Market Safe Havens Rapidly Dwindling 14 comments
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Things are about to get very tricky.
Throughout the last year the regulators—the Federal Reserve, Treasury Dept, SEC, and even Congress—have done everything they can, including some things they weren’t legally authorized to do, to try and stem the deflationary tide of the US housing market.
However, ALL of their efforts have failed. The Case-Shiller Home Index—a general measure of housing values in the US—has fallen 18% from its June 2006 peak. And if anything, the drop is now accelerating—the index fell 8% in all of 2007… it’s already fallen 7% in the first nine months of 2008.
It’s now getting to the point that the Fed has no other option than hyperinflation. And by hyperinflation, I mean the dollar as a currency is toast. As disturbing as this option sounds, it’s already happening. US banks and money managers borrowed an average of $188 billion PER DAY last week. Altogether, the Fed leant nearly $1 Trillion in a mere five trading sessions.
I realize some people are visual. And these are enormous numbers to picture. So perhaps the below chart will put this all into perspective. It’s a chart of the US Adjusted Monetary Base.
To put this recent surge in context, consider that the little bump in March 2008 was the Fed pumping the system during the Bear Stearns (BSC) deal. That slope in July 2008? The Fannie Mae (FNM) / Freddie Mac (FRE) crisis. Compared to the horrific spike that is September 2008, both of these periods appear positively rosy.
Please understand, I don’t mean to be all “doom and gloom.” I would much rather write you a glowing piece about an “incredible opportunity” to double your money in some stock or another. But I value honesty and transparency above all else. And for me to claim that everything is ok and that you’re going to make a ton of money this year and the next would be completely misleading. In fact, anyone who tells you they can help you make a fortune in this market by buying stocks is either lying or doesn’t get the real implications of what’s going on.
In simple terms, today’s markets are the most difficult, volatile, and treacherous I’ve seen in my entire investing career. Many of my friends who manage money or head up trading groups are genuinely scared. I’m not saying this for emotional impact. We are literally on a razor’s edge here. And the number of safe havens is rapidly dwindling.
The best thing in this environment is to take a portfolio approach to investing. With the printing presses going nuts the dollar is in danger of dramatic devaluing. So some foreign currencies—particularly the Swiss Franc or Japanese Yen—are worth considering.
You also MUST have some exposure to gold and gold stocks. Foreign government bonds from fiscally conservative countries are attractive to some degree as investors begin to digest just how dollar negative these latest events are. And as far as stocks go, find businesses that provide services or products people will need regardless of economic conditions: alcohol, fast (cheap food), tobacco, etc.
But whatever you do, protect yourself now. This bailout deal has give us time to put some moves in place. Once the bailout hits, there’s no telling what will come.
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This article has 14 comments:
Real-time quotes at yahoo have not changed in at least 10 minutes and may be down. Spreads on options are out of this world. It may be possible that trading has been halted.
Anybody able to add some facts to my observations/speculati...
SMN UltraShort Basic Materials ProShares22.92%
EEV UltraShort MSCI Emerging Markets ProShares20.96%
QID UltraShort QQQ ProShares10.34%
SIJ UltraShort Industrials ProShares9.86%
DGP PowerShares DB Gold Double Long ETN9.73%
SDS UltraShort S&P500 ProShares9.64%
IEF iShares Lehman 7-10 Year Treasury Bond Fund9.47%
TWM UltraShort Russell2000 ProShares7.08%
Options on GLD provide more leverage than double gold. More like 10:1 or so.
We shall recovery quickly and there will be the beginning of a bull in 2013. Act like leadership and gentlemen. We'll get rid of the corrupt in Washington and repair the economic damage. But in-between be prepared and help your neighbors. Become politically active. I have said for a year watch Washington. To make money your better watching Washington and the legislation passed or not passed then a chart (although this does still matter, but barely).
The two-day chart below for GLD simply does not make any economic sense. So much so that I am now thinking that the bullion banks must be simply shorting gold and silver (and to a great extent, oil) and once they get the money for the sale they destroy any evidence of it. And, it's done with the fill knowledge and abetment of the various G7 governments for the specific purpose of destroying any remnant of belief in gold as money.
The time to buy insurance is before the fire, not when the house is burning down. The time to buy gold is in the uncertain times before the crash, not during or after it. In the last six months, as the economy has by all account become more uncertain, gold should have been able to break through any 'honest' naked shorting of gold. Certainly, yesterday should have sent gold up 25%. And today gold is down lower that it started yesterday? Silver went lower during the biggest stock crisis in 21 years, and today is far, far lower? Give me a break.
I think the numbers faithfully reported by exchanges are a complete fraud. Why would a group of crooks, especially at the behest of governments, illegally naked short gold and silver suddenly get a streak of honesty and report honest figures? This fraud against precious metals has to be far more cunning and widespread than I've seen Ted Butler or GATA (or anyone) express.
I just read Ted Butler's latest article ( news.silverseek.com/Te... ), and it reinforces my suspicion expressed in my previous e-mail that these bullion banks are shorting gold and silver by direction from the government, so they have no fear of any 'investigation' by the CFTC or anyone. Or, maybe they don't read the Wall Street Journal?
Why on earth, if they learned that the regulatory agency was going to do a 'criminal investigation' on precious metal manipulation by the CFTC Division of Enforcement, would they intensify driving silver down . . . unless they knew that any investigation was a complete sham?
The only reason for the CFTC to announce such an investigation is because it is a total sham, and both they and the bullion banks know it. The announcement has nothing to do with starting an investigation - it is to quiet those who are lobbying for one.
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