Saturday, November 30, 2013


Do you? "You have to know the risk" was a forgotten line in an old movie, but the line still has the same meaning today for a variety of life's situations. You must decide if this time it is different. Can a market continue to rally in the face of declining top line numbers? Can companies continue squeeze every possible drop out of the earnings sponge? Will the available work force continue to accept a declining wage scale compared not only to 6 years ago but to wage earners in many developing and developed countries. Do you believe the military can continue to be extended in an effort to prop up the hegemony of the dollar? Will the public here accept the concept of "Unending War"?  Perhaps more importantly will the rest of the World accept it? How much time can a Nobel Peace prize buy you? 

Maybe you had trouble with math in high school, but the last time I checked its very difficult to service a debt of over 100 Trillion with a current yearly federal tax rev of 1.7 Trillion.  IF you believe the hype then you have to believe we can grow our way  into an expanding tax revenue that will service the debt and bring our yearly deficit to ZERO.  Let's assume that by hook or crook that can occur during the next two years.....Here is the problem for that "pollyanna" resolution. It's called the accumulated treasury debt AND the "other 90 trillion in debt and unfunded liabilities". It's called the "reversion to the mean" in interest rates. Its called the "law of nature" and it must be obeyed. As the rates rise as the "economy grows" all hell will break loose with the burden of debt hanging over the economy like an Oklahoma thunderstorm ready to dump the biggest flood of chaos the economic system has ever seen.

THIS is the "risk" that professional money managers are frozen in fear over. They know the "risk on" trade is being headlined by the Central Banks ponzi masters but they also know the light at the end of the tunnel that is promoted daily by the MSM and Fed speak could just be a freight train.  They don't know the timing but they are afraid to get caught in an awfully big crowd trying to go through a very tiny exit door. THAT is the consequence of  a policy of fiat that violates every free market principle known in history. 

You have been the subject of an experiment. Its never been tried in history and it will end. If you believe you can get through that exit door with all of the professional money when the music ends then I wish you only the best. You've had your time to prepare and I hope you have used it. Seasons wishes to all.

from Goldseek

I Died For Beauty

I died for beauty, but was scarce
Adjusted in the tomb,
When one who died for truth was lain
In an adjoining room.

He questioned softly why I failed?
"For beauty," I replied.
"And I for truth - the two are one;
We brethren are," he said.

And so, as kinsmen met a-night,
We talked between the rooms,
Until the moss had reached our lips,
And covered up our names. 

Sunday, November 24, 2013


During the last major World Depression a juggling act by the Central Bankers and the disparate sovereign interests resulted eventually in the power shifting within a sovereign to an ideology and leader bent on his own ideas of power consolidation outside the realm of the bankers. One can argue how far he was aided by the bankers before he went off the reservation but like most conspiracy theories it would not be provable to the masses and serves little purpose to this brief essay. These same risks today are somewhat different and revolve more around the struggle between the old dominant developed world and the developing world. These two entities are driven less by ideologies (communism, socialism, capitalism etc.) but more by the desire of the East to escape domination by the Western bankers. 

Keeping this post from becoming too abstract and wandering into the fog of boredom let's cut to the chase. CONtrol and domination to prevent another "Third Reich" is always a major concern for the elites. Driving various chess pieces into a global conflagration is however a delicate balance they DO intend to play. So never confuse "command and control" as a road to "totalitarian peace". Peace does not produce revenue and debt. Conflict produces debt and those that control debt "control everything". 

Its very obvious that the East and its "developing nations" want to have independence from the West's domination, and are working their way steadily towards that goal. This effort hinges on mitigating the "DOLLAR". It is a fiat currency and many claim it is backed by NOTHING. That is not correct. It is backed by the might of the military. SO NEVER MAKE THAT MISTAKE. If it were not backed by the military it would already be a historic footnote and we would be riding our bicycles to the grocery store with roving check points. You must back your currency with something to maintain CONfidence. Its fairly simple. THIS is why most central banks outside of the Western sphere of central banks are buying gold bullion and are even accelerating their buying now even as paper prices (through Western Bank derivatives) are crushed. They know the end game. Eventually, and one can never know for certain what will happen between now and then, but at some point the physical gold that is being made available to the east will evaporate. Therein lies the endpoint for price suppression. 

