For me, having most of my net worth in precious metals is an easy decision. I understand the Big Picture and the Primary Trend. I am not discouraged by short-term “noise” and manipulation. I know that when the dust settles, sometime in the next year or two, gold and silver will be the assets of choice. As the owner of Miles Franklin, which I founded based on my desire to help educate as many people as possible to make enlightened choices, the last two months have been very hard on me. To some of our readers, we are starting to lose credibility. I understand. It’s been a tough 8-months and the carnage has intensified since mid-April. All of the reasons that gold and silver should go up and would if the markets were not manipulated seem not to matter. There are a lot of very bright and experienced people in our industry whose views I present to you five days a week. We all see the same thing and we couldn’t be more bullish, but there are forces out there that are working very hard to prove us wrong. We can’t all be wrong, but the price of gold and silver are telling a different story. That’s why it is so important for you to pay close attention to what I present and focus on the facts and the end game, not the short-term manipulated price. The turn around is only one Black Swan event away, and it could appear at any time. The world is a mess! There are many potential problems out there that could cause a panic into gold and silver. Gerald Celente outlines most of them, later in this section in his video presentation.
Today, Richard Russell wrote a great piece. Here is what The Dean of the Financial Newsletter Industry had to say. Note his comments on the Primary Trend:
The key to the stock market has been the Fed’s manipulation through the use of QE. This has turned the stock and bond markets into “financial zombies.” They have been dragged out of their natural and normal paths ever since 2009. But now the forces of nature and the primary trend have restored the stock and bond markets. They are now reverting to their normal paths.
–Dow Theory Letters, June 20, 2013
THE KEY TO ABSOLUTELY EVERYTHING NOW IS THE PRIMARY TREND. Bernanke did not, and has never, understood the meaning and the sheer power of the primary trend. Bernanke thought he had succeeded in turning the primary bear trend to bullish at the bottom of the market in 2009. He was dead wrong!
History does repeat. I view what has happened as a repeat of the great 1929-30 market rebound that followed the 1929 crash. The rise since the 2009 low was a powerful and extremely deceptive bear market correction of the 2008-09 crash!
Originally, I thought that was what was happening, but when the rise from the 2009 low carried so far, I grew confused and thought it actually might be a new bull market.
What has happened is that the primary bear trend since 2009 was just asleep. It is now coming out of its hibernation. What has happened is that the primary bear trend has now re-established itself. Obviously, the primary bear trend has worn out the Bernanke Fed. The primary bear trend has now returned from the dead. Everything that has been propped up by the Fed is now breaking down. The bond market is starting to crumble and with it interest rates are rising. The KEY yield on the 10-year T note has pushed over 2.4%. The Dow is hovering over its KEY 14,000 level. Gold has broken below the 1300 level. The S&P is hovering over the KEY 1500 level. The NASDAQ is just above the key 3,000 level.
Bernanke has finally realized that the Fed has lost its battle with the primary trend. The Fed and the economy are now at the mercy of the strengthening primary bear trend. Deflation, which the Fed has tried frantically to hold back, is now taking over. The Fed would like to exit the battlefield but it can’t. The mere thought of the Fed giving up the battle to hold back deflation terrifies the stock and bond markets. Years ago Ben Bernanke stated emphatically that he would never, ever allow the nation to deflate — even if he had to drop cash from helicopters to prevent it. But now deflation is happening. And Bernanke, the academician who has never understood markets, is frozen with confusion, consternation, and fear.
Everybody’s escape, so far, has been to rush headlong into Treasury bonds. But that avenue is no longer working (the bonds are sinking). The next avenue of escape is the dash for cash. Cash today amounts to intangible Federal Reserve notes, which are fiat paper and actually intangible financial garbage. The last and final avenue of escape will be to gold. But that won’t occur until the dollar falls into international disrepute (which could be one to five years from now).
Coming — a new reserve currency, and the fall of the dollar. But nobody knows when.
All we can do now is sit back and watch the primary trend express itself. It will express itself through lower prices and a lower US standard of living — This will continue until the primary bear trend has finally exhausted itself.
–Dow Theory Letters, June 20, 2013
Think about what happened today. On the mere “possibility” that the Fed will slowly withdraw the punch bowl all of the major global markets tanked.
The bond market is collapsing – in spite of massive Fed purchases. As the bonds fall, and interest rates rise, the cost of carrying debt will spiral higher around the globe.
Interest rates are rising and the all-important 10-year rate is now up to 2.4% and rising. That means higher mortgages, car loans and interest due on the Federal debt. That is why the Fed instituted their QE policy in the first place; to keep this from happening. How can they possibly consider cutting back now, when the rates are rising even WITH QE?
The Dow is not immune from rising interest rates. It dropped 353.87 points today. The NASDAQ tumbled 2.33% today as well.
Even Harry Schulz’s solid-as-a-rock Permanent Portfolio is down 4% this year – and it is designed to protect against losses. Well, maybe it is doing its job because almost everything else is doing worse.
This brings me to another point. You can run but you can’t hide. All of the major alternatives for your cash are not performing. The stock market could fall hard from here. Real Estate, with rising interest rates should fall too (listen to what Celente has to say about this in his video). The bond market is the last place you want to be. Even bond maven, Bill Gross says so. Interest bearing options pay you next to nothing. Precious metals have been slaughtered. What should one to do with their money? No easy choices here, unless you believe in the reasons to own gold and silver, in spite of the last two days downdraft, in which case, your discount for buying is even larger than before.
The Fed’s policy is not working unless you are one of the “privileged” – a Wall Street Bank or government contractor or mega-hedge fund with access to unlimited funds at ultra-low interest rates. For most of us, we are forced to gamble with our life savings – or sit it out in cash and watch inflation eat away at the principal. Short-term, nothing looks good. Blame the Fed for that.
