Fingers of Instability Series, Part V

By: Ty Andros | Thu, Apr 5, 2007
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WAR, Matches being lit in a bomb factory, or Don't Spit in Superman's face
US decoupling likely, Global boom proceeding
Get on the Train, it's pulling out of the station; Commodities and Gold

In this final edition of the Fingers of Instability we will cover the bomb like plans being implemented in Washington DC. The overall look and prognosis for the Global Economies (it is bright), in spite of the Sub prime, "Arm"ageddon and auto debacles shaping up in the US. And the signals emanating from the precious metals and commodities sectors necessary to feed a booming global economy.

We have had a lot of wonderful reader comments about this "Fingers of Instability" series (all the back issues can be accessed at our archives at www.Traderview.com, subscriptions are free please sign up or send to a friend), as we have covered many thought provoking sideshows and opportunities created by the Sand Piles of Currencies and credit creation being implemented by virtually every Central Bank in the world. It's been a fun mental exercise, and has clarified many thoughts. Thank you all.

On another note, I will be participating at the Chicago Natural Resource and Gold Conference and Exhibition on April 27th and 28th at the Rolling Meadows Holiday Inn & Convention Center in Chicago - attendance is FREE! - this will be the last time it will be free. This is one of the oldest Natural Resource conferences in the U.S. I will be joined by such luminaries as Joe Granville, of the Granville Market Letter; Clyde Harrison of Brookshire Raw Materials; Jason Hommel of the Silver Stock Report; Jay Taylor, Editor of Jay Taylor's Gold and Technology Stocks; and Natural Resource Guru Rich Ridez. We would love to see you there!

WAR, Matches being lit in a bomb factory, or Don't Spit in Superman's face

The big news for the week happened just as it was coming to a close; the US congress fired the first salvo in their newest WAR against their "Bankers" and "primary suppliers". Biting the hands that feed them. It will turn out to be an "exploding cigar" as it blows up in their faces and injures everybody in the United States. WAR, WAR, WAR, that's all Washington seems to want to do; war on Iraq, war on China, war on Japan for a cheap yen (the Japanese economy is BARELY growing), cold war brewing with Russia, war with Iran, war on terrorists, war on financial sovereignty of other nations, war on global warming.

These WARS all cost MONEY, and create nothing but destruction; destruction of productive uses for the capital, destruction of our relationships with the rest of the world, destruction of the domestic economy. Like a petulant child who has had the candy taken away they are having a temper tantrum. The consequences for the citizens of the US will be higher prices on EVERYTHING that you consume; food, credit, clothing, oil, etc.

will all skyrocket over the coming months. And the potential for lower prices on everything you hold your wealth in, ie Dollars, stocks, bonds, real estate etc. Or they could be higher if the US currency is devalued by this episode. A real double edged squeeze. What did they do now?

They launched their first bomb in the opening salvo of their ill latest ill-conceived trade war with the rest of the world. They slapped Tariffs on the importation of coated paper from China, and it is only the beginning. It is the proverbial camel's nose under the edge of the tent, opening the floodgates of claims sure to come from businesses across the US to press their congressional representatives and the regulatory authorities to disrupt trade with this "joined at the hip" with the US behemoth called China. It is supposed to be a tax on "THEM" it is most certainly a tax on "US", as everything you buy will cost more. US politicians could do this twenty years ago when we had the greatest industrial base were greatest lenders to the world, now we are the worlds biggest debtors; they are living in a "BYGONE ERA". It remains to be seen whether this will hurt the global economy in general, but it certainly will be tremendously disruptive and destructive to the United States in particular.

A nice little trade deal was just completed with South Korea, you can expect it to be scuppered without thought by the US Congress in their blind rush to destroy the position we now have in the global trading community, further diminishing our future prospects.

