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!

Conspiracy diagram

I wrote once before about conspiracy, and what I think about them.
This diagram is very appropriate, as to I want to write a post about problems in gold price fixing being uncovered, more on that later.

For now, enjoy this conspiracy diagram.

Greece, Ireland, Portugal, Spain, what is wrong

The Euro is a way for the 'richer' countries to extract value from the poorer countries.
It isn't a normal fiat currency.

Nigel Farage gives a nice speech to describe the situation that has been created.

Gold about to break up, india continues to lighten resitrctions

Gold is set to break out to the upside finally this week.
I can't tell right now if it has, but as of Sunday night gold is moving up.
Lets take a look at a longer term Gold chart.

This is good for gold bugs, and if I can ignore the global economy, it in itself is not bad.
It is simply one resource going up, about to possibly break up changing a down trend to an up trend.
Nothing spectacular, but a time to be on the right side of a trade, if it can break out upwards.

Lets look at some other assets, like Oil

Oil has outright flatlined, which is fantastic for every american, and the western world.
The vast majority of this is from fracking, which is an environmental disaster, but has catapulted USA production. Unfortunately the half life of fracking is crazy short compared to normal oil wells.  Which means when all the easy fracking is done, the pressure should shoot oil up, sealing the deal on the next leg down.  I cant tell if thats next month, or 5 years from now, but it will happen.  Anyway in near term, nothing to see here.

Lets take a look at overall S&P 500.

Holly heck batman, thats a great run up,  Lets project forward this run, and see where this goes.

Now here is the rub, there is absolutely no reason why we CANT have the nice multi year rally in stocks for next 3 years, resulting in a 35% gain from here, at about 10% per year.

Really, I mean that, there is no reason why this can't happen or do even better!
But here is the rub, we have a few facts that causes concern.

1) USA and global banks are based on a debt based system.  Japan is by far leading in this debt.  Until Japan falls, the thought is America is OK.  Japan  is the canary in the coal mine.  Again, America could run into troubles BEFORE Jaapan, just conventional wisdom says Japan is first on the critical list.

2) USA investors are at a 27 year high for bullish outlook.  Again, there is no reason why we can't get to 100 year bullish outlook among investors. But a 27 year high on bullish outlook is starting to stretch the statistical envelope.
3) Jobs just simply....suck.  This is a strange one. I think in 20 years there will be 50% unemployment.  Sure there maybe many considered employed reducing this number, but many will be jobs the government 'creates' through BS work.  Think of person a digging a ditch, person b filling in a ditch, alternating days.  While this may seem like work, its really just non-vent work.  In immediate future, there is no denying, new jobs blow for average pay and overall full time employment.
4) Federal reserve bank chair has changed to Yeltsin.  Make no mistake, I think the fed will always ease money constraints to promote growth.  But Yeltsin is new, before her decade reign can begin, she may need to 'show toughness'.  The parabolic growth in stocks probably needs a good punch in the gut to show she means business.  Not long after that happens and she is reamed through the press, she will step in line with bernanke and resume the growth.  Bottom line is we have no clue if/how the fed changes, but we do know there is a new sheriff in town.
5) USD may be in trouble...but not yet!
The doom of USD has been in the air since nixon pulled off gold standard.  Its pretty easy to say that doom of USD is over-hyped.  But that's not to say USD can't have trouble ahead.  While ther is no clear direciton, USD is looking like at a cross roads soon.

What I can tell from facts above is gold is POSSIBLY about to break up.  The overall market is looking toppish, both from graph and from a new sheriff in town, yeltsin.

India is lifting restrictions on gold, I think that will pop gold up.
http://www.israelidiamond.co.il/english/News.aspx?boneID=918&objID=13954

Anything in marijuana stocks may explode up as USA starts to legalize drugs.  The stocks rallied and since crashed, may be a good time to buy some lottery tickets.
GRNH
MDBX
MJNA
HEMP
CBIS
TRTC
PHOT

I REALLY Do not like stocks like Priceline, Amazon, and a bunch of other stocks with a 4 year drive straight up here.  Proceed with caution.

this is shaping up to be an interesting week. Good luck to you.

Gold Breakout soon - India is BACK!

My thesis for gold has always been about demand, not currency gold bugs.  Gold as a currency is as insane as it gets, and I am not a supporter.

The thesis was and is, as India and China get richer, the 2.5 billion people there will consume more resources & gold.  In addition, ALL RESOURCES will get constricted as the USA, a vast consumer of resources, gets pinched with inflation on resource prices.  I choose gold simply because it seems like a more direct play, and it does have the 'bonus' of gold bugs behind it.

