The Winds of Change Are Blowing a Hurricane

"A decline in courage may be the most striking feature that an outside observer notices in the West today. The Western world has lost its civic courage, both as a whole and separately.  Such a decline in courage is particularly noticeable among the ruling and intellectual elites.   Must one point out that from ancient times a decline in courage has been considered the first symptom of the end?"

Alexander Solzhenitsyn, A World Split Apart, Harvard Commencement, June 1978

"The US must win, since it has infinite ammunition: there is no limit to the dollars the Federal Reserve can create. What needs to be discussed is the terms of the world’s surrender: the needed changes in nominal exchange rates and domestic policies around the world."

Martin Wolf, Financial Times, 12 Oct 2010

"The historical evidence is overwhelming.  Many societies have done well for a while – until powerful people get out of hand.  This is an easy pattern to see at a distance and in other cultures.  It is typically much harder to recognize when your own society now has an elite less subject to effective constraints and more able to exert power in an abusive fashion."

Simon Johnson, Jamie Dimon and the Fall of Nations, May 31, 2012

“The eye of the commodities storm has not been oil, and peak oil, but rather a collapsing international trade system based on the US dollar.  The heart of the problem is that trading increasingly worthless dollars for hard goods has been a nice protection racket with an amazingly long run under the Pax Americana. The non-G7 countries will stop accepting this arrangement, and the world will adjust.

The markets are searching for a replacement for the Bretton Woods II arrangement of dollars for oil and military protection. Increased demand and peaks in supply will merely accelerate and intensify the storm. The heightened sense of risk and volatility is because the world's markets do not yet see a viable, sustainable solution.

A new equilibrium that will underpin international trade will be discovered. But given the length and breadth of the status quo the seismic shocks of the adjustment may be quite convulsive, taking down more than a few major institutions."

Jesse, The Collapse of Bretton Woods and the Pax Americana, 25 August 2008

“When you see a cloud rising in the west, you immediately say, ‘It is going to rain,’ and so it happens.  And when you see the wind blowing from the south, you say, ‘It is going to be hot,’ and so it happens.  You hypocrites.  You know how to interpret the appearance of earth and sky.  Why then do you not understand the signs of the present time?"

Luke 12:54-56

"The regal power of her consuls, the authority of her senate, and the majesty of her people, were now trampled under foot; for those divine laws and hallowed customs, that had been the essence of her constitution–were set at nought, and her best friends were lying exposed in their blood.  

These were surely very dismal times to those who suffered; but I know not, why any one but a schoolboy, in his declamation, should whine over the commonwealth of Rome, which grew great only by the misery of the rest of mankind.  The Romans, like others, as soon as they grew rich, grew corrupt, and, in their corruption, sold the lives and freedoms of themselves, and of one another."

Samuel Johnson, Review of the Memoirs of the Court of Augustus, 1756

“If you shut up truth and bury it under the ground, it gathers to itself such explosive power that on the day it bursts it will blow up everything in its way." 

Émile François Zola, from Dreyfus: His Life and Letters, 1937


Oh all right, so you were correct in your analysis.  

But so many very important people were saying something else.

So what do I need to do next?

'Learn to serve, and to pray.' 

Stocks and Precious Metals Charts - Precious Metals Come Roaring Back

 

Given the big moves in the precious metals today I am going to be just posting my charts, which I keep updated anyway.

The risks in the market for equities are significantly mispriced.

The correction we just saw was more of a symptom.  It does not qualify for the first step in any kind of a market break or a crash sequence.

It was a reaction to Donnie making retaliatory tariff threats against China, which he quickly walked back, as he is often wont to do.  

He tosses things off the top of his head quite often, in case you have not noticed.  

But consider this a taste of what will happen in the event of a financial or geopolitical shock of consequence. 

Daisy was driving me nuts during the storm. Thunder doesn't bother her but I think she is aquaphobic to the extreme.  I had to give her a bath as well.  What a calamity.  She's little but sneaky and wiry.

Have a pleasant evening. 

Stocks and Precious Metals Charts - Deliver Us From Evil

 

"You are not a God who delights in evil,
       the lawless cannot remain in your presence.
The arrogant cannot bear the weight of your gaze;
        you despise all who do evil.
You destroy all who tell lies— 
        the Lord detests the violent and the deceitful."

Psalm 5:5-7

"Daughters of Jerusalem, do not weep for me.  Weep instead for yourselves and your children."

Luke 23:28

"Put on sackcloth and lament, you priests.
       Wail, you ministers of the altar.
Come, pass the entire night in repentance,
        you ministers of my God.
For the house of your God will be deprived
        of even the offerings of grains and wine.
Announce a holy fast;
        proclaim a solemn gathering.
Call the elders
        and all the people of the land
To the house of the Lord, your God,
       and cry out unceasing to Him there.
For the day of the Lord is near,
       coming as a destruction from the Almighty.
       What sorrow will visit you on that day.

Sound the trumpet in Zion
        Raise the alarm on my holy mountain.
Let everyone tremble in fear
        because the day of the Lord is upon us.
It is a day of darkness and gloom,
        a day of thick clouds and deep blackness.
Suddenly, like dawn spreading across the mountains,
        a vast and mighty army appears.
Nothing like it has been seen before
        or may likely ever be seen again."

Joel 1:13-15, 2:1-2

"Behold, your house is now yours, but is made desolate.’”