As any grade school technical analyst will tell you the US dollar, is at a MAJOR inflection point, it is on the edge of the knife. Last November during the Thanksgiving holidays the dollar broke down and took a major turn for the worst against foreign currencies. It was messy and the convulsions in affected markets, was substantial. The carry trade convulsed and with it number of other markets. The breakdown was contained courtesy of the central bank of Japan and the New York Fed (aka "the plunge protection team", this is where Federal Reserve market manipulations are directed from as it is or was the financial capital of the world) and reversed over a several week period, but the charts are now saying we are on the edge of the next leg of the breakdown following through after a period of corrective action. The Congressional action Friday probably will turn out to be the tipping point.

When the dollar is declining, everything you consume is rising as it requires that we pay more from our existing foreign suppliers for everything we import, and we import a lot; energy supplies, textiles, clothing, house wares, office supplies, savings from foreign savers, capital for investment (as the US as a people have no savings to fund this), autos, electronics, You name it we import it. It is imported because previous politicians destroyed the manufacturing sector in America over the past 30 years (high taxes, brutal regulations and mandates will do the trick every time), just as they have destroyed the savers of America over the last 5 years. We have none of either, it doesn't pay do either of these activities on the US; you are punished if you do so. So we don't!

When Greenspan lowered rates to stimulate the economy over the 2001-2004 time frame he did it for THREE reasons, one was to facilitate borrowing and encourage lending which could then be used for 3 things; inflate other assets (reflating the stock market, underpinning bonds and of course the newly minted housing and mortgage bubbles) to counteract the bursting NASDAQ bubble, encourage borrowing for consumer spending, and force the money in savings accounts "OFF THE SIDELINES" (and he succeeded savings in the US has plummeted from 5 to 7% of GDP to -2%) and into the economy. He wanted to head off a Japanese style deflation and financial system collapse; ala 1989 Japan and the great depression in the United States. (He postponed it, and the postponement was set to continue, now these political leaders are rescheduling to an earlier date).

He succeeded in all three as asset prices have soared restoring the underpinnings the asset based financial system we now have, rescuing institutions, banks, brokers and pension funds from their outsize market losses (the little guy just went along for the ride), driving savings rates to lows not seen since the great depression (now we have no savings habits), and spurring domestic borrowing in the United States to levels never seen ever. The previous high just prior to the great depression was about 238% of GDP, this number now stands at over 315%. This doesn't include government debt and obligations.

Bush's Capital gains, dividend and marginal rate tax cuts spurred additional activity as investing, hard work and risk taking paid off. It paid off if you worked harder, "you got to keep more" so people started new businesses and worked harder, it paid off to invest in stocks as your Capital gains and dividends went to you not the government "so they went up" as people bought them, Capital poured into the United States as foreign investors correctly understood that the economy would boom under these policies, the economy boomed. Now these things can be expected to reverse as the Congress is set to set in motion the reverse all these policy's (see attacks of the economy killers in the Tedbit archives at www.TraderView.com) but one; the creation of mountains of fiat dollars and new credit. This is set to explode, as the Federal Reserve will be forced into becoming the lender of last resort. The foreign savers and suppliers of dollars (our bankers and lenders) are going to raise the price for their benevolence, or seek opportunities elsewhere (send their investments to other destinations), and there are now lots of elsewhere's! And the elsewhere's are growing every day.

The first thing you need to understand is that for the US to thrive business, the economy and wealth creation must expand. It is inflate or die for our financial system as it is currently structured and has been since 1913 when the Federal Reserve was created. To do so you need savings and investment, since we now "save nothing" those savings have been coming from dollar holders abroad (see the clock is "TIC'ing in the Tedbits archives www.traderview.com), dollar holders are everywhere as it has been the principle export of the United States since Greenspan took office in 1987. And the principle import since the trade and budget deficits started exploding under the Bush administrations and Congress profligate spending over the last 6 years.

