Thursday, May 31, 2012

WHAT IS THAT?

I'm not sure but its making these guys terrified. Perhaps they are starting to understand just how absurd this entire process is. The following is an article out of ZH that I just thought was simple and straight forward enough that no further development from me was necessary ...you read it below and decide if you want to be in a paper market. gl


If Raoul Pal was some doomsday spouting windbag, writing in all caps, arbitrarily pasting together disparate charts to create 200 page slideshows, it would be easy to ignore him. He isn't. The founder of Global Macro Investor "previously co-managed the GLG Global Macro Fund in London for GLG Partners, one of the largest hedge fund groups in the world. Raoul came to GLG from Goldman Sachs where he co-managed the hedge fund sales business in Equities and Equity Derivatives in Europe... Raoul Pal retired from managing client money in 2004 at the age of 36 and now lives on the Valencian coast of Spain, from where he writes." It is his writing we are concerned about, and specifically his latest presentation, which is, for lack of a better word, the most disturbing and scary forecast of the future of the world we have ever seen....
And we see a lot of those.
Consider this:
  • We are here...
  • We don’t know exactly what is to come, but we can all join the very few dots from where we are now, to the collapse of the first major bank…
  • With very limited room for government bailouts, we can very easily join the next dots from the first bank closure to the collapse of the whole European banking system, and then to the bankruptcy of the governments themselves.
  • There are almost no brakes in the system to stop this, and almost no one realises the seriousness of the situation.
  • The problem is not Government debt per se. The real problem is that the $70 trillion in G10 debt is the collateral for $700 trillion in derivatives…
  • Yes, that equates to 1200% of Global GDP and it rests on very, very weak foundations
  • From an EU crisis, we only have to join one dot for a UK crisis of equal magnitude.
  • And then do you think Japan and China would not be next?
  • And then do you think the US would survive unscathed?
  • That is the end of the fractional reserve banking system and of fiat money.
and then there is this...Stock market investors continue to hold on to their stocks in the hope that we will again see bull markets like in the 1980s and 1990s. But looking at the very long term Dow/Gold ratio chart this optimism seems unfounded.  The chart shows a major “megaphone” pattern that has a target of 1.  This would mean that gold and the Dow would be equal in value.  It would also mean another 90% fall of the Dow against gold.  In my view the pattern will probably overshoot and we will go well below a one to one ratio. 


 

Even if we “only” go to a Dow/Gold one for one ratio, at what level would that be?  For many years I have forecast gold at $10,000 dollars, and that would mean the Dow would be at the same level.  But remember this means that gold would go up 6 times from here and the Dow would be down 16%.  With hyperinflation gold could go considerably higher.  So investors who want to preserve their wealth in the next few years are likely to do much better by owning physical gold than stocks.

Egon von Greyerz
Matterhorn Asset Management AG
GoldSwitzerland
May 31, 2012



Now back to my charts...these are NOT for the faint of heart.....but very possible....if the charts with the descending wedges hit their targets then that is the bottom imo.......

Wednesday, May 30, 2012

ITS ABOUT TO GET REALLY UGLY

So toughen up cupcakes. This ride is gonna get a lot bumpier. They don't want you on it and today's shakeout was just for starters. Overtrading after this monster beatdown may find yourself on the sidelines without your shares and staring at your monitor wondering what the hell happened. They can rip this right through your resistance AND your supports without breaking a sweat. They want you OFF the train. Just watch and see how good they are. Sure, go ahead and ask....ARE THEY REALLY THAT GOOD?? Answer: youbetcha. Next on the agenda is your wake up call with gold up 50$ in one day. That is when you know that things are going to get rolling and they plan on leaving you at the station. Once we get up to the 75$ day then you may need to lighten up a little but that's going to be north of $2100. Its still possible we could even see a truly big move in gold this year but thats probably more than a year or two off......They still have control but once fiat begins unwinding in the true fear trade, gold's moves will become shocking. Remember...gold's daily price discovery from being revealed is being defended by the system at all costs......but remember what "all costs" means.....It means that a certain amount of actual bullion must be taken out of the hands of the cartel and distributed to interests in places like China, Venezuela, Bangladesh, India, Vietnam etc.......and that does not set well. Once the Western Central Banks say ENOUGH.......then gold has to start rising to prevent the draining of their own gold reserves.

You are still in the early stages of this game. When they have to trot out the likes of Munger and the other big name gold haters to attack....then you know they have a problem. It will only intensify so prepare for the battle royale. You're gonna get some scrapes and bruises and you're gonna take some body punches but remember this is a LONG game and it will be measured in years......sit tight and try and enjoy the history you are watching. Everyday is another chess move. gl






Tuesday, May 29, 2012

DRAMA!

