The ongoing euro crisis, to bail out Greece or not, the 50% haircut, the Euro bond, the new rescue package, all these things are leading us to a stronger dollar which in turn is pushing the price of silver down. Europe has not yet agreed to a solution but it will most certainly involve more stimulus and more Fed involvement. With the dollar strengthening the Fed has the cover to send off more dollars to Europe. Gold and silver are on sale and will remain on sale until people realize that the risk off trade should include buying gold and silver. Right now we are stuck in a pattern of dollar up, market down, gold and silver down followed by market up, dollar down, gold and silver up. This will soon give way to gold and silver going up in both scenarios as gold and silver are the ultimate safe havens that provide protection in both inflationary and deflationary environments.
Friday, October 21, 2011
Wednesday, September 28, 2011
We can move on without them
Do we really need these insolvent banks? Will our economy collapse without them? What would happen if we had to move on without them? These are the questions I'd like to examine.
Today's disconnection between main street and wall street is as stark as ever. Just a mere few quarters after the biggest financial crisis we have seen since the depression, banks were making record quarterly earnings and collected fat bonuses.
How can the banks get back on their feet so quickly while the rest of the economy continues to suffer? The answer is easy. This is what banks have done.
Mark to Market valuations suspsended - A suspension of mark to market valuations has lead to creative accounting as banks can now value their loan portfolios and securities investments at any made up number they want. If banks were writing down their assets prior to the suspension of mark to market rules, then they can easily write them back up to the par value or to a value they determine it to be worth based on their calculations and methodology. A rubber stamp from the external auditors to assess their assumptions are reasonable and bam instant profits out of the thin air. Homes that should be in foreclosure are suddenly performing assets.
Borrowing from the Fed - The Fed discount window is permanently open to the Fed banks as they borrow FRN at a rate of .25%. This money feeds the trading desk. With the advent of high frequency trading (HFT) platforms, banks can borrow endless money from the Fed at .25% and gamble with that money out on the open market. The vast majority of volume on the NYSE is due to HFT. HFT platforms make hundreds of thousands of trades, both buys and sells, in literally nanoseconds. They are capable of making a profitable spread on hundreds of thousands of trades every nanosecond. We've heard about banks who didnt have a single trading day loss in any quarter. I would speculate that there are banks out there that haven't had a single nanosecond trading loss in any quarter. HFT is akin to skimming off the top. These platforms funnel legitimate money out of the market and into the banks earnings which are then converted into fat bonuses for the fat cats on wall street. This is how public money turns private because we are talking about profits. If the banks were losing money then the backstop to bail them out again would be the public.
Conventional Banking no longer part of the business model - Banks no longer make money based on conventional banking practices such as lending. Taking in deposits and lending based on the deposits no longer happens. The model is broken due to the cost structure banks currently have. Bankers make too much money. There is simply no way for banks to earn the profits they are used to if they don't gamble and speculate on investments and securities. Convential banking spreads are not enough.
Also, very astutely, they recognize that the public is broke. Why make loans to people who can't pay you back? They know full well the state of the consumer. Most people are buried in debt and unlike the government they can't borrow endlessly (at some point the same will be true of the government). So potential small business ventures have no chance of ever lifting off the ground because banks refuse to lend.
So why do we need these banks? Their profits have no direct link to production. Their profits are merely accounting entries. Banks are supposed to facilliate business but have become a larger sector than sectors that actually make things. The government is continually spending good money chasing bad money when its bailing out these banks. There are very productive companies such as Apple that bring value to the marketplace. If we allow these banks to fail and others the opportunity to fill the gap then lending would be available to small businesses who will actually produce something of value to society. We are cutting off our innovation base by not allowing them to have access to money that will be put to good use. All of us can't earn profits due to accounting trickery and then extract real money out of the business.
If these changes occur, the economy wouldn't collapse, it would merely adapt and change for the better. Those invested in the current structure should not be bailed out or kept afloat so that they can rig the next market. It is time for a global reset on all the fake debt owed to these banks, assets need to be priced to reality, sound money should be introduced to restore faith and confidence to the markets, and lets move on. This is the only way we will have growth. Because right now the only thing growing exponentially is our debt (which is by design and worthy of its own blog entry entirely).
Today's disconnection between main street and wall street is as stark as ever. Just a mere few quarters after the biggest financial crisis we have seen since the depression, banks were making record quarterly earnings and collected fat bonuses.
How can the banks get back on their feet so quickly while the rest of the economy continues to suffer? The answer is easy. This is what banks have done.
Mark to Market valuations suspsended - A suspension of mark to market valuations has lead to creative accounting as banks can now value their loan portfolios and securities investments at any made up number they want. If banks were writing down their assets prior to the suspension of mark to market rules, then they can easily write them back up to the par value or to a value they determine it to be worth based on their calculations and methodology. A rubber stamp from the external auditors to assess their assumptions are reasonable and bam instant profits out of the thin air. Homes that should be in foreclosure are suddenly performing assets.
