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Analysts had expected a QE-3
announcement similar to previous ones. Instead, they got an unrestricted
new policy for quantitative easing to print more currency and bonds with no
limits imposed whatsoever. Markets liked what they heard as investors in
larger numbers jumped in to buy and buy with some serious power. For those of
us less reactive and shall we say, more studious about the outcome, it
signals rabid inflation with a potential for hyperinflation.
With interest rates so remarkably low,
the majority were holding zero inflation ideas on their collective minds as
they heaved a joint sigh of relief when the Federal Reserve had indeed come
to their markets’ rescue, and that all is well for now.
We suggest that these new policy
decisions are ominous indeed as the FOMC is in fact accountable to no one. We
see a powerful group of private banker reserve governors at the beck and call
of big money capitalists sprinkled throughout the world without any
accountability to their respective national governments and their supporting
taxpayers.
This means they have absolute power to
do as they wish, when they wish, with all international currency, credit and
bond markets. What this is saying for all to hear is that there is nothing in
this old world that can begin to compete or impose any kinds of rules on this
private banking cabal at all.
The old paradigms with at least some
restraints are invalid and old news. One of our top analyst colleagues just
reported a fabulous history of similar events since the 1700s throughout the
world. His excellent historic work proved these economic catastrophes always
end the same: in a massive bubble that blows up. Further, as he wrote, the
healing time is usually one full decade.
We were pleased to see he also reported
something we noticed and discussed at length before, the epic USA bad times
from 1873 to 1896. This cycle arrived after the American Civil War and was a
massive, rolling, recessionary depression. Some economic historians prefer to
tell us there were intermediate cycles of better times during that period. We
agree with the latest analyst’s report that it was just over 20 years
of hell.
What was further interesting was the
fact this mess landed in the middle of America’s Industrial Revolution,
which seemingly should have given major support and jobs growth as new
industrial might was blossoming. This was not case however.
The truth was, once again political and
governmental economic intrusions protracted this depression and would not let
it heal itself naturally. Between 1897 and 1906 things were much better. Then
the Panic of 1907 ensued and a new nastiness began all over. This
malaise extended from 1907 to 1916 in broader stock markets. Only World War I
cranked-up the soldier jobs program and related defense industries as a
prelude to better times in the roaring 20s.
We strongly suggest right now, and have
many times before over the past few years, that the
cycle from 1900 to 1920 in America is being replicated all over again from
2000 to 2020. How interesting 1908 and 2008 had similar frightening market
moments. In both cases it was so bad that some observers were saying those
markets were permanently toast.
Trading and investing education
has now become sheer survival.
Steve Roach, a top economic mind and
analyst, has called this entire cyclic event a “Charade.”
For those of us immersed in the financial industry, for the most part in
precious metals and commodity related reporting, we cannot disagree. We can
all complain until the cows come home as the entire situation is unlikely to
change in any way.
What we must do is educate ourselves
fundamentally on a broader view for most markets and then make decisions
determining how we can best manage to successfully trade in this very unusual
and volatile environment.
We are not saying that buy and hold for
the short, intermediate and longer views will no longer work or ever be
successful. What we are saying, is as traders with basic instincts, we have
to move faster and more often, and that might be a better way to procure a
happy outcome with your trading and investing money.
We attribute the first half of
2012’s trading problems to market controller’s
“indecision”, which extended the choppy, sideways action and in
turn delayed the settling down cycle. Media manipulation has created lots of Wild
West unruly trading, which would not have been possible years ago.
We’re not whining, we’re just saying we’ve got to be better
and obviously more nimble than in “the more normal
environment” of yesteryear.
Based upon our experience over the last
decade, it is safe to say we have now entered a new and unusual trading and
investing atmosphere where numerous bedrock rules have been thrown out the
window.
Current advantage we have: knowledge
they will print fiat paper forever.
With the announcements by the FOMC last
Thursday, we have some guesswork removed from the trading equation. It is
very clear now that the Federal Reserve and the central bankers of Europe
will flood the markets with paper until they are satisfied they have won the
battle and beat Greater Depression Repression II. History has proven over
and over again that they are mistaken.
