Is Anything Missing?

Sun, Sep 14, 2014 - 2:38pm

A man must know his limitations...

Eastwood- A Man's Got to Know his Limitations

Problem is : what are my limitations?

I guess there are two types: the limitations I have been taught; and the limitations I still have to learn about myself.

Am I limited by experiences I had, or by experiences I never (yet) had:

"Easiest Way to Turn Your Kids into Geniuses" - John Taylor Gatto - AWESOME!

.... or by experiences and lessons I will never ever get to have?

Possibly I have been taught limitations which I do not really have, but as long as I accept them they limit me and "contain" my potential....

Be that as it may, I have no alternative but to move forwards from how and where I find myself now with the knowhow and assets I currently have. This idea operates pretty universally. It applies within me for sure, and it also applies to the world outside of me.

Sometimes I can see what is missing ..

and sometimes I can't ... but I can often look around at what is present and then figure out what's missing ....

on the other hand, sometimes it will never be possible to obtain answers about that which is missing ....


... but whatever ... I must move on with what I've got.

So what is not known can be vital.

Sherlock Holmes observed "the dog that didn't bark" at the crime scene and knew the culprit must the the dog's owner. What isn't there can be more revealing than what is. It depends.

So continuing in that vein, here is a book :

This book in it's original edition had 1348 pages. But when printed one version of this book had only 676 pages, and it was essentially the second half of the whole book.

This book fell foul of several problems when it was published. It got produced in "half" form. It sold out, and when prospective buyers, or libraries requested copies they were told that it was out of print. But it didn't get reprinted. And the publishing company of the sold out edition had copyright so nobody else could print it either.

The printers' plates for the original got destroyed by some sort of "accident".

Two pages were "left out".

Another complication was that the author who wrote it in good faith thinking that was ok, discovered he had "ruffled some feathers in high places" among those he previously considered his friends or at least, colleagues. He was loyal at first but later in his life, and this is subjective, he may have changed his opinion of his high society colleagues from earlier in his life. Interviews are not clear on this and the few audio records available must be listened to carefully.

1974 interview with Carroll Quigley to hear him describe in his own words how the book was suppressed and its marketing plan undermined.

The book is available on a website of the author's name:

But 1300+ pages is quite a doorstop of a volume so you might (if in a hurry) like to know about this link to a summary, a shortened version of Carroll Quigley's most salient points:

There is a fascinating discussion here about it:

Working on the principle that what is missing may be extremely interesting - those two pages which went missing - what did they contain? Here is a part of page 62 from link at the author's named website:

That would make interesting reading for people in government no doubt. But is it one of the missing pages? Or is it an interesting page located after the missing pages which moved into their place when they disappeared? And did I just highlight a part of the text somebody found offensive, (offensive to a degree beyond the other text), I won't provide the answer, so as to give you a good reason to delve into this at your leisure!

So the missing parts of that particular book provide illumination beyond their apparent content. They illuminate beyond their scope as it were. So interesting. It seems to me that what I need is some similar thing or source which does the same but is right up to date. That would be a wonderful help in figuring out what those in higher places than I are currently getting up to.

Well I can self educate and look at their motivations, and speculate as to what they must do to prosper. But if there are things I am not aware of my imagination might not go far enough and my speculations could fall short of the reality. It's those darned unknowns again!

Donald Rumsfeld Unknown Unknowns !

I leave it to you to consider how bizarre it is that a part of my message for today should be uttered, in one particular form, by that particular person! At least, I find it bizarre.

So we are all kept in the dark like mushrooms and getting fed BS? I agree that a substantial number of us are. However, while it is never, ever, mentioned, there's always the door if we wake up and decide to use it. Always the misinformation is present, ready to lure all of our attentions away from looking at the right things. Once we understand the game we must apply self discipline to not fall for the product of the PR industry. This is where the movie "The Matrix" comes easily to mind. Many people feel that it applies uncannily to life today. But it's just a fiction with a meme of unknown controllers of the everyday. Take a real person instead. We can do that Richard Branson thing and begin to grow ourselves. Step out of our parent's car (govt protective coccoon) and find our own way home seeing whatever we see on the way! I wish I could verify that Branson story! But it's ok for this essay.

So what about a source regarding the current system which is more "up to date" than Carroll Quigley? This is a little more difficult. Time elapsed provides perspective and we use that perspective to judge the accuracy and honesty of sources. But a present day source will not come with such a pedigree.

