Money And Markets Update With Special Consideration To Gold And Black Gold (Crude Oil)
I’m going to hold off on my radical Islam post and insert a market post in here. If one really appreciates how tight liquidity is around the world, then one recognizes how unnerving today actually is. Global liquidity has never been this tight. Ever. I mean ever. Central banks have no methods left of loosening that noose. And with the Federal Reserve now raising interest rates into the tightest liquidity the world has ever seen, it’s going to get even tighter. We should expect dead bodies to start floating to the surface. That could be countries, financial firms, hedge funds, corporations and even more and more of humanity. Could policymakers act in nontraditional methods to loosed that liquidity? Sure, but they are the driving ignorance behind this crisis in the first place. So, don’t bet on it. Obama and both parties are ignorant to the messes they create through their own pathological megalomania. I literally have no idea what is going on in the debates. It really doesn’t matter. No one is going to save the world from crises that have been building for the last forty years. Some of my long time themes are starting to expose themselves. One is that the socioeconomic control system that has been in place for the last 400-odd years is now likely in the midst of its final collapse. That is, capitalism. And, that we will likely see states around the world in some degree of collapse. No one, and I literally mean no one, was writing that the vast majority of the crises in this world would reside outside of the United States back in the 2008 collapse. No one, and I mean no one, was writing that event was not a housing crisis but rather a coming economic calamity. That is, except what was written on here. Nothing in today’s macro world should be a surprise to readers on here. It was all predicted through sound qualitative and quantitative analysis.
I’ve only issued two dire liquidity calls on here in the last ten years. The first was coming liquidity shocks in the U.S. leading into the 2008 collapse. I wrote of that so often that I sounded like a broken record. The other was in the second half of last year when I noted that liquidity was draining out of the global economy at an unprecedented rate. I don’t make this stuff up. Just because I don’t share every data point and analysis, mostly because there are so many pilferers on the Internet, there are actually scientific methods of measuring what I write about. It’s not because I am some genius. It’s because I use science to determine most of the specifics I write on here about markets and economics. Something that neither finance nor economics really captures or understands. Do you think Jamie Dimon, Barack Obama, Mao Zedong or Joseph Stalin used science? Bahaha. The ego’s primary intent is to control. The state is here to control humanity or the benefit of the very few that enrich themselves through state violence. Humanity is in a battle for their very existence and that war is with the state.
Within months of my last liquidity call, oil started a massive collapse (which is not finished) and dozens of global currencies started their collapse. Most of the world is now in early phases of depression or worse. These are signs of unprecedented liquidity draining out of the global economy. 2016 could be very unnerving. I would definitely make sure you have a month or two of food and a few months of cash in your physical possession if you can afford it. I’m not sure cash will have any use at some point, but we aren’t there yet. You don’t need to spend hundreds of dollars to have some degree of food available. 25lb bags of rice and beans should suffice. Most Indian or Asian grocery stores have rice very cheap. If you live more remotely, there are still methods that may cost a little more but are available. We are almost certainly going to experience supply chain shocks at some point and whenever this system starts moving, it could be horrific and incredibly fast.
In the recent market weakness of some months ago, we saw the Dow open down over 1,000 points one day. I noted many years ago that we could see a time arise where markets opened down thousands of Dow points. That statement was really unheard of until I made it. But, if you understand what I have talked about, you know how illiquid financial markets are becoming. There are massive gaps in liquidity in all global markets right now. I’m not just talking about financial markets either. This is likely to get much, much worse as the back end of this crisis metastasizes. I don’t know what effect circuit breakers will have, if any, and neither does anyone else. But a Dow down 2,000-3,000 or more at the open is certainly not a stretch. Again, another unique data point on here is that I see ample evidence that the stock market itself could very well disappear forever as this cycle winds down.
