muses of the moment

April 29, 2011

Friday update on gold, silver, US Dollar, and US banks

So…….

Five banks down so far, as the controlled banking collapse continues. Keep in mind that the bank “stress tests” show that US economy must grow more than 2% per year for US Banking system to be stable. US has not grown 2%. Prior growth stats continue to be revised downward and future predictions continue to be downgraded.

Gold closes at $1563, today, with an intra-day high of $1570. Gold going strong in the mist of options expiration and Bernanke’s speeches/meetings this week. Gold didn’t seem to hesitate at $1550 at all.

Silver closed at $47.94, today, with intra-day high of $49.24. Can’t seem to make it past $50, so close to the all time high. Remember the battle of gold at its all time high, $850. Higher silver: just a matter of time. The correction that gg expected this week was only a few dollars in intra-day trading. Had to buy quick. It is clear that demand for gold and silver is very strong.

And then there was the dollar, barely closing above $73, at $73.03. Holding support at $72.80, but seems weak. Breaking below $72 will have major impact. Rumors are that Greek debt will need to be “restructured” (they’re bankrupt) in less than 2 weeks. This could put downward pressure on the Euro, causing the dollar to rise or hold steady. It will be interesting to see how precious metals react to this next European debt crisis. Press releases after close in European trading focuses on their failing banking system, click here. It is a global bank default, no one will be left behind.

The numbers say it all. Dollar is toast, gold and silver trading as alternative currencies and store of value, and US banks still failing although in an orderly fashion.

Hope you have protected yourself.

Latest Letter from Martin Armstrong dated April 28, 2011

Filed under: Economic Confidence Model Cycle, Martin Armstrong — Tags: — totallygroovygirlfriday @ 11:37 am

Click here for Martin Armstrong’s latest letter entitled Passing the Torch to Asia dated April 28, 2011 (8 pages).

Mr. Armstrong is cranking them out this week. It is great! The letter is obviously about the decline of America and the rise of Asia. If you are a reader of Martin, you already are aware of this transition in process right now.

Mr. Armstrong explains how low-interest rates cause capital to move to better environments. Ever since 2000, global money (not just jobs) has been slowing moving to Asia (China and India). With the global economic crisis, that process is just accelerating. With the global banking system on the internet, it takes about less than a second to move money to better returns.

April 28, 2011

James Turk

Filed under: Dollar Crisis, Gold and Silver Investing, Precious metals — totallygroovygirlfriday @ 11:18 am

James Turk via kingworldnews.com gave his thoughts on the Fed meeting, the dollar, and gold and silver. Click here.

The dollar is in trouble and the Federal Reserve has its head buried in the sand.  Washington’s politicians are spending money they don’t have and the federal government’s credit rating is being called into question, I could go on, but you get the point.  We’re at an historic moment.  Years from now we will look back and point to 2011 as the moment in time when the flight out of the US dollar accelerated leading to its eventual collapse.  A simple and safe way KWN readers can prepare for this catastrophe is to own physical gold and physical silver.”

Latest letter from Martin Armstrong dated April 25, 2011

Filed under: Economic Confidence Model Cycle, Martin Armstrong — Tags: — totallygroovygirlfriday @ 9:34 am

Click here for Martin Armstrong’s latest letter entitled Nihon Jishin (Japanese Earthquakes) dated April 25, 2011 (10 pages).

Martin describes his prediction for a major Japanese earthquake, or a series of intensifying earthquakes beginning in 2009. They actually began in 2008, and the most recent one is part of that series. He goes on to illustrate from history that nature (earthquakes, volcanoes, and weather) change economies and sometimes whole civilizations.

Martin also mentions his new book…coming in an ebook form at some point (probably after September). It will be an explanation of his cycle theory, the nature of cycles. Can’t wait to read it! The last part of the article goes into a little detail about the formation of a wave or cycle.

Side musing: gg is also researching that drop in the dollar early this morning and the rumors of a run on physical gold and silver at the COMEX.

Update on Pirates

Filed under: Dollar Crisis, Odds 'n ends, Tangible Assets — totallygroovygirlfriday @ 1:58 am

This post by Bruce Kasting was very interesting. Click here.

