Consumers are 70% of the USA buying economy and bonds are 70 times the size of stock markets. Both reside on the doorstep of fiscal hell. What happens next?

Our beloved Federal Reserve Chairman is probably not sleeping too well these days. Benny (Chopper Ben) Bernanke and Treasury Secretary Hank Paulson managed a Houdini escape from Credit Crises Round One by papering over a host of financial disasters with New York’s Big Boy Banks. Problem is the resolution has only begun and they know it. The tip of this iceberg was managed but 90% of it still lurks beneath credit waters in back rooms all over Manhattan. Our fiscal generals are in it up to their necks, desperately, frantically working to contain the uncontainable. They are toast and they know it. It’s only a matter of time as Lehman Brothers, as well as others, could be the next Bear Stearns.

Political Stupidity Reigns Supreme

Congress, our political purveyors of idiocy in Washington, escalates ill-conceived

Why Wall Street Hates Gold and Silver

Wall Street ignored gold and silver during most of the 1970’s hyper-profitable bull market. They were either outright hostile, or acted as though the metals didn’t even exist. I got no respect, even though the first edition of this book sold 2.6-million copies and was near or at the top of The New York Times best-seller list in both hard and soft cover for two years, and I was all over the media; Wall street Week, Oprah twice, Regis and Kathy Lee three times, etc, etc. They were usually hostile. Wall Street paid little attention to gold until it passed $650, far too late for them to have much of a chance for their clients to make money. In retrospect, we know that in 1979 the aging bull market was almost over. Soon after it made a brief climactic spurt to $850, and then went into a multi-year decline. They did their usual thing; they bought high, and then held on too long, and sold low.

Why the hostility? Partly because they believed their own rhetoric! Historically, because rising gold always means falling stocks or a troubled world, and they made most of their commissions in the stock market, they had to remain bullish on stocks, and bearish on gold. Investors wouldn’t buy stocks if their advisors were bearish. They sneered at the inflation fears of us gold and silver fans, and derisively called us “gold bugs.” OK because I have lost much of my respect for them also for a lot of reasons. I also didn’t get any apologies from them when inflation rose to 18% and gold to $850 and silver to $50, and didn’t expect any. Unfortunately, most of the young whippersnappers who now control Wall Street were in diapers 25 to 30 years ago, so they haven’t experienced rising gold and inflation. Consequently, another gold bull market is inconceivable.

Studying Psycho-ceramics

I can’t resist telling you about one of the funniest things that ever happened to me which illustrates the skepticism of mainstream media types. In 1978 I was on a national promotion tour for the first edition of this book when I was in Detroit, rushing to a TV station for an interview on a big live morning show. I barely got there in time. The host turned to the camera and said, “Today we’re going to study psycho-ceramics, and with us today is a crackpot from California.” And the interview went downhill from there; with his biggest argument being that silver

Monday April 14, 2008 | Roger Wiegand

The following is by technical analyst, Roger Wiegand, editor of Trader Tracks, a publication geared for investors who seek to trade stocks, bonds, commodities and currencies.

“Here are identified negative trends; but it’s too early to measure how fast and how deep these problems will sink.” – Traderrog

Those nearing retirement will continue to work as long as they can hang on to their jobs. These folks see rising inflation and are fearful of getting by on reduced pension payments.

Retirees will see their pension payments frozen, or reduced as pension plans are slammed with massive investment losses in stocks, bonds, and real estate trusts. If it gets bad enough, the entire combined retirement system of social security and capital based pensions are facing disaster.

Our banking system in America is being nationalized by the federal government. First they’ll take-over the global banks by backing their messes and then off in the future they will be under total Federal Reserve controls. Later, smaller banks will suffer more heavy-handed controls of the Federal Reserve.

You can count on the Federal Reserve to print dollars and toss credit-cash at everything they see. Resulting inflation will be legendary. Somewhere down the road, the hue and cry against these failed policies will not only create a public call for reducing Federal Reserve powers, but demand its final demise and dismissal.