This is a professional’s market and the reason this is a professional’s market is because it has been rigged to be. This market was created for corporations and the ruling economic aristocracy. Large financial firms on Wall Street and elsewhere, hedge funds and the like have created the perfect looting mechanism in financial markets being backed by the Federal Reserve’s easy money policies coupled with political fraud. Don’t kid yourself. The Federal Reserve is just a mechanism used by class to maintain control. It’s no different than debt, corporations, political parties, standing armies, government spying or any of the other control mechanisms. The real crisis in this nation and the world is the massive power grab by the state and the politicians who have destroyed everything through their palpable ignorance and hypocrisy. But, people cheer for their political party or army or corporation because they won! What they won was the unfettered rights to impose corporate and class-based will on the rest of humanity. Possibly the most profound remark of Orwell was in the future there will be no loyalty except to the party. How true that has become. But remember, another long time theme on here is that we will likely witness both political parties in this nation collapse. This was written well before the rise of alternative candidates and parties in Europe, the U.S. and elsewhere. It’s just beginning. As noted in prior remarks, I expect the Democratic Party to be the first to collapse. Obama likely believes he is setting up this nation for Democratic Party majority for decades to come. Possibly more. But, what he is ignorantly doing is creating its collapse. Guaranteed.
The overarching theme on this blog for the last decade is that we are in a cycle of volatility. And since 2008 we have been awaiting the back end of that storm. We are still in the eye right now but the hurricane force winds are now picking back up and people are realizing another storm is on the way. When Obama, corporate diktats and political predators told us this crisis had passed in 2009, they probably believed it. It’s this type of megalomania that has destroyed this world. The universe is teaching humanity a lesson right now. That is, to stop giving your power to class and hierarchy or the state. Market volatility a few months ago sent the VIX to a record for its largest percent change in its 25 year history. Remember, as noted many times on here, volatility always precedes a change in trend. Whether that is climate, financial markets, economics or anything else. Volatility tells us the world is about to change. The world economy and climate are headed for a coming winter as noted on here countless times.
Crashing oil is telling us this is not a financial crisis but rather a massive economic and corporate capitalism crisis. And the crisis is global. Just as I have written it would be countless times over the last decade on here. As more and more of the world reveals itself as I have written it would, it seems that this may be the end of the state control system of corporate capitalism. These articles are some months old but they give an indication of how global and deep this crisis is becoming. It will get much worse.
Hundreds of thousands protest as Brazil collapses. (I’ve written many times over the last decade that Brazil is headed for collapse.)
Russia’s depression deepens (Russia’s heavily commodity-dependent economy is in the midst of a widening depression. War and armaments are propping up the massively fraudulent Russian state.)
Oil companies travel back to 1986 as oil collapses (A long time theme on here is that oil is going to $10 a barrel.)
Saudi Arabia plans 27 billion in bonds. (Remember a long time theme on here is Saudi Arabia and other Middle Eastern oil fiefdoms are headed for collapse.)
Saudi Arabia may go broke. (Just as I wrote would happen many times over the last decade.)
Now let’s turn our attention to gold. I have made quite a few substantially accurate calls on the shiny metal’s major moves in the past. But, the long term price of gold is still appeals very strongly to a class of people who are heavily invested in this system. Because if you own a lot of gold, you were or are heavily invested in the status quo. The largest owners of gold are central banks, oil sheiks, the one percent and the predatory renter capitalist class. They only got that large amount of gold by serving this system. Or more importantly, rigging this system for their benefit and stealing it. They looted the public treasury to get the money to buy all of that gold. Now, they think that gold will protect them as the consequences of their actions come to pass. Believing gold will now protect them is simply the ego trying to bargain with a massively corrupt system for its own self interest. And betting that system is going to maintain some degree of power so that gold is actually worth something economically or monetarily when the dust settles is another belief system. Belief systems are emotional control systems created by the ego. In other words, don’t bet on it. I just can’t see how anyone finds any comfort in holding an asset that is almost exclusively controlled by central banks and economic crooks at a time when their actions are starting to realize their karmic fate. But, we shall let the price of gold speak for itself.
