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"When Injustice becomes Law,
Resistance becomes Duty." -- Thomas Jefferson
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 depression.
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.
SENTIMENT
"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 increasing
crescendo.
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 STILL GOOD.
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% TRAILING STOPS.
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.
TECHNICAL ANALYSIS
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.
GOLD
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 have done.
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 $10,000/oz.
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 in Volume.
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 months...
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.
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