Well today my friend John sent me an email about how India is moving to lift Gold import restrictions.  India placed these restrictions back in September 2013 in post 'Gold has anything changed'.

The irony is gold was falling, not rising in price when India did this, and China immediately picked up the gold buying slack preventing gold from falling significantly farther.

Once this comes to pass, I have a hard time seeing how gold can go down in price the next 11 months.  Everyone should be well positioned now in ETF's GDX & GDXJ

Gold Breakout?

Gold closed on Tuesday the 31st at about 1205, this morning it hit about 1228.  This indicates a trend change, but we cannot know if the trend has actually changed until a few days has passed.  Usually out of a bottom the greatest gains are during a trend change.

This combined with my post on Tuesday GDX call option activity , is a decent sign that gold bottom may finally be in.  Of course no one can know if the bottom is in until looking back 60 days.

Good luck!

GDX call option activity

I had a bid in to buy 20 (2000 shares) of GDX call options for strike of 35 in 2015.
Basically, for $1k, at anytime GDX is worth more than 35.50 in jan 2015, get all profits.
Alternately sell if the option is worth more in the year ahead.


Today, I saw some insane volume with this option.  interpret as you wish.
Over $500K in options in this one level alone exchanged hands.
See below.  Good luck

100 Years ago Fed Created, Israel meeting to dismantle the system

The Federal Reserve bank started 100 years ago today.  To read up on how the Federal Reserve Bank, a private institution, came about click here.

I have written already on how I think the next currency should evolve, using private enterprise in post titled Ideal form of Money, Power to the People.  However, getting there does NOT have to be a 'revolution', it can be an 'evolutionary' process.

Israel Monetary Change Movement is making noise about how to overhaul the system.  At the heart is the uneven power in banks to create money and the power of corruption in politics.  I am skeptical that this movement will gain enough momentum to make significant change, but who knows.

Hopefully a debt-free society can emerge for public money.  I have covered before how tricky this is, often this can lead to hyperinflation or currency collapse.

Bill Still covers this event.

Cautiously Optimistic for Gold Miners

I am cautiously optimistic the worst is behind us for gold miners.
I have more than I should in gold miner options, and all things gold miners.
Good luck!
GDX - 22.03
GDXJ - 30.90
GLD  -121.82
RGLD - Royal gold Mining - 47.50
NEW - Newmont - 24.18

Tripple GLD - NUGT - not a good long term investment - 30.59

Catching falling knives

Trying to catch a bottom or sell at a top of the stock market is impossible.

The Gold call I made is still a question to be resolved.

By Friday the 13th I suspect we will get our answer, this blood letting may not be over.

GDX sits at 20.67, BELOW my gift call.  More of a gift? I haven't got a  clue.

Christmas is early, Gold Miner Gift is here

  I got out of miners in September 2011, waiting for what I thought was a good time to re-enter, I was mistaken in July 2012.  I have had several mis-starts, each time with cutting losses before the next leg down.
It has gotten so ugly, that people who I know are very pro gold can't even think of buying into miners.

Is this time different? Lets go over the facts.
1) India citizens are paying about 20% higher on the black market for gold.  This is in reaction to India trying to cut off gold sales in India.   Basically pent up demand waiting to hit the world market.
2) China has kicked up buying gold in India's absence, otherwise gold would have fallen much farther...
3) CME has altered the rules on margin requirements for Gold this past Monday, lowering gold by 9% and Silver 11%.  Basically allowing higher leverage to buy these materials.  A nod and a wink from central authority OK to go into these sectors with more leverage.
4) Buying gold shot up today (lifting this from Gary's blog, click here to purchase, best there is)
$123 million in the ETN for gold GLD, yesterday it wasn't even in the top 100.

Not a fact, but I consider it one. :)
My thesis still stands, 2.5 Billion people (China/India) are getting wealthier by the day. Both cultures purchase gold, this will drive gold higher.  Anything to do with gold and financial stability concerns is just extra value for gold/silver.

So I pulled out the stops and started buying again last two days.  Today just solidified the gut feeling I had with the buying on weakness report above.

If  you wish to invest in this sector, consult a professional, see my disclaimer, I am a hack.
There are easy ways to buy.  The top two ETF's are GDX and GDXJ.  GDX is a mix of gold miners, with GDXJ a mix of silver and gold miners.  
If you wish, but I don't do this myself, GLD is for gold and SLV for silver.  I prefer to buy companies not price of gold, but it is valid if you wish.

See chart at bottom for GDX, how we got here.  GDX is $21.66, GDXJ is 31.50, GLD 119.82, SLV 19.13

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I do NOT advise doing the next thing I am going to explain. I took some capital for high risk 'investing'.  Its really legalized betting when you take away the spin.

