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Nobody wants
to talk about it. And certainly the mob does not want change when it is
painful and violently alters the illusion. This is why the fascist oligarchs
and bureaucracy that control power in America (and abroad) are allowed to
remain at the forefront, not accountable for their actions and accelerating
the decay of our society. And this is why our civil liberties and freedom are
systematically stolen by these same perpetrators, because the mob is too
afraid and soft on the alternatives. This is our time of bread and circuses.
Behind the
scenes (of the bureaucracy's mainstream media) however, and much to the
chagrin of the powers that be, the seeds
of revolution are germinating in a grass roots movement by the youth
(including many in the military) of America who have been forgotten by the
'me generation'. The youth of America are angered they have been forgotten by
their baby boomer parents who are use to having
everything they want, and are willing to do anything and everything to
maintain the status quo. Youth
unemployment rates are at all time highs,
making this a structural problem the present two-party system (it's really
one party controlled by the fascist oligarchs and bureaucracy) will not be
unable to overcome no matter what gimmicks and deceptions are employed.
Nope - food
stamps or unemployment insurance or any other handouts are not going to do it
for this growing
crowd. They want jobs. And they want jobs now. So, given this group is far
larger than official statistics would
have you believe, and sentiment towards the status quo is being radically
altered within growing ranks, one should not be surprised if equally
radical change grips the official political monster around its precariously
exposed neck at some point, making the election this fall anything but the 'lay-up'
incumbents expect at this point. Upset here would definitely shake some trees
that think they are firmly rooted
at present.
For now
however, all appears well for the powers that be, with US stock markets
higher and commodity prices under control, even if only on the surface. In
this regard, and something predicted last year, the MF Global scandal has now
matured into a festering sore that will ultimately morph into full
blown cancer in the financial markets, where the present brand of 'crony
capitalism' will no longer be tolerated. And again, while this may take
considerably more time to fully mature given current events can be compared
to Rome's
long decline, please, make no mistake, the West is in
decline in real time - right now - whether you chose to believe it or
not.
Of course if
you use the investing population's distain for precious metals investments
right now as a sign meaningful change in attitudes is much closer than can
presently be discerned (anticipate the opposite of dumb money expectations),
then it is my opinion you would be on the right track. Here, a bell will not
ring in this regard, which means it's up to you to take a look at which way
the wind blows and move to protect yourself financially. It's either that or have your life savings potentially go up in smoke in what
can be termed a paradigm
shift. You will remember from our last
commentary that we made the point the masses remain fundamentally
uninvolved in the precious metals market(s), and that precious metals shares
are as cheap as they were back at bear market lows in 2000.
Now we have
consistently tuned in high profile commentators coming out with similar
observations, and
more, talking about paradigm shifts (see above), the virtues of owning
physical precious metals over paper, and where this is all going
one day. Myself, I think precious metals shares will do 'just fine'
moving forward despite their present malaise because amongst other things, in
the end, this may be the only means most will be able to participate in the
trade once physical supplies become (semi) permanently encumbered. (i.e. because of physical shortages all mine sales are
bought by governments, etc.) It's important to note that a shade of this is already
the situation in China, where not only is it the top
producer of gold (and soon to be top
importer above India), exports have been outlawed, and sales to its
citizens are completely controlled by the State. (i.e.
and the State needs to increase its gold reserves
drastically.)
Beyond this
however, there can be little doubt that despite a concerted effort by the
powers that be to misrepresent true physical metal inventories, supplies are tight
right now with public interest at an all time
low (Westerners are cashing in jewelry never mind grounding assets in eternal
money), and getting tighter by the day. So again, and wholeheartedly agreeing
with the attached above, the stage is in effect ripe for a 'paradigm shift'
once demand begins to affect these tight supplies, where when it comes to
silver, its tiny market
size will end up backfiring on heavily off-side price managers (think the
banks via central
bank / government accounts trading through JP Morgan) presently using
this dynamic to keep excitement from the market (entire sector at large)
removed.
