Posts Categorized: Jim’s Mailbox

Posted by & filed under Jim's Mailbox.

Dismal Dave with some visual financial extremes.

Bill

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Great recent article Shan!  I would only mention, the Fed really has zero choices available to them as raising rates or suspending QE will implode the most swollen debt structure in all of history.

Bill

Are We At The Inception Of An Inflationary Depression?
June 17, 2021

[PDF available here]

Jim/Bill ,
Many people (myself included) have come to believe that the study of economics is a worthless endeavor.  Nothing seems to follow the rules.
How often have we seen the laws of supply and demand thwarted by manipulation governmental stockpiles such as gold, or by misuse of the futures markets,  or changing margin requirements, or by legal directives (eg: FDR’s ban on private ownership of gold)
But that is not the fault of this discipline.
It is the interference from outside parties, such as the Fed and government, that makes a mockery of economics.
The best analogy I can give is orbital satellites.
They circle the Earth continually, but eventually fall back to Earth.  Yes, they can be kept in orbit utilizing boosters.  An occasional jet push will keep them on track.  But when fuel runs out, they will always fall, as dictated by physics.
So it is with today’s markets.
Capitalism is nothing more than a sine wave.  You economic trajectories above and below the mean.  Good times and bad times.  Furthermore, its the bad times that create profit opportunities in the next upturn.  That’s the beauty of capitalism.
Nowdays, what central banks and governments attempt to do is flatten out the wave.  Yet the harder they try to prevent a down wave, the greater the eventual downturn.  They are inadvertently turning a sine wave into a tidal wave and that always ends in a megadisaster.  It’s basic physics. They are just postponing the inevitable.
So why do it?
In one simple word:  politics.  The aspirations  of the  “NON WORKING CLASS”…..politicians. Looking for reelection.
And who pays for all this fenagaling?
The taxpayer.
CIGA Wolfgang Rech
Stated a different way Wolfgang, TPTB are not allowing business failure to occur which has has always been a basic tenet of capitalism. Without the cleansing of failed debt…it is no longer capitalism. 
Bill

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Posted by & filed under Jim's Mailbox.

JB sends us a true weekend funny!

Bill

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Bill/Jim,
We already heard St. Louis Fed Chairman Bullard speak this morning regarding the unsustainability of all the bubbles.
Froth in the market is clearly evident and must be contained.
Below, Michael Barry warns of a massive crash in most markets.
So, my next question is “where will all this money go”?
Give you 3 guesses and the first 2 don’t count.
G O L D
CIGA Wolfgang Rech
If and only if you can find sellers of real metal for fiat at that point Wolfgang.
Bill
https://markets.businessinsider.com/currencies/news/big-short-michael-burry-warns-meme-stocks-crypto-crash-coming-2021-6-1030534935

Posted by & filed under Jim's Mailbox.

Jim/Bill,
The paradox of the Dollar. (with its reserve status).
The weaker the fundamentals of the country, the stronger it gets (or at least maintaining its footing).
Everyone wants and needs lower interest rates:
-the Fed to ease the funding of our national debt
-home buyers and refinancers need lower mortgages for bigger houses
-car buyers need lower loan payments
-corporations to take out loans for stock buybacks to give the illusion of greater earnings per share
-the bond market, especially Muni’s, to ease the burden of funding requirements to keep the economic and political machine in tact
-the stock market for greater leverage (margin) in this speculative environment
I’m sure you can think of many more reasons.
The common denominator in all these needs is a troubling financial environment requiring massive supportive measures.
Surely you would think a flight from the Dollar is of paramount importance in protecting your wealth.  After all, who wants to keep their money in a country whose prognosis appears bleak, both financially and socially. 
Except for a few central banks like China and Russia, the money flows keep coming and the optimism remains unbridled.   Go figure.
Most analysts appear to accept the reality of the Dollar on life support.  Yet the game goes on.  Like musical chairs.  Perhaps a “Black Hand” of government is dealing from the bottom of the deck.   You never know.  If something doesn’t ring true, run!
CIGA Wolfgang Rech
Until it doesn’t Wolfgang!
Bill

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Yet gold and silver markets portray the Fed can hike rates and control inflation? With 135% debt to GDP…this is a pipe dream!

Bill

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Posted by & filed under Jim's Mailbox.

Bill/Jim,

Who would have EVER thought that inflation is a negative for gold. (and a weakening Dollar to boot).