The reality is most people who advocate gold really don’t understand money. Gold is termed honest money by propagandists, shills, dunces and hierarchy. If it’s so honest, how come all of the people who labor away to mine it get to keep none of it? Instead it goes to the people who economically-control and prey upon the people who are mining it. If gold is honest, then why have millions of acres of land been polluted by unethical mining practices as criminals seek it at any cost to the planet or humanity? Nor do those who blow chunks about gold being honest money generally understand anything about economics other than those who have the gold make the rules. That includes the biggest buyers of gold, the ruling elite and central banks. I know a lot of people get upset when something like this is said but it’s true. My intent is not to offend anyone. By the way, it is only ego that is offended. That we live in a world where everyone is offending everyone else should tell you how primitive and unevolved our existence has become under the violence of the corporate state.
One of the best proof points that everyone can see of draining liquidity is that everything is in crisis globally. Including gold, which as noted here many times, is a proxy for central banking liquidity. Steve Forbes is probably the only person I have ever seen talk about this in a level of working knowledge. In the late 1990s Forbes proposed that we peg Federal Reserve policy to $400 gold. If gold fell appreciably below $400, the Fed was too tight. Above $400, it was too loose. This was actually a pretty astute observation and mechanized what has often been horrendous Federal Reserve policy decisions that eventually drove gold into the stratosphere. And as I have noted before, gold at $250 in the late 1990s was foretelling deflation and economic collapse in the U.S., but I don’t want to get off track here. When gold starts dropping appreciably, we can safely conclude in most instances that central bank monetary policy is too tight. Is that comical to say right now or what? After central banks have essentially created tens of trillions of dollars out of thin air, have driven global interest rates to or near zero, and in real terms, well into negative territory, and they are too tight? Yes. Do you know how much money this system would have to print globally to keep the Ponzi Scheme going? It is literally an impossibility. Literally. Central banks are not going to save anyone from anything. As noted many times on here, central banks are likely in their final phases of permanent collapse. All central banks would destroy their respective currencies if they printed the amount of money necessary to stop this crisis. But, then, most probably already have and we just haven’t seen the outcomes yet. As discussed many times, central banks can’t fix what ails the global economy because the issue isn’t monetary. It’s economic. Politicians around the world created this crisis by ignorantly meddling in things they don’t understand because our state and corporate masters needed this to maintain control. And we supported their efforts at creating our own slavery.
The new low stock list has been recently cluttered with gold and silver stocks. Newmont Mining, which is a favorite proxy of mine, hasn’t seen its stock price this low since gold was $250 an ounce. I wrote this would happen leading into 2008’s crisis and that gold and silver were headed for a dirt nap. And those who were true believers in gold got murdered. Now they are back blowing the same bullsh*t. Commodity producer stocks almost always lead the price of the underlying commodities. This is fundamental to the front-running of our monetary system. I don’t give a hoot what someone is writing right now about underlying demand for gold being strong. They don’t understand what is happening in the world. But they will soon enough when they get butchered again. So, that is either being inaccurately reported because of bias and beliefs or is going to change trend because central bankers have lost control. The paper monetization of gold in the futures market has aberrated price to the upside quite substantially. And so has the useless money printing in places like China that has gone on for decades. China bought all of that gold with paper money that was being uselessly printed for a long, long time. So, how much is that gold they purchased actually worth? They purchased it will yuan that is and has been uselessly printed for decades. Look, I’ve noted for years on here that the yuan is worthless. But the Chinese communists just don’t know it yet. A devaluation in the price of the yuan was easily predictable as far back as the late 1990s because of a shift in China’s economic policies. If someone understands economics as a control system or complex system, the global economy is not that hard to figure out. I realize most people are busy leading their lives and doing other things but complex systems, economics and finance are sort of a hobby of mine. So, while you are watching a baseball game, I’m analyzing the global economy. It doesn’t mean I’m smarter than anyone else. What is smart anyway? A made up word because I would argue that our greatest degree of intelligence cannot even be measured. That is, our ability to love, be empathetic, forgive, appreciate people for their difference, know the difference between justice and deceit and on and on. Can you measure that? No. You can only experience our greatest intelligence. That little old grandma who would dote on you and shower you with affection, how much smarter was she than anyone else in your life? Than any politician, banker or CEO?