We can look at the change of behaviour of eg Alan Greenspan before and during his job as FedHed, FedChair, FedBoss or whatever it's called nowadays - how about FedPA for the Bossofbosses? Didn't the Italians have a word for that? The Capo di Tutti Capo? Earlier in his career Greenspan wrote about the merits of hard money (the paper is available online) and the gold standard. But later, when he had power, he did the opposite. That must have been some "Road to Damascus Revelation" moment when he turned! Ah to have been a fly on the wall when that conversation took place would have really been something!

So given that there has been no coup, and Greenspan's replacement Bernanke, and Bernanke's replacement Yellen have both been chosen by the same system, it's a sure thing they have great amounts of the same qualities. Therefore the successors are just as friendly to our interests as nice Mr Greenspan was. Which is not very friendly. They'll never change and are always going to do more of the same stuff! We don't need to see, we can look at what's around the information gap and infer what we need to know. But a little more details would be nice, (in a holding our hands kind of supportive way) so we get weak and once again listen to the psychobabble and in so doing we expose ourselves to the misinformation.

Better to accept the lack of detailed knowledge, accept the difficulty of proceeding without a full picture, accept that whose with complete satisfying pictures probably have their own agenda which is not for our benefit.

So this week the(ir) rumour mill is all full of deflation, and words like that. Funny thing. It seems to me that gold was going down (deflation) last year and the year before. Old news. But there are impressionable folks out there, so the gold price went down last week a bit as these investors unloaded their gold to ... hmm .... somebody else. Where is all that deflation stuff coming from anyway? The reports I mean? J S Kim of SmartknowledgeU dot com's closing phrase seems to apply here : Remain Intensely Curious.

You can't fight progress so they say. It may be true. So did it ever occur to you that opposing the march towards crazy and spreading the word about what's wrong might be delaying it just enough to ensure society arrives there right on time? It's a sobering thought.

On that point - the march to crazy - here is Ed Seykota talking with Michael Covel about Seykota's book called Govopoly:

Seykota is/was a trading legend and that sounds like a good insightful book. On my list, but the list is pretty long these days. But I like the taste the interview provides.

There's a lot more from Mr Covel at He has many really good interviews here: It's worthwhile looking through his backlist from time to time.

It's unnecessary to say to "be careful when dealing with markets". What you don't know, and don't know you don't know, can take a chunk out of your hide! In a way shaking hands with Mr Market is like shaking hands with Whiplash Willie! Count your fingers after the interaction!

For those not already in the know, or below a certain age, Whiplash Willie was the name of a crooked damages seeking lawyer played by the inimitable Walter Matthau in The Fortune Cookie. It has a truly great cast: Billy Wilder, Jack Lemmon, Walter Matthau all together, maybe not as brilliant as Some Like It Hot, what with no Marilyn Monroe present. The Fortune Cookie was made in 1966, and it's still as sharp as a tack and could have been done yesterday! I'll leave you to search it, if you are in the mood you'll have some good laughs. Highly recommended for raising of morale.

Well that's it for the moment. I look forward to what you have to say in the comments section!


Argentus Maximus

The author posts daily commentary on the gold and silver markets in the TFMR forum: The Setup For The Big Trade. More information about the author & his work can be found here: RhythmNPrice.

About the Author


Sep 15, 2014 - 5:02pm

Sry, but crow

what was it, 6 mo ago, yours said ukraine get cheap gas and russia gets the crimea. Willie says merkle on deal, gas/crimea trade. Willie got there, which is rare.

Sep 15, 2014 - 5:09pm

Safety Dan

“We are all in the gutter, but some of us are looking at the stars."

And then there's the banksters...

Safety Dan
Sep 15, 2014 - 5:33pm



Again you slide past my thoughts, leaving us/me in the gutter. Are you or have you ever been a Bankster?

Sep 15, 2014 - 5:55pm

Could be the timing is just right for the dead head fed

to lose credibility. yellen the felon isn't first fed chair opposite gender to promote feminism in the 21st century. There are no certainties but a yellen surprise in one area not entirely out. The taper lie. They could stop doing what they never really were doing and it wouldn't effect a thing. Ramping up QE covertly is nothing new to the fed and print to infinity has always been a done deal since the crud fuds began it. What the liars say and do is black and white.

