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Timing & trends

CAUSE, EFFECT & THE FALLACY OF A RETURN TO NORMALCY


Posted by The Burning Platform via Peter Grandich

on Thursday, 08 March 2012 00:00

“Thousands upon thousands are yearly brought into a state of real poverty by their great anxiety not to be thought of as poor.” – Robert Mallett

Debt-Is-Slavery

I hear the term de-leveraging relentlessly from the mainstream media. The storyline that the American consumer has been denying themselves and paying down debt is completely 100% false. The proliferation of this Big Lie has been spread by Wall Street and their mouthpieces in the corporate media. The purpose is to convince the ignorant masses they have deprived themselves long enough and deserve to start spending again. The propaganda being spouted by those who depend on Americans to go further into debt is relentless. The “fantastic” automaker recovery is being driven by 0% financing for seven years peddled to subprime (aka deadbeats) borrowers for mammoth SUVs and pickup trucks that get 15 mpg as gas prices surge past $4.00 a gallon. What could possibly go wrong in that scenario? Furniture merchants are offering no interest, no payment deals for four years on their product lines. Of course, the interest rate from your friends at GE Capital reverts retroactively to 29.99% at the end of four years after the average dolt forgot to save enough to pay off the balance. I’m again receiving two to three credit card offers per day in the mail. According to the Wall Street vampire squids that continue to suck the life blood from what’s left of the American economy, this is a return to normalcy.  

The definition of normal is: “The usual, average, or typical state or condition”. The fallacy is calling what we’ve had for the last three decades of illusion – Normal. Nothing could be further from the truth. We’ve experienced abnormal psychotic behavior by the citizens of this country, aided and abetted by Wall Street and their sugar daddies at the Federal Reserve. You would have to be mad to believe the debt financed spending frenzy of the last few decades was not abnormal.   

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The Age of Illusion
“Illusions commend themselves to us because they save us pain and allow us to enjoy pleasure instead. We must therefore accept it without complaint when they sometimes collide with a bit of reality against which they are dashed to pieces.” - Sigmund Freud

In my last article Extend & Pretend Coming to an End, I addressed the commercial real estate debacle coming down the pike. I briefly touched upon the idiocy of retailers who have based their business and expansion plans upon the unsustainable dynamic of an ever expanding level of consumer debt doled out by Wall Street banks. One only has to examine the facts to understand the fallacy of a return to normalcy. We haven’t come close to experiencing normalcy. When retail sales, consumer spending and consumer debt return to a sustainable level of normalcy, the carcasses of thousands of retailers will litter the highways and malls of America. It will be a sight to see. The chart below details the two decade surge in retail sales, with the first ever decline in 2008. Retail sales grew from $2 trillion in 1992 to $4.5 trillion in 2007. The Wall Street created crisis in 2008/2009 resulted in a decline to $4.1 trillion in 2009, but the resilient and still delusional American consumer, with the support of their credit card drug pushers on Wall Street, set a new record in 2011 of $4.7 trillion.     

RetailJan2012

.....read more HERE




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Energy & Commodities

Action Items to Capitalize on Water Becomiong the World's Most Sought-After Commodity


Posted by Marco Rabinowitz - Benzinga.com

on Thursday, 08 March 2012 00:00

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Below are factors that suggest that water will be the world's most sought-after commodity in a handful of decades.

I couldn't help but notice a new ad on Yahoo! Mail from Fidelity Investments that boldly asks, "Are you ready for water to become a globally traded commodity?"


This video accompanying the Fidelity Investments ad is as thought-provoking as it is ominous. The video discusses the respective costs in water to make items like a slice of bread, a cup of coffee, and a hamburger. From the video: "With global population expected to increase by 30 percent by 2050 and more developing nations transitioning to higher standards of living, regional water shortages and peak water issues will become more widespread." The issue of water becomes more complicated in considering the accessibility and availability of drinking water in the years to come. From the video: "Global consumption of water is expected to increase by 40 percent over the next 20 years. And according to some estimates, more than half of the world's population could be living under conditions of water stress by 2025." Thus, the video suggests that water stress could intensify geopolitical affairs and "border disputes" related to the water supply.