We now live by the good graces of our foreign lenders as they hold the purse strings to our future. Now those purse strings are set to be "CUT" by the Mandarins in Washington DC. The US Congress is set to spit in the eyes of their lenders (try it sometime, it doesn't work, it is what caused the Asian and Russian debt crisis in 1997-8, and it will set off a bomb here too as the lenders leave the United States just as they abandoned Russia and Asia when they spit in the eyes of their lenders then). They are cutting these strings to cover up their misguided domestic policies that they have implemented over the last 60 years since Lyndon Johnson set in motion the next great wave of entitlement spending and mentalities. In an attempt to avoid the painful restructuring the US must do to resume growth in the global marketplace. Blame the foreign devils, its their fault, not ours even though we taxed and milked domestic manufacturers till they were forced to flee the country to preserve any profitability.

Because the enormous government burdens placed on the domestic paper industry have now become so large they can't compete in the United States or in the Global marketplace, these manufacturers have appealed to their "leaders". It is a story written wide in many other industries; textiles, autos, electronics, just to name a few. Domestic auto makers can no longer twist their parts suppliers for reduced prices, these parts suppliers are all in bankruptcy themselves, profitability only lies offshore for these firms where inexpensive labor, competitive tax and regulatory structures still exist. Ask Delphi, they aren't closing overseas operations just domestic ones. This Delphi standoff is set to give a big example of the destruction a Union can cause, their members are in the Twilight zone and don't understand its compete or die, they refuse to compete so their jobs are GONE. These firms have been forced to move their operations off shore or fail to be competitive in the global market place.

(Authors note; looking for assistance in creating portfolio diversification that can survive and thrive in what I am outlining? In fingers of instability? If so contact me through www.TraderView.com. Subscriptions to this newsletter are also free at this address; send it to a friend, Thank you)

The ONLY solution is lower corporate taxes, reduced mandates and stifling regulations creating the recipe for the growth for any business residing in the United States. These "representatives" are only planning the opposite so they are attacking their competitors so they can avoid changing their spending and vote buying plans, which they perceive to be the keys to their next reelection. The "domestic" greedy corporations are also under attack by politicians at all levels of the US government, Federal, State, and municipal governments nationwide are grasping at the record profits seen over the last few years. After years of booming tax receipts the only thing that has grown faster in the United States is government spending. And we all know government spending priorities are always more productive than in the hands of the private sector. LOL. Political solutions to practical problems, nothing new to long time observers of the US political system. More Good reasons to continue sending investments into the United States. Right? NOT

It used to be that to be successful you had to export into the United States, as it was the consumption locomotive to the world, if you wanted to invest in growth this was the destination of your investment. Now that has and is changing (see next Tedbit). The Global marketplace has hit critical momentum, they have savings, growing internal demand for all products, and they have growing infrastructure needs and great prospects for the owners of Capital, the seed corn of growth. These emerging economies are growing much faster than the US, and this is set to continue. So this money will now be redirected where the returns are the highest. And it IS NOT in the United States.

When the Foreign holders of dollars withdraw their support for the spending of the American government and citizens.

Heres a quote for you; from People's Bank of China Governor Zhou Xiaochuan ... "Many people say that foreign exchange reserves in China are large enough. We do not intend to go further and accumulate reserves."

Zhou laid out a PBOC plan to allocate NEW income 'Reserves' to a new agency which will "manage" those assets, most probably by 'investing' them into the global financial markets, with a good portion likely to flow directly into raw materials and raw material assets.

Who did Congress attack on Friday? CHINA. Next up? Japan. After that? Russia. Ending this huge influx of financial support from abroad will be a two edged sword for us (the United States), the dollar will decline causing inflation in everything you buy that comes from abroad, and from the money and credit creation that will be a result of the Federal reserve steeping in to cover the shortfalls of capital that no longer comes to the US from foreign investors (devaluation through cubic money printing). I can hear Ben firing up the helicopter as we speak.

