Big Week Ahead in News

This week the Federal Reserve Board will announce policy changes (if any) in response to the US economic activity.   Most believe they will not announce any major changes.  The economy has not faltered enough to justify action. (intervention)

The European Union Central Bank announcing their own plans Thursday.  There is where the action will likely be.  It is widely recognized that the European union is having severe issues with certain members.  The ECB has demonstrated the worst attributes of communal leadership, that is lack of ability to make decisive decisions.  If history repeats lots of tough talk, zero actual material change in policy.  However, anything is possible.

And on Friday is the US employment report.  Historically this report can start a change in direction if the market is disappointed enough.

So there you have it.  I am in Gold miners as per my post Friday, and I have added positions.  But leaving room now to see what happens into next week.

Try number 2, Time to start buying gold miners

Back on September 1st, I posted know when to hold em, when to walk away.  It was a hard post to make, I have been soo bullish on the gold miners, its hard to make the call to get out.  I haven't been looking for a re-entry until recently.  The post Moving into Natural Resources on June 30th, was too early. I made that statement partly because Gary of SMT was bullish.  I am not blaming Gary, just when your getting close to a bottom your looking for others to confirm your own disposition. And bottoms are very hard to spot, it is pretty depressing to watch a ETF degrade for a year, trying to figure out when it will stop!

Below is a long term trend for GDX, Gold miner ETF.  You can clearly see that we may have formed a bottom after 1 year of losses.   buying here with a stop loss of 39 should keep risk low, with high potential profit.  A bounce up 48 bucks, hit only a few weeks ago, is definitely possible.  Getting in early helps psychologically later to add more if GDX breaks above 49.

The second chart shows GDX in the last few months how fast it has depreciated.  Also shows the recent down trend has been broken, while the longer down trend in the first chart has not.

So once again, I am mildly bullish and addition positions.  I'll be giddy when GDX closes ABOVE the longer term trend line in the first chart, with a pop to 49 seems very likely.  The next question will be can GDX close above 49.

Other plays are GDXJ (Junior miners), GLD (gold), and SLV (Silver).  Other resources are Oil companies (OIH), and food (DBA, RJA).  However precious metals does tend to operate on its own drum beat at times.  It is possible, although not highly likely, that gold miners rally in face of other resources falling.  I posted on 27th Commodity markets - is the bull back,  why overall I like commodities

The macro picture is still pretty grim as I posted in Economics Degrading, whats up with Oil?
This is another facter that dampens my excitement for gold miners.  But bottoms are formed when everything looks bad, not when everything looks perfect.  So that grim post, on July 22nd, aligns very well with GDX bottom on the second chart.  A good indicator that a bottom is there. (Economy looks grim, miners bottom).

So there ya have it, its up to you to see how giddy you get.  Stop loss of 39 should give enough room to not get accidentally pushed out for a "1 hour" dive of the ETF below 40.  Such games have been known to happen in the markets.

The question I have is if the USD resumes a rally above 84, can the miners hold their value or can they rise with it?  Also, can the USD rise for more than 1 year without a falling lower?  For the USD has been on an impressive March.

Back on July 22nd, 2011, I posted US Dollar headed for disaster.  The issues I called then still exist today.  The only thing that changed is the other countries are being beat up for their own issues.  Kinda like best house on a bad block.  I also quoted many times that USD crisis (not same as currency collapse) I expect in 2013-2017 range.  USD being THE global currency makes it impossible for anyone to guess if or when a crisis occurs.  That post was timed near the bottom for the USD for an entire year ahead, calling for USD to rise, not fall right then, right now or be prepared for worse conditions.  A gift of a good year was given to the USD.  Point is, how far can USD appreciate simply based on the rest of the world is also looking not great?  A USD top with elections ahead may be finally here for the next year or more. 

Thanks to John for the shout out email, and subsequently thanks to Gary for his insights on his blog.  I have been working long hours, and its been hard to keep the eye on this ball.

To the charts!

Economics Degrading, what is up with Oil?

This post shows links to other blog posts news items as a basis for this view presented.
I encourage readers to click on links for detail on each macro item presented.

Trouble in the Eurozone as more countries come under citizen pressures.

