Thursday, June 30, 2011

This Summer's Market (Revised)

As the world turns, so does volatility.  The Algo Machines from Hell have smelled the fear in the market and are front running the "Greece is A-OK" rumor, which has the DXY at support and the Euro at resistance.  The trade will slide in the opposite direction, and everyone will beg for QE 3, even while QE Light supports the fragile US bond market. 

I am going to paste a comment a made on the last thread here:

It looks like due to the French/German "restructuring", the debt will be paid up front to the banks that issued the loans (French/German banks). So this "bailout" is not likely to help Greece in the long run. It is a short term fix for the Major European banks.

The "bailout" will give the European banks a minute to move assets around their book. One thing they must buy is European Bonds, as it would be foolish to take the money and run right away. It is not a bad deal, because the bonds are cheap, and the yield is far greater than those across the Atlantic.

The likely hood of Euro bond strength is great, which means that the Euro will likely weaken. The range is likely to break, and EUR/USD is likely to test $1.38. I think that it will take a few weeks to get there. By that time, DXY should be slightly above 76.

Currencie trades will remain volatile, so it will not be a quick move to $1.38, but likely choppy, which is why I think it will take a few weeks. I think gold will move with the Euro, but silver and oil will remain at the bottom of their ranges, as will US equity.

Yet oil and silver are on a bull run, and they will over take this move even in the face of a European bailout. This will lead to DXY weakness, which will reverse the downward trend in the Dow (since the lesser value of the dollar will make equity more expensive).

Yet this does not address the US default situation, and the Treasurie needs to issue massive debt to stay out of the red. The US debt ceiling will be raised, and QE 3 will be issued to accomplish the feat, as the Treasurie acts in coordination with the Federal Reserve, and the liability of debt must be paid off in dollars.

Since oil trades inversely to the dollar, there will be a two fold move in oil's favor, because of the bull move in real assets, and because of the issuance of new debt/credit. This will have the Euro strengthen as well, even though it will stay minute, sense it will have gone through a period of weakness.

I think that EUR/USD will be at $1.38 around July 29th, at which point the trend will begin to reverse. Bernanke will announce QE 3 around August 11th, and this will quicken the move.

Gold will move back to the high of its near term range ($1550) through this first leg of Euro weakness, but will move to $1650 soon after QE 3 is announced (by September). Silver will remain under $36 until late July, but on Dollar weakness it will move quickly to $50. Oil will move with silver, and will test $120 when silver is at $50.

Monday, June 27, 2011

This Summer's Market

So far my recent calls are in line.  The DXY call is especially right.  It has tested DXY 76 today, as well as last week, but failed to breach it.  PMs have gone a little further south than I thought, but I called the pullback none the less.  Oil is also skimming the lows.

The EUR/USD trade remains volatile.  I still believe that for the next month or so will see the trading range stay EUR/USD $1.40-$1.45 before any major turn.  I think a European default is as likely as a US default, and this will impact the currencie dramatically, but not the way people might imagine.  If rates continue to rise in Europe, the Euro may continue to rise.  If rates rose in the US, the dollar may see support.  The reason is people will go to cash while rates rise because no one wants to buy bonds while they rise.  At the same time, the biggest winner will be PMs, as they are the default world reserve.

Equity wll remain volatile over the said time period of the next few months.  Support is at Dow 11,900.  Support needs to stay there or above to support the global pension system.  If the pension system fails, it all fails, and old people everywhere will be without income.

Saturday, June 25, 2011

Swan Lake: Complacency

Complacency has become the standard operating procedure of the American, Japanese, and European cultures.  The people argue their opinions over sports and other entertainment, and spend time focusing on their own lives instead of the larger societal good.  Vices like Facebook draw people in only to make them judge everyone around them without touch and feel of humanity.  It has become a lonely planet for most who embellish the new complacent persona.

