World Of Wallstreet

Gold News Paragraph Of The Month

From the India Times (click here):

"Directorate of Revenue Intelligence (DRI) had last year recorded a record 800% increase in gold smuggling. This has led to fears of more black money getting infused into the economy as increased import duty and other restrictions are put on gold. 'The government is less concerned about black money as it is concerned about rising CAD [Current Account Deficit]. Black money in any case is not being accounted into the economy. Government would rather have white money shift away from gold to give a spurt to economy,' said a DRI official."

The whole article about increased gold smuggling into India is worth reading but that quote at the end of the paragraph is a real-admission giving a clear window into the Indian G-Man and what's really going on. Here's my takeaways:

• "last year recorded a record 800% increase in gold smuggling." - how does the India government gauge how much gold is being smuggled? This can't be accurate. The takeway here is: Because of gold smuggling, don't believe any official numbers about Indian gold imports any more.
• "The government is less concerned about black money as it is concerned about rising CAD [Current Account Deficit]." - this tells you a lot about how governments think about economic statistics. All politicians care about is looking good. They don't care about how the economy is actually doing. If the same amount of gold is imported, but now it is being smuggled, the real "Current Account Deficit" is unchanged, but the "official" Current Account Deficit gets better because the money leaving the country in the smuggler's pockets isn't officially counted. The Indian G-Man would rather have phoney numbers make them look good than for the government to get the tax revenue that is being lost because of smuggling. Compared to looking good, the G-Man doesn't give a rip about organized crime either. 

MontyHigh, www.worldofwallstreet.us

Gold Stocks Outperformed Gold Over The Last Month

Now that's a change.

MontyHigh, www.worldofwallstreet.us

OttoTrans Of "As Gold Is An Emotional Issue In India" ...

From time-to-time Otto Rock of IKN (e.g. http://incakolanews.blogspot.com/2013/04/mining-prs-and-ottotrans-part-69.html) offers a translation of what junior mining executives say and what it really means. Here's an homage translating a WSJ quoted Indian G-Man (link):

"Industry executives said the government may limit the amount of gold imported by state-run agencies such as MMTC Ltd. and State Trading Corp. of India Ltd.

'It's very difficult to ban imports as gold is an emotional issue in India. Any such move will also lead to a rise in the smuggling of gold,' the official said."

Here's what "as gold is an emotional issue in India" means: "as gold has been the only way of limiting G-Man plundering which has been going on consistently in India for millenia. "

When you've been ripped-off consistently for centuries its "an emotional issue".

If you read Indian history, you'll see that every century or two a new G-man (e.g. Alexander, Persians, Guptas, Mongols, Mughals, etc). sweeps thru plundering everything he can find. When that happens, hidden physical gold is the only thing that isn't swept away.

For example, the British G-Man directly benefited from the "crown jewel of the empire" in the form of tax revenues in the form of bullion money. These taxes were jacked up, especially on the peasant farmer, as soon as her Majesty really got a grip on the whole subcontinent (click here and search for tax and/or gold). There was a "giant sucking sound" as the gold went east to west.

A Hindu friend of mine told me the story of how his prosperous merchant family got out of what is now Pakistan during the post-colonial partitioning of India (when a new Islamic G-man replaced the British G-man in Pakistan). They got out with the gold they could carry (and nothing else) using some of the gold to pay and bribe their way. This is within living memory.

Indians have also been living with consistent, high inflation (the currently fashionable form of G-Man plundering) for decades. Intermittently it spikes to near hyper-inflation levels.

The Chinese, like the Indians, know a lot, both over the millenia and especially in living memory of G-man plundering. Perhaps that has something to do with their "emotional" attachment to gold.

The American middle-class is the most naive people in the world regarding G-man plundering (and gold). None of them have suffered any serious G-man plundering (except those south of the Mason Dixon) for centuries. They just don't get it. But might they get a life-lesson soon, good and hard.

MontyHigh, www.worldofwallstreet.us

Best Of The Web: "In the Morning!" To No Agenda Show's Adam Curry

who pointed out months ago that the Syria civil war (and most middle eastern conflict) was about pipelines. Click thru the map below for an article supporting his thinking:

MontyHigh, www.worldofwallstreet.us

Off Topic - William Rivers Pitt: Dishonest, Lazy Or Stupid?

William Rivers Pitt, Truthout Editor and Columnist, writes this piece:

links to another article to claim: "A report released early this year by the organization Oxfam International revealed that the combined income of the richest 100 people in the world is enough to end global poverty four times over" and later claims that "one billion children live in poverty". A quick click-thru to the article reveals that the net income of these billionaires is 240 billion dollars.

So, which is?