Aside from buying GDX, gold miners ETF directly, you can buy stock options with a brokerage account.

I bought options that expire in January 2016, at strike price of $23.  GDX as of today is 21.66.  IF GDX is every higher than 23 dollars on January 2016 expiration day, all profits are kept.  if it is lower, i lose only what I paid for this option.   I paid $4 per share for this right.  So, to make money, need to be over $27 to make any money.
Example: if you buy 10 options (each option is 100 shares, for total of 1000 shares) for Jan 2016 strike $23 for $4 dollars, and the price of GDX is at 30, you will make $3,000.  If for some bizzarre reason GDX is at a new high, say $73, you will make $50,000.  If GDX is at $23 or lower, you lose the $4,000.

If at any time between now and then the option is worth more, say $5, you can sell and pocket the money.The option is a combination of the price of the stock and the strike price of the option ($23),  the time remaining (2 years vs 2 days, etc), and overall market volatility. (more volatile, more premium)
UPDATE EXAMPLE 11/29/2013, the option that I bought for 4 dollars is now $4.35, even though GDX rose to only 22.28 today.

If you buy the same option for Jan 2016 for $35, it costs about $1   So for the same $4,000, you could buy 40 options (4,000 share rights).  With the price so far away, its prudent to follow the stock and sell if/or you are up quite a bit before the option expires.

There is an entire science around options, and tons of strategies.   Buying straight up like I did is considered by the pro's a novice move.  But I did want to document for you ways to LIMIT your risk, capital while maintaining the possible gains.    Options of course can only be done in a trading account.

To the charts!

Gold miners, how low can you go?

Gold miners have gotten SMOKED, any attempt to buy has been rewarded by one heck of a slap!
But lets take a look at the Gold Miner ETF.  It sits now at 22.25,
The ultra-low of GDX back in the depths of 2008 crash was 16-17.

Gold miners can go lower, heck the ETF could go below 2008 crash, anything is possible.
BUT, with China loving gold, India paying 20% premium and smuggling gold in due to import restrictions, I think this may be a demand spike waiting to happen.

I really have a hard time saying buy, after trying to catch a falling knife several times already.
But me liking gold miners has been between 25 and 30 GDX, and here we sit at 22.50.
Really not THAT bad of a timing on my part (assuming we don't go lower).

I am putting myself in again tomorrow, about 1/2 my purchasing power left, leaving 1/2 for later.
Good luck

Decentralizing and Centralizing the economy

I see so many aspects of the economy changing rapidly due to technology.   Between 3d printing, the maker movement, kickstarter, youtube video, bitcoin, and an ever increasing list.

These new business models are tearing away and the centralized business model and distributing it.
Today I ran across a coffee machine that promises to roast, grind, and make your coffee in one machine.
The idea being that once you have such a machine, coffee farmers can sell direct, revolutionizing the coffee farmer, and hopefully putting more in the end worker pocket.

This continues to be a theme, 'lose the middle guy'.   Its happening to media, and now its going down the chain.
Once all these changes settle, will be interesting to see the new landscape.

I am applying a new label to this post, economy3.0. Version 1.0 was pre industrial, 2.0 industrial, now we are moving into a more direct, social economy.

Consolidation - Command and Control

The corporations created since the manufacturing era have been consolidating for last few decades.  A nifty graphic from Reddit shows how so many consumer products are attributed to a few corporations.

My reaction just a few years back would have been one of aversion, I am for decentralization generally speaking.   But in reflection, I think we are seeing a much broader change, one that is hard to grasp.

The millennial generation and beyond frankly, are not going to be as material as the baby boomers.  They need very specific things, and must have it, but don't need as much of broader items.  What we are seeing is, the end game for old business.

The new businesses some of them are here, many are technology based corporations.   Some are starting, such as the maker movement, and home-DYI.   Many of the manufacturing and food companies are going to face strong headwinds as the people attitudes change.

The complex manufactured foods are going to continue to decline, cheap plastic sold at high prices will go away as 3d printing comes to life.   I am starting to realize the same goes for Media Consolidation, something I have been very concerned over.  I don't watch ANY TV, and rarely any mainstream media.   My media is purely Internet alternatives, blogs, YouTube, etc.  Considering how old I am, pretty sure the younger people shun old media even more.  Newspaper? Magazine? Fox news? 

So I present to you this graphic, and link to article from Mish, and while it does smack of concern, put your thinking cap on.  How important will these companies be to the general economic and growth of the world in the next 40 years? Most I think are past their peak.  Many won't exist or be a small version of their former glory due to dropping demand.