The big picture

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Dear reader in this post you will find information about

The big picture, my musings about what is expecting us

Economy
- Red Alert: The Second Wave of The Financial Tsunami
- Demographics and spending, babyboomers will spend less
- every eighth American receives food stamps
- Latin America: How the decreasing world economy might have an impact

Gold, stage 3?

Silver
- NIA Declares Silver Best Investment for Next Decade

Fixed Income
- Debt binge sideswiping Greece, Spain, the US and the UK

Oil
- We have lots of oil, but . .



As usual, let’s start with the last weeks overview from www.prudentbear.com
For the week, the S&P500 was little changed (up 22.5% y-t-d), while the Dow added 0.8% (up 19.3% y-t-d). The S&P 400 Mid-Caps increased 0.5% (up 31.1%), while the small cap Russell 2000 declined 0.4% (up 20.2%). The Morgan Stanley Cyclicals added 0.5% (up 69.6%), while the Transports dipped 0.2% (up 15.7%). The Morgan Stanley Consumer index declined 0.3% (up 22.7%), and the Utilities jumped 4.0% (up 7.1%). The Banks dropped 1.5% (down 1.6%), and the Broker/Dealers fell 2.5% (up 45.2%). The Nasdaq100 was unchanged up 47.9%), while the Morgan Stanley High Tech index gave back 0.6% (up 62.4%). The Semiconductors were little changed (up 58.0%). The InteractiveWeek Internet index slipped 0.3% (up 70.0%). The Biotechs added 0.1% (up 40.7%). With bullion ending the week down $47, the HUI gold index was hit for 5.8% (up 46.7%).


The big picture

After having tried, with my last post (the information about Dubai and my respective musings), to tune you in to what I believe are important happenings down the road, I’d like to give you some information about the big picture.
What is the big picture? Have you heard about One World Government, One World Currency, One World Forces? If not than it is time to find out more about it. The One World movement is a movement that has been going on for decades. It is, a well planned strategic plan, with the goal to implement a one world government. Which will mean that only a handful of individuals will decide on everything on this planet. Your freedoms will be gone. Controls will be the case. George Orwell at his best. This is not fantasy or the idea of a conspiracy nut. It is, as simple as it is, a fact. Many of our yesterdays and today’s leaders and thinkers mentioned time and time again, that a World government is the solution to all problems. The idea or the goal of a One World Government is nothing new. It is just that these remarks were ignored by almost everybody. Most thought that it could not happen at all.



Guess what, It will happen, unless we wake up. With we I mean everybody you and me included. The One World government and the respective restrictions of our freedoms, will not be to our benefit. We do not need others to decide for us. In my opinion we have accepted already too much. Too many restrictions have been implemented and we just accepted them. So it is time to wake up. Let’s have a look at their plans: How can their plans be achieved? What makes people cry for help? What makes people wish to have strong leaders? Yes the word is crisis. Whenever there is a crisis people cry for leaders. Managed chaos and crisis make people cry for a solution. What do you think dear reader, is in the planned screen-play to achieve the goal for a One World currency? Well it is simple, the actual world reserve currency has to disappear and the more dramatic the act is, the stronger the acceptance will be. To accept absolute controls by the authorities, threats are needed. Does that sound like the movie you are in right now? Yup it does. The European Union is an excellent example. The plans for a One World government include unified areas such like the EU or a union of the Americas or Asia. The two world wars, provoked by a small group, were the basis for the movement that pushed the idea of a unified Europe because nobody wanted another armed conflict. The wars were planned ahead and were a puzzle piece of the whole game. Although some ideas of the Union are certainly not bad at all, such as free movement of people and goods, most of it is unacceptable for people that like freedom. The idea of the union was presented to the people as something excellent. It was never meant that a couple of dictators in Brussels decide for all people living in the union. It was never meant that these bureaucrats make new laws that are binding for everybody living in the countries that are part of the EU. Unfortunately that’s the reality today. Most people are not yet aware of it. Even Switzerland, which is not part of the EU, has to follow certain laws from the EU just because Switzerland signed the Schengen agreement. With other words, some people in Brussels are those that decide how the future of the EU will look like. Well in fact it is even worse, a handful of individuals, those who control the finances, tell those people what to do.
What will the next steps be? What will be done in order to have the masses accept a Unified Americas or Unified Asia? Might it be a deep worldwide economic crisis? Not possible? Maybe, but I would not bet on it.



