Sunday, July 21, 2013

AND THE BAND PLAYED ON


How can you NOT enjoy a great marching band when times are good. The sound of 76 trombones and everyone watches life march by with all of its glamour. Its natural for one to just expect the parade to infinity but of course the music will stop..... that's the law of nature. There is of course a twisted kind of admiration one has for our band leader......Ben Bernanke..... "His" plan of debt monetization seems to be the perfect tonic for a wounded Western World economy. One may criticize aspects of it, such as complete collapse in Spain, Portugal, Italy, Greece, Cyprus, Ireland, most of the Middle East and Northern Africa, then there's Japan, and now major American cities such as Detroit....but let's not dwell on these minor negatives and look at the positives. 

With the resurgence of the housing market through a multitude of "programs" like hedge fund buying that now has a monstrous portfolio of homes that will become permanent rental properties that most likely will be very poorly rented and mortgage rates that plummeted to obscenely low levels so that couples that can ill afford a 400K mortgage can be placed in one.....barely. Even though the rigging of the rates has destroyed any private mortgage market maybe for DECADES! Now that bonds have moved up to "staggering" 2.5% the peeps that were loading up on the overpriced 400K homes are already vomiting and crying on the main stream media. Good luck Ben keeping that bubble going. You had better figure out another plan on those mortgage derivatives still on your precious big bank balance sheets. You should only have 50 or 60 Trillion left of those derivatives to "bail out"..... but then you know that already. 

Let's see what kind of precedence we can set this week in the latest ponzi problem.....the Detroit default. An awful lot of real people are about to be completely flattened with the reality of nature unless you step in with the big printer and pull their "dependent asses" out of the proverbial fire you've started.  Let's see how you spin this disaster as nature meets ponzi.

Speaking of nature today, gold and I do mean PHYSICAL GOLD is about to become extinct. Many of you still believe we get that buy at 1100 or even below 1000.......maybe......maybe not. It seems if you believe ANY of the Macro that faces us you would have been accumulating at these current levels, but then maybe you are right and the greatest cabal on earth can bring PMs down to give away levels. I hope so and apparently so do some of you waiting for those K Mart blue light specials. One thing is certain the masters of the Universe will always make sure to deliver to you "as ordered" and on "your schedule". 

Good luck on the musical chairs as the band plays. I'm not that bright so I've taken my seat early. Apparently too early but hey.......I've got a seat. Gl gang. Oh...by the way.... I hear there are some great real estate buys in Detroit right now.


. “Today, America would be outraged if U.N. troops entered Los Angeles to restore order. Tomorrow they will be grateful! This is especially true if they were told that there were an outside threat from beyond, whether real or promulgated, that threatened our very existence. It is then that all peoples of the world will plead to deliver them from this evil. The one thing every man fears is the unknown. When presented with this scenario, individual rights will be willingly relinquished for the guarantee of their well-being granted to them by the World Government.”
Dr. Henry Kissinger, Bilderberger Conference, Evians, France, 1991



52 comments:

  1. Gold is skyrocketing in Asia right now.

    1315 as I type this. Why didnt I listen to KLI and buy some physical in the 1200s? I might not get that chance again.

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    1. you might get the chance but accumulating now at this level is still very reasonable for physical. Silver is still dirt cheap. It could get cheaper but physical accumulation HERE is still a bargain. I hope I get another down draft but at these levels I am still buying physical silver

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  2. Here's another little thing to add to the mix:

    http://www.usatoday.com/story/news/nation/2013/07/21/defense-cuts/2573881/

    Despite all these signs of breakdown around us, I expect the insanity to continue, as markets reach new highs in the coming months.

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    Replies
    1. and so it goes as the 120y Supercycle unfolds.....these cuts will continue and will begin to show up meaningfully in the real economy. It is an example of MALinvestment in death and mayhem that has to be "tapered"...never stopped....that would be too civilized and probably NOT practical. Watch for hints on whether Ben tapers in September by how the Detroit default unwinds. IF they don't step into Detroit in a big way (and i think they DONT) then Ben does pull the plug on the show in September. This will show you how IMPORTANT printing is and open the way for him to REALLY begin printing in a massive way later in 2014 (or his successor) as everyone says how his printing DID save the world in 2009-2012......hehehehehehehehehehehheheheheheheehheehheheheheheehehehehehehe.

