Wealth Distribution in America

I wish this video stuck to pure facts and didn't color it with questions of fairness.
I am not agreeing or disagreeing with anything the guy says, but the facts are best presented to let the viewer draw to conclusions.

Anyway, well worth the watch, thanks to friend Rob C for liking it on G+

Gold, has anything changed?

Well, the stop losses was violated, GDX and GDXJ went much lower.
The FOMC meeting blew gold straight up and miners with them.

Here we sit, I am good again with entering positions, but slowly over time.
Stop loss at 25 for GDX and and 42 for GDXJ.

And here is the rub, both are much higher, so there is no safe entry.
You can buy in here, and simply lose 10% to next stop loss.

For this reason, I cannot advocate going all in here.  Hopefully 50% of the position remains, so can add another 20% and simply .... wait.
If GDX and GDXJ do keep going up, you can really buy in a week...or two..or three.
Won't be a straight line, but in two weeks if we don't violate those levels, we are making higher lows, which is a trend up.

I am slightly reserved here.  India is a large buyer of gold, but India is trying to cool it off.
It can't last forever, but darn straight it could last couple more months.

Lower demand = lower price, simple as that.
I am unsure if there is enough global demand to make up for lack of India demand.

If I believed on conspiracies, which I don't, insiders are influencing India to stop the the gold buying, to build up demand and cool off price.  The insiders to get in cheap before the demand resumes.

So buy in here if you wish, but I can't advocate load the boat, lose 10% on next stops, repeat.
I can say, if you still have half your original position, your not out, and there is no burning need to get back all in today.

Good luck

Gold Miners - Stop losses

I put stop losses on about 1/2 my shares for GDX and GDXJ.

If the miners finally bottomed, then we should not see a significant pullback to the levels we saw.
So, I may be wrong, and miners are headed lower.

GDX stop loss I put at 27.25
GDXJ stop loss I put at 45

Gary of smart money tracker put it at different levels than I did.
I want to give this more range than normal, I don't want to be whip-sawed out of the position.
But I also don't want the stocks to melt, and I sit watching the miners fail.

Take a look at your cost-basis, and stock charts, pick what is comfortable for you.
My target to sell is 2017+, or 300%+ profit.

Good luck

Gold and Gold Miners, hoping worst is behind us

As of today, I am completely in gold and gold miners.  Any free capital in any account I have is all in.
Further, I have a small play in some calls, year 2017, so far in last 4 days up over 100% in value.
If this was 2009, I would have made some serious earnings, but I don't take risks like I used to.

My friend Happy John has been in fixed income primarily for last 3 years, and finally he is materially 'in' on miners.  A friend who used to manage a hedge fund is also in, and Greg 'the day trader' is in for a bit.

Gary of the smart money tracker is optimistic, and always with some caution.

Friend of mine got in near the low of GDX in pretty good.

Bottom line, what I have been waiting for since 2010 is here.  In September 2011 post titled "The Bear is Back" I stated:
Out of ALL Long stocks, and even resource stocks should get somewhat routed. The next upswing I think will be an explosion for resource based stocks on the upswing.  .... The USD crisis isn't until after the next upswing and the next cycle of down pressure. I still think 2013-2014, possibly as late as 2018, depending on how events unfold.

Routed isn't the right word for what happened to resource stocks.  A brutal beating the likes almost no one saw comming.   The US dollar is indeed falling, but it hasn't been a confirmed rout yet, so we'll see about the USD part.  But remember, my view of gold going up is UNRELATED to USD currency, that simply adds fuel to the fire.
From post in January 2011, quote:
Precious Metals – I have blogged many times, I do not believe gold is money. I therefore do not like gold as an alternate currency. It is frankly, insanity. Gold as money works in a mad-max world. I will not spend my life planning for mad-max. However India and china cultures are in love with gold. As 2.5 billion people can afford to spend more disposable income, one common theme in both cultures is buy gold! And of course, the alternate reason is there are plenty of people who do view gold as money. For whatever the reasoning of people purchasing, I expect gold gold gold to the moon.

India has placed a surcharge tax on all gold of 10%, and Pakistan has BANNED gold imports.   Seems like there is a slight uptick in gold buying, who could have seen that comming?

Now is the time to simply own GDX, GDXJ, GLD, and some individual gold miners and wait.

I expect this blog to be quite boring.  I may simply have a chart of Gold and Gold miners showing when at risk (if it happens) to be reversing.
I expect to hold these positions for 1 to 4 years, making a pretty boring blog!

Good luck to ya.  Gold went up pretty dramatically over last 4 days, taking GDX with it, to the chart!

Gold and Gold miners - A buy

I have been beating the gold miner drum for a while now, but I'll re-iterate this call.
I see no need for me to report charts, reasoning, and other items to point to gold miners.

Instead I refer you to Gary Savage post 'Behind the bear raid'.  I don't subscribe to the reasoning that there is a plot to tank gold miners recently.  Ignoring Gary's twist on the gold decline, the charts and analysis is good.

Consider looking at ETF's  GDX and GDXJ, with GDX at 28 today, and GDXJ at 45.

I am almost full tilt in this sector now.  good luck!

Giving opinion is NOT worth it

I have been posting here and there on the technological advancement in monitoring since 2009.  Recently I asked in  a post "Giving opinion, is it worth it?". I have to say it is not.

Patriot Act was ground zero of  all of this, and it had mass support.  Now we have the NSA PRISM scandals, and all the public revelations on tracking, there is no material action being taken. Therefore there is one direction, continue spiral of ever increasing monitoring with zero restraint or process. Yes, you can point to restraint and process today, but the illegal actions taken, with zero indictments, and no material backlash equals free ticket to go much further.

Therefore the government has NO check and balance to enforce restraint on creating databases and profiles on every person.  What will happen is a 1984 ish future mashed up with Gattaca, to shape your personal future. I cannot justify how posting my opinion in a public, non-eraseable form will have a higher chance of helping than hurting in 20 years, or my son. The only one way one person can make a difference is when the greater body of people yearn for leadership and support the person at the right time who stands up. The greater body of people will not look for leadership until after there is much pain to WANT leadership. Today we have all of this troubling technology exposed, and not enough willpower to act. Therefore what must happen is for this trajectory to go full course, and only after excess is so painful that change can happen.  I dont think it will get painful until the common law enforcement officer has access Google-glass like technology.