One world currency an utopia? Do you believe so? Well I for my part, I have no doubt that this is in the cards. Why? Because already today we can hear people cry for a new system with a basket of several currencies. It is time you get used to the idea that the US Dollar will soon be gone. R.I.P. The Dollar is on its way to the graveyard and possibly it will not be a smooth transition. How long will it take until we will hear people talk about the one world currency? Possibly not much time. Are you prepared for the situation of a collapsing US Dollar? Are your ready? Are you ready if it happens in 2010?



How can we best protect ourselves against this scenario? There might be many solutions to have some protection. First of all and it should be on top of your priority list, stock up your food reserves. Do it now!! Don’t wait. You should have food reserves for at least 3 months, much better for up to 12 months. Don’t forget that in most developed countries wholesale and retail business had to be very efficient in order to survive. That means that they had to keep costs low. One solution of holding costs low was to have the stocks of any item basically at an absolute minimum. Just in time was the mantra for those responsible to plan the stocks. Delivery was no problem so this strategy worked just fine. However, dear reader, the situation has changed and the wholesalers and retailers in today’s environment should in fact hold more goods on stock. However as the economic situation is not good at all, the stocks are still at a minimum. Well guess what. What happens when the delivery chain is interrupted? Worse, if this chain is interrupted for a couple of days or weeks. Maybe the shelves at the supermarket will be empty or almost empty. Of course you could say that this is not possible and maybe it is not possible at all. However I prefer not to bet on it and have at least some food stocked at home. Maybe some matches and other items would come in handy in such as situation as well. If you like to have a list of those things that are most wanted in a situation of interrupted delivery chains, drop me an e mail and I gladly send you the list.




Apart from food there are other ways to protect from a scenario mentioned before. Being out of the Dollar seems to me a good idea. Much better is being out of paper currency at all, although I must admit that there are certain paper currencies that I prefer to hold in case I have to keep some paper. Being invested in tangibles might be a good idea.

Introducing the new One World currency



Well dear reader the new One World currency might look sligthly different but in essence it is the same crap (sorry for the wording).



Economy

Red Alert: The Second Wave of The Financial Tsunami From GlobalResearch.com. “The US economy will be spiraling out of control in the coming months and will reach critical point by the end of the 1st quarter 2010 and implode by the 2nd quarter. “The massive US$ trillions of dollars stimulus has failed to turn the economy around. The massive blood transfusion may have kept the patient alive, but there are numerous signs of multi-organ failure. “There will be another wave of foreclosures of residential and more importantly commercial properties by end December and early 2010. And the foreclosed properties in 2009 will lead to depressed prices once they come through the pipeline. Home and commercial property values will plunge. Banks’ balance sheets will turn ugly and whatever ‘record profits’ in the last two quarters of 2009 will not cover the additional red ink.
http://www.globalresearch.ca/index.php?context=va&aid=16218




Demographics and spending
Found on http://www.inflation.us
Twenty years ago, a father with an average job was able to support an entire family of four or five on one income. Today, both parents need to work, and they are still unable to support their family without getting deeply into debt with credit cards, mortgages, auto loans, and college loans. Less families today have health insurance. Wages have not kept pace with inflation, all we have seen is an increase in debt to meet some of the demand from inflation.

With the babyboomers beginning to retire, the decline in our standard of living is about to dreadfully accelerate. The average American peaks in spending at around 46 years old and the last babyboomer will turn 46 in 2010. Therefore, a major drop-off in consumer spending is coming. But more importantly, beginning this next decade, 1.5 to 2 million Americans will apply for Social Security every year until 2026, compared to only 500,000 per year during the last decade. Tax receipts are about to fall off a cliff, at the same time as government entitlement spending for Social Security, Medicare, and Medicaid go through the roof.

