Friday, June 28, 2013

Silver near bottom: 3 of 5 of C is done. Now working on 4 of 5 of C.

In this post I indicated that I thought 3 of 5 of C was nearly done.  Check out the chart there and you will see that my EW count modeled a nice rally (red line) that would be 4 of 5 of C.  Today we are essentially getting that rally (click on the chart for a more detailed view).  Keep in mind that this EW
charting exercise is just a probabilistic modeling technique for tracking what is essentially a chaotic event - the emotions of people. 
Chaos is somewhat predictable at the very high level but as you get to finer and finer resolution the odds increase rapidly that a butterfly's wings will perturb the direction.  Still, Elliott Wave charting has been the best tool I have used for trying to time the markets and my EW model for silver indicates that we should have one more wave down indicated by the blue line coming out of the circle. 
The strength of that blue line is hard to predict.  It could stop mid channel and then bounce up.  This is actually the most bullish formation because it results in an inclining double bottom.  It means buyers couldn't wait for the chart to hit the bottom of the channel before stepping in.  Another possibility is for the chart to touch the bottom of the channel on dwindling volume, again indicating that all the sellers have been fleeced and it is time to run the price up again.  Finally, there could be an avalanche of sellers causing a high volume poke down through the bottom of the channel.  This could result in another extended wave down so the buy signal here for traders is when the chart tests the channel again from below and then breaks back up through.
I also want to point out some other things that are related.  In the past, metals smash downs would be real long term events.  Why?  Because Americans had all the money for buying them and Americans also had a strong currency called the dollar.  So Americans had the choice of metals or paper money.  Thus, when metals were smashed down like this it panicked the only possible buyers out of the metals and into something else that could be held for a long time with little perceived risk.  But today things are different.  The smash down might still be scaring Americans but it is being used as a buying opportunity by Asians.  Those trying to sell the metals into the fear zone are getting a big surprise: the buyers love the lower prices!  Instead of making the entire market fearful, a big chunk of the market is celebrating and buying. 
I think Asians have a long history of crappy paper money and so they simply don't trust government money like Americans do.   There have, for example, been many stories about how India is having to enact stupid laws in order to quench the gold buying of its people.  Indians LOVE gold.  Not paper gold but real, physical, in your hands gold.  And they love it more at lower prices.  Chinese folks are of a similar mind except that their government has been telling them to buy gold and silver for the past 5 years now.  China, IMO, intends to back the Yuan with metals in the future as soon as they sense enough weakness in the dollar.  That would be the end of the American funny money hegemony over the world.  It's what I would do if I were them and there are plenty of them that are far smarter than me.
 I think this is the new dynamic that JP Morgan and Goldman Sachs did not count on with the metals sell off.  I think the Federal Reserve is very worried about what it is seeing.  The fed knows the golden rule: he who has the gold makes the rules.  I sure hope we are not "selling" metals to the Asians that we really don't have (naked shorting) in the hopes that they will get scared out of their positions and let us cover our shorts on the cheap.  I really hope that is not happening because if it is then we are going to lose that bet.  Asians are committed to metals ownership, period.  They cannot be scared away by fake paper money.  If we have been doing this we will eventually default and fail to deliver the gold and silver that we sold them.  You will know this by a COMEX default.  If this happens and we don't make it right then it could start a world war.  Who knows, maybe that is the plan in Washington given that the US military is so powerful right now.  Perhaps all roads still lead to the US "going Roman" (conquering people to get their money instead of earning it honestly).
Another indication of nearing the bottom is the massive sell off in gold miners.  Check out the chart for Barrick Gold (ticker ABX).  It recently broke long term support in what was most probably a 3rd of C wave.  Keep in mind that C waves generally look like 3rd waves - they are powerful.  So a 3rd of C is like a 3rd of 3rd and that is what it took to smash through this long term support "with gusto".   Also note the declining volume on ABX.  The sellers are tapering off and volume changes often precede trend changes.  If I had to venture a guess, ABX is within spitting distance of a sustainable bottom where the speculators will then pile back in on margin for huge profits.  I think the lowest it will go is the downward sloping support line shown in grey below.  Of course, those who are buying shares in miners are gamblers because there could be a lot of hidden $hit buried in the kitty litter.  With corporations you simply never know the depth of fraud and corruption and off book leverage that has occurred.  Conversely, those buying the underlying metals are savers.  Gamblers might win big but savers will never lose.
Nobody knows for sure what will actually happen in the short term of course.  That's why they call it chaos.  But we do know one thing and it is a VERY powerful thing to know: if you buy the metal and hold it yourself, the metal can never, ever go bankrupt.  There can be no lawsuits against it, no CEO fraud that steals the value of it.  In other words, it gives you the possibility of holding until the storm passes knowing that your ship might take on water short term but that it is completely and utterly unsinkable.  Armed with that knowledge you never have to abandon ship in a panic as long as you don't buy it using debt and you hold it yourself so that some scum bag Wall St con man can't steal it from your account while you are busy living your life.