This post is my last opinion post on corruption.  If you care enough to know, look yourself.  That is why the internet today is still the greatest tool for the common person in human history.  Its all out there if you can sift through the crazy for the sane.  I will continue to label corruption when in conjunction with events that transpire.

If you think I am nuts for this opinion, two things.  First, what did you think of my opinion in June 2012 or in 2009 stating that the government can and will track everything?  Today what do you think given the video below?

Show me wrong, pick up where I left off, feel free to post your efforts in comments on this post for others to follow you.

Jim Chanos China vs USA

Mr. Chanos I find always worth watching, his insight and what appears to be honesty is refreshing.

Well worth the watch, and he is actually bullish on USA compared to China and Europe.  Slightly dated, from December 2012

Comments on HP and services companies

Paying off Credit Cards

I love credit cards for cash back, as my post "Credit Card Cash Back" explains.
The key of course is pay on time, in full, and incur no interest or fees.
I have everything on autopay to ensure it is never an issue.

However, if you have some debt you need to pay off, first thing is to stop over-spending.
Second step is to move the debt to lowest interest possible.
Third is to pay off the credit cards in full in a set timeline, payment per month.  In this case, set a goal of 18 monthly payments.

There are credit cards that let you transfer balances to it, with ZERO interest for 18 months.
Pretty incredible actually.
There is a 3% transfer fee, but typically that fee is ignoreble compared to annual rates of 12-30% annual interest.

Here are some cards with 18 month no interest on transfers
CitBank Simplicity - No annual fee, no  late fees, no penalty interest rates.
CitiBank Diamond Preferred - will charge late fees, but like Simplicity
Discover - I like 5% cash back on new purchases (like gas right now), and 1% on all else.

15 month zero interest
Chase Slate

LOW Fixed interest of 8%! and get back 1% on balance transfers!
Barclay card

Time to buy Gold miners, try number 3

With the multi-month blood letting on gold miners, and gold, I think we are close to a bottom if not already passed.

Even if gold and miners reverse from here, how much farther can it fall?
In the 2008 crash GDX hit around 15 for a day or two, and traded around 17-20 for a bit before moving much higher.

Below are the charts for gold and GDX.  If you can stomach it, now is the time to get in.
Actually last two weeks was, and I went in early myself.
I think with Gold gaping above the trend, and GDX and GDXJ heading for the trend reversal, it is looking like a good time. (GDXJ is gold miners/silver miners, smaller cap)

Don't expect a straight line up, both could get a nice punch down after such a good rally.

And to boot, my friend Happy John who hasn't traded in gold miners for years, went in for a decent chunk.

As for overall stock market health, the last two bubbles lasted about 6 in 2000 the .dotcom bubble, then 5 years for housing, now its sovereign debt.  If history repeats the market is reaching the end of this bull run.  Even if the market fell apart tomorrow, again, how much lower can gold and gold miners go?

To the charts!

Municpal Bonds

Back in 2008 I wrote a very short article calling out that Municpal bonds will run into trouble. Since then I had made it part of annual predictions that the municipal bond market would have issues. The city of Detroit has now declared bankruptcy, but this is a first major US city to go bankrupt, and I expect quite a few more to follow.
I won't give timelines, apparently when there is an issue, politics can kick the can much farther than I thought possible. Detroit has been bankrupt for years, but somehow they managed to not go legally bankrupt until now.
Its a pi-polar marketplace right now.  The reality seems grim, but the markets are levating.  If municpal bonds do start to see rising rates, this could be the begining of the phase 2 of this decade journey we are on.  Contagion spreading to the government bonds, the next bubble.  
I do think gold is near a bottom, if bonds start having issues, gold may start moving quick.   I suspect we are finally seeing the gift in gold I predicted back in 2009, quote.

The gist is, I plan to ride this next wave down short the market (not short resources). I'll start looking for rolling into precious metals/resources WHEN IT LOOKS LIKE A GIFT. 

If gold and gold miners don't look like a gift right now, not sure how much lower it must go to be a gift.

Good luck.

The fall of USA

I posted before of the first steps of the downfall of the USA in post "Blame Republicans or Democrats"?.
Specifically around how media was allowed to consolidate.


This video series is excellent, clearly laying out our current sad stae.
I'll file this under corruption

Marty Kaplan on the Weapons of Mass Distraction from BillMoyers.com on Vimeo.

Across the world -- Greece, Spain, Brazil, Egypt -- citizens are turning angrily to their governments to demand economic fair play and equality. But here in America, with few exceptions, the streets and airwaves remain relatively silent. In a country as rich and powerful as America, why is there so little outcry about the ever-increasing, deliberate divide between the very wealthy and everyone else?

Media scholar Marty Kaplan points to a number of forces keeping these issues and affected citizens in the dark -- especially our well-fed appetite for media distraction. An award-winning columnist and head of the Norman Lear Center at the University of Southern California, Kaplan also talks about the appropriate role of journalists as advocates for truth.

Bring Back Glass-Steagall act

When the Glass-Steagall act was repealed under Clinton, it set the stage for what we are dealing with now.
Take a look at how the total assets in the banking industry was moved to the top 3 banks.

Good video to watch below, see article on this here.

Market direction

When you look at all the news, corruption, revolutions, its pretty easy to point to the market and say it has to hit it. One thing that I have learned since 2008, is the market is not a pure report card of economic health. It is an almagum of politics, perception, and financial realities. So as I look at the market, I try to remove my predispotion to the view of problems with corruption, currency wars, problems with labor, and middle class crush. From purely a chart perspective, if the S&P500 traded between 1700 and 1500 for the year ahead, it would be a reasonbly decent outcome.

Aside from general market direction, we have my beaten friend, Gold miners ETF.

Best I can say for this thing is, what is down, probably may go up. Who knows, it can stagnate here or rebound. The spin seems to be the sector is beaten up, and time to buy. What I have, I'll keep, I really don't have the stomach to double down. This maybe a golden opportunity of a lifetime, if your not in, a little here is lower risk. Just take alook at the valuations, it hasn't been this bad since the economic implosion in 2008. Or wait for the red and blue trend lines to cross, that usually indicates its on the rise for a while. Then we have Gold (GLD), just plain ugly!