My hope, (not my belief) is this transition occurs peacefully and with economic conditions imposed that don't result in collapse of the financial and social structure of the World. The only way this happens would be if the grand chess game has determined that outcome already. There will be destruction of the dollar. There will be currencies backed by "something". What that "something" will be remains to be seen. Developing countries and the East are buying gold in anticipation of this

Wednesday, November 20, 2013


Relax......I won't bore you with a debate on Frank Baum's Wizard of OZ. Was it a metaphor for the times regarding the politics of Silver and Gold and the Bankers that openly controlled the U.S. in the 1890s? Did Frank Baum create a "children's novel" to convey a covert message, that passed through unnoticed by the publisher's censors at that time. The yellow brick road, the silver slippers (yes they were actually silver in the book..not ruby red) the Wizard etc all representing the debate at that time on sound money with the U.S. intervention into the World's Imperial Power game.  I want to just leave you with the thought that it was ONLY a mythical fairy tale written only for children, and that's why Frank Baum wrote an overtly political Broadway version of the Wizard of OZ just two years after the book.......because the book was just a fairy tale.

No.... I want you to visualize that some things never change. The battle between good and evil never changes. The naive populace that is always easy prey for the power that dominates and manipulates their lives through fear and subterfuge remains a constant. We're all products of this magical world and most likely, because of human nature will remain trapped in this realm of do have some choices. At least you still have choices today. You will ALWAYS be able to choose between good and evil. You may be told that's not true, but in the end, you have the choice....just maybe not the courage to admit it or make it. 

Where your real choices are disappearing are in the world of "need vs want". Many of us still want to cling to the illusion that "want" is a viable choice unimpeded by consequences. That illusion is still present and seems to be approaching that feared "day of reckoning" for those still standing after the 08-09 financial collapse. Many of us close our eyes every morning when we get out of bed and refuse to look at the 120 million Americans on Government assistance.....and that number is very low but I don't have time to give you the details can figure it out (for one add in those receiving mortgage deductions).....and I could go on. We close our eyes.  Let's not look at the 60 million receiving food stamps (17 million in 2000).  We close our eyes. For goodness sakes lets not discuss the real unemployment and loss of earnings in the private sector working class.  We close our eyes. We shut our ears. Hear no evil...see no evil. We're the Tin Man, the Scarecrow, the Cowardly Lion. We make excuses for being those characters and we close our eyes. 

Enjoy the Wizard's game. Enjoy the lever-pulling behind the curtain. Its an illusion and it will end and when it does you'll ask.....Why couldn't I have seen it?  YOU just had to many wants......and ignored your needs........remember how the movie ended???

Sunday, November 17, 2013


Now the big gun is about to begin. Miss Bubblicious is being crowned for her reign in the final bubble of all bubbles. Anyone that can remember Dr. Bernanke during his first years cannot forget the statements that were made repeatedly going into 2008 to Congress expressing his unwavering confidence in the economy and its ability to withstand any "slowdown" that might occur in housing in spite of his repeated assurances there would be no slowdown in housing for months. Even when housing and the economy in late 2007 began to flag he assured Congress it would be minimal and short term only. The rest is history....a panic ensued as an enormous liquidity crisis developed. The massive structural malinvestments created by the over-leverage money printing through derivatives began to unwind and the demons began to infiltrate all corners of the fiat money system.  

Here we are now 5 years later and not only were the underlying structural problems NOT addressed, but the bubble was reinflated with even more leverage and once again the piper must be paid. With interest rates at near zero and massive fiat printing, what will be the course of action to stem the next "Crisis in CONfidence" when the exit door begins to get crowded? What rabbit is left in the hat for the Fed Mistress? What will Miss Bubblicious be called upon to do for her masters? 