And there are
other
reasons to own silver, such as peak
precious metals (peak commodities, crude, everything) that we have been
talking about for nearly a decade now, and continue to believe is why you
should first anchor at least half your investing assets in physical gold and
silver, and then look for opportunities in the share market(s) at opportune
times, like now. The powers that be have the machines (via aglos) set to ignore precious metals when US stocks are
rising, and sell them in apparent deflationary collapse when they are falling
in order to maintain the appearance that king Dollar ($) is still boss, and
that America is still strong in this election year. This topic was covered
extensively in our last commentary.
In reality,
and as reflected in the rest of the world's stock (and bond) markets (most
notably in Europe and Asia) this year (being down and many at 2008 lows),
nothing could be further from the truth; and, if it were not for increasingly
surreptitious and largely unrecognized currency debasement (which is why the
$ is not falling) in the US, the picture here would be quite different as
well. At some point the growing divergences between US stocks and the rest of
the world will need to be closed however, and if precious metals investors are
wrong again, aside from working off US market overbought conditions this
should involve global stock markets recovering on an intermediate-term basis,
which would also involve perspectives on inflation prospects moving forward
rapidly snapping back the other way as well.
Because no
matter how much obfuscation and diversionary tactics they use, it's important
to remember that as long as the present group of thugs running Washington are
still in charge, inflation is still policy, even if this involves the destruction
of the currency ($). (I will have more to say on this subject in the near
future.) For now, our focus will remain on discussing just how cheap precious
metals shares (silver bullion too) are right now, and why one should be a big
buyer when the Amex Gold Bugs Index (HUI) is vexing 400. (i.e.
note it does not need to get all the way there making recent lows the
potential bottom.) In a nutshell the most immediately compelling reason is
400 on the HUI represents a Fibonacci 50% retracement off the 2008 lows. And
naturally above this, equally important is the reason we have been harping on
above - because of the excellent value in precious metal shares (and silver)
at present. (See Figure 1)
Figure 1
Turning to
the charts now, and beginning with the above, here we have the long-term
chart of the Amex Gold Miner's Index (GDM) from the Chart Room that shows not
only have precious metals shares retraced a common correction ending
Fibonacci interval of 38.2% from the 2009 lows, but more they have also
perfectly retraced 38.2% from the 2000 lows as well. You may remember signatured moves in this regard have tended to be 50%,
which was an observation made in my original
harmonics study back in 2003, however considering the GDM / Gold Ratio is
all the back down to year 2000 levels (pushing a 100% retrace), we will have
to allow for the possibility for a bottom here based on present oversold
readings, negative sentiment (Gold Miner's Bullish
Percentage Index $BPGDM most oversold since 2009 lows), etc.
What's more,
based on the above observations, not only are technical conditions oversold
enough to sponsor a significant intermediate-term rally, sentiment wise it's
important to note we also have perfect sentiment related conditions for
prices to climb the proverbial 'wall of worry' moving forward, where many are
too afraid to jump in the pool because they think general liquidity
conditions are suspect. And if you only watch conventional money
supply measures Western central bankers want you to watch, this would be
an appropriate concern. Consider however that just like everything else they
produce, these measures are lies too, and such a practice could be dangerous
to your financial health. Today, one must watch all
the various ways (global monetizations are
designed to hide the extent of currency printing) these characters get money
into the system. (See Figure 2)
Figure 2
Further to
this, and leaving our US-centric sphere for just a moment to make a point of
just how widespread the theatre has become for good speculators, I bring your
attention to the plot of the Dow set against the French stock market ($CAC),
pictured above. The reason I do this is to show you that in terms of bells
being rung, and in spite of too much attention being paid to Spain
(because France is far more important), it appears French stocks are about to
begin outperforming US bellwethers, which means the generous and fluid
liquidity conditions of late are about to begin having an effect on prices.
And if this is happening in France, it will be happening everywhere, meaning
general price levels should begin to rise around the world quite soon. (i.e. much to the chagrin of those fearing deflation.)