Thursday, June 27, 2013

Bullish on Alcoa [AA]

I'm looking around at many factors and I see that inflation is starting to creep into things.  The rising interest rates are the canary in the coal mine and they are accompanied by what I believe to be the coming bottoming in metals after a large deflationary smack down.  Another way to look at this is via the stock charts of commodities producers.  Look at Alcoa's chart.  I think 2009 lows was a 3rd wave bottoming, that the subsequent bounce was wave 4 and now the chart is working out the 5th and final wave down.

The EW justification for this chart interpretation is twofold.  First, the move from 3 to 4 is a clear a-b-c retracement sequence, not a 1-2-3-4-5 impulse sequence.  So I do not think that the 2009 low was the end of a full 5 wave large scale move.  I think it was just a massive 3rd wave.  Also, look at the chart action now.  AA is clearly forming an ending diagonal.  Ending diagonals happen at the end of long trends and they suggest that a significant trend change is in the cards.   Finally, and this is not a done deal yet but the odds are quite high that it will work out like this, I see a failed 5th formation in progress that will result in a very bullish inclining double bottom.  In other words, red 5 will not likely be lower than red 3 was.

Alcoa is not an especially good company.  It is not especially smart or innovative or cost effective.  It's sort of a plodding commodities processor.  The only way for this chart to play out like I think it will is if we start seeing significant commodities price inflation.  In other words, Bernanke's feckless spending and years of exporting dollars to the rest of the world begins to come home to roost as others figure out how to conduct business without the USD as an intermediary.  It is baked into the global debt Ponzi scam that this will happen some day and the only question is the timing.  Bernanke recently talked about tapering and the market had a heart palpitation.  Imagine if he actually did anything along those lines!  It would likely result in a global depression.  The US isn't just propping up its own economy with funny money, it's propping up the whole global debt Ponzi.

It should also be noted that the past few years of smack down  in commodities shares has made AA stock a relative bargain (if you think that any shares have any value and if you think that traditional valuation metrics have any merit).  Several of the stats are in "Prechter Territory" as predicted by his book," Conquer The Crash":  At the current price of $7.86 per share, the forward PE is 11,  price to book is 0.62 (low!), price to sales is 0.35 (OUCH! That is low!).  In other words, the markets have priced Alcoa at what it is: a plodding commodities processor in a deflationary environment.  Couple that with large debt (nearly $9 bn) to cash (only $1.5bn) along with a pathetic 1.5% dividend and it's no wonder why the shares are this low.  But significant inflation will be a friend to Alcoa.  It means rising prices and it means paying back debt with devalued dollars.  Alcoa's recent earnings have been reflecting business improvement.  They were profitable last quarter and quarterly earnings increased 58.5% year over year.  It is no coincidence that solar bottomed recently.  They were always a canary in the inflation coal mine IMO.   Alcoa is about to make those who understand the cyclic nature of things a nice chunk of change.

Aluminum is so ingrained into our society that we need Alcoa.  At today's price and with that ending diagonal chart in place, I think it is a very good buy today with the intent to hold for the next 2-5 years.

Wednesday, June 26, 2013

Silver appears to be near the bottom of 3 of 5 of C

For those who have been following my EW analysis of silver, here is an update.  The silver smash down continues but we have not yet seen that high volume capitulation day (with a possible but not required intra-day rebound) which often accompanies the bottoming of panic selling.  Normally, I would not call selling something a "panic".  Selling stocks is always wise because they might eventually go worthless.  But selling money metals like this does fall into the "panic" heading because they are never going to go worthless.  In other words, it is always safe to buy physical metals on the dip if your time horizon for holding them is retirement (as it should be).
 In any case, the chart broke long term support a few days ago and so significant additional selling was expected.  But I don't actually expect a full mania retrace on silver back to $5 (and if it happens, it is a total gift to anyone who is 20-25 years from retirement!).  What I do expect is for the metal to form an inclining double bottom of some sort and then to go on a rapid tear upwards.  The chart is now at the bottom of the channel and it should find significant support in this region.  Then perhaps a quick head fake up before a capitulation 5th wave or alternatively a failed 5th followed by a breakout.  It could go either way.  Accurate and more importantly, repeatable prediction of chaotic events becomes exponentially more difficult (i.e. more random) as you go down in time scale.  In other words, the big moves are far easier to predict than the small ones.  Thus, grubbing for every last penny is not always the best strategy.  Dollar cost averaging into the bottom is a much more reliable method of accumulating a desired asset at a good price.

