muses of the moment

October 16, 2009

Martin Armstrong’s latest letter Christiaan Huygens The Father of Cycle Theory

Click here to view Martin’s latest letter dated October 15, 2009 (11 pages).

October 15, 2009

Saving for a rainy day

If you read my blog regularly, you know that I suggest to stop putting money into your 401K and start investing in gold (if you have lots of money) and silver (if you have not so much money) for retirement.

But what about those people who don’t have any money to save. Here are my suggestions for “saving” for a rainy day when you don’t have any extra money.

Some things are short term, some are long term.

Buy a few extra cans of food and toiletries each week/month and start filling a pantry. Even if it’s just one extra thing. It may take a while, but it’s better than nothing. Buy some canned meat/fish one week, and canned vegetables/fruits, the next, and so on to rice and soups. Have a variety available and buy things you like.

Plant a garden (or go in with a friend, if you don’t have access to land). If you are in an apartment building, plant in pots and containers or on the roof. There may be a community garden in your neighborhood or start one. Fresh food is expensive, try to plan to have some on hand next season. Seeds and dirt are cheap. Grow inside during the winter. Try a sunny south facing window or grow lights are available at the hardware store. Plant what you like to eat.

Preserve your food from the garden for the winter, canning, freezing, and drying. Lots of books at the library about different ways to preserve food.

Join a local food club or CSA. More and more people are getting together to buy in bulk, not just organic food, but all types of food.

Become friends with your local farmer, they hang out at the local farmer markets. They, just like the grocery stores, have produce that is very good, but not “eye-appealing” for one reason or another. Ask if you can buy at a discount or just take the extra unsellables. They give you too much….preserve.

Only stock up on the necessary things you will need. This is not consumerism, it is called being prepared.

Don’t forget you have these items stored away, use them when you need them. Then, replenish when you can.

If you will be choosing between paying the electric bill and eating, imagine what a better position you will be in, if you had food saved for a month.

Save food and toiletries for a period of sickness, unemployment, natural disaster or just a time of low funds. (I suggest storing some drinkable water for the natural disaster possibility.)

Having even a week of food stored will give you options in an emergency. Options will give you more peace of mind.

Side musing: silver is $17.70 right now. If you can save $20.00 a month and buy a silver coin each month, you will thank me in 4 years. (If you can only save $5 per month, buy a silver coin every 4 months.)The USDollar is being debased, silver coins are an easy way to protect the purchasing power of a small savings. Start today doing what you can.

Side-side musing: if you are not blessed with a great-grand mother to teach you how to cook on a very tight budget, check out Clara, Depression Cooking with Clara, on youtube. Click here for the main page, then chose a season to watch for free. Lots of good ideas for under a dollar per serving. If you have more funds, add more to the basics she presents. Lots of great stories in the mist of the cooking lesson.

October 14, 2009

Where should I invest? Gold, silver, commodities

Sounds simple enough.

It is. We are in the middle of a 20-year bull market in precious metals and commodities. The USDollar is being devalued on a daily basis, making stocks move sideways in real terms. Physical gold and silver keep their purchasing power in a deflationary or inflationary economic climate. When paper, that’s stocks and fiat currencies, are unstable, investors flock to tangible assets like land, food commodities, precious metals, non-precious metals, and oil and gas. 

Excerpts from some sites I visit with gold predictions:

Jim Sinclair:

Alf (Fields) says triple in less time (to $4,000 in 4 years). (Martin) Armstrong suggests the possibility of a fivefold increase in less time than the article suggests. ($5,000 in 4 years)

I (Jim Sinclair) am convinced that gold will trade at a minimum of $1650 on or before January 14th 2011.

Gold price ’set to double in four years’
Gold prices, which hit record highs last week, could nearly double again in the next four years, according to a report to be published tomorrow.
By Garry White
Published: 11:06PM BST 10 Oct 2009

 

Hi Jim,

I have $1089 Gold as our next resistance. We are getting close to October 25th.