Asset prices will collapse or soar depending on the asset class, until the return on those assets is superior to foreign opportunities. And they won't until domestic tax, spending and regulatory policies abate. Take a look at what domestic businessmen think of their future prospects since the most recent congress was decided;

As you can see US domestic capital spending on new plant and equipment is in freefall, just like 2000-2002. Do you think this might not bode well for future domestic economic growth and job creation? A piece of paper or policy out of Washington won't change this reality. These are the laws of nature and Capitalism. At some point foreign savers and investors will return and buy the stock markets and everything else but at a fraction of today's inflated asset values, so the return on investment is much greater than if they purchased those assets today. This will only turn around when policies are introduced conducive to an expanding and competitive economy, a situation that will not be embraced till our economy crashes forcing the changes that must be made. This ball towards a devastating downturn in future prospects and inflation was already rolling but it got a big push Friday and is accelerating like a Freight train towards a dramatic decline on our economic interests. It is Bipartisan POLITCAL affair and thus looks to be unstoppable. The ghosts of SMOOT HAWLEY are alive and well on Capital Hill. Expect a déjà vu. Expect us to reach the big trouble zone by late summer or early fall.....And because of this...

US decoupling likely, Global boom proceeding

In previous periods of US recessions it was said "if the US sneezes the rest of the world catches a cold". This was because the US was the biggest supplier of capital and demand in the world. It also held the greatest manufacturing base as well. Now none of those things hold true, demand is set to crumble, we are the biggest debtors in the world, all the capital is in the hands of foreign trading partners and central banks, and manufacturing has left the country en masse. So if you are creating policies from these assumptions you are miscalculating (see previous Tedbit). If you invest in the former, you lose, in the latter you win. Not a lot of winners on the horizon in the US.

Demand is exploding worldwide as income, employment and monetary stimulus are at record levels. Roads, factories, schools, homes, cars, and capital markets are now being built in far away places to substitute for the would be hegemon's in the US. The decline of America Capital markets and economic prospects extends far far beyond Sarbanes Oxley. And of course we are included less and less in these new foreign opportunities as they are tired of having sand kicked in their faces. They hate and resent US regulators trying to project their laws and wills outside the shores of America. Our words carry a little less weight on a daily basis. And why not? The US has misused this position of responsibility for generations now. They are unwinding their business with us in a quiet and consistent manner, trying to avoid an explosive exit that will damage all participants far more.

Manufacturing is done anywhere BUT the US as it is now unprofitable here, ask Intel, ask GM, ask GE, ask Delphi, ask Boeing, they build no new factories here, and don't even consider it. Their companies no longer can compete in their domestic markets and certainly can't in international ones, as taxes are too high, regulations are too much and mandated wages/benefits are too high. The only profitable parts of their manufacturing business lay off shore and they send it back to the United States or sell it in thriving emerging markets. It doesn't pay off, so they don't do it. The United States used to be the destination for the worlds production, now foreign markets offer far more profit potential now and into the future. The US is broke on all levels; Federal and State government, and the populous at large. Why send production here if you are not expecting to get paid? Or have anyone with money left to spend. Our foreign trading partners and allies are waking up to this reality daily.

The only thing we manufacturer more of than anyone is guns and military equipment!! A great business to be in when wars are no longer fought in the battlefield, now they are fought in the global market place. The US is positioned perfectly for the future. Right? President Eisenhower warned us about this. The department of defense sucks up the money that really needs to be directed at the private sector to prepare for the war we now find ourselves in. Thank you George Bush and neo-cons everywhere.

The weapons needed in this war are; Savings, GREAT EDUCATION, modern manufacturing techniques, INTERNATIONALLY competitive tax and regulatory environments, automation, computers, communications, modern transportation. Guns, Tanks and aircraft carriers no longer are the tools of war except in the backwaters of Africa, Middle East etc.; Civilized people (and there are a lot of them) want wars fought without physical violence. Trillions of dollars are being misspent to prepare for the wars of yesterday (the war on terrorism, IRAQ, IRAN, etc.), instead of preparing for the war we now find ourselves in. Economic WAR!