Best I can say here is, as long as it stays above the longer term trend line, still an upward moving asset. For the USD, it's demise is a tad bit overblown, its held up, although quite flacky in recent months.

So your guess is as good as mine. I do think there is ONE asset above all to watch, the cost of debt. I REALLY do think this is the entire story. Everything above is a sideshow. Why? Because in 2008 I warned (and many others) that the shift was from bank/private risk to government risk. The governments of the world have shouldered the burden of 'stimulous' for 4 year. Most governemnts have been burning the midnight oil on debt creation, and taking on risk assets. The US government buys 85 billion of the worst debt obligations from banks every month, taking them on. In effect, the problems are being buried in the good old faith and credit of currency system. So what we have here is a trend line of 30 year interest rates on the fall since 1981, and recently its been rising. If this trend ever breaks the downward two green lines, its pretty much over folks. I don't think the system can take rising debt costs.

So there you have it, market valuations high, Gold miners eating dirt, USD valuation holding, and US 30 year treasury rates, the foundation of cost of debt spiking in recent weeks. What is next? Tune in for second half of 2013 for the answer.

Robotics, Demographics, and the changing landscape of employee skills

The bar will continue to be raised for all workers, as they will need to compete with higher skillset to add value.  I ran across a video that dives deeper into yet once again, how the baby boomer demographics will influence the rise of the robotics.  See my previous post on March of the Robots, Deflation for Decades on my view of the changing landscape.  The video below isn't from an economic perspective, but does a great job of capturing the technological landscape ahead.

Technology, driving the next economic reset

Most people don't know this, but economic structures like the one we live in resets every 100 years or so.  Resets can come in many different forms, the most extreme is currency is devalued or exchanged for a new system.  This is needed deal with the overhang of past people's financial obligations and the reality that the people who acted may no longer be living.  For example, the debt incurred during the Great Depression that was never fully paid off, what does debt from the 30's and 40's have to do with current 20 year olds feeling economic tension?

An economic reset allows the current generation to set a new set of rules, and move forward until that system no longer meets the needs of society.

In our current case, I have written how technology is applying pressures on a system constructed in 1913.  Technology further applies pressure by allowing much more to be accomplished with much less, raising the bar significantly of workers who can benefit from employment driven by innovation.

I have also written how we will see deflation for decades with an ever rising unemployment.   The bright spot I have written about is innovation in a future new currency system allowing more to participate, and an world revolution in manufacturing.

The current system places quite a bit of emphasis on real estate.  Partly because since 2001 the world banks have used real estate to grow paper wealth to drive more business activity and employment.  This drive I believe is reaching a peak in the next few years world wide.   What I believe will limit real estate valuation is yet again technology.  What if, a house could be built at higher quality, costing 1/10th the price of current house building?   What would happen to older house prices if a new houses could be built undercutting the old?

That is exactly what is in store for our future.  The same manufacturing revolution I noted above will drive to new technologies, yielding an economic bonanza for developing countries, but potentially a death blow to the west economic structure.

The ability to automate construction is getting a new twist with massive 3d house printing technology in it's infancy.  Such technology is not a threat in the next 3 years, but in 10? You an Guarantee it will come into play.

So we continue the race of the old system, rebirth into the new, whenever that comes.  For now, continue to sit back and watch the Great Degeneration as it unfolds.

Gold Miner bloodbath

The GDX ETF has really hit the skids.  The overall market is just slightly below all time highs, and gold miners are at lows not seen since the 2008 crash!

If that isn't a buy low, sell high setup, I don't know what is.

If you managed to stay out of this until now, this is really decent to START buying.
put bids in at 5% here, 5% at 21, 5% at 16.
Granted, it is possible that the miner go lower than the 2008 crash, worst crash since the great depression.
OR we are nearing a multi-year low.

I  put bids in for January 2015 calls strike 35, at 5 contracts at 1.50.  Risk 750, reward 'unlimited' ;)

Good luck.

Gold Miners

My original plan was to stay out of mining sector until it was depressed.

I made the call too soon and went into miners before they rose (good) and then fell further than bought (bad).

If you like the idea of this sector, I highly recommend Mish's analysis of some buys. (click)

I picked up some NEM today.

I REALLY like the ABX chart (click)

Government monitoring is not a surprise

Back in 2009, I called in post called "Increasing control by central authorities" a proposed law at that time giving the government legal permission to monitor user data.  I called out that this legalizes using technology to monitor it's citizens without warrant.

I posted similar concerns over the years since then, culminating in post of June 2012, Giving opinion, is it worth it?   In that post I call out how everything is subject to collection and analysis.  I call out how that this data will be used to profile you for the rest of your life, no matter how your own disposition changes.

Then in Feb 2013 in post "Future Tech - The Double Edged Sword" I point out how big data married with tech, such as Google glass, will bring unprecedented power to centralized authorities.  That at a mere glance you can be instantly profiled and singled out based upon criteria.

There are posts from other bloggers, like Karl Denninger on such technologies that can mass process data years ago for monitoring.

Sure, a person (Edward Snowden) says he has 'inside knowledge' that he is breaking the law to give to us.  This knowledge is frankly known before he broke the information if you are paying attention.  I believe that this event is political is spun to use against Obama (I am not a fan of Obama), rather than a real concern over US privacy.  If that was such a concern, the media would have highlighted when LAWS are proposed to invade privacy.  Instead they do not report important news, only when news is sensational and sells.

Even with this 'revelation', so? People will grow tired of it, and it will become the accepted fabric of society.
Until the 'revelation' that a Google glass product marries with face recognition and big data can instantly profile and single you out on questionable criteria.

Euro Enslavement of Europe by Germany

I have been delaying quite a rant about Germany.  Mostly I needed the time, and the fire in my belly to take the time to do this topic justice.

If you have been paying attention, Greece, Spain, Portugal, and other countries in the Euro are hurting bad.
On a collision course to the potential epic explosion of the Euro is France vs Germany.
To learn more about the state of these countries, click on the links above.

At the heart of all these problems is the Euro.
The Euro is NOT a pure fiat currency.  It is a currency that has strings attached, set by the dominant members of the Euro, with Germany at the heart of this debate.

