muses of the moment

May 19, 2010

The action in gold

Filed under: Dollar Crisis, Economic Crisis, Fiat Currency, Gold and Silver Investing, Precious metals — totallygroovygirlfriday @ 2:07 pm

It’s a scary market out there today. This is to be expected during an ongoing currency crisis.

Here is a post from Jesse to give  little insight.

If the trend is broken it will be time to step aside. Until then we sell strength and buy weakness, slowly. For most it is better to take small incremental positions and then just let them ride the ups and downs.

Sage advice. Physical gold and silver is the ultimate currency, it will take hits as other people figure that out.

And from Jim Sinclair’s website (he has said this before): 

Gold will trade in ranges of $100 to $150 a day in the foreseeable future therefore if you do not have a private wire to God as your advisor, be careful trading.

Groovygirl says: The time to trade gold is over. Buy on dips and hold for insurance in the mist of a global financial crisis and global currency crisis.

Side musing: from John Williams at shawdowstats.com, here are the real facts of our economic situation. You pay for the detail, well worth the money. (groovygirl comments in blue)

Market Fears of European Financial Instability Should Shift to Fears of U.S. Financial Instability (This will be fun.)(Real inflation is at almost 10% people, the governments stats are delusional! Those on a fixed income/social security are screwed. This is why you want to NEVER, EVER switch your 401k to an annuity, even an inflation-adjusted  one. Because guess what inflation-adjusted percentage they will use?)

– Perils of “Core” and Seasonally-Adjusted Inflation
(Numbers don’t lie, so the government changes the formula for their own benefit.)

– Housing Starts Keep Bottom Bouncing
(There is no rebound in the housing market. It is stuck, and it will stay stuck until debt is restructured or wiped out.)) SGS- Annual Inflation: 2.2% (CPI-U), 9.5% (

Gold and silver are the insurance against these awful stats. Your house will not keep its value, your social security and fixed incomes will not keep up with real inflation/living expenses, and investors are moving what capital they have left from market to market because there is no safe place in a global currency crisis except physical gold and silver. It may go up and down, but it will still be standing after the other currencies have been “revalued”.

May 18, 2010

Short term impact?

Filed under: Credit Derivatives, DOW and S&P500, Odds 'n ends — totallygroovygirlfriday @ 4:25 pm

Germany has announced that they will ban naked short selling of CDS as of midnight (that is in about 4 hours for US).

Click here. From zerohedge.com (Note sometimes during these news bombs, zerohedge gets hit with huge volume, cuz they are on top of everything short-term financial, unlike F-TV. Try back later if it is down.)

It will be interesting how the markets read this.

Right now:

gold up

silver up

US stock markets down

USDollar up

Euro down

Update: here is a better explanation of why Germany is doing this and how it might/might not effect markets. (From Jesse’s Cafe Americain.)

May 17, 2010

GEAB N45 is out

Filed under: Bailout Nation, Fiat Currency, The Dollar Crisis, The Financial Crisis — totallygroovygirlfriday @ 12:01 pm

The European trend report from GEAB N45 is out.

Click here.

Groovygirl really likes this report because it gives people in the US, the real situation in Europe, not US financial TV’s version.

Summary:

The nations of Europe have just committed to a new Euroland through the latest crisis. The Euro will rebound to $1.45 in the coming months. Although the people may not be that trilled since no one asked them about committing billions of Euros and their future tax dollars to the new United Euroland. (We in the US understand and sympathize).

Britain is next on the chopping block, as they declined to join in this latest Euro plan. They are on their own and it doesn’t look pretty at all.

More of the same….waves of economic crisis (as this new plan takes effect) and citizen violence (as people realize their government reps just made major decisions without them on May 9th).

Now moving toward GB and US.

May 16, 2010

inflation.us

National Inflation Association has a new documentary video called Melt-up online now.

Move past the dramatics and learn what is really going on, lots of good stats. Talks a lot about Obama wrongdoing, groovygirl says, same outcome with Republicans, don’t be fooled. We are past political parties making a difference.

Click here.

Groovygirl’s notes:

About 27 minutes they start talking about the JP Morgan silver short manipulation and the silver market in general. Very important information. SLV (the ETF) comments at 31 minutes.