An historic moment in time.

Never in thousands of years has this been the case.

Too many hands (Central Bank manipulation) in the pot, I bet. And if that’s the case, there will be a reversion to mean. The Banks will be left with no gold, and China, Russia, and a few others will have cornered the market at ridiculously low prices.

Fools.

CIGA Wolfgang Rech

It’s not a negative for gold, it is just what they tell you and want you to believe. Pretty much the same as all the other idiotic ideas people are being fooled with in our world filled with skittles, unicorns and rainbows!

Bill

Gold Price Doesn’t Budge After New York Fed Highlights Higher Inflation In 2022
June 14, 2021

(Kitco News) – The gold market is off its lows but still struggling in negative territory, finding little traction as data from the Federal Reserve of New York further highlighted the growing inflation threat.

Monday, the regional central bank released the results of its May consumer expectation survey. Traditionally, the report doesn’t garner much media attention, but markets are sensitive to the looming inflation threat.

The report said that median inflation in May 2022 will increase by 0.6 percentage points to 4.0%. The report noted that this is the seventh consecutive monthly increase and a new series high.

Looking further out, the report said that median inflation expectations for 2024 increased from 3.1% to 3.6%. The report added that this is the second-highest level in this series, behind only behind data from August 2013.

According to some economists and analysts, the Federal Reserve has been effective in managing inflation expectations. Federal Reserve Chair Jerome Powell has said on many occasions that the central bank expects rising inflation to be transitory as the economy continues to recover from the COVID-19 pandemic.

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Jim/Bill,

Nicely put by Charles Hughes Smith.

He captures the essence of today’s mindset.

There always was, and always will be, blowout tops in markets and human psychology.

Unfortunately, people keep turning a blind eye to history.

Yes, the Fed is manipulating everything. But even they have their limits. Should they be bold and reckless enough to transgress that line, then the volume of bailouts/support/stimulus required will herald a new era….the total destruction of the Dollar.

Perhaps this is what they want…a Reset.

And Russia and China see this as clear as day.

CIGA Wolfgang Rech

Wolfgang checks back in again.

Bill

Seven Things Nobody Talks About that Will Eventually Matter–A Lot
June 13, 2021

Nobody seems to notice the ‘diminishing returns’ on Fed manipulation, oops, I mean ‘intervention’.

Perhaps it shouldn’t surprise us that everything that will eventually matter is ignored until it does matter–but by then it’s too late. Here’s a short list to start the discussion:

1. The Federal Reserve has transformed the American populace into a nation of dismayingly over-confident gamblers. I’ve been writing about moral hazard–the separation of risk from consequence–since 2011. Punters who are insulated from risk will have an insatiable appetite for risky bets, which is precisely what we see on a mass scale, as the confidence that the Fed will never let markets drop is 99.99% because the Fed has indeed reversed every decline, no matter how modest, month after month, year after year.

The Fed has perfected moral hazard: everyone from the money manager betting billions to the punters gambling their stimmy money is absolutely confident I can’t lose because the Fed will always push the market higher. Hence the advice to never sell and keep increasing the size of one’s bets because losing is transitory (heh).

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Debt, debt, and more debt!

Bill

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Posted by & filed under Jim's Mailbox.

Have a look at the charts very bullish!

GG

GG sends us the visual set up.

Bill

Most Bullish Set Up For Gold & Silver In Over 50 Years, Gold & Silver Stocks Getting Ready To Soar! Plus More Surprises
June 10, 2021

Most bullish set up for gold and silver in over 50 years, gold and silver stocks getting ready to soar! Plus more surprises.

Best Possible Scenario For Gold

June 10 (King World News) – Fred Hickey: “…negative “real” yields soaring to -3.5%. Typically, the best possible scenario for gold. Should be a good test for the current gold pullback following sharp 2-month gold rally to “overbought” technical levels. Is the pullback over? We’ll soon find out.”

Look Around You

Fred Hickey on inflation: “Look around you. Paying less for anything now? Been to grocery store? Pumped gas? (up 56.2% in CPI), bought any clothing (apparel prices +5.6% in CPI), travelled anywhere? (“transportation services” in CPI +11.2%). Bought a house (+19%). Economists only ones not seeing inflation.”

This Won’t End Well

The Daily Shot: The US stock market’s put-call ratio is once again hitting extreme lows, signaling wider investor complacency. (See chart below).

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