Monday, February 18, 2013

What If?

I know one of the questions everyone has is, 'What if the central planners had never stepped in with easy monetary policy?  What if we had never had any of the QE programs by the Fed and Treasury?'  I want to try to address these questions and also give me guess at to what prices would have looked like.

The first thing we hear is that if these programs had never been created and implemented then the 'recession' would have been much worse, but considering that it has been a depression (given real UE and real GDP numbers), is it true?

We need to start a long time ago however.  So long ago that we really can't guess what the price action would be now.  If we start with the fact that the bank runs in the beginning of the 20th Century were manifested by John Pierpont Morgan, that the First World War was created by European Aristocrats, and the Great Depression was instituted by Wall Street, then we can see where this is all headed.  We can't accurately find P* (price) becuase it has been so distorted over the years.

Yet let's continue the historics so we can see how much manipulation has occurred.  After the Great Depression FDR devalued the dollar in terms of gold (I am also going to stay away from social programs), then WWII started - another war that was created by the financial system.  Then the Military Industrial Complex got in full swing and has had war after war since, costing tax payers trillions of dollars for slightly better technology at the expense of a lot of bloodshed.

The 70's saw the MIC lose a big war with the Fall of Saigon, and before that the US was already going bankrupt and had to pull back the gold standard from the international market.  Then we get into the coked up Wall Street of the 80's and all of the shady deals that happened then, ending with the collapse in '87.  The 90's had the LTCM scandal, NAFTA (which shifted industry across the ocean), the end of Glass-Steagall, and the dot-com bubble (and many small wars).  Then we get false pretenses for wars after 9/11, a housing bubble, and another stock market collapse.  So really, more lies and scandal by the Fed and UST were just the norm come '08.

It will be impossible to discover accurate P* (price) given all of their previous losses.  Price discovery uses standards and metrics that monetary policy has blasted into sand over the century.  If we had not had all of that lying and cheating then maybe an ounce of gold would be worth what it was in 1912 and we would still be purchasing dinner with our metal change.  But the fact is our currency's purchasing power has been inflated away and we now spend $100/month on internet.  We spend $5 for a beer.  We spend $5 for a gallon of gas.

So what if there had been a collapse of finance in '08 - however orchestrated by ineptitude and malfeasance - and proper measures had been made?  First let's assume control right at the top of the market:  I am not sure but I would assume that the banksters shorted the markets on the way down, even the PPT and other government working groups (they are concerned with only making money anyway).  So if we had it proper, we would have let the big banks go out, and other banks that were not in trouble could have bought their holdings on the cheap.  It is possible that community groups could have bought mortgages cheaply and people who had never been entraupanuers who had savings  became the new banking industry.

Yes prices would have fallen, but we see now that there is a 1:1 ratio on goods to services.  So houses would have been cheaper, but oil would have been too.  Therefore the pensions would have been lower but we would be buying the same amount of goods.  The only reason higher prices are wanted is because corporations wanted their stock prices higher.  The average person on the street would have been better off.

Unemployment is a hard one to figure out.  A lot of work had already been outsourced.  Maybe there would have been a return to community though.  Maybe those corporations that needed high equity prices would have gone under and local companies would have hired those out of work.  Basically all we did was keep the crappy system together at the benefit of the rich.  DJ 5000, oil at $50/b, gold at $1k, it doesn't sound bad to me.

Thursday, February 14, 2013

Recent Technicals and Future Prognostications

I was asked how I feel about platinum right now and I decided to write a post on the technical behavior of precious metals, and touch on platinum too.

To start, gold and silver have been money for thousands of years, yet platinum has not always been seen that way.  Platinum was shaved off of silver like natural gas was flared from oil wells.  It has only been recently that platinum has been used in bullion coins.

I've always been very bullish on platinum because it is in such short supply.  The interesting thing about platinum is that it is not talked about as a monetary investment in broad terms.  So if there ever is a turn in investment and people move cash towards platinum it could be wildly bullish.

I looked at some short term charts today:  gold looks under bought, silver looks like it is in the middle of its recent range, and platinum looks over bought.  My coin dealer says silver and gold should follow platinum higher.

I think, looking at just the charts, silver could consolidate until May (although trading is becoming very volatile, signaling a coming breakout), gold looks like it should break out in April.  Platinum looks like it has already broken out.  I like to think of the complex as trading together but they don't move in tandem.  Look at how silver broke out in the spring of '11 and gold followed in the end of the summer.  Platinum spiked before the Fall of '08 much more than the others.

