At the precipice of disaster

I haven’t been posting too much over the past several months as things in our country continue to deteriorate at the usual pace, fast and un challenged!

 

The economy is fragile and the ‘medicine’ that Ben Bernanke is giving the ‘system’ will soon become the poison–it is inevitable. This is not just me spouting off at the mouth but several very good economists with pretty darn good track records as well.

 

Take a look at this article, read it and weep for what once was and what is coming soon.

 

Major Bank, Economists Agree: Market Collapse Will Strike in 2013

Wednesday, 09 Jan 2013 10:22 AM

By Christian Hill

 

According to a major bank, a pair of noted economists, and one controversial billionaire, 2013 will be a “year of terrible reckoning” for the stock market.

 

JPMorgan just released its outlook for the first quarter. Surprisingly, this regularly bullish company has reversed course and revealed an ominous chart that every investor needs to be alerted to.

 

As you can clearly see, stocks have retraced the pattern from the last two big market rallies (averaging over 100%), and now face a massive decline in 2013 (of over 50%).

 

JPMorgan isn’t alone in its stark predictions.

 

Economist and NYU professor Nouriel Roubini has said in recent interviews that there is a chance that an economic “perfect storm” will devastate global markets in 2013. He points to a worsening eurozone crisis, a hard landing for the Chinese economy, and a war in the Middle East that could push oil prices above $200 a barrel.

 

Agreeing with Roubini’s worrisome outlook is billionaire Jim Rogers. In a recent interview with Yahoo Finance, Rogers says regarding 2013, “You should be very worried, and you should prepare yourself.”

 

Rogers referenced a little-known economic cycle that proves the United States experiences a slowdown every four to six years (and 2013 marks four years since our last slowdown).

 

Perhaps most alarming of all are the predictions made by economist Robert Wiedemer.

 

In a recent interview for his New York Times best-seller Aftershock, Wiedemer says, “The data is clear, 50% unemployment, a 90% stock market drop, and 100% annual inflation . . . starting in 2013.”

 

Editor’s Note: Watch the disturbing interview with Wiedemer. click here to view

 

Now before you dismiss Wiedemer’s claims as impossible or unrealistic, consider that he and his team of economists correctly foresaw the real estate collapse in 2006, the stock market crash of 2008, and the federal debt bubble plaguing America now.

 

And bear in mind, Sam Stovall of Standard & Poor’s has stated that Wiedemer “makes a compelling argument for a chilling conclusion,” and MarketWatch’s Paul Farrell called Wiedemer’s work “your bible.”

 

When the interview host questioned Wiedemer’s latest data, the author unapologetically displayed shocking charts backing up his allegations, and then ended his argument with, “You see, the medicine will become the poison.”

 

The interview has become a wake-up call for those unprepared (or unwilling) to acknowledge an ugly truth: The country’s financial “rescue” devised in Washington has failed miserably.

 

Wiedemer says blame lies squarely on those whose job it was to avoid the exact situation we find ourselves in, including current Federal Reserve Chairman Ben Bernanke and former Chairman Alan Greenspan, tasked with preventing financial meltdowns and keeping the nation’s economy strong through monetary and credit policies.

 

Shocking Footage: See the eerie chart that exposes the ‘unthinkable.’

 

At one point, Wiedemer even calls out Bernanke, saying that his “money from heaven will be the path to hell.”

 

But it’s not just the grim predictions that are causing the sensation; rather, it’s the comprehensive blueprint for economic survival that’s really commanding global attention.

 

Now viewed over 50 million times, the interview offers realistic, step-by-step solutions that the average hard-working American can easily follow.

 

The overwhelming amount of feedback to publicize the interview, initially screened for a private audience, came with consequences as various online networks repeatedly shut it down and affiliates refused to house the content.

 

Bernanke and Greenspan were not about to support Wiedemer publicly, nor were the mainstream media.

 

“People were sitting up and taking notice, and they begged us to make the interview public so they could easily share it,” said Newsmax Financial Publisher Aaron DeHoog, “but unfortunately, it kept getting pulled.”

 

“Our real concern,” DeHoog added, “is what if only half of Wiedemer’s predictions come true?

