World Of Wallstreet

Bitcoin Is Winning And Its A Real Threat To The Banksters

This brings to mind my favorite Ghandi quote: "First they ignore you, then they mock you, then they fight you, then... YOU WIN".

As you can see, Bitcoin has advanced to the "THEN THEY FIGHT YOU" stage. Bitcoin is a genuine threat to the Banksters because it ELIMINATES THE MIDDLE-MAN which is what the Banksters are.

The headline could have been... "BITCOIN SAVES YOU MOST OF THE 3% COMMISSION THE CREDIT CARD COMPANIES TAKE FROM EVERYTHING YOU BUY" but it isn't. I bet you've never heard that simple story of the legitimate benefit of Bitcoin offers. Instead you hear about drug-dealing, fraud, danger, government arrests, etc. Just another data point confirming that all major-media stories are slanted to preserve the status-quo.

The real threat is that Bitcoin transactions are "anonymous" taking away the government's visibility into transactions that is a key part of their ability to TAX transactions (sales tax, income tax...).

I think the Empire is just beginning to Strike Back. It will be interesting to see how this turns out.

MontyHigh, www.worldofwallstreet.us

Notes From Jim Sinclair Q&A Session Today Near Dulles Airport

I stayed thru Jim's opening remarks (at least half an hour) and the pitch from the gold bullion sales-man. I did not stay for the Q&A. Jim looked healthy. The crowd was good (at least 200 probably more), upbeat, all white and mostly middle aged. Nobody was angry. There were a few way-out-of-the mainstream folks pitching their own ideological, political efforts.

These notes are only slightly better organized than when I took them. They are not verbatim but are pretty much thought-for-thought.

DEAMERICANIZATION

A 40-yar cycle is coming up for the US. Its band for the dollar, even this month, as international acceptance of the dollar wanes. A Chinese offician recently called for a global Deamericanization. Chinese officials do not make off-hand remarkes. What the Chinese are talking about is the dollar as the predominent reserve currency. The gold and silver markets are small enough to be manipulated by the Bullion-Banks and the G-Man pals, but the currency markets are a different matter.  From now on its all about the dollar. They will not be able to maintain, internationally, the "everything is ok" perception. There is an unwind of the dollar coming.

The recent gold take down (presumably into the $1200s) was different in that this time it was bought. As long as the Chinese like the price of gold it will be supported. The current price of gold is about the price where the Chinese were shut-out and the IMF sold its gold to India.

Deamericanization means a fully convertible Chinese currency (remimbi) in less than five years. Petroleum will no longer be sold just in dollars. Soon (my notes say 2 years, but I'm not sure about that), petroleum will be sold in whatever regional currency is convenient, unlike the current Petro-Dollar situation where it was only sold in US dollars (in fact nearly all international contract payments were denominated in US dollars. The Chinese recently bought to JP Morgan building to hedge out their dollar holdings. The Chinese are not trapped into the dollar. They are not locked into their dollar position.

The 40-year cycle says a definitive change is coming. Something new is the US government inability to govern. Ungovernable means no compromise or middle ground. Riots in the street have not yet occurred in the USA, but they soon might. Its telling that the adminstration will negotiate with Iran but not with the Republicans. The recent government shutdown was the Tea-Party's last chance to negotiate and its not over yet.

From a European or Asian perspective, this in ability to govern and the repeated threatened and actual shutdowns results in a loss of confidence.

Draghi recently spoke about gold indicating its not something you sell. Its protection against violent movements in the dollar he intimated. The US dollar risk of significant volatility and gold itself has just suffered its first big volatility movement.

Side note: We are in dictatorial markets. You cannot win trading gold without being an insider. Back in the 70s the big boys who owned the futures market definitely manipulated them and Sinclair did it himself in the gold market. But the Morgans and Goldman Sachs of today are worse. They ones who run these institutions are totally selfish. They don't even care about the firms they work for. All that matters who can be the biggest gamer and extract the most loot out of the suckers. That's what leads to advancement in the firms.

Deamericanization is the most important thing that has changed recently. This week (after the government shutdown ended) the dollar went down. It "should" have gone up, but it didn't that the key data point showing that things have changed.

Side Note: John William's shadowstats show current government statistics are just a big distortion to help out the status quo. There has been at best a bottoming since the global financial crisis with just an incremental move off the bottom.

Side Note: There is no debt ceiling. Instead the government can borrow as much as it wants up until a Feb 7, 2014 deadline.