There is only "me" and "they" now, no collective idea of the group.  It has been a long time coming, but now it has firmly established itself as the way to live.  Evidence in Fukashima, where the Japanese population wallows in radioactive filth three months after the disaster.  Evidence in the letting of American wealth by the hands of a blood thirsty US government who continues to drain resources at home to furnish wars abroad.  Evidence in Europe where people are demanding their purses without noting that Africa, which is a stone's throw away, is starving, and because of NATO's war, dying a gruesome way at the hands of the former.

It is this physiological problem, that of need and want by the individual over the collective, that has created a vacuum from where discussion and dialogue was supposed to come.  When gathering at Fourth of July parties, high oil prices will be discussed, yet shrugged off before anyone can understand it is their own greedy nature that is causing them.  The self serving complacent behavior of people has gotten the world where it is today:  on the edge of a deep abyss.  It will mean for the collective to wake up before it falls over to decline, but it works against itself, and that means that they outcome will most likely parallel the past motion.  The destruction is likely to occur before any progress is made.

Thursday, June 23, 2011

40 day Reprieve

The oil release should calm the price by adding supply for about forty days.  That means that right after the Grove meeting ends, supply will once again fall.  The math is simple:  Lybia's loss of supply is 1.5 million barrels per day, and there will be 60 million barrels used out of the world's above ground reserves.  So 60/1.5 is 40 days.

I expect the market to continue to wash their recent ranges for these next forty days.  Bernanke is using QE Light to again put a floor under the market, and the fresh oil supply will calm the oil market as well as the precious metal market.  Precious metal supply will also increase and this will keep a lid on the price.  I expect that the markets will trade here until late July.

Wednesday, June 22, 2011

Quantitative Easing Continues

Today it was reported that QE will continue in the form of another QE Light program.  This will be to support the fragile monetization program.  It appears, due to the size of the program, that the goal this summer will be to support prices, and not increase them. 

The new QE Light will monetize debt twice a week, and only twice a week, until QE 3 is announced.  The amount is not substantial, but it will be enough to put a top on the dollar.  M2 may contract slightly from where it is now, but it will not last long.  The further this policy lasts, the more weight will be placed on the dollar.

The mainstream media did not think there was a hint at further easing, but they did not listen to the NYFed.  The NYFed confirmed what we already know:  there is only one form of monetary policy- monetize the debt, so to keep rates at zero.  At this point, there is no other option and there is no going back. The Fed will continue to monetize the debt until it has no more credit to do so.

Tuesday, June 21, 2011

One Last Pullback

Bernanke will hint at QE3 tomorrow.  Remember, the recovery needs to stay on track.  He will not come outright and say it though, because the Algo Machines from Hell that run the financial system for the oilgarchs needs one last pullback so as to separate the corporate Dinosaur Kings from the lower classes.

The bottom of support on the Dow will be tested over the next week; it will slide back to 11,950.  The dollar will rise a tad, almost seeing DXY 76.  Oil will scrape its recent low, hitting $92/barrel.  Precious metals will move down, if only slightly:  gold will stay the strongest, as it will continue to beat up on the fiat currencie; it will keep around $1530.  Silver will drop a little, as it has yet to take its place as a reserve; it will test its support around $35.  Platinum will continue to wallow at the bottom of its long term range; it will touch $1730.  This will be the last pullback before QE3 is announced.

QE3 should be announced after this pullback, so to keep the recovery on track.  Neither Bernanke or Obama will admit their policy a failure.  They will bail out and monetize until the problem is passed on. 

Monday, June 20, 2011

Without Quantitative Easing

If monetary policy changes, and Fed monetary policy goes without a form of easing, if it be a TARP bailout, a STIMULUS bailout, a Jobs Program, or downright Quantitative Easing, then rates will rise.  Then there will be a margin crunch, as the debt is sold for less and the Fed's cashflow is shrunk.  Investors will not want to buy debt while the rates rise, and a waiting game will begin that will never end.  Bernanke would have to raise the rates 10% at once to end the game.