 

“That’s a scary thought for sure. But we want the average American to be prepared, and that is why we will continue to push this video to as many outlets as we can. We want the word to spread.”

 

I urge you to take the necessary precautions as things could get rather weird in the coming days and months ahead! No one knows the exact moment, but many will point back in time and pick some arbitrary event that ’caused it all’. Ben Bernanke will most likely avoid ridicule. Many have been, are and will be responsible for our economy and none will be made responsible.

 

Billionaire Money Manager Bets Big on Gold

Billionaire John Paulson has bet big on Gold, raising his firms investment in the metal to 44%. He has been big on gold since 2009 but his luck has not been so hot for the past 2 years with record losses.

 

He is betting that gold will remain a great hedge against currency debasement, rising inflation and the possible break up of the euro. All things that everyone of us should be concerned about! He must be really concerned with a bet that size.

 

Seriously folks, while this guy’s recent track record isn’t the best his long term record is pretty dang good! For those of us out there that continue to hold gold and silver we can take comfort in the knowledge that some very sophisticated investors are feeling the same way as we are and doing the same thing..buying gold and silver.

 

The prices are down and the macro economic situation hasn’t changed at all, in fact in my view it is even worse. Now you have the Israelis talking about bombing Iran again. Syria is falling apart and the news on the Euro, Spain and Greece is just not improving. Added to all this is the threat of a world wide food shortage and I have not listed all the bad stuff out there either!

 

Time to get prepared? I would think so in spades! Food, water, gold and silver make up a really great starter kit!

 

 

Thoughts on the Drought

I was just sitting here today thinking about the drought and a number of thoughts came to mind about the drought. Thoughts such as: This is supposed to be decimating the corn and soy crops, yet they are the 8th largest harvests on record…So how bad is it for us? I know we live in a global economy and that there are many countries that must source these grains from us and at the same time I wonder if this is just and excuse to raise prices or even worse, to blame the food price inflation on the drought when a lot of it stems from the excessive printing of money!

 

I believe that on average here in America we spend less than 10% of our income on food, which means that price increases won’t cause us to starve just reallocate money to pay for the increased costs. In many poorer countries that percentage shifts to somewhere between 35%-50% or even higher. For the people in these countries that means that a small increase can mean starvation or doing away with some pretty basic services that we take for granted.

 

My issue is that with such a harvest and the large price increases we have seen in the commodity markets, are they really justified based on the drought! I am uncertain. Could it be an effort to ‘blame’ these increases on the drought when actually it stems from the inflationary tactics of the Fed? We have already seen some pretty dramatic increases in food prices over the past several years, if you don’t believe me ask your wife or mother or whoever does the shopping. It has been pretty dramatic.

 

Now that it appears, at least according to the MSM folks and their numbers, the real estate market may be poised for a comeback of sorts, will the price increases, theoretical at this point, be explained away as the ‘natural’ adjustment of values post financial crisis? I wonder about these among many other things. It just feels that sometimes many of the ‘crisis’ headlines are manufactured or have some other motive…

 

Just saying…

Crisis of Confidence for the Euro

As the can tumbles down the road, we are now hearing that the Euro is showing signs of some deeper issues developing. At first the Euros flowed from the troubled nations to the core now the capital flows are outward, from the Euro to outside currency havens.

 

The Euro has lost 8% against the dollar just since May. For many that might not seem too large but in the currency game this is huge! Seems that everyone is just losing hope as the European Central Bank and Germany can’t seem to come together on anything.

 

Ultimately the only weapon that they have is the printing press…buying more bonds with newly printed money to keep rates down in the ‘troubled’ nations. This in turn will eventually lead to inflation. Too much money chasing limited goods and services leads to higher prices for those same goods and services…at least that is the traditional thinking.

 

In my opinion we have not seen a ton of inflation in typical safe haven assets such as real estate due to the tremendous amount of price inflation that was artificially injected into the system via virtually unlimited cheap credit. Now we are seeing that ‘fluff’ taken out of the market entirely.

 

Given this logic then we might see a ‘bottom’ in that market and then a huge bounce. Rates will begin to rise and so will prices. We are already seeing food costs soar due to the drought and the drop in worldwide food supplies.