Spain and Italy are both experiencing protests and a growing call to leave the Euro.

China unemployment higher than their government is reporting, china trade plunging.
Japans trade surplus drops a whopping sixty three percent.
Australia  real estate market collapse has begun.  Their collapse may be similar to US sub-prime repeat.
Euro-zone PMI steep rate of contraction, Germany signals steep slow down.
There are hints of a global collapse in auto-sales has begun.
The Germany is entering a legal gridlock in moving to a true fiat currency or participating in larger bail outs.
Twenty six states in US in severe drought, killing massive amount of food crops, a probable signal to higher prices.  Farmers slaughter cows in droves to avoid food price increase.
Oil prices are going parabolic, increased input costs in a slowing economy does not bode well.
France has increased their top tax rate up to 75% federal tax rate, rich flee in droves.  With the rich gone, finally France can prosper?

All of the above and more point to a global economic slow down and we are in a global recession.
I for one believe that we are.  Food and Oil may continue to rally, but I wait to see what precious metals do.
In a deflationary collapse any rally could overnight turn into a full out collapse, so any longs are riskier than normal.

The main question is will global central banks plan a monetary assault in an attempt to stop the deflationary collapse.  Even that is not a solution, for our debt based government system as a built in time bomb called bonds.

As for Oil, it is disturbing AS The economy slows down, the price is leaping higher.  If it collapses shortly, then not a big deal, just a short term rally.  If it is rising due to politics, or supply, we may have a real issue at hand.

For now, its wait and see.

Waiting for Central Banks Reactions

There is pressure on all sides right now in the global economy. Europe is teetering on an economic deflationary event not seen since the Great Depression. In 2008, it was a deflationary event, but quite short lived compared to most. The US changing laws to stop valuating companies using Accounting standards since the great depression helped, as well as 1.5 trillion annual deficit spending.
Food prices, gas prices, and some other resources are not even close to their 2008 lows. US unemployment/under employment is at 8.5% to as high as 25% depending on what statistics you believe. US Federal bonds at near record interest rate lows. China experiencing a credit collapse, with Australia at minimum experiencing an economic cool down. There are many other signs such as manufacturing slowing, etc.
 Since 2008 NOTHING has been fixed. As a global society we pissed away 4 years, trillions in debt spending, as well as encouraged companies to be reckless and remain insolvent. So its back to the central banks, what is the response going to be? Watch another 2008 unfold? Or pre-emptive strike? If history is any tale, pre-emptive strike is a shoe in.
 But there is a fly in the ointment. Natural resource prices have not yet collapsed like they did in 2008. If the Central Banks come out guns a blazing with more free cash, it will cause resources to move UP from here. I won't call for skyrocket by any means. But a higher low between economic issues does not bode well for the next few years.
 So I remain mildy bullish resources, with a toe in the waters, waiting to hear the other shoe drop, a "new deal" of printing to further flame the global currency war.

Dollar Rising

The US dollar is rising today, which does NOT bode well for resources.
Just earlier in the week I was calling for resource bottom, mainly due to how badly the sector was beat up.  Then Gary got bullish, and I was already starting to get bullish, pushed me over the edge.
But looking at the chart below, it could be a snap back rally that fails next week, or what it looks like, the dollar is not rolling over.

When in doubt, caution is best.

I am going to LIGHTEN positions, but not exit.  I am taking down my bull/bear image for now.

But the US Dollar looking to continue to make new highs wont play well for resources.

US Federal Debt

Just wanted to take a quick moment to post about US Government debt.
Back in 2008, I posted about US debt, and linked to a movie called I.O.U USA.
That movie projected a scary budget debt for 2008 at 410 billion. (ended up 460 Billion).
In 2009, the final year for George Bush budgets, the debt was 1.4 Trillion.
Since then, Obama has managed to keep the deficit each about  1.3-1.5 Trillion.
This chart shows 2010,11,12 each one about 1.3 trillion per year.

So at end of 2009, US total debt was at 11.9 trillion.  the projected debt at end of 2012 is 16.4 trillion, a run rate of about 1.5 trillion per year.  I am confused why the site that I used doesn't align with the 1.3 trillion figure.  So lets go with 1.5 trillion per year for Obama, 100 billion more than final year of Bush.

