skip to main |
skip to sidebar
I forgot to remind you all that today was the April options expiration for US equities.
Given the thin trade, it was shenanigans abounding.
So far the April equity action is nothing but disappointing, and earnings reports seem lackluster.
Next week should help us to sort things out. Despite today's up day the short term downtrend remains intact.
"Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked, ‘Account overdrawn.’
Ayn Rand
This is how it happens, on a smaller scale.
I was in Moscow in the 1990's when they were starting to flee the Russian rouble for gold, diamonds, US dollars, and vodka. It is hard to imagine what it feels like to watch your life savings simply and relentlessly evaporate away. It was a 'quiet panic' that left a very deep impression on me.
Apparently the US dollar is no longer so much a safe haven in that part of the world. At least that is what I hear.
Belarus is small. When a bigger ship starts to founder, the lifeboats may be very crowded.
It cannot happen. The authorities will not allow it. This is what they always say.
In some ways it is already happening.
The Feds are already rationing and throttling gold and silver sales by throwing paper and propaganda at the demand.
I wonder how much of it has been secretly siphoned away by insiders already. The time to buy income producing fixed assets is when there is 'blood flowing in the streets,' but the time to get safe and independently liquid is before that blood starts to flow.
Big things are happening, little brother.
Reuters
Belarus Central Bank Halts Sales of Gold for Roubles
MINSK, April 15 (Reuters) - Belarus' central bank has stopped selling gold to local retail customers for Belarussian roubles it said on Friday, after demand for precious metals soared due to expectations of a currency devaluation.
The bank did not explain its decision.
Belarus is in talks with Russia on a $3 billion bailout package that Minsk hopes will help it avoid a painful devaluation of the rouble and offset the large current account deficit.
Belarussians bought 470 kilograms of gold from the central bank last month, up from 209 kilograms in January and February together, as they sought to protect their savings.
Analysts say that Belarus will have to eventually devalue the rouble by about 20-30 percent even if it receives aid from Moscow. However, the central bank has said it would not make any such moves until late April.
Gold is resilient, bouncing off its tentative right shoulder support. Silver is just awesome, taking no prisoners.
The commodity commentary on the Bloomberg network was particularly ridiculous today. They drew a parallel between the commodity rise into 2008 and the subsequent sharp decline with the rise into 2011, suggesting that there will be a similar decline, without ever mentioning the cause, using ominous sounding words and innuendo.
Uh, as I recall there was a stock market crash in 2008 that pulled down everything including commodities. Funny, they keep forgetting to mention that while predicting a waterfall decline in commodities, and endlessly touting equities.
I will repeat as I have done so over and over, that if there is a general liquidation of all financial assets, gold and silver will take a hit as well, along with most other commodities. Silver will decrease further because it has a high beta or variability. Since the miners have a correlation to stocks they will take a hit depending on their beta.
This will most likely represent a buying opportunity if you have the right time horizon and capitalization, and of course depending on your economic outlook, because gold and silver tend to recover more quickly than stocks if there is an economic recovery.
Why? Because money supply and credit expansion lead productive GDP growth, and in some cases as we have now to a much greater degree than normal because the transmission mechanism between credit and the real economy is broken, with a heavy tax being placed on the inflow of new money by the outsized financial sector.
This is how it also happened in the Crash of 1929 and the decline of US equities and valuations into the trough in 1933. And it will most likely happen like this again even when there is an eventual recovery with legitimate and substantial reform. I expect that reform to also include a significant restructuring of US debt, the international money reserves and arrangements, and of course the US dollar.
*Could* something else happen? Yes, and in that case I would do something else. That is what is called decision making based on data, not speculating on nonsensical quackery and theories, ignoring the actual data provided by the markets and the economy until you run out of money to play the game.
If there is a waterfall decline in stocks, which is a possibility, I would expect to have my trading account weighted to the short side by the time it gets underway, and make a significant sum of money as I have done the last two times this happened in the past ten years. I would expect not to touch any of my long term gold and silver holdings and take the charges of turning over long term assets such as bullion. I will not touch them until something fundamentally changes in the makeup of the dollar based money system.
Trying to get positioned well ahead of improbable events is generally pretty dumb, the hallmark of an amateur, but especially if you are doing so using financial instruments like triple ETFs with lots of valuation slippage, and take them as long term positions, thereby almost guaranteeing a loss even if you are eventually right.
Yes anything can happen, but as Walter Bagehot so appropriately observed, 'Life is a school of probability.'
Earnings came in somewhat mixed today, but there was some ominous trend news on PC sales this morning.
After the bell, Google missed its earnings per share number.
The bulls saved it for the day, again on lighter volumes, but stocks appear to be struggling, and may even be in a bit of trouble.
I turned more cautious into the close, adding to short positions to hedge bullion longs.
