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Europe Fights Illusionary Wolfpack With A Boomerang...
Submitted by Nic Lenoir of ICAP
Hilarity ensues!
Not one bit embarrassed by their last witch hunt against speculators that led European politicians to discover that the biggest CDS "speculator" against Greece was in fact the Greek post bank (a fact that received very little publicity surprisingly), they are back at it again. It seems there might be a slight confusion though on their part between investors and speculators. By taking on the supposed speculators with an unprecedented galore of currency debasement, European countries are very unlikely to attract any foreign capital going forward. This is nothing else than capital markets fascism and a poorly disguised ponzi scheme. Fact is that fiscal finances are in poor order and not expected to get much better in the future. Rather than tighten the belt and address the gap as they should, governments around the world are lending themselves the money they need to spend. Throughout the financial crisis the only category of workers that has seen a pay rise are those working for the government. Yes there have been layoffs, but very little pay cuts. Talk about a collective effort! While capital markets seem happy to celebrate the madness this morning, also a by-product of a lot of shorts of risk being chased through the gates of hell, I expect that the markets will see through this mascarade in due time.
The natural idea is that we had advanced in the past few days: wait for a socialization of debt at the European level to sell bunds. The market gapped down at the open, and so did US Treasuries which are also encouraged by the positive NFP data on Friday. However note that both 10Y Treasury futures and Bunds are both still in their uptrend channels. It is worth keeping a close eye on this. Who knows maybe the Bundesbank will include Bunds on its shopping list and fight the speculators sell German debt (who would want to own German debt denominated in a bound-to-go-lower Euro yielding next to nothing rather than own 7% or 8% on PIIGS debt guarantied by Germany?). The only trade that makes complete utter sense is being long Gold, and once the short covering is over short EURUSD. It is worth noting that the precious metal now trades with a positive correlation to the USD, and the weakness this morning should not be expected to last as the weekend's news is exactly what gold investors have been counting on: complete global monetization of debt. It won't be long before central banks run out of gold to sell to put a lid on the market at this pace. Maybe the financial bill will also include a speculation limit on the purchase of physical commodities.
Good luck trading and make sure you ask your government what trade it wants you to put on before you do anything, soon it will be a crime to express one's opinion via investing.
Nic
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The move last night by the ECB/Fed et al is actually the black swans of all black swans. I am lowering my long term equity targets to zero.
yah but ... zero what? If fiat currencies are going to zero in value, will equities go to zero as measured in fiat currency (which, like it or not, is how your margin call is stated when you lose your shorts.) Maybe equities will go to zero gold, oil, etc. Maybe a million shares of Intel won't buy you sex in a Jersey motel room. But what about equity prices as measured in archaic things such as $???
i declare this the lamest nuclear option ever.
+100
Children of the future have no need to learn mathematics. Because, in real life, when 2+2=4 and 4 is not enough, we just change it to 2+2=5.
This bailout, with the complicit help of the Federal Reserve, was expected. Don't lose sight of the fact that the trillions thrown at our own markets didn't prevent last Thursday from happening. All we've seen is a cementing of the future. Use the time that's been bought to get your own house in order. You've been warned--now heed that warning.
Good advice. But for so many people who want to believe that the worst is behind us, who are desperate to ignore the warning signs and sirens, any plausible explanation concocted by the SEC (coming soon after this mornings' meeting with the exchange heads) will be welcome Kool-Aid, to be gulped down followed by pleas for more. "More sir, I want more."
This includes professional traders, not just the average Joe. When you're married to and dependant upon the system, you'll do just about anything to remained hooked up to the monetary IV.
Prob the first time ever u made sense about gold Nic
Hey all you market geniuses out there. Short of playing spreads on FX whatever whatever---don't even know what you're talking about, John Connor, we are sending the latest model out to get you---what am I supposed to do? Keep wads of cash under the bed?
I just need a sensible, plain English take on this, and not the usual "buy canned food" schtick. I mean, what are you gonna do when the canned food runs out? That doesn't help at all!
Deflationary Depression is a way of getting rid of the current power structure. The schmucks at the wheel need to realize that orderly decline is the only alternative to disorderly decline for the 'developed' world until others catch up and start playing ball again. Stop wasting everyones money by building castles in the sky fighting the natural flow of things just because your lobbyists masqueraded as experts push you to do so.
Jacob,
You need to stay out unless you are playing for the long term and have ample resources at home. If you are trading for short term capital gain, you will likely get blasted no matter what side you are on.
I recommend having 6-12 months of cash and physical gold in your house. If you want to buy gold electronically, buy PHYS.
If you want to short, either short 2x long etf's or buy 2x short etf's if you are willing to absorb the rebalancing burn. The short 2x long will have limited upside as they can only go to zero. The 2x short could pay off bigger in the upcoming supercrash, but counterparty risk will be a consideration in either case. Do NOT buy near term options on either side of the trade. My plan is to accumulate long term put options on days when VIX collapses, like today.