The current messes are nothing new. This
stuff has gone on for centuries and it always ends up the same: they lose the
battle and all that paper goes down (and in some cases re-values to zero).
Define the Problems
The rule of law for big bankers does not
seem to matter. With the elimination of the Glass-Steagall
Act, banks can take depositors funds and commingle them with trading
accounts. This started with the late Enron disaster and has continued openly and
notoriously.
With interest rates so low, passbook
savings and other types of “buy and hold” investment vehicles pay
so little that they are unworthy of investments at all. In our view the
global bond markets have now been damaged beyond recognition.
There is extreme danger in the domestic
and global economies creating a pall over most all kinds of lending. Small
business is the backbone of USA commerce and growth. Losing customers in a
depression and being on overload with bureaucratic red tape, small business
survival is doubtful for many. Larger others with substantial capital prefer
not to take new risks in this atmosphere. There is no recovery and no
expansion. We just continue to pucker-up and shrink each day.
Starting January 1, 2013, new and heavier
tax burdens will crush individuals and companies, smothering existing
potential growth and blocking new start-ups. Banks are loaded with taxpayer
cheap money furnished by the federal government. They can just hold it, and
earn a small but steady interest income on the rate spread, basically doing
nothing. This is much less risky and enables banks to keep doing what they do
which is trade for larger gains using passbook savings.
The housing industry, a major part of
America’s commerce is broken. It stays broken for a decade until the
bond and related credit markets are healed and repaired. You must have a job
to pay a mortgage payment, yet unemployment is 25% and still rising. The jobs
situation is growing worse ever faster. Only the next world war will change
this.
Understanding the difference between
trading and investing. –Wikipedia
“Day trading refers to the
practice of speculation in securities, specifically buying and selling
financial instruments within the same trading day, such that all positions
are usually closed before the market close for the trading day. Traders who
participate in day trading are called active traders or day traders. Traders,
who trade in this capacity with the motive of profit, assume “the
capital markets role of speculator.”
“Not widely known, the correct
definition of an ‘intra-day’ means the move as measured from the
previous close and not just relative to another price traded on the same day.
Some of the more commonly day-traded financial instruments are stocks, stock
options, currencies, and a host of futures contracts such as equity index
futures, interest rate futures, and commodity futures.”
“Day trading used to be an
activity that was exclusive to financial firms and professional speculators.
Many day traders are bank or investment firm employees working as specialists
in equity investment and fund management. However, with the advent of
electronic trading and margin trading, day trading has become increasingly
popular among at-home traders.”
We would say that swing trading (a few
days to 1-2 weeks) and an entry-exit in a cycle of less than 90 days should
be considered faster trading and/or day trading, of a type.
“Investing-investment has
different meanings in finance and economics. Finance investment is putting money
into something with the expectation of gain that upon thorough analysis, has a high degree of security for the principal
amount, as well as security of return, within an expected period of
time. In contrast, putting money into something with an expectation of
gain without thorough analysis, without security of principal, and without
security of return is gambling.”
This last statement suggests faster
traders move in and out without proper analysis. We would argue many futures,
commodities and some faster stock transactions based upon both technicals and fundamentals are more safe than the longer
view “buy and hold” positions now vulnerable to unwarranted and
cowboy-like market manipulation using credit tools, media and street gossip.
“Putting money into something with
an expectation of gain without thorough analysis, without security of
principal, and without security of return is speculation. As such, those
shareholders who fail to thoroughly analyze their stock purchases, such as
owners of mutual funds, could well be called gamblers. Indeed, given the
efficient market hypothesis, which implies that a thorough analysis of stock
data is irrational, most rational shareholders are, by definition, not
investors, but speculators.”
Yes, this was formerly the case but now
buy and hold is a big banker target. The definitions of trading and investing
shown above in a quotation from the Wikipedia website explain what we
would call the traditional discussion in both kinds of speculation.
The new and dramatic difference that we
see today provides very strong evidence that traditional investing, due to
market manipulation and on-going interference by The Plunge Protection
Team and the fiat paper printers in global central banks suggests that
investing, in many respects, is now more risky, or even exceedingly
chancy, as old reliable market rules no longer apply.
