This page has been archived and commenting is disabled.

When Pigs Can Fly, the Devil Shivers in Hell, and 30% Gains in Western Stock Markets Will Mean Practically Nothing

smartknowledgeu's picture




 

With deception in the mainstream financial media reaching
new heights regarding the recent rallies in Western stock markets, it’s time to
shed some light on this matter. The first rule of building wealth is that your
gains have to outpace the rate at which Central Bankers depreciate the currency
in which your asset is denominated. Otherwise you end up with more money in you
account but no better standard of living. For example, if your investment
adviser tells you that his or her goal for you this year is 8% returns, if
Central Bankers have depreciated your currency by 15% this year, then
fulfilling his/her goal actually results in a 8.2% destruction of your wealth,
exclusive of tax consequences.

 

Even though every investment veteran, sans the most naïve of
the naïve, understands that the US stock market has been rigged higher for the
past two years solely through free market interference by politicians and Wall
Street elements, what if these rigging games continue and the Central
Banking/government cartel successfully rigs the DJIA and the S&P 500 higher
by another 30%? Those still naively invested in the broad US stock markets
should be ecstatic because of the fact that their accounts now hold 30% more
paper money, right? Wrong. In 2007, the Zimbabwe Industrial Index soared 545%
and at one point, on a 12-month rolling period, was up more than 12,000%!
However, Central Bankers in Zimbabwe would probably not care to reveal that the
unemployment rate during this stock market “boom” was also an astounding 80%.

 

But this is the trick that Central Bankers use to fool those
that don’t understand how the monetary system works. Central Bankers can
actually rig the stock markets to return a greater absolute amount of dollars
(or Euros, or Yen, or Pound Sterling or Yuan) and a significant positive return
in nominal terms, that in actuality, may contribute nothing to or may even
decrease your REAL net worth.

 

So let’s put this into pictures. Below I’ve reproduced three
charts for you. The returns of the S&P 500 priced in the fake monopoly
money of US dollars since its bottom on March 6, 2009 and the returns of the
S&P 500 priced in what I consider to be the only two REAL forms of money
today, gold and silver. When priced in US dollars, the gains of the S&P 500
are an enormous 76.68% since March 6, 2009. Not so fast though. Price the gains
of the S&P 500 in gold and more than 55% of those gains disappear. Against
gold, the S&P500, despite the daily rigging games of the government/banker
cartel, has only managed to rise 21.64% since March 6, 2009. Price the gains of
the S&P 500 against silver since March 6th, and not only does every single
percent of the 76.68% gains disappears, but it actually astonishingly loses
1.84%.

 

S&P500 gains priced in gold and silver

The moral of the story? Beware of Central Bankers bearing
big bags of paper money as gifts. It’s not the amount of money you own that
counts or your nominal returns that matter. All investors should be fixated
upon only REAL returns (adjusted for REAL inflation, not official government
inflation rates which are never correct) and the purchasing power of their
money, not how much of it they have.

 

 

About the author: JS Kim is the Managing Director of SmartKnowledgeU, a fiercely independent investment research & consulting firm dedicated to exposing the fraud of the mainstream investment industry, helping the everyday retail investor earn real gains, and uncovering the best ways to invest in gold and silver.

 

 

 

 

 

 

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 10/15/2010 - 01:02 | 651920 honestann
honestann's picture

Accurate article... except the truth is even worse.

When you LOSE wealth in term of actual value (approximated by the average of the above gold and silver charts), but sell for more dollars than you spent to purchase the assets in question, the taxman steals even more of your wealth.

Thus, in fact you've had a capital loss, but they deem it a capital gain... and tax you on the fictional (non-existent) gain.

Hence, the entire system of paper assets is a pure, unadulterated ponzi scheme.

Thu, 10/14/2010 - 14:57 | 650130 non-anon
non-anon's picture

and the beat goes on.