GET OUT OF THE SYSTEM NOW:

There's a bill, HR4646, where all banking transactions will be taxed 1%. This is the first step towards a wealth tax. Christine Legarde, head of the IMF, has already called for a 15% wealth tax on all bank deposits. She's the one who called for the nationalization of all Cypriot retirement funds. HR4646 also provides for all social security payments to go via direct deposit thereby requiring virtually every citizen to maintain a bank account.

In Cyprus 87% of a depositor's money was lost by the bail-in. Draghi, in the same talk mentioned above at Harvard, also called for the "postponement" of bank bail-ins. Thhe term "post-ponement" implies that its definitely coming sooner or later. A failed "stress test" will be enough to force a "bail-in" and loss of depositor money. The Cyprus depositors money was actually lost years before their bail-in. It just that the loss was realized when the bail-in happened.

Its the same situation with the too-big-to-fail USA and European banks. Mark-to-model in 2009 did not make the losses disappear. As long as there is no run on the bank the losses need not be realized. Still, their derivative positions are humonguous and the bullion banks (JP Morgan and the like) have the biggest of these derivative positions. Derivatives are currently valued on bank balance sheets on a mark-to-delivery basis, but what if there are defaults. The counter parties have virtually no reserves set aside to cover their derivative losses.

Russia in the last month or so confiscated all retirement funds. Poland did the same and gave nothing back in return. So, it makes sense to "Get Out Of The System Now".

Most retirement accounts are based on the idea that your taxes will be lower when you take the money out of the retirement accounts. How did that work out for the French with the Hollande election. For the USA, taxes will simply have to rise because of government spending and deficits. Sinclair recommends paying taxes now, not later. At least don't add to these tax-deferred retirement savings plans.

Look at social security. The country's biggest retirement plan "has" to hold nothing but US government bonds. Mandatory government bond holdings is coming to private retirement savings as well. Its a fact that the Chinese and Japanese have reduced their US bond buying. The Chinese are not forced to buy US bonds. They (and India) are moving to consumer economies. Those billions of emerging consumers is enough to keep their economies growing. They don't require a continuous high-export growth-based economic model.

They really aren't developing nations any more. They are growing both in terms of geopolitical influence and militarily. China seeks world dominance. Not by military conquest of geography, but by ownership. Tanzania is "owned" by China.

Gold is for saving. Fiat is for financial transactions.

THE EMANCIPATION OF GOLD

Sinclair knew the Hunt brothers personally. They never intended to corner the silver market by taking delivery. They just screwed up the paper work and were 3 days late in rolling over their silver contracts so it looked like they wanted delivery. But the Comex gold vaults are getting to the point where, like if the Hunt brothers had demanded delivery, they just can't deliver. They are going to have to resort to cash or GLD share delivery. Then gold will be a cash-only market (no futures) and that kind of market can't be manipulated like a paper futures market because you have to actually deliver the physical metal. Its going to be just like the emerging Russia and Singapore gold markets that have just spot delivery. Victor Lu in Singapore is setting up that kind of market because he knows its what's going to make money next. The emancipation of physical from futures is coming. The big bullion banks are probably using the latest gold price knock downs so they can corner physical gold and so they are likely to be the big winners of the emancipation of physical.

HYPERINFLATION

Velocity of money - in order for there to be inflation you need increasing velocity of money which we don't have now. That's part of the reason for current gold price weakness.

But, hyperinflation is not an economic event. It a currency even where the currency loses confidence. A currency event is coming to the US dollar, but not yet.

The Plunge-Protection Team (PPT) is a reality. Just look at how stable the markets were during the government shutdown. Remember that meeting of the president with the bankers when the shutdonw was immiment. That's where they agreed upon their plan.

But its the dollar that is what really counts to maintaining the status quo. What the bankster and government status quo really care about is the dollar, specifically the petro-dollar. Look at what has happened militarily/stability-wise to oil producers moving away from selling oil in dollars: Libya, Iraq, ... But the dollar is already losing that monopoloty as the euro is now getting used for the purchase of petroleum and other international contracts. Why the euro? Its the only current dollar alternative.

The bottom for goldd was August, Sinclair thinks (not as cocky as earlier this year). Going forward we are going to have to deal with volatility. Gold is for savings. Sinclair recommend trading about 1/3 of your account and selling 1/3 whenever gold looks like a rhino horn on the monthly chart and buying whenever it looks like a fishing line on the monthly chart.

Gold mining stocks. Listen to Mike Martin (never heard of him). Good mining stocks must have cash, production or a clear path to production with a defensibly low cost of production.

Well, that's what I heard. Did I leave anything out?

MontyHigh, www.worldofwallstreet.us

Want Proof The Mainstream Media Is Controlled By The Banksters?