Lets examine Greece as a case example.  We'll bypass how Greece could never have entered the Euro without bogus off-the-book tricks to make their balance sheets look good enabled by large financial companies.    The Euro (Germany) sets the rules that to be a member of the Euro you must have your finances in order.  Countries cannot run deficits of 250% of GDP like Japan does.  Such recklessness is at the expense of saving nations, like Germany.

Germany looks like the victim, a saving nation bailing out its neighbors, and enforcing tough love.  This tough love of course is causing Greece to experience about 60% youth unemployment, 27% for general population,  and 10% of all children at risk for insufficient food.  A tough person would look at this and say "hey, Greece dug this hole, let them dig themselves out for the next 50 years".  That in itself has issues for anyone born since 1980, hardly fair price to pay.

So the question is, why did Germany enter into such a disastrous marriage with countries with less than stellar financial histories?  It is simple, it benefited Germany.  How  you may ask?  It is a slight of hand that must be followed carefully.

Lets assume there was NEVER a Euro.  Every country would have independent autonomy on their currency and finances.  Greece could continue to (over) spend  on their economy without having to cut back on their finances.  You may say, that's illogical, they couldn't do that forever.  True, there may be consequences but the likely net result is a currency that continually loses value compared to saving nations, like Germany.

So in 1990, 1 Drakma could buy 1 German Mark.  By 2013, 5 Drakma buy 1 German Mark.
This of course, looks bad for Greece, their currency slides lower while Germany acts responsible.

So say you live in Greece and buy a BMW car for 30K in 1990.  Car runs great and in 2013 time to buy another car.  Now that same car will cost you 150K in 2013 in Drakmas'.

All things being relative, this will likely result in LESS German goods being purchased by Greeks.  Now expand that thinking to every country 'not as fiscally' responsible as Germany.

The net result is for Germany to keep its exports healthy, it would REQUIRE to cut it's standard of living to it's citizens to bring down that car to say, 70K from 150K.  Sure its not 30K, but something that may strike a balance of economics vs standard of living.

Now, which sounds better to you, have a customer base that sees your BMW as a 30K car in 2013, or 150K?  The consequence of course is what Greece is experiencing today.

The only victim in Germany and Greeks citizens who believed their politicians.
Now the real victims is the youth of all countries, as they have near zero prospects for work. What we are building now is a European revolution, as the young get older, disgruntled and angry.  Once we have a majority that are angry, this farce will end in a spectacular event.

Market Crash closer than expected...or is it?

The Japanese bond market is breaking, with Japanese interest rates accelerating higher.
The Japanese stock market has had some nice sell offs last week.

The European union cannot fix their issues, and Greece just predicted 2007 employment level will be attained in 2076.

The US stock market has hit a nice parabolic blow-off rise last week, reaching extreme levels never seen.

All of this adds up to a market crash is quite possible around the corner.  But never fear, this will be followed by even MORE extreme responses by the central banks to save the economy by easing money creation.  Overall this isn't a bad thing per say, it just we don't know how this ends.  I do believe that gold miners after the extreme sell of of GDX down to 26 is approaching a bottom.  MAYBE another 20% lower? maybe?  I can't see it breaking 19 a share like it did in 2008.  In any case, we are closer to a bottom than 2 months ago.


I will caution all readers.  If this plays out badly for the world governments, we could see that this next leg will be one that has rising interest rates at it's heals.  The US bond market has seen rates drop for 25 years straight!  30 year bonds are near 3%, so this is also near a all time bottom.   For who would lock in at 1% for 30 years?

What doesn't go down, usually goes up.  If rates start to go up, all hell will break loose on our debt based society.  If you own bonds, it will be very hard to get out without taking a substantial loss.

Good luck, we all need it.

3d Printing on paper

As an example of how innovative 3d printing is, I ran across video showing 3d printing using paper instead of plastic.  As 3d printers refine in a variety of materials, interesting cost effective printers will emerge as a popular choice.  I suspect the price right now is out of reach of typical consumers.


There are a variety of 3d printer twists you can read up on at this article from Gizmodo titled Nine incredible objects that prove 3d printers are total worth it.
The video below the image shows how 3d paper printer works.

Virtual Currencies reach US Government Attention

Bitcoin's primary exchange, Mt. Mox, has been shutdown.   I am giving the benefit of the doubt to the US government, and that Mt. Mox has issues with corruption, violating international laws and accounting issues in it's financial reporting.  And for any critics reading saying the US government has corruption issues, the point is invalid.  The new currency system MUST be held to the highest possible standard and survive.

There are likely millions of organizations globally that have all sorts of black market and money laundering schemes.  The timing of taking down Mt. Mox with the currency recent sharp valuation rally  is not a coincidence, and is viewed as something to defend against.

To me, what Bitcoin has achieved is a historical milestone on the road to a new financial system model.  The Bitcoin system being used for years by a very small minority, now has achieved with validation that Bitcoin is a threat.   And a new currency system must survive the worst global assualt possible and survive to be considered 'good enough' for the world to trust.

I have written about bitcoins in the past, I do not believe it is a good currency replacement.  It is subject to shortages, and therefore prone to deflation.  I'll take inflation over deflation, and therefore I find deflation much more damaging.

In this article from rt.com 'Bitcoin Threatens economic monopoly, bolsters free speech' I think does a very good job of capturing the true power that a new financial model will set the world free, from a debt based society to a free one.

What I have not yet seen is an indepth critique of many core flaws in the bitcoin model I see, how those core flaws cannot be overcome and doom the currency to failure.

What do you think? Below is the techie in me experimenting with a service called Branch, to facilitate discussion via twitter.   I doubt I'll get any reader (if there is any left!) posting on this, but feel free to do so.  If I do get even a tiny amount of responses, I'll be encouraged to make it a staple on this blog.

Click on the red odd icon at the top to get started.

More progress on alternate currency

Lets be clear, I can't see an alternate currency to be viable until the USD is in trouble, something that I have written I believe won't happen until 2015-2017, probably 2017.

I have written what is needed is a financial system overhaul that has hit most industries by technology advancements.  Bitcoin is an initial attempt at this, and Amazon has put its toe in the water.

Now we have Google Ventures backing OpenCoin, the firm behind Ripple.  OpenCoin is meant to be a transparent exchange for things like BitCoin or Ripple.

