The Golden Bull

Wow, Gold is really picking up the pace, take a look at the first chart and after years of downside it is exploding up.  If you think you missed the entry, keep in mind its a long way to gold over 1900 an ounce as second chart shows.  The advancement in GDX, GDXJ, and GLDX has been nothing short of stellar.
On Sunday night I revised my New Reader entry to highlight my concerns and positioning on gold.
Wednesday of last week my post Gold miners, Stock Market what next? all of the stocks below where even lower than Tuesday AM, so gains are even greater in 7 days.

Assuming GDX breaks above 27, the long term stock indicator will indicate a probable multi-month rally.  since gold has been very suppressed for so long, I suspect the pent up demand and heavy short covering will make this scream higher.
                   
                    Tuesday AM             EOD Thursday         Percent gain
GLD            122                             127                            4.1%
GDX            23.75                          26                              9.5%
GDXJ           38                               43.07                         13.3%
GLDX          14.25                           15.90                        11.5%
  

Gold, 10 year view

Gold miners indicating multi-month rally

The etf GDX, gold miners, has crossed on 20-50 weekly SMA, indicating a potential multi-month trend change.  GDXJ, junior gold miner ETF may have better return on investment, as well as the etf GLDX, gold miner explorers.

Since the 20-50 weekly SMA just crossed today, it is not yet a convincing indicator.  GDX hitting above 27 I believe will be a clear indicator of trend change.  However, the miners have been depressed for so long, there is a good chance this is the beginning of the final, multi year rally I have been waiting for since April 2011, in post Precious Metals into 2015-2017.

In that post, I violated my own advice with this statement:
I am sitting more on the sidelines as per his paid service recommendations. I am keeping core positions, as I will until this run ends, sometime after 2013.
I grew impatient and started re-entering gold miners earlier, to my detriment.  It is 2014, and I think the down trend may have finally run its course.


Throw into the mix of Iraq falling apart, Russia acting very aggressive, and China always looking for ways to advance itself as the next world super power, any instability should send gold shooting insanely higher.

My original thesis for liking gold is still in tact, that India and China as they grow richer will buy more gold as part of their culture.  See blog post why I like natural resources better than bonds.

Below is GDX 20-50 weekly SMA long term investing indicator, as explained in post when to buy stocks or get out of the stock market.

Welcome New Reader

You will see text hyperlinks throughout posts, please link through for more information.

Welcome new reader, my name is Mike Murphy, Software Architect and arm chair global financial watcher.

Back in August 2006, while talking to my friend John Chinnock, came to realize that the entire financial markets where based on a ponzi-scheme of subprime mortgages and off-balance sheet derivatives.   Since then I was obsessed with reading ever aspect of the global economic forces at work, up until about 2013, as you can see by looking at my posting activity.

One of the reasons I have posted less is in my minds eye, I grasp enough to personally satisfy my own curiosity of the pressures on the global economic system.   I hope to someday boil down all the information into a concise summary.  For now, here is my short-sweet version.

**UPDATE** Skip all the summary below and read future of employment Post (click).  While below are all important and factors, the reality that affects you most is your ability to be employed.

The world faces unprecedented challenges today, the most critical being peak oil.  Fossil fuels are the reason why we have the lifestyle we have today in the west.  Fossil fuels took about 400 million years of sunshine on plant life to create, and mankind will take about 200 years to burn.  That release of stored energy has created the incredible world we live in today.  Peak Oil basically means that the era of cheap fuel is over.  I urge you to watch the 58 minute video below to indoctrinate you on the many resource challenges we face today.

The world is facing epic deflationary forces driven by technology, except monetary policy which is helping hide the financial strain. As of this writing I believe stock market valuations are precarious at best, partially inflated due to monetary policy.  However, after living through the last few years I have come to realize that investing depends on laws, or lack of laws to determine valuations.   Given reasonable expectations of maintaining sane law enforcement in the USA,  a reversion to the mean is historically likely.   For an ample discussion on this, please see the third video below, starting at 50 minutes in.   An independent indicator for longer term investing that you can read more about here, I do apply this to other stocks and ETF's as an indicator.  The jump the shark moment will be if US Treasuries break the downtrend of last 40 years.

If you think China is somehow going to pull the global economy, I for one don't believe it.  I have posted much about the China ponzi scheme, and with Jim Chanos providing an excellent job in his 2013 synopsis below on China's troubles.  Even if somehow China is wildly successful it would result is substantial cuts to western lifestyles due to resource redistribution.

I do believe in crypto-currencies, a great place to start is my series on money, and what I wrote back in 2011 the ideal form of money.  I think crytpo-currencies are a manifest-ion of what I described back in 2011, and I am lightly following bitcoin and 100 other crypto currencies as they develop.  And I have great hope for the new economy that is brewing with latest manufacturing revolution. But for the old generation I see deflation for decades as robotics and technology sheds millions of more jobs.  Its a generational shift, bad for the older employees, good for latest smart students out of college.

As of June 2014 I do think Gold Miners are a good buy, however due to all the issues above I am nervous about them as a longer term play.  ( GDX at 24 dollars)

For more information, if you care to research, my old new reader post is here.  If you browse my old posts keep this in mind,  the world is changing as I am, which affects viewpoints over time.  Posts in 2008 are likely to be significantly different than my current view.

I highly recommend the first two videos as a must watch.

