Blog Archives

Dear Trump Advisors: Prop the Market Up Now and Lose in 2020, or Let the Market Crash and Win in 2020

One of the more reliable truisms is that Americans vote their pocketbook: if their wallets are being thinned (by recession, stock market declines, high inflation/stagnant wages, etc.), they throw the incumbent out, even if they loved him the previous year when their wallets were getting fatter. (Think Bush I, who maintained high approval ratings but ended up losing the 1992 election due to a dismal economic mood.)

As a result, politicians try to time the economy to align with elections. Get any economic pain over with early in the election cycle, then prime the fiscal pump in Year 3 to boost the economy in Year 4 (election year).

The global economy and the credit cycle aren’t always so pliable or predictable. Oil can soar due to geopolitical tensions, or a speculative financial bubble can burst (subprime mortgages in 2008, dot-coms in 2000), torpedoing the economy.

The intuitive strategy is to prop up the economy and stock market by any means available heading into the election cycle: if we can just keep this over-valued pig of a market aloft until November of next year, so the thinking goes, we’ll likely win the election (or at least we won’t lose because stocks and the economy tanked).

But this strategy is a loser when the credit cycle has run past its expiration date: most credit-based expansions last at most seven years, and here we are in Year Ten. Credit exhaustion is setting in, speculative bets are maxed out and the global economy is rolling over.

(more…)

Tagged with: , ,

A Stock Market Crash Scenario

We have all been trained by a decade of central bank saves to expect any stock market swoon will soon be reversed by central bank sweet talk and/or rate cuts. As a result of such ever-present central bank willingness to intervene in the stock market, participants have been trained to believe a stock market crash is no longer possible: should the market drop 10%, or heaven forbid, 20% (i.e. into Bear Territory), the Federal Reserve and the other global central banks will save the day with direct purchases (The Plunge Protection Team), happy talk of future easing or, some unconventional quantitative easing measure or a rate cut–whatever it takes, in Mario Draghi’s famous words.

But irony of ironies, such complacent confidence in the efficacy of central bank interventions is actually setting up a crash scenario. Crashes and melt-ups are both manifestations of herd sentiment. Though this is often simplified into greed or fear, this might better be described as confidence in near-term prospects or the lack thereof.

(more…)

Tagged with:

Silver Price Spiking & Gold Pushing Higher On The 30th Anniversary Of Black Monday

The intra-day “bull flag” formed in silver:

 

Here’s a closer look at silver with good volume:

Which makes us wonder if this short-term bottom is in?

(more…)

Tagged with: , , , , , , ,

All Cartel Fingers at the Ready: The Assault on Gold & Silver Is GOING TO BE NASTY

Last night did not go that well as we saw constant pressure on the precious metals throughout the night:

Constant, steady pressure to the downside. This is in light of “Rocket Man” comments, many Floridians still without power as 3 new threats are swarming in the Atlantic, Venezuela pricing oil in yuan, bitcoin erratically, Syria heating up again, and any number of “pick your poison” doubleplusbad fundamental news. However, we knew this would happen, which can be seen in the following ominous chart for silver:

When we look at silver, we see there is some minor support around$17.15. Major support is at $17:

Let’s hope we really don’t fall through $17 at this point, though we are quite certain the cartel will push as hard as possible on price to the downside over the next two days. Once $17 is lost, there is no consolidation anywhere on that daily, and momentum would most likely carry the white metal even lower, so a $16 handle before 2:00 p.m. EST on Wednesday is where they will indeed try to push the silver price down to. If there was a great time to scrape-up some extra cash and grab the change jar to put in an order, it seems like the best time would be over the next two days.

(more…)

Tagged with: , , , , , , , , ,

Truth Slip AWESOME FOR GOLD: MSM Anchor BUYS PHYSICAL GOLD

Thank’s World Gold Council for the Tip:

Here are some of the best parts:

I bought gold for the first time this year. Not a gold ETF like GLD or a gold miner stock like Barrick (ABX), but actual physical gold. I had a limited budget, but wanted it as a diversification and a small hedge against the coming zombie apocalypse or market crash, take your pick.