Our competitors are building the former and the US is building the latter, great leadership, foresight, and vision is in short supply here. The headlines talk about the sub prime mortgage and housing debacles to taking down the world economy, NO WAY. The day when we were the leaders of the world economy were in a long ago era, now we are broke paupers with no modern plants and equipment, generations of dumbed down young people. They will build many times more homes abroad then you can imagine, the people in those countries have the money in the bank to finance their construction, and the construction of all the things they used to look to us for. Their domestic credit markets are maturing by the day. Modern US banking systems are rising worldwide, but without many of the absurdities that have evolved on Wall Street.

If the United States economy sinks into recession or worse don't expect tears from the people we have spent a lifetime torturing by imposing our will, rules and laws on them. They will laugh, laugh at our arrogance and lack of responsible behavior. Laugh at our failure to plan for the future as all the successful societies around the world save money and we don't. They have saved for a rainy day. If that rainy day is a depression in the United States they have the savings to see them through and invest in their own countries and futures. And that of more reciprocative trading partners. When China, India, Russia, the Middle East, Japan, Australia, do business with you they don't try to impose their domestic laws and regulations on their trading partners. The US does. Arrogance personified!!

(Authors note; looking for assistance in creating portfolio diversification that can survive and thrive in what I am outlining? In fingers of instability? If so contact me through www.TraderView.com. Subscriptions to this newsletter are also free at this address; send it to a friend, Thank you)

This is no longer the only place to invest in the world; there are now many destinations. US capital markets are now only one destination for investors, now they have London, Dubai, Tokyo, Hong Kong, Zurich, Geneva, Sydney, Singapore, Moscow, Dublin, and many more to chose from. Take a look at this link to a 15 year pictorial anthology of Dubai - click here. This is written large in all the aforementioned cities and more. These places dwarfed the Capital creation in the US last year. Not even US investors have faith in the US economy, investment in foreign stocks and bonds from domestic US investors dwarf flows into US assets. Look at the fund flows.

These new destinations are CAPITAL friendly with low taxes and financial privacy as primary advantages. The smart money knows that anti money laundering laws are a canard for the taxman, coming currency controls and possibly confiscation of foreign owned assets. Everyone understands the importance of clean money, and support reasonable identification of source of funds; it is practiced in all of the above capitals. In the United States it has nothing to do with terrorism; everybody who's done any homework at all knows that only small small fractions of 1 percent or less of the domestic and global money flows are nefarious in nature. Why would these governments impose these 10's of billions of compliance costs in their economies to capture 100's of millions of dollars of dirty money? It doesn't make sense; the game these OECD governments are stalking is much larger. So these foreign investors are placing themselves outside the hands of the US and European Hegemon's grasping hands, nefarious plans of confiscation and abusive authority. He who controls the money is in charge, and controlling of the money is getting more and more outside the grasp of US and European politicians. The Anti money laundering laws are their solution to clawing this money back. They have been losing this grasp as the price for past and present irresponsibility to the people of the United States and the global community. It is set to accelerate.

The world may hiccup if we go down fast, they will do anything to keep it orderly, as they understand the consequences of rash or hasty behaviors. They want to quietly leave the burning building that is Central Europe and the United States of America. Our politicians may try to keep them out of the country as they are doing in the first Tedbit (they will beg them to stay invested in the US and Europe before this is over, they may wish them gone now but be careful what you wish for you might get it good and hard, they will).

Foreign central bankers and finance officials may send fire crews to calm US hysteria and fight brush fires in US financial markets so as to postpone the ultimate endgame. All Jaw boning and a little money to prop up the gargantuan emerging sick man of the world. The ultimate endgame of decoupling from the US economy, it's begun and will succeed. They have the money to get to the objective. Billions of People and Governments around the world are working very hard on it on a daily basis. It will happen sooner then later if Central Europe and Washington goes down the path currently in their ill conceived plans...