Matthew 23:38


I'm still on vacation.   But I thought today called for at least a weekly update. 

Every day I update my charts, and continue to trade for my own account, lightly. 

Was I positioned for this?   

We had a correction today, as the Donald threatened to slap whopping tariffs on China. 

This was in response to China's throttling of rare earth mineral exports to the US.

'Only we get to do that, ' said J. D.    

The Dollar melted.

VIX soared.

Stocks dropped like stones, and went out near the lows.   

But there is still an open gap, notably on the NDX.

This was just a correction today, and long overdue, the bubble having become overextended in the pursuit of a big, beautiful stock market, the best ever seen.

Walt and the ESF decided to just let it slide, the better to skin your with my dear.

Gold and silver held their levels in the selling, with gold putting together a late rally. 

If we get a serious market reversal I have marked target levels on the charts.

We should, by historical standards, get a rally shortly.  If it fails to make a new high, we could be slipping into a crash sequence which I will be following real time.

Have fun.

And a pleasant weekend.

Stocks and Precious Metals Charts - The Rise of the Unspeakable

 

"Even if it were to explode into smithereens today, the fact would remain that it [NSDAP] recently won fifteen million voters. Its brutish, loud-mouthed and brainless behavior has acted not as a deterrent but rather as an attraction, and has generated unconditional and subservient followers."

Carl von Ossietzky, Die Weltbühne, January, 1933

"It is very odd that the unhappiness of the world is so often brought about by small men."

Erich Maria Remarque, All Quiet on the Western Front, 1928

"I have tried to keep memory alive, that I have tried to fight those who would forget.  Because if we forget, we are guilty, we are accomplices.  We could not prevent their deaths the first time, but if we forget them they will be killed a second time.  And this time, it will be our responsibility.

And that is why I swore never to be silent whenever and wherever human beings endure suffering and humiliation.  We must always take sides.  Neutrality helps the oppressor, never the victim.  Silence encourages the tormentor, never the tormented.  Sometimes we must interfere.  When human lives are endangered, when human dignity is in jeopardy, national borders and sensitivities become irrelevant.  Wherever men or women are persecuted because of their race, religion, or political views, that place must – at that moment – become the center of the universe."

Elie Wiesel, Nobel Prize Acceptance Speech, 10 December 1986

"What theology, history and common sense have taught me is that the civilizations which allow the gap to widen between the ideal to which they claim and the realizations which they propose of it, these civilizations are dying of their hypocrisy.“

Henri-Irénée Marrou, France ma patrie, Le Monde, 5 avril 1956

"The Barbarian hopes — and that is the mark of him, that he can have his cake and eat it too.  He will consume what civilization has slowly produced after generations of selection and effort, but he will not be at pains to replace such goods, nor indeed has he a comprehension of the virtue that has brought them into being.  We sit by and watch the barbarian.  We tolerate him in the long stretches of peace, we are not afraid.  We are tickled by his irreverence; his comic inversion of our old certitudes and our fixed creed refreshes us; we laugh.  But as we laugh we are watched by large and awful faces from beyond, and on these faces there are no smiles."

Hillaire Belloc, This That and the Other, 1912

"Turning to them Jesus said, 'Daughters of Jerusalem, do not weep for me. Weep instead for yourselves and your children.'"

Luke 23:28

"The days are coming when men will go mad, and when they meet a man who has kept his senses, will rise up against him, saying, 'You are mad, because you are not like us.'  And I saw the snares that the enemy spreads out over the world and I said, groaning, 'What can get us through such snares?'  And then I heard a voice saying to me — humility.”

Saint Anthony the Great, Abbot of Colzim Egypt, 251-356


Gold topped and closed above $4000 today.

This marks the consummation of a forecast about the global economy and the 'currency wars' in the resolution of Bretton Woods II that I had made in the late 1990s with gold at $300.   

I am very grateful that I have been allowed to live long enough to see this all unfold.

Silver lagged a bit, being weighed down by the economy and the equities.

Stocks sagged but held a level.   When they give way they could fall quite a bit, but we'll need to see some trigger event for that.

But is is coming, sooner or later.   And it will be remarkable.

I haven't had a vacation in a very long time.   As you know I have been posting pretty much every day since 2008, through thick and thin.

So I am going to take a little time off now.   Unless some other forecast event in the markets comes to pass, I will probably see you again around Thanksgiving if God wills it.   

I have an abiding concern that some truly unfortunate geopolitical event is going to take the markets down, and perhaps some people and significant organizations, even nations, down with them. 

There have been a lot of very ugly things that we've seen over the past 70 years or so.  The Vietnam war and the political assassinations and lies that paved the way for it were awful to live through.  The Cold War was a little frightening for a child.  The Civil Rights struggle was both thrilling and discouraging in its hope and brutality.

But the shameless rise of lawlessness and cruelty among our leaders, with their complicity in the horrific war crimes of proxy wars and the sadistic genocide in Gaza, has just about broken my heart. 

So let's remember to pray, and heed the storm warnings as they develop, and be mindful of the wickedness of those who lie and deceive people in order to ensnare their souls.  

And they are certainly out there and on the prowl, even now.  

'What can get us through such snares?'   And then I heard a voice saying to me — 'humility.'

See you then.

Have a pleasant evening. 

 

"Fear not, little flock, for your Father delights to welcome you into His Kingdom." Luke 12:32