That is a WHOPPING 41% gain in debt in 3 years!!

One can clearly see this is not sustainable.  Matter of fact, if the chart was a stock chart, many would call for stock collapse as it can't continue to be a parabolic rise. See below.

The key element to keep in mind is a DEBT BASED system with the chart above CANNOT continue forever.  However, there are many ways to morph this system.
One is to eliminate debt based system.  If US simply printed money or the Federal reserve bank bought 100% of US bonds, debt magically becomes irrelevant.

This of course can bring on new problems, one of which could be currency collapse.
But theoretically, it could solve the parabola above.

As for blame, well, there is blame for each political party.  Using the chart below, clearly every president since WW 2 was fiscally responsible, until Reaganomics.  Since then Reagan the big W clearly did much to blow up the debt.  If Reagan and Bush where fiscally responsible, we would have been debt free by the time Obama rolled in.   I hear much about how horrible Obama is, I am not a fan.  But he isn't any different than Reagan or Bush for budget responsibility.

I would love to see deficits of 460 billion, seems so reasonable now.....and I am sure in a few years 1.5 trillion will seem like the "fiscally responsible days".  Republican or Democrat, the outcome is the same, pander and kick the can, it is only a matter of the packaging.  

Moving into Natural Resources

I exited my Federal US bond fund inplace since January 2007 today.
I am moving into natural resources over the next few weeks.

I am convinced that Europe will print, USA will print, China will print, and the rest of the world will follow.
I am not calling for hamburgers hitting 100 dollars each.  I am calling for a rebalancing of a more equal distribution of the world resources, away from the west and more to the east.

Oil, Gold, Silver, select food, etc will all rise relative to USA past experience.

Even if I am right, the move I am making will NOT properly compensate for the future world, but it will help.
This isn't a mad-max prediction, world war 3, or fall of US government.


Simply put, China and India will get net richer 2.4 billion people, and US citizens will get poorer, 300 million, relative to each population.  Natural resources are one component to gauge the new reality.

Also Gary of the Smart Money tracker is bullish now, I strongly recommend signing up for his service.

Good luck!

Commodity Market - Is the bull back?

Back on March 24th 2009, I declared the Commodity Market bull is back.  We may be close if not already at the next bottom poised for the next leg up.  The upward exponential drawing below of course may be materially wrong, but it should correct quickly whenever bottom hits.

Timing of course is IMPOSSIBLE!  Catching falling knives is very painful.

Investing in this sector will only marginally help offset the cost of living crunch everyone will continue to face once the bull resumes.  This is inline with my 2008 post of global consumption squeezing the American consumption.

Back in 2009, the graph I showed was the standard CRB index.  What I didn't realize at the time, like most indexes, it is changed over time to re-prioritize weighting of the underlying components.   The previous revision to this index was more evenly distributed across all resources.

Although weighting differently may be more meaningful, it does skew the graph unfairly.  When an ETF composition is changed to be "fair" the entire index should be recomputed back to the start of the index to reflect a graph that has the same underlying funds consistently.

That however is not done.  I found an index where the composition was NOT changed with the last revision,  called Reuters Continuous Commodity Index (CCI).   The chart looks materially different than the current CRB index.

I believe that keeping the same mix of items is more realistic to show the impact of commodity prices.
Look at the chart below to see how even in 2008 crash, the bottom BARELY touched the high in 1980!
This graph shows what I believe is a more parabolic price change that we are experiencing.  Some deem it inflation but wages are not rising.   I deem it simply what it is, commodity prices are rising.  This is NOT about strictly US dollar debasement.  It is about poorer countries buying more commodities driving prices up for Americans.  Countries like China and India simply did not compete with Americans for resources 30 years ago as percent of purchasing.  Also consider watching Chris Martenson on exponential growth and commodity issues.

The only question is, how far does it go down before the trend of up up up resumes.  Strap on, for whenever the next leg up starts, it won't be fun.  High unemployment AND rising costs.