Get on the Train, its pulling out of the station: Commodities

Leg two or three for you Elliot wavers out there is just pulling out of the station, the most powerful legs of any BULL market. Worldwide money, credit, job, income, and demand creation are at record-breaking levels. Every Capital in the world is experiencing growth as the present economic expansion goes to a full-throated roar. The first leg of the commodities bull market was just these emerging tigers getting up to cruising speed in their burgeoning economies. Globally governments are fully tanked up with the capital necessary to continue the job of building out their economies, credit and capital markets (it's a hefty, time consuming and difficult task). Provided courtesy of the US government and consumer, the US has exported trillions of dollars, add in the stimulus of fractional banking systems and you have 10's of trillions of dollars of investment capital looking for a home. And they have made the decision to spend the money, at home. And abroad when the price is right, or it serves the strategic purpose of growth or wealth preservation from the depredations of the current US political establishment. The only way they can decouple is to build out their own economies and get off the sweet milk that the US markets used to represent to them. They are focused on this goal like a laser beam; Economic Growth and self sustaining wealth creation.

The dollar has lost 97 % of its value since 1913, and sixty percent of its purchasing power in terms of gold since 2002, and now commodities are set to catch up with this loss of integrity. Building homes, roads and factories in the emerging tiger economies takes lots of raw materials and the world is actually a little short of all those crucial ingredients. A chronic shortage of raw materials and food as these people buy more food and things as they rise in income. They have plenty of cheap labor though, and though the pay may rise slowly for these new entrants to the global workforce they will happily do the work as the jobs they are employed at create a virtuous cycle of ever rising wealth as middle classes emerge around the world. Just as it did in the United States and Europe many generations ago. A good motivator. These emerging economies and people have the work ethic; the west has the rest, relaxation and something for nothing, entitlement ethic. One will thrive and grow and one will wilt and die? Can you guess which one?

But the size of their populations dwarf the developed world. Working harder, longer and now in many cases smarter then the West, for the foreseeable future they are always going to be on the buy side of the materials necessary to build their economies. Using the dollars they now hold, and the currencies and credit their own governments are adding to the mix. Knowledge is now a worldwide phenomenon, available instantly in real time worldwide and they are buyers of knowledge. They are buyers on the margin in markets that can't yet expand as fast as their demand emerges. Energy, metals, technology, building materials, plants, equipment, wire, plumbing, education, etc.

(Authors note; looking for assistance in creating portfolio diversification that can survive and thrive in what I am outlining? In fingers of instability? If so contact me through www.TraderView.com. Subscriptions to this newsletter are also free at this address; send it to a friend, Thank you)

The US is not going to collapse because of US policies, just muddle along always selling something cheap to put off the ultimate bankruptcy. Periodic Fire sales as markets fall back in fingers of instability. These strategic foreign purchases will be designed to transfer knowledge, expertise, US factories, and prop up the dollar as we bleed to death from terrible policies now in practice and previous episodes of poor governance. But it will prop up the prices in the US from crashing. Each high will be lower as will each low in terms of real currency such as gold, in nominal terms it may appear to the US populous as a bull market. Creating an illusion of an expanding economy for the stupidest among us. Many look for the US stock market to crash, it won't. It may go down when domestic liquidity finally cannot grow, but when it does buyers will emerge to by these assets at discount prices. Asset that will just reprice higher in melting US dollars. Take a look at these charts from a previous Tedbits brought to us courtesy of www.elliotwave.com:

It already has crashed, and is continuing to do so as we speak as gold breaks out to the upside measured against any asset class in the world. Gold is breaking out against US treasuries. I have technical targets for gold at $3800 dollars, sounds unbelievable, we will see in the fullness of time. It takes 200 pounds of copper to build a house, can you say 10 dollar a pound copper? China is importing it like mad, as is India, and Russia, etc. At $3.30 a pound it is within spitting distance of the Old highs. We'll see. How about 150-dollar crude oil? The SPR (the Strategic petroleum reserve) is on the bid, crude inventories have shrunk in the last three months; gasoline supplies are growing scarcer by the day. Capacity utilization is not in the nineties, its in the high eighties in the refinery industry. The chart shows a clear head and shoulder bottom with an initial target of 75 near the old highs. Commodities have undergone an intermediate to long-term correction in terms of time and price from the first leg of the bull market from 2002 to May 2006.