Borrowing from the Fed - The Fed discount window is permanently open to the Fed banks as they borrow FRN at a rate of .25%. This money feeds the trading desk. With the advent of high frequency trading (HFT) platforms, banks can borrow endless money from the Fed at .25% and gamble with that money out on the open market. The vast majority of volume on the NYSE is due to HFT. HFT platforms make hundreds of thousands of trades, both buys and sells, in literally nanoseconds. They are capable of making a profitable spread on hundreds of thousands of trades every nanosecond. We've heard about banks who didnt have a single trading day loss in any quarter. I would speculate that there are banks out there that haven't had a single nanosecond trading loss in any quarter. HFT is akin to skimming off the top. These platforms funnel legitimate money out of the market and into the banks earnings which are then converted into fat bonuses for the fat cats on wall street. This is how public money turns private because we are talking about profits. If the banks were losing money then the backstop to bail them out again would be the public.
Conventional Banking no longer part of the business model - Banks no longer make money based on conventional banking practices such as lending. Taking in deposits and lending based on the deposits no longer happens. The model is broken due to the cost structure banks currently have. Bankers make too much money. There is simply no way for banks to earn the profits they are used to if they don't gamble and speculate on investments and securities. Convential banking spreads are not enough.
Also, very astutely, they recognize that the public is broke. Why make loans to people who can't pay you back? They know full well the state of the consumer. Most people are buried in debt and unlike the government they can't borrow endlessly (at some point the same will be true of the government). So potential small business ventures have no chance of ever lifting off the ground because banks refuse to lend.
So why do we need these banks? Their profits have no direct link to production. Their profits are merely accounting entries. Banks are supposed to facilliate business but have become a larger sector than sectors that actually make things. The government is continually spending good money chasing bad money when its bailing out these banks. There are very productive companies such as Apple that bring value to the marketplace. If we allow these banks to fail and others the opportunity to fill the gap then lending would be available to small businesses who will actually produce something of value to society. We are cutting off our innovation base by not allowing them to have access to money that will be put to good use. All of us can't earn profits due to accounting trickery and then extract real money out of the business.
If these changes occur, the economy wouldn't collapse, it would merely adapt and change for the better. Those invested in the current structure should not be bailed out or kept afloat so that they can rig the next market. It is time for a global reset on all the fake debt owed to these banks, assets need to be priced to reality, sound money should be introduced to restore faith and confidence to the markets, and lets move on. This is the only way we will have growth. Because right now the only thing growing exponentially is our debt (which is by design and worthy of its own blog entry entirely).
Thursday, September 15, 2011
US veto of Palestine can lead to Petrol Yuan
Next week the UN will convene on the Palestinian's bid for statehood. If accepted, Palestine would be the 194th nation to be recognized by the UN. Currently there are 120 countries that already recognize Palestine. The US had repeatedly stated they will veto the resolution. Is it bluffing? Americans should hope so because the consequences will be disastrous and will put an end to all illusions about a recovering economy.
Weighing the pros and cons of vetoing it should be obvious but let's focus on the cons. The US will have in effect bowed out of middle east policy. The honest broker status, while a joke to the rest of the world will now be obvious to Western idiots. The US will no longer be the mediator of any peace processes going forward. The US will no longer have input or influence. They can sit at quartet sessions but will not be running the show.
The emergence of the counterweight powers of countries in the region will be complete. Turkey and Iran will be the biggest winners. They are cash and energy rich and will have rising influence. Egypt and Turkey will be closer to breaking off all ties with Israel. Saudi Arabia will move eastward as they are desperate not to be seen as denying Palestinians basic justice that we supposedly value. They will move towards China as the petrol dollar enters its final stages. Oil prices will rise for the West. In the US this is untenable. Can we see the petrol yuan?
Weighing the pros and cons of vetoing it should be obvious but let's focus on the cons. The US will have in effect bowed out of middle east policy. The honest broker status, while a joke to the rest of the world will now be obvious to Western idiots. The US will no longer be the mediator of any peace processes going forward. The US will no longer have input or influence. They can sit at quartet sessions but will not be running the show.
The emergence of the counterweight powers of countries in the region will be complete. Turkey and Iran will be the biggest winners. They are cash and energy rich and will have rising influence. Egypt and Turkey will be closer to breaking off all ties with Israel. Saudi Arabia will move eastward as they are desperate not to be seen as denying Palestinians basic justice that we supposedly value. They will move towards China as the petrol dollar enters its final stages. Oil prices will rise for the West. In the US this is untenable. Can we see the petrol yuan?