Headwinds ahead

China is NOT the answer

Market Investing June 2014

Gold Miners, Stock Market what next?

Gary of the Smart Money tracker is getting bullish on Gold Miners. I myself added to my options a few weeks ago. There is a neutral indicator that I have used and at times dis-reguarded to my own detriment of a stock direction. Please refer to post When to buy and get out of the stock market, a guide for long term investing.

Using this same indicator, I applied it to GDX, and it is not yet clear that GDX is on the rise using this indicator, but the stock may push the indicator over the edge in the days ahead.
Below is a graph of GDX, calling out when the 20-50 weekly SMA crosses, potentially indicating a stock trend change.

As you can see it is reasonably accurate as an independent indicator over long periods of time.

Using this indicator, there is ZERO indication of a market trend change, so for now the sky is the limit.

Audio Books

Very good sale today 6-10-2014 for 4 bucks on Audible for Niall Ferguson's book
The Ascent of Money: A financial History of the World.
http://www.audible.com/pd/Business/The-21-Irrefutable-Laws-of-Leadership-Audiobook/B002UUKMXI

If you don't belong to Audible, can get two books free to join

http://www.audible.com/t1/amazon

Books that I either recommend
Outliers: The Story of Success
My most recommended book, a must read for anyone under age 30, or with kids.
http://www.audible.com/pd/Nonfiction/Outliers-Audiobook/B002UZDRK8/ref=a_search_c4_1_1_srTtl?qid=1404474932&sr=1-1


No Excuses, Existentialism and the Meaning of Life
http://www.audible.com/pd/Nonfiction/No-Excuses-Existentialism-and-the-Meaning-of-Life-Audiobook/B00DDY7SWS

The World is Flat
http://www.audible.com/pd/History/The-World-Is-Flat-Audiobook/B002VA8GTO/ref=a_search_c4_1_3_srTtl?qid=1402408697&sr=1-3

On Intelligence
http://www.audible.com/pd/Science-Technology/On-Intelligence-Audiobook/B002V8LKTE

Getting things Done
http://www.audible.com/pd/Business/Getting-Things-Done-Audiobook/B002V0PPRU/ref=a_search_c4_1_1_srTtl?qid=1402409266&sr=1-1

I have on my queue to listen to:
The Fourth Revolution: The Global Race to Reinvent the State
http://www.audible.com/pd/History/The-Fourth-Revolution-Audiobook/B00KCSJ8NU

Corruption, Gold, Bitcoin, and Beyond

I ran across a summary of recent massive corruption in the US financial system of preferred treatment. I actually have Zero against the rich or influential, I have a problem with the law not being applied evenly. Not because its immoral, but because a system without law, is a system that is bound to fail, as history has shown many times over.

 As I write this, gold MAY have bottomed last week, and Gary of Smart Money Tracker is thinking it has. I did buy some options last week for a GDX bounce, but time will tell. If gold rises, miners should follow. Bitcoin has exploded from about $50 a coin when I bought in a couple of weeks ago to 650 a coin. I should have put ever nickel into bit coin, but its hard to pull that trigger.

The market on the other hand is the gift that keeps on going. I wrote back in 2010 that the market may instead break up instead of down in the next crisis. What I meant by that is if corruption is so great, there is no reason for markets to ever go down. If there is no accounting, no law, no one to judge negatively, then the next market failure maybe the dow 10 times higher than now. In that scenario, being outside of USD is best.

Even though the markets are at all-time highs, there is something very disturbing. Banks are back giving loans to anyone and everyone. the problem with this is once you are willing to give loans to people who cannot pay them back, whats the next level of 'loose' money to get the next leg up? I guess banks could start giving $1,000 bucks for every $10K you deposit, or some other insanity. And that's what we have ahead, either a 2007 correction, or we must be much more reckless than now.

 Either way, the outcome will not be pleasant, 2014 is really shaping up to be the decision for the next 4 years. Good luck!

America is losing its global advantage

I have always thought the greatest asset America had over the world was two things, low corruption and civil freedom.

I have already covered about violations of the constitution with due process and privacy from government.  I have posted on corruption.

Here is examples of BLATANT corruption, and I wait to see if a state or federal official steps in and not only enforces the law, but prosecutes the officials who do not hold up the law.

As America doesn't offer as dramatic of a difference between freedom and low corruption, there is less of a differentiation of USA for small business.




But we can rely on our lawmakers to have an even head and good judgement to defend the citizens. Or maybe instead they are spending their time making up problems that dont exist instead of pushing on real issues....

Fools Folly

Unless tomorrow AM has a ridiculous open lower, I am covering all my shorts in the market.
Since my last post, the market really hasn't exhibited weakness.

I can't imagine a scenario where I try to short again, its plain foolish based on all aspects of market action.  No matter what happens, the market rebounds.

If this trend continues, then back to gold miners is the best play.  As an example. this morning someone DUMPED 500 Million dollars in gold assets in a flash, gold rebounded nicely today.

So while the market did go down today, I am unimpressed by the action.
I'll hit out of options, may keep some of SZK.  Oh well, after watching for years for a break down, its a fools folly to try to predict when this ends.

As I said in 2010, the end maybe a break up not down, and who wants to be short into that!

First hit, right on the Chin, whats next?

Today was one hell of a rally.  Needless to say, my buying spree on Friday should have been delayed to today.
SQQQ strike June 21st, 56 call, shoot for 3.90 an option, buy at the open, 10
That position took a 50% NOSEDIVE IN ONE DAY!
Yikes! Hind sight I should have done 1/2 Friday 1/2 today, buying all position on a whim is never good.