Greece crisis at 33 minutes.

Impact of unsustainable debt at 36 minutes.

Reason you should store food and grow a garden: 41 minutes.

At 43 minutes: there will probably be enough food, but not enough money to buy it.

At 45 minutes you hear Nixon’s speech where he announces the “temporary” suspension of gold conversion of the USDollar. Be aware that something soon may be announced as “temporary”, but will be morphed into permanent. Assume it will be for forever and adjust your investments accordingly.

At 49 minutes they talk about how every creation of dollar of debt creates a lower and lower amount of GDP. This is discussed in-depth in yesterday’s and the day before’s posts. This is called debt saturation and it is when currencies breakdown and the “waterfall effect” happens (as Martin Armstrong would describe it).

20% of the people think for themselves. Are you part of the 20%?

The takeaway here:

Silver is cheap, debt is unsustainable, hyperinflation is inevitable.

Don’t panic. Be prepared.

May 15, 2010

Latest Letter from Martin Armstrong dated 5-14-10

Martin Armstrong’s latest letter dated 5-14-10 (7 pages).

Martin Armstrong talks about the May 6, 2010 drop and the “waterfall effect” in currencies.

Click here. (better version uploaded now)

I have to say that I am confused by Martin’s statement that there will be no depression. As you know, groovygirl agrees with John Williams that there will be a hyperinflationary depression, high prices, high DOW, no debt availability, thus a contraction in economic growth. Not a depression in the sense of 1930. Perhaps he means this and just hasn’t stated it as plainly as I need to understand. Or perhaps I am missing something here

Everything else Martin says, especially about the global debt crisis and it’s effect on currrency confidence falls right in line with groovygirl’s thoughts on the situation. Perhaps when his book comes out, it will be the whole picture.

The good thing is that gold is a good place to during a currency crisis, whether there is a official depression or not.

Groovygirl also completely agrees with Martin regarding this: if countries (the entire globe) do not restructure their debt, it is all over.

Taleb tells it like it is

From zerohedge…..click here.

Nassin Taleb, piggy-backing on Chris’ thoughts on the debt Ponzi scheme now worldwide from Wednesday’s post, offers his advice for investments. Remember from yesterday, we now understand that all debt will default, the game they are playing now is to keep the interest payments coming. They must sell the T-bills to get the interest payments. No t-bills, no interest payments, end of Ponzi:

Taleb’s advice: stay away from Treasuries (especially long-term), avoid both the euro and the dollar, have a collection of metals and agricultural land exposure, and “use the stock market as something for entertainment not investment.

Groovygirl could not agree more. The very unfortunate thing about Ponzi schemes, they unravel very quickly.

Side musing: there will be a window of time where long-term US T-bills will go up and then default. If you chose to invest as they rise, fine, but get out before the default. This may be a very quick timeframe. If you don’t want to risk it, buy gold and silver and Taleb’s other suggestions. They will go up during this time too.

Side-side musing: right now we have a different countries unable to make interest payments and we are asking others to make those payments for them. This does nothing to ensure or enable that they can make payments in the future. We will run out of “other’s people’s money”.

May 14, 2010

Latest letter from Martin Armstrong dated 5-6-10 on the Greek Crisis

Martin Armstrong’s latest letter dated May 6, 2010 entitled, Greek Debt Crisis: The Preview of What Is To Come (5 pages). Excellent summary.

Click here.

Some tidbits:

Martin Armstrong states what all who read this blog regularly already know, selling debt or printing money is inflationary and does not solve the debt problem. He states that the vast amount of capital bonds will be wiped out. He has a charts showing this same wave in the Great Depression.

Martin states that what made the Great Depression so great was not the falling stock market, but the complete wipeout of capital on a global scale.(groovygirl: it took 10 years to rebuild capital just in the US, so to move on in economic development (for other countries it was longer).

With the crisis overseas capital will fly to the safety of gold, and also USDollar and USDebt (for the moment).

If you are in international business, get out of the US as capital controls/laws will drive your customers elsewhere.

He comments on the 1000 point drop on May 6th.