Fannie Mae and Freddie Mac bought 60% of the mortgages both bad and good. They are not a government entity any more than the Federal Reserve is and all shall eventually be closed out in failures after the next depression. These people will learn some harsh lessons about real anger.

Federal Reserve interference in these derivative markets will mess-up shares held by pension plans. Their mucking around in things they cannot control will smash the shares’ dishes in the pension china shop. This is quite serious and has implications far beyond the stock markets. Insurance companies and pension plans rely heavily upon income produced from a broad investment range. If the Dumbo Federal Reserve elephant runs through pension plans like they’ve managed the real estate mess, heaven help us. We are looking at a $500 Trillion risk within pension plans and insurance companies!

The key trading nations of Europe could be hammered as violently as the U.S. We also see their current vulnerability making them the first, very hard-hit victims; especially the U.K, Spain, Portugal, and France. Euroland’s Euro currency is headed to 170 on the money index as the USA’s fails and falls further. Some where off in the future, the fiat Euro will sink just like the dollar.

The Eastern European bloc will suffer greatly as they depend upon the west for investment and product sales. Germany is the strongest and most able to maintain their status quo. However, they too, shall be smashed with this depression. Watch for Europe’s troubles beginning this fall and worsening with China and Japan after the U.S. elections during the last quarter of 2008.

The entire world in our view will enter a
many year’s long deep depression in 2009-2010

War is always the answer to exit a recession-depression. This event will be no different. Some are forecasting an attack on Iran by Israel and the U.S. in a joint effort to prevent nuclear weapons development. That may be true but there are more important other reasons. (1) The first is Israel’s safety from on-going attacks (2) The second reason is to control Middle Eastern oil reserves by the United States. Four of the six largest identified global oil reserve pools lay under Iran and Iraq.

Consumers are being whacked with hard inflation most prominently displayed in energy and food prices. With job raises being static and companies suffering higher costs across the board, Mr. Consumer is squeezed in a cost vise growing ever tighter.

Real estate ATM equity is no longer available. House prices are falling and there is no equity left to tap or, in many cases the homeowners are under water owing more than their properties are worth. This source of funds for consumer-homeowners is gone. We forecast 10,000,000 foreclosed and repossessed homes before this is over and millions of adult kids returning home to live with parents caused by unemployment.

Dilution of United States dollars creating skidding currency values will drive prices higher. Things don’t cost more the dollar is just worth a lot less in purchasing power. This will continue to apply additional tightening money pressures on families.

And, of course last but not least, household net worth is falling as shares sell-off and interest rates fall diminishing investment income. Stock pros are selling into strength when the market rallies. This entire event is a race to shed assets and raise cash paying for necessities and obligations.

EDITOR’S COMMENTS: Roger Wiegand is editor of Trader Tracks Newsletter for gold, silver, and energy traders. Roger provides recommendations for short- and longer-term traditional futures and commodities trading, with specifics for individual trades.

To learn more about Trader Tracks and how to profit from stocks, bonds, currencies, and commodity trades, go to www.tradertracks.com.

Base metal stocks and precious metals stocks are the place to be as the world begins to price paper money toward its intrinsic value of zero! Oil (and other commodities) will rise to the moon. J Taylor’s Energy & Energy Tech Stocks newsletter contains interesting commentary and news on oil, gas, nuclear, as well as alternative energy technologies, , and commodities. The mission of our various newsletters is to help prepare our subscribers for the impending economic calamity that awaits us.