But even with that, I am still optimistic for a market decline this week, and the weeks ahead.

The Volatility Index took a nosedive today, and what goes down usually goes up.  VIX going up means market volatility which is down.

Today the headlines reminded me of back in 2008-2009, shouting at the rooftops to encourage stock owners that all is well, just before the left hook comes.

Then again, we could rally for weeks ahead, how do I know?
If I had tons of $$$ to risk, I'd be doubling down today.
Instead I nibbled, CALL (SQQQ) PROSHARES TR SEP 20 14 $55 at 5.10 an option. (2).
With such a drop today, I couldn't double down, but I did add with a farther expiration.
If I had real strength, I would have bought 1 week from this Friday much cheaper and many more shares.

Good Luck!

Time to take it on the chin

The market seems exhausted, and Gary of Smart money tracker not only agrees, in his paid service has a variety of reasons pointing to this.  Assuming the market FINALLY starts to head lower, we have gone up for so long, so high, this things may quickly fall apart.

Gary's thought is by June FOMC, we could have capitulation on market deterioration, ready for the next free dollar give away.

I have NOT gambled heavy in years, since 2010 really.  But I am making  a big play for the AM.
I don't know if I'll get these prices, but I am trying.
I advise NO ONE to do this, really, it is stupid.  But when I look at the chart below, maybe not so much.

Options are high risk, I may hit out of all of these by next week if I am eating crow.

Triple inverse Energy - Energy up over 18% last 3 months
ERY Strike June 21st, 17 call, shoot for 60 cents an option at the open, buy 10
Double inverse Oil - When markets fall, energy takes it on the chin.
SCO strike June 27th, 28 call, shoot for 1.50 an option at the open, buy 10
Triple inverse S&P500 - Catch general market fall
SQQQ strike June 21st, 56 call, shoot for 3.90 an option, buy at the open, 10
Consumer good - market falling does not make good for consumer
SZK buy 1,000 shares at the open, market order.

The Fed is fighting deflation, can it win?

Deflation has a bad rap.  I think deflation has a bad rap harking back to the gold standard days.
In those days, when deflation took hold, countries could NOT print fast enough to counter its effects.

In essence in classic deflation, people horde money and don't spend it.
That starves the entire economy, resulting in people working more for less in a never ending death spiral until the economic situation hits rock bottom.

In such situations, people with cash (banks, the rich) rule the world as they take control over much more pennies on the dollar.  If you seen the movie its a wonderful life, that is what a deflationary collapse looks like.

But like so many words, they can be used for many different things confusing situations.
Deflation can also be used to describe falling prices.  While that looks on the surface to be same deflation as I just described, it may not.

Take assets like stocks and houses.  If housing goes down by 90% in price, young adults can buy houses they cannot afford now.  In effect standard of living for buying assets such as houses goes up.  Who suffers are those who already own a house, their savings goes down.  In addition if houses have larger loans on them than the face value, banks will get stuck with the houses, causing losses not only for the home owner, but the loan holder.

Depending how you look at it, housing prices collapsing is very good for humanity, for more can afford with less.  But in production such as making good or houses, lower prices result in lower wages or fewer jobs to create the items for consumption.

As for houses, if USA didn't build an epic ponzi scheme since 2001 on real estate, I can say with confidence lower house prices is good for humanity.  The ponzi-like scheme we have built on perceived value of houses unfortunately, make it not as clear as what is the best thing for society.  Hence in comes the Federal Reserve bank where 'status quote' for the financial markets is of utmost importance.  For the Federal Reserve bank is a  PRIVATE institution with the health of the banking system front and center.

What we have seen since 2008 is an attempt to stabilize the prices and restore valuation before 2008 collapse.  As I have just pointed out, this is at a cost of the 15-35 year olds in society.  We can see the effect between jobs and living costs of that generation taking it square on the chin.

The question is, can this go on forever? The answer is simply, no.  There are two forces at work that will make the reality of housing go down, and with it other over-inflated assets.  The first and foremost is demographics.  as the 35 year olds become 40, 45, 50, etc the needs of the older will succumb to the younger.  The asset protection for the older simply becomes less important demographically as that generation dies off.  The fiscal balance sheet shifts not only in who owns the assets, but the overall support of the system as the older generation stops working and the younger force at a fraction of the income replace them.  Mathematically something will give.

There is a second force at work, technology.  I have posted about 3d printing of all shapes, including houses.  I read an article today bringing housing one step closer to a price collapse.
A 3d house printer can make 10 houses a day for cost of $5K each.  The house of course, is basically a concrete shed, hardly the American dream house.  But here is the rub, its 2014, what will that printer do in 2020? I am positive in 6 years for $5K not only will that house have more than 1 room but it will have plumbing and pipes to run wires to install electric, a fireplace, and other basic needs.  by 2030, it will print the american dream house for maybe $100K or less in today's dollars.

Once we can print as many new homes as you want at a fraction of what houses cost today, what will old houses go for? Sure, by location it will vary greatly.  Desired areas have value not because of the house build cost, but because your buying into a neighborhood.  But for many areas I predict a Detroit-like exodus issue as a potential.

Combine this with 3d printing as seen below you destroy the need for many objects to be made at all, and many made locally right in your house, destroying the needs for millions of cheap factory workers.