Transparent is good, it is a key tennant in my view of a new currency.

The level of investment is 5 to 15 million for different aspects of the new virtual currency.  I call this as a groundbreaking event making this topic legitimate.

I am back! So are manufacturing jobs

I have been on a project that easily took 70+ hours per week to work on for the last several months.
The project is over, and I hope to ramp down my hours in the weeks ahead  back to 40 hours.

That opens up time to post!  I have much to say, from being quiet for so long. :)

Today I ran across an article that makes the argument that US manufacturing losing ground to China has hit bottom.  I agree.   Some of it is because of natural resource costs, a prime theme of this blog.  As resource costs increase, producing products locally may net save money due to logistic costs.

Another is China and India's rising wages, yet another theme on this blog.  I agree that China and India will net become 'richer' for the common person relative to the west, as I pointed out in The Big Picture.  This is the backdrop on why resources are rising.

One aspect the article mentions is innovation, USA has some advantages.  It doesn't mention specifically the maker revolution.  I covered this in Manufacturing Revolution Revisited , also on this blog.  I believe that is part of the story.

Good read, in a flurry of depressing economic news I post, its good to post positive developments.

Article
Is US Manufacturing making a comeback?

Buying gold and Gold miners on hold

I am not selling here, the long term trend shows that 'someday' gold miners should trend above here.
Be that next month or 3 years from now.....

Most pro gold people, like Gary of Smart Money Tracker, are calling this to be temporary decline.
I am not so sure.

There is a fact missing from many, that Greece is being FORCED to sell it's gold reserves.  This is likely a first of a string of countries that will dump their gold in the debt pinch that is approaching.
With economy trending sideways at best, I am not sure who is going to buy up all the gold.

The same conspiracy theorists that say gold is being artificially depressed are DEPENDING that the same big political and money powers WANT to buy gold.  That second assumption is a farce if you can believe that the same people are depressing the price.

I believe Gold is not money.  I believe that Gold becomes money again it will set back humanity a century and further enslave the common person.   Gold is a collectible.  I also believe the current framework for the financial system is headed for very rough waters.   We have seen Bitcoin emerge (its not a valid currency), and other contenters.
My thesis on gold is China and india have 2.5 Billion people, they are getting richer over time, and those cultures LOVE gold.  China encourages gold purchasing to boot.

But we have seen India taking a stance to CURB gold purchases, combined with countries dumping gold, and economy flat lining, I am not buying the mantra that gold must rise in the next 6 months.

I still am a believer in the year(s) ahead, but there are MASSIVE deflationary pressures everywhere, I can't auto-buy into gold will recover and soar to new heights in near future.

I am not selling here, nor am I buying, and I cannot see buying more until we clear the levels we set earlier this year.

Good, luck, chart below.

Mortgage Reform

The legal enforcement of handling of mortgage issues with citizens has been degrading significantly since 2002.
After the 2000 crash, the government switched to supporting lax (less legal enforcement) standards for mortgages. This is well documented in this and other blogs.

 It takes an outsider to push for change, one that isn't under undue influence. Elizabeth Warren is that person. NYTimes has decent article covering at a very high level the state of affairs with mortgage abuse. Below is quick video. I am not optimistic at all that change will be for the better.

 I fully expect the spiral to continue downwards, and these efforts will not succeed. Only in the depths of a financial disaster will the majority rally behind the minority who care about these topics.
Tnx for Bob for link

Visit NBCNews.com for breaking news, world news, and news about the economy

BitCoin Crash

Bitcoin is not a currency, it is a collectible, like gold.

Since Bitcoin is finally crashing, I will NOT proclaim Bitcoin is now failed, far from it.
The fundamental nature of how bitcoin works is bound to produce more bubbles.

It wouldn't surprise me if someday Bitcoins go for 5,000 a unit.
If Bitcoin can figure a way to remove the collectible - hording aspect that drives prices higher, then I may become a fan.

Until then, play at your own risk.  If this thing over-shoots and hits 20 bucks a coin, I may buy some.

Jim Chanos on Cheating

I have been fairly critical of the law, and lawlessness that is very widespread to the tune of trillions of dollars.

Mish pointed me to a great interview of Jim Chanos on Salon titled "We’re incentivized to cheat".
I highly recommend reading, Mr. Chanos I find very balanced and truthful in his discussions.

A nice short interview below on regulation

Crash of 2013

I really love this blog, and wish I could spend the time to blog daily like I used to.

Work is insanely busy, and I have a wonderful boy who is 3 turning 33, time flies.

Today I will go back 2 year ago, to the day, on a prediction I made in post "Reaffirm that I believe the market will go to heck".  Back in 2010 into 2011, I was insanely bearish on the market.  Quite clearly, I was dead wrong.

What I didn't understand then, and I do now, there are no reliable laws.  Laws are agreements today that can be changed tomorrow.  Sometimes laws change simply by en mass wink wink, lets not enforce.  Sometimes laws are changed officially to change the landscape of what is reality.

Back in 2010-2011, I understood that what was being done then is doomed to fail, as I still believe today.  But I have changed on the 'doom'.  I no longer believe that the specific issue with the global financial system is 'printing money' per say.     As I have written since then, I believe what we are seeing is a financial system established by men in pointy hats in 1913 that try to use human processes to control something that is too big to actually control.    The rapid technology assault will uncover the weaknesses and destroy the system.  This is pretty much the same pattern for every industry technology has struck.  Unfortunately, I am concerned that the global financial system under assault may lead to not so nice consequences.

Here we are, with markets going higher, never ending higher.  It should be quite clear to anyone looking around that this is not the market highs of the mid 1980s, or even 2000.  This is a game score being manipulated to appease the fans that the game is going good.

Fundamentally, there is plenty that is going really good in the economy and technology.  I am very excited about many new industries pushing forward.  But when you look at the wages and breath of impact, it is a bit disappointing compared to past decades.

Which brings me back to 2011.  I posted

"So for now, I am playing long, I am also adding stop losses all over the place, with a bit of room to maneuver. I suspect that most of the market is doing the same, which makes this truly an insane game of chicken. I really don't know when I will jump off this ridiculous ride back into cash. For part of this game is the fear the USD will implode next.....something I agree will happen, but it's too soon. 2013-2016 is my thinking."

