|
On stardate 3842.3, the starship USS Enterprise, under the command
of Captain James T. Kirk is
transporting Federation ambassadors to the Babel Conference to discuss the
admission to the Federation of the Coridan system. The system is a prime
source of dilithium
crystals but is also underpopulated and unprotected. Mining rights are
disputed by many warring species who have strong
reasons for keeping Coridan out of the Federation.
Formal negotiations are to take place on a neutral
planetoid called Babel, but preliminary diplomacy begins aboard the Enterprise. Meanwhile,
Communications Officer Lt. Uhura has detected
an encoded transmission beamed from the Enterprise
to a fast-moving vessel at the extreme edge of sensor range. The unidentified
vessel closes in to attack the Enterprise,
moving at extreme speed; far faster than the Enterprise can lock weapons on it. Kirk orders
Thelev (a member of the Andorian delegation)
brought to the bridge and questions him about his and the attacking ship's
motives, though Thelev is evasive.
The ongoing attack damages the Enterprise and Kirk decides
to try a ruse, shutting down internal power to make the Enterprise appear crippled.
This lures the attacker to slowly approach and the Enterprise damages it with
a surprise phaser counterattack. The disabled ship self-destructs, and Thelev
reveals that both he and the ship were on suicide missions; he then collapses
and dies from a delayed-action poison.
In the aftermath, Spock speculates that Thelev and
the attacking ship were of Orion
origin and the speed and power of the latter were consistent with a suicide
mission, with all energy dedicated to attack and none for defense. Thelev's
mission aboard the Enterprise,
Kirk and Spock presume, was to sow distrust among the Federation members and
weaken the Enterprise
(by killing Kirk) prior to the attack. (i.e. to confuse and confound.)
Taken from the Wikipedia synopsis of
the Star Trek Original Series in
the 60’s, the above encapsulates salient features (for our purposes) of
an episode that was entitled ‘Journey To Babel’,
where not surprisingly (considering Roddenberry’s
incredible talent and intellect), a meaningful sophistry (manufactured
parallel) can be drawn between it and today’s monetary system, it too
on an undeclared and unavoidable suicide mission. Indeed, in what will come
as a ‘big surprise’ to most once it unravels, you should know our
present fiat currency
based economy(s) are well within the time of what would appear as a suicide
mission to sane trustees of a nations wealth. (i.e. think the Austrian School)
And eventually it will be understood by all (when some degree of
hyperinflation arrives) that the bad actors in charge of our money
(economies, markets, etc.) today are nothing more than marauding power barons,
interested solely in furthering their own hidden agenda(s). (i.e. much like the Andorians.)
Unfortunately for us however, we do not have James
Kirk and Mr. Spock to take care of the bad guys. Nope – they have been
allowed to run free since that faithful day on Jekell Island
when the Federal Reserve was created, that group of ‘bad guys’
whose sole purpose is to defraud the citizenry of the United States (and
world). And since 1971, when Nixon abandoned what was left of the global gold standard,
they now do their dirty work (clandestine wealth confiscation via currency
debasement) unrestrained by any measure associated with Mother Earth
(historically currencies have been commodity based in order to maintain
harmony with the natural world), where in doing so, have set us on what
amounts to a suicide mission with respect to the larger economy due to years
of excessive and unchecked growth in currency (of increasing varieties these
days), GDP, etc. Yes, they have fostered quite the bubble economy for us to
survive, where increasing money printing sponsors serial pockets of price
increases, speculation, and popping noises eventually as all good things
(heavy on the sarcasm) must come to an end. (i.e.
God will come down on the Tower of Bable one
day and confound their speech [fraud].)
What’s more, the Fed does all it can to hide
and confuse the public about just what they are up to (like the Andorians),
not that an increasingly debased society would largely be concerned with such
drivel. (i.e. what your favorite movie star is up to
is far more important – right – wink wink.) Fortunately, America
does have Ron Paul (Presidential hopeful) to help explain to the masses what honest money is,
and why we should have it, and not the Fed.
