“Too big to fail? No such thing in Free Market Capitalism.
The new term is ‘Bankism’. The banks control the world.”
The Keynesian central planners have done an excellent job of bastardizing the free market system. Capitalism always gets blamed for the unexpected and undesirable results created from the poor decisions of central planners tinkering with the system.
The hubris and greed of these academics who think they can control an economy from their ivory towers either don’t understand or don’t care that free markets are a natural force that shifts out of balance when you manipulate it.
A free market is the most efficient market of any economic system. It’s a natural force that rebalances itself when things get slightly out of kilter. Free markets are a source of prosperity and history proves that free markets work.
But once you start to manipulate the market or intervene to try to create a more desired result, free markets are no longer free and therefore, cannot be blamed for the undesirable result of the intervention.
Socialist central interventions always fail, eventually.
The unfortunate thing is that the populace of a country leaning toward socialism or central control is always ignorant of financial markets and that’s by design. If people were educated in how free markets work, they would understand that what we have today in the U.S. and the world are not free market economies.
Ever since the great depression, the world’s economies have been manipulated and controlled by governments and central banks. These entities have socialist tendencies and want to control every aspect of our lives.
It’s a natural human flaw for people who are in power. Power corrupts, and like a drug addict, those in power always want more control and more power.
History always repeats itself. Empires who want to control the world always end up collapsing under the weight of their own hubris and greed.
Today’s generation has never known or lived in a free market and therefore, will never understand the difference. I miss what the United States used to stand for, but the government of our founding fathers is gone and unless we change our current direction, like Rome before it, this empire will also fail.
Where’s the yield?
Liquidity is drying up. Treasuries have no yield; some even offer negative yield. The stock market is in a bubble and faltering. A new bear market has begun. Corporate bonds are free falling. Commodities are dead. Economies around the globe are cliff diving. Banks don’t pay savers any interest. All the economic indicators are showing that the world economies are seizing up.
Does this not look like a meltdown?
Where should one invest to protect their wealth?
The answer is to invest in real money. What is real money? Gold and silver.
Throughout the ages, the wealthy have used gold and silver as a store of wealth, as insurance against the manipulations and mal-investment created by arrogant and corrupt governments.
Currency has no real value other than the perceived value created by the faith in the government that created it.
Gold is finite and has been used as real money since the beginning of civilization. Gold is the ultimate insurance against the collapse of any monetary system.
But who says you can’t get yield from gold? Ever heard of gold mining companies or gold royalty companies? When the price of gold finally takes off, these companies will not only skyrocket with the price of gold, they will pay a handsome dividend as well.
Gold provides insurance against currency devaluation. It also provides wealth protection, capital gains and yield.
I believe 2016 will be the year of the gold bull market. With the global economies in free fall and the U.S. Fed tightening at a time when everything else is faltering, I wouldn’t be surprised to see a global debt crisis soon and that’s good for gold.
In addition, the SGE gold fix (Shanghai Gold Exchange) is scheduled to launch this April and that will use the price of physical metal for price discovery, rather than the paper markets of the COMEX and LBMA. That means any manipulation of the paper gold price will have little effect.
Also, the latest COT report shows that commercial traders have a short position in gold of less than 6,000 contracts. That's the lowest level in more than 15 years. Commercials are net long and this means we should see a spike in the price of gold in the coming weeks.
I’m going to add Barrick Gold (ABX) to our list of gold stocks above. The company has reduced debt significantly and should benefit greatly from the rise in gold in 2016.
Gold is at the beginning of its next upswing and the MACD is showing upward divergence. I expect a short term retrace once we get to the upper trend line, however, once it breaks the upper trend line and holds, then we may see the beginnings of the new bull market.
I think gold will pick up more momentum due to current global market conditions and once the SGE goes on line in April, I believe we will see a bullish surge throughout the rest of this year.
Stock Market Indices: (SPY) (QQQ)
You may recall this chart that I posted in December. I wanted to show you the chart patterns of the last two crashes in 2000 and 2008, so you could see the similarities in all three bear market patterns of a crash started and then followed by a rally of hope only to have the continuation of the crash thereafter.
We are now in the continuation phase of the current crash cycle. (See below.) We had a quick rebound on the phony jobs report this morning, but the market quickly turned around and I expect the carnage to continue from here and possibly drop below the August lows next week.
Energy Stocks: (XLE) (UNG) (USO) (LNG)
The carnage in Crude continues as it drops in a bear market channel. We may see some brief short term rally’s within this channel, which may provide some good short term trading opportunities, but the longer term pattern is down.
Financial Stocks: (XLF) (IYF)
The financial ETF’s are a mirror image of the stock market. These would make a good candidate for a longer term short position.
Commodities: (FCX) (JJG) (DBA)
Commodities are so hated and oversold right now you would think now would be the perfect time to get in, but I think more pain is on the horizon as the global economies continue to fall. China is one of the largest consumers of commodities and with their economy faltering, expect the commodity markets to continue to trend down from here.
However, I do think we are getting close to a bottom with sentiment at all-time lows, commodities may be gearing up for a turnaround in the coming months. We’ll keep our eyes on commodities as the next big trading opportunity may arise.
US Treasury Bonds: (TLT)
I expect long term T-Bonds to slowly trend lower. I would not expect a collapse anytime soon because I think investors will move from a failing stock market and move to safety, which will temporarily be treasuries and for the longer term, precious metals.
(SPY) December 2016 PUTS 190 Strike
(IYF) August 2016 PUTS 84 Strike
(XLE) June 2016 PUTS 57 Strike
(SLW) January 2017 CALLS 13 Strike
(GDX) January 2017 CALLS 15 Strike
(ABX) January 2017 CALLS 10 Strike
(RGLD) July 2016 CALLS ATM
Collapse Accelerates – Worldwide Panic Increases As Historic Super-Bubbles Burst
“I found it very interesting that the opening day of trading in 2016 was the worst since 1932, and as you recall, Eric, that year didn’t work out too well".
The ruling class, in all cases, is driven by a voracious appetite for supremacy, wealth, and control. The domination of the world by central bankers representing private interests has never been more evident than it has since the Federal Reserve created 2008 financial crisis and the traitorous actions taken by politicians and central bankers in the last seven years.