And again,
this is the perfect circumstance to sponsor a wall of worry related advance
in precious metals once the market(s) see collapse is not on the immediate
horizon. Just like the newly elected socialists in France, like-minded
thinkers around the world will ensure such an outcome in monkey see monkey do
fashion, abandoning austerity measures en masse. Make no mistake about it
folks; this is the event horizon we have been waiting for to signal all out
inflation moving forward. France is considered a core and important (big) EU
member, so breaking from the ranks will be viewed as a game changer - a game
changer that could spread across the entire globe in a monkey see monkey do
chain reaction of austerity abandonment. (i.e.
because jealousy amongst children spreads like wildfire.) Just think of what
will happen to the $ once traders figure out US currency debasement rates
will need to exceed those in Europe soon given this is an election year. Is
it any wonder the $ can't rally.
So, don't be
fooled by superfluous statements out the Fed this week (think FOMC meeting),
watch gold and silver prices for the truth. They have been firm (think foreign
central bank buying), and precious metals shares appear to be finding a
bottom (possibly prior to reaching a signatured 50%
retrace - this number is ~ 395 off 2009 lows for the HUI), which would be
extremely bullish. A great number of people are looking for a repeat of 2008
here and they are not going to get it because of all the inflation, although
with the public broke and essentially not participating in the share markets
these days, debt will need to become less attractive to the institutions
before precious metals will catch a bid.
This
reasoning is why you can expect some sort of QE3 announcement out the Fed as
summer approaches, because bonds should be feeling the pressure of all this
inflation by then, where increased monetization (monetary authorities already
buy more than half the bonds issued by all governments today) will be
required for yields not to skyrocket. What's more, this will likely be
happening as economic data continues to weaken, which is already
the case, putting an especially good bid under gold and silver at some
point. A monkey see monkey do chain reaction of widespread austerity
abandonment and currency printing (including new
means) should be expected as the year presses on for these reasons.
Along these
lines then, whatever you do, don't short the stock market even though it may
appear to be setting up to fall. Many people will be burned this year doing
exactly that. As evidence of the potentially significant rally in US stocks
that still lies ahead once the $ tops out take a gander at the two charts
below. These are risk adjusted measures of US stocks beginning with the
S&P 500 (SPX) divided by the CBOE Volatility Index (VIX). (See Figure 3)
Figure 3
New highs are
likely on the way for the broad measures of stocks before it's all over. All
that newly created currency will be looking for an inflation hedge home once
prices begin rising in earnest later this year, and stocks will be seen as a
logical alternative to many. (i.e. likely still the
majority of people.) This is especially true of tech stocks when lots of free
money is floating around, where it would not be surprising to see the NASDAQ
attempt vexing the 2000 highs. (i.e. it should not
make it if history is a good guide however, as such manias are not repeated
within the same generation.) (See Figure 4)
Figure 4
We know this
is a distinct possibility (probability) because the NASDAQ / Dow Ratio
just put in what will likely turn out to be a wave 2 corrective low, with
waves 3, 4, and 5 (this one will be a doozy) still to go. Apple could hit
four figures under such circumstances, as the mindless machines continue to
seek out momentum. One day the negative momentum plaguing precious metals
shares will turn with a vengeance, and the sizable divergences (to the
metals, broads, etc.) should be closed quickly; however again, as we know
from our harmonics study all those years ago (attached above), the indexes
may need to correct 50% before this happens.
So, be
prepared for anything good people. Those holding through this correction are
getting a good taste of what it means to be a battle harden veteran of
precious metals investing. At times it can make no sense (like now), with
inflation acceleration obvious to the naked eye and other hedges acting
rationally, set against an onslaught like the one presently gripping gold and
silver shares. Please remember however that at least as far as the senior
indexes are concerned, this is nothing more than a routine correction (50% --
give or take), one that was overdue in fact, which should make you wary of perma-bull commentators in the future.
When in doubt
about such things it always makes a great deal of sense to sit back and look
at the 'big picture', which in this case centers around the fact precious
metals shares have a signatured tendency to correct
at least (2008 saw a 78.6% correction) 50% after a significant advance like
the one witnessed off the 2009 bottom.
That's the
fact Jack.
Those who can
live with this will see things in the proper perspective and prosper through
time.
And those who
cannot will buy and sell at the wrong times.
It takes all
kinds to make a market.
Good
investing all.
Captain Hook
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