Empire of Dunces

…gets beaten again. Yesterday’s defeat of Ron Paul by Romney and Santorum is quite literally the death-knell for the US economy. Paul is the only man, who has always understood the problem, and also the only one who actually had a realistic solution, radical as it was. It is immaterial whether or not there was voter fraud, of which there are certainly indications. The panic that the establishment displayed in the run up to the Iowa caucus, and a potential victory by Ron Paul already showed quite clearly that they would do whatever it takes to prevent Paul from winning. In New Hampshire, Romney will win now, and from there on out, it should be fairly easy sailing. However, in the end it does not matter which one of these warmongers wins. Unless the US economy craters before the general election – definitely possible – Obama will win. If need be, there will just be another war, since apparently wartime presidents never lose. Obama or Romney will not make any difference either way. Both are more than eager to look for excuses to start wars. Both are economically illiterate, and in the banksters’ pockets. And both are eager to keep selling out their citizen’s civil liberties.

I can only encourage you to continue diversifying internationally. Get a second passport. Uruguay, Panama, Dominica, Chile or Singapore are just some of the good options there. Get your money into different currencies in various international banking centers. Singapore and Hong Kong are good places to start. Switzerland and Liechtenstein are certainly not what they used to be. Plan ahead. Do not get rolled over by the tidal wave of history. The status quo seems like it will go on forever. Until it does not. And then everything changes very quickly. Even if I am wrong, there is no harm in being prepared. And international diversification will also provide you with greater opportunities for profit.

http://www.lewrockwell.com/blog/lewrw/archives/102467.html

This post is a little different, in as much as it is not directly concerned with the markets. Instead, I feel compelled to speak up with regards to the constant warmongering by western media and governments. Libya was bad enough, but except in private, I remained quiet. But now Syria, and then inevitably Iran and Lebanon. There has to be a line, and these people need to be shown that line.

Focusing on Syria, especially in the last couple of weeks it has become obvious how the western civilian population and hapless governments are being manipulated by a London outfit called the Syrian Observatory of Human Rights. This organization under the leadership of one Rami Abdul-Rahman is busy putting out ‘news’ about the various massacres being committed by the Assad regime. Google News currently lists over a million news items by this Syrian Observatory of Human Rights. All the news that you hear in your local TV station and read in your newspaper, and even find on the internet, comes through this outfit. Independent journalists such as Webster Tarpley, Thierry Meyssan (German) and the German publisher Kopp Verlag confirm this. Clearly, the Syrian opposition is being financed and equipped by the same people that already toppled the Libyan regime. And the mainstream media are playing right along. A crime is being committed right in front of our eyes that will lead to thousands of deaths, and could conceivably even cause a third world war. Russia and China have a vested interest not to let another friendly nation fall to this so-called Arab Spring. Russia even has a naval base in Syria. To get a clearer picture of the geopolitics of the situation, I recommend an article by Stratfor that will show the various motivations at play in the Middle East.

We must not just swallow these lies. Even if we are powerless to stop this, at least individually, we have to stand against this constant warmongering. The internet has been the tower of freedom and independent information for years now. But it seems that more and more internet outlets are being co-opted into this drive for endless war. There are motivations at play here that we never hear about in the MSM. And there are forces at work that do not have the best interests of the various peoples at heart. The Syrian people deserve better than to be slaughtered at the altar of Western interests, like the Libyan and Iraqi people already have.

AN excellent post at Zero Hedge, addressing the constantly reoccurring meme that it is best to be a contrarian when it comes to following the herd. When the herd is overwhelmingly bullish, you are supposed to sell, and when the herd is overwhelmingly bearish – such as right now – you should buy. It is advice that has usually worked like clockwork. Except since 2008… Read.

Guest Post: Breaking Down The Bullish Argument | ZeroHedge: “”

(Via .)

It has been a long time since my last update, on account of our regularly scheduled meetings. But I need to drop you a quick note in light of current developments. A lot has happened these last few months. The cartel for the suppression of the precious metals prices has essentially come out into the open, and nobody in their right mind can still doubt their existence. Our speculative portfolio also took a hit from all of this. Your best insurance, as always, remains to hold physical silver and gold. And not to hold it within the banking system either! Private storage! As far as speculation in paper silver and gold goes – this is an extremely risky proposition. The upside potential is enormous certainly, but so is the downside potential. Allow me to worry about that.