A $13 million dollar ransom paid in cash for captured oil tanker. Oil is going to get pretty expensive if our military has to escort every ship. Groovygirl is going to really start worrying when pirates demand ransom in gold and silver. We now know that Middle Eastern rebels, whatever their recent labels, have the ability to be well-financed and probably are. Russia is playing hard ball when addressing this problem.

US media seems to downplay the pirate problem unless it pertains to small recreational vessels with western world citizens.

Greek default, um…..”restructure”, coming soon.

April 27, 2011

John Williams latest update

Filed under: Housing Market — totallygroovygirlfriday @ 12:59 pm

You pay for the detail, but here is the summary from John Williams of shadowstats.com:

– Pending Benchmarks to Retail Sales and Durable Goods Orders Should Show Economy to Have Been Weaker
– Home Sales Remain Troubled

The charts in the subscription detail show that rising home sales the last 6 months have been driven by rising foreclosure sales and not a recovering housing market.

April 25, 2011

US Dollar

Filed under: Dollar Crisis — totallygroovygirlfriday @ 12:03 pm

Jesse with Cafe Amercain had some great updated dollar charts last week. Click here.

Jesse’s chart illustrates that the dollar has broken down from the last consolidation. The other charts show the dollar testing the recent lows from 2008.

It is important to keep an eye on these charts. If the dollar breaks to new lows, it is not good. We know the Fed and the Treasury want a controlled debasement of the US dollar. But the question is; can they control it?

April 23, 2011

Chris Martenson: next downturn drawing near

Another excellent analysis from Chris Martenson of the current problems that could bring the next leg down in this on-going global financial crisis. Click here.

When both big banks and sovereign entities are simultaneously facing twin walls of maturing debt, it is reasonable to ask exactly who will be doing all the buying of that debt?  Especially at the ridiculously low, and negative I might add, interest rates that the central banks have engineered in their quest to bail out the big banks.

This is the major problem. They may be able to print money for a time to cover this ongoing issue, but at some point, even the “last buyer of unsustainable debt” will run out of money creation capability or “investment capability” as per the Fed. We may even be at that point now, when the big banks and sovereign countries will just send the toxic assets back and forth from each others balance sheets depending on what the stats need to look like to get some idiot to give up their capital to buy the maturing toxic debt.

There are two entirely, completely, utterly different narratives at play here. One of them is that the economy is recovering, policies are working, and the vaunted consumer is either back in the game or close to it. The other is that the world is saturated with debt, there’s no realistic or practical model of growth that could promise its repayment, and the level of austerity required to balance the books is so far beyond the political will of the Western powers that it borders on fantasy to ponder that outcome.

If we believe the first story, we play the game and continue to store all of our wealth in fiat money. If we believe the second, we take our money out of the system and place it into ‘hard’ assets like gold and silver because the most likely event is a massive financial-currency-debt crisis.

Which narrative will you believe?

April 22, 2011

Latest Letter from Martin Armstrong dated April 21, 2011

Filed under: Economic Confidence Model Cycle, Martin Armstrong — Tags: — totallygroovygirlfriday @ 3:54 pm

Click here for Martin Armstrong’s latest letter entitled, The Next Wave, dated April 21, 2011 (15 pages). Martin discusses the next wave that begins June 2011 and what it might look like.

So, what does the spring cycle of the K-wave look like?

Groovygirl, we are already sick of this winter phase of the K-wave, long wave, economic cycle. When can we expect the Spring Cycle and what might that look like?

Well….I have good news and bad news. The bad news, it is a ways off. The good news is that winter will not last forever and spring is full of slow, steady growth.

The Characteristics of Spring Investment Cycle (start of the winter cycle was January 15, 2000. It averages 20-30 years. The start of the last spring cycle was June 13, 1949 and lasted until 1966):