Usual suspects to invest in.  OIH  , DBA, GLD, GDX, etc.  The ETF GCC tries to mirror the blend that the CCI presents.
(UPDATE: 6-28, end prices.  GDX-43.30, GDXJ 18.20, OIH 34.30, DBA 27.77, GCC - 27.55, TAN - 17.74)

Europe failure could trigger global depression

The Euro is not a true currency, but is a currency peg.

The euro was doomed to fail in it's current state the moment it was created.

Will Germany agree to debase the Euro and therefore Germany helps pay the tab.

A great video with Chris Martenson making the call Europe will print and Germany forced into this path.

The only question is will this happen before a true global crisis or will 2008 repeat?
Chris Martenson is author of crash course I have featured before.

Well worth the watch, first 15 minutes of each video,

Martenson on Fiat Currencies, exponential functions, and energy crisis

Solar, buy low sell high

We are likely about to enter a recognized recession, that may last months or years.
If years, buying anything right now in the market is not a great idea, markets can go much lower.

However, many industries are already slammed hard, like solar.
The ETF TAN reflects 25 solar companies, and FSLR has been brutalized.
For longer haul, if you think solar has a future, TAN is pretty cheap at 17.90 compared to 300.

And of course, I still love OIH (oil ETF) at this range.
Time to start nibbling OR we may have a deflationary collapse bringing all stocks much lower. (well worth the WATCH!)
But if we don't here is pretty cheap.

Don't forget my disclaimer!  I am throwing darts on a dartboard, any trading is up to you.

Europe is a Giant Ponzi Scheme

Good watch on Euro is not a proper currency, and the government debt bomb.




I am starting to think pure fiat and no bonds is the only way out....but of course it wont be done right and will lead to worse things.

Giving opinion, is it worth it?

I have posted before about some concerns about blogging some of the political aspects of the topics before. What I find most disconcerting in the years ahead, police will be able to sweep a room and using face recognition technology to associate me with things I posted....anywhere.....ever.
In effect the posting on the net will put me into different categories, one of which may plop me into "anti-XXX" or "radical", etc.  That future cop will likely be WAY less open minded than I'd like.

I could delete this entire blog today, and it would make zero difference.  Everything is backed up, archived, and indexed.  I could even change as a person to the core, heck, I could be one of the worst people I rant against today someday. But the internet scan will not take this into account.  

I used to hear in high school behave or "it will go on your permanent record".  Like anyone looks at such a thing.....  But the internet EVERYONE looks at it!  Even a future employer.
A simple search on WebSurfinMurf reveals WAY too much about me that the random public should not have.  Its a pretty small jump to find out my real name from there.

I had a super tiny altercation via email on an opinion with a friend today.  It amplified to me that if a friend has such a radical reaction to relegate me to crazy.....what about people who find offense about my postings on Goldman Sachs? Financial Companies? US government? Current or Future employer?  Worse yet, for my son's future college or employer!

I am in effect, playing with fire posting ANYTHING that could offend against my future self.

Therefore, I am going to try to roll back severely my rhetoric.  I did a notch back in 2009 when I realized above, but I didn't turn it down enough.    I want to cut this blog back to more dry facts and avoid calling out opinions on corruption, or specific companies issues like Goldman Sachs, etc.

I'll continue to report on Money, USD, Fiat Currencies, bonds, and some other topics along these lines that are controversial.  These topics are  the next crisis and it  too important to not contribute to the social discussion.

I am adding this post to my corruption tag, so it can show when I tried to tone it back.
I urge people to read Mish and Market Ticker, for they do not pull any punches.
 10-24-2014 - see update 2013 Giving opinion is NOT worth it

Sports News vs Financial news...whats the difference?

I watched this video of a football player, Mark Cuban, chewing out ESPN news casters on the lack of depth of coverage.
Much of what he calls out is exactly the same across all US news.

No depth, all fluff and spin, a great mini-tirade.

Social Media Comes to Stock trading

Absolute brilliant idea from the Slope of Hope, creating of a social site, akin to facebook and other social sites, for stock trading.   As for how helpful the platform is, not sure yet, but well worth a look.

To learn more about Social Trade, watch the video below.

Chart state of Gold, Silver, Oil. Time to buy?

