Stocks and Precious Metals Charts - How Time Flies - Tactics and Strategies

 

"This forecast was published on my old website (Yahoo Geocities) at the beginning of 2005, when optimism was running high, the maestro was still on his throne, black swans still an uncommon topic, and the US was in a fresh bull market in stocks with a growing housing bubble that very few would admit, and many would vehemently deny.  

I have edited out extraneous contemporary detail, and most of the charts which are dated, except for one. I edited out some grammatical errors and awkward phrasing.  I have also renumbered the footnotes and eliminated several for the sake of simplicity and relevance."

Jesse, 11 January 2010

"Predicting the failure of a complex system is not easy.  One can examine it as a whole, and determine that it will fail, and often calculate what must change in order to allow the system to function more reliably.  But it is often beyond our power to calculate exactly how it will fail, and consequently when it will fail. 

This does not invalidate the observation that the system will ultimately fail.  It merely underscores the unpredictability of timing a failure with the degrees of freedom inherent in a calculation with a large number of exogenous variables. 

There are four major types of tipping points:

o Demand:  a break in the level of consumption in the US caused by the unwillingness or ability of households to incur further debt to support consumption beyond real wage growth

o Supply:  a major disruption in the supply of an essential commodity like energy, food, or raw materials, or even the realization that a major commodity is in shorter supply than expected, such as silver or oil.

o Monetary:  an inability of foreign central banks to continue to monetize the US trade deficit and budget deficit through the recycling of their trade surplus into US debt securities.

o Systemic failure:  the failure of a major counter party that threatens the US financial system, particularly in the hugely leveraged derivatives market.

Jesse, Long Term Forecast: The Humpty Dumpty Economy, 2005 

"Many of us like to ask ourselves, 'What would I do if I was alive during slavery?  Or the Jim Crow South?   Or apartheid?   What would I do if my country was committing genocide?'  The answer is, you're doing it. Right now."

Aaron Bushnell

“You may choose to look the other way, but you can never say again that you did not know.”

William Wilberforce


Stocks ended up with another ranging day which seems to be so common now in this 'roller coaster' valuation ride. 

This reminds me of this same time of year, but in 1929.

Stocks finished flat to lower.

VIX fell from its lofty close from yesterday.

The Dollar chopped but held on to the 106 handle.

There is a stock market option expiration this Friday.

The geopolitical situation is on a hair trigger.

It's all about managing risk in a market such as this.

There was an intraday post about the Performance of Various Assets including Precious Metals in General Market Declines.

During times of unrest and war the lies start flowing hot and heavy, and often delivered with a great deal of unwarranted hubris and presumed audience ignorance.  

Jerome Corsi does a reasonable job in this video of summing up the case for the hidden details in the National Security State assassination of JFK.  They are other books that go into more details including motivations but this is a nice summary. 

This was the beginning of the fall of the Republic, and the rise of oligarchy and Empire.

Have a pleasant evening.

 

Performance of Various Assets including Precious Metals in General Market Declines

 

First, let's realize that not all 'crashes' are the same. 

They are precipitated in different ways from different contexts, and with post decline actions by the fiscal and monetary authorities, and of course exogenous events. 

This expresses as the duration of the decline from top to bottom, and the speed and duration of the 'recovery.'

The Crash of 1987 was a 'liquidation event' that occurred as a break in confidence during a market bubble based on faulty fads and assumptions including portfolio insurance.

 In a liquidation event almost everything is sold in a panic to raise liquidity (cash).

The recovery was facilitated by the monetary actions of then Fed Chairman Alan Greenspan.

Here is a picture of the tech bubble collapse of 2000-2002 

Although the miners (HUI) in this case took a heavy hit in the initial decline, their recovery was notable in its outperformance.

There is a similar scenario for the Crash of 1929-33, but the price of gold is heavily influenced by the actions taken in the gold market by the government. Monetary gold was withdrawn from circulation, and afterwards revalued higher to help stabilize the banking system.

The performance of Homestake Mining post crash is legendary.

Stocks and Precious Metals Charts - The Lethal Chambers of Hardened Hearts

 

"The essential characteristic of a good and healthy ruling elite, however, is that it views itself not as a function of the monarchy or the commonwealth, but as its very meaning and highest justification, and that it therefore accepts with a good conscience the sacrifice of untold human beings who, for its sake, must be reduced and lowered to incomplete human beings, to slaves, to instruments."

Friedrich Nietzsche, Beyond Good and Evil, 1886

‘The only fundamental and possible socialism is the socialisation of the selective breeding of man. A part of eugenic politics would finally land us in an extensive use of the lethal chamber. A great many people would have to be put out of existence simply because it wastes other people’s time to look after them.”

George Bernard Shaw, Lecture to the Eugenics Education Society, The Daily Express, March 4, 1910

"The moment we face it frankly we are driven to the conclusion that the community has a right to put a price on the right to live in it.  If people are fit to live, let them live under decent human conditions.  If they are not fit to live, kill them in a decent human way.  Is it any wonder that some of us are driven to prescribe the lethal chamber as the solution for the hard cases which are at present made the excuse for dragging all the other cases down to their level, and the only solution that will create a sense of full social responsibility in modern populations?"

George Bernard Shaw, Prefaces, 1934

"As everything in what used to be called creation becomes a commodity, human beings begin to look at one another, and at themselves, in a funny way, and they see price tags. There was a time when people spoke, at least occasionally, of 'inherent worth'— if not of things, then at least of persons. It is sometimes said that since everything is for sale under the rule of The Market, nothing is sacred. The Market is not omnipotent— yet. But the process is under way and it is gaining momentum."

Harvey Cox, The Market as God

"Fascism is capitalism plus murder."

Upton Sinclair

"Through our relationship with the Incarnation, we recover our true humanity, and at the same time are delivered from that perverse individualism which is the consequence of sin, and recover our solidarity with all mankind."

Dietrich Bonhoeffer

As you may recall, George Bernard Shaw was a member of the Fabian Society, a far left organization, and an avid supporter of eugenics, which was quite popular in the US and UK in the early part of the 20th century.  He, like so many other of the elites, was an early admirer of Hitler and Mussolini.  He modified his views of course with age, but never apologized.  Truly, there is probably no more perilous habit than the sanctifying of success.

It is the theory of the political continuum that at the extremes of the left and the right, their perspective on the individual and the human soul become remarkably similar, and the outcomes and policies tend to be indistinguishable except in their wording and rationalizations.  They tend to denigrate democracy and the common public, and have a penchant for fascism.

Stocks were in rally mode this morning, for a number of reasons some of which were exogenous.  

The stronger than expected retail sales number was taken in stride, once you looked 'under the hood' and saw what constituted it.

And so things were clicking along happily.

But alas, an exchange of words and a threat of further escalation in the military situation in the Mideast turned the risk lever back to off.

Stocks melted, giving up all their gains and going out near the lows. 

Gold and silver rallied sharply.

VIX rose sharply.

I suspect that this new found respect will wear off if nothing occurs on the geopolitical front.

Wall Street can shift from fear to greed and back again with phenomenal speed.

Have a pleasant evening.