We know the Fed is purchasing toxic debt from the Major Banking Houses but we don't know what these banking houses are doing with the cash. Not exactly, anyway. They are probably doing lots of creative things with it, such as bathing in it, spending it on hookers and blow, and building paper houses. Financially they are creating operational desks outside of their main paramet6ers so to trade without the scary eyes of the Frank-Dodd and Volcker rules watching them - Goldman Sachs announced an LLC today that does just that. Now what exactly are they investing in?
Everything and everything. They have OTC investments and derivative investments in dark pools. They are buying CDSs and leveraging banking deposits. They are toying with everything imaginable, all with cash they recieced from the Federal Reserve Bank, a private for profit bank that is under charter from the UST to "maintain the stability of the financial markets". The markets have the appearance of being stable, so say the MSM, but is that the case?
The way the markets are being held up is by massive positions on both sides of the shorts and longs. Imagine the Great Wall of China, but instead of its actual size, imagine it being wider than it is long. That is what the money changers have done - they have put a massive amount of cash on both the longs and shorts to hold a price in place.
This is not only excessive but dangerous, and the slightest imbalance could bring any one option down. It is likely that it could be the dollar, since that is the largest market. Or it could be the UST market, as it is the biggest bond market. It could even be a small market such as silver, since not only does silver correlate directly with oil and thus the dollar but the amount of silver traded everyday equals the total mining done in a whole year.
So the markets are highly unstable and only kept a float by massive amounts of cash long and short. The game will end when an investment, like silver, shows that it can not be papered over. I think silver is the best case to do this because there is such strong demand industrially and for personal invesment for the phyiscial bullion. Other front runners include oil. When one of these investments shows the paper price does not equal the real price based on supply/demand, the house of paper will fall and leave the whole system looking like a naked emporer.
Monday, April 1, 2013
Monday, March 18, 2013
Bank Runs Cometh
This week will be looked back by history as one that stood still; while the establishment licked its chops at stealing savings deposits outright - without the guise of a trading error such as MF Global/JPM - Americans lauded it would never happen here. Anyone in their right mind has now begun to pull ALL of their savings from their bank and diversified at least half of their savings into precious metal. Of course, Americans are not in their right minds, and presumably neither are most Europeans.
One question that comes to mind is: What were the Global Bankers thinking trying to blatantly steal around $8B from depositors in Cyprus? In the aggregate this is chump change and I would have a hard time believing that this would go unnoticed by even a small percentage of the Western populations. That is why I think more than trying to rattle Russian Oilgarchs, or steal a small amount of money, this move was put forth so people would do exactly what is rational - this was done to cause bank runs.
The bet is that people in Greece, Spain, Italy, and other States on the brink of absolute economic disaster will run their cash out of the banks and cause bank failures across the continent. The reason is the establishment wants to blame those people and institute a cashless society so that bank runs can not happen. Then, when enough fiat has been takne out to leave the bank loans unfunded, the value of the fiat will go "poof" and everyone will need the government/banks to create a new system. This one will be cashless, so the people, who will be painted as "foolish" for crashing the banking system, will not crash the system again.
The only solution is for people to exchange the fiat for real money - precious metal - so that when the banks collapse and the currency loses value there will be enough people who can trade without the banks dictating the credit system.
I think it will be slow to start, but by the end of the Spring there will be enough whispers about bank failures and depositor "taxes" that a great amount of cash will be held outside of banks. Once again, the reaction by the establishment will be a cashless society; John Pierpont Morgan created the Federal Reserve to solve the problem of a bank run in the 20th Century and now a cashless society will solve today's bank run. This has been the plan all along, and now we have seen how it will be implemented and who will be blamed.
One question that comes to mind is: What were the Global Bankers thinking trying to blatantly steal around $8B from depositors in Cyprus? In the aggregate this is chump change and I would have a hard time believing that this would go unnoticed by even a small percentage of the Western populations. That is why I think more than trying to rattle Russian Oilgarchs, or steal a small amount of money, this move was put forth so people would do exactly what is rational - this was done to cause bank runs.
The bet is that people in Greece, Spain, Italy, and other States on the brink of absolute economic disaster will run their cash out of the banks and cause bank failures across the continent. The reason is the establishment wants to blame those people and institute a cashless society so that bank runs can not happen. Then, when enough fiat has been takne out to leave the bank loans unfunded, the value of the fiat will go "poof" and everyone will need the government/banks to create a new system. This one will be cashless, so the people, who will be painted as "foolish" for crashing the banking system, will not crash the system again.
The only solution is for people to exchange the fiat for real money - precious metal - so that when the banks collapse and the currency loses value there will be enough people who can trade without the banks dictating the credit system.
I think it will be slow to start, but by the end of the Spring there will be enough whispers about bank failures and depositor "taxes" that a great amount of cash will be held outside of banks. Once again, the reaction by the establishment will be a cashless society; John Pierpont Morgan created the Federal Reserve to solve the problem of a bank run in the 20th Century and now a cashless society will solve today's bank run. This has been the plan all along, and now we have seen how it will be implemented and who will be blamed.
Thursday, March 7, 2013
Are We Wrong?