Thu, 10/14/2010 - 14:20 | 650003 tony bonn
tony bonn's picture

thank you for another excellent presentation on money. he owns the gold makes the rules. the hand writing is on the wall for the usd and as the multitude of fucktards show, belshazzar is still reveling in orgies and drunkeness.....

fuck the fucktard! long live the fucktards!! they make great gruel...

Thu, 10/14/2010 - 13:13 | 649726 kevinearick
kevinearick's picture

always back to the exit strategy.

love that headline that oil is the least volatile on the other thread; what, are they measuring averages: anyone trading intra vs inter day has been making a bundle.

Who cares if it's going up or down; a 3% change is a 3% change, negative or positive, and it happens like clockwork.

What choice does the Fed have? none.

 

 

Thu, 10/14/2010 - 12:39 | 649595 dougiefreshhh
dougiefreshhh's picture

Hmmm...

Mr. T ( a gold icon) on public tv.

Gold ATM's coming to America.

"Weaking dollar" news on Yahoo front page...

"We buy gold!" shops in strip-malls.

Gold must be going up becuase of inflation worries..

Sorry gents...the big dogs have been picking up gold over the years.  It is now time to blow this thing sky high. 

 

Thu, 10/14/2010 - 12:31 | 649567 obewon
obewon's picture

Thanks, JS, for another great "common sense" commentary.

Unfortunately, there's always the naïve and the extremely naïve who can't seem to understand common sense. A quick perusal of the responses here proves that point.

Thu, 10/14/2010 - 11:43 | 649388 Doctor sahab
Doctor sahab's picture

In parts of Malaysia, Indonesia and Indian subcontinent you can use gold and silver to buy goods and services. Maybe not formally everywhere but definitely informally.

Thu, 10/14/2010 - 11:05 | 649251 yipcarl
yipcarl's picture

I have gold I didn't say I didn't.  I do understand this, there is no reason to demean me because I disagree.  I studied economic history in school I'm well aware.  I'm telling you of the largest developed nations we are going to be fine for quite some time and DEFLATION will ensue FIRST, then after this period of deflation we may have RUNAWAY inflation HOWEVER not before we have ALOT MORE DEFLATION and therefore all you inflation bugs will be wrong, then later, right.  Just because we disagree with you doesn't mean we don't get it??

Thu, 10/14/2010 - 12:00 | 649461 RacerX
RacerX's picture

Right. It all comes down to following the price action. You can either fight it or go with it.

Thu, 10/14/2010 - 10:35 | 649163 yipcarl
yipcarl's picture

It seems also to me that this board is overrun with intellectuals compared to others HOWEVER the mantra of 'monopoloy' has gone too far.  The only thing that's happening is our government is handing money to rich people, that doesn't cause inflation.  No one is lending, no one is spending, that 'printed' money is causing absolutely no inflation because it's going into the hands of the banksters not getting into circulation.  Furthermore the mantra also seems to be the perception that there are so many great places to put money.  The US may look horrible but you tell me what currency, spendable, don't tell me gold, that you want to put your money in?   Euro?  Canadian dollar?  Brazil?  China, the socialist republic ponzi scheme?  Give me a break the US dollar will tryumph.  The US still controls the land, air, and sea and maybe many of you forgot he who has the money(even if it's a lot less)and guns makes the rules.  This gold gold gold inflation inflation inflation mantra is getting a little much, it's a bit like the rah rah rah, market, go, go, go of CNBC.

Thu, 10/14/2010 - 13:50 | 649904 Goldenballs
Goldenballs's picture

How much of this QE money is finding its way into Commodities and inflating basic needs,answer - a lot.A bank would rather invest in a sure return or bonds keeping the debt going rather than a private individual or a business.The system is consuming itself at a faster and faster rate.

Thu, 10/14/2010 - 13:46 | 649885 merehuman
merehuman's picture

yipcarl, reading your lines i sense you are stressed. Upset you failed to buy into gold?

USD has stinky fundamentals, no way to go but down and ...out.

