IT'S TIME TO FACE THE TRUTH
I have been warning as far back as February that
Greece and Spain are in reality, in the midst of a complete system breakdown
that invariably will encompass the rest of Europe and then engulf the USA as
well. This credit crisis, as they call it, is just an effect and not the root
cause of the problem, which is a Socialist crisis. Socialism can never stand
on its own two feet; it is a parasite and can only survive as long as it can
confiscate the wealth that the Capitalist Free Market generates. But like every
other parasite, it eventually destroys its host. Margaret Thatcher explained
it the most clearly and concisely when she said, "Eventually Socialism
has to run out of other people's money." That is exactly what is now
happening all over Western Europe, England and yes, America as well.
Socialism has borrowed to such an excess that it has just about killed the
host that laid the golden eggs that kept it alive.
Last month, just as the European leaders declared
the Greek crisis resolved, I again warned you that it was not resolved and it
just marked the first of what will be many more crises to come; with the next
one likely to be Spain with a 25% unemployment rate, then France and then
Italy to follow shortly thereafter. Eleven other European nations, if not
already in depression, are definitely in at least recession. With austerity
measures already driving unemployment skyward to 25%+ you can expect riots in
the streets and a revolt at the election boxes. The public will most likely
completely reject all austerity measures and replace all who are for them
with far left Socialists and Communists and drive all of Europe into
Once the USA sees what is going on in Europe,
hopefully we will wake up and realize that we have gone too far left and
drive all the Socialists out of office. However, it will be too little and
probably too late as the Republicans will not know what to do with all their
new found power and the USA will first follow and then lead the rest of the
world into depression.
DANGER: If I am right, history teaches us that the
next step will be war as war always follows depression and world depression
always leads to world war.
YOU HEARD IT HERE FIRST
In the US, the Democrats and their media lackeys are
so used to lying to themselves that they cannot recognize the truth even it it hits them on the head;
they still act and think that Obama will sweep to victory, but he won't. Even
he cannot overcome the tsunami of history that is sweeping the world.
THE BEAR IS ON ITS HIND LEGS AND GROWLING
The Greek market is already below its 2009 lows and
Spain is not far behind. The bear will drive each country in turn below their
2009 lows and that will include the USA. However, that does not mean that you
must go out and sell everything. We are most likely at or approaching an
oversold low and could bounce starting this Monday.
We all know that I am stubborn and I cannot let go
of my opinions easily; that Bernanke, Geithner and the rest of his gang of
thieves will come up with QE3 soon and make every effort and use every weapon
they have in their arsenal to attempt to drive this market higher: Maybe high
enough to make a new, all time high above 14,200 on the Dow, in an all out effort for the Democrats to win the election.
Should they win, the accompanying celebration will then mark a rise in the
DJII that slams shut the biggest bull trap in history and will start a bear
market that will make 1929 look like a picnic.
"The economy is picking up"; "there
are more new jobs now being created and there is in general a feeling that
the economy is getting better." "Even real estate is supposedly
bottoming". Is this all true? Only if you believe the government's
massaged phony statistics.
Barron's big money poll shows 84% are bullish of
which 55% are very bullish and expect to be big buyers over the next 6-12
months. On the other hand, only a bare 14% are bearish or and less than 5%
are super bearish. Any time we have a big majority on one side or the other,
they are always wrong at the extremes. I won't bore you by citing all the
terrific news coming over the air waves and newspapers, nor will I cite you
any of the B.S. coming out of the mouths of the politicians in an ever
HOPE SPRINGS ETERNAL
Rest assured neither Apple nor Google or Facebook
will reach $1000 per share anytime in the near future. Of course, Silicon
Valley is busy pointing out the differences between now and 1999, when you
did not even need revenue let alone earnings to go public, while today, Apple
and Google are generating huge profits month after month and there are still
a billion Chinese who still don't have even a cell phone yet. Apple's steady
flow of innovations will never cease even though Steve Jobs is no longer with
us and he and his vision and drive will be easily replaced. Sure, guys like
Steve Jobs come along every day. Don't they?