 

We will see if the making of the perfect storm are here and develop. The system is, in my opinion, severely stretched and it won’t take a lot to just see it disassemble. The rate and timing of this event is a moving target and when it becomes evident it may be too late for those that are not prepared!

Euro Crisis Continues

The demise of our global economy is not an event that will go in a straight line to the bottom. It will be up and down with lots of posturing on behalf of the ‘leaders’ of the ‘developed’ countries.

 

Today is yet another example of this political posturing as the European Central Banker came out and said he would do whatever necessary to preserve the Euro and the EC! Pray tell what that would be sir!

 

The only weapon that these guys have is the ability to print money into infinity. As we all know, infinite money chasing limited supply of products, goods and services means prices will eventually rise to the point where these prices can change on an daily if not hourly basis. Hyper inflation this is called. Something that we in this country have never witnessed.

 

We will see in the coming days more of the same as Greece exits the Euro and the EC, yields will go higher on the sovereign debts of the EC members that are in the most trouble which will result in the European Central Bank to print more money to buy their bonds to try and lower yields. At some point this type of strategy will simply cease to function as needed and collapse will follow, but not in a straight line.

 

Be very careful if you are in the markets now. I personally am and have been out for quite some time…Closed my account at PFG just in time! Stick to food, water, shelter, gold and silver if I were you…And pray for better days to come!

 

Food Inflation – Post Drought

Now the mainstream media is paying a bit more attention to the drought and resulting price increases in the price of grains and corn in particular. Projected for next year are price hikes up to 5% across the board for products requiring any of the affected crops, which is almost everything these days.

 

Think about it, if it doesn’t have corn or wheat or any of the 1000′s of by products of each one of just these grains, it probably isn’t on the shelf at your local grocery store. Sure this is an an exaggeration but not by much!

 

And I don’t know where the individuals in the article by the Wall Street Journal shop, but my food costs have certainly gone up more than 1% this year. My wife complains about the amount of groceries she can buy compared to just last year. Yes, folks it has gotten so bad that everyone is noticing just how bad it really is.

 

We are starting to hit on the stored food supplies now just to offset some of those higher prices now. We are eating healthier too. The cost and nutritional value of the prepared foods are just not in alignment, at least in my opinion.

 

If everyone were to do this, the food companies would have no choice but to offer healthier prepared foods just to get people to buy their products. Imagine if everyone all of the sudden just stopped buying anything with GMO ingredients! We would very shortly see some major changes in the way our land is farmed and the products we would see on the shelf!

 

I am off the subject a bit, not much though. Perhaps mother nature is getting rid of the abominable crops all on her own! Of course the humans will suffer, but it will be over rather quickly as opposed to the slow suffering that is indicated by continual use of GMOs.

 

Back to the inflationary pressure that the drought is placing on us. Remember that it can take up to 6 months to see this price pressure on the foods in the store. So my advice is to buy as much as you can now and store it up. Cook more of your own food instead of buying prepared foods.

And remember you can always start to grown your own!

 

 

ObamaCare…

Obamacare has been upheld by the courts and short of Congress reversing the entire law, fat chance, we will be seeing some major changes in our society in less than 2 years. Changes that I for one am not in favor of.

 

As a small business owner the costs of this law will most certainly make our products more expensive even if we don’t go along with the health care plan and just pay the penalty tax.

 

What really concerns me and many others is the broader reach that this law could have. Give Congress and inch and we are down the road for a mile of more taxes. This new interpretation could give the President and Congress the ability to create taxation by passing laws that obligate a person to buy a certain product or service.

 

This says that the health care law is tantamount to a new tax. I think it a stretch but then I am not one of the Supreme Court Justices. I am convinced that the cabal in government now runs the gamut of Legislative, Judicial and Executive branches. Each of these were supposed to have checks and balances to curb each others powers. Apparently that system has completely failed.

 

I have spoken to many folks about this and what we consider to be abuses of power and for many the easy solution is to move out of the country. Many are looking for ex pat communities in central and South America due to the ease of travel from the U.S. to these destinations. I am also considering such a move.

