Tuesday, August 30, 2011

Triangle Scenario Negated

The triangle scenario was negated by yesterday's action.

Now this is either a plain old 4th wave, or we have had a "failed" or truncated fifth wave already and this is the a-b-c bounce now.

Either way, what happens in the next 90 days will tell us a lot.  My advice has not changed.

Friday, August 26, 2011

We Didn't Know That Times Were Lean....

Alabama - High Cotton (Official Music Video). Watch more top selected videos about: Alabama

Dow Tracing Out Symmetrical Triangle

The Dow seems to be tracing out what's called a "symmetrical triangle." These are a classic fourth wave structure, and so provide some clarity for what the near term future may hold. I made a crude chart detailing the near term (weeks to months) path of the Dow. The other two stock indexes should perform in roughly the same manner. The Elliott Wave count numbering is indicated with pink Roman numerals. The contours of the triangle are indicated in orange. The projected path of the Dow is in blue.  Clicking on the image will make it easier to see.

I think the path of the markets and the underlying deterioration of the economic conditions will provide a deflationary scare and give policymakers the political cover they need to fire up the printing presses again. Perhaps they will choose different targets for their "stimulus" but they really can't choose where it goes once they create it and loan it to the banks. As I have said before, it will not go to productive places.

Near term, prices should come down a bit. This will be a good time to stock up or purchase durable goods. I recommend buying high quality used goods from distressed sellers when you can.

I say prices should come down a bit, but that's probably not going to include most food products.  Fuel has been expensive, and we are looking at reduced supply.  Between the drought in Texas, Oklahoma, and Kansas, the wet, cool spring in much of the Midwest, and a large swath of drier than normal weather for the past month in fairly substantial area of the Midwest, we are looking at poor harvests for corn, beans, wheat, and cotton. Some Texas cotton farmers haven't even bothered to try and harvest their cotton and have left what little there is standing in the fields.  Ranchers in Texas, New Mexico, Oklahoma, and Kansas are really hurting, due to drought damage to grazing land. We in South Dakota were in exactly that situation four years ago. We had seven years of extreme drought up here, and it really put a hurt on ranching families. Pray to God that the drought down south doesn't last as long as ours did. We could be looking at a new Dust Bowl if it does.

I spoke with a man today who was trying to have a large item shipped here to South Dakota from Texas by truck. He could not get a shipper. All of the available trucks out of Texas are bringing oilfield machinery up to the Bakken oil fields in North Dakota, and then they are loading up with hay from North and South Dakota and taking that back to Texas ranchers.  Beef will go down in the near term as desperate ranchers sell their herds en masse.  Then it will skyrocket for a year or so because of smaller herds and higher production costs.

You're now beginning to get a taste of what life will be like during the hardest years of the Second Great Depression.  You do not need to fear.  You will survive.  Adjust your thinking and make wise decisions and you may even prosper.  Do not shield your children from reality.  These are the times that will form their character and make them more like the Greatest Generation.  Teach them about the value of hard work, responsibility, and how to handle money.  Pray for them.  Pray with them.  Let them see you making good decisions and let them see you taking responsibility for bad ones.  In their own way these times are good times.  It's just a different kind of good from what we've known for the last 20 years.

As I said before, hunker down.  Save money.  Get out of debt.  Buy some gold and silver on the dips.  Sell it when you see gold sellers advertising on prime time TV.

Use it up.  Wear it out.  Make it do, or do without.

Most of all, trust God.

Tuesday, August 23, 2011

The First Steps Toward The New Monetary System

From Bloomberg

Financial Crisis Is Too Big for Developed World to Cope, Ex-IMF Head Says

By John Simpson - Aug 22, 2011
The crisis threatening the global financial system exceeds the capabilities of developed nations and requires a new International Monetary Fund “debt facility,” former IMF head H. Johannes Witteveen said.

“Unusual problems require unconventional solutions,” Witteveen wrote in an opinion piece in the Financial Times today. “The world’s financial system is threatened by a new crisis that could be even worse than that of 2008.” He was IMF managing director from 1973 to 1978.

Renewed signs of economic weakness globally and the downgrading of U.S. debt by Standard & Poor’s have rekindled concern about the quality of government borrowing, especially in Europe. Slumping confidence has wiped $8 trillion from the value of equities in four weeks.

The leaders of euro zone nations have done everything politically feasible to counter the crisis, while the European Central Bank and the U.S. Federal Reserve are close to the limit of their capabilities, Witteveen said. A new fund could tap the currency reserves of China, Japan, the Middle East and European nations such as Germany, he said.

It “would allow the fund to borrow large amounts from all surplus countries and so provide temporary financing even for a big country such as Italy,” the former official said.

To contact the reporter on this story: John Simpson in Toronto at jsimpson12@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

Monday, August 22, 2011

More Depression Cooking With Clara

These were such fun a couple of years ago, and Clara's still chugging along.

Her channel is on YouTube if you want to watch her various videos. I recommend the dandelion green salad and the eggplant parmesean.

Sunday, August 21, 2011

Gold to Correct Hard Soon

.... but the picture is considerably less clear for silver.

This is not the end of the bull market by any means. It may be the best buying opportunity you'll see for the rest of the precious metals bull market.

Friday, August 19, 2011

Contentment and 1 Tim 6

The message that the filmmaker wants you to take away is that people are starving in the world. This is, of course, true. Mostly because of politics and corruption and violence.