How do you see Gold playing out at $1089:

1) A back off to $1024 or less?
2) $1089 is obliterated in short order?

I know it all depends on the US Dollar and $0.76 seems to be a line in the sand.

CIGA S

Dear CIGA S.

Alf Field’s has refused to give this interim numbers in the best interest of those that have benefited so much from his wisdom. He is not withholding for a price, but rather because he rightly believes that any trading in this market has the prime probability of taking a member of the public out of position at just the wrong time.

You have read Armstrong who has made it clear that when it all unravels, it will be in but a few days that this occurs with gold promptly trading at $1224, $1650 and possibly into the multi-thousands.

Yes, things are that bad, camouflaged by MOPE to a degree never witnessed in history.

Now to your question.

Yes, so many people believe $1084 is meaningful that it must have some degree of meaning.

In the grand scheme of things, it has no more meaning than 34 similar points on this journey from $248 to above $1050. Why must you trade when you know the gold price is going to a minimum of $1650?

Do not gauge price in light of the timing of 27 days to go. Things can easily happen sooner than later. This countdown of days is for the purpose of keeping all readers focused and committed. It is based on knowledge, but nothing can be set in cement to the second.

You must see that international confidence in the US dollar is waning at an accelerating pace. Statements and interventions by the government only serve to bring more attention to the fundamental weakness of the currency in question, now the US dollar.

Recall the intervention in the Swiss Franc that got all the press’s attention, but only failed?

The carry trade is like a rampaging virulent disease once it attacks a currency. This is an added negative to the US dollar.

It is going to be a very cold winter for the US dollar.

I must assume you are NOT using leverage as it is suicidal in this gold market.

In your question, the last line has already given you the answer.

Your friend,
Jim

 

Jim Sinclair’s Commentary

What is Mr. Rogers predicting, a commodity boom or a paper currency crash? I will go for the latter.

Either way this is great news for Africa, especially Tanzania.

Add to that the fact sub Sahara Africa is becoming in the main the safest place on the planet geopolitically and Africa wins.

In the early 90s Frank Vogl and I wrote a book titled “Boom” that featured the emergence of China. Now comes the emergence of Africa.

Jim Rogers Claims 20 Year Commodities Boom to Replace Financial Crash

Just to let you know, both Jim Sinclair and Jim Rogers have been making these predictions for several years (when gold was less than $300), while gold and commodities have steadily gone up. It’s just now that the financial crisis has imploded everything else, people are actually listening.

 

October 13, 2009

The Fed wants the US Dollar Dead

Here is more information you will not see from the F-TV talking heads:

Click here for the whole article from Zero Hedge. LOVE this site. This is the information you need to invest wisely…not CNBC.

A clip:

By purchasing $40 billion in SDRs virtually overnight, what the Fed has done is to increase the value of the entire basket pro-rata, while in the process reducing the actual value of the dollar (which is a weighted constituent of the SDR basket). This was an operation to reduce the dollar’s value: pure and simple. In many ways it explains why the DXY has continued its straight one way decline since the beginning of September, when many pundits assumed the market was finally going to tank on profit taking after Labor day. By performing this dollar adverse transaction, the Fed sent a loud and clear signal what the Fed was going to do going forward vis-a-vis the i) dollar and ii) its derivative, the stock market.

And what is worse, this is not a roundabout or circuitous way of devaluing the dollar: this is head on intervention. It is one thing to print trillions of MBS and Agencies and to monetize Treasuries, where one could say Tim Geithner’s claim that the U.S. is for a strong dollar, and the dollar is only weak as a function of supporting housing prices. That could potentially fly as an explanation. However, when the Fed is actively and purposefully destroying the dollar’s worth via transactions such as material SDR purchases, then it truly demonstrates Geithner’s statement as an bold faced lie to the American public. When will Mr. Geithner be finally taken to task for his repeated fabrications of reality and intent?