There is NO QUESTION, massive deflationary forces are at work, and the FED wants to keep the status quo, I predict it can't hold it forever, between now and 2017 the cracks will become apparent to all.

And the next currency must be deflationary matching the technology and demographic needs, not inflationary as current currency is.  I believe a virtual decentralized currency will meet that challenge.

Gold may take it on the chin, hardcore

I am looking at the gold futures, and I am seeing that gold price is violating the trend line up, as I posted Friday as a possibility in post "Gold, are we in for another leg down"  If Gold ends below 1280 Monday into Tuesday, I fear gold is going to new recent lows, down to 1180, and could even make a run for the psychological line of 1000 an ounce.

I hit out of most GDX and GDXJ, I may hit out of the rest, and simply watch.  GDX could easily go down 20% from here, down to 19.  It seems quite insane, but I think there are some major strains on entire financial system that is hitting the gold market hard with political meddling.
Doesn't matter really as to if there is any meddling, all that matters is being on right side of a trade.

Good luck out there, I still like long term better than ever.  As an example of the gold tension, an Indian man was cut open by doctors to confiscate smuggled gold bars in his stomach.  My original premise has come true, China and India gold buying is reaching fevered pitch, but there is market suppression that is also happening.  Only time will tell of the market will break free and start rallying.

Gold, are we in for another leg down?

I already posted I lightened up heavily on gold miners, but I am still in for long haul.
However, I have to point out that gold maybe in for another leg down.
The gold trend line from it's low is in danger of being violated.
Once violated people who watch trend lines will likely pile on to short gold, and push it down.
The next line will be to violate it's recent low.  If that is violated, gold could tumble a bit more.

See the chart, do what you must to take risk off the table.

Market Topping?

In my post January 2014, The Great Unwinding Starting in 2014, I called out mounting evidence that the global economic ponzi scheme was starting to crack in 2014.   Since then, the market has made valiant attempts to re-establish a sustained bull market, but has failed to materialize.

We had Ben Bernanke leave the Federal Reserve, replaced by Janet Yeltsin.  I think Ben knew the top was potentially near, and wanted to exist on a high note.  I am not a Ben hater, I just don't think any one person can fix the global economic system, and his attempts where I believe in good faith given the many constraints of the current model.  But if I was to believe his actual words, he is naive to think buying time by relaxing laws and policies will 'teach' people to be economically responsible.
World Ward 2 is best example how appeasement doesn't lead to better results.  Germany now is also a lesson on how LACK of appeasement does not lead to better results.

Before I go on, credit where credit is due, Gary of the Smart Money Tracker posted market topping as a possible scenario right now.  I believed the market has been topping for the last few weeks if not since January.   But that is a feeling, and I relied on Gary to give a harder signal to trigger this post.

When in doubt, I try to go to the MACRO view of the markets.  In my post about long term investing, how to spot a market top, we have NOT yet had a signal this has occurred.  So if you want to wait for the signal, please do!  Read my post When to buy stocks or get out of the market . I encourage everyone to review their holdings and pick hard stops.

Below is a picture of the current market valuation, and I recommend watching this video making a case of peak everything.

Assuming there is a near term top in the market now, the USD valuation should rise.  Latest USD chart of valuation below. Right now there is no indication USD will rise, but it isn't failing yet compared to recent years. (TheChartStore.com)

US 30 year interest rates, this is the most damning for markets.  The US government knows that interest rates for 30 year bonds MUST stay in the range below, or a crisis could trigger.  To force rates lower, we need a 'flight to safety' for investments, that is usually triggered by stock market valuation problems.  See my post on The Hard Road MUST be Taken on the global currency battle stakes.

Assuming safety is the play, I have to imagine gold is going to get hurt, and buying bonds is good now.  If the USD valuation breaks down, or interest rates break up then this assumption is likely wrong.  This is one of those periods in time, I see risk everywhere.  If the market falls, so should gold and gold miners.  HOWEVER, GDX is about to show it is entering into a bull market!  So I am torn.  I did lighten up GDX and GDXJ this past week and keep an eye out for what happens next.

Back to market topping.  A market usually tops with high fliers cracking first.  Here is a bunch of charts, while most have not shown a convincing top using 20-50 weekly SMA, many look toppish.

The Hard Road MUST Be Taken

My readers know what I believe is at stake over the next few years is the global dysfunctional financial system, and there is only one way out, the USD must lose it's status as the global currency reserve.

I have been thinking of crypto-currencies for a while, and I am starting to think the best way out is for a virtual currency (doesn't have to be bitcoin) must become the standard-bearer of currencies, the new global reserve currency.  What MUST happen is USA, Japan, Europe, hopefully (but likely not) China, and Russia agree to disagree, that NONE of them can take over for the USA as global reserve currency.  That only a NEUTRAL reserve currency none of them control must be the standard bearer.
Then all currencies will trade freely against each other against the standard.

That is the only way out for the old currency system to survive to the new one.  For the USD reserve currency is becoming a problem mathematically and politically for the world.

