Thursday, June 27, 2013

Stocks Higher for Third Straight Session; Dow Back Above 15,000; Gold Below $1200

After Ben Bernanke scared the entire investing universe last week, his captains - Fed governors from the various districts - have been talking it back, generally saying that the economy isn't strong enough to support even a tapering of QE, which comes as welcome news to the money-hoarders on Wall Street, who like nothing better than access to capital at close to zero percent with which to play about in their rigged lottery.

So much for ever having a balanced, unstructured, free market that isn't completely held hostage to central planning by the Federal Reserve Bank. With this kind of thinking predominant, it doesn't take much in the way of analytical skills or market knowledge to profit in equities, since, it is, as they say, "the only game in town," complete with the promise of higher returns than bonds and - with the Fed keeping the monetary spigot wide open - limited downside risk.

That's it. We're back to the Fed and big banks running the show, letting savers get slaughtered because the market will not be allowed to do what it normally would: take a pause, maybe a 10-15% correction, and wipe out the mal-investments.

All this means is that it will take a total collapse of the global economy (or at least a large share of it) to get markets back into what would have been considered "normal" just a few years ago.

Zero percent interest rates are not normal. Central banks purchasing every kind of asset - in quantity - that isn't tied down is not normal. The past five years since the crash in September-October of 2008 have been an aberration and when economies return to sound fiscal and monetary practices, the collapse will be colossal, sparing nobody.

Be prepared. There's a good reason for gold and silver to be selling off dramatically while equity prices soar. The fed and their cohort central bankers cannot stop the deflationary spiral their own policies have created. Continuing a non-discount of money over time is, in itself, the root of deflation, yet the Fed seems content to put their own feet forward into the abyss.

In a nutshell, the problem lies with their downward pressure on gold, which has been in backwardation for months. Gold is collateral, meaning it is at the root of the monetary system. By artificially pressuring it ever lower, demand increases, though, because of hoarding, supply eventually becomes non-existent, all other currencies become devoid of value, thus creating the Pandora's-box-like situation where the price of gold is near nothing, but none can be purchased for fiat because all faith has been lost in currencies built on sand, leading, quite logically, to barter, the most primitive, yet most reliable, form of trade.

This is precisely where the current policy-driven, over-sensitized, can't-take-a-paper-loss, unbalanced global economy is headed. It could take as little as a month or as long as 20 years for the entire system to unwind, which is the conundrum currently facing the peoples of the planet. When it does, those barren, rice-paddy farmers in Southeast Asia will be better off than paper billionaires with nothing but broken promises, McMansions and zero productive skills, because the farmers, at least, will be able to raise their own food and have something to eat.

An eye for an eye, or, more aptly, a plot of land for an ounce of gold.

Nice message for an upbeat stock market day, huh? Keep buying into the system of lies, greed, avarice and contempt for one's fellow man and see how far that gets you. When the Dow is at 20,000 or 30,000 or higher and gold is only $500 an ounce, Adam Smith's invisible hand will come clapping down on all the broken rules of economics and crush the fiat currencies flat.

Dow 15,024.49, +114.35 (0.77%)
NASDAQ 3,401.86, +25.64 (0.76%)
S&P 500 1,613.20, +9.94 (0.62%)
NYSE Composite 9,143.55, +76.28 (0.84%)
NASDAQ Volume 1,643,086,125
NYSE Volume 3,722,540,750
Combined NYSE & NASDAQ Advance - Decline: 5311-1227
Combined NYSE & NASDAQ New highs - New lows: 218-60
WTI crude oil: 97.05, +1.55
Gold: 1,198.20, -31.60
Silver: 18.42, -0.162

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