The Government believes they can control this financial crisis. They can, until they can’t. (In the mist of their trying, they will kill the dollar and any investment in dollars.) Be prepared as there will be no warning when they lose control. Could be tomorrow, could be 7 years from now. Result….hyperinflationary depression.

The government understands that their debt to China (and the world) and their debt to you (in the form of future social security payments and Medicare) will be CHEAPER if they devalue the dollar. Your social security check will be the same, but worthless to buy anything. So, technically, the government will not “break their promises”.

First step, devalue the dollar, second step change the inflation formula (so they don’t have to raise SS payments in line with real inflation). The government is doing both these things. This is happening now, prepare yourself and your family now. Start educating yourself about investments that will protect your dollar’s purchasing power; physical gold and silver are a good start.

The government is in a position where they gain nothing by a strong dollar, they will continue to print money. Watch what they do, not what they say.

Side musing: The dollar index will have to rise above .86 to break the trend downward (going on since 2001). This morning (10-13-09) it fell below .758 (in Asian trading), up to .761 in early market trading.

October 12, 2009

Pension Funds

Investing in this financial crisis….

Pension Funds are having a hard time. This will get worse. Do not count on your pension fund for any part of your retirement.

Click here for the whole article.

This article not only tells us the story about pension funds, but 401Ks, Roth IRAs, and Social Security. DO NOT DEPEND on these traditional retirement plans. Start saving and investing for yourself today. Buy gold and silver for capital preservation.

This is a new economic-financial landscape and these traditional formulas are not the best option moving forward.

Here is a snippet from the article: Bolded are groovygirl’s comments/opinions.

More Risk or Lower Returns

 This is the dilemma confounding pension funds as they emerge from the wreckage of the financial crisis: If they shy away from riskier investments, they would be settling for lower returns that leave future shortfalls unaddressed. But by aggressively pursuing the higher rates of return they need, pension funds increase the chances they will be burned again by investment bets gone bad. (They will get burned again.)

 “State pension fund directors face enormous pressure trying to recover their investment losses. It will be tempting for them to consider investments that promise a high rate of return,” said Sue Urahn, managing director of the Pew Center on the States, which plans to release a report on pension losses within weeks. (Look for this report.)

 Traditional investment strategies, which rely on stocks, haven’t fared well in recent years. To meet their obligations to retirees, pension funds tend to assume they will earn an eight percent return on investments each year. (Net of inflation, the stock market has NEVER earned this percentage return. If your fund is invested in stocks, they CAN NEVER earn this return. It is a Ponzi scheme.) The stock market, as measured by the Standard & Poor’s 500-stock index, is actually down 32 percent this decade.

 Like many states, Maryland had begun moving money from stocks into hedge funds and private equity (Clue in…these funds invested in the stock market, they will NEVER earn a higher return than the market.) before the financial crisis. The goal was not only to earn a higher return but to diversify the investment portfolio. Should stocks sink, the thinking went, less traditional investments might hold up. (A 5-year old would know better. If the market dies, all derivatives of the market die, too.)

 The financial crisis offered a shocking retort. (No kidding.) Nearly all investments, save for government bonds, tumbled at the same time.

 Yet Maryland is now continuing its shift away from stocks and into nontraditional investments. (I wonder what those “non-traditional” investments are.) Pension officials argue they have little choice.

 “How do I act in the new environment? There aren’t any ready answers for that,” said Mansco Perry, chief investment officer for Maryland’s pensions. “But I have difficulty throwing away 30 to 40 years worth of knowledge and practice and say that doesn’t work anymore.” I would say Mr. Perry needs to study economic history at least 100 years back and ditch the last 40 years…it’s not working for him. We are in the winter phase of a 100 year K-wave cycle. Invest strategies from the summer and autumn cycles….do not work.

 Some pension funds are also continuing to engage in other investment practices that got them in trouble during the crisis.