Sep 15, 2014 - 6:28pm

Safety Dan

It's "BOLLOCKS". Thank you.

TFMR is a Bullock-free zone.

Yes, I am a bankster. What would you like to ask me? Don't be shy.

Sep 15, 2014 - 6:35pm

Very good movie

Fix, Bollocks, Lantern...

Watched a movie last night called Lucy. It claims it is an action movie, I think not.

Seems to fit with new age spirituality. Well worth a watch.

I would have pm'd but.....

Sep 15, 2014 - 6:52pm

new age spirituality?

now that's some real BOLLOCKS!

Sep 15, 2014 - 6:55pm

This one Bugzy?

I've not seen it, but if that's it I'll watch it. Ta .

Sep 15, 2014 - 7:01pm



I Run Bartertown
Sep 15, 2014 - 7:06pm


Your writing gives such a vivid insight to your thinking. It is a gift.

FWIW, after not buying anything for a while, I bit on some of these

from Provident. They're at $14.45/$1 face now, I bought just a hair higher. I remembered how thrilled I would've been to get them for that a few years ago, and I just decided to be that thrilled now. Mind over matter and all that. It might go lower, but I'm a simple man. Buying PM's is the closest I get to 'pay yourself first'. It's the only 'money' I'll stash and refuse to use for debts, emergencies, life, etc...

Sep 15, 2014 - 7:12pm

Latest from Polny - mistake admission

"A possible low Price target is derived by calculations using a Fibonacci scale and a break of $1240 Gold is nothing but a break of a Fibonacci price support line NOT Gold’s 21-year Bull Market cycle. So stating... ‘The historic Gold cycle dictates an end of summer 2014 low MUST remain ABOVE the June 2014 low at $1240’ was an overzealous statement and mistake on my end and nothing more and a Fibonacci support line break does NOT constitute breaking Gold’s 21-year Bull market cycle!"

Link to Polny Sep 14, 2014

Will Gold hit $2000 in 2014? It is my personal opinion, now more than ever, believe Gold will spike in 2014 and the big question is will the spike hit $1600, $2000 or is $2000 much too low a target? Remember Cycle analysis gives price direction, NOT exact price so how high could the spike go? Only God know; but the Gold Price Suppression Game that holds Gold down comes to an end in 2014 and TIMING the coming spike is exclusive to subscribers!

For those new age spiritualists, just substitute any offensive words in bold with "gaia, baal or your favorite false deity.

RockerBoxer SilverRunNW
Sep 15, 2014 - 7:40pm

Latest from Molny News! The real deal...

just substitute Mo and cash in on the big Molny!

Sep 15, 2014 - 7:41pm

At least 40 million dead a year from now

His projections are at the link:

Vanity - Ebola model projects future case based on Daily Transmission Rate
Self | September 15, 2014 | Scouter

Posted on 9/15/2014, 2:50:13 PM by scouter

My User Name on Free Republic is Scouter. I have been a member of Free Republic for 14 years. I don't write many vanity posts, but I consider this one to be very important. I had been working on this post for several days, and I was planning to post it tomorrow. But the Drudge Report headline CDC: PREPARE FOR EBOLA has moved up my timeline.

I have developed a model for making future projections of the number of Ebola cases. I have undertaken this project for several reasons. First, out of simple professional curiosity. Second, I believe the time has come to be concerned and to prepare for the possibility that the Ebola epidemic could spread to other countries, including the United States. And third, my daughter will soon begin working as a nurse in a major Pediatric Intensive Care Unit, which will likely see some of the first Ebola cases in the United States, should it make an appearance here.

I am not an epidemiologist, and I have no inside knowledge about the current Ebola epidemic. But I have spent the last 26 years of my career applying computers to the practice of medicine and to medical data. I hold a Master's Degree in Medical Informatics from a major university known for their expertise in that field. I currently work in that field at a large, famous, metropolitan teaching hospital. I am remaining anonymous only because I don't want my employer to be held responsible for this post in any way. It is my work exclusively, and I am responsible for any information or projections it makes.

The numbers produced by this model are "projections", not "predictions". That is to say, I do not predict that there will be x number of Ebola cases on any given future date. Rather, I "project" into the future, assuming a constant Daily Transmission Rate (DTR), based on past data.

