"Unhappy people are better off living in the city. A person can live in the city for a hundred years and not even realize that they are already dead and rotting. They don't have time to realize this on their own; they are too busy."
Leo Tolstoy, The Kreutzer Sonata, 1889
I am keeping an open mind on this year's window dressing cycle as to the extent and the timing.
Wall Street desperately wishes to hand off this bubble to mom and pop and foreign hands, but so far the target victims are reluctant to buy in. The standard script is to keep running it higher while protecting your own risks with derivatives. If your derivatives counterparty fails then you obtain public funds to bail out of your losses. The objective is always the same: the public loses.
The Fed and Wall Street *could* conceivably keep this going as they did in the early cycle of housing bubble, or the tech bubble. Never underestimate the recklessness of desperate men caught up in a fraud of their own design. When the suckers start to question the game, double down and act even more resolutely and boldly. The average person will believe because they do not think people are capable of such obvious and blatant deception, since they are not so free of scruples and conscience. And of course greed is a marvellously effective prescription for silence, rationalization, and self-deception.
They may feign ignorance in Washington, New York and London, but they know, and it serves their purpose. This is a classic fraud, not even elegant or complex, but merely clumsy, an obvious abuse of trust and power. It is as noble and productive as running a protection racket on the neighborhood candy store, and robbing little old ladies for their pension checks.
The only thing that is surprising about Wall Street and the US financial frauds is, as Eliot Spitzer famously observed, their scams and schemes are so simple and so obvious when one can pry back the veil of secrecy and see what is actually being done. Old frauds never go way; they come back endlessly with minor variations and different shades of lipstick.
How obvious and bold can they be? How about this obvious and bold?
It is called 'running the stops' held by the small specs. It is an old and treasured fraud on the Street, like running up the prices of stocks and then selling them to the public at the top while you quietly exit with your profits and fees.
On the bright side the metals manipulation seems to be faltering, with silver soaring to new highs as the lack of physical metal for delivery impedes the ability for a few banks to endlessly run their paper ponzi scheme of naked shorting and leverage.
All Ponzi schemes end badly, but timing is everything. While there are overleveraged spec shorts to squeeze and pensions to plunder the money printing and tape painting can continue. You will run out of real wealth, assets and freedom before they will run out of ink.
Since the rather sharp breakout from the cup and handle formation, gold has assumed what appears to be a steady, sustainable trend.
Yes there will be rallies and corrections. It appears that gold will be bumping into the upper end of its trend channel between 1455 and 1480 in the beginning of 2011.
If it maintains the current tight channel, which I think it will do unless there is a panic liquidation, 1390 *should* hold.
A more serious sell off could test 1250.
Will those waiting for a chance to get back into the gold bull market buy into position if it drops to 1390? Or even 1250?
If they did not buy into the worst correction down to 700-50 on this chart then they will probably not. Once you lose your position in a bull market it is very difficult to swallow your pride and climb back on board. One tends to keep waiting for THE low.
Gold is rising because the fiat currencies of the developed nations are being devalued. So while 'cash' may seem safe, it may not be, depending on what happens next. I am struggling with the notion that a hyperinflation will occur for reasons previously stated. It CAN happen, but it would take a series of policy blunders and some event for it to happen. And the Fed has the means to stop it, although they may not have the latitude politically or the will.
It would also require a spectacular act of self-destructive gullibility on the part of a greater portion of the American people. But in this I have rarely been disappointed in the last twenty years.
Silver is rising dramatically as an epic naked short position held by a relatively few parties is being slowly unwound. I should add that a similar scenario is underway with gold, except the parties holding the short side are being supplied with bullion to stragecially cover their shorts by some of the central banks and the IMF. But the difference in intensity is apparent if you compare Gold and Silver deflated by the Commodity Index (CRB) as shown below. Silver is undergoing a massive short squeeze since some of the big banks started scaling down their prop trading operations. I think the gold manipulation scheme has more official sanctions than the silver market manipulation.
For me the big question in 2011-12 about silver is whether it will be remonetized by countries who will once again include it in their official reserves, and even provide some silver content to the exchange mechanism of international trade.
There is little doubt that the international monetary scheme is changing more dramatically since the first Bretton Woods agreement established the dollar reserve currency in 1944, and even more than when the US unilaterally changed the arrangement by abandoning the gold standard in 1971.
If silver is remonetized, I suspect the impetus for this will come primarily from the BRIC's in conjunction with Mexico and other Latin American countries.
There is relatively little discussion of this amongst economists, and almost no mainstream media discussion in the US and UK. Europe is consumed with its own monetary identity problems. Monetary without political and fiscal union is like dating. What is now occuring is that Germany is pondering its options as the betrothal grows stale.