Friday, September 9, 2011
Silver at 9/11
Hello folks,
Apologies to not updating the blogspot frequently. As I notice the views are low and I focus on the youtube videos, I've neglected this forum. It's a self inflicted downward spiral. No content equals no followers and vice versa. I will make it a point to update more frequently, at least once a week, and I'll link the site to my youtube channel so that i can reach more people and increase silver awareness. That is my ultimate goal as whatever monetizations that google throws my way is completely insignificant. I've made like 8 bucks in 5 months. And that's a digital 8 bucks, nothing I've ever collected. I'll be posting my blog not in essay form, but as a collection of my thoughts at the moment. I will jump around, come back, as this is unedited. With that being said let us get to the content.
As we approach the 10 year anniversary of 9/11, the government and the media will look to stoke our emotions of that historic day. As a NYC resident at that time, I recall the day as if it were yesterday. I remember hearing so many reports of disinformation, I didn't know what was real and what was fake. What was real was one of my best friends in college, Christopher Santora. He was a teacher but joined the Fire Department to follow his father's footsteps and was one of the 343 firemen killed that day. He was the only person I knew personally that died that day. To make matters worse, his body was so charred that they mistook his body for someone else's. May he rest in peace.
I remember wanted to lash out at the world for attacking us. Bomb everyone, and whoever dies so be it. It was such a foolish thought but a natural reaction for what happened. This is when my awakening began. I wanted to know the reasons why we were attacked. For naive Americans, it is because of our way of life. That couldn't be the closest thing to the truth. The truth is most people around the world love American culture. It really stems from American overreach and activism in others affairs. Anyway, by the time we set our sights on Iraq, I was already an antiwar activist.
The 9/11 ten year anniversary will be used as an opportunity to remind us that we are not safe and as a result you must sacrifice. What they mean by sacrifice is what I want to get into. They don't mean save money, help your neighbors, and the poor and elderly. Sacrifice to them means spying on your neighbors, letting the TSA violate your body, your wife's, your children. Spend money that you don't have via credit cards and loans. Accept that your savings account earns zero interest but when you borrow you borrow at 15, 20, 25, and even 30%. Neglect the unemployment numbers. Indulge and pay later or let your kids pay for it or their kids. Neglect inflation, the debasement of our currency, our savings. Neglect the price appreciation of precious metals.
Most people view gold as out of their league but the real trick is not letting people understand that sound money also includes silver. A precious metal, and industrial metal, part of the US currency as early back as 1964. With a nation of immigrants, 15% on food stamps, and no sense of neighbors, as we are a melting pot, a nation of 300 million individuals, they rule us by keeping us divided.
How often have you seen a family from China, India, or other Eastern country come to the US, save money, work together, and become home owners, business owners, and do well for themselves? It happens quite a lot. They don't have this feeling of self entitlement that has spread throughout our country like a disease. They believe in hard work and taking care of family. It is missing from our society. Capitalism equals individual greediness.
It is that set up that will break us free from the bankers shackles. We must save our own capital, finance our own projects, and not use the banking system. Become your own central bank. You must own physical silver. Never spend it. It is to be used as your collateral for you business ventures. You must find a way to have positive cash flow. Assets must produce cash flow. You cannot rely on capital appreciation. The housing crisis is proof of that.
You cannot put a price on your financial freedom. At least 50% of your net worth should be in precious metals. I prefer 80% but that might be high for some folks. This will also pave the way for you to take advantage of the paper game. You can be wealthy outside the financial system but poor within it. This also has its advantages. Look at the all the government handouts. You can now grab a piece. You can get a home mod, welfare, and whatever else as long as you are paper poor. And to me its all about being hard asset rich and paper poor.
That's my 9/9 rant. Have a nice weekend.
Apologies to not updating the blogspot frequently. As I notice the views are low and I focus on the youtube videos, I've neglected this forum. It's a self inflicted downward spiral. No content equals no followers and vice versa. I will make it a point to update more frequently, at least once a week, and I'll link the site to my youtube channel so that i can reach more people and increase silver awareness. That is my ultimate goal as whatever monetizations that google throws my way is completely insignificant. I've made like 8 bucks in 5 months. And that's a digital 8 bucks, nothing I've ever collected. I'll be posting my blog not in essay form, but as a collection of my thoughts at the moment. I will jump around, come back, as this is unedited. With that being said let us get to the content.
As we approach the 10 year anniversary of 9/11, the government and the media will look to stoke our emotions of that historic day. As a NYC resident at that time, I recall the day as if it were yesterday. I remember hearing so many reports of disinformation, I didn't know what was real and what was fake. What was real was one of my best friends in college, Christopher Santora. He was a teacher but joined the Fire Department to follow his father's footsteps and was one of the 343 firemen killed that day. He was the only person I knew personally that died that day. To make matters worse, his body was so charred that they mistook his body for someone else's. May he rest in peace.