Mr. Fix
Sep 15, 2014 - 8:51pm

Happy Birthday Lehman Bankruptcy:

Happy Birthday Lehman Bankruptcy: Silver +71%, Gold +61%, S&P +58%

Submitted by Tyler Durden on 09/15/2014 - 16:44

"The West is done, it's over! We screwed it all up. Do you want your great-grandchildren speaking Chinese?"

Sep 15, 2014 - 9:05pm

Polny, Mo Money, Mo Money, Mo

Polny, Mo Money, Mo Money, Mo money

Time to whip out the ole fav

In Living Color (1990 TV Show) - Mo' Money with Whiz and Ice
Sep 15, 2014 - 9:22pm

Harvey's Up! (TFMR)

Harvey's Up!

  • Koos Jansen (IGWT): Robust Chinese gold demand is keeping up its pace. Chinese wholesale demand, measured by withdrawals from the Shanghai Gold Exchange vaults, was 39 tonnes in week 36 (September 1 - 5). Year to to date 1290 tonnes has been withdrawn from the SGE vaults. The Chinese are always trying to buy the dips; whenever gold goes down they buy, accumulating at the lowest prices. We can not only see this by SGE premiums moving inversely to the price of gold, but also from SGE withdrawals. Silver is trading in backwardation on the Shanghai Futures Exchange (SHFE). It is not just the second future month, ALL future months are trading at lower prices than the front month. Silver prices on all Chinese commodity exchanges are quoted including 17% VAT. Silver's discount to London spot was 4% on September 12. This is the smallest discount since September 2011, when the price of silver made a massive vertical slide. If the discount reaches zero and turns into a premium it would significantly stress world silver demand as China would increase import.
  • Harvey: Chinese demand continues on the high side as 39 tonnes this week. That averages out at 5.5 tonnes per day. The world produces 6.02 tonnes per day on a 7 day week. Also silver is in complete backwardation at the Shanghai Silver Futures Exchange. The inventory at the Silver exchange also recorded another 1% drop and it now stands at 92.5 tonnes or 2.883 million oz. Last week we had over 2.9 million oz of inventory at Shanghai. Once Shanghai is out the Chinese will seek silver from the Comex.
  • Harvey: Ladies and Gentlemen. It is impossible to obtain the massive amount of silver in such a short period of storing nothing put paper silver. The big news today is the massive open interest remains elevated in silver on the Comex. Also today we had a huge 3.354 million oz addition to the SLV. I have no doubt in my mind that this addition is a paper addition and no physical was involved. The SLV is one massive fraud. As far as the open interest on silver is concerned: It could only mean one thing: that the massive longs on the Comex is sovereign China holding these open interests through proxies. As I have explained to you in the past, it is my belief that China entered a deal with the west by loaning their hoard of between 300 - 600 million oz. Generally this would have been done by a lease arrangement for 10 years. The USA ran out of silver in 2003 so, as Bill Holter states...fill in the dots. China wants its silver back and is also very happy to receive copious amounts of gold at low prices. This is the reason why the CFTC remains mum on the silver/gold probe.
  • Mark O'Byrne (GoldCore): Singapore continues its push to be a global gold hub. Further details emerged at the weekend about the planned launch by Singapore of a new 1kg physically deliverable gold contract for the Asian wholesale gold market. This new gold contract differs from others in that as well as acting as a price discovery benchmark for 1kg gold bars in the Asian region, it has been specifically designed to actually deliver gold to wholesalers, because settlement of the contract is in gold 1kg bars and not in cash. A 1kg gold bar is 32.15 troy ounces. In June the Singapore Exchange (SGX) indicated that their 1kg gold contract would probably be launched by September, but the launch date has now been pushed back to either October or November. The SGX is Singapore’s securities and derivatives exchange and clearing and depository provider. The Singapore contract will be in lots of 25 kgs, denominated in US dollars, and it will trade for three hours in the Singapore morning time. Singapore is 7 hours ahead of London and 12 hours ahead of New York, and 2.5 hours ahead of the Indian market, but is in the same time zone as both Hong Kong and Shanghai. Six consecutive daily contracts will trade at the same time, so when one contract expires, another will be added. Physical settlement is two days after trade date and consists of 99.99 purity 1kg gold bars that meet the approval of the Singapore Bullion Market Association (SBMA) good delivery list. This means that wholesalers will be able to gauge demand and supply of 1kg bars over the following week. Four international banks that are members of the SBMA will act as market makers for the new gold contract and these banks need to guarantee availability of 1 kg gold bars in order to provide the liquidity to allow the new contract to work as designed. These banks are JP Morgan, the Bank of Nova Scotia, Standard Chartered Bank, and Standard Bank.
  • Andrew Hoffman: The upshot of "secession movements gaining momentum" from an economic perspective? As you can imagine, the dislocations, delays and deferrals of even a Scotland/UK breakup would be significant; let alone, if a major nation seceded (or was expelled from) the European Union. Not to mention, the general business uncertainty such movements cause; and oh yeah, the dire monetary impact of crumbling nations and unions. In fact, one of the leading secession catalysts will undoubtedly be escape from the unpayable debts caused by "economic hit men," as in Greece. Thus, debt defaults and potential hyperinflation of newly introduced currencies will not only become clear and present dangers in directly affected areas, but fears of such events unfolding in other regions will become acute as well. This is why, among countless other reasons, the need to protect one's assets with at least a modicum of physical gold and silver has never been stronger. Do so now, before the first dominoes start tumbling; or potentially, regret such inaction for decades to come.