Having observed Miss Yellen during her recent testimony, I sense there may be some very uncomfortable times ahead waiting for her and for us. She seems ill-equipped for her job as liar in chief. The only question one might have is could she possibly pretend to "tighten" as Dr. Bernanke did prior to the last collapse that resulted in him ushering in a mountain of printed money to stem the hemorrhage created by a minimal interest rate increase.  Unfortunately for Miss Yellen her toolbox is very light compared to the Bernank, and there are an awful lot of very big players looking to exit this stage as soon as the signal goes off that the music is to be turned off. Most importantly we now have a destroyed bond market with the Fed as the 800lb Gorilla in the room. If we disturb that market with evidence that we MIGHT be stopping printing and interest rates get near the 3.50 level then mathematically this game goes into HYPERCRASH! Turn off your lights and get out the Alpo. 

So you see....faux attempts at "tightening" with bond rates just going up 50-75 basis points could be disastrous with a cascade of events that she would not be able to reverse this time. So one way or another there will be even greater QE within the next year. You see...... its Math....its the Law of Physics.....its Nature......

Wednesday, November 13, 2013


So what's the really smart money buying.......AAPL? WMT? CMG? GOOG? really what are they buying? I know......TREASURIES!......nahhh.....They're buying artwork and a lot of it and they're spending that money fast and furiously. The recent art sale in NYC registered monster profits this week, while selling works that would have fetched one-tenth of their price a few short years ago. Money's moving and its moving fast. Its looking for value and one of the first red flags is very high end art. Its transportable and over the long run it holds its value. Why do you care? Because this move is signalling what the smart money is doing and they're getting out of fiat fast. 

There's a war comin'. Its comin' fast and its not a shootin' war its a currency war, and the goal is to get to the bottom faster than the next guy. He who devalues first and fastest WINS! Smart money is big money and they know this. They're moving into hard assets and stores of wealth as the market asset prices move higher and higher. The purpose of establishing gold as a terrible "safe trade" has had some success in the West with the "dumb money" but not in the East as record amounts of precious metal is being accumulated as PRICES PLUMMET. Oh the beauty of it all. Paper prices wrecked as the East takes the discounted metal in massive amounts to their shores and convert ounces to kilograms....... and you're sitting there wondering if the price drop will ever end. Do you think the Asians are thinking the same thoughts? Actually they are and they cannot believe their fortune in still being able to buy a multi-millenial store of wealth FOR A DISCOUNT. They know the Western Central banks are playing the Volker game of controlling the gold price to maintain their fiat ponzi. They also know it has a finite timeline and they are going to act.

Enjoy the ponzi......the East surely is. Oh and one more thing just to let you know its not a one way trade for me. Buy some art. If you have a few hundred million lying around it really does make good sense

Sunday, November 10, 2013


Tapering is the last weapon the Fed has to combat the reality of money printing. Did you ever wonder why there is so much discussion BY THE FED on tapering. Its actually quite simple, and that is because without tapering then everyone would realize there is no escape mathematically from the literal counterfeiting the Fed is engaged in now. One can argue the first QE was necessary to maintain the system and allow a foothold to be gained for some kind of attempt at recovery (I disagree). However, no one can make a case for the following barrage of QE. It has created a monster that can only end in a debt collapse and/or fiat collapse...take your pick.  
So why the taper talk? ...... Without taper talk, the illusion the Fed has any control of the creation of money out of thin debt..........would evaporate and a virtual panic would ensue. Of course the smart money already knows this and has been taking the necessary precautions for this eventuality for several years and are accelerating (see Asia's accumulation of gold and hard assets). Arguments are made daily (and accelerating) by Western economist and money managers for the success of QE. In fact if you have followed this chatter, you would notice it has noticeably increased as the (rigged) numbers on the economy grow weaker and weaker.... We have been promised by the Fed better GDP numbers going forward for several years and THEIR numbers are actually more and more disappointing. We have had job predictions each year that have only resulted in fewer and fewer BLS that is THEIR BLS numbers. These numbers when parsed are horrific. Millions of working age Americans falling off the payrolls due "giving up" looking for work. Many of these are Americans with degrees in engineering, computer services, skilled manufacturing, that were the lifeblood of a healthy economy. Instead we have high paying government jobs that have supplanted these. Not only that we have had government (malinvestment) money that is being diverted into the remaining "private sector" job market that is creating the distortion/illusion of a "recovering economy".  I know this because I am a recipient of this money and am amazed daily by how it continues to flow......but I know it will stop.....many do not.