Lets recap from my view on the events around natural resource pricing in the last year or so.
On August 1st 2011, posted that a market crash may be around the corner, this was based on the long term weekly trend lines, in post This Week in Charts.  S&P was about 1300, just off the high of 1350.
Then August 8th posted about not panicking about US debt downgrade. The market low was the very next day and the market hasn't returned to that level since.

I started to get nervous on August 18th, sold longs 9-1-11 in post know when to hold them, know when to walk away. Then made it official with my 9-11-11 post down market ahead in charts, 9-15-11 posted about gold down ahead in Gold Break Trendlines.  Then added a bear icon added to the top of this blog on 9-18-11 in post the Bear is Back.

Since then I have been very nervous about going long just about anything.  A few times posted nibbles on natural resources.
Little bit on gold and silver on 10-26-11, in hindsight way to optimistic.
Little bit of GDX on January 26 at 55, with stop of 49 (triggered)
Little bit of GDX and GDXJ at 46 and 21 respectively on April 26 12.
Finally a timid (should have been more aggressive) in post Decent entry for miners.  GDX at 40, GDXJ at 18.50.
So here we sit with GDX at 47.73 and GDXJ at 21.13.
To date all buys since April 26th have been vindicated as good buys.  Lets try again at future telling charts.
I look at these charts and see building blocks for movements higher.
I am cautiously moving from my natural resource timid attitude as of 9-1-11 to a resource bull now.

Don't forget my disclaimer, I am an idiot throwing darts on a dartboard, invest at your own risk.

To the charts!

Very funny if it wasn't so sad.

The Colbert Report
Get More: Colbert Report Full Episodes,Political Humor & Satire Blog,Video Archive

Discussions on true financial reform

Ran across this former Goldman Sachs employee talking about true financial reform.
Refreshing to talk frank about there is a true issue here.
Wish some solutions are offered, but recognition is a great first step.

Quick 15 minute watch.

Time to buy more resources

We have seen one answer in in the last 20 years by central banks to resolve all issues....print print print!
Europe is on verge of falling apart, deflationary pressures are all around.

Do you think that the central banks will wait like 2008 and react after massive collapse?
Would they RISK another 2008 by waiting too long?

Yep its possible, the only question is it more probable?

Hedging on the probable, good time to follow up on my May 20th post to buy more miners.   At the time GDX was at 41.50 and GDXJ at 18.50.  Now they are at 46.93 and 20.71 respectively.

Others to consider is SLV (silver) GLD (gold) and OIH (Oil companies.

Good luck!

New Jersey bucking recession

I don't know the details of the numbers, but apparently New Jersey in May added 25% of the TOTAL new jobs created in the country, at 17,600.  I am not sure if that is a slap on the country low job creation, or a huge plus to living in New Jersey.   Of course, out the 17600 jobs, quite possible 17,000 pay less than 10 bucks an hour, so the devil is in the details.

Gov Christie gets to crow in his speech about NJ.  Christie maybe a thug, but got to give credit when due.  Question is, what will the numbers look like after the Federal government revises numbers like it always does a month or two later?

Pending European Union Failure

The European Union in it's current state was doom to fail the moment it was created for one simple reason.
The Euro which it is based on, is NOT a fiat currency.  It is a fiat currency tied to economic shackles on countries.  I say shackles for countries like Greece could simply print more money to pay their debts.  Granted, their currency would devalue, and their interest rates to borrow abroad rise.  But that would be the 'gentle' and to force Greece to improve their economic imbalances.   One way that would happen is in a currency devaluation is to NOT increase the salaries and payments to bankrupt social services.

They would in effect re-balance their budget through currency debasement.  Granted it is a very ugly way to do so. The right way would to get some adults in the room and balance a budget.  But since that is no longer possible, then currency debasement is next way to get there.

Spain, Greece, Ireland, Portugal, and others are all insolvent, unable to keep their debt ratio in line to belong to the Euro currency PEG.

A great rant by Nigel Farage once again about the reality and pending failure of the Euro.   There is an out, give up on balanced budgets and print print print.  But Germany in effect will be looted, the question is, are the German citizens going to allow it to happen?