Then the Fed would have to collateralize all of their reserves, be them gold or what not.  Gold will be lent to back the debt, as the Social Security Trust Fund is insolvent (it ran $1 trillion in the red last year), and the only collateral left is the toxic debt on the Fed's book.

This will trigger a butterfly in corporate bond prices, as corporate debt will be seen as the safe play.  This because it was the corporations that received the bulk of the bailouts through TARP, STIMULUS, and even QE (as it has been the Major Banks flipping the US debt back to the Fed).  The plan all along, since the Fed's inception, was to establish the corporations as the ruler over the economic landscape.  Corporate equity would meet gold 1:1.  If that means the Dow pulls back to 5k, and meets gold there, or if the Dow holds steady at 12k, and gold meets it at $12k, then that is possible too.   Based on the size of the US debt, and global debt, gold will be sought at loan at a fair price of $9k-$13k.

This will be the finishing move.  The reason I think that QE in some form will continue, is because I think there is still some ground to gain, and I think that the corporatocracy has a little more blood to let from the almost dead middle class.  I think that the Republicans caving on the debt ceiling was a sign of this.  I think they will monetize the debt for awhile longer, until gold, silver, and platinum are too expensive for the average consumer, until oil is breaking the backs of not only the poor but middle class, until people are forced to give up their sovereign rights to Rockefeller and Morgan's dreams.

Saturday, June 18, 2011

The Weak Link

The weak link in finance is fiat money.  Bonds are a collateral item.  If it was needed, the Fed could, and does, put their gold up for loan.  Corporations could liquidated their assets.  But if there is a panic in the FX markets, there is nothing stopping a run.

When panic hits a currencie, such as the dollar or Euro, the Tresurie bonds strengthen.  Look how the dollar is at its lows, while T Bills stay expensive.  European countries are having trouble selling their bonds, and the Euro goes through the roof.

If a country wants to preserve its bond holdings, which they do because they hope to use them as collateral once the system crashes (because they will say the other Reserves owe them), then they can continue to spend fiat like the paper is on fire.  It is the fiat that will be dumped, and dumped for physical assets.  This has been on going, but it will speed up significantly once the newest Fed/Gov policy is released.

Thursday, June 16, 2011

QE Support Broken

The support level that was holding up the market was taken out over the last few days.  QE is now a necessity.  What is Bernanke waiting for?  The system is crashing.  They need QE now, or else yield turns negative.

Well, I guess people with money are now buying at fire sale prices, but if they wait to long, then GDP turns negative and it will be well known that Bernanke's policy does not work.  That is the point when people would turn on the system, when then people figure out the big lie of fiat "money".  It is now a fine line between what would be a fiscal stimulus that could trigger hyperinflation (if the world all spend dollars at once) and a deflation that will turn return hugely negative.

Bernanke and Co. have two weeks to issue a new fiscal stimulus.  If not, then stocks continue to crash (hello FNSR/RIMM/etc), while the fiat "money" flounders about, and precious metals and oil remain at a premium.  Imagine DXY 77 while the Dow is at 2k, while gold is at 2k.  Yes, this is a realistic scenario.  The problem is, pensions, including the SSTF (Social Security), turn negative, and then the system will continue eating itself.  This is why Bernanke must print money, and monetize the debt like there is no tomorrow.  The problem with that is it will spur hyperinflation.  We are now one week away from deciding if it will be hyperinflation, or deflation beyond deflation.

Austin-Fitts today said the Grovers will decide QE.  If the Grovers think they can wait that long, the are not only insane but stupid.  Yet there is a line from there main play that always comes to mind when I think about economic collapse.  It is, "Here in the Grove we are safe from care".  They may know the system will crash next month, and wish to be away from their cares, in the midst of the redwoods, in the safety of nature.