Many people have been asking us on NIAnswers, if we see massive inflation and gold prices go through the roof like we predict, wouldn't that be good for the U.S. because we have the largest gold reserves at 8,133.5 tonnes? Well, at the current gold price, our gold reserves are worth approximately $300 billion. Our budget deficit this year alone was $1.6 trillion. If we had to pay back our $12 trillion national debt using only the gold in our vaults, it would require a $45,889.44 per ounce gold price. But once you factor in our $55 to $100 trillion in unfunded liabilities for Social Security, Medicare, and Medicaid, our gold reserves will not put a dent in saving our country from the financial system collapse that lies ahead.
Unquote
The above comparison does even look worse taking into account that the reserves are most probably less than ¼ of what is believed to be the US gold reserves. In my opinion all the gold reserves of the US are gone. What still might be kept in the US is gold in custody but belonging to Germany and other states.


Food stamps
One out of every eight American receives food stamps. This, without doubt is not an indicator of an improving economy. Forget all the official statistics, which are cooked anyway. The spinmasters make us believe that everything is fine or getting better but unfortunately this is not the reality for many people, at least not for the 37.2 million that need food stamps in order to get food.
Read more on the following link
Food Stamps Go to a Record 37.2 Million, USDA Says
http://www.bloomberg.com/apps/news?pid=20601012&sid=aFbqGE.lEdi0




Latin America
Trade surpluses in most Latin American countries are declining. Mostly due to less exports to the US, although we are permanently told by the US spinmasters that the US economy is improving. Of course the improving economy news is nothing less than lies. What does that mean for Latin America? It means, that apart from more and more expats coming back home, looking for a job and therefore increasing the mass of job seekers, local business or manufacturer of any export item will have to reduce production and consequently reduce staff as well. This of course will lead to even more people without job. Traveling through Latin American countries I was hearing many times that these countries are doing well and that the crisis possibly will not hit them at all. Of course I am happy that most countries I visit did relatively well during the crisis but, we should not forget that most Latin American countries are mostly commodity producers. If the world economy is not doing well, sooner or later the commodity producers will feel the impact of a lower demand. The commodity producers normally are the last ones to feel the impact of a considerable reduction in consumption and demand. Therefore my guess is that the decline of exports, which most countries have to face now, will soon show an impact in the local economy too.



Gold

The last Stage Three gold parabola unfolded over several months climaxing in January 1980 at $850 (just under $2400 in today’s dollars). That event was blisteringly fast, gone in the blink of an eye. Over the final 10 trading days leading to the end of its bull, gold soared 34.1%. Over the final 20 trading days, it was up 80.3%. And over the final 30, just 6 short weeks, it nearly doubled with a 95.9% gain! ... Nevertheless, for a variety of reasons I am almost certain our current gold bull is nowhere close to Stage Three yet. Gold isn’t going parabolic anytime soon, so if you are planning on retiring in early 2010 from the next few months’ gold gains I suspect you’ll be sorely disappointed. As any student of the markets who has studied history and psychology can tell you, today’s conditions are all wrong for Stage Three dawning. ... How can Stage Two transition into Stage Three when the only investors with heavy gold exposure today remain a relatively small fraction of contrarians? It can’t. Stage Two will not reach maturity until large professional investors all over the world have great-enough allocations in gold to consider themselves fully invested. I suspect it will be many years yet before professionals reach this milestone. http://www.zealllc.com/2009/goldpara.htm



