why except it was open.
    Jeff

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