Over the last several years Governments around the world have confiscated oil fields, mining interests and commodities based businesses from the private sectors in their respective countries, in a great big money grab, and we all know how well populous central governments create, maintain and expand capacity on the resources they control. LOL. Take a look at Mexico and Venezuela; they are in the process of destroying their oil reserves through mismanagement and lack of prudent maintenance. Mexico's Cantarel field has been tortured for decades, and lost over 500,000 barrels a day of output in the last 15 months, its plummeting. All in a head long rush to "cash in" on the commodity bull market before it recedes. The Central, South American and African governments are doing the same to their domestic commodity resources. This is not a recipe for increasing inventories of commodities in a rapidly expanding global economy. It is a recipe for higher prices and ever decreasing ability to meet demand. Soaring demand versus stagnant or shrinking output. Take a look at these "monthly charts" of Gold, Oil and Copper, all on buy signals after multi month pullbacks:

Notice how we have had 50 to 62% Fibonacci pullbacks in all the above markets, a head and shoulder bottom is clear on the crude and gold charts and the sub 50 dollar low tagged the longer-term trend line on the crude chart. Buy signals on all slow stochastic's with confirmation signals in the MACD on tap for the near future, all markets pulled back to neutral on the RSI indicative of strong bull trends. Gold tagged the 20-month moving average as did both other markets, all markets held the moving averages, some tested them more than others. Gold broke through the top of the bull trend channel and tested the breakout of the upper trend line. On the weekly charts fanline breakouts are clear, reverse head and shoulders are clear, pennant breakouts are clear. Need I say more? It is top quality bull market action in energy, industrial and precious metals in dominant long-term monthly charts. Now lets look at the CRB, the broad basket of commodities markets index that is published by the commodity research bureau:

The CRB barely pulled back over the same time period and just did a SIDEWAYS correction, RSI couldn't even get below 60 and an emerging breakout is clear. Remember this is a monthly Chart (big picture, dominant timeframe). Looking at the weekly charts reverse head and shoulders are evident as are rising wedges at breakout points.

This is not a coincidence; the last 4 plus years were just the 1st leg of the market. Now its time for round two in these respective long-term bull markets. I am SUPER bullish on commodities "RIGHT NOW" and bullish on asset prices in general that can't be printed. The paper pushers out of New York and Wall street all talk about "risky" commodities, it is actually those "faith based" paper assets (See all currencies sink in the Tedbits archives at www.TraderView.com) they push that is the most risky asset in the current global economy.

Take a look at the Stock market in Zimbabwe, it is soaring, anyone looking at a chart would believe this is the most vibrant economy and market in the world. Alas, it only signifies the total collapse of purchasing power as domestic currency holders flee the printing presses to get into something that can reprice no matter how much the governments print. I am getting very powerful technical buy signals on US stocks right now. For holders of dollars and currencies in general commodities are the hottest markets on the horizon, as commodities are constantly on the bid from the emerging economies and currencies and the dollar is constantly on the offer, what a nice spread trade. There are lots of people, businesses and governments holding paper currencies and dollars and they want commodities and unprintable assets of all types...

In conclusion, The "fingers of instability" will be with us for quite some time. It will be roller coaster rides in markets worldwide, thrilling or frightening depending on the seat you are in. Astute investors will profit from them and the least prepared will be eaten by them. Learn how to structure your investments to be on the winning side. If you want help with this give me a call or contact me through www.TraderView.com. Unintended consequences of government policies past and present can be anticipated, learn to profit from them. In the next issue of Tedbits we will be covering the Bomb, er Bond markets, it will be thought provoking.