THE EUROPEAN PONZI SCHEME
The unraveling of the giant European Bond Bubble
default is now clearly becoming visible in Europe. Off the radar, but even of
more importance, is the debt smothering both US states and especially
municipalities. The defaults have begun and will continue to rise as
exorbitant salaries, pensions and health benefits take an ever increasing
amount of a declining tax base. Bond and Munis are
NO longer safe havens for your money.
OTHER VISIBLE SIGNS OF A TOP
The construction of the Empire State building began
right after the crash in 1929. If you believe in coincidences, two of the
tallest buildings (one in the US, the One World Trade Center and the other in
Toronto, the tallest residential building in the world were both recently
completed. Both Manhattan and Canadian real estate (especially Toronto) are
still near their real estate bubble peaks. GET OUT WHILE THE GETTING IS
SPECIAL WARNING TO MY CANADIAN FRIENDS
Get out of all your speculative real estate
holdings, while you can. The old adage that when the US catches a cold,
Canada catches pneumonia still holds true. Canada cannot possibly continue to
prosper with both the USA and Europe heading first into recession and then
depression. At least the Canadian Banks are still sound.
EUROPE HEADING INTO DECLINE
The Euro Zone could break up at any time now and
trigger a "full-blown panic" in financial markets: As this real
worry increases, European Banks are suffering from increasing depositor
flight as they witness a slump to rival the Great Depression. In its World
Economic Outlook report, the International Monetary Fund (IMF) said the
collapse of a crisis-torn single currency could not be ruled out. It warned
that a disorderly exit of even only one member country would have untold
worldwide ramifications. Signifying the mood of caution among the world's
central bankers, 71% of those polled said gold was a more attractive
investment than it had been at the start of last year.
Central banks made their largest purchases of gold
in more than four decades last year and have continued to buy record amounts
of the precious metal thus far in 2012.
THE EUROPEAN STOCK MARKETS
February 3rd was the day the rally off the December
19th bottom died, and it's been an erratic, indecisive, up and down market
ever since. There has been an insidious sequence of up and down days, brought
on by an incessant inflow of ECB money. None the less, I haven't been able to
make any substantial money going either long or short. Thank Goodness For
Trailing Stops. It's given me a living, but no real money. So the time has
come to take a break and see where this market wants to go. My bet was over
the past few weeks that it probably will go down first before heading back
for that finally RALLY that will trigger the BIGGEST BULL TRAP IN STOCK
MARKET HISTORY. But as of right now, it is only a 50-50 bet. So, hold on
to your puts, maybe buy a few more, BUT be cautious and keep your tight 10%
HOW NOW DOW
The longer this sideways trend continues the larger
and more powerful the eventual breakout trend, up or down will be. It really
boils down to letting the market tell us what its next Major move will be.
The economic data has been abysmal lately, Durable
Goods orders were down sharply, Housing prices down, and Housing starts were
also down. The Fed left the market with the impression that it would soon be
printing more money: Hinting QE3 may be on the horizon.
Should prices fall below 12,250 in the Industrials,
or below 1290 in the S&P500, that would suggest a huge decline is just
getting started: If those levels hold, I believe a strong up rally into the
fourth quarter 2012 is still possible (there is no end to the
manipulation). The charts for the S&P500 and the
DOW are getting close to finishing a Head and Shoulders top pattern... FOR
NOW PATIENCE IS THE WORD.
I always had in the back of my mind that gold could
selloff to the $1525 level, but I did not think it would do so, since more
and more Central Banks are favoring Gold and the IMF warns of a possible
"Collapse of the Euro" and "Full Blown Panic in Financial
Markets." So this latest Selloff in Gold is not logical unless the market
is being manipulated in a last ditch effort to maintain the value of both the
Euro and the US Dollar.
IS THE CORRECTION IN GOLD OVER?
It was just last week that I felt that I had to
re-make the case for my being a gold Bull (that in and of itself is a sure
sign of a Bottom) and this week, we're talking about gold again - but with
good reason. When there's a market correction such as we are having, it is a
good idea to take a step back to re-think ones perspective, to make sure that
I am not just being stubborn in refusing to admit that I was wrong. So I did
step back and re-evaluated my entire reasoning only to find that I am more
convinced than ever of my position on gold and silver.