Take a laugh at this headline:

Is it more likely that the Banksters are meeting with the president to get his input on how to help "main street" or to:

1. Gather insider info so that they can win their zero-sum trading games at the expense of everyone else (pension funds, small investors, smaller banksters who don't own politicians the way they do, their own clients, etc.)?
2. Tell the president what to do so that they win their zero-sum trading games at the expense of everyone else (reminding the President that they were his biggest campaign contributors in both 2008 and 2012)?

MontyHigh, www.worldofwallstreet.us

Best Of The Web: Best Interview On Either Gold Or Politics In Months

Lars Schall gets, in this interview (click here), Jesse, of Jesse's Cafe Americain to serve up a full spread of his thinking rather than the usual small bite. This interview has done more than anything else in the last year or so in figuring out two of my biggest questions:

• Who are the Banksters? - My current thinking: It is the big names running the big banks.
• Who is really running things - My current thinking: No one is "in control", but the Banksters have huge influence along with some of the other major status-quo special interests (government officials, military/ intelligence services, Israel and friends, ...).

MontyHigh, www.worldofwallstreet.us

Denver Gold Forum Anecdote

This is the kind of anecdote that can make you money (do your own due diligence).

"The Denver Gold Forum is held every September and is considered to be one of the most prestigious gold and silver mining stock conferences in the world... Both XRA and AAU told me that the majority of the attendees - aside from the usual bankers, analysts and mining stock fund analysts - were "generalist" fund analysts, meaning analysts and portfolio managers who run the large macro-oriented diversified institutional stocks funds.  They said that this cohort of investors was there because they think the mining shares have become too cheap relative to their fundamental value (ya, no shit) and that these large macro funds are looking at taking their allocation to the sector up significantly."

MontyHigh, www.worldofwallstreet.us

NetFlix: Nothing Lasts Forever

NetFlix has tripled this year.

They don't seem to fundamentally have a protective moat against competition, much less something that justifies a 380 P/E. Their business (profits) would have to grow 20-fold for them to justify a 19-to-1 P/E. How likely is that?

So, they look like an over-valued, momemtum drive short candidate to me. The question is how to do so? One could:

• Short it right now with no stop and hope you are right (seems risky).
• Short it right now with a "higher-high" being a stop.
• Wait for the 20-day moving average to be broken to short it - seems like a decent possibility.
• Buy out of the money cheap put options. Actually put options look pretty expensive to me so I think I'll pass on that.

Let's take a peek at a couple of other potentially similar situations. AAPL running up to its all time high is one:

At the end of its three month tear above its 20-day moving average along its upper bollinger band it fell immediately (within a couple of weeks) to its 50 day moving average (12%) and within a 6 weeks fell to the 100 day SMA. So, going short on 20 day SMA break at the close and covering on a 50 day break at the close makes sense or covering at the 100 SMA intraday touch makes sense. Having a stop of a retouch of the previous high looks sensible. The same system would have worked on that final nearly 2 month long tear above its 20 day SMA.

Here's a recent AMZN chart. The same strategy would have worked. Maybe I'll give this a twirl with NFLX. Let me know if you know of any bullish NFLX fundamental analysis.

MontyHigh, www.worldofwallstreet.us

How The Bankster's Hired Help Are Doing

There's an interesting story (hat-tip Jim Sinclair) (click here) about the accumulated wealth of Federal Reserve officials.

I'd like to comment on the discussion of Richard Fisher's holdings. Here's the discussion:

"Richard Fisher, president of the Dallas Fed, is one of the richest of the 12. He accrued a portfolio of at least $21 million after working 22 years in the financial industry as a banker, stock broker and hedge fund manager."

$21 million dollars is way more than enough money for an empty-nester like Fisher, but compared to real wealth its chicken feed. For example, its just 1/10,000th of the market cap of JP Morgan Chase. I conclude that Federal Reserve officials are not the Banksters themselves, but rather the Bankster's well-paid hired help.

MontyHigh, www.worldofwallstreet.us

 

Michael Pettis: "Revisiting My Earlier Predictions"

Michael Pettis sent out, via email list (no cost), a piece where he revisits his earlier predictions regarding China's economy and the matching model for the world-economy as a whole. I'd say this piece (now that the predictions are largely confirmed) represents the best piece of fundamental, macro-economic research I've read lately. I wish I could put a link up here. I'd say his predictions are working out nicely. Here's a link from earlier this year summarizing his predictions and how they are working out (click here).

Here's the 12 predictions:

"1.       China will be the last major economy to emerge from the global crisis. 

2.       Chinese consumption will continue to stagnate or decline as a share of GDP until the growth model is abandoned. 

3.       Although there were many factors that explained both rapidly rising GDP and the contracting consumption share, financial repression would eventually be recognized to be the key factor.