The following comment I found on www.lemetropolecafe.com, posted from a trader
Quote
I have been trading gold-related securities since 1979. Sometimes I trade futures and sometimes I trade senior golds and sometimes I trade options on gold but never - repeat - NEVER - do I use traditional T..A. (Technical analysis) to trade ANYTHING related to gold. The reason is that over the past 32 years in the investment business, I have learned to BUY "breakdowns" and SELL "breakouts" but until I joined GATA in 2007, I never actually understood the reason for it. It was simply an acquired observation that prompted such trading behaviour. After reading the superb commentary night after night for the past thirty months, it has slowly dawned upon me that the manipulations of the Cartel actually prey upon followers of T.A. in order to carry out the raids. If spot gold was being "spun" as having "major support" near some magical number, you could rest assured that gold would get hammered down through it. If there was "major resistance" at some other magical number, you could simply wait until it cleared "resistance" and then sell it because lo and behold, some mysteriously entity would put a punctuative HALT to the advance. This action is uniquely sinister.
An old pit trader I used to talk to back in the 80's told me that T.A. worked perhaps 50% of the time in the futures markets but, in his words, "It don't matter what system you use, in gold, you BUY breakdowns and you SELL breakouts...".
I go a step further in this assessment. If you think that recent trading in the gold futures pits has been frenzied, I would submit that in thirty years of battles in markets, I have NEVER seen more bizarre behaviour or "action" than in the SILVER futures pits. The move in gold from earlier this year from $880 to $1000-plus took SILVER to over $22 but the recent gold move to $1225 was accompanied by a move in SILVER barely above $19. I am astonished that the price action alone did not evoke a stronger cry of protest from the masses. You have a massive concentration of shorts all using JPM as the custodial broker and every $20 upward jolt in gold is accompanied by day after day after day of thump! thump! thump! as these thieves let all of the spotlights targeted on gold create the finest of all diversionary tactics (and that is what it was - a TACTIC) as they surgically manipulated the silver price and prevented the explosive move to $25 that would normally accompany a $200 advance in bullion.
Nothing in the text books of Technical Analysis 101 could ever explain this action. Nothing in Fundamental Analysis 101 could either. It CAN, however, be found in the playbook of the JPM's of the world. When they realized they were stuffed by the raw physical demand in the gold pits, they turned to its smaller, weaker schoolyard sibling (silver) and bullied it with both fists and hobnail boots.
Unquote
Well dear reader, I would say that we have not seen a brake-out yet. Yes the Presidential working group for financial markets has taken the market down some 5 to 6% in a week but neither the move up before was really a break-out nor the last week move down was a break-down. However I do agree with the tactic and I would add that one should buy on dips. The action we have seen over the past week has given us another excellent opportunity to buy on dips. I do expect that we stay more or less at the same levels at least for the next more or less 5 days. After that we will start to move up again however possibly at a slower pace than before. My guess is that we see prices go up until February/March 2010.

Silver
Following an excellent article and in my opinion a must read:
NIA Declares Silver Best Investment for Next Decade

We are less than three weeks away from entering the next decade. The most important thing you need to know entering 2010 is that silver is the single best investment for the next decade. In our opinion, investing into silver is the only sure way to tremendously increase your purchasing power over the next ten years.
http://inflation.us/silverbestinvestment.html


Fixed Income

In my last post I wrote that we should get used to the idea of sovereign defaults. Well it seems that we are clearly on the way. Greece, Spain and other countries in troubles. More to follow.
Debt binge sideswiping Greece, Spain, the US and the UK
This week rating agency Fitch cut Greece’s government credit rating from A- to BBB+. It described prospects for Greek public finances as “negative.” On top of it all, four of Greece’s largest banks also received risk downgrades. It’s bad news for a small country that has seen its total public debt skyrocket. Sovereign debt-to-GDP is expected to surge to 130 per cent before it stabilizes sometime in the coming decade.
http://www.troymedia.com/?p=6644


Oil
We have lots of oil, but . .
There is a huge amount of oil which theoretically can be extracted, but the question is whether the cost will be cheap enough for us to be able to afford to extract it. If the oil is too expensive to extract, the shortage of oil seems to cause a recession, similar to what we are having now
http://www.theoildrum.com/files/We%20have%20lots%20of%20oil%20but%20.%20.%20..pdf

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