IF YOU’RE NOT NERVOUS YOU SHOULD BE

                                       Good For Traders Too

The real news today isn’t that Europe is toast; geez, we’ve all known that for some time. Only the politicians think that with just one more conference they can fool pretty much all of us find an answer to a non computable problem. Who else would sit around and try to figure out how 2 + 2 = 22 and then with a straight face tell you it is true?

No, the real news is that interest rates around the world are flattening big time. Pick a maturity, it doesn’t make any difference; everything is approaching zero or below.

The ramifications of this are mind blowing. What the Central Planners are attempting, while everyone else flees to safety in Germany, Japan, and U.S. government paper, is forcing you out of cash and into just about anything else. The rationale here is simple: money that lies around getting interest just isn’t productive.

So, while the Cntrl-P button over at the Mariner Eccles building is on full speed ahead and the dollar is getting debased by the minute, as of today your after tax yield on 10 YR. U.S. Gobermint toilet paper is less than 1%. Break out the party hats; you can loan spendaholic deadbeat politicians money for 10 years and get nothing back. Ten years from now what is that money going to be worth?

That this is terribly destructive to those who are near or in retirement isn’t really a concern of the Hope & Change crowd. So, how do Ma & Pa Kettle, besides the Ponzi known as Social Security, earn a return on their life savings and work? Easy Peezee; they don’t.

Don’t worry, we have all kinds of Gobermint benefits for you folks; food stamps [oops, I mean nutritional assistance], section 8 retirement housing, heating & cooling bill help, supplemental Medicaid and/or Medicare, and the list could go on for pages.

Rights enumerated in our Constitution are God given; benefits dolled out by Government are given and taken by the whim of the political elite.

“Hey Grandma, you haven’t eaten your broccoli today! Get with the program or we may just have to cancel your Medicaid. You are undermining the future of your grandchildren by unnecessarily raising health care costs.”

Given the fact that, on the whole, the Amerikan public is dumber than a bag of carrots, this won’t dawn on the masses until their IRA’s and 401k’s are confiscated or forced to buy Gobermint paper. Even then, though, I’m betting more than half will care more about American Idol and college football than the fate of the country.

At every step of the way, government will do whatever is necessary to keep the masses soothed and stupid. That they are intentionally robbing people of their life savings and productivity, right in front of their eyes, should make you nervous.

You are nervous aren’t you?

Have a good day everyone.

-vegas

ROLL ROCK UP HILL REDUX

                                       Attention Gold Buyers

I’ve had this nightmare dream before; I’m driving along and everything’s fine and then out-of-the-blue the rocks come falling down crushing my car and me inside. You wake up and realize it ain’t happenin’, but nonetheless for a few seconds it’s a little disturbing.

How many times have we seen this scenario: sharp rally, crush shorts, turn common tech indicators bullish, get public long [again] at or near the top within 100 hours?

As the world falls apart and specifically Europe implodes, the smartest people in the room have just bet, in the last 48 hours, that Weimar Ben will hit the Cntrl-P button over at the Mariner Eccles building and start QE3 in June. If we don’t get it, a whole lot of people are gonna be trapped inside my dream.

I’m going to go out on the proverbial prediction limb here.

I think we have seen the low in gold up and until the Fed meeting in June. I can see about 1550-1557 on the low side and maybe 1610-1625 on the upside until then. But here’s the rub; if we don’t get QE3 from the Fed in June, and 1530 -1525 subsequently gets taken out, we are headed for a major debacle in price on the downside. And with that comes many months of price congestion and basing before gold can ever hope to go higher.

Around the 1580 level and higher today I have seen the “nibble nibble BOOM!!” phenomena from the Central Planners. There’s no doubt in my mind they were heavy handed in the market today. What do you suppose that means?

While the entire world goes ga-ga over the FaceBook IPO today [expecially California State Tax Apparatchiks], Greece is toast, Spain implodes, and European GDP is falling rapidly. Granted we needed some kind of rally because so many people have piled into the short side of gold.

[Here’s a thought; what if FaceBook opens higher and closes lower? What happens then?]

But remember this: in a bear market [not just gold but any market] the rallies are killer – they come out of nowhere and they are vicious – and they convince a whole lot of traders that the trend has just changed and now we can pile into the long side of the trade. If you look at a daily chart of gold this is the type of action we have seen since 1800.

Ultimately, after the stupid money has piled into the wrong side, price rolls over and we get the rinse & repeat cycle we have seen ad infinitum nauseum  since last Fall; buy the rally get stopped out [pick number of days here ___ ] later.

You can rationalize a lot of things, but you can’t ignore the math; Europe is complete toast and the U.S. [add Japan too] is next. Stocks are so overvalued, pumped up via the Fed to get Chalky Soetero reelected, and give the illusion that things are just fine.

We have started to see stocks roll over world-wide; practically every major stock index is lower on the year. When the complete “risk off” comes, just remember gold isn’t immune.

Meanwhile … Chuckle of the day before the weekend.

Have a good weekend everyone.

-vegas

Update 3:15PM Chicago Time

In case you were wondering why I have Friday rules, I present EURUSD as prima facie evidence of what the Central Planners can do when conditions are thin and stops are on the plate. At 2:00 P.M. we had a melt up stop hunt in the EURUSD of about 60 pips within a few minutes on zero news.

Whatever can make your weekend can destroy your weekend. I wonder how many Euro traders are crying in beer as I write; only it won’t just last a few minutes, it will be there all weekend into the open on Sunday night. Been there done that once in 1980; ain’t ever happened since.

Sometimes it may seem to those who are new to trading and creating wealth that my methods can be restrictive and that I may miss some profit opportunities for no apparent reason. Lesson #1; first do no harm, then make money. I rest my case.

The Dow 30 closed near the lows of the day as FaceBook closed at $38. Another pump and dump scam Ma & Pa Kettle will eventually lose money.

Over the weekend [probably Sunday] I’ll have a special post. Tune in for details.