In any case, if I charted this correctly it seems that the bottom should occur just around the 4th of July.  It would be a fitting bottom given that sound money is the key to true liberty.

Monday, June 24, 2013

Fitch: "China credit bubble is unprecedented"

The UK Telegraph reports that Fitch credit rating service says,"The credit-driven growth model is clearly falling apart. This could feed into a massive over-capacity problem, and potentially into a Japanese-style deflation".

Well, what a shock.  Well, not really.  In fact, I've written many times and for several years now that China would prove to be a massive credit bubble the likes of which the world has never seen.  For example, here is a post indicating Chinese credit bubbles from 2010Here is another.  And in this post I applied Ponzi logic to it so that readers can know that it was all done on purpose even if supposedly with good intentions.

It's not that the leaders of all the nations are stupid thus causing them to make poor financial decisions.  It's that they are mortal humans.  Mortals die some day and so in the Keynesian spirit of "in the end we are all dead", why not get what you can while you can even if you have to stab your fellow human in the back?  Humans are greedy and selfish by nature.  This is why it has never worked out well for normal people to let other people be in charge of them.  This is why we must all be sovereign individuals come what may.   Self sovereignty does not guarantee safety.  Nothing guarantees safety.  But it does promote freedom and that is about all you can ask for in this life: freedom to determine for yourself how you will live it.

The government corruption always starts out slow.  A favor for a campaign donor here.  A kickback accepted for political favor there.  But all of it always justified in the minds of the con men because of the other good stewardship that the politicians think they are doing.  Of course, eventually their human nature pokes through and over time they figure out how to game the money supply (which is really just a proxy for human labor) and they use it for outright treasonous theft which is really a hidden form of slavery. 

That is where all governments of the world are today.  If you do anything they don't like, it's a felony.  The recent NSA leaks debacle shows that it's a felony even if what they don't like about you is that you told the truth about them.  On the other hand, if they do something horribly immoral then perhaps they need to be furloughed with pay for a couple weeks (which I call "vacation") while the sheeple forget all about the wrongdoing.  And if that doesn't work then offer a heartfelt (fake) apology and, hey, perhaps suggest more training for the government felons so they don't repeat it.  After getting used to complacency of the masses, the con men at some point don't even try to hide their wrongdoings.  They don't even feign remorse or embarrassment.  They simply say "NSA spying is not an invasion of your privacy and besides we need it to save you from terror".  Folks, that's where we are today and it is really sad to see.

Very soon government is going to have to make a decision.  They will either have to decide to reform themselves and make do with faaaaaar less than they have today or they will have to become outright tyrants; they will have to do something in order to justify martial law.  The other option is to start a world war and to hope that the people are too stupid to hold the con men accountable.  They will have to decide not because they want to but because the credit Ponzi which supported their scammy ways will have collapsed.  They won't be able to borrow money in order to fuel their political ambitions cheaply and perhaps not at all.

It's very hard to tell who is going to implode first - Japan, China, the EU, Russia, or the US.  Perhaps it will all happen very quickly for all players once any large player defaults.  The one thing I am sure of at this point is that there is no escaping massive global economic pain and no doubt a BUNCH of social unrest.  I am shocked by the number of people who have gotten caught over the past few months stockpiling pipe bombs in their houses.  For example, this and this and this. For every one that gets caught, 50 remain. 

There is going to be serious unrest all over the world, including the US.   I don't know what will kick it off here but it will just be 1 too many straws on the camel and there will be no taking it back.  There is really no way around it.  A massive debt bubble bought people's complacency and calmed them down.  When it all goes away I expect the opposite effect.  When it happens, have no doubt: those to blame are named Greenspan, Bernanke, Clinton, Bush (everyone named Bush who was ever in government), Cheney, Obama, Paulson, Every present and past executive in JP Morgan and Morgan Stanley and Goldman Sachs, and of course every executive in Monsanto, etc.  And let's not forget our shadow bankers like Jack Welch, etc.   In other words, our government and corporate "leaders" for the past 40+ years.  They all sold us down the river.

When it all comes tumbling down it's really going to leave a mark.

Friday, June 21, 2013

Brazilian spring is happening right now.

Amazing things are happening all around the world as the debt Ponzi collapse continues to unfold.  When the credit runs out, the government spending power goes away.  When the government tries to put more burden on the people to make up for this, the herd finally wakes up and shows government who is really in control.  Brazil just tried to raise rates on public transportation in order to make up shortfalls from the collapsing debt Ponzi.  At the same time, the elite were spending billions on their plans to host the World Cup soccer matches.  The combination of this tiny bit of additional austerity thrust upon the people with the audacity of spending money on something that really benefits only the very wealthy's egos when everyone else is tightening their belts was just too much.  The herd revolted on it in unison.  Hundreds of thousands took to the streets.  Importantly, rescinding the additional transportation tariffs did not calm the herd.  The worm has turned.  There will be no easy escape for the con men IMO. 
Scroll down to the videos, they are very telling.  The riot police look around, see the people all acting in unison and in common cause. They realize it is a lost cause and actually join the sit-in.  This is absolutely amazing to watch.  Observe how the one lone riot policeman sees his fellows sitting down and giving up.  He is confused but eventually submits to the implied peer pressure and he sits down too. 