No ......not Johnny Drama but EU drama. Bullshit drama. Headline manipulating bullshit drama...designed to confuse you and to draw out the shorts to chop up like little pieces of sushi at a Japanese cook-off. Its extend and pretend at its finest as the global fiat ponzi tries to extricate itself from the overleveraged  casino bet its made over the past thirty years. Simple plan is to maintain the Too big to fail banks at the expense of the real economy and try and keep control of the paper backed digital fiat world. Damn the torpedoes and foch the real economy. Let the Chinese sort that out........we've got a global casino to work on. Meanwhile erstwhile economists and business sorts scurry to try and explain just what really makes sense from the multitude of monetary interventions that seem to be occurring on a daily schedule now. It is really comical now to hear the likes of Joe Kiernan and Steve LIESman debate monetary and fiscal policy while bringing out the Rick Santellis for their perfunctory display of reality. It is truly a tired dog and pony show on a fading business network. Trying to glean a morsel of intelligent and/or useful information is virtually a waste now and turning on the mute and letting the ticker on the screen go is about all the use I have for CNBS now.

In fact BREAKING NEWS is really BROKEN NEWS. Its laughable how they've destroyed any semblance of credibility they might have had in order to be "team players" for the ponzi. Oh well if most of us were making 2 million a year like Kiernan we might continue the clown act for the boyz up front too. Fortunately we don't have to deal with that question. Sitting in the cheap seats does have some advantages.....like maintaining a modicum of dignity.....something Joe K should search for.


from ZH, courtesy of The Telegraph, we learn that Germany is quietly reminding the world that the stealthy, but voluntary, accumulation of gold is what it is all about. As part of a renewed push for quasi-Federalism, whereby Germany would fund a "European Redemption Pact", in which Berlin would, in the form of Germany-backed joint bonds, be responsible for any sovereign debt over the 60% Maastrtich limit, but with a big catch. The catch is that "a key motive is to relieve the European Central Bank of its duties as chief fire-fighter. "We have got to get the ECB out of the game of distributing money, and separate fiscal and monetary policy. Germany has only two votes on the ECB Council and has no way to control consolidation," he said. Germany would have a lockhold over the fund, able to enforce discipline. Each state would have to pledge 20pc of their debt as collateral. "The assets could be taken from the country’s currency and gold reserves. The collateral nominated would only be used in the event that a country does not meet its payment obligations," said the proposal.
In other words: a perfectly legitimate, and fully voluntary scheme in which sovereign gold is pledged to a German "pawn broker" until such time as the joint bonds are extinguished, and if for some "unpredictable" reason, a country fails to meet its obligations, read defaults, all the pledged gold goes to Germany!
But why Gold? Why not spam. After all gold is selling off, spam is stable, and the dollar is soaring. Couldn't Germany merely demand that broke countries simply pledge all their USD reserves, and keep their worthless, stinking yellow metal?


Game still on with the miners and I would have to say we aren't lost yet but their rise from the ashes may still be premature......more oversold on the monthly may still be in order........so be prepared and don't panic. If they take gold down to 1400 in the next month I will add to my physical. Otherwise......let's watch. I'd rather be in miners than cash with just how screwed up the banking system is right now. gl all.




Monday, May 28, 2012

STOP IT NOW!


We cannot withstand these type of events without the proverbial run on the casino. I don't mean just any casino but I mean the entire enchilada. The Spanish bank implosion and spread blowout means the clock is ticking for the Central money printers. QE has never stopped at any time since the initial QE 1. The only thing that stopped was the outright announcement that we will print. By announcing massive printing strategies like QE 3 it basically admits the casino is in dire straits and that massive fiat devaluation is coming to prevent the system's breakdown....so instead you get stealth and not so stealth programs without the fanfare. At the same time you have shorting strategies to hold down the prices of commodities and precious metals. Meanwhile the smart money is pulling out of weakened fiat reserves and positioning themselves in real assets to protect themselves from currency devaluation that is obviously coming down the pipe. There is absolutely no stomach to impose fiscal austerity by the politicians on the massively overleveraged western countries and as attempts are made to do so we will endure tremendous social upheaval. What is more likely for the Western policy makers is a route that is being promoted by the Keynesians such as Krugman that bluntly call for massive printing with NO regard to the effects on inflation. Stagflation is not even mentioned by Krugman when he talks about these measures. He completely discounts inflation and I believe his route will be taken as the least painful path out of the current depression. Interestingly enough I listened to an interview by Krugman with Charlie Rose this week and he openly admitted and called this a Depression that we were in....and then went on to define WHY we were in a depression. Funny how this mainstream economists now admits what we have discussed for several years now and no one even blinks at it. Of course the Central bankers will never admit to massively printing strategies lying ahead or precious metal would explode and become a daily headline price exposing the dire effects of this policy. Instead you have the Chinese strategy of letting the West die a death by a thousand cuts. Rest assured they will print. They have no choice to maintain the global massive to big to fail banks that they protect and form the basis for the casino. What Krugman and his followers fail to address is that by massively printing and propping up the Too big to fail banks and allowing governments to direct shovel ready projects etc.....they are perpetuating the entire malinvestment that has led us to this cliff.......in fact they are only making the cliff higher. Watch how Europe unwinds some banks but you can bet they will step in very soon and put a stop to this nonsense......at least for a little while.