Whats gonna make the dollar worth more...our renewed trust?lol

Thu, 10/14/2010 - 10:56 | 649223 Jean Valjean
Jean Valjean's picture

It's not causing inflation NOW.  But as confidence wanes, it will.  What people promoting gold and silver are doing is WARNING you.  What you and dragon don't seem to understand is that the dollar = a note = US debt.  As debt deflates, or becomes worth-less, everything else will inflate relative to it.  Historically it has happened many times.  Many of us think it is happening now.  It starts slowly and grows into an avalanche.

I agree that gold and silver are not currently 'spendable'.  That is why I look at them as insurance.  But you should try to imagine a world where they are 'spendable' and the FRN is not.  If that happens, you will wish you had some.  So will Mako.

Thu, 10/14/2010 - 16:21 | 650592 yipcarl
yipcarl's picture

jean I just got back but I can't beleive you're serious.  So most of you people are chicken little?  You think the world is going to end but there will still be goods produced and you will need gold to buy them OR you will exchange gold into the new paper currency?

You people are in fairy land, I really hope you are alone here Jean.  Apparantly +10 doesn't think so.  And you people are speaking about my intellegence or lack there of, wow. 

AGAIN. I OWN GOLD, physical real gold.  Yea I do.  I just don't believe the hype and I too have no real idea of anything, I am not immortal, however I have an opinion just like you. 

Thu, 10/14/2010 - 12:41 | 649603 I need more cowbell
I need more cowbell's picture

Of course they are spendable, i can within 10 minutes go down and exchange one of my gold coins for fiat. And if I don't like dollars at the moment go to the bank and exchage for yen, euros, whatever. I of course pay for each transaction, but it's all spendable. 

My stocks are spendable- I pay my $7 to Scottrade and voila 10 shares of Bullshit Inc. becomes $100 of bullshit fiat.

Thu, 10/14/2010 - 11:44 | 649393 hbjork1
hbjork1's picture

Jean,

+10

Thu, 10/14/2010 - 11:43 | 649379 hbjork1
hbjork1's picture

Jean,

+10

Thu, 10/14/2010 - 10:27 | 649138 yipcarl
yipcarl's picture

Our money buys nothing?  What are you people talking about?  Prices in my area of the country are not going up on the whole and there is VERY little inflation.  Houses, rents, cars, food, electronics, etc are going down.  Commodities are going up for now that's about it.  Let me get soemthing straight. Let's say there is 100 Trillion in debt and 10 trillion is bad debt, debt that has been defaulted on and will never be paid back.  So now the central bank adds 10 trillion in the system to replace the 10 trillion that is dead.  HOW IS THIS INFLATIONARY?  if all your doing is adding back to the market the amount that was defaulted on...how is this inflationary?

This article is stupid in that this action doesn't not gaurantee inflation even though the pundints tell you so and gold rallies, of course it does.  You can't measure inflation effectively over a 6 month period either.

Thu, 10/14/2010 - 13:50 | 649884 Goldenballs
Goldenballs's picture

Your money does in the main buy nothing,it is accepted as a token transaction for goods and services received,as more and more of the population (sheeple to the banksters) wake up and realise each week and then each day buys less and less as it is destroyed by manipulation they are going to want stability and something that does not have to be changed regularly to keep its value,for 2,500 years Gold and Silver have been a store of wealth,so you are not really disagreeing with us more with history.You may be right but a bookmaker would not give very good odds.

Thu, 10/14/2010 - 09:59 | 649050 dragonspirit
dragonspirit's picture

Crap. Who cares about S&P priced in gold? As far as I am concerned, hard assets are getting cheaper, discounts are getting deeper, sales are on... ole bucky buys me more than ever.