It strikes me very curious to see such large-scale
movements following the mutterings of Ben Bernanke - doubly so when he says
he's not doing anything. Yet his supposed inaction doesn't undo one iota the
harm he's already done, nor does it do anything to solve the serious
underlying problems that drove the world to crisis in the first place. On top
of all that, he is lying. The printing presses are running full blast,
without which neither our Government nor Europe could pay their bills.
Nothing changed from one moment to the next, and yet a large number of people
in the precious metals market decided to sell. I can only wonder at their
reasoning - who on earth would buy gold just because they thought Bernanke
would announce QE3 on a given day? Or who could possibly imagine that just
because he does not announce the next QE that one is not coming: Does it then
follow that this long-term secular bull market for precious metals is over?
What about Europe? The biggest of their problems, Italy, France and Spain and
as an afterthought Ireland, Portugal and of course Greece are not even in the
news. But rest assured they soon will be as their problems are still not only
festering in the background but are actually getting worse. One by one,
elections are replacing relatively conservative leaders with Socialists
/Communist leaders, who are the cause of the problems in the first place,
because the public does not want to accept the austerity measures imposed in
order to get the financial bailout necessary to get their financial house in
order. The USA will soon be in their exact same situation.
THE WORLD'S POPULATIONS REFUSAL TO ACCEPT THE FACT
THAT THE FREE LUNCH IS OVER. IN POINT OF FACT, THERE NEVER WAS SUCH A THING
AS A FREE LUNCH; THERE IS ONLY DELAYED PAYMENT WHICH IS NOW COMING DUE. The
Piper must always be paid.
I don't know about you, but I'm more than happy to
take more cheap gold off the hands of weaker investors as well as take some
more great gold stocks off of fearful hands at bargain basement prices. After
all, this market is only 2/3rds over. Gold still has another 5 years
and $4,000 plus yet to run at a minimum.
I have been right on for GOLD for going on 11 years.
I was right when I urged you all to hang on and buy into weakness in the face
of most of the Gold and Silver Bugs turning Bearish in 2006, 2008 and 2011.
Well, hanging on THEN and NOW will also turn out to be the right thing to
2011's $1,920 peak Gold Price only marked the end
of Wave 3; we still have Wave 5 yet to come and in commodity
markets, Wave 5s are most often the largest and strongest; taking up as much
of the advance as both Waves 1 and 3 combined, which should just about do it.
(1,700 X 2 + 1,700 =$5,100) + $250. So forget CRAMER, stick with AUBIE! After
almost 10 years, even CRAMER now thinks that gold deserves a place in every
portfolio. Let's hope that everyone takes his advice that gold should be at
least 5% to 10% of every portfolio. That alone will push gold way past
GOLD AS A SAFE HAVEN ASSET
Further confirmation of gold's continuing renaissance
as a safe haven asset was recently given by the IMF who warned that a "growing
shortage of safe assets" poses a threat to "global financial
stability." Don't you all feel more comfortable now? What would we do
without the IMF to guide US? (LOL). We certainly don't need the politically
correct IMF to tell us what to do. But it is just some outside confirmation
of my thoughts and bodes well for gold in the coming years. We should soon
see gold once again as a leading if not the ultimate safe haven asset. After
11 years, it's about time the so called experts began to see the light.
Goldman Sachs' Gold ETF in India Sees 11 Fold Surge
TECHNICAL ANALYSIS FOR GOLD
I like to use a 26-week rate of change ROC system to
find winning sectors. Just this past week, my system signaled that it was
time to buy gold.
Gold looks like a great long-term investment, but
there's one investment group that might perform even better in the coming
Gold Mining Stocks: You see, production costs are relatively fixed for mining
companies. As the price of the gold increases, most of that increase becomes
profit for miners. In the long term, miners should outperform gold in a bull
market and that is exactly what we have been seeing. In the past three years,
gold is up approximately 120%. Meanwhile, the Gold Miners ETF (GDX) is up
more than 160%. Over the past year however, that has not been the case. -
Gold has outperformed the gold stocks by over 25%, but I think that trend is
about to change. We can compare the value of gold bullion to gold miners with
a simple ratio, the GLD/GDX ratio. High values of this ratio indicate that
miners are undervalued. As gold miners started their big run up on price, the
ration was near 3.0, just as it is now. I expect gold miners to outperform
the metal over the coming months and year, just as they did the last time
they were this undervalued.