However, these people are obviously not starving. They are perhaps hungry. They definitely appreciate the meat in a way that you and I don't. They are eating things that you and I would not eat, but they are not starving.

The point that I take away from this is that these people have enough to be content as 1 Tim 6 describes it. Do they look unhappy?

Is it probable that you will ever get to the level of a rural filipino, no matter how bad the economy gets? No. It is not.

Be at peace.

You Do Not Need to be Afraid

Autarcheia is a loaded word. It comes from two root words in Greek, "autos" which means self, and "archos" which means beginning, head, leader, master, etc. A monarch is "one leader," for instance.

Autarcheia is a rare word in the New Testament. It is fairly common in Stoic philosophy, however. At its most basic meaning is "self headship" or self sufficiency. Liddell and Scott's Greek Lexicon defines it thus:

"a perfect condition of life, in which no aid or support is needed; a sufficiency of the necessaries of life: subjectively, a mind contented with its lot, contentment"

It is rendered "contentment" in the two places in the New Testament in which we find it. How shall we have this perfect tranquility of mind that needs no outside aid or support? Paul tells us.

But godliness with contentment is great gain. For we brought nothing into the world, and we can take nothing out of it. But if we have food and clothing, we will be content with that. 1 Tim 6:6-8

Mark carefully what Paul is saying. If we have

1. Godliness
2. Food
3. Clothing

then we can have perfect tranquility of mind. You can have perfect peace of mind right now. You have to accept that all you really need is godliness, food, and clothing. If you have those three things, you have all you need.

Right now you are probably scared, or angry, or both. The world seems to be falling apart. And in some ways it is falling apart. Our monetary system is profoundly broken. It will be dismantled in the next few years and a new one erected in its place. The new one will probably be even more wicked than the current one. Guess what? That's happened every 40 years or so like clockwork for the last 120 years.

Our political system is profoundly broken. The president is blaming both bad luck, his political and ideological opponents, and the last president for all of the problems we're facing today. Guess what? Blame shifting is as old as the Garden of Eden.

Are you really in danger of not having sufficient food and clothing for yourself and your family? Even if your job ended tomorrow and you didn't have a penny in the bank, are you really likely to go hungry and naked? No. Probably not. You might lose your house and your car. Your retirement account may take a big hit. Your government or private benefits might be reduced. But you can still have godliness, food, and clothing for yourself and your children. If you can really accept that's all you need, you can be at rest in your heart. Admit it, much of your disquiet comes from the question, "What will others think if I go down in this world?" You do not need to worry about what they think of you. Worry about what God thinks of you and leave your neighbors to their own devices.

God is judging this nation and this world. Look around you. Droughts. Wars. Famines. Earthquakes. Tornados. Economic mayhem. Political chaos. Social wickedness. The Evangelical Christian church is not just drifting from its moorings. It's paddling away as fast as it can. You and I are caught up in that, and we shall, in some measure, share the judgments with our neighbors. We have shared in their sins, and so it is just that we shall share in their judgments. But we also have secret stores which lie in our Heavenly Father's possession, and which are dispensed like manna on the day they are required. All of this is our Father's loving rod of discipline.

Be prudent. Be disciplined. Be godly, and you will not be afraid.

Thursday, August 18, 2011

Watch This Video

If you want to understand why

1. we will have a deflation and then a hyperinflation,
2. why we literally cannot and must not repay the national debt or all hell will break loose,
3. why a whole new monetary system is going to replace the existing scheme,
4. why gold is going much, much higher, even though it is due for a very sharp pullback soon,
5. why silver is even better than gold
6. how to survive what's coming, and even prosper from it,

then watch this video. Yeah, it's an hour and a half long. You spend more time than that watching football. So get over it. Also, there is some bad language towards the end. You've just got to live with it. Sorry.

We are in the beginning stages of a real and measurable deflation. This will provide the political cover for the Fed and every other central banker in the world to goose the global currency supply. It's about as bad as it's been for more than 100 years. Sorry to be the bearer of bad news.

Thursday, August 4, 2011

Welcome to the Excuse for QE 3

The stock indexes have had a rout recently, and today was downright ugly. Look for a manic bounce soon, but I don't think the down is done. We could get a 900 point down day on the Dow before this is all said and done. I'm thinking a solid intermediate term bottom in late October, but that's only a guess.

Gold and silver (particularly silver) are off sharply today, too, as are most of the commodities sans oil which is still holding up pretty well. The scuttlebut on gold is that it's being sold to meet margin requirements on tanking stocks. You will have a nice buying opportunity soon.

Bernanke is speaking at the annual convocation of world central bankers held in Jackson Hole, WY in the next couple of weeks. The lower minions are whispering to the media that Uncle Ben will telegraph more stimulus and another round of quantitative easing. Europe has just started the equivalent of that behavior. The banks will soon be flush with cash that's loaned to them at essentially zero percent interest. With all that free cash, they will be looking to invest it somewhere and gain some yield. However, they won't be loaning it to people like you and me, who don't want to borrow it anyhow. And they won't be loaning it to businesses, who don't want to start something new in shaky times either. Instead they will be chasing oil and food and precious metals higher with it. Maybe stocks, too, after the unfolding crash has unfolded. Look for a flood of money that's not going to go anyplace productive. It will, however make our lives more expensive.

We are so, so screwed. The middle class is going to get crushed.

Debt is bad. Simplicity is good. Contentment is good. Gold and silver are good.

And, of course, God is good. All the time.