 

And besides, you guys over yonder in the good ole US of A keep forgetting all the time that worldwide debt is priced in USD, and there is a helluva lot more USD debt that USD cash. Ccommodities are priced in USD (for the most part, at least) and the green bits of paper are happily accepted at black market rates in just about every underdeveloped economy... which has a combined population and demand exceeding that of the US. Yes, for the bucky. The euro won't be feeling too good very soon, the EC will most likely disintegrate into a mass of squabbling neighbors that the europeans always have been historically, and asia..  asia produces crap the west consumes, and it doesnt have enough domestic wealth to replace that consumption. So I say, fuggit, the buck will be the strongest currency there is, at least for a couple of years. The US is the biggest economy out there (and yes, I know the lazy ass gringos produce mostly services and outsource production of products), its still the most liquid and the most appealing in terms of credit risk. The the coming worldwide debt implosion the world will be selling everything (including gold) to cover their USD debts... sending the buck higher. Whoever is left standing without debt will prefer to park their wealth in US treasuries, which they have to buy with USD and not euros, dinars, pounds or whatever. Gold? Hah. Can't eat the danm thing. I bet most people who have been holding gold for longer than the last 3 years and quitely taking profits... and with Mr. T touting gold on Bloomberg I bet gold has cilmbed about as high as it will, at least for the time being. Once it starts to roll back, everyone that climbed aboard recently will be bleeding badly.

 

Thats my view in a nutshell. For disclosure: I'm short everything (gee, that wasn't too hard to guess, was it?) and long the bucky. Yes, at the moment its a bit painful, but I can bear a little pain now in view of good gains later.

Thu, 10/14/2010 - 10:43 | 649188 yipcarl
yipcarl's picture

ah..someone with a brain. nice.

 

Look at the monkey who disagrees with you, his screen name and picture.  Probably hacked his house to buy gold and is married to it like alot of the peopel here.  Gold is fine but it's not the end all be all.

Thu, 10/14/2010 - 11:07 | 649250 I need more cowbell
I need more cowbell's picture

I feel so intellectually crushed. Yes, my nom de plume and icon are so inferior to "yipcarl" and a bag over your head.

I have no certainty what gold, any fiat currency, any asset class, will do in the future. I have assessed proabilities, and made choices therein. The dollar at some point will of reverse course, and gold will ( most likely) not be moonshooting daily.

But I and others have been minting money for many years holding gold, so don't give me your bullshit assumptions about me- you know nothing.

Thu, 10/14/2010 - 10:30 | 649145 I need more cowbell
I need more cowbell's picture

I salute you, sir. Anyone who is obviously too stupid to breathe, to have the energy to construct such a long-winded piece of idiocy- hats off to you!

I myself have no such energy, so just one mild retort. Taking profits in gold over last three years? And putting said profits in dollars? Please just look at both graphs over last three years and explain how losing money selling gold to buy dollars was profitable?

Thu, 10/14/2010 - 08:53 | 648810 aerojet
aerojet's picture

Stock market priced in gold, blah, blah, blah.  If you bought futures contracts this past  couple of weeks, you are sitting on some very solid gains.  I realize the dollar taking a shit is behind all of it, but the ramp job worked.

Thu, 10/14/2010 - 08:59 | 648829 Goldenballs
Goldenballs's picture

Sticking plasters are temporary and should not be viewed as permanent.

Thu, 10/14/2010 - 09:10 | 648867 aerojet
aerojet's picture

Of course not! 

Eat, drink, and be merry, for tomorrow we die


Thu, 10/14/2010 - 08:40 | 648771 doolittlegeorge
doolittlegeorge's picture

you mean "will the real compounders stand up."  Gold is a nothing burger compared with agriculture.  Now either jump off the tracks or get run over 'cause that's a FREIGHT TRAIN you moron.

Thu, 10/14/2010 - 08:14 | 648726 Charley
Charley's picture

Now perform the same calculation for the average hourly wage since 1970. Priced in gold it is currently below ten percent of the 1970 level. If you want to talk about folks who have gotten f***d by this game, that is the place to start.

Thu, 10/14/2010 - 08:54 | 648814 aerojet
aerojet's picture

My dad always said he lived better on $3K/yr. in the 1960s than he did in the 1980s making over $50K/yr. 

