“The difference between the dollar and the Titanic is… the Titanic had a better band.”
—An online philosopher somewhere
I haven’t been saying or repeating much of anything of late, just fussing with my last workshops of the year and consequent upresting, Christmas shopping, card writing, and insipidly dating. Throw in a little churchyness, deep apologizing to the universe for ever doubting it, and sucking up to a few Saints (not the football team, although they do seem deserving of it), and my how the time flies by.
To continue in the exculpatory vein, I’ve also been engaged in a little cleanup after the 97 mile an hour windstorm buffeted the Foghorn’s little abode. I’m fine, thank you, but a few of my arboreal friends are no longer with me. Nor are several cars that previously enjoyed tree-free parking on my street. To segue ever so casually here, I see the fallen greenery as a metaphor for the dollar. Be it ever so humble, there’s no place like prone.
To begin, I always knew that with sufficient browsing earnestness, I’d come across some nugget of financial wisdom that would enrich my internet investment activities. I suspect I have done that. A too often unsung blogger known casually as Mr. financeandeconomics.com, or Alasdair Macleod to his legions of fans, has unearthed a delightful chart whose simple slope and curvature should be required reading by all who dream of avarice, or at least of financial independence. Dumb institutional money managers of course, shall blither on without such simplicity.
If you’re looking for a CAGR (the acronym for Compound Annual Growth Rate) stop hanging around fraternity parties, and visit Alasdair’s fountain of knowledge, the Institute of Ludwig von Mises place at Auburn University. Here the old Austrian hung his hat on a couple of charts for the ages and the ageless:
The first shows how the dollar moves when mean and evil bankster types manage and manipulate it from their Temples for their own ill gotten bonuses:
Notice the artful symmetry. Notice the classic colors – black and blue.
Notice the substance of the lethal hockey stick pattern that we’ve all been warned about, especially when such a stick is held in the hands of a Russian mobster hockey player slash Central Banker. This is a pattern you never want to see in your local currency. This is a death chart. It’s a race to the top of an imminent mountain, from which a crash is inevitable. This is a pattern “discovered” by various South American governments in the 1980s, the Germans in 1923, and Zimbabweans everywhere in the previous decade. It’s what we call fugly. If there’s a fugly stick with which a currency could be beaten, this is it. Note carefully the dates at the bottom of the chart. The Iceman cometh in 2014. This chart puts paid to the date when bad bankster practices will finish. The end game is within sight. There’s a time certain when the fearful and loathsome fugliness reaches its dénouement. Once banksters have passed the well,–we-need-to-do this beginning and the well-let’s-not-worry-about-it middle…there’s an Oh-my-God end.
Moving along past the dollar desecration chart, look what happens to gold when the Von Mises CAGR pattern is utilized in chart number 2:
Same graceful curvilinear shape, same delightful readability, but for gold and silver bugs everywhere, a salvation. (Ok, it got a little wacky in late ’79. It happens.) The frustrated gold and silver coin and share owners can also see a goal line, and it’s easily extrapolatable to be 2014. If the dollar dies in 2014, PMs will overcome all the price suppression efforts in the world, and march to $10,000. (When the need calls for it, I consider myself a master of extrapolatability in the hopefulness area.) In 2014, hope returns triumphant to Mudville. Faith is resuscitated after previous tragic losses. Broken hearts begin to mend. The clouds part. The naked chorus on stage of the traveling Hair production company builds to an in-the-buff crescendo. The sun shines on. Enemy soldiers meet on the battle field and embrace. (Except of course, JPM’s soldiers, all of whom will be shot.) We’re home, Toto. High fives abound. Cheerio. Pip Pip. Good show.
Enclosed below, if the above conversation weren’t enough, is a chart showing how cheap gold is at this juncture. In the past ten years, when gold has gone below it’s 200 day moving average, it has always meant BUY time. To listen to hedgie stooge Dennis Gartman say that the bull move is “over” because gold has temporarily dropped below some artificial nine month trading pattern number, created by a bunch of chartist squiggle watchers is really silly. Make that really, REALLY silly. Think all of Asia and India are going to stop buying because of chart squiggles? Think the Central Banks that are facing dollar destruction are going to stop buying gold? I don’t either. (When the Dow falls below its 200 Day Average of 11938, that’s one thing. It’s in a secular Bear Market interspersed with overnight manipulation. With gold, it’s in a secular Bull Market and will ignore the 200 Day all the way up. And it neared it today.)
As Wistar Holt wrote at lemetropolecafe.com yesterday, “With massive borrowing requirements in both Europe and the U.S. next year, quantitative easing (printing of money) will be a necessity. This will undoubtedly drive gold and silver prices much higher and set off the sirens of economic and financial stress.”
Reflecting on this recent central bank maneuver, John Embry of Sprott Asset Management reflects, “I’ve been through this (takedown) so many times whereby the gold cartel can take the gold market apart and scare the life out of many investors, and its just noise. It’s gone on over and over again. In the end this will pass like they all have, and gold will move on to new highs.”
And…This Just in From the Bill Murphy’s “London Trader”
www.lemetropolecafe.com, December 20, 2011
“The bullion banks like HSBC hold that little bit of physical gold and claim they are backed up on their position to the CFTC. I have all my large buyers now going to producers and saying to them, ‘Look, don’t sell it to the bullion banks, we’ll buy it from you.’ So my large buyers are buying directly from the producers and this includes some sovereign entities which are doing the same thing.
The bullion banks are struggling to get the physical out of the producers because the miners have so many people banging on their door, saying, ‘Sell it to us direct.’ What these buyers are doing is essentially taking gold out of the system, which means the bullion banks can’t leverage that gold anymore.
“This is a huge, tectonic shift in price dynamics going forward because it takes price discovery away from the bullion banks. Large Chinese buyers and sovereign entities doing this are going to have a massive impact on the market.
We are making a historic bottom right now. The paper gold, or virtual gold market, has diverged so far from the physical market that it’s no longer a credible marketplace. That’s the key thing that came out of a very important meeting I was in yesterday where we had some serious players. The people I was meeting with are all on the buy side and have been since the lows last week.”
And so having displayed winsome charts, and quoted esteemed authors, FF’s work here is done. I can move on to other festivities, pleased with the knowledge that I have sprayed Christmas wassail to all my readers, during what would otherwise be a dreary Euro-doomster and tax-selling season of corrupt MF Global proportions. To all a good night.
FF sincerely hopes that you’re having a pleasantly jolly Christmas, Hanukkah, or Kwanza season, and are buying a little gold and silver at what will be looked back upon as boastfully cheap December prices (Gold near $1600? Silver under $30!) compared to prices which will reflect, unfortunately, an “interesting” 2012.