Wednesday, June 15, 2011

Jobs Program

It will be interesting to see what the next name of the next fiscal stimulus will be because they have tried to change the name so many times thus far that they may have run out.  There was a TARP that was strictly for the banks.  There was a STIMULUS that was supposed to promote job creation, but it went to the corporations and banks.  There was quantitative easing, and that was to flip bonds, and monetize the debt.  Yet there is still a liquidity problem due to the massive deflation in the system, and the inflation needs to more than equal it if growth is to be conceived.  There needs to be another program.

There needs to be another program but it is obvious these fascist programs do not stimulate growth.  That is why this time Obama and Co, will need to have a program that does hire people directly.  This program will also have to allow the Fed to print money above the already ridiculous curve.  This is why Obama will hire people to do random things like pave roads even though oil production has peaked.  We will create meaningless jobs just so people stop rioting in McDonald's parking lots.  It will most likely not work, but Obama will try.  He, and they, will try because they must.  There is no growth but it needs to be perceived as if there is, otherwise the game is over, and the curtain will drop on the Neo-Keynsian Empire of easy credit and debt.

Monday, June 13, 2011


You don't need charts do you?  One week ago I said the Dow's support would be found at 11,953.  Well, need I say more?

And also, give it a name, it is all the same, the financiers will have access to easy money by way of the printer and it's issuance.  Call it TARP, STIMULOUS, QE, call it a jobs program, there will be money printed and loaned to banks at an alarming rate.  Just what it do.

Sunday, June 12, 2011

Long Silver

People got caught on the silver trade because they were trading with paper.  This can be done, because silver acts as a currencie, it acts as an asset, it acts as a reserve, but most importantly, it acts as monie.  Its wealth lasts forever, and it is best used as a wealth preserver.  If one is trading it, then it should be known that what is being given up is monie.  The collateral for trading with monie should be highly valuable, but most accept paper.

If people stuck with the monie, the price would turn upwards on a dime.  Yet people ignore it value as monie, and search for yield.  This affects global demand but still demand stays high.  Once supply decreases, it will join the other PMs and oil on the downside of production.  Considering inflation, and the gold/silver ratio, silver remains the best long choice on market, no matter trader sentiment.

Friday, June 10, 2011

QE3 support Tested

We have seen the Dow's support tested just below 12k three times this Friday, and this is the number we should look for.  Three times and the support line is official.  This is short term however, and support could break and go lower.  Look for a bounce and then 12k, or just below, to be tested on three separate days during the next few weeks before QE3 is announced.

The bears, however astute they are, want the world to fall apart before QE3 is announced, but they forget that it is not a numbers game Bernanke is playing, but rather his policy.  He needs the recovery to stay on track, and the data suggests that it needs additional support.  Besides, he needs to monetize the debt, for if he does not, then rates rise.  He can not afford for rates to rise.

The President's Working Group on Financial Markets have access to the most liquid book known to finance.  They have access to the Treasurie's holding, as well as the Federal Reserve's.  Support is needed at Dow 12k to keep pensions returning 7%, and since this is the only thing returning interest above inflation on the markets, besides precious metals and other commodities that do not define monie as PMs do, there is great need to keep equity up.  The dollar and all fiat will be continued to be sacrificed at the alter so to keep the fiat ponzi rolling.

Equity will trade in this range until QE3, and then because it will be truth that governments are insolvent and have no choice but to rely on fiat issuance, money will run to corporate debt and equity.  The first move will be to go after the government collateral, and that is gold.  Then oil will be sought, and then the other corporate collateral will fall in line.  By Fall, the house of cards will be undone, and the scramble for real assets will be established.  It will start this month, with QE3.

Monday, June 6, 2011

Getting close Now

As I have written, the Dow will wash the whole 12k range through.  As I made this prediction awhile back, I expect to have my support number taken out, but only barely.  I thinkthe Dow will bottom at around 11,953 and then Bernanke will anounce the recovery needs to stay on track.