Thu, 10/14/2010 - 10:51 | 649212 hbjork1
hbjork1's picture

aerojet,

Yes.  Some of it might have been change in expectations but it is at least a factor of a little over 10. 

Thu, 10/14/2010 - 07:52 | 648700 Species8472
Species8472's picture

You do not add or subtract percentages if they are not part of the same 100% pie! therefore you need to multiply:

an 8% gain (1.08) and a 15% depreciation (.85) is

1.08 X .85 = .918 which is a loss of 8.2% not 7%. With small numbers it doesn't matter that much, but 15% is not small.

 

Thu, 10/14/2010 - 07:56 | 648705 smartknowledgeu
smartknowledgeu's picture

we stand corrected and will amend the article to reflect your pointed out correction. thx.

Thu, 10/14/2010 - 07:47 | 648695 Goldenballs
Goldenballs's picture

At least with Monopoly money you collect £200 when you pass Go.Money still spends but will purchases less and less.If you like your assets to be manipulated just stash cash and watch it plummet.

Thu, 10/14/2010 - 09:02 | 648843 aerojet
aerojet's picture

We need a version of Monopoly where each time you round the board, the currency is worth less.  Hyperinflation Monopoly.

Thu, 10/14/2010 - 10:42 | 649182 hbjork1
hbjork1's picture

aerojet,

That is a great idea!  Microprocessor chips are cheap these days.  Should be possible to make an upscale game that would teach kids about the effects of inflation. Decent computerized Chess boards were introduced three decades ago.

Sounds like a joke but in the games business truth is stranger than fiction.  1) Fresh out of school (U) in the 50's, I played with electrically resistance (110V) cooked hot dogs.  (Hamburgers worked but required more complicated hardware.)  Commercialize - no.  Imagine the lawsuits filed by wackos who somehow defeated the safety bypass and shocked themselves.  Then what to my wondering eyes should appear a little over a decade later than a simple plug-in Westinghouse electrical hot dog cooker. 

Another time, when doing government contract work irriadiating things with Cesium 137 gamma, there was a firm in California tha advertised the cryogenic freezing of the departed so that the body was well preserved. (For potential future recovery?)  I suggested (ha ha) that it would more practical to make the casket out of lead an put a little cesium source (long half life) in the casket with the departed.  The gamma would kill everything that might degrade the body(except, of course, for the gamma which would break lots of bonds).  Guess what?  About a year later we saw a patent filing by somebody from Brookhaven on the process and purpose.

Crazy world out there.  You've got a decent idea.  You can get info on the letter filing on the internet.   

 

Thu, 10/14/2010 - 09:41 | 648984 Big Corked Boots
Big Corked Boots's picture

The street names would be taken from Washington and not Atlantic City?

Thu, 10/14/2010 - 10:12 | 649093 Walt Whitman
Walt Whitman's picture

I think you guys are on to something...

Too bad it will have to be bought with worthless paper cash.

Should be called Debauchery Monopoly: The Ironic Edition

Thu, 10/14/2010 - 07:53 | 648702 fallst
fallst's picture

So, the "Gold Bug" meme, has now disappeared from American Conciousness?

This was the Big Joke on CNBC.

Oh, the Gold Bug Kooks. Ha.

Thu, 10/14/2010 - 06:46 | 648654 Chartist
Chartist's picture

yes, but the money still spends.

Thu, 10/14/2010 - 07:46 | 648693 Robslob
Robslob's picture

But buys nothing...

Thu, 10/14/2010 - 09:04 | 648847 aerojet
aerojet's picture

Last time I looked, I can pay for my house in dollars.  If I  throw money in stocks while the dollar shits and then cash out, can't I pay off the house?

Thu, 10/14/2010 - 15:19 | 650261 infotechsailor
infotechsailor's picture

thats the difference between making a new purchase or paying off an old debt. your bank bought the house. but you are correct, old debts will become easier to pay with a devaluing dollar. just have fun paying 5x more for gas and groceries than your mortgage.

Do NOT follow this link or you will be banned from the site!