2011 will likely be a difficult year, and 2012 will be worse if the current trends continue. The recklessness and hubris of the central government is an awful thing to watch. I am afraid that it will likely reach a climax and turn away from the current path when the real economy 'hits the wall.' I am not confident that the developed countries will be able to resist the call to fascism in the name of expediency. Too few did so in the 1930's. And even then the denial and recriminations may be quite alarming and confusing.
I see no viable reform movements in the US and the UK, and Europe seems leaderless. This concerns me more than anything looking forward to 2012.
"True happiness is of a retired nature, and an enemy to pomp and noise;
it arises, in the first place, from the enjoyment of one's self, and in
the next from the friendship and conversation of a few select companions."
Its a bit tough to forecast this rise in silver because of the nature of the rally which is a price breakout precipitated by the collapse of a market manipulation. The large naked short positions have yet to be covered.
Few people yet understand what is happening here. Silver is being re-monetized, and the back of the silver bear cartel is being broken on a wheel of global demand, shredding their paper pyramid schemes.
If there is no panic liquidation because of a collapse in China or US equities it appears quite possible for silver to reach the 37.50 target on its fourth leg up, with a spike to 40 possible.
If there is no spike higher then a steady climb can keep going until the market clears and the bears deliver their promised bullion, made available by higher prices. What that price will be is difficult to forecast because of the lack of transparency and excess of duplicity in the market fundamentals as they are publicly disclosed.
The more I think about how these markets are managed and regulated, especially in light of the 'mystery trader' who currently holds 90% of the copper at the LBMA, approaching a 'corner on the market,' and the enormous leverage and naked shorting in the 'bullion markets,' the more ridiculous they seem to be in terms of a productive economic market function and capital allocation system.
If as stated the market participants driving these schemes are recently bailed out Too Big To Fail Banks utilizing reserve currency freshly printed by Anglo-American banking cartel, then this is an absolute discrace, even worse than the manipulation of key commodities which flourished under Enron.
You are going to love the punchline to this US economic recovery story which should be arriving sometime in the first half of next year.
Fooled again. What a surprise.
One can almost never overestimate the self-destructive gullibility of people when a fraud appeals to their vanity, prejudice, or greed.
Raptores orbis, postquam cuncta vastantibus defuere terrae, mare scrutantur: si locuples hostis est, avari, si pauper, ambitiosi, quos non Oriens, non Occidens satiaverit: soli omnium opes atque inopiam pari adfectu concupiscunt. Auferre trucidare rapere falsis nominibus imperium, atque ubi solitudinem faciunt, pacem appellant. Tacitus, Agricola
Translation: "Plunderers of the world, when nothing remains of the lands to which they have laid waste by indiscriminate thievery, they search out across the seas. The wealth of another excites their greed, and its poverty their lust of power. Nothing from the rising to the setting of the sun can satiate them. They alone are as compelled to attack the poor as they are the wealthy. Robbery, rape, and slaughter they falsely call empire; and where they create a desolate waste, they call it peace."
These are not charts. This is an economic IQ test.
Kitco’s Jon Nadler is today’s most notorious gold bear; and, although Mr. Nadler’s predictions are remarkably consistent, they also have been consistently wrong; but within this consistency lies a clue to tomorrow’s price of gold.
The website www.buygoldco.com kept track of Mr. Nadler’s predictions regarding the future price of gold in 2010. In November 2006, he predicted in 2010 gold would average $800. In October 2008, he predicted gold would be in the low $500 an ounce range in 2010. In January 2010: he predicted “With a view to the three-year average gold price still near $845… In May 2010 (with gold at $1200), He predicted the 2010 price would end [lower]…gold at the $800 per ounce figure. I am not alone in computing such figures. I still think..between $680 and $880. From 2006 to 2010, Nadler predicted the price of gold would be in the low $500s to the high $800s today, a spread of approximately $400, the mean being approximately $700. Based on this data, the apparently unerringly accurate Nadler Gold Predict-O-Meter is as follows:
To accurately predict the future price of gold, investors can take the arithmetic mean of Mr. Nadler’s predictions—then simply double it, i.e. $700 x2 = $1400, a number which, astoundingly, is almost exactly today’s gold price, i.e. $1405, at the end of 2010.
Let us pray for those whose hearts are hardened against His grace and loving kindness by greed, fear, and pride, and the seductive illusion and crushing isolation of evil.
We pray that we all may experience the three great gifts of our Lord's suffering and triumph: repentance, forgiveness, and thankfulness. And in so doing, may we obtain abundant life, and with it the peace that surpasses all understanding.
It is available for your use at no cost, but with attribution and a link to the original posting.
I make every attempt to respect the rights of others. If you feel that something here has infringed your work please let me know and I will correct it immediately. It is not always easy to determine the status of material posted to the Internet with regard to fair use and public domain.