I'm sure others have their own plan or may not agree, but that is my practical advice.
PHYS is my number one position but I'd be very hesitant to acquire at these levels (of PHYS, not gold). The current premium you're paying to get into the trust is over 20% since people are so terrified to hold GLD and IAU that they are rushing into PHYS.
Sprott definitely deserves a premium but 20% is pretty damn high. Much cheaper to just purchase physical bullion right now. Keep an eye on PHYS though. It's fair value is probably closer to $11 so if it gets back down to those levels have at it.
http://www.sprottphysicalgoldtrust.com/Net-Asset-Value/default.aspx
If you think market swings like we are experiencing now are indicative of a healthy market, you better go hit the books. The system is seriously warped at this point. If you want to go follow Jim Cramer, Harry "Johnny Bravo" and the rest, good luck. There is no way around this simple point: THIS ENDS BADLY.
I would normally say that at this point in time other commodities besides PM's would be worthy of purchase, because people must eat. However, if the financial house of cards falls on either or both sides of the Atlantic, then I am not sure if the nationalization of agriculture will not too far off.
God help us (or is he/she just laughing too hard to care)
Will all the "geniuses" that made a ton of money fighting the FED from March 09 please raise your hands and say "I did".
Crickets chirping......
I haven't made much money, but I can tell you I have not lost one single penny either. Only gamblers in this fixed market. Never play a rigged game with the guy who has the most money(FED), you will NEVER win. Just when those playing along with the FED think they are making a fortune, the rug is pulled suddenly(hence last week). I would rather be an investor, than a gambler.
Not one single mention anywhere in the news regarding the JPM civil and criminal fraud investigation. Wow, what a whacked out world we live in. People cheering bailouts of entire countries, and don't even realize they are paying for it everyday, while crooked bankers send you a bill for it every month with interest added on to it. When will people wake up?? Probably, when its too late and the wars have already started.
The media are as dishonest and with agenda as the government, banksters and Fed.
I admit to dragging my feet on not swallowing the gold pill, but frankly speaking, I can see no other asset worth owning now other than the barbaric relic. Yes, it's built on the same kind of faith as fiat money, but gold has a longer history than anybody's god, let alone anybody's paper money.
Gordon Gekko, you are right. I toss a $5 gold piece your way (because I'm far too cheap to toss any of my remaining Eagles or Maples).
Go long PM, take possession, and then sit and wait patiently. Au has been my most patient trade ever. In that regard, 20 years of amateur trading have taught me well.This baby is going down...
edit: just listened to the latest Celente interview on RT. He's calling for the crash
of 2010 and is 80% Au
http://www.youtube.com/watch?v=GcbifKU06h4
I don´t trade forex - nor do I play Russian roullette with all but one cylinder loaded. I do watch the rates though, as this has immediate impact in my weekly/monthly timescale. Look at the rates overnight in the EUR/USD. $1,000,000,000,000 now buys an overnight bounce from Friday's close at 1.275 more or less, gap up opening to about 1.29, high overnight of about 1.305, and now this morning again around 1.29.
What they don't get is that by 'printing' 1E12 dollars, they havn't increased demand for Euros at all.
HOW DO YOU SPELL DISGUST?:
http://williambanzai7.blogspot.com/2010/05/how-do-you-spell-disgust.html
And when is the HSBC going to be questioned over gold manipulation?
The long range purpose is financial collapse, not only of governments and banks, but of every investor/speculator/fool. When you enter a casino you exchange your hard-earned cash for plastic chips, there's a message here. There is no difference when exchanging cash for equities/bonds/toilet paper. Since when do the players set the rules for payoff?
And Nic, you don't really believe that the rulemakers would limit anyone's ability to purchase, much less confiscate, do you? Do you think they would go so far as to enforce the already existing laws against barter? Jacob asked the only good question, "...what do you do when you run out of canned goods?" Unfortunately, the answer is simple, Starve. What is it about "Game Over" that we don't understand.
Now, if all you boys and girls stand in a straight line, you'll each get a biscuit.
Jacob asked the only good question, "...what do you do when you run out of canned goods?" Unfortunately, the answer is simple, Starve.
I can't say I agree. I live in a semi-rural area that still has a county fair where people bring in their animals and vegetables to win prizes, and our town raises a crop (cranberries) on town land. We're happily situated by the sea and our town's populace could easily feed ourselves on seafood alone if it came to that.
We also have some ongoing experience with off-books labor (mostly hospitality and landscaping as of yet) and I really don't think it would take much of a mental shift to move more transactions to that system.
Would I miss soap? Yes.
Would I starve? I doubt it.
I've uploaded a DOW chart.
http://www.zerohedge.com/forum/latest-market-outlook-0
http://stockmarket618.wordpress.com