If you enjoyed this edition of Tedbits then subscribe - it's free, and we ask you to send it to a friend and visit our archives for additional insights from previous editions, lively thoughts, and our guest commentaries. Tedbits is a weekly publication that comes out on Thursdays or Fridays.

Don't forget, I will be participating at the Chicago Natural Resource and Gold Conference and Exhibition on April 27th and 28th at the Rolling Meadows Holiday Inn & Convention Center in Chicago - attendance is FREE! - this will be the last time it will be free. This is one of the oldest Natural Resource conferences in the U.S. I will be joined by such luminaries as Joe Granville, of the Granville Market Letter; Clyde Harrison of Brookshire Raw Materials; Jason Hommel of the Silver Stock Report; Jay Taylor, Editor of Jay Taylor's Gold and Technology Stocks; and Natural Resource Guru Rich Ridez. We would love to see you there!

 


 

Ty Andros

Author: Ty Andros

Theodore "Ty" Andros
info@TraderView.com
www.TraderView.com

7800 Southland Blvd. #110 Orlando, FL 32809
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Tedbits is authored by Theodore "Ty" Andros, and is registered with TraderView, a registered CTA (Commodity Trading Advisor) and TraderVest Clearing LLC a GIB (Guaranteed Introducing Broker). He currently is the principle of TraderView, a managed futures and alternative investment boutique. Mr. Andros began his commodity career in the early 1980's and became a managed futures specialist beginning in 1985. Mr. Andros duties include marketing, sales, and portfolio selection and monitoring, customer relations and all aspects required in building a successful managed futures and alternative investment brokerage service. Mr. Andros attended the University of San Diego, and the University of Miami, majoring in Marketing, Economics and Business Administration. He began his career as a broker in 1983, and has worked his way to the creation of TraderView of which he is the CEO. Mr. Andros is active in Economic analysis and brings this information and analysis to his clients on a regular basis. Ty prides himself on his personal preparation for the markets as they unfold. Developing a loyal clientele.

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DISCLAIMER AND TERMS OF USE: While TedBits strives to present accurate and useful information, we make no guarantee of accuracy or completeness. All information and opinion expressed herein is subject to change without notice. Opinions and recommendations contained herein should not be construed as investment advice. Under no circumstances does the information in this column represent a recommendation to buy or sell any securities or commodities. Do not assume that any recommendations, insights, charts, theories or philosophies will ensure profitable investment. The information contained herein is for personal use only.

Gold and silver backed means that various commodity options strategies in gold and/or silver may be used. When buying options, you may lose all of the money paid for the option. When selling options, you may lose more than the funds received for selling the option. Strategies using combinations of positions, such as spreads or straddles, may be as risky as taking a simple long or short position. A high degree of leverage is used to buy or sell a sufficient quantity of options and/or underlying futures contracts equal to the value of the entire portfolio. The high degree of leverage can work against you as well as for you and lead to large losses as well as large gains. Absolute-return is not meant to imply that a positive return can or will be achieved. Absolute-return describes investment strategies which are designed to have the potential to succeed in rising, market-neutral and falling market conditions. Gold and silver backed and absolute return investments do not mean the investor will take actual physical possessions of any precious metal. Nor should any promise or guarantee be implied that such investments will perform better than any other investment in any possible future scenario described herein nor that such investments can or will preserve or protect in such possible future scenarios.

TedBits may include information obtained from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made to ensure its accuracy or completeness. Many of the statements and views made are the opinions of the author. Opinions expressed are subject to change without notice. This report is not a request to engage in any transaction involving the purchase or sale of futures contracts or options on futures. There is a substantial risk of loss associated with trading futures, foreign exchange and options on futures. This letter is not intended as investment advice, and its use in any respect is entirely the responsibility of the user. Past performance in never a guarantee of future results.

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TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/