I hope we get it this easy when the mass protest “contagion” finally comes home to roost in the good old USA.  All I can say is that politicians and police will be wise to just give up and join the people instead of trying to fight.  Contrary to what some sheeple think, there is no possible way that government and police and even the US military can possibly control the American people once the herd "goes Brazilian" on them.  Heck, we couldn't even conquer Afghanistan and that is a place where military atrocities could be committed by war criminals like Bush and Obama without knowledge of the American people.  That will not be the case if they try to pull the same crap here.
Someone is going to be in charge after things change and smart cops will not go against the will of the people.  Especially those in the US where everyone is armed with high tech military style assault weapons and optics.  It is just a really poor gamble to attack American citizens on our own ground.  I hope the police of this country are looking at what is happening in Brazil and learning from the wisdom of the Brazilian riot police.  The winner of the coming conflict has already been decided in favor of the people.  The only thing we don't know is how many lives will be lost in the process.

JNK, a submarine starting to submerge with all hatches open.

Over the past several weeks I have written several times about JNK which is a junk bond ETF.  Junk bonds are those with low credit ratings.  That means high yield.  They would be absolutely worthless if the coupon (interest rate) goes up too high because the issuer would not be able to roll them over at an affordable rate.  As long as Bernanke is juicing the credit markets with stimulus, people have run into the JNK ETF in search of yields that cannot be found on higher rated debt.  Nobody wants to own junk bonds.  They do it because they have to in order to meet the ridiculous, mathematically un-keepable promises of 7% or 8% payouts on insurance annuities.  They also do it in order to try to make up for massive shortfalls in pension plans.  They think that as long as Bernanke is juicing the markets that the junk debt will be able to be rolled over, thus avoiding default.  The only way to keep this game going is to roll the debt over - once that cannot be done at low enough rates (or at all), the game is over and the junk bonds will collapse to worthlessness as they default en masse.  The JNK ETF is how I will be tracking all of this.

In this post on JNK I likened the ETF to a submarine that was getting ready to dive.  I also overlaid 
the chart on top of a picture of an owl because the double top formed by an ending diagonal reminds me of this illuminati symbol of wisdom.  As you can  see from the recent chart below, the ending diagonal did in fact break down as modeled.  In fact, during the selloff yesterday that hit all markets including stocks and metals, the JNK ETF broke an important support like and it did so with gusto.  I do not think that this support can be recaptured. 
I think Bernanke's talk of "tapering" has convinced the market that he will eventually try it. The smart money wants to to exit the Ponzi first. 
While the case for JNK ETF collapse is pretty clear, most people will not extend this thinking to the broader markets but the reason to watch JNK is as a fear indicator/fear proxy for the broader markets.  From the JNK chart it seems that the herd has become fearful again as expected.  There will be a stampede for sure.  All of the stock markets are way over valued simply based on the largess of Bernanke.  Nobody is in it because they believe in free market principles or the value of these assets on their own anymore.  Bernanke has ruined the stock and bond markets as a price determination mechanism which they are supposed to be.  Prices are now subsidized with Bernanke bux.  When that stimulus ends, so will broad market participation.  In short, the con has finally exposed itself for what it is and the people have lost faith in the market con.  In addition, people have stopped talking about the foolishness of conspiracy theorists and have themselves become conspiracy believers.  People have lost faith in government.

All of this is interrelated.  As Prechter says, "It's all one market".  My take on that is that it's all one big con.  Prechter puts gold and silver in the same pot and so far gold and silver have led the way down.  But their pullback was predictable (and predicted) by Elliott waves and at least my read of the EW tea leaves says we are finished with 3 of 5 of C and now have one last capitulation smack down in metals before they bottom.  At that point I think people will begin to fear government takeover of the money supply from the central bank a-la-Japan in order to counter all of the plummeting markets.  When that happens you will want to be in gold and silver IMO.  

Central bankers are con men but they are educated con artists.  They know how to run the long con.  Politicians?  Not so much.  They do things to benefit their chances of winning the next election.  They don't care a hoot about what comes after that.  Thus, they are likely to show less restraint than central bankers.  When politicians (or their appointed puppets) get control of the currency supply, the currency is on the road to massive (if not hyper) inflation.