The reason for this current missive, however, is a different one. The Greek debt crisis is taking on systemic threatening proportions. Right now, a number of indicators are flashing warning signs. We are due for a correction anyhow. If you combine that with the upcoming end of QE2 (however temporary it will be) and the very real threat of a Greek default, which is appearing ever more certain these last few days, then we are talking about a crash of epic proportions within the next few weeks, possibly days. The dollar is rising strongly. Treasuries will also rise in this environment. Pretty much everything else will be sold off hard. Precious metals, commodities in general. Stock markets, emerging markets, you name it.

To name just a few red-flashing indicators – the Euro is dropping heavily and close to inflection points that might indicate a drop all the way to 1.25 to the USD. The Russell 2000 has fallen through every support level already, and now is just waiting for that final nudge, before a precipitous fall that looks to go all the way to 700, possibly more. Agriculturals (RJA) are also on the edge of their 200 day moving averages, and once they cross that have a ways to fall further still.

Step very carefully in the markets right now. Cash is not a bad place to be in. And you really want to have some cash on hand for all the buying opportunities, especially in the mining sector, once this crash has really gone through. Now obviously, I cannot look into the future. My analysis might be wrong. But the probabilities are strongly pointing in this direction. In the end, we are just dealing with probabilities after all. So – prepare. But do not yet get out of dodge and hide in the bunker. However, things could start to move very quickly very soon. Be ready.

On Zero Hedge recently, Tyler Durden, I believe, coined the term ‘clusterflock of black swans’, which is just an absolutely lovely way to put this particular period right now. Revolutions, war, earthquakes, tsunamis, meltdowns, sovereign debt crises, spiking inflation, etc. And yet, through it all, the markets in most countries have been remarkably resilient. How come? In a word, liquidity.

Why has the stock market been rising so steadily? I have said this before, but it bears repeating – one of the best performing stock markets of the last few years was Zimbabwe. Anybody would like to have been invested there? This is the normal course of an economy and stock market on the road to hyperinflation. There is a boatload of money floating around right now, and it has to go somewhere. Wages will also be rising quite nicely. Just as they did in Zimbabwe. Only, it did not help then. Because the wage increases never did keep up with the price increases. And it will not help now either.

The Continuous Commodity Index CCI has tripled since 2002 and doubled since 2009. This index is comprised mostly of food. And these increases are what revolutions are made of. What is going on in North Africa and the Middle East right now is only the beginning. And it has in fact little to do with a desire for democracy, as our MSM are trying to tell us. This is about the desire to EAT. In the western world we will feel this as somewhat unpleasant cutting back on going out maybe. Maybe a bit more purchasing from wholesale supermarkets, instead of buying Argentinean steaks and South African ostrich. But in the poorer parts of the world, where food costs already make up more than half of all monthly income, increases like this mean starvation. What most people do not realize, is that those pitiful pictures of starving children in Ethiopia during the 80s, where not on account of a lack of food. There was more than enough food produced even within the country itself during that time. The problem was one of distribution and pricing interference by the government. Today now, we still have enough food, at least internationally speaking, and despite this insane, tree-hugger driven push to convert much of our food production capacity into biofuels. Already, the majority of the corn fields of the United States has been converted to biofuel production. Because the government subsidizes that. Now add onto that the fact that Bernanke has been going completely insane with money creation, and you have a situation where things can only get worse. Prices are going up GLOBALLY. Not just in the US. You can thank the continuing reserve status of the US Dollar for that. As well as the fact that most governments in the world are following the same policy recipes as Bernanke and Obama. Deficit spending, bank bailouts, no accountability, and no choice in actually getting a different government. The faces may change, but the policies remain the same. At least until economic reality sets in. It already has in the Middle East. And it is busy setting in, in the rest of the world.