And Paul’s message is becoming more popular as
increasing numbers begin to feel the effects of loose minded economics and
debased politicians (people become as debased as the currency), where as the
bubble economy(s) deflate, painful readjustments must occur. And because the
bubbles are so big these days, this insidious process will continue for some
time while the Fed fights to keep its hot air economies inflated, but in the
end such efforts will not help, only exacerbating the depths of economic
depression that will be experienced as the system is cleared. Growing legions
of Ron Paul supporters know this and are pushing for a return to
constitutional money (money not lent into existence by self-serving banks) in
order to get the process moving along so that the
real economy begins to grow again.
Be that as it may, and whether Paul’s efforts
have a direct effect on ending the Fed sooner rather than later, the point is
for all intents and purposes it will end at some point in the not too distant
future, because like the situation much of Europe’s periphery States
are already in, America will no longer be able to pay the tab on
a geometrically
increasing national debt, and the party is over.
There is no denying it any longer as the Debt to GDP Ratio in
the US is already past the terminal parity mark no matter how you measure it.
(i.e. it’s much higher if measured correctly.)
What this means is the US either stops printing the debt based money the Fed
wishes used in order to enrich its owners
(who are above any resemblance of good law); or, the
situation will need to ultimately progress to some degree of hyperinflation,
which is closer than you may think.
Right now the Fed is holding back on the money printing because Bernanke is
attempting to pop the commodities bubble so that his buddy in the White House
has a better chance at getting re-elected (because if Obama is not victorious
Bernanke will get the boot too), but with big banks blowing up all
over the world (many soon to come) at
an accelerating rate once again, the helicopters might need take flight
sooner rather than later or the larger economy will implode as per previous
discussion on Bernanke’s
Pickle.
But you won’t know we are out of the woods in
terms of this game of chicken
Bernanke is playing with deflation (or at least a scare) until precious
metals shares turn back higher decidedly, especially the small ones. For the
large cap stocks, the most commonly followed measure is the Amex Gold Bugs
Index (HUI), which will need to better 500 (both the 2008 and 2009 highs)
before we will know a good head of steam is back in the global
economy’s fiat currency pipe; and, for the small caps we would like to
point out the head and shoulders (H&S’s) pattern in the TSX Venture
Exchange (CDNX) will need to be negated, meaning prices would need to exceed
right shoulder extremities at 1700. Here is a chart that shows this, along
with pointing out its divergence to the rest of the larger equity complex. (See Figure 1)
Figure
1
The importance in knowing of this divergence is it
must be closed one way or the other, meaning either the larger equity complex
crashes with the juniors; or, the juniors snap back to the top of the more
immediate range. (i.e. ~ 2500 CDNX.) So the implications for junior
exploration stock holders, new investors, speculators, etc. are profound in
this regard right now because if the CDNX doesn’t just test the
neckline of the H&S’s pattern in coming weeks, and then continue to
trace out the measured move (MM) down to 400 (that would hurt), it would
quickly double (and likely go even higher subsequently) from present levels
having completed a corrective zigzag. So, as you can see, the stakes are high
right now, and all educated eyes are on the Bernanke to see if he’s
going to blink in terms of this game of chicken he’s playing with
deflation, or whether he will make the same mistake he vowed to never make
(and apologized for) by
allowing the stock market and economy crash a la 1929 style.
Somehow, I cannot see him allowing this to happen, however
stranger things (worse mistakes) have happened theoretically. Be that as it
may, and even if the Bernanke allows a deflation scare to get a little out of
hand initially, if history is a good guide he will undoubtedly respond to
such a development aggressively, which would likely mean substantive and
increasing bailouts for the banks (QE3) considering their already fragile
state, which would put a good deal of pressure back in the world’s fiat
currency economy(s). In terms of confirmatory signals, and as per previous
comments (attached above) in this regard, watch for the Dow / TSX Ratio to
convincingly fall back below the 2008 peak for a signal it’s ‘all
systems go’ in the inflation trade once again. (i.e.
traders will bid up Canadian stocks on a relative basis when it is assumed
inflation has a good grip on macro-conditions once again.) (See Figure 2)
Figure
2
And you will know its all systems go when gold and
silver take off again too, which will likely be led by precious metals
shares. (Note: precious metal share ratios closed with healthy gains against
just about everything that moves last week giving us the weekly signal we have
been patiently awaiting.) There is a great deal of chatter on
the internet right now about how Goldman Sachs and the hedge fund community
are naked shorting / spread trading (long bullion against a short the stocks)
precious metals shares, especially the juniors, which have been annihilated
by these characters. This could be what has created the divergence in the
CDNX discussed above; where again, once 1700 is taken out on the upside this
disparity should be quickly closed, doubling (and better) many of the shares.
