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Who could forget those piercing words shouted out from the Titanic?s
Captain Smith as he gave the command ?abandon ship ? its every man for
himself?, as it became obvious all was lost. To just about everybody?s
amazement, the unsinkable Titanic was going under, and there was nothing the
crew or engineers could do about it. Fast forward to today, and this makes
for some powerful imagery when put against our supposedly unsinkable modern
day fiat
currency economies ? bubble economies that only those as delusional as
those thinking the Titanic could not sink would dare to characterize as
stable ? steady as she goes. Central, in this we regard, we have central
bankers (see Draghi?s comments attached), who are the ?rock stars? of our
Keynesian based interventionist
economies.
It?s important to understand all this before we go on to talk about how is
change is in the wind right now, even as the European Central Bank (ECB) has
just instituted a new
Quantitative Easing (QE) program in the Eurozone (excluding Greece);
this, where it should be noted former Bank of England head Mervyn King
commented recently that QE does
not work, because it didn?t in the States according to Alan
Greenspan. It?s amazing these guys will only tell the truth once they are
out of office ? no? Why is this the case? Answer: By design, QE is not aimed
at enriching the middle class because this would bring on uncontrollable
inflation outside of asset prices, which would not be the prescription for
central authorities and their increasingly enriched corporate
masters. (i.e. think oligarchs.)
It must be remembered the aim of central banks is to do whatever is best
for the larger banking community (meaning the too
big to fail mega-banks these days), whose interests are directly aligned
with the larger bureaucracy due to incestuous relations that range from
currency creation mechanisms to political contributions from the largest
lobby in the world ? the mega-banks and their ilk. Funny thing is though,
because the life cycle of these characters raping and pillaging the globe is
now fully mature, the ship appears to be taking on water with calls beginning
to come in to break up the
biggies before it?s too late. Of course Jamie Diamond?s ego would never
allow for that, so he will likely go down with the ship eventually.
Be that as it may, it?s important to notice we are rapidly approaching a
point where like the Titanic, despite what appeared to be a situation that
was totally under control, and that the best minds of the time were on the
job, Mother Nature struck out at the arrogance of man pushing beyond his
boundaries to teach a lesson ? a lesson that is still revered symbolically to
this day. Certainly the Swiss National Bank?s (SNB) decision to break its peg
to the euro ahead of the ECB?s QE announcement is a shot across the bow in
this regard, sending the message ?we know that in the end it will be every
man for himself?, so they capitulated and turned rudder ahead on what would
surely have been seen as an unnecessarily expensive exercise in the end, a
sentiment the Danish will possibly
entertain at some point in the not too distant future.
So while the SNB decision to abandon
its cap against the euro was not abandoning ship on the system as it
were, again, it is a warning shot across the bow that increasingly desperate
measures buy increasing numbers should be anticipated as Mother Nature claws
back at these characters, which is definitely a sentiment
that is growing (think anti-Western posture) ? one that will be perceived
by the market at some point that will disseminate to individuals acting in
their own defense (against a collapsing West) eventually as well. And once
the top 1%?ers get into the act, it will be like the Titanic going down for
the Anglo-American Alliance, Central Bankers, and West as we know it today.
(i.e. think Europe moving closer to the EurAsian Economic
Union, where it is being speculated this is the real
reason the SNB acted secretly in the removal of its peg.)
And while the SNB may not have abandoned ship on ?the system? (because
they still needs to print money), it does looks like its getting closer to
doing so in terms of Western alliances however, which should be viewed as a
warning short across the bow for all to see, including Eurozone countries.
(i.e. Switzerland is not a member of the European Union [EU], so it can
establish new alliances more easily.) Eventually, this sentiment will spread
and take on an ?abandon ship? like candor at some point, which is when the
dollar($) will be destroyed. Certainly the fact periphery economies are
having to cut rates (think the Danes [see above] and Canada
most recently) with all the stimulus that has been injected into the global
system since 2009 is testament to the fact that not only does QE
not work (only for the top
1%), but the entire Western model comes into question, which is why the
SNB is increasingly moving towards Asia. It was not a rash decision on the
part of the Swiss last week, but a strategic one.
Why Asia, and more specifically, China? Because unlike Western QE (money
printing), when you raise wages 60%
overnight for a large part of the workforce, meaningful growth actually
occurs in your economy because the money is getting into people?s hands. With
no deficits the Chinese can do this, whereas an already bloated and
over-indebted West cannot. See why the SNB broke their peg to the Euro now?
Expect increasing numbers (from entire countries to individuals) to recognize
this condition set soon and start thinking in an entirely new manner. Just
look at Iran, who has already de-dollarized
(because they were another easy target for the US to pick on), and one can
understand why Russia and China have been proactive in building their
defenses against the world?s biggest bully ? America. This is essentially the
reason the Dow / Gold Ratio (DGR) cannot hold above the all-important
233-month exponential moving average (EMA), because it may not look like it
on the surface, but the world is pulling away from the US. (See Figure 1)
Figure 1
All-important ? is the DGR really the all-important technical measure of
the world?s financial markets? Answer: Yes. I have written on this subject many
times before, but I never get tired of it. Of all the symbols of Western
power against Mother Nature, who in the end will judge all markets, we have
the DGR, with the Dow symbolizing Anglo-American success in capitalizing on
?the system?, and gold, the ultimate judge and primary measure of real status
quo success in measuring asset prices in real terms. (i.e. what it really
costs to produce these prices.) This is why, when the system is in its end
game, like it is now, where it takes more printed money to produce the same
prices because of diminishing returns acceleration of our fiat currency
economy, we get a collapse in the DGR until it reaches the vicinity of unity,
essentially removing any optimism from man?s desire to overreach his earthly
constraints once shown his true state of fragility.
This then, ladies and gentlemen, is why the DGR is ?it? in terms of
indicators, taking in all available information about the ?true state? of the
economy and giving you a factor to gauge its condition. This is why I spend
so much time on the DGR, and why it will be the only chart that will be
featured today in our foray into technical analysis. This knowledge does you
no good if one does not know how to read the charts / know the important
measures, but thankfully I do, an art not properly practiced widely these
days. So, what is the DGR telling us at the moment? In looking at the monthly
chart, which is the prescription these days considering the increasingly wild
swings in an ever-destabilizing macro-condition, we are actually looking at a
possible ?classic set-up? for a reversal, where although the nominal Dow
could in fact make new highs in coming days, it may not be confirmed in the
DGR, or real terms, suggestive a turn lower in both measures should be expected
sooner, rather than later.
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Good investing all.
Captain Hook
The above was commentary that
originally appeared at Treasure
Chests for the benefit of subscribers on Monday, January 26, 2015.
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