Unfortunately, I have learned the hard lesson since 2006, that when I make certain observations, the world refuses to acknowledge the new realities.   Stupid world ;)
I now understand this is the way it must be.
The current system is run by politics, and political decisions must appease those who most influence those decision makers.  So when a new reality hurts the them,  they basically instruct the politicians to RESIST making the right changes.  In fairness to the politicians, most probably have zero clue what to do is right vs wrong, and they just go along with the flow.   No one person can know what is right for all angles of their current job responsibilities.
When it comes to Global Currency reserve, we are asking those in decision making positions to make decisions that are PERFECT and have best outcome for USA, and the entire world!
I have never met a person who makes perfect decisions, much less at the complexity level of a multi-trillion dollar global economy.

So back on point, now that I am convinced this currency system is headed for a fundamental change, and even though I see a potential way out that would minimize damage, this of course is NOT the way the world will go.   The decision makers will fight tooth and nail to keep the existing fiat system, no matter the collateral damage on everyone.  Therefore I expect between now and 2017 the most un-fun economic atmosphere I will ever have the displeasure to experience. :(   Doesn't mean life won't be fun, for as things change, it does tend to be gradual, I do not expect a sudden currency crisis of epic proportions.
That can't happen until many other events transpire first, starting with stock market volatility, which I believe is next up.  See my next post for why.

What I think may happen is China and Russia want to take over the fiat currency system, and if USA is smart, they will let them!  I know that seems insane to say, but once they get the old system under their control, USA will be free to adopt an alternate system, hopefully one based on virtual currencies. In a weird way, the USA may know this system cannot sustain, and best let someone else hold that bag as it terminates.  The old system is based on demographics, cheap oil, and dependency of the world to agree USD as a value standard. (I need to make a new post, will update link here)The termination of the fiat currency and rise of virtual currencies as dominate winner may take a decade, but should begin in earnest by 2017.

Whats up with Gold and Miners?

As readers know, I have been bullish on gold miners since GDX hit 27 on the way down to 21, and around 21-22, I loaded up on gold miners.

Recently when GDX hit 28 going back up, it topped and toppled quite hard down into this past Friday.

Gary of the Smart Money Tracker is pretty bearish, on the gold mining sector.
To Gary's credit, he keeps nimble and will change in an instant once there is momentum to the contrary to prove his view wrong.  Until proven wrong, Gary is bearish.  Gary has been more right than wrong the last few months, so I do give his opinion weight.

Tim Knight of the Slope of Hope is actually turning bullish.  Tim bought GDX with  a stop of $22.70.  Meaning if GDX violates that level down he will exit his position.   I put a video below to see his opinion on recent miner analysis below.

Also my friend and life-long day-trader Happy John is hanging in there, sticking to miners.

Me? I am concerned, not just because Gary says so, but yes Gary's weight does influence me.  I am concerned because out of a bottom I would have expected miners to be stronger.  The fact they haven't held up with gains is a concern.  However, if oil price drops miners should shoot up like a rocket.  After all miners biggest expense is energy.

The readers out there need to hedge bets, lighten up if GDX pops up to be prepared if GDX is beaten down below 21 ahead of the beat down, to be ready for the final bottom.

Corruption

I have posted that I will avoid posting about corruption because of the future effect it may have on me or family.  But after watching this video, I had to share.
This is clear that there is no law, and above a certain line in society.
If/When US dollar has issues, it has nothing to do with the deficit, although it will be spun that way.
It simply will be because lack of trust.

Crypto currencies backed by anything is not the answer

I published my thoughts on the next money system in post "Ideal form of Money - Power to the people".
Since then, crypto-currencies have become hot items, and a step closer to what I published.  However, it doesn't meet all the ideology I put forth.  But it is a crucial step creating huge investment to evolve the framework to what it will need to be to replace the current system.

This past week Crypto-currencies hit a huge milestone with the US IRS making a ruling on how they are to be treated, as property.  This on the heals of other statements indicating the US government will not impede crypto-currencies.   Crypto-currencies are becoming legitimate with regards to the current system.  As crypto-currencies become interwoven to the current system, a close eye must be kept on a clear separation of the two.

The next currency to replace the current debt-money system must be not be linked to debt, or assets for it to be the liberation of humanity.  Any linking to a central debt/asset class is a mere smoke and mirrors of change, when it will be the same old central control system.

Bill Still created a video on this topic, worth the watch if your interested.

Getting Bearish on Gold

Hopefully gold will rebound after the beatdown that has happened since the 14th.
I am really starting to get concerned that there will be a lasting rally out of this latest decline.

My intention is to LIGHTEN my miner positions, if GDX can make its way back to 26 range.
Of course, this is likely a read that we are finally going to rally to 30+, now that I am considering lightening my position.

But if we do have a deflationary collapse in the months ahead, or at best a negative market outlook, I can't see gold miners rallying to new highs.
Thats not to say I will go completely flat, I couldn't stand it if I am wrong.

I encourage subscribing to Gary of Smart Money tracker, his subscriber blog is calling for GDX hitting 22 and below.

Technical Charting good for gold, good for miners, bad for bonds, bad for stocks

Ran across this video, does a decent job of showing chart technical's on gold, gold miners, bonds,  real estate.

The basic gist is once bonds start having interest rates rise for US bonds, stock market should get hurt and areas considered safe havens should rally.  Of course, we will all have to wait and see how this unfolds.
Below is a quick update of the 40 year trend for US 30 year bond debt.

Bitcoin explained

Found a video series to explain bitcoin, enjoy

HTM - Alternative Power

I have held HTM since June of 2012, announced in post 'Alternative Power as Investments'.
Today, HTM took off like a rocket ship, delivering impressive gains.