  • Bill Holter: There are no possible sources anywhere on the planet to have sold an "extra" 31 million ounces of silver on Comex on Thursday. They just simply do not exist. What also does not exist are "the" 31 million ounces that were purportedly sold. They were paper, pure, simple, logically, and not even much common sense needed to understand and grasp this. But, it is what it is right? Your "real silver" which you hold for savings and insurance is "worth" less today than it was, right? Is it really? "They" say it is, just look at the "price". I am showing "how" the price is "made". With enough (unlimited) cash and no rule of law or regulators doing their job, the "price" can and is being "made".
  • Zero Hedge: Any other Monday and futures would be scorching higher. After all it was a nearly perfect storm of bad news: from China's disastrous economic news, the worst since Lehman, to the Scottish vote where the latest poll tally had the Yes between 46% and 54%, to the dispatch of a second Russian humanitarian convoy into Ukraine, an event which a month ago sent the S&P 500 crashing, to ISIS openly defying the US by signing a non-agression pact with the "moderate" Syrian rebels to launching a new splinter group in Algeria and threatening to take over the Suez Canal, to the BIS once again warning about bubbles and complacency, and culminating with the Pope himself warning that World War III may have started, surely the S&P would be well over 2000 on any new normal day if not at new record highs. Yet something appears to have changed not only because the USDJPY is not some 100 pips higher overnight on, well, nothing but because the S&P, which is treading water, has yet to spike on no volume reasons unknown.
  • Tyler Durden: Following ISIS blitzkrieg in which it took over nearly half of Iraq and a third of Syria in the blink of an eye, at which point it created its own Islamic State Caliphate resulting in Obama's own personal war against the jihadists, some have wondered what is ISIS' next step: surely its leadership will not merely stagnatte as one after another US predator drone bomb away the capital Reqqa until ISIS figurehead leader al-Baghdadi is killed or gravely wounded. To be sure, the one thing ISIS, which stunned the world with the speed of its ascent, can not afford is to stand still. So what is next on the strategic timeline for the Islamic State? According to one source, Al Arabiya, which cites Egyptian experts, the answer is none other than the Suez Canal, and the country it is located in: Egypt. “There is definitely a threat from ISIS to Egypt,” Mohammed Badr, a professor of political science at the University of Germany told Al Arabiya News, adding that the group has the country in its “line of sight.” “All extremist groups represent a danger for Egypt,” Badr said, adding that “ISIS, the Muslim Brotherhood, Ansar Bayt al-Maqdis [an Islamist militant group] are all dangerous for Egypt but the level of their threat is different.” More details from Al-Arabiya: One alleged ISIS militant took to social media to warn Egypt that it should be expecting a “surprise” soon. “
  • Zero Hedge: But but but... the survey all said record highs... Yet another piece of hard data hits the tape and disappoints. While Fed surveys point to an exuberant economy, Industrial Production fell 0.1% in August (missing +0.28% expectations) for its worst print since January's "weather"-related plunge. This comes on the heels of Chinese Industrial Production at its worst in 6 years... perhaps explaining why global GDP expectations continue to test cycle lows. US Capacity Utilization also dropped to 78.8% (lowest since Feb) and the weakness was all Manufacturing driven as production slumped 0.4% MoM - its worst since Jan. So who you gonna believe? Soft surveys? or Hard data?
  • Tyler Durden: China may have mastered the art of goalseeking GDP, always coming within 0.1% of the consensus estimate, usually to the upside, even if the bogey has seen dramatic declines in the past few years, dropping from double digit annualized growth to just 7.5% currently and the projections hockey stick long gone. China may need to expand its goalseek template to include the other far more important measure of Chinese economic activity, such as Industrial production, retail sales, fixed investment, and even more importantly – such key output indicators as Cement, Steel and Electricity, because based on numbers released overnight, the Q2 Chinese recovery is now history (as the credit impulse of the most recent PBOC generosity has faded, something we have discussed in the past), and the economy has ground to the biggest crawl it has experienced since the Lehman crash. What’s worse, and what we predicted would happen when we observed the collapse in Chinese commodity prices ten days ago, capex, i.e. fixed investment, grew at the slowest pace in the 21st century: the number of 16.5% was the lowest since 2001, and suggests that the commodity deflation problem is only going to get worse from here. As JPM summarized earlier today, pretty much every economic data release was a disaster, missing consensus significantly, and suggesting GDP is now trending at an unprecedented sub-7%.