In any case, if JNK doesn't retake that red support-turned -resistance line on the likely back test then it will be the famous "goodbye kiss" and the junky submarine will go under will all the hatches open.  This time there will be no saving it.  Most of its "assets" will show their true value of zero before it stops falling.  It will go sub $5 and perhaps even go to zero or be closed down.  The broader markets like the DJIA, S+P500, NASDAQ, etc. will also collapse.

Thursday, June 20, 2013

Silver - the value of dollar cost averaging.

Silver and gold are getting hit again today in an obvious attempt to shake the tree at the very bottom.  In this recent post I speculated that the long standing support line would be broken and it would take the power of a 3rd wave to do so.  I was planning on waiting for the high volume capitulation selloff that oftentimes is required in order to put in a sustainable long term bottom. 

At the same time, calling the very bottom is difficult and there was a good chance that the long term support line would hold.  In that case we could see a very violent vee bottom bounce into the next bull market and I wanted to make sure I caught a good price on that bounce.  So in this post I revealed that I bought 1/3 of my intended tranche of silver metal.  I presented a charting case for my move but like all charting, it is nothing more than the odds of trying to predict chaos (at least chaos to our simple minds; it's unlikely to be chaos at some level of omniscience).

Today the market rewarded me for my impatience with another big step down.  As I had originally thought, it took the power of a 3rd wave to do this.  In fact, the 3rd of a 3rd of a 3rd to do this as the following chart will show (click on it to get a clearer image).  IMO this action is chaotic but not coincidental.  The market had to make a decision at that support line and it pondered on it long and hard and it eventually decided that there were more suckers to fleece (and they were right).  I suspect a lot of stops were taken out by this move.  The logical thing now for markets to do would be to head fake back up and then go down one more time to see if any other sellers can be found.

I, of course, am of the mind that this is the time to be looking to buy, not sell.  I think there is perhaps $2 to the downside and $50 to the upside on this issue.  By the way, green 5 hand drawn in below also corresponds to a very large C and the end of the metals pullback.

Gold is also looking like it could be very near a bottom.  It is flirting with the 38.2 fib right now.  A case could be made for saying it is tracing out a 3rd of 5 of C right now as well.  Of course nobody knows for sure what the herd will do in a panic which is why I am dollar cost averaging into what I strongly suspect is a long term bottom. 

I'm also mindful that the eventual retracement could turn out to be the 61.8% fib or even that this could turn out to be not a C wave but a 3rd wave!  That would mean years more of pain for metals
 holders, pretty much in line with what Bob Prechter expects.  It is never smart to completely ignore Prechter but I am not trading.  I am accumulating for retirement.  I am confident that by the time I retire this retirement metals fund will be in very good shape.  Obama is saying that Bernanke wants out and that he has been in there longer than he wanted to be.  I read this as saying Obama wants Bernanke out because he is not doing enough to prop up the collapsing debt Ponzi.  One day in the not too distant future, the US will have a Shinzo Abe moment - an event marked by the government takeover of the Federal Reserve and the installation of a puppet chairman of it.  There will be a mandate to inflate.  This has been my long standing "super nova economy" view: first big deflation and then massive inflation and perhaps hyperinflation.  It will take years to play out.

The eventual takeover of the central bank by the government is why I'm into the metals as a store of value for the long term.  Until that happens, I'm hoping for lower prices so I can buy on the cheap!  This is the difference in mind set between someone who buys physical metals for retirement and someone who trades the paper based metals funds like GLD and SLV.

Sunday, June 16, 2013

Charles Nenner on the stock market and on metals

I first saw Nenner on CNBC back in 2008 and to be honest I wrote him off as a crank.  The reason for this was that he would make predictions without explaining any reason for it except "cycles".  He would talk in very vague terms and give no information that could be used for back testing his system.  To be blunt, the way he described it sounded a bit like Jewish Kabbalistic mysticism and numerology.  This is in sharp contrast to something like Elliott waves the theory behind and "rules" of which are clearly documented all over the web.

Despite my skepticism, I have watched him over the past few years and I have to admit that his calls have been pretty good.  Also, he is right up front saying he doesn't know why the system works, just that it seems to be built into the fabric of things somehow.  The more I hear him speak, the more he seems to be describing herding movements.  One of his recent calls was regarding a bottoming in crude oil.  You can watch the video here.  That happened on April 18th of 2013.  So how'd he do?  You be the judge:

While a move from $31 to $34 is not definitive proof of the start of a bull market, he did call the very day of the low.  Also, the chart has broken through the top resistance line and that should speak volumes.   I would guess by looking at this chart that oil will move up in a rapid 3rd of 3rd wave movement soon.

In any case I have been calling for stocks to go down while gold and silver go up and that is what his company is now saying.  In fact, I just recently made a "possible if not likely that the bottom is in" call on silver and today I see that his company is saying "bottom in gold very soon".  Here is a head honcho from Nenner's company discussing commodities and gold and the stock market.
If he is right, gold will surprise everyone to the upside because everyone has been trained into thinking it is a commodity like copper when in fact it is a fear safe haven.  He thinks the stock market will plummet and so do I.