And as for gold (where silver was discussed in our last commentary),
with the dollar ($) losing its reserve currency status at an accelerating rate
these days (because of bad policy),
the Bernanke will have no choice but to rev up the printing presses sooner
rather than later to keep what’s left of $ money supply velocity
from falling any further.
(See Figure 3)
Figure
3
As you can see above, technically gold is now
‘oversold’ on the weekly chart, which increases the odds
favorably for a springboard off the channel top indicated above. For silver,
word is getting around about the rather large descending and
contracting triangle in the trade that breaks out at
approximately $31.50 this week. Will it breakout this week? Perhaps –
but even if it does don’t expect it to zoom higher right away. Instead,
watch for a good test of the breakout, which could even involve a break back
below triangle support in order to fake out technical traders who ignore
fundamentals. Fundamentals like $ reserve currency
status erosion from multiplying sources
which will eventually have a very real impact on prices in the US one day,
sending them materially higher. And you can be sure this will be reflected in
materially higher gold and silver prices ahead of time, where if not for any
other reason physical precious metals
constraints (supply issues) will eventually expose corrupt Western markets.
Because unlike the world surrounding the Tower of
Babel the real world does not speak just one language, and foreigners have
something to say about gold’s place in our monetary system. (i.e. and they are shouting their views loud and clear via record demand.)
Yes, the East continues to drain the West of its physical precious metals
while the west continues on with its paper games in an attempt to slow the
inevitable. What’s more, soon the West will have to start the big print
that will be so obvious to all that the present papering over of the problem
will be insufficient in halt advancing prices any longer, especially when it
becomes apparent US banks are
as insolvent as their counterparts in Europe. Perhaps this is why foreign
central banks continue to increase the pace at which they are accumulating gold.
So while precious metals could experience further
volatility in the days ahead, one should ignore any such noise as exactly
that; noise, and focus on the eventualities that will unfold in the longer term.
Monetary inflation is about to grip the world with the US election, repeal of
austerity in Europe, and sagging economies in Asia forcing the issue. But
it’s up to you to recognize this, as with the exception of the very
few, US institutions are not interested in protecting themselves (and
beneficiaries) against inflation. (i.e. they are on
a suicide mission.) No, instead they are interested in painting a picture of
low inflation in an attempt to continue the surreal dream / vision they have
of the economy (low interest rates, rising stocks and profits, etc.) –
that everything is just ‘fine and dandy’. (to
confuse and confound.)
Because of this deception what will happen is when
the games have run their course(s) and physical precious metal supplies run
out you will wake up one day and foreign markets will have gold bid much
higher (some see $3000), meaning
those without exposure to precious metals prior to such an event will have to
‘pay up’. They will have to pay up if they wish to protect their
wealth against the ravages of runaway inflation (i.e. hyperinflation.)
As Von Mises pointed out long ago:
“There is no means of avoiding a final collapse of a boom brought about
by credit expansion. The alternative is only whether the crisis should come
sooner as the result of voluntary abandonment of further credit expansion, or
later as the final and total catastrophe of the currency involved.”
Along this line of thinking it does not appear present day money changers are
about to voluntarily slow the rate which we are debasing our fiat currency
economies, which can only mean one thing – taking a stab at
hyperinflation eventually. And while we may not get their before the entire
system collapses, no matter, it will become clear to all at some point along
the way gold (and silver) offer strategic refuge from the insidious theft
that is monetary inflation, sending prices much higher.
Protect yourself with precious metals.
Good investing all.
|
|