It is very clear – if the Fed cuts back on QE, the markets crater. That’s what today’s market action says, and in no uncertain terms. That’s why Jim Sinclair says “QE to Infinity.” If the Fed continues to create a trillion dollars or more a year to keep the markets from tanking, the dollar will be sacrificed. There is no third choice here. The Fed is between a rock and a hard place.
My guess is that Ben Bernanke will do nothing before the end of the year. His term will be up by then and he wants to exist with the markets still intact. Leave the tough choices to the next Fed Head.
According to Bob Wiedemer, author of The Aftershock Investor:
People are defiantly in denial about what we’re doing. . . . Nobody mentions the $85 billion a month we’re printing now. . . . We’ve only printed about $800 billion in the last 100 years. We’re going to print more than that next year. So, literally 100 years of printing next year.” Wiedemer says you think of your mortgage as rent because you will never get it back. Wiedemer contends, “When interest rates rise, the value of homes drop. We’re assuming interest rates will never rise. Well, when you print as much money as were talking about, it’s inevitable. Interest rates will absolutely rise one way or another.
–USA Watch Dog, June 19, 2013
In his latest book, Wiedemer says to get out of stocks and bonds. He predicts:
Between now and 2014, I think you’re going to fall out of bed. . . . Stock investors could take a very big hit—well over 50%.” Wiedemer calls gold ‘the once and future king” and goes on to predict, “gold will go to $6,000 to $7,000 per ounce.
–USA Watch Dog, June 19, 2013
Great! I believe it! But many of you are losing faith – in what we say and in where gold and silver are headed. Don’t. We are not wrong!
According to Kyle Bass, the Fed has created over $10 trillion in the last few years. He said:
We’ve essentially printed $10 trillion in the last few years” “The first $5 trillion replaced the lost equity in the leveraged financial system and the second $5 trillion is making its way into deposits and expanding the monetary base” “This is unprecedented… and it’s not going to change.
–Zero Hedge, June 18, 2013
Where is all of the money going? Most of us aren’t seeing any of it. The top 1% control 80% of the wealth, so we do know where it’s going. The wealth in America is VERY CONCENTRATED! I have often written that South Florida has an unimaginable amount of wealth. I live there, and centa-millionaires are a dime a dozen. The reality really hit home today when I heard that the cost for a courtside seat for the NBA finals is going for $24,000. The best seats will cost you $58,000. How wealthy do you have to be to be willing to pay that much money for a ticket to an NBA basketball game – even game seven of the finals? Yes, it’s a happening event and that’s where all the happening people want to be seen, but $58,000 a seat? That’s what happens when the Fed inflates the money supply with trillions of new dollars. The people high up on the list get first crack at the money. The rest of us get heartache. I intend to watch the finals tonight, from the comfort of my living room couch, in front of a hi-def large screen TV. It won’t cost me a dime!
Today, I have put together some great information for you that will go a long way toward explaining what happened today. It’s the same story every time. The paper price is hammered and it has nothing to do with the fundamentals, which didn’t change one iota. The demand for physicals grows stronger as the price falls lower. How long can this go on? Until there is not enough gold and silver to meet the demand. That day is coming, and that is a fact. In the meantime, we wait.
One of the most surprising articles came from the pen (keyboard) of Larry Edelson, who I have admonished all year for his bearish views. His views are predicated on moving averages and charts – I like to believe that the markets will be rational and act accordingly. I must be naive. For the last six months, his chart analysis has been more accurate than all of our Big Picture and Primary Trend philosophy. The hedge funds buy and sell on the same data that he relies on, and the price is being set on the Comex, at least for now. A couple of days ago, he issued a special bulletin and said, “Now is the time to start buying again,” but also pointed out that the price “could” still fall lower. “We are very close to the bottom now,” according to Edelson. Jim Sinclair says this will be behind us by the end of the summer. Celente says it’s time to buy now, the bottom is in, or very close. No one knows with certainty, but I have no problem with having a majority of my wealth in physical metals instead of paper dollar-based investments. I look ahead and that’s where I believe we need to be! That view has cost me a lot of money, IN PAPER, but only if I sell at these low prices. If I wait, it means nothing. The only price that counts is the price you get for your gold and silver when you sell them. I will make it all back, and much more. I just keep reminding myself that the end game has already been decided – In the end, the dollar is not your friend.
All of the paper currencies are in a race to oblivion, but it is a slow-motion race. The Bull Market in gold and silver are NOT dead; the ownership is just changing from weak hands to strong hands. Which are you?
BE SURE AND LISTEN TO GERALD CELENTE’S VIDEO, BELOW. WHEN IT COMES TO GOLD, HE SAYS, “GOLD IS IN GOOD SHAPE; IT WON’T GO BELOW $1,200. IF I WERE IN THE MARKET I WOULD BE BUYING GOLD NOW. GOLD IS BOTTOMING NOW. IF YOU’RE IN IT FOR THE LONG TERM, YOU WILL BE A WINNER.”
Market Meltdown, Gold and the Future
KINGSTON, NY, 20 June 2013 – Following the statement yesterday by the Federal Open Market Committee at 2 PM EDT that the US central bank would be tapering asset purchases, the Dow plunged 200 points.
In reaction to the Fed statement and news that China’s manufacturing is shrinking faster than anticipated, overnight markets around the world also sold off.
Today the Dow sank another 353 points. All commodities were sharply off with gold and silver taking the hardest hits.
What does this all mean, where is the economy heading and where is gold going? Find out by tuning in to my special Trends in the News feature.
For your convenience, by clicking the Trends in the News below, the video will open in your default web browser or click here.