All this and more on...

The Harvey Report!


Safety Dan
Sep 15, 2014 - 11:17pm

Bollocks,  Glad you caught


Glad you caught that zing. I was teasing you a bit. I'm curious which area of banking, retail, wholesale, or investment?

As a Bankster, would you agree with the past thoughts on TFMR regarding some of the crooked bankers?

Safety Dan
Sep 15, 2014 - 11:19pm

Long Cycles and Trend

Long Cycles and Trend Changes

By: Gary Tanashian | Tue, Sep 9, 2014

Several markets seem over-extended and about to reverse their current trends.

S&P 500 Index: It bottomed in March 2009 about 670 and is currently about 2,000. The S&P, thanks to QE, ZIRP, Central Bank purchases, and who knows what other contrivances, has levitated to the magical 2,000 level. Will it go higher?

Dollar Index: The dollar index, currently about 83, is well below its high in 2002 at about 120. However it is also well above its 2008 low around 72. Will capital flows into the US and the fear trade continue to levitate the dollar?

Gold: Gold prices peaked in August 2011 about $1,920 and today gold sells for about $1,260. However, prices have retreated to 2010 levels but are still far above the lows in 2001 at about $255. Is gold ready to rally?

What about cycles?

  1. I have little faith in short term cycles which can be easily overwhelmed by other forces.
  2. I prefer longer cycles as I believe they are more reliable.
  3. I think any cyclic analysis should be confirmed with additional technical and fundamental analysis.

S&P 500 Index: Consider the following graph of monthly prices for 30 years. The blue vertical lines are drawn every 81 months - about 7 years. Note the highs in 1987, 1994, 2000, 2007, and 2014, and note the current "over-bought" condition of the S&P as indicated by the MACD and TDI indicators. This graph does not conclusively inform us that the S&P is ready to correct, but it does indicate that the S&P could be forming a 7 year cyclic top with a low due perhaps in 2016 - 2019.

Larger Image

Dollar Index: Consider the following graph of monthly prices over nearly 30 years and the vertical blue lines every 75 months. Note the alternating high - low pattern with a high in 1989, low in 1995, high in 2002, low in 2008, and possible high in 2014. The dollar index might move higher and take longer but it could be topping now. The monthly TDI is modestly over-bought and the weekly (not shown) is strongly over-bought. The dollar index could be peaking.

Larger Image

Gold: The gold chart shows 20 years of prices with blue vertical lines every 56 months. Note the lows in 1999, 2004, 2008, and 2013. Gold appears to have made a long term low in 2013 - 2014 and has built a base from which another rally should appear. The MACD and TDI indicators are oversold and indicate strong rally potential. Further, my long-term empirical gold model indicates that current gold prices are too low by about 20%, which will provide a "tail-wind" for gold prices over the next several years, independent of massive QE, more wars, dollar weakness, and economic slumps that create even more unpayable debt.

Larger Image

Given the troublesome economic conditions in the world and potential expansion of war in the Ukraine, Iraq, Syria, North Africa, and elsewhere, there is considerable risk that the S&P could fall substantially and a strong probability that gold will rally. Furthermore, there is a growing global movement away from the use of the dollar in global trade, led by China and Russia, and that bodes poorly for long-term dollar strength, particularly as cycles indicate a potential top due in 2014. A fall in the dollar would likely be accompanied by a rise in gold prices.

