Gold and silver surged higher today on the expanding troubles in the Middle East, and the faltering US dollar reserve currency. Buying from Asia remains very strong, particularly in China.
I flattened out my positions and am sitting in cash, waiting for another opportunity to enter a trade. As always, I do not touch my long term positions. That was a big move down in the stock indices and a big move up in the metals. No need to tempt fate when both sides of a pair trade work for you.
"Actually as I said what we are experiencing is an ongoing debasement of the dollar and I don’t mean to bang on the same drum, but this is the reality and it is critical for readers to understand this important fundamental. This is why all risk assets are rising in price. The increase in the S&P 500 in this case is a precursor to a potential hyper-inflationary event. This befalls a country which runs such high expenditure to deficit ratios. All things equal, this will end badly.”
Ben Davies, Hinde Capital
As you know I still believe that stagflation is the most likely outcome for the US, as the result of the policy failure created by a credibility trap that prevents the government from making the necessary reforms to its political and financial systems. Hyperinflation and Deflation are both possibilities, but remain outliers for now.
I could definitely see some improbably lunatic outcomes in the States, given the hubris of wealthy purveyors of propaganda and their shills who are leading their sleep-walking electorates to ruin. The US now has the worst unemployment of the ten major developed countries, depending on which deceptive government statistics you might favor.
If there was a double dip and a major depression there is some sizable minority segment of the US public that would either deny it was happening on ideological grounds, or simply fail to notice it was happening until they either starved to death or were overwhelmed by hordes of crazed zombies, as long as the electricity remained on and the mainstream media was continuing to dish out mindless pap for a diversion and corporatist propaganda for the news.
There is a commonplace saying that most conspiracy theories cannot be true and 'fall apart' because of the many people who would have to be involved, and who cannot be all that clever and also keep things secret. I think that is wrong. Many conspiracy theories fall apart under skeptical and rational examination and factual inquiry. But some do not. The Madoff Ponzi scheme was certainly a conspiracy. What is not known is its breadth, how many insiders there there, and what happened to all the money.
Conspiracies are possible because too many people can be persuaded to become self-delusional idiots and true believers who allow themselves to be badly used by a very few clever men, who themselves are quite capable of making plans and keeping secrets with an impressively ruthless determination.
And excepting for the inner circle which often quickly flees the scene or remains completely unknown, after a major conspiracy reaches a bad end and is exposed, the majority of those involved will deny that it ever happened, and that they even did the things that they undeniably did. Or at least, that they never intended any harm, or ever meant to commit outrageous acts against decency and common sense. And they will be outraged if you dare to hold them to account for their crimes. And when they are finally forced to see the enormity of their actions for the first time, they are dumbfounded and seek to either skulk away, shrug it off, or remain in obstinate denial, seeking to punish someone, anyone, excepting themselves.
This is the backstory of the US financial crisis, and the credibility trap in which its government and intellectual elite are caught today.