I looked, the only material news is HTM announces profits on March 25th.
So unless some news leaked, this maybe a flash in the pan.

However, figured I'd share the good news for this longer term hold.
I wouldn't be surprised if it cracked through 1 buck tomorrow.

Gold, whats not to love?

A good couple of days for gold miners

Thanks to Eric for the link

Is US Dollar Under Duress

Its no secret that America's luster has been tarnished since 2001, and arguably since Nixon.
With (Russia) Putin's Hubris, and China's economic duress, either acting aggressively to take down the USA is not out of the question.

USA has had the benefit of being the world's reserve currency since World War 2.  This benefit in the last decade has turned into an albatross.

No matter what the USA has done with it's finances, the world adjusts it's currency valuations to ensure their currency parity is in line with what politicians and economists believe is a health exchange rate.

Even countries, like Russia, who may prefer USD to falter, are compelled to be compared by the US dollar since their trading partners do keep their currencies locked to USD.


The net result is the USD has had it's valuation tied to its trading partners, and in turn countries that don't want USD to be world currency reserve have no choice but to maintain parity.

However, we are starting to see some unusual pressures continue to build.  I posted previously on various countries having local currency problems.  That combined with potential with aggressive countries may look for an opportunity to attack the US dollar standard puts America at risk.

Further, a market PREVENTED to freely trade by suppressing interest rates, changing accounting laws since 2009 in place since the great depression, giving banks 85 billion dollars a month (yes giving) for 2 years, and other aggressive measures will have an unintended consequences.

What I fear is a USD decline that once it hits a certain point, a run for the door will happen.
If/when that happens everyone will be trying to put their money into assets to stabilize their wealth.

Natural resources, and now crypto currencies are good candidates for storage of wealth.
Now to the charts, lets take a first look at the US stock market, S&P 500.  Does anyone believe the economy is stronger than 2000 by a longshot? Than 2007?  If you don't then you must ask, how can the market be valued this high?  Answer is simple, accounting rules changed and various unintended consequences of free money.

 toda

Now lets take at look at US Dollar valuation since 2000.

Hmm, the US dollar was 50% higher in 2000 than now.  At that level, a market at 1500 in 2000 is equivalent of 2,250 today.  So we have not yet broken the highs of 2000 even though the first chart indicates we have.

OK, so we get it, USD is lower, market looks higher, but in real valuation it is not.  Big deal right?  Things move around.

Now lets take a look at US 10 year interest rates, notice we hit a bottom around June 2012, as I posted back then!  It was a golden opportunity to bet against US bond values as we hit.  So far that was a correct call.





Lets take a look at Gold, old school alternate storage of wealth.  Remember I HATE gold = money, but it still needs to be raised here:

Gold has been recently rising since end of December.  Also gold is near its long term up trendline.  Notice the 25/50 weekly SMA lines are starting to turn up, if they cross it usually means the asset is on an upswing.  But we are no there yet.

What about Bitcoin? Despite its original exchange blowing up and going bankrupt, its valuation is holding steady, dropping from 800 to 650 from the scare. Not bad for something that just recently exploded from 20 bucks to 1200, going to 800 before the crisis hit.

So what does this all mean?  The market is going higher but still hasn't surpassed the USA wealth of 2000, not by a long shot.  The USD if it ever crosses below 70, it is a very strong indicator we are in a new world, probably an epic crisis, based on USD valuation over last few decades.
US Interest rates may have bottomed for my entire lifetime in June 2012.  If the rates break out of the range we are in now up, we can see a generational shift from decreasing costs of debt to ever increasing costs.
Gold is still trending higher, relatively stable since before 2006 with a nice steady rise.    Bitcoin for all the shouting about its a crackpot scheme has been fairly well.  No where close the reaction the US economy had with the bankruptcy of Lehman brothers.

One thing should be a takeaway, the market valuation ever higher is an illusion considering how much money is being pumped to prop it up compared to 2000.  The USD value alone tells a story about USA wealth.  With rates seemingly past the least costly in 60 years, Gold and Bitcoin holding well, the USD may be headed for troubled waters from its enemies.

Good luck

Gold, Bitcoin, US Dollar, and the Ruble

Below is a summary of stores of value that is in the news, gold, Bitcoin, USD, and Russia's ruble.
The moral of this story is all storage of wealth is relative.
To the charts!

Gold Miners

Back on January 26th I posted Gold at a Crossroad. As readers know, I don't buy gold or gold paper, but gold miner stock. Since that date, GDX has risen from about 23 to 26, a little over 10%, at best 15% from low to high in that period. So while 10% is not that big in the scheme of life, its pretty big for a sector beaten to a pulp since 2011. Of course, the magic question is, will it continue.

Bitcoin

Bitcoin ran into major issues when gtmox started to fail a couple of weeks back, with bitcoin spiraling from 820 to about 540 a coin.  Bitcoin shaken to the core has held up pretty well, considering it is not even a currency!

I should have my first bitcoin tomorrow, already up 20% in a few days.  Reports of bitcoins death is insane, its here to stay.  Overstock predicts before years end, $20M in sales through bitcoin.

US Dollar

The US dollar is under constant attack from arm-chair economists, I see nothing of concern according to the charts.

Ruble

Well, the Ruble is not having a fun time, there is active intervention just publicly announced to stop (yea, right)  to hold the ruble's value.