• Less than 60$/year is enough to lift someone from poverty? (Applying 6th grade math 240 / 4 = 60 and there are more than 1 billion poor people since not all poor people are children) OR
• William Rivers Pitt is too stupid to do 6th grade math OR
• William Rivers Pitt is too lazy to explain to us why obvious 6th grade math does not apply OR
• the editor of Truthout doesn't care about the truth as long as he can make statement that supports his agenda.

This is enough to cause me to ignore Truthout forever. Help me William to see what I've got wrong in this post.

MontyHigh, www.worldofwallstreet.us

Gold Seasonals: What If There's A Big Downturn In April / May

Ok, so here we are in the aftermath of that April / May 2013 downturn. Let's compare this with other recent years where there was fat, year-to-date low in April / May? Here they are (2003, 2004, 2008):

Here's my observations:

1. None of the downturns were as big compared to this years and these, unlike this year, came directly (or pretty directly) out of the bollinger band highs. So these are not that directly comparable.
2. Looks to me like all three of these somewhat comparable situations went on to make out of the upper bollinger closes (highes) prior to any post-mid-may lower lows.
3. Two out of three went on to really nice runs to the end of the year. Of course, the other case was 2008 when everything went to hell.

My overall conclusion is that the current situation is unlike anything else we've seen since the start of the bull market. I wish I could say more than that.

MontyHigh, www.worldofwallstreet.us

 

Once Again, Is The Gold Bull Market Over? And, What If It Isn't? Part 1

Now that we've had the big gold breakdown and the first bounce out of it, I guess its time to collect my thoughts on where we stand. Maybe you can help me with your own thoughts.

As you perhaps recall, I've been very, very heavily invested in precious metals including some long-dated gold call options (now out of the money), a good-sized chunk of semi-paper gold (Sprott's PHYS) and a bunch of junior producer gold mining stocks.

In addition to this, I'm holding some gold-money bullion, an expensive paid-off-house and am maintaining my quite lucrative CTO-level high-tech day-job. I've basically held over the last month with a little shifting around of the gold stocks. I didn't want to sell out at the bottom.

Clearly I have been long and wrong.

Now, I have a much higher risk tolerance than I would recommend to anyone else. I think that wealth is accumulated in investing thru concentration and is maintained by diversification. I'm still trying to accumulate. Despite the action of the last month my investing returns over the last 10 years remain over 200%. They were up nearly 600% when the all time gold price peaked in 2011.

I'm still at the point where the day job is "for fun" and not needed to make ends meet. I do not have to work another day for the rest of my life. For me, that is the line that my risk management has to hold and I've held it. So, I've taken a bigger hit than anyone would want to take, but have not "blown up".

I hope, dear reader, that you appreciate this candor which I don't think you'll find most other places. 

So, that's where I stand. Now, to my question: "Is The Gold Bull Market Over?". This is a critical question for me because I've been convinced that the Gold Bull Market was a singularly good place to concentrate investments. This was based on the idea that the manipulation of the gold market caused short term high-volatility (to manage mainstream investor sentiment to keep it out of precious metals) while managing a rise in the price of the metals resulting from the managed plunder of savings via negative interest rates. Nearly all of my short-term analysis was based on the idea that this managed trend was intact and that parallels from earlier in the bull market provided insight into what was coming up yet.

Let's start with a review of this piece from March 8, 2012: The Primary Trend... There's Nothing Like Gold. Here's the key chart from the piece:

Here's the summary of the post: "Rising consistently for a decade with just a minor downturn for the 'global financial crisis'. The 75 week EMA barely turned down during the crisis. There's nothing else like it."

So, let's see how that chart looks now:

Clearly the recent downturn is unlike anything else in the bull market except the 2008 global financial crisis. Unlike 2008, this current downturn is specific to gold. 

PRELIMINARY CONCLUSION: The gold bull market may not be over, but it is clearly not the steady, reliably rising market that it once was.

Feel free to leave me a comment with your thoughts, especially if you can link to a relevant chart or other empirical data to support your thinking.

Best wishes,

MontyHigh, www.worldofwallstreet.us

Here's the links to earlier posts of mine that I'll probably be referring to in upcoming posts in these series. These are mainly provided here to help me author those posts.

 http://www.worldofwallstreet.us/2013/02/gold-situation-arguably-worse-than-2008.html

http://www.worldofwallstreet.us/2012/12/once-again-is-the-gold-bull-market-over-and-what-if-it-isnt.html

http://www.worldofwallstreet.us/2012/11/chart-of-the-week-about-due-if-gold-bull-market-is-intact.html

http://www.worldofwallstreet.us/2012/09/is-gold-overbought-and-what-is-the-two-month-outlook.html

http://www.worldofwallstreet.us/2012/03/best-of-the-boards-danstraightmans-chart.html

http://www.worldofwallstreet.us/2012/03/gold-recent-work-revisited-with-updated-charts.html

http://www.worldofwallstreet.us/2012/03/the-primary-trend-theres-nothing-like-gold.html

http://www.worldofwallstreet.us/2011/11/letting-the-charts-talk.html

http://www.worldofwallstreet.us/2011/09/a-study-of-gold-bull-market-corrections-through-the-50-day-moving-average.html

http://www.worldofwallstreet.us/2011/09/current-gold-price-action-anybody-seen-this-before.html

http://www.worldofwallstreet.us/2011/09/a-study-of-gold-bull-market-corrections-through-the-50-day-moving-average.html

 

 

 

 

 

What's Happening With Chris Martenson?

