Journey To Babel - Revisited
The following is commentary that originally appeared at Treasure Chests for the benefit of subscribers on Tuesday, February 4th, 2014.
This is the third time since 2011 this topic has made these pages, the reason being it's a very important understanding for everyone to absorb, and it needs to be repeated to help counter the continuous misinformation and distraction in mainstream media. Based on little reported, but important signs (growing numbers at levels that could actually affect fundamental organizational / political change), it's becoming increasingly apparent the message is getting through, because people know when they are getting screwed. And this is especially true when the 'screwees' figure out the 'screwers' are going to kill them in the process.
What on earth are we talking about? Are we talking about the Fukushima situation, a situation that could literally end the species, yet remains 'blacked out' in mainstream media? No, that's not it, but this is another situation you should be aware of and acting on in terms of attempting to apply pressure on those responsible for 'public health'. Given these lost souls are 'bought and paid for' bureaucrats of varying degrees, who don't want to rock the boat (their paychecks), it appears people might actually need start dying before profits will move to the backburner in this case.
On this note we return to the focus of this paper handily however, and the answer to the question above, that being the fact our global plutocracy, in an effort to maintain the 'status quo', continues to crank up the Keynesian machine Globalization depends on, increasing aggregate debt to unsustainable levels, essentially suicidal thresholds, which they apparently don't see blinded by their greed. These people were partying in Davos a few weeks back, mapping out the journey to a new world order (Babel) designed to maintain their present power structures come hell or high water, with central banking / planning at center. It's Orwell's Animal Farm - worldwide.
So again, it's absolutely essential everybody understand these clowns are taking us down a road we do not want to be on given it's a Keynesian suicide mission for the masses. Even if you work for these people it's important for your survival (literally) to understand we do not want to go down this road with these greedy idiots. Because you don't want to destroy your money, as it's not only what keeps the wolves from your door, it's also what keeps society 'civil', allowing you to walk the streets. Unfortunately, such concerns will likely not be taken seriously before it's too late. (i.e. there's no plan b).
But hey, we're not supposed to worry about that right? James T. Kirk and the Starship Enterprise are on the way to 'save the day'. The Tower of Babel must be preserved at all costs, no matter what happens to the common folk. At least that's what the assholes in Davos would have you believe. They would have you believe the plutocracy should be admired, protected, and allowed to continue their rape, pillage and plundering ways. And they are on television everyday conditioning fools that get their information this way with propaganda it should be so. And they have no problem enforcing 'the law' with their jack-booted dogs if you don't agree.
Every dog has his day however, which has been true of all fascists throughout history, from Rome to Germany, and our present day oligarchs will be no exception. Because the rot and corruption will eventually become overwhelming evident to all, and behaviors will change when survival becomes an issue. This is already becoming evident in China, where despite a growing middle class more recently, these people remember where they come from, and are nowhere near as trusting as your average North American dope. This is why everybody from the plutocrats to the peasants still put gold in its proper place, leaving North American's to concentrate on bling bling - just anything that will keep them distracted from reality.
Of course the Chinese can still afford to deal in reality, which is why they may be the pin that pricks the West's bubble. And while it's true they have become an integrated facet of the Western machine, the chief benefactor of offshoring, it's the wealth hefty trade surpluses have created that allow the Chinese to contemplate legitimate tightening despite evidence of increasing stress in the economy, not too mention their sagging stock market(s). But as with the Fed in its early days in the lead up to the 1929 stock market collapse, and the Great Depression that followed, if the Chinese continue to ignore the magnitude of their problem, a similar result could unravel worldwide.
What's more, Chinese authorities appear to not only be ignoring their own signals, but those being thrown off all over the world, in both developed economies and emerging markets alike, which is something the Fed and company will have a problem containing if left unchecked for too long. In this regard, and as pointed out last week (when it made sense to act on this knowledge), the failure in the Dow / Gold Ratio (DGR) advance is a big deal in terms of signaling a return to secular (long-term) trends for these respective markets, which are down for stocks and up for gold. So the kabuki theatre that is better known as 'tapering' will likely be reversed at some point this year once the economy / stocks contract sufficiently, especially considering the Presidential Cycle has shaped monetary policy timing since the Fed's inception. (See Figure 1)
Now, if the recent top in the DGR proves to be lasting, which was confirmed in the count discussed last week, completing a two and a half year corrective zigzag, what this means is the Fed is making a big mistake as well in attempting to tighten this year (joining the Chinese), the second year of the Presidential Cycle, which is customary, because they tend to loosen things up as the election approaches in rewarding incumbent politicians for allowing them to maintain their monopoly money. Moreover, the failure of both the DGR and Dow to maintain upward trajectories (and in the Dow's case 16,000) before completing their respective larger sequences is quite ominous in fact; suggestive a topping associated with the large broadening top seen below on the monthly plot from the Chart Room is in play. (See Figure 2)