4.       Investment is being misallocated on a massive scale and this was not due to any special Chinese characteristic but was rather a fundamental requirement of the way the system operated. 

5.       Debt is rising at an unsustainable pace and debt levels will become unsustainable well before the end of the decade.

6.       When specific debt problems are indentified, resolute attempts by Beijing to resolve them would be warmly welcomed by analysts but wholly irrelevant – because the problem of debt was systemic, not specific.

7.       Privatization, a topic all but forbidden in polite company, would become a very hot topic of conversation by 2013-14. 

8.       As some policymakers gradually became aware of the problem with the growth model and the risk of crisis, a fundamental political split would emerge between those that demanded rapid reform and those that wanted to maintain control of resources. 

9.       Chinese government debt will continue to balloon through the rest of this decade. 10.    If the transition is not mismanaged, average Chinese GDP growth rates will drop to 3% for the 2010-20 decade. 

11.    If China rebalances correctly, then much slower GDP growth rates will be accompanied by only slightly slower growth rates in household income. 

12.    Non-food commodity prices are set to collapse over the next three to four years."

What follows is my quick analysis regarding how this affects the precious metal investor. 

Pettis' basic idea is that China's household income can continue to rise at a high rate (e.g. 6%/year) while the overall Chinese GDP grow slows sharply (down to roughly 3%/year). If this is true, it seems to me that:
(a) Chinese consumer demand for gold can continue to grow (provided their G-man doesn't get too restrictive with import restrictions, etc.) at a high rate (6%/year).
(b) Chinese demand for quality food will continue to grow (bullish for corn, wheat, soybeans, rice, etc.) at a high rate (6%/year).

(c) Look out below for copper, iron ore, etc. as Chinese investment demand growth drops sharply.

(d) Gold mining fundamentals (gold mining stocks) should be good because:

• of slower growth in costs (miners, mining equipment, etc is in lower demand from (c)) and
• continued high-demand (because of continued demand growth from Chinese consumers). 

MontyHigh, www.worldofwallstreet.us

 

"Biggest Oil Discovery In 50 Years" Debunked

I like to listen to voices outside of the mainstream, but I don't buy everything I hear. I bumped into this one from Joseph Farrell (click here) who I like for his geopolitical insights into what the Banksters are up to. He links to this piece:

You'd think a discovery equivalent to Saudi Arabia would have been pretty big news, but I hadn't heard about it. Let's spend about 5 minutes and dig into this. The announce was in January. The current company market capitalization is roughly 900M$. CONCLUSION: This isn't a very big deal.

Here's Linc Energy's June Corporate Presentation (click here). Here's what I see straight out of the chute from this presentation:

• First reference to this in the company presentation is page 4 and more than half-way down the page. CONCLUSION: Its not that important, otherwise the company would be leading with this.
• Its shale oil (pg 4) which is a lot more expensive and harder to get especially out in the boonies with little infrastructure.
• First discussion of this is on page 17 of the company presentation (again its not that important). 
• The money page is page 19 where the "Estimated Recoverable Resource" is about 1/3 the size of one USA shale-oil field (Texas Eagleford) at 3.5B BBL. This is enough to supply the world for four months.

CONCLUSION: This discovery doesn't significantly impact the Peak Oil thesis, although it (and discoveries like the North American Shale Oil discoveries) could prolong the period prior to a significant decline in oil production.

This is a pretty quick evaluation. Let me know where I'm wrong. I'd be really happy if the Peak Oil thesis ended up being wrong (insignificant as far as the global living standard is concerned) although I don't see any evidence for that outcome, yet. Instead I see the global economy slowing down everytime the price of oil goes over $100 and little or no global growth in liquid fuels consumption. It seems to my that "Peak Oil" is one of the main factors limiting the world "going back to normal" economic growth after the $145/BBL oil triggered global financial crisis.

MontyHigh, www.worldofwallstreet.us

 

 

Indian Gold Smuggling: Its Real, Its Significant

Here's a piece worth reading: http://timesofindia.indiatimes.com/business/india-business/80-dip-in-gold-imports-linked-to-rampant-smuggling/articleshow/21198956.cms.

The money quote is circled below:

So, the tariffs have had:

1. a beneficial impact on "official" trade statistics.
2. a minor hit on the actual importantion of gold.
3. but a major hit on Indian G-Man tax revenues.

Which of these do you think is most important to the G-Man long-term? I pick 3 and expect we'll see those gold tariffs reduced pretty soon.

MontyHigh, www.worldofwallstreet.us