As I looked at Facebook this morning one of the first things I saw was a post that showed the “markets” were rising and that this person was giddy with excitement. I guess I might be too if I had no clue that the “market” has nothing to do with the underlying economy at all. The economy is dead in the water while Many games are being played to manipulate the stock averages higher even though most stocks are actually struggling. A lot of this manipulation is taking place in the futures market and is leading to higher prices in stocks that are being bid higher. I don’t understand the nuts and bolts but I do understand that the major stocks that have been rising have all seen the same action- people buying FAR out of the money calls (buying a position that, to pay off the stock would have to rise a LOT) causing others to have to buy the stock and bid the price up. This has been taking place before the “markets” open and have led to spikes that have seemed to hold during the day. WHAT COULD GO WRONG THERE?
This has led to a TOTAL disconnect between fundamentals, the economy, and most stocks- but a select few in particular. Of course, to a casual observer the moves have been monumental and since we humans think linearly [maS1] that casual observer sees nothing wrong and projects the current trajectory into the future no matter how outlandish that might be.
This is a reason why it is so important to keep we the people baffled with BS so that we can’t think critically and can be persuaded that we have the “greatest economy of all time”.
I have discussed the unemployment rate many times but I think this is particularly important when tens of millions of Americans have lost their jobs or are at risk of losing them shortly. I went to the Dept Of Labor website and saw that there were 881,000 people who filed for unemployment last week BUT the unemployment rate dipped to 9.1%- down from 9.9% last week. DOES THAT MAKE SENSE?
Let’s look at a few numbers. In that same DOL report there are 29,224,546 people receiving unemployment insurance. According to the USdebtclock.org there are 143,018,587 people in the US labor force. Using simple division the unemployment rate- without any other revisions is 20.3%. This, however, is just the tip of the iceberg because there is another 100,725,275 people who have been unemployed for so long that they no longer count. I am sure some of these are disabled, etc. but that leaves 87 million either children or retired. Since I can’t be sure of how that 100 million plays into real numbers I will defer to John Williams of Shadow Government Statistics who says the real unemployment rate is north of 30%. Higher than in the great depression.
Another concerning fact is that of the 143 million workers only 120 million or less have a full-time job. Let that sink in- we have about 120 million people pulling the wagon for 330 million.
Without wages how does the economy grow? Of course, many may say that the Fed will just “print” money and it will be ok. It may be- to a point when there are few, if any, goods to be had because the economy has been so hollowed out by fake money and the illusion of normalcy where none exists.
Even now, our national debt is approaching 27 TRILLION that they admit to and there are trillions in off-the-book expenditures and possibly hundreds of trillions of unfunded liabilities like Social Security, Medicare, Prescription coverage, etc.
We actually have the most indebted nation in the history of the world- not the richest or any where near the “greatest”. The sad part is we DID have the greatest economy of all time PRIOR to going off the gold standard in 1971.
A man could earn a meager salary and raise a wife and kids on one salary. It didn’t matter so much what your income was because everyone was getting by, doing well and respecting others regardless of their occupation or state in life. Fake money has driven a wedge between the “haves” and the “have-nots” and the chasm is growing wider by the day. While I am disgusted by the rioting and looting I can’t say that I don’t understand where some of this anger is coming from. When people lose all hope- they lose it! (Thanks Gerald Celente for that one).
The bonds are being bought in record amounts and rates are manipulated to be ridiculously low and even negative in many cases.
Even with all of the games being played by central banks with The Bank of Japan virtually BEING the Japanese bond market and owning nearly 80% of all Japan ETFs AND being a top-10 shareholder in a majority of the Nikkei stock index- that index is STILL 40% LOWER than it was 30 YEARS ago. Markets always go up eh?
With all of the “printing and buying” taking place by the ECB the net result so far is banks in trouble and a RETURN to DEFLATION. You can’t make this up. They conjure up trillions of euros, buy assets and the economy STILL declines by 2/10ths of a percent.
The one thing that is astonishingly apparent to me is that any backing off from these extraordinary measures would likely lead to an epic crash in virtually all paper assets. Even a slowdown could be a cause for a major contraction. Keeping this in mind and hearing what the Fed said last Thursday- letting inflation run and low rates for a LONG time there has never been a better setup for hard assets than we are seeing today.
I have chronicled the manipulation of gold and silver so I won’t go there again but I will say that it is imperative for those in charge to keep gold and silver “looking” risky so we regular folks avoid it. It is a threat to them. However, as I always say- watch what they do- not what they say. According to Basel 3 (Central bank agreement) last year gold became a riskless asset on the Central Bank’s balance sheets. Think about that!
In addition, the major banks, central banks and many billionaires (add Warren Buffett who is a little late but has finally shown up-buying gold stocks anyway) have been buying in record amounts for 3 years. Might they know something WE don’t?
When the confidence in an economy is lost there are many instances in history where gold has come in to stabilize the system and restore confidence. Many times, this has been in individual countries where they “printed” themselves into oblivion. Today, if the confidence is lost it will likely be a global phenomenon and require a total reset. Time will tell.
Just yesterday on Zerohedge there was a headline “Venezuela Turns To Gold Mining To Escape Economic Ruin”
My guess is that the world will need to include gold and possibly other hard assets to re-instill confidence in whatever new currency or currencies are created.
Remember, the idea is BUY LOW- SELL HIGH. In my opinion stocks, bonds and real estate are all in major bubbles while I would call hard assets like commodities, gold, silver, etc. an inverse bubble. I also believe that when the “reversion to the mean” takes place it will leave many stunned at the movements that take place because the numbers are so far from reality that it will seem surreal.
Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
Commodities are generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only be a small part of a diversified portfolio. There may be sharp price fluctuations even during periods when prices are overall rising.
Precious Metals, including gold, are subject to special risks including but not limited to: price may be subject to wide fluctuation, the market is relatively limited, the sources are concentrated in countries that have the potential for instability and the market is unregulated.
Diversification does not ensure gains nor protect against loss. Companies mentioned are being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk regardless of strategy.
Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees which will affect actual investment performance. Individual investor’s results will vary. Past performance does not guarantee future results.