 One such trading technique is called securities lending. In this transaction, a pension fund lends a stock it holds to a hedge fund and receives cash in return as collateral. The deal is meant to provide a twofold benefit: The pension fund can make money by investing the cash collateral and can continue to benefit from the stock through its dividends and any appreciation in its value. (This is still going on, it will break the pensions the next leg down.)

 Before the crisis, states committed billions of dollars to this practice. But when the credit markets seized up last year, pension funds got stuck. They could not access the investments they made with the cash collateral. Some had to sell off other investments at a loss to pay retiree benefits.

 California’s pension fund lost $634 million from securities lending as of March 31, but the total could reach $1 billion after a full accounting is done, according to a report from the system’s consultant, Wilshire Associates. Still, the pension fund says it remains committed to the practice because it boosted returns in the two decades before the financial meltdown. (As I said above….what worked before, will not work now.)

 Pension funds have also been aggressively pushing into real estate and troubled mortgage securities that were crushed in the crisis. California’s pension fund is putting $2 billion into buying these toxic bank assets. Financial analysts say the prices for these assets have fallen so far that they may be a better bet than in the past. But the crisis showed how unreliable these investments can be. And their prices may not yet have hit bottom. (No, they have not hit bottom.)

 In August, California’s pension fund took a similar gamble by investing $463 million in shopping centers across 17 states and the District of Columbia, though many experts forecast a prolonged slump in commercial real estate. (This is the stupidest investment I have ever heard of. California pension fund and the whole State is BROKE, they just will not admit it. Pension funds can use mark to market accounting to make their investments look better just like the banks do.)

 Even if these strategies succeed, the shortfall may still be insurmountable.

Do not be fooled, start taking control of your own retirement savings account outside the system of pensions, 401Ks and the social security system. Learn about investing in the winter cycle. Read and educate yourself.

Yes, the stock market is up, but I would like to mention 2 facts that you will NEVER hear from the talking heads.

  • The recent run up in the stock market has been the lowest volume ever…that’s manlipuation.
  • Insiders have been selling (dumping stocks) all summer. That means they are using the artificial rise in the market to GET OUT. Please, do the same.

Side musing: There is a disturbing trend happening lately. Companies are declaring bankruptcy to make the sale of the company more attractive to a buyer. Prior to 2008, companies were up for sale because their pension funds had so much money sitting in them. Now they have to shed those liabilities to sell. If the market doesn’t get your retirement fund, bankruptcy will.

But, groovygirl, what about the Government’s National Pension Fund that’s to guarantee pension funds of companies that go bankrupt? First, they guarantee a portion, not 100% ,and they will go broke just like the FDIC will.

There will come a time (and it may be 25 years away), when the government can not print, borrow, or steal more money and will have to decide whether to bailout the big banks or the FDIC (your bank deposits), social security, medicare, and the bankrupt pension funds. Guess which one they will choose?

Or the dollar will be worth so much less that the $1000 that would have paid the rent now, will not buy a nice meal out.

October 10, 2009

China did what US will not.

Here is an excellent article explaining how China has changed the rules of the game.

Click here.

This is a very important development that will never be covered by the media (in an accurate way).

October 9, 2009

Should you buy a house right now?

Filed under: Dollar Crisis, Economic Crisis, Good Debt Bad Debt, Housing Market, Hyperinflationary Depression — totallygroovygirlfriday @ 8:27 am

This is an individual decision, but here are some things to consider. This is only groovygirl’s opinion, you must make your own decision and live with that decision.

Housing prices will go down more, we have not hit bottom. We will not start to hit bottom until at least 2013. So, if you need to sell between now and 2016, put your house on the market.

Housing prices will go down more, we have not hit bottom. I believe we will not start to hit bottom until at least 2013. So, if you want to buy a house, wait.

Will interest rates go up? No, not for houses, the government will keep interest rates low (and create other incentives), especially for housing for many years to come (even after the housing bottom). The housing market is still in free fall, they know that.