QE3 will blow the dollar out of the 70s, and we only have a matter of weeks before the continuation of quantitative easing is announced.  Quantitative easing is easily the most ludicrous monetary policy ever conceived, yet it is the only policy that has been considered.  At no time has the even mentioned that a rate rise is around the corner, never mind unwinding their book.  The Fed will continue with the same policy to help jobs and what not.  They will also likely announced a new jobs program.

Friday, June 3, 2011

Checking the Levels

Oil flash crashed today and yesterday.  This is a sign that there was large supply moved on strong demand.  This is very bullish.  Oil is sitting right under the level I called for it to break America's back.  One reason it has not gone much above $105 (the number I picked last Fall) is because precious metals were allowed to appreciate.  Precious metals are money and they trade with oil.  They trade with oil because it is a necessary component of the economy more so than any other; oil is its lifeblood, and precious metal is monie.

Gold has been the clear winner, as silver sold off and platinum is stuck in a range.  Gold reserves are important because this is how Central Banks trade with each other; they loan gold to each other to facilitate growth.  They are not using silver and platinum yet, so those two have a backseat role.

When I called the Next Move last Fall I said the system would break when gold was at $1440, silver was at $36, platinum was at $1800, and oil was at $105.  The Central Banks knew oil was the only one that would instantly bankrupt the system if it broke the said level, so they let gold handle the inflation (although silver took the torch for a minute).  This was to their benefit anyway.

Eventually, because silver is undervalued, silver will catch up.  Since silver and oil trade as a pair, this will be disastrous for currencie,  So since gold facilitates loans, gold will have to rise too.  Platinum will go along for the ride, or it will get cornered, and lead what will be a parabolic move for these four.

Thursday, June 2, 2011

The Discount Window

The Discount Window is the Federal Reserve's overnight lending facility.  All loans issued by the Fed must be repaid in the morning.  It is the last loan a bank would take, because it shows weakness.  A bank would rather take a high percent loan from another Major than go to the Discount Window.

When a bank is closing its book at the end of trading, it must have its assets meet its liabilities.  If not, the assets and reserves need to be made up.  They do go to other Majors, but if they are turned down, they go to the Window.  This usually does not happen because other banks can charge high interest and it is very profitable.  So when we find out that the amount of loans issued from the Window are high, we know that banks are turning each other down.  This would happen if they do not think the bank asking for the loan can meet the requirements, meaning that they would not have the collateral to pay them back.

There is also another aspect at play:  what if banks are purposely turning down other banks so to force the Fed's hand into continuing quantitative easing?  Bernanke's policy can not handle another crisis, and if a crisis occurred his gig would be up.  If there is another major crisis, it shows Keynesian and Bernanke policy has failed.  This will turn not only finance but economics on its head.  All the textbooks taught at major Universities will be shredded.

There is currently no popular alternative to economic policy.  There is no plan B for Bernanke.  Plan B is Ron Paul heading, and then ending, the Fed.  This alternative is Von Mises, which is to say, there is no alternative.

So the water has boiled over, and a bank will either fail, or quantitative easing will add liquidity into the market.  It matters not which bank has a liquidity problem, because it could be any of them.  Goldman Sachs takes both sides of every trade, and makes money fleecing clients.  If they have no liquidity, which could very well be the case if they were ever only on the wrong side of a trade, their book could be all liability, and no asset.  JPM has been shorting silver, an asset that has doubled year over year, and this could have caused major damage to their book.  They also have more derivatives than the world over, and if these imploded their book would be burnt.  Wells Fargo and Bank of America have massive exposure to real estate, and real estate is one of the worst performing assets there is.  Both of those banks may be proven insolvent because of this.  Citigroup has loaned out credit to millions of near bankrupt Americans, and will likely never be paid back these loans.

So now the banks have their guns drawn on the Fed.  They need QE to go on, or a hostage gets shot.  The system can not handle this.  The Treasurie is already looting public pensions to pay for debt creation, so as to not breach the ceiling.  Politicians, democrats and republicans both, are calling for austerity, and they can not do any more bailouts without increasing the debt ceiling.  Other funds such as social security have run trillions of dollars in the red and can not provide the finance to save the system.  Every mobster in the room has their gun drawn on each other, and there is no way out without a shoot out.  Whoever shoots first may make it outside, but only into the cold of a late spring night.