Who could have seen there may be issues?  Well lets look back to my post Global Currencies Showing Strain.  Granted, the Ukraine issues have accelerated Ruble problems, but its no shock to me there is an issue here.  Lets look at the Ruble value over last 10 years, there is no question the Ruble is under strain vs USD, hitting lows not seen 2008 crisis.

Bought my first bitcoin!

I bought my first bitcoin using Coinbase , click to use link and I get referral credits :)
The first purchase takes 4 days, but after I can buy more readily.

The process was simple, but credit card verification was a hassle, simply because my credit card company refuses to show charge amounts until a charge clears. (two charges used for verification by coinbase).

As soon as my bitcoin is 'mine', I'll start using it to buy Quark Coin, Lite coin, etc.
Check out my previous posts to see how the values are trending.

Bitcoin under crisis, Mt. Gox fails

Mt. Gox is the oldest, largest exchange that has lost about 350 million dollars in BitCoins, with over 744,000 bitcoins lost.
This is due to a flaw in the bitcoin code, that allowed bitcoin theft to occur for years.
Mt. Gox KNEW about this flaw but failed to report it.

Obviously the bitcoin community is rallying to improve code to maintain system order.
I believe this is a mere blip in the advance of bitcoin, and I hope we see many more of these issues exposed sooner rather than later.  For each time a flaw is exposed, it will be resolved making Bitcoin, and by leadership all other crypto currencies to become more resilient.

I need to get myself connected via any trading exchange ASAP to start getting bitcoin while the price is suppressed at $553, for I am confident bitcoin will advance easily back to double of what it is today in short order.

Bitcoin under co-ordinated attack

Bitcoin network is under attack, causing transactions to be halted while the Bitcoin community re-engineers against this latest assault.  While some may look at such an event to dismiss bitcoin, I welcome all forms of attack against crypto currencies.   For society to trust crypto currencies, the process must be unassailable, since we cannot rely on governments to prosecute or shield such attacks.

Each new attack, and I expect many more to come, will make the currency more reliant.  And if a weakness is found that the Bitcoiu community cannot fix, and it breaks the currency, good again.
For whatever crypto-currency must take over as the next form of money, it must take on the job of being reliable enough for all of humanity to use.
There will always be enemies of anything, always people looking to cut down a competitor.

Unfortunately for me, I was not able to verify my coinbase.com registration due to this attack, so I'll keep trying.  Once bitcoin emerges, I'd like to get some Bitcoin, litecoin, Ripples, and Quark.

More power to the community who must rally together continually for years to come to over-come assault.  Bitcoin has the unfortunate responsibility to lead the other crypto currencies to solve these complex technical challenges.

There are two possible reasons for the attacks, one could be people who want bitcoin to fail.
The other, I think more likely, is opportunists who want to drive the price down with fear for them to buy for the next leg up.

Crypto Currencies

I am diving into Crypto currencies, and there seems to be a few at the top.

From basic browsing the top 4 buzz crypto currencies are in order below:
Bitcoin is the original Crypto currency with wide support.
Litecoin , created by a Google employee, it has a wide base support
Quark , seems to be one with some buzz out there right now as stable.  Quark price chart vs USD
Ripples , next biggest market cap to Bitcoin.

To view over 95 Crypto-currencies market caps and prices, click here at coinMarketCap.com.
Here is a chart for some of the popular Virtual Currencies.  Quite clearly there is significant action.  Click to add bitcoin and litecoin to chart.

I should be done connecting to coinbase.com this week, I already connected to the virtualworld currency exchange.

Once I figure out the best places to connect to, I'll do a post on what they are, and how to start sprinkling some cash in these things.

You have to know that this is the right thing, simply because Russia has banned it and USA has not.  I am not one of those America does everything right, but when it comes to fighting change or adopting and taking advantage of new opportunities, USA clearly is the leader between the two.

Commodity Index -costs- breaking up

The Commodity index CRB has broken out of a range starting back from 2010 this past week.
This maybe a foretelling of what is ahead.
Gold and Gold Miners have NOT clearly broken to the up or downside since it started to consolidate in a price range.

I am optimistic that gold miners have bottomed, as it has had a really solid price this past few weeks relative to market volatility.  The ETF GLDX, representing high risk pink sheet gold miners is seeming to get some traction, moving up from 10 to 13.85 in recent weeks.

But according to chart view, there isn't a solid view of an upside yet.
I am in GDX, GDXJ, and looking to get into GLDX in the week ahead, with optimistic view yet again due to the strength of the ETF's price action.  But until we see GLD, GDX or GDXJ break up, all we have is CRB as a possible lead indicator and the seeming bottom price in GDX and GDXJ in the face of market volatility over the past few weeks.

See Gary of Smart Money Tracker for his thoughts by clicking here, he believes market will explode up over next 3-4 months as the final inflation bubble starts to be re-blown before a horrible pop.

GDX is at 23.91, GDXJ at 38.35.
To the charts! Food for thought!

Global Currencies Showing Strain

We are starting to see the countries run into currency problems.  I have written for years how this should start between 2013-2017 culminating probably around 2017.  I have been amazed how well the system has been able to hold itself together despite the challenges the global banking system has had.

Greece would have lead the world on this front, but since it is part of the Euro, instead of currency problems they have been rewarded for years on end high unemployment and low wages.  With 45% below poverty line, its a powder keg.