Jim Rickards, noted gold bug and author of numerous books on gold, including “The New Case for Gold,” recommended I buy…

–> Click here to read the rest of this article on Silver Doctors

Tagged with: , , , , , ,

SD Midweek: Overnight Strength in Gold & Silver Has Cartel In BIG TROUBLE

Silver had strength to start the overnight session, and then again throughout the night:

This is pretty much where we would want silver to be. All things considered, the strong-arming of the markets looks to be waning. There is, after all, only so much hurricane. Hurricanes are regional events, and while the costs to rebuild will surely climb, it’s not like hurricanes offer the continued threat of Thermo-nuclear Armageddon, which seems to come front-and-center every few days now. And so silver is looking healthy here for several reasons:

We know that silver is going to have a little trouble at $18.25. Sure enough, the two day tap-and-bounce followed by a dip is very bullish. Everything is set up for the move to the upside. Higher-lows, not screaming “overbought”, and the need for silver to catch-up to gold are all signaling that it is silver in control of the price action and not the central banks. What the silver price really need to accomplish is a commanding break-out above $18.50. Until that happens, the three-way divide between the skeptics, the bears and the bulls will remain as wide as ever. Gold saw the same strength overnight as well:

(more…)

Tagged with: , , , , , , ,

SD Monday Outlook: Suspended Animation, Gold & Silver Smashing and Fed Radio Silence

First things first – when it doubt, smash:

Last time I checked, you can pick up a bunch more ounces at $17.75 than you can at $18.25! One look at the economic calendar one thing should immediately stick out like a sore thumb:

No Fed speeches at all this week. This is common the week before FOMC day. Next week Janet Yellen will hold a “press conference” in conjunction with the rate hike decision or indecision, so this week, there is nothing to for the market to take the wrong way. It’s not like the Fed, ESF and market manipulators won’t have their hands full behind the scenes anyway.  CME Group rate hike probability is showing the Fed will hold, with any variation to the “rate cut” side:

This is not to say there is not a ton of fundamental news brewing in the background. North Korea is still at it, Russia is conducting war games, the United States is dealing with a one-two hurricane punch, and Syria is front and center again. Not to our surprise, none of this is good for markets, but sure enough, one look at the charts will show that apparently it all is. In fact, uncertainty seems to be quelled. The “fear” barometer, the VIX, is subsiding, and the dollar is slightly up going into the week:

(more…)

Tagged with: , , , , , , , ,

Market Wrap: We are the Sultans of Gold & Silver Price Swing

Cap the metals they may. Smash the metals they may. Save some ammo for another day, cause Gold & Silver didn’t come here to play. We are the Sultans of Price Swing… 

Gold & silver have been on tight lockdown all week. After gold punched through $1300 on Friday, August 18th, both metals have been range-bound and capped ever since:

 

 

Furthermore, we have been monitoring the daily chart all year, and noticing, especially with silver, that there has been very little to no consolidation. However, all that has changed this week:

 

 

 

The MSM will be quick to point out a healthy “consolidation”, “basing”, or however they would like to spin it, but one look at that chart and we know exactly what it is: Fierce capping of price ahead of the Fed’s Jackson Hole Keynesfest.

The “consolidation” is pronounced in gold as well:

 

 

 

Of course, we can rest assured that the battle for $1300 will not be pretty. This is the third defensive stance by the market manipulators this year. After the April and June gold offensives, maybe we took for granted “third time’s a charm”, and now we are finding out that since June, they have been hardening their defenses.

And then, of course, today happened. Gold and silver caught a bid, and gold popped above $1300 at 9:17 a.m:

 

(No, that’s not the elusive yet uber-bullish “Loch Ness Chart Formation”, that doesn’t happen in the metals. That is the “Cue the Fat Finger Chart Formation”)

Then, 23 minutes later, the smash began, and one minute later, for one minute, between 10:41 a.m. and 10:42 a.m., 21,135 gold futures contracts were dumped on the COMEX.

(more…)

Tagged with: , , , , ,

Why We Won’t Have a “Lehman Moment” in the 2016 Crash

One way to lose a war is to focus on preparing to fight the last war. Preparing to fight the last war is a characteristic of losing generals, militaries and nations. The same is true of finance and economies.