Will banks restrict access to mortgages? Yes, they are doing that now, it will continue. I suspect the government will  be more involved in direct lending to home buyers to keep the housing market from complete collapse over the next 5 years. Cash is king when buying a house for the next 25 years. Save money and make a big downpayment…no matter what.

Should I buy right now? No, unemployment will get worse. Do not buy a house and be stuck….not being able to sell and not being able to move to a better employment location. The ability to move with the jobs is a better option than having a house right now. The cheapest house is not cheap, if you can’t make an income in the area. Just ask Ohio and Illinois.

Isn’t a house an investment? NO…it is a liability, especially if you can’t get your money out by selling for the original price paid or at least the loan amount. A house is a place to live. You can make it a home, but it is not an investment anymore.

If I buy now, won’t housing prices rise eventually? No, this is the winter cycle of the K-wave. The number may go up, but the value of the dollar will go down. Real estate will not produce the return it did during the autumn cycle. There are better investment options for the winter cycle.

Do I have to give up the American Dream of owning a house? No, just postpone and save for it. Cash is King and debt is to be avoided like the plague for the next 10 years (at least). Otherwise, you run the risk of getting a house and then losing it plus owing money.

Click here  for more information on the dropping price of rents. This is a general economic stat. Different areas of the country are not impacted the same.

If you do decide to purchase a house right now, make sure you will not have to sell or move (because of a job or any other reason) for at least 10 years. You will lose money otherwise.

This is what the next 10 years look like, the next 5 being the worst:

  • Unemployment will continue to rise.
  • Housing prices will continue to go down.
  • Hyperinflation (collapse of the dollar) will occur.

The bottom line…if you buy a house in the next 5-7 years, wait for the bottom of the housing market, put between 50-100% cash into the deal (but this should only be 35-50% of your total net worth), don’t settle for anything over 3% fixed interest,  and take a lawyer to the closing.

If you are threatened with foreclosure…hire an attorney to demand the note holder face you in court and don’t move until the sheriff shows up.

October 8, 2009

Martin Armstrong’s latest 3 letters October 2009

There are 3 letters and one article out today.

Most important:

Deflation or Inflation:Which is More Likely? Martin Armstrong dated September 29, 2009 (5 pages)

With the continuing of the printing press, inflation is more likely.

Three Year Old with a Pocket Calculator Can Figure Out We are Screwed Martin Armstrong dated October 1, 2009 (17 pages)
The above article has interest rate and bond forecasts. The government is more interested in debasing the dollar in order to reduce government debt. We are looking at a collapse between June 11, 2011 and October 1, 2015. See article (page 13) for more info.

Conspiracy Theories Cloaking Reality Martin Armstrong dated October 5, 2009 (9 pages)

New Yorker article on Martin Armstrong and the Pi Cycle

Interesting that after a media black out for the past 10 years, the New Yorker goes into prison to interview Martin and then calls zerohedge (.) com a conspiracy supporter.

October 7, 2009

Hyperinflation….stage 2

Voltaire said, “Paper money eventually returns to its intrinsic value – ZERO”. No paper money has ever survived in its original form and the dollar as well as most other currencies will not survive this time either.

I highly recommend this article. It explains the 3 stages of hyperinflation. It is coming to the US and UK. There is no stopping it now. I suspect we are really in stage 2 and the Government is buying its own paper through central banks (and loaning them the cash) and through off-shore banks.

Very important article, if you read nothing else during this economic crisis, read this and take action. Click here.

By the time stage 3 rolls through, it will be too late to move your money out of dollars. Do that now. When the dollar index is at .52, it’s too late.

Hyperinflation and the US currency collapse has less to do with the state of the economy in the traditional sense, it is a loss of confidence in the currency and the government backing it.

A quote from the above linked article (I have said this same thing many times before):

Gold will not fail to go up from here. If there has ever been a clear investment situation, this is it. A financial system built on quicksand will see to that. Also, hyperinflation and money printing will see to that. Some people ask, what about if we get a deflationary collapse instead, won’t gold go down then?