Side note: because of the above video where Nenner says natural gas will peak and then re-test lows again, I will dump my Ballard Power shares ASAP since that was supposed to be a nat gas play.  Since I'm up more than 100% from my buy price already I won't be too disappointed if I don't catch the whole run.  But Nenner's view is that nat gas will test the bottom again and that means a double bottom could occur.  If so, I'll be back into Ballard or some other nat gas play.

Saturday, June 15, 2013

Why I started buying physical silver metal today.

In the past couple weeks I have been on increasingly rising silver bottom watch.  The sentiment on the metals and the miners is in the dirt because of the big pullback they have been experiencing since early 2011.  At the same time, the fed has been buying stocks and bonds trying to get everyone into that Ponzi again.  So it would seem that Bernanke is winning blah blah blah.  Balderdash.  Bernanke has already lost but he's so stubborn that he is willing to risk the security and the sanity of the entire country trying to prop up the status quo.  Everyone thinks he's a hero when in fact he was never anything more than a confidence operator, a high priced carney in the global debt Ponzi.  Words do not convey the contempt that I have for him.  He has caused global suffering with his money games and we still haven't seen the bad stuff yet.

Well, today I started buying again.  It might go lower but I decided to pick up the first 1/3rd of my intended tranche.  So, why now?  Why not wait a bit longer?  Well, I was going to do that originally even though I know that I sometimes have trouble reading the 5th of the 5th of the 5th very well.  But then it struck me - I could possibly find some independent verification in ZSL which is the 2x leveraged short fund.  These leveraged shorts move the chart faster and can thus pull out details in the movements and make them a bit easier to read.  Of course, in the case of ZSL, all the charts are inverted.  So if SLV must be near a bottom, ZSL should be near a top.

In any case, here is the ZSL chart.  What I saw when I looked at it made me wonder greatly if the 5th of C hadn't already been put in.  First off, wave 1 is a pretty easy read.  There are 5 clear wave thrusts with 3 going up and 2 being pull backs.  Wave 2 was pretty clearly a sideways correction.  Per the EW model, I should then get a violently upward 3rd wave followed by a big, vee style pullback (since 2 was sideways, 4 should be a vee per the EW rule of alternation.).  In addition, a line between 1 and 3 should be roughly parallel to a line between 2 and 4.  In fact, the chart seems to have done exactly that.  So now the big question is, is the next peak the 5th and final wave of the series or is it just wave 1 of 5 with waves 2 of 5, 3 of 5, 4 of 5 and 5 of 5 to complete before big red 5 is complete.

I was originally thinking that it could be just 1 of 5.  In fact, it still might be just that.  But it suspiciously hit the top line (the one that goes through 1 and 3).  That's what a 5th wave is supposed to do.  Now the chart is struggling to hold lower support.  If it breaks down it will probably be with gusto because it will be a 3rd wave in the downward direction for ZSL (as silver breaks out to the upside).  In addition, I noticed that the vertical distance from 4 to "5???" really isn't much different than the vertical distance from the start of red 1 to the peak of red 1.  Sure, the recent wave made its move much faster than the red 1 wave played out but the amplitudes are similar, just as one would expect between a 1st and 5th wave.  

Finally, I remembered that the SLV chart was sitting on a support line going all the way back to 2008 (see chart below).  I think it would be quite difficult to break that long standing support line.  I could always be wrong about this but I currently believe it would take a 3rd of a 3rd wave to have enough power to break down through it in a meaningful way.  I'm not convinced that a 3rd of a 5th wave could do it.
Given all of this I think there is a technical case to be made for the immediate bottoming (if not just recently bottomed already) for the SLV chart.  That means the odds are enough in favor of going long right now that I bought 1/3 of my intended allocation for this cycle.  If it goes lower then I will be very happy and buy a lot more.  But if it begins to break out I will also buy more. 

Bernanke will be checkmated soon by the monster market that he helped create.  It will demand increasing amounts of stimulus or it will have a tantrum and this is happening when Bernanke is trying to talk up the unworkable idea of "tapering" off the stimulus.  Pulling off the stimulus will invite deflation.  At the first sign of it, the fund managers will pull their money from the scam and run with it.  The result will be lower stock prices, commodity prices, etc.  But I think this time that gold and silver will go up, not down with because what is anyone to do with the cash they raise by selling stocks?  If it goes into commodities it will cause an Arab spring in Main St. USA.  Government will intervene and anyone foolish enough to have money in it will get robbed by price controls.  Metals are the only safe hiding place.