Venezuela is having severe issues, with reports of toilet paper shortages,   The antics of the government are amazing.  Many of the knee jerk reactions of price control and government annexing merchants who refuse to sell goods at a loss is par for the course.  What amazes me more is this tactic never works, so it must be good to do yet again.

Argentina is also having currency problems, with yet again many government antics taking place.  Argentina has had their currency collapse quite a few times in the last 70 years.  You'd think that they would have figured out how to handle it better by now.  Government BANNING imports and IRON FIST for merchants who refuse to sell goods at a loss.   50% internet tax, food price fixing, etc. Good luck with that!

Ukraine has imposed a 6 day waiting period for foreign currency purchases with additional capitol controls instituted.    When I read this what I see is the super rich in that country will continue to drain their wealth out of the country while the common person remains TRAPPED with their devaluing money.  This gives the rich more time to exit with more of their wealth preserved.  When such actions are taken, everyone in that country should apply to exchange money since they have no clue what 6 days will look like.

Brazil and Russia are having their interest rates rise for cost of government bonds and they don't like it.  The solution? Don't hold bond auctions!   While in some aspects this is reasonable, if you don't issue debt over time the debt should become scarce, lowering the premium.  But without me doing any research, I am going to take a wild guess those countries did not unilaterally cut spending to match this action.  Assuming I am correct, they are going to need to auction off bonds to pay people at some point.  Or they can follow USA central bank and simply have their central bank buy their bonds.  In any event, I hardly think world opinion for bond games like america can do will go over well for those currencies.  Rising rates = potential currency run.

Turkey currency the lira has been devaluing quickly under currency fears.  That has in turn lead to yet again, capital flight.  Imagine that, those who can move wealth out to safety, do.  This has sparked a real estate sale in Turkey.  Once these things light, its pretty hard to put out.

Europe Union under the Euro has been and continues to be a challenge.  Spain, Portugal, and Italy have very challenged economies.  Greece's debt is NOT the worst as a percent of GDP in Europe, I put a nice graph at end of this post to show how the debt monster is starting to turn it's head.

China bank HSBC for a short period was instituting capital controls to restrict money flow.  That was quickly overturned once it hit mainstream media to avoid a panic.  This is a tell.  Why did they do this? Because there are issues that people are trying to 'help' by slowing the flow of money.  It doesn't matter they overturned it, there is something not right.

Bottom line people is this is not normal, we are entering the phase I stated in Global Currency Shakedown, Round 4 begins in October that things continue to move along nicely for the next phase of this now 5 1/2 year crisis.  I believe gold will fare well early, but I am starting to realize the end game is we all go to crypto currencies like Bitcoin.  I have started to open accounts and move money as an experiment into Bitcoin and Litecoin and start familiarizing myself with crypto currencies.  I stated back in Jan 2011 in post 'power to the people' that the best thing for the world is to go to crypto currencies.  There are now 83 crypto currencies and growing, there will be winners and losers.  I can't see how Bitcoin loses in the near term so for the short term one of the safer places. I'll do a post on this in more detail later, I highly recommend you listen to this podcast.  Thanks to Mike C for the link!

Jim Chanos on magnitude of China real estate game

http://youtu.be/gr4W7h0lBbM

Gold at a Crossroad

Gold on a long term trend and trend down for the last year is at a crossroads.
Many including myself, are optimistic that the downtrend is behind us.
But we cannot know for sure until a few months of a trend change is behind us.

Below is a long term view of gold price, and how gold came down to the long term trend line up and bounced off it upwards.  It maybe a 'dead cat bounce', or a trend change.

For your info see below, I have to run and plan to do a GDX/GDJ chart later.

The Great Unwinding is starting in 2014

In Sept 2008-March 2009 the world decided to double down on all problems and have the world banks and governments go all in to prevent an epic economic collapse.  For now, I'll steer clear of political debate if this should have occurred, lets assume the world was better off to act.

What I can say for certainty is what brought the economic catastrophe was NOT corrected, and this is the greatest sin since March 2009.  The world pissed away about 5 years that could have been used to fix the social economic order, instead we doubled, tripled down.     In hindsight, maybe thats all the world is capable of doing, keeping the same dance a moving until the song must change.

So here we are, lets take a look of signs of the Great Unwinding is starting to happen.

1) Countries currencies are destabilizing, with Argentina and Venezuela leading the way, Turkey looking to follow.
2) Greece after years of oppression is ready for fundamental change its only a matter of demographics as 45% hit below poverty line.
3) Various stock markets are hitting into trouble as Brazil plummets, US market hitting resistance,
4) HSBC, a very large Chinese Bank, is restricting withdrawals, not a sign of financial confidence for what is supposedly a global economic leading country....
5) US is bracing for a fundamental shift in retail, to last for potentially a decade of employment decline.
6) Banks in Germany, France, Spain, and others face a 1 trillion dollar reserve shortfall.
7) Back in 2008 I posted how China and India would squeeze USA of resources, with Oil as a key concern.  China is positioning to secure oil globally while USA uses local, temporary, fraking to cover the shortfall.
8) Global tensions are mounting, with various points of contention that could cause a catalyst for global tensions to flare, right now Japan and China are key contenders for sparking escalation.
9) In general, currency volatility is higher so far in 2014, with it expected to continue....
10) Gold on verge of possible break out, while not a sign of doom, it may be an indicator of economic sentiment change.


So while none of above really proves anything, we are opening 2014 with a heck of a bang!