MÜNZEN - MEDAILLEN
However, there is the small matter of a looming market crash and the collateral damage it could on inflict on most everything, including the PM sector, to take into account. This is a big reason for the Fed raising rates ahead of the competition, the European Union and Japan etc, in order to create a rate differential so that funds continue to flow into Treasuries, and in order to prop up the dollar, because if the dollar drops significantly there will be less reason for foreign investors to buy Treasuries since they will fear a loss of principal if a dollar downtrend sets in. The Powell Helium Pump By:
ALTGOLD - SCHMUCK
Jay Martin, Cambridge House International. The Powell Helium Pump By: Dave Kranzler, Investment Research Dynamics. Axel Merk, Merk Investments. Gold Market Update By: Back during the crash, as we know, the dollar rallied sharply due to a flight to cash coupled with a move into the dollar to buy Treasuries.
This time round it may not be so straightforward because global bondmarkets are in deep trouble due to careening deficits and the attendant risks of outright bankruptcy and default, and there is a projected severe shortfall in demand for Treasuries. This is a big reason for the Fed raising rates ahead of the competition, the European Union and Japan etc, in order to create a rate differential so that funds continue to flow into Treasuries, and in order to prop up the dollar, because if the dollar drops significantly there will be less reason for foreign investors to buy Treasuries since they will fear a loss of principal if a dollar downtrend sets in.
The reason that the Fed is caught between a rock and hard place, to use a hackneyed old expression, is that they have to raise rates much more than have already to create the desired wiggle room, but because of the towering deficits, the markets will crash long before they reach their rate target, especially as they are draining liquidity with their QT Quantitative Tightening program, with the clamor for relief then forcing them into emergency QE, which will have to be on a gargantuan unprecedented scale, a development that will usher in the last and inevitable stage of the fiat endgame, as the economy is vaporized in a firestorm of hyperinflation.
If you complacently think this only happens in banana republics like Venezuela and Zimbabwe you better think again, because it can happen anywhere that banana republic economics is employed, and sadly that includes pretty much all of the Western World, thanks to the completely irresponsible descent into fiat, which is paper money that is unbacked and intrinsically worthless.
With the above in mind we will attempt to figure what the Fed will do with rates at its upcoming meeting this week. Some potential flashpoints are already obvious, chief amongst which are the South China Sea, Taiwan and the Ukraine.
So, since dollar dominance in support of the Treasury market is much more important to the US than even the stockmarket, it seems likely that the Fed will stand firm and stick to its rate rise program, and the stockmarket can do as it pleases.
Gold will do a moonshot. The alternative to a stealth default by hyperinflation is an outright default on many debts, and the reason why the former option is preferable to the powers that be is that is it takes longer. There are times in life when being frightened can save your wealth and it can sometimes save your life. Egon Von Greyerz has written a string of lurid and terrifying essays on what is heading our way. On the contrary, he looks more right with each passing day, and his warnings should be taken seriously.
If they do the former then our take is that the markets could plunge and the dollar advance quite sharply, if the latter the dollar will break down and gold and silver should rise sharply. Just how finely balanced this situation is can be seen on the latest 2-year dollar chart where we see that it has been in an undecided unresolved state for about 6 months now, bumbling sideways beneath the neckline of a potential Head-and-Shoulders bottom.
Fluctuations have become very tight in recent weeks, implying that a big decisive move is in the works, and the Fed is likely to trigger it next week. Our strategy at this time is to be generally short the market, using inverse ETFs, which it is thought best to refrain from trading, whilst long a few exceptional stocks such as several we will look at in coming days, and unless the Fed caves in on its rate rise program, it is thought best to hold off from buying most PM sector investments until the initial crash phase has almost run its course.
Options, especially Puts for the downside, we will of course trade much more aggressively, which is what they are meant for, an example being the trades last week where we tripled our money in Amazon, Apple and Home Depot Puts in 2 trading days , and if we can time the breakdown into the main crash, we will consider adding some triple leveraged inverse ETFs the better to capitalize on it.
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Please contact us for any further information. The views contained here may not represent the views of GoldSeek. In no event shall GoldSeek. Avi Gilburt, Elliott Wave Trader. Rick Ackerman, Rick's Picks. Asian Metal Market Update: Chintan Karnani, Insignia Consultants. Jay Martin, Cambridge House International. The Powell Helium Pump By: Dave Kranzler, Investment Research Dynamics. Axel Merk, Merk Investments. Most investors are of course destined for misfortune, in some cases severe misfortune, when the crash hits.
That said, there are always some stocks that go up even during a severe bearmarket. We will be looking at a number of such stocks in coming days. Perhaps the oddest thing about the great year long bullmarket is that it has been of so little benefit to the broad swath of the American middle class, whose standard of living has been so eroded in recent years that after paying their bills they have little left over for stock trading. They have speculated heavily in Real Estate, buying properties solely for speculative gain which have often been kept empty, exacerbated the homelessness problem.
This has been really extreme in China where entire ghost towns have been constructed that are never occupied. With the Real Estate market now turning, huge amounts of inventory are likely to be dumped onto the market that will in time collapse prices. Another reason that the stockmarket is so out of whack with the real economy is that prices have been artificially elevated by buybacks on a massive scale.
Since much of this has been done on margin, it is clear that when the crash gains momentum it is going to result in ruinous declines.
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