Progress Report at end of 2014
How much at risk our invested assets are in the present global economy and top-of-society-centered legal immunity is a really difficult thing to quantify.
Jim Sinclair has for a long while made the point of GOTS. (Get out of the system). Ann Barnhardt also sings this particular tune, as do other advisors-mavens-people-dealers particularly in the financial side of the "prepper" sphere.
Unfortunately it's a pity that some of the many people advising this strategy have been making a living from it, while at the same time the benefits to their customers have been shall we say a little "spotty", what with precious metals oil and so on falling significantly after they suggested buying these items.
And of course while stocks rise as freshly created money flows into this asset class, an opportunity for capital gain is lost by those who stepped aside while they awaited various crash scenarios to come to pass.
But even the boy who called "Wolf!" was right in the end of that story. Unfortunately his friends had moved away from listening to him by the time he came through his bad patch.
(I mention before moving on that extremely large structures usually crash at slow speed.)
On the one hand - all this advice was basically intended as prudent advice to fireproof your a$$ from adversity. On another hand - it was a counter reaction to moves observed to be made by the other side in the wealth confiscation war (intra national financial wars against ordinary people by their state) which we are living through. On a third hand - some sellers of goods used the storyline to encourage a different kind of consumer spending for those who awoke from the consumer society dream and found themselves in a bigger dream but didn't realize it. This didn't work out and assets were bought at too high a cost as lessons were learned.
I look at mostly at timing of events, sequential reaction and counter reaction, and series of connected events. At the moment I would like to draw readers attention to:
- new rules in CME;
- new derivative issuing banks bailout legislation slipping through US legislature this week;
- new G20 rules about "bailin" depositor funds capture;
- a geopolitical violence cycle peak of size on 18th December;
- the approaching end of quarter/end of half year/end of year accounting period;
- the Chicago Fed reportedly bricking up ground floor windows in their downtown building;
- US Dept of Treasury purchases of survival kits for staff;
- large financial institution busting swings in the value of bonds and oil;
- CDS prices increasing sharply for some countries recently.
In the longer term I draw readers attention that interest rates were recently at approximately 60, 120 and 300 year lows and even more recently rallied to retest those lows.
Certain large historical events like Cold Wars, Global Power Wars in Eastern Europe and exchange of ownership of The Crimea has also happened at these past interest rate extreme periods and this type of stuff is happening now. The financing of those wars through sovereign debt hitting extreme highs provides the banking and economic connection from interest rate extremes at those times to banking cartels, and sovereign protection of financiers.
Because of the above points I think it is a good idea to watch short term interest rates carefully. What they say for each nation will tend to cut through the fog of misleading news swamping our senses.
That indicates that I am of the opinion that those who say oil will stay down forever or interest rates will never rise are wrong. So if you think I am incorrect in suggesting that, the rest of this article may not be for you, but remember I am considering a period of 1-10 years here.
We are in for a churning period in my view, a period which when looked at from a future date with the benefit of hindsight will be seen as a turn of a long term magnitude. Such turns in secular trends take 3 to 5 to 10 years to form. If you try to imagine an eg 5 year long double top, triple bottom, or head and shoulders pattern in your favourite asset class, well the hills and valleys in that make for a lot of churning. This would be churning on a big scale if it turns out this way.
I am thinking in terms of range trading as stagflation evolves into inflation over an extended period. Ray Dalio's "Beautiful Deleveraging" is continuing, and the counter-stagflationary social political forces to it are now organizing. This is visible in popular protests rising over peripheral reasons. There is a general protest against injustice, and a reactionary move by authorities to protect establishment from it and keep the little people in their place. The late 1970s and early 1980s are reminiscent, but the late 40s through 1960s are a much better comparision to today, though less recent.
2015 will be an exciting year with many unpleasant surprises for the unprepared. Exciting may be putting it mildly. As usual, insiders will be pre-advised about precisely what to do to profit. Outsiders including the masses will be propagandized and misinformed to cause mistakes and loss. The best we can do is figure out in advance the parameters of the ranges within which prices may fluctuate and act accordingly.
Because the debt still exists and cheap energy has not been discovered or seized by military means, stagflation will continue as will also the resource wars against all resource (wealth) containing countries not already controlled by the western financialized zone.
In this context the (apparent) turning of Turkey and India eastwards and to a certain degree away from European Union and the British Commonwealth towards the new Asian Bloc is a significant event which will set off many new missions and counter missions. We will possibly soon see violence materialize in places where it has not occurred for a few decades. The reasons for this will be invented to suit the needs of the moment, but competition for and domination of resources is what it is all about.
Also, please remember that a population of tax payers, whatever their living standards have risen to or declined to, can be regarded as a resource. For example, at the present moment workmen are outside the houses in my area installing water meters so we will pay water charges in addition to our existing taxation which already contains water costs.
As we move towards the end of 2014 the precious metals and oil and stocks are moving towards extreme valuations. Never forget that this incurs a high cost on big players upon the geopolitical field. On the smaller level, my national government within the EU can easily bully me and others and charge double for drinking water in order to redirect funds towards other wealth accumulating parties, and so in many other ways can other governments mistreat their citizens.
But sovereigns react to bullying attempts. They can and do strike back with lethal force at any perceived force which seeks to destroy their control of their territory and resources.
Two interesting questions we might ask ourselves might be : Have we seen retaliation yet? Will it be overt or covert?
The answers to these two questions raise the subject of derailment of processes in action. Such derailment seems to me to not be discounted in the prices currently set for the various assets. If that is the case, and unexpected derailment of plans subsequently occurs to reverse short term trends, then we are currently getting close to an edge of a trading range for many assets classes.
So good following questions are: What must Asia do to protect and preserve it's resources or create new ones? Will the Asian sovereigns choose to watch and do nothing or will they act?
This possibility may help up us to look in the right direction for information which at present is not already discounted and fully in the price. There is an old market idea which seems to apply here. We have to look to our perceived future, make it as realistic as possible, then locate differences between that future and the present, and as the world moves towards our vision the assets we have acquired will change their value accordingly.
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. The author advises that he trades and holds market positions in accordance with his own opinions.