Thursday, May 24, 2012

BANK RUN!

The real fear of the game. That complete and utter loss of CONfidence is lost on the system. That the deleveraging process suddenly implodes into chaos. This is the part that makes me root for the Central Bankers. This is where I get scared and my craving for justice and a return to free capital markets collides head on with reality. That reality will NOT set you free. It will send you through gyrations trying to understand the repercussions of a complete deflationary implosion. THIS is what the central bankers are in a race against time to prevent. To retain control of the current system without a crash landing. Extend and pretend is what was embarked on and is what will be used contrary to any verbal intonations to the contrary. There is no choice for the game but more monetization. Anyone that has doubts only needs to ask themselves this one question. What is the other side of this coin? COLLAPSE ......and that is going to be fought to the end. The outcome is still going to be a collapse and the question is whether its a controlled collapse or a SWOOOSH!. This will be controlled but in what form. Bank runs cannot be allowed and they will need to be stopped before the systemic spread occurs. This will manifest itself in gold bullion accumulation by sovereigns and individual investors alike and will result in an explosion in the gold price to purchase physical gold.

The key to this is physical gold. That is....gold in your possession. It is a SHTF investment. There will be no pure gold standard coming so forgettaboutit it as an "investment" or currency. This is a "store of wealth" for you.....or a pure SHTF investment in the nearer term if we get into the currency debasement spiral, and that brings us back to the Bank runs. They are going on and they are accelerating. We need the Central banks to step in soon with another bazooka, which is why I want to hold on tight to my PMs and PM equities. Let them play the game in the clouds. We are peasants in the whole scheme of things and we're going to have to take care of our own little world. My latest visit to the heart of the investment world reinforces that we have as much advantage with what is coming as many top pros have. They are just as confused by what is taking place. They for the most part are just followers. gl

Wednesday, May 23, 2012

WHIPSAWED!

Since most of the action today was missed by me I didn't have to put up with any excuses from the media  why the PM equities moved up dramatically intraday while the market was taking a savage beating. Even though the market managed to stage a "brave" recovery to finish flat, the story of the PM equities finishing very strongly in the black with gold and silver solidly red tells an even bigger story. Money as stated here previously is forming a bottom in the miners and showing just how much trouble the shorts are about to get into. The battle looming on the bullion vs paper trade will only intensify as sovereigns and hedge funds ready for battle with the fiat masters of the universe. The outcome is assured but the pathway will not be known to the proles. Only the boyz know how this game will play out.

If my earlier suspicions are correct the game will not begin in earnest for a few more weeks, so chop shop trading in the miners may be in the offing. Don't shake out. I am reluctant to even engage in peripheral account trading when major bottoms may be in the making, but I am sure I will succumb to some temptations on big moves and daily overbots.

The boyz in the city don't really have much more of a feel for what the metals trade is about to do than you or I but there is definitely some doom and gloomers in the pro ranks but they keep it to themselves. I didn't see much on the faces down at the NYSE today other than zombie looks. I think they know they are facked.