Looking ahead I will put it this way -  I think silver will trade 15:1 vs gold, I think that platinum will likely have a greater premium in the future due to its small supply, and I see gold moving to about $10k to $20k once rates top out.  I see rates having to get to 15% to kill the inflation that is and will be in the market.  This is a long term outlook mind you.

I think that the next leg for precious metals will rise a little faster than the second leg up.  I think gold will get between $4k to $5k during that time.  I think the Central Banks can print to buy bonds for about another year or so.  There will be a turning point where there is massive inflation in the system.  When it is undeniable rates will have to rise.

Then once rates rise I think gold will go parabolic.  This is when we see $10k to $20k.  I also think that the DJ will be 1:1 with gold during that time, and I think fiat currency will be burned into ash.  Then the system will have to be revalued, backed with gold, or all governments fail and people get to create a new political system.  I am hoping for the latter, thus why I will wish that all the good people of this blog buy silver and tell their friends this cause.

Of course there is also the kicker - when oil production plateaus it will spike price and kill the fiat currencies.  The EIA says it will happen in 2015, but they are as accurate at predicting oil production as the BLS is at predicting unemployment.  So I think it will be before then.  When this happens it will be perfect cover to raise rates.  The last thing the oilgarchy wants is anyone knowing that oil is finite and that we have no current technology to replace it EROEI wise.

Wednesday, February 13, 2013

No Good News

Most media outlets and all the political puppets have ignored a negative 4th quarter GDP print and also the fact that jobless claims have stayed near the long running highs.  2012 GDP came in at a paltry 1.5%.  This is at the most hinting at recession.

Yet when did the recession end?  When the Fed began pumping trillions of dollars into the finance sector?  The news cycle is blatently ignoring flashing lights.

So the economy has spun out of control once again, stocks are at highs once again, and everything is fine.  Sound familiar?  It should.  When things are at their worst everything is spun.

I imagine February should see things brew up and a collapse of sorts should come in March.  I don't know if bonds will begin to sell off in earnest, causing rates to rise while stocks....fall?  Maybe stocks rise nominally to inflation since the Fed will continue their large purchase operations.

I do know one thing - precious metals are about to begin their third leg up.  The move should begin in between March and May.  From the charts it looks like silver could trade flat until May but gold looks like it should ramp up before then.  I don't know where the top will be but I do know the next plateau will be at $3k.  We will get there and then maybe something will be done about the Fiat Ponzi the Fed is running.  Maybe not.  Maybe at that point the establishment tries something else stupid.  Who knows.

**Please note, this post was written a couple weeks ago but went to "Drafts" instead of on the board**

How? Buy Silver!

How is it that stocks can rise to all time highs and gold and silver trade flat?  How can miners continue to fall?  The banksters are tricky, but they are not clever.  The only way that this can be done is by supressing the paper price of bullion while leveraging equity.  This will not end well for a financial system that has been broken for decades.

It may be that the only thing that can stop the Fiat Ponzi dead in its tracks is a spike in oil prices due to falling production.  It is possible that a squeeze on silver production can happen, but that depends on how much bullion the banks are willing to let go.  As far as I can tell the bullion bank coffers are emptying at an alarming rate.  Maybe COMEX does default.

As far as gold I think that all Nation-States are in on the malarkey.  The bullion is passing West to East so the East will keep playing the game.  The West will be depleted and America and Europe will finally be conquered by the establishment, an establishment consisting of British Royals, European Royals, and other blue blood factions on the Eastern Seaboard.  They have plans to remain above the water.  How they plan on doing that I haven't a clue.

Other than waiting for peak oil production to hit (which is like waiting for paint to dry) our other option is to take enough silver off of the market so that there is an investment/industrial squeeze.  I know that everyone that reads here understands this and likely discusses it with friends.  It is important to keep doing so.  Remember that each person is different and they should be treated so.

There are many tools to use when trying to get someone to invest in silver:  Do they wish to make money?  Silver looks to have great upside due to industrial use in technology and investment demand.  Do they want to end the Fed?  Taking back the silver supply will destroy the dollar because the dollar and silver trade inversely.  Supply/Demand dictate higher prices, and money will be made, and if enough people do this we will take back our freedom from the totalitarian establishment.