What I have come to realize is, the markets have zero to do with reality at this point.  What is in control is politics front and center.  Central banks are no longer influencing based on sane decisions, but instead on the will of the environment.   Everyone but anyone thinks pressing buttons that say 'ignore accounting' and 'print more money' will end well.  I am here to tell you for 1,000's of years many societies try this, it hasn't worked yet.

So I expect in 2013 a punch in the face for the markets.  And here is when it gets hard.

Gold, Gold miners, can they withstand the pressure.   They may go much cheaper also.  But maybe they won't pull back hard leaving everyone without a bargain buying opportunity.    The precious metal mining sector will reach unbelievable heights as a limited resource is subjected to leverage to push valuations artificially high.  This of course will happen sometime in the next 4 years when people are panicking, looking for security.  After the panic passes gold will be the most spectacular crash ever seen.  I of course, want in on the upside, and I may jump out too soon on the way up.

Between now and then is really the question, what to invest in.  For now, I have no good answers.  When the crash hits, and markets start to recover, one thing is for sure, natural resources for the next pump and dump years.  

BitCoins is NOT the Answer

Bitcoins is getting a bit of press recently.  I have posted on Bitcoins before.   The entire construct is based on scarcity, which is akin to using baseball cards or gold as money.

I am against gold as money, baseball cards, or any means of placing value based on constricting circulation to derive 'collectibles' value.

Bill Still put together a decent video on bitcoins below.  I could do with less preachy god-life values and more with the core reality of bitcoins vs a better solution.

In any case a good watch, see below:

Europe poised to blow in 2013

Granted, I have stated YEARS ago that Europe was going down the tubes.  And yes, I was year(s) too early.  As I have watched over the years Germany and the European union contort, twist, manipulate, and do everything under the sun to maintain the Euro status quote, I keep wondering, is it time yet?

I am amazed at how really stupid the European Union is behaving towards Greece, Spain, and other countries.    The European Union had entry criteria for each country to maintain a certain fiscal responsibility inorder to ensure the Euro wasn't undermined by some countries using the clout of the Euro to get a free ride.

Here we are years later, and its known that many countries used off-balance sheet tactics to hide massive debt, to play games with their balance sheets to appear more compliant than they where.

Once the derivative insurance schemes blew sky-high with cost, the jig was up.  No longer could these countries afford to pay the premium to ensure the risk, to offset their at risk balance sheets.

The right thing to do for their citizens was one of two things.  Either get the Euro onto a path of fiat currency, allowing countries to run debts not tied to a central authority OR to exit the Euro and return to a soveriegn currency.

Neither of those things happened, instead these countries have sold everything that wasn't nailed down, and cut services to the public to reduce spending.  At the same time, jacked up taxes to new highs in hopes of balancing their budgets.  Recently Greece initiated a 'savings tax', basically taking a % of all savings in banks, under certain criteria.

The result?  Business plummeting, unemployment syrocketing, budgets blowing wider, not narrower.  And like a crack addict trying to get his life together just by taking 'one more hit', it just gets worse.

Greece is entering into full implosion mode.  The society is devolving into a barter society, with credit collapsing.  Food stocks are low, estimated two days in super markets.   Bank losses are going parabolic, and cash shortages due to the credit collapse.

The Greek government due to lack of strength to choose what is right for the people, has set themselves up for a violent revolution.  Something that I didn't even think was possible 2 years ago.  Never did I think the leaders would outright ignore the public and drive into private interests, bankrupting a nation.  I knew that was the path they where on, but I thought this game of chicken would have ended a couple of years ago.

Next up is Spain, then Italy, then the rest of the weaker European countries.  If Greece falls into revolution, we will have a Euro Spring, with a contagion that cannot be contained.  If Germany doesn't relinquish its tight demands for fiscal responsibility, deflationary collapse is going to occur.   Once started, it may actually take France down with it.  I do think Germany will not fall, but will go under some severe stress as it tried to hold the line.

I really do hope I wake up tomorrow to hear Euro come to their senses.  Forcing countries down a deflationary collapse and under economic strain to jack up taxes, slash services is not sane.

I do agree that all of that needs to happen - but under local rule.  In this situation its a foreign entity - European Union, forcing fiscal responsibility.  This will force the common Greek to enter a mind set of nationalization, us vs them.  A more prudent path would have been Greece to have its own currency and due to its lack of fiscal constraint their own currency devaluation forcing Greece to reform. 

I really hope that this collapse does not occur, that the nations can see fit to change the construct.  The irony is if Germany holds the line, the Euro should shoot up like a rocket in a deflationary collapse with the dollar plummeting.   As the European nations go under immense strain, the rising euro should give it a one-two punch accelerating the chaos.  I am mildy optimistic that the US fares reasonably well, as the currency war favors the dollar in the near term.  Take a look at the chart at the end of this post.  Pretty amazing eh? Its nice to be the big boy on the block.

Gold should do well, but may get a punch down as asset fire sales occur to raise capital.

I could be wrong on all of this, but its starting to look pretty dicey to me.  I went from looking at this situation that the policy makers would see the problems and realize that the path was destruction.  Now its obvious that there is only one way to change course - by force.

Euro Doomed

The Euro was doomed to fail the instant it was created.
It is not a true fiat currency.  A true fiat currency can be printed, at will, for whatever reason.  Need more cash, just issue more!

The euro requires memebers to try to keep a fiscal order.  If you have high debts, then get it under control.  The US has no such limitation.

So countries like Greece, Spain, Italy get slammed while the savers of Europe, such as Germany scream they must get their lons repaid.

The result is a currency at odds with itself.  If countries like Greece had their own currency, they would print more money - answering to no one - and continue on their merry way.  Their currency would likey trend lower vs German currency.  The local Greeks would be appeased and not rioting.  However, rest assured, german exports would be too expensive for most greeks and not buy german products.

So one side benefit of the Euro is to ensure everyone keeps currency relatively flat to each other.  This DRAMATICALLY favors the sellers and puts the debtors at great disadvantage.

Niral Firage has a nice speech about recent step being done.  Announcing to the world taking money from EVERYONE's savings as a tax, over-night, no wardning.    The message is: dont keep money in banks, keep them in mattresses.