There's no question: Gold stocks are cheap.
Many of the sector's stocks trade with lower
earnings multiples than the S&P 500. Earnings growth is in double digits.
Some pay dividends close to 2%. With the exception of the massive selloff in
October 2008, the sector is now cheaper - relative to the price of gold
itself - than it has been at any time since the gold bull market began 11
years ago. Fundamentally speaking, the sector is a screaming buy.
AN OBSERVATION: "Two things are
infinite. The universe and human stupidity and I am not sure about the
universe" -- Albert Einstein
"Asian economies are based on production and
savings. Western economies are based on consumption and debt. What you are
seeing is simply the reshuffling of wealth and capital and opportunity
appropriately." In all my life, I have never perceived so many
diverse, powerful events to the global financial system and economy. The total
instability of the current monetary system is on the way to a grand
disruption from unstoppable events. The USA is slowly but surely being
isolated, alienating friend and foe alike. When you expand your economy by
increasing your debt, there comes a point where you cannot keep up with the
interest on the debt, let alone the debt itself. Paper currencies are
promises to pay. Gold and silver are the payment itself.
What people have to realize and I know this is in
direct contrast to what CNBC would say about any of the five major banks, but
they are all totally insolvent. They have never been more insolvent. The
word insolvent means BROKE. Without the generosity of the Federal
Accounting Standards Board, all the banks would be declared
"Bankrupt" and in liquidation proceedings by now. In addition, all
the sovereign bonds are nothing more than JUNK bonds now with big red lights
flashing warning signals. Nothing can stand alone any more without huge
infusions of cash ($5 trillion in just the last two months). That's TRILLION
with a capital T. The whole European Market is crumbling and with it will
also go the USA.
All the banks in France are now experiencing a huge
outflow of capital pushing leverage levels to 100 to 1 plus.
Europe's entire banking system is a $46 trillion
plus sewer of toxic debt: DEBT that is leveraged at 30 to 1 and still growing. Lehman was leveraged at
30 to 1 when it went under in 2008. Is the Fed going to produce another $46
trillion to bail out all of Europe? If they don't what comes next? I
wonder if anyone really understands the gravity of the situation the world is
in. I just saw a video of the Obama Health Care Bill. It will cost at least
one trillion more per year than is claimed by Congress. That is not my
figuring, but that of the Congressional Budget office.
We are in the last innings of a very bad ball game.
We are coping with the crash of a 30-year-long debt super-cycle and the
aftermath of an unsustainable Treasury Bond Bubble.
Quantitative easing is making it worse by facilitating
more public-sector borrowing and preventing debt liquidation in the private
sector-very temporary non-sustainable measures at best and both are erroneous
steps in my view. The Federal Government is not getting its financial house
in order. We are on the edge of a crisis in the bond markets. THE WORLD'S
COMPLETE FINANCIAL SYSTEM IS IN GRAVE DANGER.
The Fed is destroying the capital market by pegging
and manipulating the price of money and debt. Interest rates signal nothing
anymore because it is totally manipulated. The very idea of "Operation
Twist" is an abomination.
Capital markets are at the heart all business and
they are not working. Why? Because interest rates are being manipulated.
Savers are being crushed when we desperately need savings. The Federal
Government continues borrowing even though it is broke. Wall Street is
abrogating the Fed's monetary policy by borrowing overnight money at 10 basis
points and investing it in 10-year Treasuries at a yield of 200 basis points,
capturing the profit and laughing all the way to the bank. The Fed has become
a captive of the traders and robots on Wall Street.
If we are in the final innings of a debt
super-cycle, what is the catalyst that will end the game?
The likely catalyst is the EXPLOSION of the US Government
Bond Market Bubble. It is the heart of the fixed income market and
therefore, the world's financial system.