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    2. and what is even more diabolical the slaughter in asset prices will allow the bankers to once again buy at pennies on the dollar as the whole game resets....again ....and again.............and again

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  3. crickets........i guess they got ya

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  4. If Ben does begin to taper in September AND more municipalities default on their pension & creditor obligations, this would be deflationary. Correct? Thus, those with cash could pick up assets at depressed prices. Maybe physical Gold/Silver prices drop too.

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    1. No...it will be DEPRESSIONARY hehehehe.... He will pretend he's in a catch 22 but in reality its been his plan all along and the banks will be short when they start to tank the market .......it'll be a slaughter "that no one saw coming".......THEN Yellen or whoever will step in with guns blazing........figuratively and literally. Gold should do very well as a FEAR trade and the dollar will strengthen somewhat but not as much as you might think ....it will be a grand time

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  5. I am still hope that silver can stay at this level for just a couple more weeks. I have some money coming soon and want to make a nice purchase of physical. I have been taking advantage of these prices for months! It was just so hard to buy with the paper price falling so hard. Glad I did. GL all

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  6. Detroit Pensions:

    82 retirees who either worked many years or had high-salaried jobs are paid pensions of more than $90,000 a year, he said.

    Among them is Isaiah McKinnon, who was the city’s police chief in the 1990s and whose pension is just over $92,000 a year.


    ...And they wonder why they are going broke. hehe

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  7. Gold shorts are getting slaughtered today!

    Gold
    1,336.80
    +43.90
    +3.40%

    What's your opinion on this move KLI? Will we ever see 1200's again? Just a couple weeks ago, every Tom Dick and Harry on CNBC was telling us gold is going below 1000. Goldman Sachs lead the charge.

    Was this all a ploy to shake off the last remaining retails?


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    1. Jay I am only trading very small blocks of miners...I feel we COULD have seen the bottom BUT it should be a rough ride and either fake you out that its pulling back down for a new low (if the bottom is in) OR we could get a short term (weeks) run up with no chance to get in....THEN pull the rug out to flush the new leaves.....I like just watching

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    2. clarifying.......watching and HOLDING my miners.....I have taken this much pain I can take some more

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  8. Detroit Bonds

    I do not think you understand my question

    who has back stopped them?

    OTC or a credit default swap

    someone has the other side of these bonds

    some insurance co or some thing in that line

    who are they


    paladin

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  9. Share prices of bond insurance companies, which guaranteed interest and principal payments on many of Detroit's municipal bonds, fell Friday as they have much to lose in the city's bankruptcy. When insured bonds fall into default, the insurers step into bondholders' shoes as creditors.

    The insurers, including Assured Guaranty Ltd. AGO -0.22%and units of MBIA Inc. MBI +2.02%and Ambac Financial Group Inc., AMBC 0.00%insured some of Detroit's $1 billion of general-obligation debt, and much of its $5.3 billion of bonds backed by water and sewage revenue.

    The insurers had been trying to craft a plan with Detroit officials to restructure the city's debt and avoid bankruptcy, said people familiar with the talks.

    http://online.wsj.com/article/SB10001424127887324263404578616273666128496.html

    yea......I thought so.......LOL

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    Replies
    1. good work paladin......and the rabbit hole will go even deeper....hehehehhehe.....but we'll be pouring money into these black holes

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    2. Our own little version of Greece!

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  10. Years ago, I bought a bunch of MBIA stock after it had fallen significantly (Barron's recommended it). Unfortunately, it only went on to fall further (falling knife) and I ended up taking a loss.
    But, I read a lot of articles regarding MBIA & Ambac regarding bond insurance. These companies became quite fearful that municipalities were purposely selling bonds & having them rated at safe--and then adding a bond insurance wrap via MBIA, Ambac, or others with the sole idea that they could default on them later & then stick the loss on the bond insurers.

    I would expect significant legal battles if Detroit tries to stick these bond defaults on the bond insurers. If the insurers were to simply pay them, it will set up a precedent for other municipalities to solve their own pending bond defaults on the backs of the bond insurers.

    Just another fun thing to watch as the world melts down.

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    Replies
    1. the re insurance/default issue is at the heart of the municipality defaults....watch how the derivatives tied to this drag down the entire system......it will be epic. That is unless another swan gets the derivatives first. Ben knows this as does his masters. ALL they are doing is marking time to position themselves as optimally as possible to pick up assets without counterparty risks as the ponzi collapses. Remember and do NOT forget....counterparty risk is what will take this mess down and COUNTERPARTY risk is what will be AVOIDED by the FEAR trade. The FEAR trade WILL NOT buy counterparty risk......