Anyway, I don’t have my trading system up anymore so I can’t comment shorter term on gold. But as I’ve noted in the past, we could easily see central banks try to re-institute a gold-based trade settlement system again. So, gold could eventually get some sea legs. In the absence of what I would view as a temporary pop, because a gold trade settlement system would collapse the global economy, gold could easily go back to $250 or essentially go to zero if money loses its ability as a trade settlement medium. Again, I don’t want to rehash everything. Specifics and details on all of this are up on the blog and have been discussed many times. But I do want to state that money that is now collapsing in value around the world. This money was used to buy massive amounts of gold. So, if the money used to buy gold is and always has been worthless, (and it has because money is not a store of value but rather a useless medium for the exchage of value itself) although that fact is just now revealing itself, then how much is gold actually worth? Beyond its limited economic value in electronics or whatever, it is too worth nothing just as money is. You think it’s worth something because the people who own all of the gold told you that. They also tell you countless other lies.
I want to highlight this last paragraph in some detail. I got into a very brief discussion some months ago with someone who tried to tell me the stock market was not a bubble. And that people were buying real assets that were backed with real, tangible value. I remarked that some of those companies do represent real, tangible assets but the money used to buy them wasn’t a result of wealth being created, but instead simply being bought with money created without any economic purpose and hence zero value. So, if one could print money endlessly out of thin air to buy stocks, and that process created wealth as Alan Greenspan has so non-brilliantly noted, why would anyone actually work? We could just trade stocks all day. Interestingly, that’s one of the biggest industries in the world today. ie, Trading financial assets. Delusions of grandeur. Well, I can see how Greenspan would support such ignorance because we don’t really make a lot other than money and weapons.
How much are those stocks really worth as determined by money? The answer, in the specific case I gave was zero. The stocks are worth nothing. Because the money is worth nothing. Money is not wealth. Money is intrinsically worthless. It could be peanuts or juju beans or marbles. That includes gold. You can have all of the gold in the world. I will take all of the productive land and sea that produces food, raw materials and the like, all of the factories, all of the intellectual and physical labor and therefore, by conclusion, all of the food, clothing, technology, medicine, shelter, transportation, etc. You can eat your gold, sleep on your gold, inject your gold into your body when you get sick, drive your gold on vacation, narcissistically watch your reflection of yourself in your gold, marry your gold, try to copulate with your gold - as most gold worshippers do, and whatnot. I’ll be happy to eat all of the food, build my castle, have access to the finest health care, drive my Ferrari, own the finest clothes, go to the best restaurants and hire me a harem of thousands of women and thousands of slaves to amuse me. You know, like good capitalists. And I am not going to give you any of my output or any of the world’s labor or wit in return for your gold. Why should I? I own all of the wealth. And how will I pay my harem and slaves who provide me that wealth and all of my riches? With all of the output of my assets. With tangible items that increase their happiness, their amusement, their entertainment, their leisure, productivity and their health. I will pay them in all of the luxuries their labor and wit will provide them from the land, the sea and the creations of their wit and labor. I don’t need money to do that and I certainly don’t need gold. I can pay them in food, entertainment, shelter, healthcare, quality of life and whatnot. You can try to lure them away with all of the gold you want. Good luck with that. They’ll come work for me because I offer them tangible value. That is fundamentally how corporate slavery and capitalism works. Or, for that matter, how any economic control system works. So, again how much are stocks worth in monetary terms? Well, as long as wealth is being created, they are worth whatever that wealth is worth. But the minute wealth is no longer being created, they are worth absolutely not a single dollar in monetary or gold valuations. Do you think any of my slaves are going to leave me for your gold? You offer them nothing but a worthless piece of metal that has just about zero economic value.
Gold is worthless. And so is money. They always have been worthless. And so are all of the stocks denominated in that worthless money. What is worth something is wealth. We are going to see massive worthless money destruction this cycle as political, corporate and banking dunces are taught a lesson by the universe in economics 101.
It’s good to be the king. Not much longer though.