I admire Chris Martenson and subscribe to his service, Peak Prosperity. By looking at the empirical data, the guy became convinced that Peak Oil was real and significant and took action. He published his "Crash Course" and quit his lucrative day-job to spread his thinking.

I particularly admire his synthesis of two ideas:

• The fractional reserve financial system will collapse without continued economic growth.
• Peak Oil renders continued economic growth quite unlikely.
• THEREFORE, "Life as we know it will change.". 

Now here's what I find interesting. Look at what he's been writing lately:

The guy has bought the Gold Antitrust Action Committee (GATA) thesis that "THEY" are manipulating the price of gold. The guy has mostly been writing about the financial system lately. The guy has always said that he'd follow the data where it led and this is where he is.

What does this mean? Well there are a bunch of possibilities, but I think it means:

• The data supporting gold manipulation is strong.
• Peak oil is showing up in the sharp reduction or absence of world economic growth and so that's what he's writing about.
• The financial system is really having trouble coping with that change and is resorting to all kinds of manipulations to keep itself from collapsing.

MontyHigh, www.worldofwallstreet.us

 

The Big One: Denninger - "Large Market Swoon" Oct-2013 to Oct-2014

I think I'm going to start tracking when various prognositicators say "The Big One" is going to hit. You know, stock market crash, hyperinflation, dollar collapse, gold $3000, etc. You (and I) will be able to find them by clicking on "The Big One" link on the left of my home page.

Here's the first, Karl Denninger: "

See, I fully expect another large market swoon in the next 6 to 18 months, probably closer to the inside on time.  And by "large" I do mean large -- 50% or worse, perhaps considerably worse.

This time, however, The Fed has used its bullets with QE and interest rate games and so has Congress and the White House.  What does this means?

It means the government needs to find a way to keep the game going.  They will look toward private and public retirement assets to do so because this is one of the very few remaining stores of wealth they can attach.  To do it they're going to play on your fear and offer you a carrot that is in fact a giant corn cob aimed you know where.

Here's what I expect.

They will "offer" to replace your loss in your trading account, including a taxable account, provided that you convert the entire thing to a ladder of 10 to 30 year Treasury notes at then current interest rates, which will be ridiculously low -- lower than they are now -- and agree to lock it up until you are 65."

What's the probability that this phrase "I fully expect" indicates? I say its more than 50% and less than 99%.

I like this piece, but I think the end is further out. I think the Banksters are still in control. In fact, I think their power is increasing. Its certainly increasing over the population of the developed world as it gets harder and harder to do anything financially significant without their computers watching and correlating for "out of the mainstream" patterns. It seems like its increasing internationally as they put the screws to more and more "won't play ball" countries: Columbia, Peru, Iraq, Sudan, Libya, Syria with the screws tightening on Iran and Venezuela and Cuba coming up next.

Have any countries significantlly gotten out of the Bankster's grip? When significant countries get significantly more independent of the Banksters then I'll be thinking the jig is up.

Lord willing, we'll see who is right.

MontyHigh, www.worldofwallstreet.us

 

Best Of The Podcasts: Dominic Frisby, John Kay - Obliquity

How many financial interviews do you pay attention to once and never think about again?

Here's one I've been pondering for a while. I think the word "Obliquity", referring to something that can only be attained indirectly, is quite a useful tool. Happiness, for example, is Obliquitous.

Here's an example (underlined) that caught my attention in church this morning:

Mk 8:34-37: "And He summoned the crowd with His disciples, and said to them, 'If anyone wishes to come after Me, he must deny hiimself, and take up his cross and follow Me. For whoever wishes to save his soul will lose it, but whoever loses his soul for My sake and the gospel's will save it. For what does it profit a man to gain the whole world, and forfeit his sould? For what will a man give in exchange for his soul?'"

Have you found anything Obliquitous in your life? Leave me a comment.

P.S., I find Dominc Frisby interviews to have a ratio of "useful, I've never heard that before"  to "same old gold bug stuff" ratio to be pretty admirable.

MontyHigh, www.worldofwallstreet.us