It is stuff like this that WILL create a crisis, and assets keep value, some like gold may explode up.
People still don't get it.  Printing money doesn't cause currency problems, faith in the stability of the finance does.  And what message does it send to announce taking people who have money to pay off some of other people's debt......

Facebook, ZNGA ,GRPN

I posted a while back to buy beaten social media companies stock.

Back then facebook when it was at 22 range.  Recently the stock hit over 30.  I had a stop loss in at 26, and closed my position.  if Facebook comes up with a new micropayment model to infuse money to its user, the stock should explode significantly higher in the year ahead.  Who knows if they will do something so significnat.

Zenga was at 3, now at 3.38, I am going to hit out 2/3 of the position now purely because I am nervous.  I'll put other 1/3 at 3 to stop out.  It would not surprise me at all that ZNGA moves up to 4.50, but who knows.

Grpn is back to same place as bought, about 5.50.  I wish I watched this stock closer and hit out at 6 recently.  I'll problable dump entire position, I have no faith in Grpn model.

Good luck!

Gold miners

Gold miner ETF GDX recently hit under 36 bucks a share, quite a fall from 55 in september.
And the overall market is hitting new highs, something that i am sure leaves a bad taste in everyone's mouth.

I have been having second thoughts on long term for gold miners, I'll share them in a post hopefully soon.
But looking at the charts, longer term trends, and price of gold, I am adding a little here.

I stayed out of miners for over a year, to get in just before it rallied and crashed....lower than before I got in.
Not a nice experience, but, timing stocks perfectly is not how you win, its being in for the next rise, no matter when getting in happened.

Good luck.

Technology and Economics

Good video on economics and technology.
I agree that a company like Flattr needs to go viral and re-engergize the economy.
If we can make micropayments work, I see a booming economy instead of a dying one.
I could see the market soaring much higher from here, if we can simply include the internet generation into making money.

A setback for gold and gold miners

My contention since I liked gold is that it will rise in price due to indian and chinese demand.
I am not one who believes gold is money, and it should NEVER be money again!

The logic being, as the two largest consumers of gold increase in wealth, they would buy more gold!
Well, Indian government is putting a damper on my master plan, but actively fighting Indian purchases of gold.
The government is blaming currency imbalances on Indian high gold purchases.

So they are actively tyring to slow gold purchases, now with tarriffs.
I am not saying gold will collapse, but if the west hates gold as a threat from guns and gold bugs who think the world would be better if the economy was dictated by mining production, and the Indian government is also fighting gold.  That leaves China to pick up the slack, and I am no fan of China's economy.  China needs to prove they can change their model from exporter to consumer.

I am unsure what to do, time to leave gold?  At very least I am not a buyer of more.

Economic Disruption 3d printing

I have posted before about a collection of new capabilities that are emerging that I believe is a funamental shift in small business and manufacturing.

You can read the post here titled American Manufacturing Revolution

This video does an excellent job to tease your mind about the disruption that is ahead.
Don't believe the hype? Look at all the industries that have been dwarfed by technology in the last 20 years.
Enjoy the video

The Building of an Epic Rally

When a sector of stocks plummet, they have two destinies.

One is the sector has shifted, one to a long term lull that will wiggle around at a level substantially lower than   before their decline.  This is a common pattern.  Think of gogo 90's for tech, and after the bubble burst, although some tech has done very well, few from before the boom recovered their all time highs.

The second is selling exhaustion.  One has to look back to March 2009, when the S &P index hit 666.  Around that day, I did a post called Preparing for Anarchy, and a post only a couple of weeks later The Bull is here.

In Preparing for Anarchy post, it was a bit of tongue in cheek that the market was very unlikely to continue downward.  Reflecting back, it is obvious what happened that month.

Whoever sold at S&P 500 hitting 1000, then 900, then 800, then 700, well, anyone who could hold onto their longs are the same people who would hold on if S&P 500 hit 600.

Basically, overall the market ran out of sellers.  There was left only the people who hold and those who bought on the way down.

Looking back, I wish I really dumped my entire life savings and borrowed money to buy the stocks from my post just one day before to preparing for anarchy post, called "time for lottery tickets".

So what does this have to do with today's market?  In 2008 crash, the gold miners crashed WITH the market.  Now, they are taking, rather hard core, (GDX at 39.37) when the market is rallying.  This is very unusual.  The market sentiment of the gold miners after watching for years it do really poorly, now doing extra poorly.

Frankly, this is the time when the sellers are running for the door.

What I am expecting is the same thing with miners, at some point the sellers will be few, and that will build a base for a multi-year rally.  

There are two very unfortunate realities around this statement.

First, it may not happen, precious metal mining sector in its entirety could go the way of long term lull.  I don't think so, but it is very possible.

The second is we maybe in for a CRUSHING sell off, one with a market decline.  This would mirror what happened in late 2008.  The miners got crushed, and then started to rally AS the overall market got CRUSHED worse into March 2009.  

So its easy to look back and say, boy I wish I bought those lottery tickets, or bought options 3 years out to make a killing.  At the time of the crushing sell off, there are three kinds of people.  Those not in the sector, those holding blindly, and those trying to trade and find a bottom.

Any of those 3 options may be the best strategy, depending entirely on the next two years for the sector.

Your guess is as good as mine, I think hold is better than dump.  I don't see this sector as dead, I still believe in my post The Big Picture.

Ps. Special thanks to Gary for a similar post, for sparking my own twist.

Saving Money in Shopping

There are several steps that my family takes to cut costs for supplies for the home.
We buy primary supplies from wide variety of places.
Cheap is good, but quality for food is more important.  I'd rather eat meat from a better supplier than from the most factory treated cattle.

Taking this into consideration, below is where shopping is done.
I may post a page on each store on what is primary purchase to find lowest price.
After all, a 10% (or more savings) is huge compared to interest you will get on savings (often 1%)

I'll update with links on good deals at each by enabling links. (Amazon only currently)

Barths Market- In my home town, highest quality meats, combined with AMEX blue card, 6% cash back
Shoprite   - Primary food, combined with AMEX blue card, 6% cash back
Target      - House supplies, combined with Target 5% cashback Credit Card.
BJ's          - Bulk supplies, combined with AMEX Fidelity card, 2% cash back
Amazon    - Subscribe & Save, combined with AMEX Fidelity card, 2% cash back

Also, look for good deals and make occasional purchases that take precedence.
Look for deals at Woot.com, Dealnews.com. Coupons at Dealcoupon and Wow-Coupons.