General Grant’s difficulties in breaking the trench warfare around Petersburg, VA in the last year of the American Civil War (1864 to early 1865) telegraphed the future of trench warfare to astute observers. Few took heed of the lessons of the “first modern war,” and many of the same strategies of 1864 (digging a tunnel under enemy lines and filling the tunnel with explosives to blow a hole through their defenses, for example) were repeated in the Great War of 1914-1918 fifty years later.

When a weapon system capable of breaking the stalemate emerged–the tank–its potential for massed attack escaped planners on both sides, and the new weapon was squandered in piecemeal assaults.

“The last war” in 2008-09 was a battle to save heavily leveraged centralized financial institutions from default and liquidation–commercial and investment banks, insurance companies, etc. The concentration of capital, leverage and risk in these behemoths rendered the entire system vulnerable to their collapse (or so we were told).

Saving imploding private-sector banks was no problem for central banks that could create $1 trillion in new money with the push of a button and offer essentially unlimited lines of credit to banks facing a liquidity crunch.

But the current financial meltdown is not like the last war. Central banks are ready to extend unlimited credit again to private-sector financial institutions, but this time around, the problem won’t be a lack of liquidity.

By refusing to allow a house-cleaning of risk, leverage and mal-investment, central planners have simply pushed the risk into systems they don’t control: foreign-exchange (FX) currency markets, shadow banking and the economy that depends not just on available credit but the willingness of qualified borrowers to take on the risks and costs of more debt.

Central banks have created abundant credit and liquidity, but no productive places to invest that ocean of nearly free money Creating abundant credit works to spur growth when growth has been restrained by a lack of credit.

But when credit has been abundant for decades, what’s scarce isn’t credit–it’s productive investments that are scarce. Central banks are powerless to create productive uses for the credit they create.

The inevitable consequence of this failed strategic error is defeat. Central banks issued trillions of dollars, yuan, euros and yen in new credit to stave off defeat in the last war (the Global Financial Meltdown of 2008-09), but the problem wasn’t a lack of credit. Now, seven years into the strategy of flooding the global economy with credit,the problem is a scarcity of productive uses for all that money sloshing around the global economy.

There won’t be a “Lehman Moment” in the 2016 meltdown, because central banks can prop up or “save” any new Lehman with a few keystrokes. What the central banks cannot do is create productive places to invest the credit they’ve generated in such excess, or force qualified borrowers to swallow more unproductive debt.

The global economy is choking not just on an excess of debt, it’s also choking on the consequences of an unprecedented mal-investment of the credit central banks have issued in such over-abundance.

Issuing more credit will only make the 2016 crash worse. Trying to stop the current crash with more credit and lower interest rates is like sending the cavalry on suicide charges against entrenched machine guns, artillery and tanks. The coming financial slaughter will be as senseless, wasteful and ineffective as any suicide attack in the Great War.

My new book A Radically Beneficial World: Automation, Technology and Creating Jobs for All is being published in China later this year.

Tagged with: , , , ,

The stock market crash of 24 August 2015

Are we seeing market capitulation? Wall Street joined the China crash party last friday. Not only China, also US stock market had become detached from the reality of our economy. People who sold their houses to invest in stocks, they’re finished! This crash is not a capitulation, it is the beginning of the end of many banksters. We see evidence that the economy is slowing relatively fast. People have chosen to get out of the market. But why this happened? Here is a list of the factors that led to the stock market crash of 24 August 2015: The factors that led to the stock market crash of 24 August 2015

Tagged with: ,

Is It Time to Get into Crash Positions?

With stock markets diving around the globe, a pressing question arises: is it time to get into Crash Positions?

In case you forgot how to get into Crash Positions, here’s a reminder:

(more…)

Tagged with: ,

Who Left the Crash Window Open?

Can stocks keep hitting new highs even as sales and profits fall?

Given that we live in a world where a modest 3% decline in the stock market triggers panicky demands for more quantitative easing (QE 4), few observers expect much a correction, regardless of the souring fundamentals such as sales and profits.

A correspondent notified me of a Puetz “crash” window (based on the analysis of Stephen J. Puetz) opening in late March-early April. (Since I am not a subscriber to Puetz’s work, I can’t confirm this.) As I understand it, while these windows do not predict a crash/sharp correction, such moves tend to occur in these windows, which are based on cycles and events such as eclipses.

So I decided to look for any evidence that a sharp correction might be in the offing.

(more…)

Tagged with: , , , , , ,