 

Too many of us are completely fed up with the way things appear to be going and the lack of people with moral fiber willing to stand up and make and effort to change. The biggest problem with the ‘checks and balances’ system, in my opinion, is the sheer number of people in each branch committed to making power grabs to benefit their own turf with total disregard for the majority of the people.

 

We are in for a time of higher taxes and more regulation which will just add fuel to the inflationary fires!

Post Greece Vote…what has changed?

We are now a week out from the infamous vote in Greece to decide whether they stayed in the Euro or left. What has changed? To be quite honest, nothing! Our markets continue to be very volatile, including gold and silver. The markets, especially the sovereign debt markets are getting hammered. Spain is on the brink of becoming Junk Bond status.

 

So what was all the fuss about with the Greece vote? In my opinion it really had all to do with the news cycle, and the MSM putting way too much emphasis on this one vote when there was never going to be any impact on the global Euro situation at all. I think most have already discounted the Greece debt and don’t really consider them a viable country. I believe that defacto they will, perhaps already have, left the euro.

 

As always for those of us outside of Greece, those folks are considerable screwed in so many ways, how will further issues/problems in the European community and the Euro affect us all?

 

In my opinion, there will be a gradual decline into chaos so to speak. The Central Banks will do only what they can and are used to doing-printing more money-and they will continue to call it adding liquidity. This influx of liquidity into the money supply will eventually lead us into an inflationary scenario.

 

Once this arrives, and it is anyone’s best guess as to will it hit the U.S. or Europe first, there will be a period of uncertainty. No one can really remember the last time we had inflation and this time around it will be quite different.

 

Some things that we use everyday, like food and gas, will skyrocket, while other ‘hard’ assets like real estate could very well remain in the doldrums-we will see on this one. The respective governments will consider and after much hemhawing inact price controls.

 

What happens after that one can study the history of such efforts in various countries and learn how those peoples reacted and i don’t think the people of today will behave much differently.

 

There are some tough times ahead, even tougher than what we are experiencing now….

UK joins the crowd to print more money

As I was writing yesterday the Bank of England and UK Treasury told the world that they were committed to ‘adding liquidity’ to the system in the face of the Euro Crisis. They didn’t want to be seen to be doing nothing ‘as the storm gathers’. Ominous words indeed.

 

Even our stock markets are rising as traders become convinced that the Fed will follow suit and ante up some trillions more liquidity to the system. Liquidity in every case is ‘printing’ more dough. In my mind this will eventually lead to inflation and the amount that they are printing these days could result in hyper inflation.

 

I have lived in economies with hyper inflation and it isn’t any fun believe me. Food prices soar, the cost of every single input rise dramatically and on a daily basis. The government usually comes in a ‘freezes’ prices on basic commodities, which by the way never works, and creates a healthy ‘black market’ by doing so.   Also, expect ‘capital controls’ a nice way to say the government will control how much money you can withdraw on any given day, week or month.  Greece just implemented these sort of rules to stop the run on their banks.  Argentina has done this in the last 10 years as well.  They limited withdrawals to 500.00 a month, no matter how much dough you did or didn’t have in the bank!

I can’t think of any scenario where inflation is a good thing.  I suppose the powers that be are thinking inflation is better than a total system meltdown a la 1930 style depression.  They should wake up, the depression is here and has been here for anyone not extremely wealthy for several years!

 

Get ready folks, this crisis is not over. Indeed it has barely begun.

Gold & Silver continue to climb

When you see the world printing more and more paper money you always find more and more people fleeing to hard assets like Gold and Silver. Real estate, thanks to the rascals on Wall Street, is no longer an option as prices continue to fall amid the overhang in supply and foreclosures.

 

Gold and Silver are set to really get going this year as the printing presses work over time putting more ‘liquidity’ in the system…If it weren’t for the real estate crisis you would see inflation in the broader measures. Already you are seeing some price inflation in food.