Markets can move farther and take longer than most people expect, but it is certainly time to consider that the S&P is quite high and ready to reverse its five plus year uptrend, and that gold is too low and set to reverse its three year downtrend.

Additional Reading:

Bill Holter: What is Truly Real
The DI: Gold Prices 1971 - 2014 in 3 Waves
Arabian Money: Margin Debt Leaves Wall Street Exposed to Crash

Safety Dan
Sep 15, 2014 - 11:20pm

Why Goldman Sachs is Wrong on

Why Goldman Sachs is Wrong on Gold

By: Michael Pento | Mon, Sep 15, 2014


Wall Street powerhouse Goldman Sachs has recently reiterated its negative view on gold, which it has held for the past year. However, it is now doubling down on this view and advising clients to actually go short the metal. Jeff Currie, head of commodity research at Goldman noted "Our target is really driven by the view that we think that the Fed will ultimately be the dominate force here and put more downward pressure [on prices]".

While I am in agreement with Goldman that the Fed will be the dominant force behind the price of gold, I believe the central bank will soon be back into the QE business, rather than raising interest rates and crushing the dollar price of gold.

Here's why:

Since Nixon closed the gold window in 1971, gold has made an impressive move upward from its fixed price of $32 an ounce, to where it sits now around $1,250. But few seem to grasp what actually causes gold to move higher. An increase in the gold prices occurs when the market becomes convinced that a currency will lose its purchasing power due to central bank-induced money supply growth and real interest rates that have been forced into negative territory. And nothing convinces a market more of a rising gold price than when debt and deficits explode.

But while the parabolic move higher in gold from 2009 to 2011 did contain a period of low nominal interest rates, real rates did not fall. And, the surging gold price was not accompanied by a growing money supply either. In fact, the growth rate of M3 plummeted during 2009 thru 2010 -- it wasn't until 2011 that the money supply rebounded. So what would explain the steady move in gold from $800 to $1,900 per ounce during that time period? The gold price simply got ahead of itself because the market feared that out of control deficits would force the Federal Reserve into an unending cycle of debt monetization, which would engender a protracted period of negative real interest rates, booming money supply growth and inflation.

However, those fears were temporarily ameliorated by the reduction of Federal Budget deficits starting in 2011. This is because the Fed was, ironically, able to temporarily re-engineer asset bubbles, while sending borrowing costs lower, causing revenues to increase and expenditures to decrease. Annual deficits fell from $1.3 trillion in 2011, to $500 billion today. Adding to the gold market's recent woes is the specious belief held by U.S. dollar bulls that the Fed will be aggressively raising interest rates while the rest of the world is cutting rates. This is the explanation to why gold and gold mining shares have suffered mightily during the past three years.

Today, the equity and bond markets have positioned themselves for the best outcomes of all possible scenarios. These markets are assured that the Fed can painlessly exit QE in October and real interest rates will rise with no ill effects on the economy. The pervasive belief being that US bonds, stocks and dollars will be the sole beacons of economic hope in an otherwise slumping worldwide economy; and, having complete faith that budget deficits will continue to shrink.

I don't buy any of it, and here are the reasons:

Last week we learned that mortgage applications plunged to a 14 year low. This is because home prices are still so unaffordable that just a slight tick higher in interest rates is enough to stall both potential home buyers and borrowers looking to refinance their loans. This confirms that after six years of unprecedented Fed manipulation of markets, our economy has become hypersensitive to the slightest interest rate blip. It also supports my contention that the rise in rates which occurred during the second half of 2013, was much more influential on the first quarter's negative 2.1 percent GDP print than what can be attributed to snow. Our economy is not anywhere near strong enough to sustain growth during a rising interest rate environment. And is why the Fed won't venture very far into this game.

Furthermore, economies in Europe and Japan are in recession, while the once mighty emerging market economies are flailing. As their respective Central Banks frantically print money, the US dollar is soaring due to the belief that the US economy will remain unscathed from a global economic slowdown. But, the belief that the U.S. economy will stand alone on a pristine island, while Europe and Japan sinks into the sea, is just as preposterous and unprofitable as the belief held back in 2008 that economies around the world would remain untouched by the U.S. housing meltdown.

