Do you remember when you were a kid and there were various “groups” around the neighborhood? Sort of like gangs? If the biggest guy in one gang got beat up then the smaller kids would start thinking about jumping to another crew. It’s the same thing with dogs and horses where there is a “pecking order.” You have the alpha males and females that are followed by the “type B” personalities. It is the same thing in the real world of politics. There are the alphas and betas and the sides get split up and chosen.
The “sides” in the real world are changing drastically today and some alliances of 100 years or more are dissolving while others are forming. I believe that the current political situation is now more dangerous than ever before. I can say “ever before” for two reasons. First, the world has the ability to destroy itself in war. We have had this ability since the 1950’s but the “pecking order” was well established after WWII, this is the danger, the pecking order is changing. Secondly, the U.S. was always looked to for guidance or some sort of leadership, this is now gone. Some will say that Mr. Obama is to blame and they are correct but he had prior “help” from prior administrations in undermining our role. We have gone from the “leader” of the free world to something worse than a loose cannon in the last 20 years.
You can easily see this in the way that Russia is reacting to sanctions placed on them. Just in the last week alone, many of their trading partners have agreed to settle trade in something other than dollars. You must ask yourself this question, what will happen when the trading partners of Russia (or China) decide to settle trade amongst themselves with other non-dollar currencies? “We” are being forced into making a decision; we can either fight or turn tail. We can either force the use of the dollar or go sit in the banana republic corner. Either choice is a disaster.
In other news, just this past week alone we saw several sovereign nation’s debt markets surpass the U.S. treasury market. No, not in size as that would be an impossibility. Ireland and Spain both now have 10 year bond yield BELOW that of the United States. How is this possible? Are they “safer” than the U.S.? (Well, maybe they are?) Do they have a stronger economy than we do? Ireland maybe, Spain …they are a basket case. What you have here is a “chase” for yield. It doesn’t matter what it is, it could be dog crap but as long as you get “interest” on it …investors want it. Oh, and another thing is possible as long as they are not dollars!
Another piece of news was that James Bullard, President of the St. Louis Federal Reserve said in a speech in Florida over the weekend, “The Fed shouldn’t be intervening all the time in markets.” Did you get that? Please read that again, NOW do you get it? I guess the easiest way to pick this little gem apart is by asking a few questions. Questions like …does this mean that the Fed does intervene in markets? Which markets? All markets? Or all markets with of course the exception of the gold and silver markets? And what does “all the time” mean? Does this mean every single minute that “our markets” are open, like say from 8:00 AM to 4:00 PM? Or does it mean “ALL” the time …everywhere on the planet?
If I may be so bold, I think I can answer some of these questions and not be too far from the truth …because the markets themselves are so far from the truth. Yes, “all the time” does mean 24/7 and everywhere possible. I say this because of “arbitrage.” What good would it do to “fool” the market here in the U.S. if all of the hard work got wiped out in other markets while we slept? How much sense would it make for us to prop up U.S. stocks or bonds during U.S. hours only to see them drop back down overseas? Or what about gold or silver? What good would a daily smashing be if foreigners just bid the prices back up and beyond U.S. Fed pricing? It would be a waste of time because “people would see” for their own eyes that something is fishy. Americans would see it. Foreigners DO see it. My point is this; markets cannot be “allowed” to act in a manner where even people with below average IQ’s start asking questions, the “wrong” questions.
I also think that Mr. Bullard’s speech is interesting from the standpoint that he “assumes” that everyone already knows that the markets are “intervened” with (the word is rigged). Isn’t that a hoot? This guy is making the assumption that everyone already knows, and he is a regional president of the Federal Reserve system for the “most free, fair and open markets” in the world. Doesn’t this seem a bit strange?
The reality is this, markets are markets because they are supposed to be like “voting booths.” People “vote” with their hard earned capital and collectively they push or pull markets to “show” their opinion of policy. You either like policy or you don’t. You either like stocks, bonds, real estate, commodities, currencies or precious metals …or you don’t. What have here and now are “rigged elections” where the voting results get nullified with freely printed “ballots” by the ones who make the policy. Good policy or bad policy it doesn’t matter, the “results” are broadcast for everyone to see …and now even the policymakers are assuming that we know that the results are really not the results. It’s as if Mr. Bullard was saying that “we shouldn’t do it but what are you going to do about it?”
It’s sad to say but gold and silver are like “drugged” prizefighters in the prime of their lives and fully trained for this fight. The drug will wear off at some point and clarity will exist, it will not be a fair fight and the policymakers are fully aware that this day is coming. Just as election fraud is protested in banana republic’s when the results are known as false. Gold and silver pricing will be “taken away” from the paper markets and no amount of “paper ballots” will work. This is why the Shanghai market is becoming more and more active and important, COMEX and LBMA “results” are losing their credibility. Americans for the most part don’t see this yet, foreigners do.