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  11. My Dear Extended Family,
    The cause of today’s spectacular rise in the gold price is the reality that with Friday continues large drops in the Comex warehouse gold inventory. No cogent argument can be formed against the reality that because of the continued fall in gold inventory that within in 90 days or sooner the Comex must change its delivery mechanism.
    The highest probability is that Comex will have to move to cash settlement rather than gold. Part of that settlement could be lots of 100,000 GLD that represents the ability to exchange for gold.
    Their problem is that if GLD is part of the settlement mechanism for the spot Comex contract that GLD will be destroyed by the convertibility. It is a truism in gold that which is convertible into gold will in fact be converted over time.
    Gold rose today because those knowledgeable know the inevitability of the changing of the Comex contract, as it is today which calls for settlement in gold between contracting parties. There is no question this is the emancipation of physical gold from the fraud of no gold, paper gold. The emancipation will cause physical gold exchanges to take birth and to be the discovery mechanism for the price of gold. This is the end of the ability to use paper gold future contracts as a mechanism to make the gold price sing and dance at the will of the manipulators.
    With manipulation coming to an end the true value of gold will be discovered by the cash exchanges that are now taking birth. The advent of the cash spot exchanges around the world is the natural demise of the Comex set up as convertible and now being converted.
    As long as one can buy spot, pay insurance, transportation and re-casted by Rand Refinery to Asian products sold profitably, the demands for real gold are ending the hay days or even existence of the futures exchanges.
    Gold is headed back to be traded as it was before 1973. Gold will trade well above $3500 and those who have lived in the gold market like me for now 53 years know it.
    A price of $50,000 for gold is not out of the question as a result of its emancipation from “fraudulent paper, no gold, paper gold.”
    GOFO is screaming this truth. The warehouse inventory of every futures gold exchanger is screaming this. The fact that there is no meaningful above ground supply of gold is screaming this. The fact that most of the central banks supply of gold is leased is screaming this. There is no reason why gold cannot move up hundreds of dollars a day when the Comex changes their spot contract settlement, as they must, as they will, very soon.
    Respectfully,
    Santa

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  12. I more people park/trade their fiat currency for PM (gold and silver) doesn't this remove fiat currency from the monetary system and slow the velocity of that fiat currency which creates a deflationary environment? And since gold has no real economic use in product creation (except jewelry) it contributes little or nothing to the expansion of economic activity thereby reducing GDP. At higher prices the effect is more pronounced.

    If my assumptions are incorrect please explain how.

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    1. correct inlet but in a relative way the effect on velocity is miniscule otherwise most points are valid. Gold is a threat to the CBs because it is a FLASHING light that currency debasement and CONfidence is collapsing.....THAT is the reason they have fought the price as Volker was quoted as saying he wish he held the price of gold down in 80

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  13. KLI: 10 years from now, will we be using gold and silver coins as currency?
    I just don't see how we could transition from paper to physical metals for our everyday lives.

    Would our government step in if the dollar's Reserve Currency Status was threatened by gold?

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    Replies
    1. Jay ...gold is NO THREAT to be used as currency. Gold and silver ONLY serve as a wealth protector in a global currency debasement and CONfidence collapse in the fiat ponzi systems. They will never be a currency except in sovereign exchanges and CB reserves......gold is wealth preservation for most....including countries. That argument is absurd and does no justice to most of the big advocates of holding gold or silver bullion.

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  14. Inlet,

    I feel your assumptions are correct. In fact, I believe that is why India is trying to prevent further Gold sales. India wants its people to use their money to by other items that would better support their economy.

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  15. furthermore when currencies collapse they will only be "reset" as the mark was in 1923.....we will get a "new" dollar....backed by the good faith and credit of the U.S. ....oh....wait.......that may not work this time around

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  16. AAPL's miss should be epic after the bell today......with the collapsing consumer and a tired product line this should be a shocker.......we'll find out soon

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    1. I'm thinking about gambling some AAPL puts right now.

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    2. its all a crap shoot Jay so watch out....they can rig the report just like NFLX plays their short squeeze.......but AAPL longer term is just another bubble

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    3. great company but its stock price is down

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    4. I chickened out. Look at the last 4 days.

      They've baked it in.

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    5. AAPL diving hard late. I coulda...shoulda...woulda...

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    6. Nevermind:

      After hours:

      $439.50
      Change
      +20.51 +4.90%

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  17. Earnings will become the anchor on the market so beware if you believe the hype that QE alone can levitate the market....revenue is collapsing and earnings will follow....when the tank this pig there will be a plethora of pundits rationalizing how and why the pig collapsed and why it was inevitable....even though none of them were predicting it OR were short.