I see the probability of a deflationary collapse as very low. Governments will not stop the printing presses. But even if I were wrong and we get a deflationary collapse, gold is still the best protection.

Because in a deflationary collapse there is absolutely no chance whatsoever that the banking system will survive. No loans or derivatives could ever be repaid in a deflationary asset implosion. This is why gold is a win-win situation whether we get inflation or deflation.

Side musing: Jim Sinclair’s countdown for the beginning of the end of the dollar is 34 days….that is when China will do what they have been threatening to do.

Although gold jumped yesterday at the news that other countries want to trade oil in non-dollars, this is old news. It will happen, but the dollar has many other pressures on it besides the oil issue. The USdollar is dead…get out now.

Be very careful about trading dollars on the currency exchanges. Yesterday’s news (and its impact) just goes to show you how volatile this global currency situation is.

The US Mint has curbed production on several coins for 2009, because they can’t get the physical metal to make coins to keep with demand. If you have money, buy gold. No money, buy silver.

October 6, 2009

The Gold/DOW Ratio

Filed under: DOW and S&P500, Economic Crisis, Fiat Currency, Precious metals, The Financial Crisis — totallygroovygirlfriday @ 12:55 pm

The real numbers…

The economy is not getting better and the stock market is not getting better.

It is an illusion. Do not be fooled. And insiders are still selling stocks.

Regardless, take a look at the following chart whenever you begin to entertain doubts about your own analysis of the perilous winds and waves that are lurking ahead. The ratio of the Dow Jones Industrial Average to an ounce of gold is the benchmark, the touchstone, against which all gains in the Dow may be compared to a store of value to determine how “real” or substantive those gains might actually be. It is a simple but effective method of cutting through the clutter and noise created by the snake oil salesmen of our time.

The Dow may be rising but its rise is a subterfuge, an illusion, a cup of water that vanishes into the ether before it can bring comfort and relief to a thirsty, longing soul. The Dow Jones/Gold ratio is now below the level of 10 – the last time outside of 2009 that it was trading at this level was FIFTEEN YEARS AGO. Another way of saying this is that paper is losing value against the ancient metal of kings and has been doing so in a trending fashion since 1999 or for ten years.

It could do this in a number of ways. For example, gold could shoot to $1,500 while the Dow moves down to 9,000. Or, gold could move to $2,000 while the Dow shot up to 12,000 as inflationary pressures saw money chase equity prices higher. In the event of a deflationary paper equity collapse, the Dow could drop to 6,000 while Gold hovered around $1,000.

Regardless, the point is that the TREND in the ratio is decidedly DOWN and no amount of monetary-official chicanery and spin by feckless political leaders can do anything to alter that sobering reality. This is the hard reality that the debauchery of the U S Dollar has wrought and the future that the carry trade has in store for the US.

Click here  for the chart and more information from Jim Sinclair’s website.  Get out of the stock market and buy physical gold and/or silver. Use the Gold-Dow ratio to determine your actual wealth in the stock market and how much you have really lost.

There will be a time to sell gold/silver and buy the DOW (or something else), now is NOT that time. Use this ratio to determine that time, in the meantime…sell equities.

These are the tools you may use to determine commodity and investing cycles. Your broker will not tell you these things even if he understands it. He makes his money from fees associated with the buying and selling of equities, not physical gold/silver.

Update, December 2, 2009: Gold is now outperforming the S&P500. One ounce of gold is at $1215 and one share of the S&P500 is at $1109.

Side musing: if the real value of the stock market does not move you to action. Try this……preserve your capital for the coming currency collapse, we are in the first stage.

The prerequisites for hyperinflation are a deflationary or non-inflationary recession/depression leading to major government deficits. The government issues debt paper to finance the deficits. Initially investors continue to buy the government bonds especially as in the case of the US with the dollar being a reserve currency. This is the first stage of the money printing cycle. Egon von Greyerz, Managing Partner of Matterhorn Asset Management

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