Global Currency Shakedown, Round 4 about to begin

Back in 2006, with my help of friend John, realized that the US economic structure was based on financial fraud through mortgage securitization.
Bill Clinton signed into law the routing of the glass-stegall act, put into place to separate 'gambling' from bank deposits.  George W routed the FBI department staffing down to a couple of people to investigate the trillion dollar mortgage industry.  In the late years of George W administration the final bubble was being blown, resulting in 2008-2009 financial crash.

In August 2008 I started this blog as an outlet on my rantings to everyone I could meet on the pending economic impact.  Little did I know how close it was.

In the turmoil of then, the natural outcome would have been a deflationary collapse that was stopped by a couple of drastic measures.  First, the government went on a no-holds barred deficit spending campaign to soften the blow to the economy.  Second, mark to market accounting in place since the Great Depression to valuate companies was suspended, as it is to this day.

Some purists would say both of these acts where not appropriate and that capitalist forces should have played out naturally.  I am not one of those people.  Yes, that is an option, and maybe it was the best one that should have been followed.   But I can see why dramatic steps was taken to prevent a global economic collapse, as it was perceived at the time.

What I am against is all of the drastic steps WITHOUT meaningful reform.  That is, 'fixing' of what was broke.  We have chosen to take the worst path, appeasement without follow through on reform.

The market has hit an all time high today.  Did you hear the bell?  My friend John has said there is no bell that goes off warning everyone that the market has hit a multi-year high followed by a market collapse.  Basically, there is no warning.

I am NOT predicting a market collapse per-say.  I am predicting that we are into phase 4 of this mutli-year global economic refactoring.

Phase 1 was the incredible loose regulation and promotion of securitization of trillions of dollars providing the market collapse in 2008-2009.  There are many other factors at work, such as derivatives in the 100's of trillions, but safe to say all the games in phase 1, lead to phase 2, 2008-2009 collapse.

This lead to phase 3, appeasement into 2013.  I realized that appeasement was the route and not cleaning house in 2010, and changed my stance that the market may not collapse per-say, simply be dwarfed by lack of law and raw financial meddling.

We are soon to enter phase 4, appeasement failing.  There is no amount of appeasement that can fix the system, without taking strong steps to fix the heart of the problems.

We have India's Rupee under duress, with India taking draconian steps to curb gold imports.  Mish is calling for a possible Rupee collapse as food inflation hits 18% per year!
We have various countries in Europe, such as Italy, Spain, Greece simply upping the ante on financial gains, buying weeks, months, maybe years, but not decades as they exhaust every  'new legal' option.
We have countries like France, promoting job creation without even bothering to talk to the companies involved in so-called creation plans.  And for what? a few double digit jobs?  That is worth lying about?
Japan is leading the world on the demographic catastrophe that awaits us all in an economic system that at its core foundation is based on ever increasing demand.

We have China continuing to try to transform it's economy into a consumer-global based powerhouse to replace the USA.  In the process, the information about the Chinese economy is safely in the unreliable fantasy zone.  China has HUGE potential, but who can understand their true standings?  At best, it is a hail mary hope that may come to save the world?

Back in march 2011, once I realized the world would NOT fix any core issues, but simply appease, the timeline for 'disaster' shifted from short term (2010-2012) to longer term (2013-2017).

Well, we are here, sad to say.  I don't expect fireworks until 2014, but it could happen next week.
The world dances around the US dollar, and that dance is starting to show it's age.  All is needed is enough people to lose faith in the dance to start the next phase of the crisis, global currency shakedown.

Best I can say is diversify, with a chunk in cash ready to move.  The USD I CANNOT envision any sudden moves down in value for YEARS to come, so it is once again the safest play....until its not! :)

Wealth Distribution in America

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

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

Gold, has anything changed?

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

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

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

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

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

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

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

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

Good luck

Gold Miners - Stop losses

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

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

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

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

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

Good luck

Gold and Gold Miners, hoping worst is behind us

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

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

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

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

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

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

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

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

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

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

Gold and Gold miners - A buy

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

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

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

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

Giving opinion is NOT worth it

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

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

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

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

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

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

Jim Chanos China vs USA

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

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

Comments on HP and services companies

Paying off Credit Cards

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

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

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

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

15 month zero interest
Chase Slate

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

Time to buy Gold miners, try number 3

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

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

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

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

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

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

To the charts!

Municpal Bonds

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

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

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

Good luck.

The fall of USA

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


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

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

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

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

Bring Back Glass-Steagall act

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

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

Market direction

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

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

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

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

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

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

Robotics, Demographics, and the changing landscape of employee skills

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

Technology, driving the next economic reset

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

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

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

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

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

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

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

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

Gold Miner bloodbath

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

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

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

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

Good luck.

Gold Miners

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

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

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

I picked up some NEM today.

I REALLY like the ABX chart (click)

Government monitoring is not a surprise

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

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

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

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

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

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

Euro Enslavement of Europe by Germany

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

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

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

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

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

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

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

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

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

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

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

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

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