Massive problems are emerging for the global economy. Unless you are prepared, you will be victimized by these forces. You owe it to yourself and your family to prepare as best you can for the future. The purchase of PRECIOUS METALS in your portfolio will help you survive these economic times. Call Superior Gold Group at 888-969-6465 and a representative will make proper recommendations based on your current needs. 888-969-6465

The $988.5 forecast in Update 17 for the peak of Large wave I was exceeded by a small margin. The gold market now appears to be in the process of working through corrective Large wave II which is estimated to decline about 16%, give or take a couple of percentage points. Concerns about an extended 5th wave have been alleviated

One fascinating thing occurred in the process of reaching the recent price peak. The forecast of $988.5 presented in Update 17 was arrived in the following analysis:

Forecast Structure of Large Wave I of Major Wave THREE. London PM Fixings:

* Forecasts highlighted in yellow.

The forecast of $988.5 for the peak of small wave 5 (and thus also Large wave I) was arrived at by assuming that small wave 5 would be the same magnitude as small wave 3. Thus the gain for small 5 was predicted to be $199, the same as the gain in small 3. The absolute dollar gain of $199, rather than the proportionate gain of +31.0%, was chosen in order to err on the conservative side. If the forecast had used the percentage gain of +31.0%, the target for the peak of the small 5 (and Large I) would have risen to $1,033. ($789 x 1.31 = $1,033).

Incredibly, $1,033 was precisely the highest price achieved in the cash gold market on 17 March 2008. The London AM fix on that day was $1,023 and the PM fix was $1,011.2, both numbers being the absolute highs for those respective fixes to date.

Data updated to 20 March 2008.

In real time it was obvious that $988.5 was not going to the peak of small 5 because only one minor correction of approximately 4% had occurred up to that point. At least one further minor correction was required, followed by a push to a new high above $988.5, to complete small 5. This duly happened. The analysis of small 5 is depicted in the table below:

Actual Structure of completed Small Wave 5 of Large Wave I. London PM Fixings:

A couple of interesting points emerge from this analysis:

1. Minor wave iii with a gain of $101.0 was smaller than minor i which gained $123.5. The third wave in any impulse sequence cannot be the smallest, hence minor v had to be smaller than minor iii. It was, with minor v gaining only $42.0.
2. In situations where the third wave is not the largest in the sequence, it is sometimes found that the overall gain in the two smallest waves equals the gain in the largest wave. In Small 5 above, minor i had the largest gain of $123.5. The overall gain from the start of minor iii ($887.5) to the peak of minor v ($1011.2) is $123.7, exactly the gain in minor i.
3. Minor wave ii was a corrective wave with two downward thrusts in the 4% range, but they were part of the same corrective pattern, being the a and c minor waves. This was another of the irregular flat upwardly skewed corrections that have been prevalent in the gold market recently.
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A Puzzle

Last week the precious metals were down-right scary. Silver fell from more than $20 to $16.80; gold fell by big numbers. And yet, a broad survey of bullion dealers reveals almost without exception their was a shortage of the physical metals, and people had to wait as much as three or four months to get delivery. It was a rare commodity dealer who had silver inventory on hand and could deliver quickly.

Theoretically, with the demands for physical silver so high and increasing, silver should have been rising, not caving in.

So what’s the mystery? Why do prices seem to be speeding in the wrong direction? Percentage-wise it’s the biggest decline in the metals since a couple of huge retreats in the bull market of the ’70s.

It all relates to the futures market. There is a big difference between speculators in the metals on the futures market ,where no actual metals change hands ,and transactions in the physical metals markets where people are buying real silver and gold. They are actually taking possession of the metals. You would think this should automatically drive up prices.

Puzzle Solved

The futures market has its own law of supply and demand. If a lot of speculators want to buy or sell contracts, prices rise or fall until the market clears. But it actually has little effect on the supply and demand of the physical metals.

The market has been “deleveragering.” Says The Wall Street Journal: “Investors with losing trades in the credit markets – mortgage bonds or collateralized debt obligations, for example – are being required by banks and brokers to set aside more cash (margin calls) to cover the money they have borrowed to make trades, a process called ‘deleveraging,’ to raise cash for investors and hedge funds. They also have sold some of their commodity winners to raise cash.”