.....read more and view Action Items (scroll to the bottom)  HERE



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Gold & Precious Metals

Precious Metals Monitor: Major Reversals In Gold & Silver Reset Technical Expectations


Posted by Hard Assets Investor

on Thursday, 08 March 2012 00:00

It’s been a dismal week for precious metals, as gold, silver, platinum and palladium all dropped precipitously. The correction began on Wednesday of last week after Ben Bernanke’s testimony to Congress. But it wasn’t what the Fed Chairman said that spooked precious metals traders, but rather, what he didn’t say.

“When Bernanke didn’t mention the possibility of another round of [quantitative easing], that was enough to take the fizz out of everything,” said Dennis Gartman. “Before [the testimony], gold was looking quite strong, but [afterward] it just gave up the ghost.”

The implication is of course, that gold had been pricing in more stimulus — such as a third round of quantitative easing (QE3) from the U.S. central bank. Yet that may not have been the case.

“Negative real interest rates and accommodative monetary policy were and remain the key drivers of investment demand,” said Morgan Stanley. “Bernanke’s testimony [last week] did nothing to remove this benefit.”

“Under these circumstances, QE3 would have been icing on the cake for the monetary easing trade, but not the fundamental driver of bullish investor positioning,” the bank concluded.

Indeed, as of the close of Monday, exchange-traded fund holdings of gold totaled a record 77.4 million troy ounces, indicating that at least one segment of investor demand for the yellow metal remains strong.

goldetfholdings20120306

.....read more and view 24 charts HERE



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Gold & Precious Metals

Faber - ‘Dr. Doom’ Sees Iran-Israel Clash, Says Take Appropriate Action


Posted by Marc Faber

on Wednesday, 07 March 2012 00:00

Political risk in the Middle East has increased significantly with war between Iran and Israel almost inevitable, and precious metals and equities investments offer some safety, Swiss money manager and long-term bear Marc Faber said on Tuesday.

"Political risk was high six months ago and is higher now. I think sooner or later, the U.S. or Israel will strike Iran—it's almost inevitable," Faber, who publishes the widely read Gloom Boom and Doom Report, told Reuters on the sidelines of an investment conference.

Brent crude [LCOCV1  122.49    0.51  (+0.42%)   ]traded near $123 per barrel in volatile trade on Tuesday on fears of a disruption in Iranian supplies. Israeli Prime Minister Benjamin Netanyahu showed no signs of backing away from possible military action against Iran following a Monday meeting with U.S. President Barack Obama.

"Say war breaks out in the Middle East or anywhere else, (U.S. Federal Reserve chairman[cnbc explains] ) Mr. Bernanke will just print even more money—they have no option... they haven't got the money to finance a war," said Faber.

"You have to be in precious metals and equities... most wars and most social unrest haven't destroyed corporations—they usually survive," he said.

He said that Middle East markets had largely bottomed out, though regime changes from the Arab Spring revolutions were unlikely to be investor-friendly.

Faber said that in uncertain times, investors had to reconcile themselves to volatility.

"If you can't live with volatility, stay in bed," he said, pointing out that even cash.

The 66 year-old, who has earned the moniker "Dr Doom", earlier told the conference that the likelihood of war in the Middle East was boosted by Western powers' imperatives of keeping China in check, given its dependence on Middle Eastern oil.

"The Americans and the western powers know very well they cannot contain China economically... but one way to contain China is to switch on and switch off the oil tap from the Middle East," he said.

"I happen to think the Middle East will go up in flames," he said.

(POWERFUL Speech!) PM NETANYAHU'S SPEECH AT THE AIPAC 2012 - WASHINGTON DC Making the Case for Preventing Iran from acquiring Nuclear Weapons.



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Gold & Precious Metals

Why Buffett and Gartman are Wrong About Gold


Posted by Eric Fry - The Daily Reckoning

on Wednesday, 07 March 2012 00:00

Warren Buffett doesn’t like gold. Neither does Dennis Gartman. That settles it for us; gold must be a table-pounding buy.

In this year’s annual letter to Berkshire Hathaway shareholders, Warren Buffett scorned gold as an asset that is “forever unproductive.”

“[Gold] will never produce anything,” he wrote. “Gold has two significant shortcomings, being neither of much use nor procreative.”