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  18. http://blog.milesfranklin.com/the-entire-western-world-is-detroit

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  19. Anybody picked up the DUST puts I mentioned? Wish I had been able to do it :( Money will be here the 31st but it looks like I may miss this 1st leg up of the miners. Hopefully they correct here in a bit.

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    1. most likely they will correct and correct hard.....but from what level? lets see if they bump their head on gold tonight at 1350.... I don't see solid evidence that we can't see a retest of the mine'r bottom yet

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  20. AAPL hits their numbers and slightly beat. I phone carries the day...... I pad misses its numbers....see what happens with the guidance and margin guidance and revs are light.....gl playin this pig

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    1. Apple’s third quarter earnings fall 22% on flat revenue.

      And it skyrockets after hours.

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    2. shorts getting squeezed ...watch at the opening after they digest the earnings and conference calls. They may have shorts to fry in AM

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  21. Jay & Kil..

    remember the post I made on Eric Sprott
    trying to open a Bank with gold & silver holding

    you hold your wealth in gold....you buy and sell
    to cover what you spend & deposit

    there is a American Indian tribe that has a bank set in the style

    you can park your cash with them for a fee

    you want to earn %.....you loan the bank some and they loan it out with risk

    one dollar of capital.....same thing Karl Denninger is talking about

    paladin

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  22. AAPL a bubble? Gotta disagree there. AMZN & NFLX, certainly, but AAPL makes real stuff, and despite no new products for a year and intense competition, they delivered decent earnings. There's nothing in the valuation to suggest it's even close to a bubble. I've traded AAPL in the past, both making and losing money in the process. In my view, this is the time to go long now at current levels. They have been muddling along for 3 quarters now, and all anyone can talk about is their need for something new. Well, looks like something(s) is coming soon, and I suspect the stock will make a run to $500 in anticipation of that. Should that happen, you can always book some profits and sell the news.

    The verdict for AAPL will come when they make their new product announcements. If they underwhelm, then the company is in trouble. If come out with something even borderline revolutionary, they'll be fine. I don't see anything approaching a mania like before, but you can make money trading the ranges.

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    1. yes bud I agree that was hyperbole in the sense of time. The reason I called it a bubble is that if you look at AAPL in inflation adjusted dollars over the next ten year it will mirror all mature "tech" stocks like microsoft csco etc.....in that sense AAPL will break down over the next 4 years to find a bottom. They would have to have some of the greatest innovations that only a "steve jobs" at the helm could bring to the fore and tim cook AINT no steve jobs as evidenced by Their product pipeline. I use most of their products and they are a great company. At 440/sh they are fairly valued.

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    2. its been a great stock bud and i missed most of its gains when i traded it in 2008 and 09.....but i made a little. Steve jobs diagnosis kept me out of it longer term. He held on for a long time.....at 700 it was getting bubbly and will dead money for the long term holders of the stock that "love" the company....just as they loved microsoft and wal mart.....its the law of big numbers......and I dont agree with your assessment that if they come out with borderline revolutionary "theyll be fine".... in near term YES they will be...but its going to take a TON of innovative products to keep the price rising in the face of what is going to be declining iphone ipad and computer sales......they're at the VERY TOP END in all categories and their margins WILL be compressed severely going forward without remarkable innovations. The market will punish the price as these margins compress and the sycophants opt out for competitors...but thats what makes a trade. You already see their numbers dropping in the US but china and india are compensating for now. gl

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    3. I wholeheartedly agree with Kli's assessment. To put it simply, once you get to the top, there's only one place to go and that's down.

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  23. Honest & other ARNA holders,

    My July/2013 MPR (Monthly Prescribing Reference) came yesterday. Belviq was one of the newly featured drugs, and Arena used the entire back cover of the MPR to advertise Belviq.

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    1. That's great...institutions are adding every qtr...lots of naked shorts trying to get shares for hedgies etc..

      thanks doc..

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  24. Gold is losing steam:

    Gold
    1,318.50
    -16.20
    -1.21%

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    1. several good gold paper traders expected a pullback today after bumping on resistance at 1350....so this is technical only so far

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    2. I thought OPEX might set bull trap...sold 3/4 of abx yesterday...Jessie had a little reminder on opex 2 days ago that made me take some profit..worked out good...I might re-enter on Friday or Tommorrow pm

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  25. interesting read below.

    http://www.canadafreepress.com/index.php/article/54163

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