Now we are observing a true economic Wild
West throughout numerous financial global markets where all the rules
are thrown out the window. Just look at the crazy Big Boy Banker
derivative trading, commingling of funds, failures to protect sacred capital
owned by clients and the on-going massive and widespread fraud. This also
includes massive and potentially illegal loans from taxpayers provided by
governments.
This cannot be called traditional buy
and hold conservative investing but rather it has become an international
floating crap game with no rules.
While all eyes are on Europe’s
destruction, the USA’s test comes November 6th. It might even arrive
sooner if the broader stock markets slide out of control during September
23-25.
Meanwhile, we suggest you gravitate
toward physical gold and silver and only the best-of-the-best of related
stocks supporting that view. In our work we are busy looking for options and
selling ideas for the broader stock markets heading toward the dustbin of
destruction. Last week we recommended four new ones in Trader Tracks
Newsletter. We see more coming in this new seasonal beginning.
The Greater Depression Repression II
is swiftly taking hold now and layoffs will be legendary. Housing has an
additional -20% drop from the current USA national average. Joblessness goes
to 30%-35% and food stamps reach over 50 million to 60 million. We will get a
2013-2014 World War in the Middle East and when Obama is re-elected,
inflation goes to hyperinflation. Not happy stuff but it’s not the end
of the world either.
Somebody please tell us when the global
bond markets crash for good and we’ll tell you when this can all get better
and we can start all over again, maybe with a partially backed fiat gold
currency.
Roger Wiegand
www.webeatthestreet.com
Contact Claudio Bassi, at Trader Track’s New York City publishing
offices for a trial subscription. Call
718-457-1426 Monday through Friday, 9:30am to 5pm or,
e-mail cbassi@miningstocks.com
Recommendations made in “Trader Tracks”
are exclusively those of Roger Wiegand and the
publication is also exclusively the editorial content provided by Roger Wiegand. TAYLOR HARD MONEY ADVISORS, INC. (THMA)
LOCATED AT 33-42 61ST STREET, WOODSIDE, N.Y. 11377, ASSISTS IN THE MARKETING
OF “TRADER TRACKS.” However, the views expressed in Trader
Tracks do not necessarily reflect those of THMA (Website:
www.miningstocks.com). Because individual investment objectives vary, this
summary of investments should not be construed as advice to meet the needs of
any particular reader or subscriber. Opinions expressed in Trader Tracks are
statements of judgment expressed at the date and time they were written, and
as such, are subject to change without notice. Roger Wiegand
is not a CFA nor an investment advisor, but a private individual who studies
the markets extensively and offers summary opinions. Before any type of
investment is made, you should always seek advice from your attorney, CPA,
registered broker, or financial advisor. There is considerable risk in market
speculation and investing. There are no guarantees regarding performance and
past performance provides no guarantee of future performance. Your trading
accounts are always subject to the potential for severe or total losses. This
service will involve SPECIAL EMAIL ALERT TRADING RECOMMENDATIONS PROVIDED
AT ANY TIME Roger Wiegand believes it is
opportune to trade either in or out of the market in question. AS SUCH,
THIS SERVICE WILL BE CONSIDERED A PREMIUM SERVICE. The management of
THMA, Inc. does not anticipate trading in the securities recommended in
Trader Tracks. No statement or expression of any opinion expressed herein
constitutes an offer to buy or sell the securities mentioned herein. Trading
futures contracts may not be suitable for all investors. You may lose a
substantial amount of money in a very short period of time. The amount you
may lose is potentially unlimited and can exceed the amount you originally
deposit with your broker. This is because trading futures is highly
leveraged, with a relatively small amount of money used to establish a
position in assets having a much greater value. If you are uncomfortable with
this level of risk, you should not trade futures contracts. If you need a
broker, contact mine, Ryan Olson, Managing Partner, Jackson-Olson commodities
at 800-352-5228 or by e-mail rolson@jacksonolson.com Contact Jackson-Olson
Commodities, LLC, 5510 Abrams Road, Suite# 101, Dallas, Texas 75214. Local
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