It is an important question for us to ask: Are we currently wrong about the direction of the economy and finance? We must ask ourselves this question so we can learn if we, those who have chastised the fiat ponzi of finance and the psuedo-science of economics, can figure out if we are right and if so how right we are.
Let's start off the the precious metals sector: This is a sector of investment that has been relegated to such catigorizations as - for doom and gloomers and a fear trade, speculation (whatever the hell that means but probably as a reference from the media about day traders), and other such things like "stupid", for it just sits there and has no growth potential like a company, and it does not pay a dividend.
These are of course the tactics of the banking owned and operated media to give the exact opposite take on the metals themselves. First, they are productive, as precious metals are the underlying fundamental technology behind all technology. There is no computer without PM used as a conductor, there are no solar panels without silver, there are no catalytic converters without platinum; there are no bombs for the military - even thought we could do without that, the US run world economy couldn't.
Second, the fact that it does not grow as a company means it also does not shrink like one - not having counter party risk may be the most important reason for owning PM; not having dividends paid out is fine when you are not worried about your investment going under.
Is it the fear trade? Why not the smart trade? Why don't people think it is smart to own what was used for thousands of years as money?
Who cares what the traders do in the pits? Most of what they do is upon command from the very banks that have crashed the economy over and over and over and over and over again.
Stocks are at all time nominal highs priced by the dollar, King of all Fiat. Bonds are priced at all time highs, pegged by all Central Banks buying them en masse. Does this mean anything to me? The wealth created by the rise of nomianly priced equity has been equal to the inflation of the denominated currency. Bonds are artificially high, and if there is one word that comes to mind when something is priced high it is "bubble" - and bonds make up the greater of finance when compared to equity: If bonds collapse all hell breaks lose. People will want to go to cash but inflation will steal a consistent return from their pocket. People may want to go to stock but pick a stock, I dare you; tell me which company will do well in such an environment.
That leaves us with commodities, but how will you invest in them? The futures market? How do we know that futures are trading accurately? Trust the CME? Sure, that sounds smart. If we ever wanted to take delivery we would lug around a barrel of oil? Ten thousand barrels of oil? Sounds crazy. Trading futures is especially mad if the dollar and other fiat continues to break down, because those currencies are how you will take payment.
I have been saying for years equity would rise. I wrote an article years ago how we would skip through DJ 13k (I was way ahead of course) but I stuck by it. Now I am wondering how much higher we can go; specifically, can equity go higher without a significant breakout in gold? Without a significant breakdown in FX? Without a significant breakdown in bonds? Or all of the above.
We are at an inflection point, and how interesting that my last call at LH's Market Watch on PM was for gold and silver to break out in April and May (read the last article). Get ready boys and girls....the mountain is about to turn into a volcano.
Let's start off the the precious metals sector: This is a sector of investment that has been relegated to such catigorizations as - for doom and gloomers and a fear trade, speculation (whatever the hell that means but probably as a reference from the media about day traders), and other such things like "stupid", for it just sits there and has no growth potential like a company, and it does not pay a dividend.
These are of course the tactics of the banking owned and operated media to give the exact opposite take on the metals themselves. First, they are productive, as precious metals are the underlying fundamental technology behind all technology. There is no computer without PM used as a conductor, there are no solar panels without silver, there are no catalytic converters without platinum; there are no bombs for the military - even thought we could do without that, the US run world economy couldn't.
Second, the fact that it does not grow as a company means it also does not shrink like one - not having counter party risk may be the most important reason for owning PM; not having dividends paid out is fine when you are not worried about your investment going under.
Is it the fear trade? Why not the smart trade? Why don't people think it is smart to own what was used for thousands of years as money?
Who cares what the traders do in the pits? Most of what they do is upon command from the very banks that have crashed the economy over and over and over and over and over again.
Stocks are at all time nominal highs priced by the dollar, King of all Fiat. Bonds are priced at all time highs, pegged by all Central Banks buying them en masse. Does this mean anything to me? The wealth created by the rise of nomianly priced equity has been equal to the inflation of the denominated currency. Bonds are artificially high, and if there is one word that comes to mind when something is priced high it is "bubble" - and bonds make up the greater of finance when compared to equity: If bonds collapse all hell breaks lose. People will want to go to cash but inflation will steal a consistent return from their pocket. People may want to go to stock but pick a stock, I dare you; tell me which company will do well in such an environment.
That leaves us with commodities, but how will you invest in them? The futures market? How do we know that futures are trading accurately? Trust the CME? Sure, that sounds smart. If we ever wanted to take delivery we would lug around a barrel of oil? Ten thousand barrels of oil? Sounds crazy. Trading futures is especially mad if the dollar and other fiat continues to break down, because those currencies are how you will take payment.
I have been saying for years equity would rise. I wrote an article years ago how we would skip through DJ 13k (I was way ahead of course) but I stuck by it. Now I am wondering how much higher we can go; specifically, can equity go higher without a significant breakout in gold? Without a significant breakdown in FX? Without a significant breakdown in bonds? Or all of the above.
We are at an inflection point, and how interesting that my last call at LH's Market Watch on PM was for gold and silver to break out in April and May (read the last article). Get ready boys and girls....the mountain is about to turn into a volcano.
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