Saturday, March 27, 2010

MOTHER Of ALL BUBBLES Update II

This is ultimately going to end very badly for all aspects of our country .....when and how .....who knows. But with this current proverbial "rock and a hard place" the Fed is backing itself into, I suspect within then next 2 years. Nice article to read.....

Then, in January 2000, investors put close to $44 billion dollars into stock mutual funds, according to the Investment Company Institute, shattering the previous one-month record of $28.5 billion. We all know the story from there. Money continued to pour into stock funds, breaking records for February and March and pushing the NASDAQ to 5,000, only to lose half its value by October 2002.

This gets worse. That same October (at the low for the cycle), as investors were selling stocks as fast as they could, where was all the money going? Into bond funds, at a time when bond prices were near record highs.

Think about this pattern for a minute. At the top of the market we can’t buy fast enough. About three years later at the bottom, we can’t sell fast enough. And we repeat that over and over until we’re broke. No wonder most people are unsatisfied with their investing experience.

Now we might be doing it again. Over the last year, investors have put an estimated $506 billion into mutual funds, but $409 billion of that went into bond funds. Let me repeat that: Of the total of over $506 billion, $409 billion went into bond funds.

No one is sure how this will turn out. But with interest rates again near record lows (meaning bond prices are near record highs), you could end up losing money in that bond fund you bought for the purpose of making sure you don’t lose money.

To be clear, the solution here is not to sell your bond funds. It is not to buy stock funds. The point is to recognize that, in aggregate, investors tend to be very bad at timing the market.

It makes far more sense to ignore what the crowd is doing and base your investment decisions on what you need to reach your goals, then stick with the plan despite the fear or greed you may feel. To do otherwise would be following a pattern that has proven to be extraordinarily painful.

http://bucks.blogs.nytimes.com/2010/03/24/how-greed-and-fear-kill-returns/

update I 1800 : London Gold Market Report



THE PRICE OF WHOLESALE gold bullion gave back an early bounce from yesterday's 6-week low for Dollar investors on Thursday, slipping back to $1090 as Chinese shares closed the day lower, but European and US stocks rose.

Little changed for Sterling buyers, gold was higher against the Euro as European leaders met to discuss the Eurozone debt crisis.

"We don't see decisive actions telling the market we can solve this," said Zhu Min, deputy governor of the People's Bank of China – and a special advisor to the International Monetary Fund from next month – after German chancellor Angela Merkel said the meeting would discuss possible IMF and partner support for Greece, but "no concrete help".

The government of Dubai meantime pumped $9.5 billion into the ailing Dubai World property group – 60% of it using emergency loans made by neighboring Abu Dhabi.

"Gold [was] a battleground between the Euro and Chinese buyers today," said one Hong Kong dealer earlier. "Chinese buying wanted to push it higher, but the Euro pulled lower.

"Silver prices mostly followed gold in tandem," bouncing from a 3-week low at $16.53 an ounce.

Looking at Wednesday's New York action, several analysts point to the Dollar gold price falling through "the neckline of a head and shoulders top" – a chart-formation which "bodes ill for the near future" – around $1090.

"Gold is now looking at a crucial support level at $1080," says one London analyst – "where the trendline dating back to Oct. 2008 began.

"If this support breaks down, we'll be headed for the recent low and 200-day moving average near $1050."

update II

You Don't Mess With The LBMA - Assassination Attempt On Silver Market Manipulation Whistleblower?
Submitted by Tyler Durden on 03/27/2010 19:55 -0500

Commodity Futures Trading CommissionJPMorgan ChaseMarket Manipulation


The latest development in Silvergate, in which whistleblower Andrew Maguire has exposed the manipulation details in the London commodity market, is straight out of a John Le Carre or Ian Flemming novel: an assassination attempt. From GATA:

London metals trader Andrew Maguire, who warned an investigator for the U.S. Commodity Futures Trading Commission in advance about a gold and silver market manipulation to be undertaken by traders for JPMorgan Chase in February and whose whistleblowing was publicized by GATA at Thursday's CFTC hearing on metals futures trading was injured along with his wife the next day when their car was struck by a hit-and-run driver in the London area.



According to GATA's contact with Maguire, board member Adrian Douglas, Maguire and his wife were admitted to a hospital overnight and released today and are expected to recover fully.



Maguire told Douglas by telephone today that his car was struck by a car careening out of a side road. When a pedestrian who witnessed the crash tried to block the other driver's escape, the other driver accelerated at the pedestrian, causing him to jump out of the way to avoid being hit. The other driver's car then struck two other cars in escaping. But the other driver was caught by police after a chase in which police helicopters were summoned.



We'll convey more information about the incident as it becomes available.

We are in process of corroborating this story with independent sources. It will be interesting to see what information the escapee driver discloses and whether this was just a case of a little extra fish and chips and extra, extra beer. In the meantime, the battle against the big banks and the LBMA might have just gotten a little more personal.

18 comments:

  1. I'm a big fan of diversification across asset classes, but the one I just can't bring myself to buy is bonds -- especially longer-term bonds.

    I think you'd have to be insane to buy 10- or 30- year Treasuries here.

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  2. Not insane .....just a little "misguided" lol....anyway the "buyers" of the longer term issuance now is the Fed and its buyers.... but there will be plenty of retail killed.

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  3. I should have said the "buyers" are manipulating the price to maintain stability...there are PLENTY of retail in the mix through bond fund distribution. Many of the shorter term denominations like 2, 5, 7.... will be crushed when this implodes.

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  4. Analyze a question on your post on the previous thread.

    Do you ever check the pivots used by Shadow Trader on TOS?