Malinvestment is a natural result of money printing since its NOT true capitalism directing the money flow, but government. They will always misallocate capital, creating bubbles that weaken and destroy countries eventually. The U.S. just happens to have had the World's reserve currency for over 70 years and could withstand the previous bubbles. 

Back to taper. Taper talk is all that's left. One can argue there will be no taper. I'm not sure. They may try a "faux taper" but that would be risky for them and mathematically it would be laughable. BUT.....they will talk taper to keep the illusion they can escape the money printing (counterfeiting) .  This is why gold has been kept down. Volker famously noted after he was out of the Fed that he should have suppressed the price of gold in the late 70s while he massaged the interest rates. This time THEY did. Unfortunately for a lot of people/Western nations there will be hell to pay when they lose the dollar status because there is no gold to back it. Germany has a very strong currency but it has no gold now and it knows its in deep trouble. Anger is building between Germany and the Central bankers so stay tuned for that resolution in the next few years. 

Enjoy the illusion......I have. gl

Thursday, November 7, 2013


Looking out across the landscape of the current market, one has to wonder just how long the illusion of "safe sailing" can be maintained. Daily there seems to be increasing evidence that the war for CONfidence is being lost. The market continues to "melt-up" and the usual response of past markets with sentiment rising is to see a correlation of increasing participation of the dumb money as the smart money unloads their position for a wash rinse repeat cycle. Is this time different or will the "dumb money" step into the trap? Without increased participation the ability to move out of these overvalued positions becomes less and less as the price moves higher. Dangling the bait of "recovery" and "growth" leaves the game a double edged sword that continues to grow sharper and sharper with each passing day. The rubber meets the road as more and more evidence that the "recovery" is rolling over as massaged statistics become increasingly "stretched". Let's not kid ourselves, we're in a mess and its going to need at the very least a major reset just to give the current strategy a chance at being successful. It has to have some steam let out of it and like they did in 87 a little brief shock may just do it. We may not be there quite yet, but on the other hand a "market event" seems to be gaining some steam here. It would provide the cover for further printing and after all.....what else is there for the central planners? Be cautious. Keep your focus on what's important and use common sense as usual. I apologize for the random posts but honestly there just isn't anything factual to really give me any encouragement. Non farm payroll tomorrow and if you get a chance to watch CNBS in the morning watch how disgusting they play the numbers game with it.  gl

Sunday, November 3, 2013


Can the 800 pound gorilla in the room  defy nature/gravity and walk the tightrope into solid growth and recovery? Stay tuned for the Flying Bernankies and their death defying act. Having navigated through a global collapse in 2008 with a massive printing surge of tens of trillions of dollar printing and flooding bank reserves around the globe with greenback funny money, the gorilla in the room prepares for its next act....and this one is a doozy. Can a global consumer riddled with debt and collapsing individual income and job availability stage a solid recovery in the face of structural reforms that were never addressed by the Western countries involved? 

So here we are with the ultimate conundrum. How do we load a consumer that is flat A$$ broke with even more debt to propel a flagging GDP? AND if we were able to mount some type of growth then how in God's green earth would we be able to maintain the low interest rates to maintain the illusion that we can carry the insurmountable debt that we've created to arrive at this point? Perhaps the tight rope is around our necks instead of under Ben's feet.

So, in fact, instead of a recovery we've actually put the rope much higher for the Fed to cross AND much tighter now around our necks......probably not a good crossroads to have reached. Maybe we can maintain the illusion that we're "almost there"....and "just don't look down. Sheep like to follow and in this case I see nothing to change that fact of nature. THEY will follow.....and they refuse to look down like all good sheep. Warnings abounded in 2007 while the rope was raised and the sheep kept following without breaking rank. "THIS TIME IS DIFFERENT".  "PIGS DO FLY". Enjoy the next act....just don't look down.