A reader wrote:
Yes. I am a “silverbug”. I never attacked you since I am a very open minded silverbug not a fanatic. But now the charts and the prices are showing your theory that in the economy, all the big money goes to the dollar first.
So what should be the primary advice for timing the shifts between asset classes? thats the hardest part for all the ordinary people like me
So we hoard US dollars now then wait “deflation” ends and when Bernanke promise more stimulus I should go all in precious metals again?
But the EU zone has a pending crash. I should wait to see them fall.
But the Federal Reserve is monetizing deficits, and so other developed countries.
What is the best asset class then. Can we park money in one place or just trade the markets. what is your best recommendation for 2013?
Here the crazy socialist government has placed a 20% credit card prepay income tax for online purchases to stop dollar nominated transactions via internet
Thanks for any insights you may provide to a faithful reader.
I do not deal in theory or I “think”. We are all human and nobody is perfect despite the hype. The unfolding of events is always a sequence never all at once. It takes patience but you can confirm it is developing because it is all connected. Princeton Economics was simply the largest international advisory firm that probably ever existed. When I testified before Congress it was because we at that time had more than the equivalent of 50% of the US National Debt under contract. Now you can spin that claiming I manipulated the world, or you can realize that we solved problems and crises and in so doing, we saw behind the curtain how capital REALLY moves. If there was some giant conspiracy, then why call us if they were always in charge? There are always conflicts globally and at times within the same company as branches fight with each other. In the ’90s, Citibank was having a international gathering in Asia. I was signed up to speak. They paid all expenses. But it was the Asian and European branches that wanted me there. New York objected saying they did not want to air their dirty laundry in front of an outsider. I was paid not to go. So these wild theories that paint even banks as unified operations are just not true.
I have been educated by the clients. They taught me to look at everything through everyone’s eyes. My dear friend Milton Friedman, who thought out of the box and was not a academic who followed the crowd, came to see me speak I believe at a COMPUTRAC seminar in Chicago. He convinced me that I had a front row seat that no one else ever accomplished, and that was for a purpose. So there are people who still want to make it personal and try to reduce me to their level of just opinion. Sorry – I go by the numbers dispassionately.
The Fed’s monetization is nothing. That is one side of the coin. With the global crisis, the demand for dollars keeps rising and this is why there has been no inflation because we had a massive deflation by the deleveraging of assets. The nonsense spread on this issue alone shows the hype. It is like adding income of $1 million but not expenses $1.2 million and then claiming you made a million dollars.
The numbers are the numbers. Trying to forecast markets based upon hype and opinion is like trying to practice medicine by bleeding the patient. The global economy has moved far beyond that nonsense. It is like the people who constantly call for the Dow to Crash in 1929 style. They fail to comprehend what really took place back then. They also make the same mistake and only look at stocks domestically, not government debt, and are clueless about international capital flows.
In silver, we have TWO Weekly Bearish Reversals at 2641 and 2654. If they give way, silver will drop first to $23 zone and if that gives way, look for $17. Keep in mind that everything is HIGHLY volatile. Shaking the tree and getting the diehards out, will create a fresh base from which to rally. The longer they hold in there, the longer the decline like Japan.
The metals are still pointing higher but that is 2017. The Goldbugs blame me because they cannot admit error. This is not a religion. It is a market. The object is to survive, not donate your money to the banks who trade this stuff based upon the technicals.
We will try to have a metals update out ASAP. For now, the dollar is king. Europe is committing suicide and the politicians will not reverse their course because it is all about them, not actually saving the country. Until there are one term only politicians rather than lifetime careers, there is no hope for the future.