If anyone has questions on how to buy metals, send leave a comment on the blog or send me email if you are family or friends.  I just checked the prices at Monex vs Apmex and Monex edged out Apmex and Apmex refused to make up the difference so Monex it was.  The price for silver US Eagles (decided to try them instead of the Philharmonics that I usually get) was $25.46 per coin delivered to my doorstep.

Tuesday, June 11, 2013

Bottom watch on Silver.

For my recent views on silver, please check out my last post.  Pay particular attention to the short term prediction which is charted near the end of the post.  Below is today's silver chart (click on it to get a more detailed image).  I can honestly say that it seems to have followed my EW model prediction fairly well.  The formation came very close to the right side of the channel after forming a triangle.

Given that triangles are always supposed to be the second to last waves, we should have 1 more wave after the 4th wave break down.  You can see that the 4th wave broke down with gusto and then the 1st of 5 of C stopped at the orange support line and then rebounded into 2 of 5 of C.

What followed 2 of 5 of C was another wave down which had a gap in it but it could not break down and stay down below the orange support line and so I think 3 of 5 of C will be an extended wave, itself made up of 5 distinct waves.  I think what we just saw was 1 of 3 and 2 of 3.  If I'm right about this wave count (this view of the wave model), the next wave down will be 3 of 3 of 5.  That means it will be a 3rd of a 3rd and that means cliff diving is to be expected.  If we get this type of gap down behavior it will not be time to panic but time to scrape up your spare cash and start buying. 

I will not buy the SLV fund, I think it is fractionally reserved and therefore fraudulent.  I will only buy real metal.  But I will be buying as everyone else is freaking out.  In any case the 3rd wave should play out strongly and then an a-b-c rebound as shown in blue and then the 5th of 5 of C will be done.  That will be the bottom of this selloff.  I cannot say for sure what price that will happen at but when the waves are all counted out (or if we face the prospect of a failed 5th with an inclining double bottom) then I'm going to buy a bunch of metal. 

If I'm wrong, if this Elliott wave modeling turns out to be a bunch of hoodoo voodoo then I'll buy even more silver if the price goes lower.  Without margin or leverage or any worry whatsoever that silver will ever go bankrupt I will not lose any sleep and in fact would enjoy lower prices.  But before you write the EW modeling off too quickly as hocus pocus, go check out my calls on silver as it hit its big 3rd wave up (I was not optimistic).  More recently, check out my call on Sunpower (SPWR).  My view of the EW model was accurate there.  More recently still, check out my post on Ballard Power.  I actually did buy some of BLDP having modeled the bottom pretty well. 

Again, keep in mind that all stocks are just gambling.  If Wall St got a dirty bomb dropped on it and nobody could work there for 1000 years as a result, stocks would all be worthless overnight because there would be no greater fool to sell them to because there would be no marketplace to sell them in.  Do you think you could sell them to your neighbor even if you had the certificates if you needed food?  Really?  Now consider the fate of silver and gold, metal in hand, under these same conditions.  It's value would not evaporate.  Just the opposite.  Silver and gold would skyrocket.  Now think of any bad condition and consider if it happened: would silver and gold go worthless?  I think not!  Even in civil war it would be the money of the people.  Heck, even if aliens landed and took over the planet people would value silver and gold as money. This is why buying silver and gold for retirement are never bad ideas and can be downright good ideas if you can catch them when the herd has been tricked into being afraid of them (like right now).

Note: this is not investment advice.  Don't be an idiot in thinking you should listen to some guy on a blog.  If you can't see the logic for yourself and make the decision for yourself then I can not save you.  In fact, I will be lucky to even save myself.  So just save yourself...  (kudos if you know the song that came from ;  ). 

Wednesday, June 5, 2013

JNK update: lookouts below, dive! dive! dive!

Around the first of the year I suspected that the JNK ETF (Junk Bonds) was in the process of topping out as it created a chart formation known as a double top. 

I wrote about it here.  At left is the chart I posted at that time. The owl, of course, normally symbolizes wisdom to the elite but with the lighthouse getting dim (check the long standing photo on my blog's front page), I think it's more like the owl being the sign of death.

Why so? Well the JNK bond fund went into a massive nose dive as a result of the near collapse of the global financial system a few years ago.  Now, due to unprecedented government intervention in all markets, it has completed an ending diagonal formation (which I suspected would be the case on many occasions prior within the pages of this blog).  I wrote that a breakdown of this sucker bounce formation would result in a rapid plunge of these shares and that the entire market would collapse in a chain reaction over time.  In all of these charting models the breakdowns come by degrees.  They have to go through "gates" so to speak because that is the way the herd operates.