I remember wanted to lash out at the world for attacking us. Bomb everyone, and whoever dies so be it. It was such a foolish thought but a natural reaction for what happened. This is when my awakening began. I wanted to know the reasons why we were attacked. For naive Americans, it is because of our way of life. That couldn't be the closest thing to the truth. The truth is most people around the world love American culture. It really stems from American overreach and activism in others affairs. Anyway, by the time we set our sights on Iraq, I was already an antiwar activist.
The 9/11 ten year anniversary will be used as an opportunity to remind us that we are not safe and as a result you must sacrifice. What they mean by sacrifice is what I want to get into. They don't mean save money, help your neighbors, and the poor and elderly. Sacrifice to them means spying on your neighbors, letting the TSA violate your body, your wife's, your children. Spend money that you don't have via credit cards and loans. Accept that your savings account earns zero interest but when you borrow you borrow at 15, 20, 25, and even 30%. Neglect the unemployment numbers. Indulge and pay later or let your kids pay for it or their kids. Neglect inflation, the debasement of our currency, our savings. Neglect the price appreciation of precious metals.
Most people view gold as out of their league but the real trick is not letting people understand that sound money also includes silver. A precious metal, and industrial metal, part of the US currency as early back as 1964. With a nation of immigrants, 15% on food stamps, and no sense of neighbors, as we are a melting pot, a nation of 300 million individuals, they rule us by keeping us divided.
How often have you seen a family from China, India, or other Eastern country come to the US, save money, work together, and become home owners, business owners, and do well for themselves? It happens quite a lot. They don't have this feeling of self entitlement that has spread throughout our country like a disease. They believe in hard work and taking care of family. It is missing from our society. Capitalism equals individual greediness.
It is that set up that will break us free from the bankers shackles. We must save our own capital, finance our own projects, and not use the banking system. Become your own central bank. You must own physical silver. Never spend it. It is to be used as your collateral for you business ventures. You must find a way to have positive cash flow. Assets must produce cash flow. You cannot rely on capital appreciation. The housing crisis is proof of that.
You cannot put a price on your financial freedom. At least 50% of your net worth should be in precious metals. I prefer 80% but that might be high for some folks. This will also pave the way for you to take advantage of the paper game. You can be wealthy outside the financial system but poor within it. This also has its advantages. Look at the all the government handouts. You can now grab a piece. You can get a home mod, welfare, and whatever else as long as you are paper poor. And to me its all about being hard asset rich and paper poor.
That's my 9/9 rant. Have a nice weekend.
Thursday, June 16, 2011
Silver Consolidating
Over the past 30 days silver has traded in a much narrower range than the previous 30 days. From May 16th to June 15th silver has seen a low of $32.89 and a high of $38.79. The range has become narrower as the last 3 days we have seen silver in the $35 range.
It appears that silver is consolidating and is waiting for the next catalyst to move higher. The announcement of QE3 will certainly send silver soaring but there are also has been a more subtle shift that has occurred.
There has been a shift between the dollar/precious metal relationship. The dollar is recently appreciating vs the Euro and the stock market. Historically when the dollar appreciates the precious metals decrease in price. This inverse relationship has recently changed, at least when it is in this direction. A dollar appreciation no longer necessarily means a drop in the silver price.
The Euro has declined vs the dollar due to social unrest. The dollar strengthening has not resulted in a corresponding drop in silver. Rather silver is consolidating at this current level. The relationship of strong dollar/weak precious metal prices has been replaced with the strong dollar, weak stock market. We have yet to retest the weak dollar/higher precious metal price relationship but QE3 will present that opportunity.
So the downside risk at these price levels are very small. Silver is certainly volatile and it's quite possible we can find an even more attractive entry point but all indications are that silver is looking for a catalyst to move higher, probably when the announcement of QE3 is a foregone conclusion.
It appears that silver is consolidating and is waiting for the next catalyst to move higher. The announcement of QE3 will certainly send silver soaring but there are also has been a more subtle shift that has occurred.
There has been a shift between the dollar/precious metal relationship. The dollar is recently appreciating vs the Euro and the stock market. Historically when the dollar appreciates the precious metals decrease in price. This inverse relationship has recently changed, at least when it is in this direction. A dollar appreciation no longer necessarily means a drop in the silver price.
The Euro has declined vs the dollar due to social unrest. The dollar strengthening has not resulted in a corresponding drop in silver. Rather silver is consolidating at this current level. The relationship of strong dollar/weak precious metal prices has been replaced with the strong dollar, weak stock market. We have yet to retest the weak dollar/higher precious metal price relationship but QE3 will present that opportunity.
So the downside risk at these price levels are very small. Silver is certainly volatile and it's quite possible we can find an even more attractive entry point but all indications are that silver is looking for a catalyst to move higher, probably when the announcement of QE3 is a foregone conclusion.
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