You will remember from comments two weeks ago, that once the Dow closes below 16,000 on a weekly basis, which has now happened, the odds of significant downside in stocks would be triggered. And now we have this situation, with the 1929 analog to contend with as well, suggestive significant downside in stocks is possible in coming months, culminating sometime in April (as per the '29 analog) or May. Such an outcome would open the possibility of a repeat of the '29 to '32 sequencing as well, meaning stocks would not find an ultimate bottom for approximately two years, where the Dow could fall all the way to 6,000 in hitting 'broadening top' related support (see above). Thus, with the worst January Barometer signal in 24 years, the DGR signal just triggered, and the technical evidence of a top above, it's safe to say one should not be taking any unnecessary chances in stocks moving foreword, if not being outright bearish. (See Figure 3)
Moreover, in order for stocks to continue higher from here, we would need to see the NASDAQ / Dow Ratio break up into 'extreme bubble territory', shown on the monthly plot above, which is unlikely considering such occurrences have never previously occurred within the same generation. The truism 'once bitten - twice shy' comes into play in understanding why the public will not be back into tech stocks for a very long time. What's more, and along this line of thinking, it should be understood the 'investing public', as defined by the 'middle class', is being wiped out by the tyrannical fascists (posing as goody two-shoes socialists) in New York and Washington, in attempting to preserve, if not enrich, their own living standards. So, please don't be fooled by what appears to be a situation that is 'in control' (with currency debasement rates accelerating but general prices still in check), because while the Fed can increase QE whenever it wants for now, the false sense of security inflated asset prices creates is not helping the public. (See Figure 4)
This is why, and unlike what happened at millennium's turn (see above), stocks should not diverge from the DGR trend this time around, where again, if you understand these things, the recent technical failure in cyclical / corrective rally of the DGR is a sign the premise stock bulls were buying into stocks on was wrong, and must be corrected quickly. So, this is why we could have quite the crash in stocks over the next few months, where again, one should not be looking for a bounce before early April if history is a good guide. What's more, and in referring to the chart above again, if things are to be different from the tech bubble experience / sequencing / inter-market relationships / timing, then who knows, maybe precious metals shares buck the trend of the broads over the next few months as well, especially if open interest put / call ratios keep rising.
Because while the second year of the Presidential Cycle dictates a tightening posture in Fed policy until the end of the third quarter this year, money supply growth rates are still quite buoyant, which means surprising things can happen. (i.e. given the apparent inverse relationship between precious metals and the broads.) Certainly to be safe one should be accumulating precious metals shares gingerly at this point in knowing the downdraft in stocks has not even begun in earnest yet, and that a possible crash in the Dow of up to 50% may lie just ahead (it would be bold to think a 400% rally in gold stocks is just around the corner knowing this [but perhaps this is why it might happen]); however, bullion accumulation is quite a different matter in spite of the apparent control the Fed has here too. (i.e. they have cornered the paper gold market.) Therein, eventually the Western / Anglo / American banking cartel will get called on their paper gold scheme and all hell will break lose in this market. (See Figure 5)
But that will never happen - right? Look at the situation. The status quo boys would have you believe all is well in hand, and they are celebrating the Fed's stick save of the economy over the past five-years, lavishing praise on the Bernank on his way out. Of course if you understand these things you would know that praise is likely premature with the differed inflation channeled into stocks and bonds lurking in the background that is QE, inflation that is waiting to come into general price levels at the right time. If you are a Canadian you feeling this pain in real time as the prices of real goods are shooting higher with a collapsing currency. (i.e. the C$ is falling because currency traders are discounting falling demand for natural resources as global economic contraction accelerates.)
And this is what is waiting for American's as time presses on, where again, after we finish whatever variety of swan dive in stocks that is destined to occur in coming months, which should support the dollar($), expect Janet Yellen to 'lose it', not only reversing recent tapering, but doubling or tripling existing QE. The $ will of course crash as this becomes understood by the market, sending both general price levels and precious metals considerably higher in the second half of the year. Because the economy is already crashing despite the propaganda (bullshit) mainstream media and official sectors spew out every day, which will make such an eventuality 'a must' sooner rather than later. The super cycle events now plaguing the bureaucracy's price mangers will ensure such an outcome.
It's important you understand this, that larger cycle events will continue to plague technocrats as the granddaddy of all fiat currency economy bubbles deflates, proving central planning does not work, and that the trend towards centralization is about to stop dead in its tracks to be followed by a birthing of a wide scale more towards decentralization as Globalization implodes. So, like a newly appointed Alan Greenspan in 1987, Janet Yellen will be tested this year; and again, will undoubtedly attempt to print her way out of it in an attempt to maintain the illusion. Of course the last time we had a bubble this big it took a few years to begin the re-inflation process, which could be a problem in a financialized world. What's more, considering market participants have the attention span of a ferret on crystal meth these days (because of increasing greed and just to pay the bills), the feds might have a problem keeping gold (precious metals) contained much longer if it starts to rise.
That's the big 'take away' you should get from today's effort, that the vulgarities associated with the suicide mission these idiots have taken the liberty of plunging America into is finally coming into view, and that people are going to want out. This is what the failure in the DGR last week tells you, and it tells you the time for this is now. It tells you to get out of stocks and into gold because the DGR is headed for unity. It tells you stocks are going to fall and gold rise, where in the end (think 2020) one should expect to see the metal of kings ascend to reaches that will surprise the staunchest of the bulls.
So, act accordingly, because this opportunity to buy on the cheap will not be around forever.
See you next week.