Martin’s parting words: “Hang on. It’s going to get nuts.” I think that says it all.

totallygroovygirl says: you are hunkered down and your capital is protected in physical gold and silver?

Warren Pollock comments on Martin Armstrong’s Greece letter. Good perspective. Click here.

Side musing: click here for a non-media view of the oil spill. This is the worst environmental disaster in history. Check websites, not mainstream media for updates on the impact. This will cause major problems for the United States and Mexico. If they do not stop this and it hits a main oceanic current, the effects will be worldwide. There is no acknowledgment from anyone of the impact this will have.

Side-side musing: 4 banks down so far.

May 13, 2010

Martenson’s overview of the current crisis

Chris Martenson has an excellent overview of the current economic crisis, debt, gold, and when to sell gold.

Click here. This is a big-picture look at this situation that groovygirl completely agrees with.

The euro zone bailout, unlike its US counterpart, does not create vast quantities of new money out of thin air (as did the MBS purchase program by the Fed) but instead seeks to ‘solve’ a debt problem by creating new debt.  Many people have come to the conclusion that this solves nothing and, worse, it exposes for all to see the Ponzi-like character of the modern debt-based money system. (groovygirl: our current debt-based system has turned “ponzi” because it has expanded too much for the profit from real production (or lack of) to ever create enough to pay back the whole debt.)

The dirty little secret of banking is that they have no interest in seeing the loans they make get paid back. All they want is the interest payments to be made.  (groovygirl: cashflow keeps the Ponzi scheme going, a breakdown in cashflow exposes the Ponzi scheme.) As long as the interest payments are being made, it doesn’t really matter how large the outstanding loan balance is. That just gets rolled over.

And this:

The twin pillars of Keynesianism, official deficits and monetary inflation, are being tried on both sides of the pond but they are not working as they have in the past.  Debt saturation has sapped the ability of either policy to work and, because of this lack of traction, you can be sure that additional financial crises lurk in the shadows ready to pounce.

The odd part in this story to me are how few people, especially finance professionals that should know better, seem to really understand and accept the idea that the game has fundamentally changed.

May 12, 2010

Gold on the rise again

Gold hit new highs in overnight trading ($1250). When gold rises, it is a sign that confidence is being lost in fiat currencies. It is the ultimate currency.

When global governments refuse to act responsibly toward their currency, the people will create their own currency. Click here for more info on European run on gold coins.

Click here. Continued extreme stress on the liquidity markets….worldwide.

Gold high today in NYC trading…$1249. Here is a chart from Jim Sinclair’s site with some new support/resistance numbers.

May 11, 2010

Latest letters from Martin Armstrong-May 2010

Two letters released:

Click here  for Sometimes the Lunatic Fringe Does Get It Right (11 pages). Excellent paper describing historical hyperinflation and the ideas of the fringe. Martin brings in the idea that printing money is not directly related to inflation. Which is true. It must have the match of loss of confidence and thus velocity to translate that extra paper money into the fire of hyperinflation in prices. 

Groovygirl doesn’t unusually expand on this point because it is very hard for someone who has not lived through a hyperinflation to understand how a nation can lose confidence in a currency and try to get rid of it as quickly as possible (very high velocity of money). People in the US just can’t get their arms around that concept. To them the dollar is something to be saved if the economy is unstable, not spent.

People can’t imagine losing confidence in the dollar, what would we use for money? They do not understand how money will seem worthless and any tangible assets (gold, silver, food, water, household items, liquor, survival gear) would be preferable. Or if you need to get a service, you would use whatever cash available to do it now for fear the price would be double the next week/month and you could not afford it. We will witness this.

Martin is not confident that the “out of the box” solutions needed for this currency crisis will be understood, discovered, and put in place before disaster, because the current power wants to keep the status quo. Groovygirl wholeheartedly agrees.

Click here  for The Money dated 5-4-10 (6 pages). Talks about inflation and deflation and how these terms and debt and taxes are relics from the days of the gold standard. Martins says we need a whole new currency system based on the new global conditions. He also states all sovereign debt will default.

Side musing: gold hit an all time high of $1235.

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