    I am not sure how he calculates them but they seem pretty accurate at least on the e-minis.

    None of my bids were hit on Friday, so I am 99% cash. I am not sure how much trading time I will have this week since I will be in several meetings all week.

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  5. I got out of most of my long term Treasury bond holding at the beginning of the month, still have some but mostly for diversity and nothing to write home about and don't have any corporate or muni bonds in any portfolio. The rest of the liquid cash portfolio will be shifted to FDIC insured accounts. Physical gold is still insurance. The small additional gold miner position established Friday was more of a token core since I had sold all my longer term equity positions late last year.

    Bonds will be a fight between Fed/Treasury wanting to keep rates low through monetization and creditors dumping them for cash to acquire commodities and precious metals before monetization blows up.

    The problem as someone more intelligent than me pointed out is the every hungry derivative monster that needs real instruments like overleveraged/overpriced assets in real estate, bonds, and stocks to construct imaginary assets can be traded where real commissions can be charged by the bankers/brokers of these instruments.

    I quickly visited Dan's site today and looked at the Wilshire and Bond charts, don't disagree the about the gutter in 2015 but it will be an ugly sloppy ride over the next 1-2 years (P2 top will be a rolling distribution once ~1225 is eventually hit) as governments try to re-inflate and hide inflation in essentials.

    Kli was right the Korea incident, noise, doesn't really matter if it was accidental or intentional by friend or foe.

    Side note, noticed some recent home listings are priced higher now than 2 years ago including bank owned properties.

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  6. Condo prices are still falling hard here. Prices dropping $10K plus low end and dropping $90K plus at the high end in the last few months and accelerating decline in prices as approaching end of government home buying incentives. Condo market here is going to be dead for the next six months.

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  7. Temo, I have not viewed him before but I will take a look. Thanks for the heads up. - Analyze.

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  8. I recommend this movie for light viewing...(of course I don't believe any of this nor does Joe) btw it won some indie awards....PS it helps to be a lil twisted.

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  9. Whoops here its ..

    http://www.youtube.com/watch?v=T4nzXt4QaYk

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  10. Men Who Stare at Charts could be a spinoff. Main cast as pissed off traders cursing at their monitors talking about the ponzi, they get duped by Swedish supermodels offering up trading tips who really work for GS, but then build telepathic superpowers to get revenge. Very little trading involved outside of the opening scene with lots of stock film used in Ed Woods style. Tanks at the box office like a Kevin Costner movie. - Analyze.

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  11. wait until you see my lil spin......hehhehe...

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  12. http://jessescrossroadscafe.blogspot.com/2010/03/whistleblower-in-silver-manipulation.html

    Ack! My thoughts go out to this man and his family, I hope his "luck" improves.. .. ..

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  13. You know guys, I find it hard to believe that these guys would have to kill anyone to manipulate the prices of metals. I think we all know that price manipulation is part of the game, and hence, it is priced in the market.

    One thing I can honestly tell you is this. With all this talk about manipulation, it sure sounds like a good topping indicator, and I would be a net seller of precious metals right now. These conspiracy theories are senseless and don't even apply logic. I think a third grader can even figure that one out.

    The gold market is saturated to the point, that the real estate commercials have been replaced with gold commercials. Everyone (retail investors) I know likes gold, including me. Quite honestly, in a market so saturated, a small drop in demand will be a huge deal. With demand running at highs all I see is a drop. Stay away from gold if you don't know what you are doing.

    A good contrary move would be to buy US dollars. Yeah, everyone despises them, everyone says it will crash. But all that is priced in. Which means that I can only see it move higher. It's kind of like the opposite of gold. If all buyers are holding gold, they can only sell. If all sellers have sold the dollar, all they can do is buy. It's your pick. I pick the US dollar versus gold.


    Dny

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  14. I find it hard to believe that anyone would kill someone for 150$ from a convenience store cash register but they do...Now when you discuss billions they are more civilized...usually suicide or a heart attack or an unwitnessed single car accident....so yes I agree this is unlikely

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  15. My favorites.....Ken lay "heart attack". Or the two Madoffs deaths...."heart attack" unwitnessed in pool. Or the Slashed veins (btw cut along the LENGTH of the veins bilaterally) (a pro)...and done in a bathtub to erase prints. What are the odds of this "convenience"?? But then you are welcome to your opinion since thats what makes this ponzi possible....gotta have sheeple.

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  16. Kli, that's why I enjoy reading thrillers, there's so much truth to them. Otherwise, they wouldn't be that interesting. Wonder about the glider accident in Morroco, too. Seems to me it sends a message...

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  17. A former Goldman guy actually admitted to the CFTC that paper gold is 100x physical gold. Check out www.gata.org, they seem to have collected all the juicy updates on the paper gold ponzi scandal. Can it be a scandal if the MSM doesn't touch it? Guess it's time to see what the internet is really worth.

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  18. Kli,

    My point is not that manipulations do not exist, they do and I know they do. My point is that these manipulations are already priced in.

    Did these guys just start manipulating prices? is what you have to ask yourself. If the answer is no, than what difference does it make?

    No sheeple here my friend. To me, sheeple are the ones that believe gold is the best asset when everyone and there mothers are in it. Same as every other asset class out there, equities, real estate, bonds, mutual funds, etc... It's all the same at this point. And you folks seem to forget the huge boost in prices credit provided to all those asset classes. When credit is gone, you will be the ones complaining about how much they are "suppressing" prices.

    Sheeple suggest a non-thinking brain. Believe me, when every single retail investor wants in, it's time to get out. Seems to me, you are the sheeple here buddy. But, hey, reality hurts, doesn't it.

    Dny

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