Friday, January 8, 2010

Musings On The Markets - "A Penny For The Old Guy"

It appears as if the Asians tried to "game" the Comex by dumping gold overnite ahead of the jobs number and got their fingers burned. This is an epic reversal for the metals on a "jobs lost" Friday. This is incredibly bullish.

The Fed has made it clear that they are going to have to ramp up their printing press, the Treasury yield curve is starting to price in an acceleration in inflation - either dollar devaluation/money supply expansion or actual price inflation, or both - and the Obama Government loses credibility now on a daily basis. The stock market - contrary to the babbling ignorance expressed by those on CNBC/Bloomberg (and now NPR) - is not reflecting the expectations of robust economic growth, but rather the clear and present signal that the Fed has no choice left but to hyperinflate the money supply in order to monetize growing Treasury issuance and the accelerating collapse of commercial and residential credit markets. If we have any kind of surprises this year, it won't from an unexpectedly strong economy but from an unexpected move higher in gold.

On an anectdotal note: we were surveying the home listings in the Denver area online last night and were quite stunned by the large number of listings in zip codes most affected by bubble-pricing. Even more shocking was the number of homes for rent on Craigslist. Oh ya, there are now 37 million people in this country - over 10% of the population - now on food stamps.  Our economic system is drifting into an economic Heart of Darkness - "Mistah Kurtz He Dead."

This just in:  the Government household survey show 680,000 jobs were lost in December.  This report, which never gets any televised media exposure and won't reported in newspapers tomorrow, is considered to be infinitely more accurate than the HIV-cocktail headline-reported number.


  1. Dave, this is OT, but given your opinion of the paper metals ETFs, what do you think about ETFs that hold only futures contracts? For instance, DBS: Powershares Silver Fund. Since no one is under any illusions that it holds physical metal, it wouldn't be in danger of blowing up. Or would it?

  2. Hey U6 - happy new year. I've said that the metals ETF's are fine for short term indexing of gold and silver, but if the day comes when GLD lifts its skirt and they have leased out a large [ortion of their gold, the price of GLD will plummet (and likely the spot price of gold will spike). If you're using the DBS funds for trading/indexing purposes I think that's fine. But beware of the the Comex or LME defaults on a delivery cuz the paper gold products will vaporize more quickly than Refco or Bear Stearns LOL.

    We use the DBS metal ETFs for hedging our bullion and occassionally from the long side to leverage our bullion holdings. In fact, I love AGQ, the proshares 3x silver ETF.

    Where I have a problem with the gold/silver ETFs is that you have 99% of all moronic financial advisors buying GLD for their clients and both parties believe that they've invested in gold. That is where the ETFs are fraudulent.

  3. 680k jobs? They said they lost 80k jobs.

    Anyway, what's up with EGI, I saw you mentioned this company in one of your old post so I bought some for my IRA and recently it went up and i don't see anything on it other than what's been released last month. This gold trend moving it?

  4. Ya - the non-farm payroll report that hits the headlines is the highly manipulated, facetiously fallacious U3 report which has no correlation with reality. The Govt also does a household survey which is more statistically correlated with reality and which showed something like 680k jobs lost in December. We'll probably see a lot of retail job losses in Jan and Feb.

    They also removed nearly 900k people from the "labor force" which kept the jobless rate at 10%.

    You must've picked up on EGI from another source. I don't know that one but maybe I'll look at it. I've done write-ups on ECU and Aquiline. I still own ECU. AQI was acquired by PAAS a few months ago. That one was a home run.

    I'll have some more stock picks in the next couple of months.

  5. Dave,
    no worries over the next 4 months the census workers will add the entire 7 million jobs lost to get us even. As long as the books balance.....

    Silver said "Hello" in a big way this week!

  6. Sometimes I wonder if the States weren't such a military complex and welfare state (ultra high expenditure government), would the "Zimbabwe ending" of the Dollar be delayed/could be totally eluded?

    Joe Stiglitz said the only way out is to pull the plug off the WAR MACHINE and save the cash for real necessities. Like paying for foods stamps. I guess it is too late. What's your disaster plan other than holding gold?

  7. Hey JW,

    funny cuz i was just discussing w/someone yesterday about how the only "card" the U.S. has left to play is military/nukes. Eventually China will stop exporting to us unless we pay in their gold-backed currenct that they'll peg at some huge premium to the dollar. then we're totally screwed because we're dependent imports. I would suspect most of the counries who sell us oil will do the same.

    In terms of a disaster plan, we'll probably eventually leave the country. Still researching options but Urugusy looks promising.

    Yer gonna have to decide if you want to stick around to see whst the "other side" looks after the faalout from when the real shit hits the fsn.

    But starting with as much in 1 oz soverein minted bullion silver and gold coins. Probably should have at least 3 months worth of storable food in your basement - and toilet paper. I have not purchased a gun yey but I know many who have and make sure you stockpile ammo if you go that route.

    I know someone who loaded up on ammo back in 2001 time period and he just sold a bunch of it he doesn't need at 4 times what paid for it.

    Listen to the John Williams interview from a couple weeks ago at Williams is 100% on target about what's coming and how to survive it.

  8. (excuse the typos - i'm typing one-handed cuz i broke my wrist when i slipped on the ice Monday at the end of a run in the park)

  9. Speaking of nukes, China also has access to them via the puppet state known as "North Korea".

    But then I am not sure if invading China is the best idea though. China is pretty resource poor to begin with. So I am not sure what can be gained from invading China.

    If the "reason" is to prevent Chinese from dumping "treasuries", I guess the act of invasion would probably give away the clue that the Dollar is rubbish from now on (and/or irredeemable to other currencies). So it wouldn't be a "booster" of Dollar confidence. One way or the other.

    Moreover, let's say "debt cancellation" is the "goal" of the invasion. As such, No one would essentially want to do what China did from before: namely selling to the U.S. and accumulating the dollars.

    So what good does it do to the daily lives of Americans? Imports would be expensive to most people and vast sections of the society would fall into poverty as a result.

    Remember Taiwan is also heavily armed with weapons purchased from the States. They would be in an awkward situation should Mainland China-U.S. War breaks. Russia would probably side with China, I guess as China would have been the major customer of Russian gas/oil/resources. Same goes for Australia and Japan (China is the biggest trade partner to Japan).

  10. On a completely different note, here is an interview that you will want to read.

  11. Dave,
    with a broken wrist you may be able to play for the Patriots defense!

    Crushed today by the Ravens, that one is gonna leave a mark!

  12. @Edwardo: thanks for the link - Viera is awesome. no question the Patriot Acts and Homeland Security Act and Detainee Bill were drafted with a military crackdown inside the U.S. in mind.

    @gyc: Pats need to rebuild. I think Brady was playing w/broken ribs. The Packer/Cardinal game was awessome!

  13. Ahem, so from looks of it I guess it is "understood" that the Mainland China-U.S. war is not a realistic proposition?? But then U.S. is known to engage in "pointless" wars (the military complex wants their government contracts), so Lord only knows how it will turn out in reality?

  14. Your guess is as good as mine. All we know is that going all the way back to Rome, anytime a great superpower collapses, it leads to a global military conflict.

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