Buffett’s statement is literally correct, but it has two significant shortcomings, being neither of much use nor insightful. No one holds gold hoping it will produce something. They hold gold because no one can produce it. Precisely for this reason, mankind has considered gold the ultimate money for several thousand years...and it has performed this role with meritorious distinction.

Gold’s appeal waxes and wanes, of course, depending upon the monetary environment in which it resides. But the less folks trust the cash in their pockets, the more they trust gold...and that’s exactly what’s been happening throughout the Western world for more than a decade.

Therefore, despite gold’s “significant shortcomings,” it has delivered a much higher return during the last 14 years than the “useful” and “procreative” Berkshire Hathaway. As the chart below shows, the “rolling 10-year return” of gold has been higher than that of Berkshire Hathaway since January 2008.

DRUS03-06-12-1

In other words, an investor who purchased gold at any time after January of 1998 would have received a higher investment return over the following 10 years than an investor who purchased Berkshire Hathaway. That seems like a fairly useful investment result.

But Buffett is the investment genius sans pareil. We aren’t. He knows gold is a losing bet. We don’t. But here’s the good news: You don’t need to be a genius to buy gold. You can be an idiot. In fact, according to Buffett, you are.

“This type of investment,” says the Oracle of Omaha, “requires an expanding pool of buyers who, in turn, are enticed because they believe the buying pool will expand still further. Owners are not inspired by what the asset itself can produce — it will remain lifeless forever — but rather by the belief that others will desire it even more avidly in the future.”

Like Buffett, Dennis Gartman has also scorned gold recently. Unlike Buffett, Gartman has recommended buying gold from time to time — and even buys it for himself on occasion. But he recently notified the world that gold was a “Sell” and the he would no longer be “long of gold,” as he says in his bizarre version of English.

On December 15, the editor of “The Gartman Letter” announced, “I sold all gold in my personal account... Since the early autumn here in the Northern Hemisphere gold has failed to make a new high. Each high has been progressively lower than the previous high, and now we’ve confirmation that the new interim low is lower than the previous low. We have the beginnings of a real bear market, and the death of a bull.”

A week later, Gartman kicked the “yellow dog” again. “I expect equities will outperform gold [in 2012] without any question,” Gartman told the CNBC viewers. Unfortunately for Dennis, his “Sell alert” on gold happened to coincide with a brand-new “Buy alert” from Ben Bernanke and a few of the Fed Chairman’s counterparts around the globe.

As you may recall, last November the Federal Reserve and the European Central Bank (ECB), along with the Bank of Canada, the Bank of England, the Bank of Japan and the Swiss National Bank announced “coordinated actions...to provide liquidity support to the global financial system.”

These banks have kept their promise. They have all ramped up their money supplies since November 30.

The day this announcement crossed the wires, we observed:

A new phase of monetary destruction is underway...All the largest central banks are committing to printing money in some way, shape or form.

Who knows what’s next? Probably, we can look forward to a new era of clandestine bailouts, backdoor lending facilities with inscrutable acronyms and global monetary game-playing that will look a lot like a massive money-laundering operation.

Perhaps someone should notify the authorities. The Fed is engaged in highly suspicious, un-American activities.
As it turns out, the Fed’s suspicious activities are merely part of a global crime syndicate — a worldwide counterfeiting ring. The following chart, courtesy of James Bianco at Bianco Research, tells the tale.

“Bianco’s chart,” observes Tim Price, Director of Investment at PFP Wealth Management, “shows the extent to which the eight largest central banks (China, the ECB, the US, Japan, Bank of England, Banque de France, Swiss National Bank, and Germany’s Bundesbank) have allowed their balance sheets to explode, in a desperate attempt to compensate for banking and private sector deleveraging since the debt crisis began. The Big 8 central banks now account for the equivalent of one third of world stock market capitalization.”

DRUS03-06-12-2

“If the basic definition of quantitative easing (QE) is a significant increase in a central bank’s balance sheet via increasing banking reserves,” Bianco remarks, “then all eight of these central banks are engaged in QE.”

True statement...which means that as long as the line on the chart above continues soaring higher, the precious metals are a “Buy”... no matter how frequently and self-assuredly Buffett and Gartman call it a “Sell.”



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