Can't post pics and can't do charts but we aren't overbot on the daylies so I'm still sitting tight. gl

Monday, May 21, 2012

I GUESS ITS TIME TO LIE


So what.....you can't touch me....
“I don’t envisage, not even for one second, Greece leaving. This is nonsense, this is propaganda.”
– Jean-Claude Juncker, Chairman EuroGroup FinMin Committee

When it becomes serious, you have to lie.’’
– Jean-Claude Juncker, Same guy

Sounds familiar doesn't it. A multitude of sins in the last few years seem to have this very morality at its core. The numerous testimonies of Bernanke dismissing the housing collapse, dismissing any chance of recession. Paulson repeating the same mitigating mantra and the multitude of pundits marched out to allay the fear that was gripping the peeps as the economy melted down. After it was all said and done and the initial deleveraging occurred with liquidity snatched from the jaws of death then the truth slowly ebbed out of the same individuals over the last few years. This time they were extolling the "fix" and defending it at the same time by admitting we were on the brink of total financial destruction. That we were "staring into the abyss". That we came within a few short hours of a "complete financial collapse". This would qualify as a type of "jury nullification" if these individuals were on trial.......but of course they are not and never will be. Paulson even went so far to protect himself from ANY possible prosecution in the TARP bill with a qualifier stating he could not be prosecuted for ANYTHING. I wonder what he was afraid of happening.

Breakdowns in CONfidence can never be easily addressed by further lying and distortions..and that is just what is happening. The feet are voting in the Eurozone right now with the bank runs accelerating and I believe the central bankers are going to have to act much quicker than they would like to so be prepared for a big round of some type of QE announcement coming. They have to stop the bleeding. The Greek issue is an outright hemorrage and must be stemmed. Don't sweat the small stuff on the PM trade. It will take care of itself over time. These day to day moves are almost comical so sit tight until we can see what type of channel they form. Stack your physical and stack your food and barter items and gl.


Sunday, May 20, 2012

TO THE MATTRESS!

Everywhere an investor looks now there is dissonance. Europe is in a state of disarray and the Fed is frantically, digitally printing to keep the entire system from imploding. Cognitive dissonance is a weapon that can be very valuable to the casino owners and is used like a sledge hammer on the retail investor and many hedge funds. Many retail investors view all hedge funds equally but they are far from it. Just because you are a hedge fund operator doesn't mean your marbles aren't just as easy to take as the retail investor's. Right now the table is being run in anticipation of the Grand supercycle washout coming. This is a dramatic deflationary event that the Ponzi is trying to manage. The real question is HOW they manage it. Can they realistically deleverage an enormous world debt burden without the entire system imploding? I suppose you will find out very soon because that is exactly what they are trying to do and will have to accomplish.

The dissonance being felt by investors is exactly the problem for the CONfidence game. Investors and retail peeps know that to escape the ravages of deflation we must develop a level of velocity of money and this can only be accomplished by CONfidence and they are losing the game rapidly as evidenced by the bank runs starting up in the Eurozone. This is key! Bank runs are form of voting by the peeps AND by all investors. This is NOT possible to stifle once it begins. In fact, the more intervention and attempts to allay the dissonance in the peeps only tends to fan the flames of panic by calling more attention to the problem. Its the ultimate Catch 22 for bankers. It will be the new battle cry for this stage of the Grand Supercycle...."TO THE MATTRESS".

There will be more and new battle cries coming in the next stages but we are in the Mattress Stage now. Watch how it develops and watch what the effect on PMs is. gl

Thursday, May 17, 2012

COLLAPSE!

The face of recovery. Not such a nice poster for green shoots is it? You know of course this is how a "recovery" looks according to CNBS and its army of pumpers. Noise is noise......on both sides during this "recovery". The endless printing machine still has plenty of power to maintain the ultimate financial juggernaut in the face of an obvious collapse in CONfidence. The Eurozone can limp along much further than many can imagine. Ben can snap his finger and PRESTO we have an overnite infusion of  2 Trillion in digital cocaine. Its magic.........

One thing I want to remind you is not to get too caught up in the day to day trading of the miners at this level. You should be accumulating and holdin here and avoiding the daily gyrations. Some of you are savvy enough to play the options but that is entering into the devil's cauldron for most of you. If you want to lose a finger go ahead and try it, but we are in one helluva dangerous market now so enter those options at your own risk.

Next on the agenda is a reminder on bullion. Also the advice is to accumulate on all pullbacks. When you hear that PIMCO is buying gold heavy and Rogers and Soros again and Einhorn and Bass are taking possession then you know what some very heavy hitters think of the economic situation AND what they think of gold as a "barbaric relic".

Tune in and tune out. I apologize for that one. Something is going to have to happen this weekend. Europe is breaking apart. Maybe they can hold it together with some stealth QE for a few more weeks until the FOMC in June but the bank runs are on in Spain and Italy too, so I wouldn't be surprised to see an announcement on Sunday or maybe even after the market closes Friday. Whatever it is, it will be temporizing to get through to June. Forget the noise and accumulate. Plan and prepare. Tighten up your network of friends and don't leverage at this stage of the game




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