Amazon Shopping

This post is part of Saving Money in Shopping Series.
I am continually looking to increase my purchases from Amazon.com.  Amazon has many items at rock bottom prices that beat or at least match lowest prices available.

To maximize savings, we buy items under the subscribe and save program.
Any item bought on subscribe and save automatically gives a 5% discount AND automatically free shipping.
As of February 2013, if you ship 5 or more items under subscribe and save for a given month, you get 15% discount on all items. (some items excluded).  For additional savings, use Fidelity Amex card and get 2% cash back!

I have a list of many of the items that we purchase from Amazon under this program.  The prices listed ASSUME the 15% discount applied.   Feel free to post in the comments of this post to call out cheaper alternatives.  However, some of the items are more costly due to higher quality.  For example, instead of imitation vanilla extract, we want real vanilla.

I'll try to update this post periodically.  Subscribe and Save isn't as easy as I'd like, prices and product aspects can change, so you must keep on top of your shopping list. Some below I may be grandfathered into an offering that isn't available today.

The New US Economic unReality

Many may pontificate about the market direction, hard resource valuations, the effect of debt, health of nations, or any aspect of the financial reality since 2008 crash.

There are many things that make a marked difference between 1980's until March 2009 and from March 2009 to today.

First, the accounting system using fair market valuations was dismantled in 2009.  The REALITY is the measuring stick between 1980's until 2009 is not the same as we use today. Therefore if Mark to Market accounting has been suspended, we are valuing financial institutions on what those institutions say assets are worth - not what they are worth if they where sold.  This alone distorts the reality of corporate health, and there is no hard-date to ever return to the gold standard of accounting - recording asset values for what people would pay for them if sold.

Add to this, that US Government statistics are being distorted, the very basis for many financial decisions and financial guidelines.  For example, official inflation alters the income of disability, and social security payments. (and many other social programs).    I already covered how inflation is being routinely changed, in effect changing the measuring stick.  Also, it is widely covered how unemployment numbers are continually being adjusted, distorting any reality of the unemployment rate.

Throw on top of all this the recent scandals of the global interest rate (LIBOR) used to determine most loans has been discovered to have been gamed for years.  This affected literally trillions of dollars of credit.

Throw on top of that the Federal Reserve Bank is making routine purchases of debt, and lending (giving) money to foreign banks to the tune over 230 Billion dollars in the last four weeks alone.

Looking into the private sector, we have Nobel Laureates such as Paul Krugman who have only one drum beat, ignore today for a better tomorrow.  I hope the most ardent fans of such approach are starting to question the one-way mantra for decades.

Throw on top of that nations like Japan having their government directly taking over direction of central banks to promote monetary policy for the government direct benefit, is an outright attempt to shape their own reality.

All of this speaks to how we are in a new reality, the unreality from my life experience.  Under such a new reality, any market musings are futile.  The sticks to measure at every fundamental level are not reliable.  The will of the private and government sector is to promote distortion.  The one reality that does exist, is we are divorced from reasonable capitalistic controls.

May this bring a bright future, well, atleast for the people who this new reality is their reality.  For those who resist believing and take the red pill, I continue to be concerned.
The one item that cannot be forever manipulated is resources.  An example of how governments cannot control those valuations is seen repeatedly in history.  Every government that has tried, has failed.  That is an impressive failure rate.  For the latest attempt, one has to watch as Argentina implodes in 2013.  My only glimmer of hope is a privatization of money, which should bring on a new prosperity  for the next millenia.

Anonymous, Extremists against the FRB

There is an extremist technology based terrorist group out there called Anonymous.  This group has launched  various small attacks against the Federal Reserve Bank to give visibility to their agenda.   While I agree that the current global fiat currency system has issues, I do NOT view this as a conspiracy to oppress the world.

In reality, centralized systems weakest link is, they are centralized.   Centralization stifles innovation, in effect evolution.  Centralization magnifies mistakes they make, as the people part of the central authority will over time, align with like-minded approach.  In the current Federal Reserve Bank, there is no question that overall the entire establishment believes in the mantra of Keynesian economics.  When a body of people follow a methodology, a religious like belief system, their decisions become extremely prejudice.  They are responding to a problem with 'What they know'.   That is what we are witnessing.  I am NOT a believer of Conspiracy theories.

Anonymous launched an attack and breached the Federal Reserve System, announcing it on SuperBowl Sunday.  I am of the belief while a black eye on the Fed, I really doubt there is any information they retrieved that has any remote effect on the security of the country banking system.

Anonymous, assuming they believe what they say, are unfortunately, misguided in their approach.  I believe they are likely young, under 30 years old, and view themselves as helping save the future for themselves and others.   What they don't realize is their attacks will have the exact opposite effect.  The Federal Reserve Bank are the established, lawful, and community supporting entities, and Anonymous are the rogue terrorists.

And I actually believe that this view, is a correct one.  Anonymous is the problem.

If their acts moved away from concerning of the current framework, and focused on a better framework, as I describe in my post Ideal form of Money - Power to the People, then they could help provide a solution to a system that will fail to competition of a better system.

If they actually triggered a situation by their acts, a run on the banks, they will create kaos and much death.  I'd like to not see that please.  I'd rather transition  like people did with Music, Video, Software services, tablets, smartphone, and other tech-era revolutions.  Some can stay on old, some will move to new, and eventually the new takes over, replacing the old.  That is a transition I'd rather face.

Same goes for the protest group called  Occupy Wallstreet. Stop protesting, and get on with a solution.

So if you follow these guys, this time, don't root for the under-dog.  Root for the old system, The Federal Reserve Bank, until something better is obvious.
Notice in video below how they combine what I see, Commodity Costs increasing, currency crisis, but their root is the evil conspiracy people while my view is, the world is evolving.  Its nice and simple to view bad guys are holding back paradise.  The reality is people do what they think is net best for them and others (in that order), given the construct they have to work with.  Notice they want to punish selfish people, supporting this is supporting global extinction.  Humans are selfish, its called self-preservation.