The Golden Truth: This Could Be A Bad Sign For The Paper Markets

Friday, May 14, 2010

This Could Be A Bad Sign For The Paper Markets

High yield funds see 3rd highest fund outflow since 1992. Bank of America sugar-coats this by saying: "The disconnect between the two indicates to us that it was mostly hot money shorting the market that were responsible for ETF withdrawals, as opposed to the mainstream long-term HY investor base. Otherwise, the distribution between the two segments should not differ much, just as it usually relates over most other intervals. This, in turn, gives us one more reason to believe that such outflows could be temporary" sourced from Zerohedge.com.

But that's utter garbage. In the 9 years that I was trading junk bonds, when the hot money pulled out junk bond funds, it almost invariably pre-saged a big stock market sell-off. Given the action in gold/silver today, I'm wondering if market sensitive money is starting to move into gold as a flight to safety...GOT GOLD? (two links worth reading).

10 comments:

HopiumFriday, 14 May, 2010
A MUST WATCH!!!

http://inflation.us/videos.html
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EconomicDisconnectFriday, 14 May, 2010
This is certainly not a bullish sign. Any wild thoughts for surprise weekend actions?
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Dave in DenverFriday, 14 May, 2010
No but I know for a fact that real estate sales are cratering after the 4/30 tax credit expired. Was chatting w/a good friend who's accountant handles a lot of R/E brokers' taxes. He said that starting 5/1 these guys weren't even getting showing appointments.

I bet the Fed is going to have announce QE2 soon, using the EU meltdown as the cover excuse.
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JoeSaturday, 15 May, 2010
Doing God's work has its advantages. However, he failed to mention the God he serves is the devil himself.

http://www.huffingtonpost.com/2010/05/14/lloyd-blankfein-dropped-2_n_576835.html
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AnonymousSunday, 16 May, 2010
The black swan continues to spread it's wings, this is from Fairplay magazine website, the SI Ferry tried to use this same law after the Barbieri incident a few years ago...didn't work but then again the City lawyers are dolts:

"Transocean sees 1851 loophole

Transocean seeks liability limit

TRANSOCEAN Holdings is invoking 160-year-old US admiralty laws to limit its exposure to damage claims relating to the Gulf of Mexico oil spill.
Court documents filed in the federal court in the Southern District of Texas show that Transocean, as owner of the mobile offshore drill ship Deepwater Horizon, will rely on the Limitation of Liability Act of 1851 to limit its damages to $27M. This is the estimated value of Transocean’s interest in the vessel at the time of the blast on 20 April.
The act was enacted by Congress to give US shipowners a chance to compete with foreign-flagged vessels that had limited liability under European seafaring laws. It also provided shipowners protection at a time when shipping was considered a high-risk venture.
Despite lawsuits likely to reach into the billions of dollars against Transocean, among others, the company said in its filing that Deepwater Horizon was “seaworthy, tight, staunch, strong, and properly and sufficiently manned and supplied”.
It also said any personal injury, death or physical damage was not the company’s fault."

I am Sofa King...tired.
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Dave in DenverSunday, 16 May, 2010
Thanks for that post SK
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Dave in DenverSunday, 16 May, 2010
Joe, Blankfein will meet his justice one of these days...
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EconomicDisconnectSunday, 16 May, 2010
Did a pastrami cook today, will post pictures in a bit.
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Dave in DenverSunday, 16 May, 2010
omigod i almost passed when i looked at the pics - all the blood in head rushed to my empty stomach LOL
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EconomicDisconnectSunday, 16 May, 2010
HA! Sorry brother. Com eout to Mass and I will cook you a feast!
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Add comment

Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.