These gates are called technical resistance and support levels.  In an update post discussing the JNK ETF, I suggested again that the JNK ETF was ready to break down.  The annotated chart at left was taken from that post.  You can see how the long green line at bottom was support on the way up but then it broke down and could not break back up through from below.
It tried and tried and even reached a new high but when faced with the intersection of two strong resistance levels, it broke down.  Since that post, the chart has gotten even worse.  Here is what it looks like now (zoomed out significantly):
From this it is clear that the chart touched that resistance point like it was an electric wire and jumped back down.  It is now tracing out a 3rd wave (see the gap?).  I expect a final smallish bounce upward off the long term support line (red).  I expect that the actual touching of that line will be the 1st wave down.  Then wave 2 will probably be a big bounce back up, vee style. 

If I am right, that 2nd wave will soon tire and then it will turn downward and re-test that long term red support line.  I suspect this will unfold with great power - a 3rd wave that will smash down through the red line using the power that only a 3rd wave could ever hope to offer.

IF (cough, cough, when) that happens, Mr. Market will become suddenly nervous.  After all, stocks and bonds (and any other paper based assets) are essentially worthless unless you can find a greater fool than you to sell them toFail to believe that economic truism at your own fiat-currency-is-the-new-tulip-mania peril.

Of course, there is an element of apparent chaos to everything.  Apparent chaos (it only appears so to the limited mind of man) is an architected feature of the very fabric of the universe. The decision point/trigger point for my technical analysis of this chart will be tested very soon now; we will soon know whether my 90% certain breakdown prediction materializes or whether the 10% manages to hold on a bit longer.  A breakdown below that red support line without a very, very rapid retaking of it to the upside will mean the herd is throwing in the towel and that no amount of government promises will cause it to look back.

What you are really witnessing here is a chart in confidence of the government to control things.  It is no coincidence that the chart lost support at about the same time that Obama started getting media scrutiny and derision for Benghazi, the IRS targeting, felony phone tapping and illegal reading of emails of news reporters looking for leaks, etc.  Obama's enemies were quiet on Fast and Furious gun running operation but now even that is being dredged back up.  I'm going to repeat it because it sounds just so conspiratorial and crazy today that I want it in writing as nobody will believe it if I just say it later on: It will not be too many more years until we finally see people, en masse and without batting an eye, accusing and proving government of complicity in the 911 terrorism.  It was obviously (to me at least) a false flag power grab over the sleepy sheeple. 

In other words, the herd is losing confidence in the con game and when the con is finally understood, the herd is going to be livid.

So how does loss of confidence lead to a financial collapse?  Simply because the stock market, banks and a large portion of the economy is a massive con as well.  Lots of people are doing jobs that nobody wants done.  Too many government employees doing nothing useful!  Also, the entire herd is now crowded (herded) into the stock and paper asset markets thinking Obe Ben Bernanke can  use the power of the dark side of the force in order to continue staving off global economic collapse.  He has huffed and puffed and he has thrown the kitchen sink at the situation but nothing is working.  Global manufacturing is in contraction.  Real wages are down.  Real employment is still elusive for the rank and file.  Massive numbers of people are on handouts - welfare, food stamps, disability, and yes I will throw social security and pensions in there too because people want far more out of those programs than they ever paid in and they don't understand that it is mathematically impossible to occur. 

Everyone thinks their little promise is sacred.  Screw everyone else over, they think, if you must.  But I want what's coming to me!  And I don't care if the value has already been stolen out the back door.  I want government to force someone else to work to get it so that it can be handed to me.  After all, I "earned" it.  Sound familiar?  If you think this way, you might be a sheeple.

Here is a little secret for you.  The Obama government's slogan has always been, "If we see something, we'll take something".  "We are going to spread the money around a bit".  Most people thought that they would be on the receiving end of that bull$hit.  I suggest that they will be on the receiving end of it too - but it will be like looking down the barrel of a gun.  If you have a pension promised to you, even if you are in the military, it will be "haircutted" to pay for the debt Ponzi.  And let me tell you something else: you will have no say in it and in fact (please forgive me for the truth I am about to tell you), you deserve to lose it.   Why?  Because you allowed the scam of fiat currency and fractional reserve banking to blind you to the reality of the situation.  You let the fun and frolic of the Grand Illusion fool you.  You voted for this government.  You didn't lift a finger to stop all the abuses.  You probably even ridiculed those who saw it coming (like Ron Paul).  Well, buddy, the wages for ignorance in this matter are to be patsified in this grand scam.  Don't get angry, you and me and we the people as a whole begged for it for decades.

 Please don't count on someone else to take care of you or to save you.  They can't even save themselves.  So just save yourself!  Before this collapse is over we will discover a whole new meaning for "Stabbing Westward" (Dear FBI and offiz ub der fadderland fer monkitering ub de Internetvolk, that was not a threat but rather the name of the band on the Youtube link - get a JOB!).

Buy silver and gold over time and leave Bernanke and the con men in the dust.
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