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 P.M. Kitco Metals Roundup: Comex Gold Ends Firmer, At 2-Month High; Bulls Have Technical Power
2 February 2012, 2:04 p.m.
By Jim Wyckoff
Of Kitco News

Kitco News) – Comex April gold futures prices ended the U.S. day session higher and near the daily high as bargain hunters stepped in to buy the early dip in prices. Prices hit a fresh two-month high today and bulls continue to build upon their upside near-term technical momentum. April gold last traded up $9.10 at $1,758.60 an ounce. Spot gold was last quoted up $12.80 an ounce at $1,756.25. March Comex silver last traded up $0.348 at $34.155 an ounce.

 

Gold and silver both started their rallies right around the time of Thursday morning’s testimony by Fed Chairman Bernanke to the U.S. House of Representatives. While Bernanke said nothing really new or surprising, he reiterated the U.S.’s path to better economic times remains a tough one. It’s likely that gold rallied in part due to Bernanke’s general reaffirmation of last week’s FOMC statement that pledged continued low interest rates well into 2013 and hinted more quantitative easing could be forthcoming—which was bullish for the precious metals.

 

The U.S. dollar index was slightly higher Thursday on a short-covering bounce following recent selling pressure. The dollar index bears still have some downside near-term technical momentum. Crude oil prices traded sharply lower Thursday and hit a fresh six-week low of $95.44 a barrel. Crude oil bulls are fading and that did somewhat limit the upside for gold and silver Thursday. Crude oil and the U.S. dollar index will remain the two key “outside markets” that will have a daily influence on gold and silver price moves.

 

There were a few fresh developments coming out of the European Union debt crisis Thursday. A Spanish bond auction saw mixed results but with lower yields fetched.

A debt- restructuring deal between the Greek government and the private sector has still not been reached, but an agreement is closer, reports said. The EU debt crisis appears to have stabilized for the moment. But if recent history plays out again, the EU debt crisis will be back on the front burner of the market place.

 

The London P.M. gold fixing was $1,751.00 versus the previous P.M. fixing of $1,740.00.

 

Technically, April gold futures prices closed nearer the session high Thursday and hit a fresh two-month high. Gold managed gains despite bearish “outside markets” that saw a firmer U.S. dollar index and sharply lower crude oil prices. Yet, gold rallied anyway on its technical strength. Gold bulls have the solid overall near-term technical advantage and still have upside near-term technical momentum on their side. A steep five-week-old uptrend is in place on the daily bar chart. Bulls’ next upside technical breakout objective is to produce a close above solid technical resistance at the December high of $1,769.70. Bears’ next near-term downside price objective is closing prices below chart trend-line and psychological support at $1,700.00. First resistance is seen at Thursday’s high of $1,763.80 and then at $1,769.70. First support is seen at $1,750.00 and then at Thursday’s low of $1,743.30. Wyckoff’s Market Rating: 8.0.

 

March silver futures prices closed nearer the session high Thursday and hit a fresh 2.5-month high. Silver also scored gains despite bearish “outside markets” that saw a firmer U.S. dollar index and sharply lower crude oil prices—showing its near-term technical strength. Silver bulls have the solid overall near-term technical advantage. A five-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $35.68 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at this week’s low of $32.93. First resistance is seen at Thursday’s high of $34.35 and then at $35.00. Next support is seen at $34.00 and then at Thursday’s low of $33.455. Wyckoff’s Market Rating: 7.0.

 

March N.Y. copper closed down 535 points 378.85 cents Thursday. Prices closed nearer the session low. The key “outside markets” were in a bearish posture for copper Thursday, as the U.S. dollar index was firmer and crude oil prices were sharply lower. Copper bulls still have the near-term technical advantage. Prices are in a six-week-old uptrend on the daily bar chart. Copper bulls’ next upside breakout objective is pushing and closing prices above major psychological resistance at 400.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 367.50 cents. First resistance is seen at 380.00 cents and then at 385.00 cents. First support is seen at this week’s low of 376.30 cents and then at 375.00 cents. Wyckoff’s Market Rating: 6.0.

 

Follow me on Twitter! If you want daily, or nightly, up-to-the-second market analysis on gold and silver price action, then follow me on Twitter. It’s free, too. My account is @jimwyckoff .

 

By Jim Wyckoff contributing to Kitco News; jim@jimwyckoff.com

 

I am always on the look out for dips in prices to buy more Gold and Silver…Silver especially!

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