  • Fear of return to depression/fragile confidence: right now, every up move is spun as a return to normal growth and recovery (which it isn’t). The spring cycle will be characterized by every downturn becoming a return to full depression (which it will not be). Do not get caught up in the emotions of the herd, know the signs of spring, so you may be ahead of the crowd for the next investment cycle.
  • Gradually increasing inflation: as groovygirl has stated before, she disagrees that we will have a deflationary depression, but instead will experience a hyperinflationary depression. Therefore, the word “inflation” can be misleading. Inflation in this sense will mean the gradual rise in real growth from the production of real things, not the artificial growth or “inflation” of money creation that we are currently experiencing.
  • Slow increase in credit availability: with the increase in real growth will come availability of credit and return of strength and soundness to the global banking/credit system.
  • Interest rates start from very low levels and gradually increase: we will experience a rapid rise in interest rates during the winter cycle as credit is unavailable or very expensive (too expensive for the return on investment). But as soon as the interest rates fall to a new low, after the coming high, it will signal the beginning of the spring cycle.
  • Best investments: stocks and real estate. With low-interest rates, depressed prices, and the potential of future growth, the spring cycle is an excellent time to purchase real estate. Especially, cash-flow real estate that will benefit from the slow, steady growth of the spring cycle. Stocks will also rise, as the economy experiences real growth from increased productivity, not borrowed money, creative accounting, and imaginary balance sheet asset prices.
  • Economy: gradual, but healthy growth. The spring cycle is not the wild ride upward of the 1990’s, but it will be a slow, steady growth.

More signs of the spring cycle:

Interest rate bottom as debt levels reach cycle low

Stock market bear market bottom (the gold/DOW ratio will help determine the stock market low and gold high or the time to sell gold and buy stocks)

Gold high

Gradual increase in employment and business activity. The government will not have to gimmick and spin the stats to make them look good. They will be positive on their own.

Consumer confidence slowly increases in line with growing economy. As people feel more secure in their long-term employment and investment opportunities, they will spend money on wants and needs, instead of saving/hoarding for uncertain times.

Consumer prices begin a gradual increase from very low levels. Since groovygirl believes we will experience a hyperinflationary depression and currency crisis, we will have to use another measurement to determine if prices are really low. Measuring things against the price of gold, silver, oil, is an option. If the USdollar is “revalued”, we will definitely need anther way to compare prices through the winter cycle and into spring. Because of this currency value uncertainty, it is not wise to use this as your primary sign of the coming spring.

Stock prices begin a steady rise and reach a peak at the end of spring. Again, we will have to value stock prices in gold or silver to correctly chart their real value, if the dollar is officially/unofficially devalued during the winter phase. If you are planning to retire during the spring cycle, stock dividends will be an excellent source of income. Just remember to switch to another investment option at the peak of that cycle.

Interest rates rise slowly from historically low levels in line with gradual credit expansion.

Other possibilities during the coming spring cycle:

Spring cycles are usually a time of invention and advancement for public good as real growth moves capital out of hiding and into working for the advancement of society.

Infrastructure is repaired and expanded from the disruptions of the winter cycle. This will probably include energy-efficient mass transportation, alternative energy/electricity, and internet/communications.

Scientific research and exploration advances as government/institutional money moves to research and improvements instead of crisis management. The most advancement will probably be in the biological sciences and nano-technology, with the BRICs taking over space exploration.

In the US and Europe, from a strictly demographic point of view, more of the population will be working/producing, instead of in retirement. So more production in those countries is a given with steady economic growth.

There is a renewed sense of hope and common ideals as a family, nation, or world. The world will become less fractured after the breakdown and wars of the winter cycle, but underlying tensions will still be seen, understood and need to be continually addressed. Think Cold War (balance of global power under the guise of communism vs. democracy), but this will probably be a “cold war” for control of natural resources under the guise of Western religions vs. Eastern religions.

Spring cycles usually see societies fall back into more conservative ideals and ideas (as compared with the previous fall and winter cycles), with those breaking away again in the summer cycle.

Processes that have become decentralized during the winter cycle, will move again towards centralization. But it may not be the centralized format as it was in the previous cycles. Think the fall of the Roman Empire, which after a period of winter chaos, formed into the smaller Nation-States of Europe. Groovygirl is not necessarily talking about national borders moving, but perhaps, state infrastructure becoming more influential than federal infrastructure. Or populations moving on mass and resettling in other areas of the nation or globe, causing investment and infrastructure to reorganize to meet demand.

A shift in global power from the Europe and America to the BRIC countries, especially China/Asia. Although the US will still be powerful, it will be like the shift of power from Britain to America, from Germany/Slavic Nations to Russia in the 1950’s after WWII.

Precious metals will reach a high in price, remain set around that high price as the new normal, or be part of the global currency system. Although, having some physical gold and silver may be a good idea during the spring cycle, other investments, like real estate and stocks, will offer a better return.

Spring cycles generally run between 15-20 years.

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