4 July 2012

Happy Fourth of July.

It seems that despite fighting and dying for independence, each country is more dependent than ever on other countries.  This is especially the case in Europe.  Communism lost the battle, but central planning, statism, and bureaucracy won the war.  At least the former was pitched as a way to help the lowest castes of society.  The latter is a Democratic facade hiding obscure political agendas, state-sponsored monopolies, and central planning "intellectuals" that are out of touch with humanity.

Greeks need Germans to add more and more billions to the ledger so they can continue the status quo.  Germans need Greeks to take the freshly-lent-into-existence money to prevent a Eurozone breakup.  Spain needs freshly-lent-into-existence money to shore up its banking sector that should be held accountable for blowing a housing bubble. Americans need Europe to print a bunch of Euros so the stock market can stay pretty and the dollar will paradoxically fall (as the Euro gets diluted, it seems to get stronger..) so we can export more.  Iran needs China to keep buying its crude with gold.  China needs the US consumer to stay strong.  A quick look at the Federal Reserve Primary Dealers list reveals more of the same dependence across Japan, the UK, the US, and Switzerland.  If the LIBOR manipulation case isn't a wake-up call, I don't know what will be.  If it was truly manipulated it higher in 2008 to exacerbate the crisis and receive larger bailouts, no amount of fines or jail time will make up for all the jobs and houses lost as the system crumbled.

I wonder how far the N(etherlands)PIIGSF(rance)UKUS (NPIIGSFUKUS) will continue a clearly unsustainable path.  Perhaps everyone is slowly coming around to the fact that modern "money" is something that requires no real work to create, just the addition of digits to a digital ledger, and that is only if it is actually tracked which seems rare.  As a citizen who has had most self-pride beaten out of them, why slave away for something that is created for free?  That is the question of the day.  How long can price reduction via process improvements and machines offset the necessary exponential increase in money supply?

Enough Monday morning quarterbacking..how to protect oneself..


I know GLD and SLV are not real gold or silver.  I just use them for ease of charting.

 Gold has barely broken up and out of this pattern.  It is possible that it quietly drifts back lower to challenge the bottom line once again, but this is not guaranteed.

 The close up view shows the same, but shows that it is only barely above the resistance.  Needless to say, I still believe in gold.

Silver is a little less bullish.  It hasn't broken out of its pattern yet, and for that reason calls into question gold's move.  Silver is challenging its long term support line that it has fallen beneath.  I do still believe in silver, but it is much more volatile.

 The stock momentum chasing monkeys never seem to learn.  All time high reading on the McClellan oscillator.  Yes, this could be construed as a good thing.  However, considering all the macro indicator weakness out there, I think its getting a little ahead of itself.  Where was all this excitement at the recent bottom?

 Medium term is in overbought territory again.  It is below recent peaks.

Short term is 1% away from its all time high reached on 8/30/2011.


Best of luck.  Remember that none of this matters despite it seeming like it means the world.

"All stories, if continued far enough, end in death, and he is no true story-teller who would keep that from you."
Ernest Hemingway