At the same time, if Bernanke continues QE, it shows that none of the systemic problems that started the depression have been solved.  That will create a loss of faith in the system.  It will also mean that the debt ceiling would need to be raised, unless the Treasurie plans on stealing all of the public pension funds, and if they do, it will be the greatest theft in history and will start an American rebellion against the Treasurie and the current economic system.

There are no ways into safety now.  This is it.  Now the system moves into the final stage of what has been amassing.  Now the end of finance, and with it the false economic paradigm that has dictated world policy, comes to an end.

In plain View

What do the Fed's book, Turkish Pyramids, and cell phones have in common?  Information has been abundant about all three for many a year.  Cell phones cause cancer, and this fact has been published for decades.  The temples in Turkey were built bigger and before Egypt', and this has been known for some time.  The Fed's book has many layers, some of which are loans to other Central Banks, and this is quite common knowledge.  So why is the news cycle acting like these facts have recently been broken?

Propaganda works in mysteries was.  One is to hit the propagandee with so much news that it overwhelms them.  It is hard to father the scope of the Turkish temples.  It is hard to believe that the device held against your head everyday for years heats up your brain.  And it is hard to believe that The Federal Reserve has played both sides of the economic system.

The Turkish temples were built over ten thousand years ago.  The builders realized that the monuments would not stand the test of time so they buried them (which is quite a feat on its own).  The pyramids are larger than those in Gaza.  This shows that humanity had great knowledge and understanding long before the current mainstream media showed.

Cell phones heat up the brain like a microwave.  It is a killer device.  The debate over what level of danger is implied has not been debated except to play better or worse scenarios.  For example, the debate was that certain phones only did minimal damage.  The news was brushed off.  Yet now the news is front and center.

The Federal Reserve made loans to such central banks as Libya's, which has now had those assets frozen.  The Fed made interest off of the loan and then stole it back.  The Fed also loaned vaste sums of money across the globe, and not only to central banks but to corporations.  All of this money was issued as debt with taxpayers as the debtor.

Another loan they have made is leasing their gold; the very gold they stole from the American people in 1933.  They have the gold leased on leverage to many countries.  This is on their book.  Yes they have a book, and it is a snapshot of their entire scheme.  Gold is not only their chief asset of their loans, but really there only hard asset.  Leasing it allows them to make revenue on interest, yet the money is not enough; the Fed must bail themselves and their proxy banks over and over again.  This has created the instability that is running the economy into the world, because they have loaned out all their assets, but still try to use higher and higher leverage by printing money and issuing debt.

The reason all this common knowledge is said to be news is only to crush and overwhelm the populace.  The message is clear, 'You have had a chance to not have cancer, you could have understood humanity has had its current level of intelligence for tens of thousands of years, and yes, the Fed has absolute power over the financial system'.  If the population can be overwhelmed, they will accept their given fate; that is the rational of the power hungry oilgarchs that have hijacked society and its culture.

Wednesday, June 1, 2011


Here comes the big one.  Analysts are choosing sides as if this is a financial war.  We need it to keep the economy on track.  We do not because it would be too much.  It is helping and working.  It is a sugar high.  But enough of all this noise, all that matters is Bernanke's policy.

Bernanke has not shied away from the fact that he thinks that creating dollars creates demand.  He has proved this because prices are up.  But he wants to keep his recovery on track.  He does not want it derailed.  He will continue to monetize the debt, because he has no other option.

Rates can not go up, but equity must stay high for pensions to create growth.  If he monetizes the debt, rates will stay low and he will debase the dollar.  When the dollar loses purchasing power, equity increases because it takes more dollars to buy into the casino operation.  The fiat ponzi will continue as long as possible and QE is the only way.