The markets also seemed to shrug off last week's disappointing jobs report as an anomaly. Perhaps a colder-than-normal August is a good scapegoat. But this week, Janet Yellen gave us an interesting glimpse into the Fed's view of the jobs picture with her "Labor Market Dash Board". It showed that only three out of nine metrics regarding the labor market are better than they were prior to the start of the Great Recession. Investors should think again if they believe the Yellen Fed will be aggressively raising rates and boosting the value of the dollar given the labor market's already-fragile condition.

Most importantly, the tide of shrinking budget deficits is about to turn. For instance, since 2011, we have seen a significant reduction in defense spending (down 5.5% during 2014 alone), due to the drawdown of troops in Iraq and Afghanistan. And although we have yet to learn the full costs associated with Obama's plan to destroy ISIS--we can safely assume it will be very expensive.

Adding to this, is the drastically underestimated cost of Obamacare. Insurance risk pools failed to get the proper demographic mix, and the Cadillac tax--delayed until 2018--has companies scheming to redesign existing plans in order to avoid these taxes. Add to this the unexpected costs of illegals flooding the border, demographics moving far out of favor, and an increase in interest rates that will drive up debt service costs, and you can see why deficits will rise. But nothing adds to the deficit like a recession. Our asset-bubble addicted economy faces another reduction in GDP growth very shortly. This factor alone will send deficits north of $1 trillion in short order.

Faced with a worldwide economic slump, central banks remain the only game in town. And today's central banks, determined to smooth out every hiccup in the economy, only have one answer--print money. When all you have is a printing press, every problem looks like a monetary crisis.

The Fed will not be raising rates anytime soon. To the contrary, Ms. Yellen will soon be forced back into the money printing business in an attempt to; force higher money supply growth, push real interest rates further into negative territory, keep the dollar from rising, and to make sure debt service payments remain under control.

Soon we will have a perfect storm in which gold will rise. The next phase in the gold bull market will include the four conditions of; negative real interest rates, rapid money supply growth, a falling dollar and skyrocketing deficits. Investors that have the foresight to realize this opportunity today stand to benefit greatly in the near future.

Sep 16, 2014 - 9:08am

Safety Dan

No, I'm not a bankster. I was teasing you too.

If I was a bankster why would I come here? What a waste of thieving-time that would be, eh?

Sep 16, 2014 - 10:35pm

Is there anything missing? Yes!

If the dog is owned by the criminals, and he barks, he is dead. If he is the close neighbor's dog and he barks upon misdeeds, he is poisoned or a shock collar is put on him. If he is "The Tramp", they try to kick him hard when he is near, but he is wiley, hard to contain, and always just out of reach. They can yell at him from afar, and tell EVERYONE he is mangy, and not worthy; an insane, disease ridden, pestilence on the world, and ALMOST everyone will actually believe them; the populace is well trained to listen to the propaganda machine. Many paid "experts" ensure this is so from their pedestal certificated news perch. But the Tramp runs free barking at the criminals from all over the city, alerting all. And most just see the noise as nuisance. Never forget, the Tramp is free.

AM keep the charts coming, you know, the ones I "can't read". And keep the thoughtstream flowing; your inputs are truly priceless. Thanks for all you do for the community. Now, off to go forage in some bins :)


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Key Economic Events Week of 4/22

4/22 10:00 ET Existing Home Sales
4/23 10:00 ET New Home Sales
4/25 8:30 ET Durable Goods
4/26 8:30 ET Q1 GDP first guess

Key Economic Events Week of 4/15

4/16 9:15 ET Cap Util and Ind Prod
4/17 8:30 ET Trade Deficit (Feb)
4/17 10:00 ET Wholesale Inventories
4/18 8:30 ET Retail Sales (March)
4/18 8:30 ET Philly Fed
4/18 10:00 ET Business Inventories (Feb)
4/19 8:30 ET Housing Starts and Building Permits

Key Economic Events Week of 4/1

4/1 8:30 ET Retail Sales (Feb)
4/1 9:45 ET Markit & ISM Manu PMIs
4/1 10:00 ET Construction Spending (Feb)
4/1 10:00 ET Business Inventories (Jan)
4/2 8:30 ET Durable Goods (Feb)
4/3 9:45 ET Markit & ISM Services PMIs
4/5 8:30 ET BLSBS

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