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Orwell would be amazed – disgusted and amazed
– things have gotten so out of control in the West today. Because
increasingly, for the average citizen, it’s like chapter and verse from
his classic Animal Farm,
once used as a standard in all classrooms to teach children of the horrors
associated with communism, the ‘demon of the day’, used by still
maturing Western bureaucracies all those years ago. But alas, throughout the
years something has gone terribly wrong, the lessons forgotten, the teachings
replaced with ideals of why dictatorial conformity is good, and why you
should think like a barnyard animal. That’s the way our self-serving
bureaucrats, politicians, and top level bankers (the pigs and dogs) would
have you think and act today, like a dumbed-down barnyard animal, still
operating under the belief America is the land of the free, and that you are
not simply viewed as a resource by the oligarchs.
But if one were to count it, this author would
estimate we at a minimum approaching Chapter VII
within the storyline now, a point where the way it was in the past is increasingly
forgotten, life continues to get harder for
the masses, and Napoleon’s dogs suppress objections by
any disgruntled animals. As with eventualities in all such embroils however,
the politics of man dictates that the numbers of disgruntled animals will
continue to grow until the mob becomes uncontrollable, and revolution will
take hold once again. We are not there yet however, not even close by the
important measures, which are led by the need for an honest money
regime. This is of course the ultimate measure of a truly free society. But
again, if history is a good guide we are likely far from such a place today,
where the seeds of revolution are still being sown.
Of course everything is faster today in our technologically
advanced society, so along these lines it might not take so long to get where
we are going in this regard. What’s more, and in referencing the above
need for honest money to facilitate such a transition, one should then expect
an increasingly rapid change in this respect as well, where it doesn’t
take a visionary to see our dishonest and fraudulent fiat currency / debt
based economy is ready to blow.
Yes, this transition might just be more radical than most people think (those
few tuned into such dry thinking), where I will put forth the prognostication
that if MF Global clients are not made whole in the end (causing an
accelerating loss of confidence in the system), election year or not next
year, 2012 (perhaps the Mayans were right) will mark a very important turning
point in human interaction – potentially the top of the Z-Wave. (i.e. never mind this just being an X-Wave
top, which we already know is in motion.)
So the stakes are high – and everybody should
be paying attention because the implications of such rapid and radical change
would be profound. As alluded to above however, next year is a Presidential
election year in the US and you can bet your bottom dollar($) the feds will
be printing money of all varieties to boost the economy(s). This past
week’s coordinated
central bank announcement is just the beginning of what you
can expect to see moving into next year in this regard. At a minimum we still
have Quantitative Easing (QE) both here and across the pond, IMF
‘Special Drawing Rights’ injections, and all those reserves
sitting on US bank balance sheets to consider. So, by the first quarter
liquidity spigots should be flowing full throttle, where everything from IMF
funding and the resulting foreign bailouts to the M’s at
home should be reflecting such a reality.
Does this mean volatility should disappear in the
equity markets moving forward? Although inflation should be the name of the
game next year, again, and as evidenced by the profound statement in this
regard made by the world’s leading central banks last week, we
still have continuing solvency concerns in both the corporate and sovereign
spheres that will not go away, along with investor sentiment extremes to
consider. So although next year should offer a relatively smooth ride for
equity investors in relation to what they experienced this year, by no means
does this mean investors should remove the word volatility from their
vocabularies. There are growing mountains of unsustainable debt on every
level (personal, corporate, and government) that the markets will need to
deal with at some point, although right now it appears this will have to wait
until after November of next year given election year proclivities. (i.e. cracks in the system should reappear no later than
the first quarter of 2013 when money supply growth rates traditionally slow
post the election.)
And although I will not comment on sentiment related
considerations in this regard here today, you can be sure this factor alone
will bring volatility at some point(s) over the next 12 months, so those that
know what to watch for (divergences) should factor such considerations into
their trading activities. Overtrading would of course be a mistake given the
balance of the year should prove bullish for equities (and especially precious metal
shares) once they get rolling, however with the house of
cards our meddling and corrupt oligarchs have created in the financial
markets, risk tolerance considerations should be ever-present on your mind.
Because again, as per the attached study directly above, once the Amex Gold
Bugs Index (HUI) vexes the Fibonacci signatured
target at 1,050, it will likely have a 50 % correction again, just like it
has done consistently since the beginning of the bull all those years ago now.
Ignoring seasonal tendencies for next year now
then (in fact it would be bullish for next year if seasonals
are ignored now), if the European’s finally put a coordinated plan
(involving sufficient money printing) together this week (involving the ECB,
Fed, and IMF), then precious metals should take off not long after, with the
shares in the lead if the charts below hold any predictive power. In this
regard, and in referencing Figure 1, as you can see the Dow / Gold Ratio is
at an important time-line turn right now that should lead to relative
buoyancy in the broad stock market. Such an outcome would of course create
more liquid conditions for all shares groups, which historically has been
what precious metal shares have needed to make a staged progression to a
higher level. (See Figure 1)
Figure
1
 
In reference to the XAU to Gold Ratio,
pictured in Figure 2, one can see the potential in precious metals stocks
against the metals is still very attractive right now in being at a likely
double bottom, with plenty of upside obviously in the cards. One would need
to be blind not to see the move that is likely coming if based on this
observation. All you need to do is look at the charts, invest, and wait to
get paid in my opinion. Precious metals and their related equities are still
a slow motion lottery ticket today if this is true, especially with reference
to silver and some of the better-positioned juniors. So make sure you are positioned
now. (See Figure 2)
Figure
2
Just look at silver set against the
S&P 500 (SPX) in the monthly plot below. If this chart is not screaming
buy to you it’s time for an eye test, where the majority of the larger
move is still in front of us. Silver is still a potential ten-bagger.
Eventually the liquidity from the stocks will flow into silver once
escalating inflation becomes so obvious authorities will not be able to hide
it anymore, sending the hoards into what will soon
be an unparalleled
tight market. So again, get positioned ahead of the hoards that are sure to flood into this market once
prices begin to rise in earnest. (See Figure 3)
Figure 3
And make no mistake about it, this
process could accelerate anytime once the stars are aligned, where as per above, sufficient money printing should soon
be in place, along the desire to flee the bureaucracy’s corrupt and
fraudulent markets. In this regard Jon Corzine is scheduled to appear before
congress this Thursday on
the MF Global debacle. And again, I will make the prognostication that if
nothing more comes of the fraud he perpetuated in plain sight of the public,
that same public (not just those burned in MF Global) will hasten the pace at
which they exit our securities based financial markets in favor of tangible
assets (making future fraud far less likely), not to mention foreigners will
have a much changed view of ‘safety’ in the US. This Corzine
thingy is a lot more important than most realize.
This would accelerate the larger process
considerably in my opinion, bringing significant pressure down on the $ in
good time. (i.e. anytime now given COT considerations.)
Just wait until the Europeans finally buy some time for the Euro (in coming
weeks); the combination could spell big trouble for the $ moving into next
year, potentially sending commodities, precious metals, etc. zooming higher.
So again, please realize it does in fact appear the
stars will be aligned in positive fashion for precious metals very soon,
where everything from market risk
aversion to Obama’s
re-election hopes will do nothing but add to a mounting storm of
positives for the group.
See you next year.
Captain Hook
The above was commentary
that originally appeared at Treasure Chests for the benefit of subscribers on Tuesday,
September 27th, 2011.
Copyright © 2011 treasurechests.info Inc.
All rights reserved.
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