Things are coming to a head right now. At least it feels like it. The USD seems to me to be at a breaking point. It simply cannot keep going like this for much longer. Remember that I have been investing for you in gold and silver and oil for a while now. But you should still buy physical gold and silver as well. And not to keep in a bank vault, but to bury in your back garden, or to keep it on your private yacht or something along those lines. These personally held precious metals are not so much an investment,as an alternative currency, for use when things get really bad. As far as trading the precious metals goes, this is a rather complicated and dangerous time. Commodities have historically declined between May and October, almost like clockwork. Additionally, QE2 is scheduled to run out in June, which would draw a lot of liquidity from the markets. Especially the price increases in silver lately, have been fueled to a very large degree by quantitative easing. The combination of those two factors might very well add up to a difficult period for gold and silver over the summer. If you are speculating there, be careful. The stock markets are also going to take a major hit, if Bernanke actually stops QE for a while. He will of course start it up again, all the way to QE infinity. There will be some trading opportunities here, but this is something that could literally change from one minute to the next.

Is Japan a worthwhile place for investments now? In a word – NO. I harbor great admiration for the Japanese people in general. And the way in which they have comported themselves during this latest trial, only strengthens my admiration. But the fact is that, first of all, the catastrophe has not been priced in fully at all yet. And that secondly, the structural problems of the country were already insurmountable, before this latest crisis. Having to finance the reconstruction now, on top of the highest budget deficit in the developed world, all amid severe economic contraction, is going to break the system. Now add in the fact that the population is aging rapidly, without being replaced by anything even remotely approaching proper population replacement growth, or actual immigration (which is severely restricted), and you have a situation that spells doom for the country. There are going to be opportunities for profit there of course. But as far as foreign direct investment goes, I would very much advise against it.

The markets are moving exactly as we have been predicting for quite a while now. And the development of our portfolios reflect that. Our recently established high-risk portfolio alone, has since the beginning of trading on October 4, increased in value by over 40%. Congratulations to all who participated. Since I have been asked about that – this particular portfolio will be re-open to additional inflows shortly.

In response to those who let themselves be panicked by the supposed experts on CNBC and the various other MSM organs – this is not the high of the market for either gold, silver or oil. I understand that there is always a temptation to take profits. And you are all free to do so at your own discretion. But within the funds under my management, that will not happen, because this particular bull still has a long way to go. Yes, there will be continued trading, and there will be ups and downs. Such is the nature of the market. Today alone, the market has once again first exploded upwards and then crashed downwards in silver. This is merely to shake out the weak hands. There is also a sense of panic at the long-term manipulators at JPM and HSBC, who have grown accustomed to letting the price of silver dance according to their tune. But those days are over. Not even the interference of the central banks is going to change that. But they will continue to try.

Trust me, and continue to follow our long-term advice. This is merely the beginning…

There is no need to get nervous about the latest price swings of gold and silver right now. There is considerable volatility in the markets, and we will experience such swings for some time to come. The fact of the matter is that prices do not move up (or down) in a straight line. With silver and gold there is the additional problem of massive manipulations by central banks, and institutional investors such as JP Morgan and HSBC in particular, both of which have been holding substantial short positions on silver for decades already. But one cannot fight the market forever. Especially Asian investors are greedily gobbling up the precious metals, like there is no tomorrow. The price ratio of silver to gold has historically (and by that I mean since Biblical times(!), since we have extensive historical price documentation) been about 12-1. In the nineteenth century up to 15-1. Currently, it is closer to 54-1. That is not only unprecedented, but also not maintainable. One of the two has to give. Either gold has to fall, or silver has to rise. Drastically. Knowing the way I think, you can probably figure out which of the two I am going with here…

Our newly formed high-risk portfolio is off to a good start so far. Currently, we are focused on silver, oil, and the financials. A wager on falling prices in the financial sector is certainly a contrarian investment right now, since first of all, everybody believes that the “too big to fail” insurance policy will work in perpetuity, and secondly, because QE2 is pumping an obscene amount of money into the markets. Both of these are wrong. The Obama administration will not be able to once again persuade the public of the need for a bank bailout, and they know that now already. These banks will be allowed to fail now. They simply do not have a choice anymore. As far as QE2 goes… primary dealers are obviously profiting from this, but in the grand scheme, this has been priced into the market a long while ago already. And long term of course, quantitative easing a catastrophe anyhow, as I have explained at length before.

Why am I so down on the economy, when at the same time the stock market is doing so well? A common question. And as a reader at the Economic Collapse Blog reminded me as well just now – if the stock market were a good indicator of actual economic performance, then the best performing economy by a wide margin over the last decade, should have been Zimbabwe’s. Still think the stock market is a good indicator for economic performance?