Says one partner in an investor-advisory firm, “The unwinding of winning commodity trades has been playing out for most of this week, especially in the last half of the week. This reverse alchemy is hitting many different commodities.”

The Journal then goes on to tell us, “The Dow Jones AIG Commodity Index has fallen nearly ten percent since last Thursday, after rising 18 percent since the beginning of the year. Gold and silver suffered the most, with gold down 8.3 percent from its high of $1,003.20 per ounce on Thursday on the New York Mercantile exchange, while silver fell 8.6 percent.

“Oil is down 7.7 percent from its record of 110.33, set last week.

“Exchanges and brokerage firms across Wall Street have been raising margin requirements in response to the heightened volatility of the stock and bond markets. Futures are often purchased with borrowed money.

“When markets are calm, the exchanges and brokerage firms that regulate the amount that can be borrowed against commodity trades are generally more lax. When nerves heighten and stock prices gyrate more, they make investors set aside more cash for each dollar they invest.”

The COMEX, for example, has raised margin requirements on gold contracts and crude-oil futures big time. So when margin requirements go up, a lot of investors sell, sometimes because they have to, so the selling drives down the price. This deleveraging process has, in effect, taken a lot of the speculative fluff out of the precious metals.

History

Palladium has a history that is sealed with that of platinum, with which it is found, and with which it is also associated as a member of the platinum metals group, also known as the noble metals. “Native platinum” refers to the natively occurring platinum which is not actually pure platinum at all, but rather a natively alloyed mix of platinum group metals including palladium. Palladium was not separated from platinum for quite some time after the discovery of native platinum, so the early history is a shared one.

Despite being worked with some skill by South American Indians over 1,000 years ago, not until the Spanish conquest of the New World during the fifteenth and sixteenth centuries did news reach Europe of a new white metal with unusual properties. The Spanish first

History

As an excellent jewelry material, platinum is regarded by many as a “new” metal. In actuality, platinum, one of the rarest (on an annual basis, only about 133 tons of platinum are mined, compared to about 1,782 tons of gold) and purest precious metals in the world and was discovered long before the concept of “modern” came into vogue.

Dating back to 700 BC, when the ancient Egyptians mastered the techniques of processing platinum to 100 BC, when the Indians in Pre-Columbian South America combined it with gold, platinum has played an important role in the culture of human

History

Prior to World War II, the major uses for silver, other than in coinage, were for jewelry and sterling ware. During the war, however, technological advances were made in electronics and photography. After the war, this technology was used to develop new consumer products. As the demand for consumer goods increased, so did the demand for silver, and, as a result, the market price increased. The higher market price, however, did not result in increased mine production.

The Silver Act of 1946 authorized the U.S. Treasury to purchase domestically

History

The history of gold begins in remote antiquity. Without hard archaeological evidence to pinpoint the time and place of man’s first happy encounter with the yellow metal, we can only conjecture about those persons, who at various places and at different times first came upon native gold. Experts of fossil study have observed that bits of natural gold were found in Spanish caves used by the Paleolithic Man about 40,000 B.C. Consequently, it is not surprising that historical sources cannot agree on the precise date that gold was first used. One states that gold’s recorded discovery occurred circa 6000 B.C. Another mentions that the pharaohs and temple priests used the relic metal for adornment in ancient Egypt circa 3000 B.C. However, it is curious to note that the early Egyptian’s medium of exchange was not gold but barley. The first use of gold as money in 700 B.C. is claimed by the citizens of the Kingdom of Lydia (western Turkey). Surely, you remember the kingdom of the famous fortune seeking King Croesus - circa 550 B.C.

Recent History

In 1792 the U.S. Congress adopted a bimetallic standard (gold and silver) for the new nation’s currency - with gold valued at $19.30 per troy ounce. This basically remained unchanged until 1834, when the price of gold was raised to the $20.67 level which held for the next 100 years. It was not until 1934 that President