Posted on June 28, 2008

This week, there was plenty of blood on the walls of the financials! When one sees Khadaffi buys shares of Fortis (EU bank), one knows something is deathly wrong.

Gold, silver and all gold indexes have broken up out of a triangle formation. Those financials that have been heavily shorting the Juniors will have to scrape even more blood off the walls. Also, Gold and Silver are physical markets. In other words, the days comes where whoever shorted these commodities, either has to deliver or has to take the loss.

 It becomes urgent to realign the basic structure of one’s portfolio into RA, preferably into shares from LOCG. Don’t count of banks to do it for you! Again, this is No time to hold or buy bonds.

• The Dow Jones has fallen through a double bottom.

• The Dow Jones Utilities index is building a top formation.

• The Dow Jones Transportation has fallen out of a double bottom.

• The British Footsie has fallen through a double bottom.

• The German Dax has fallen through a double bottom.

• The French CAC has fallen through a double bottom.

• The Austrian ATX has completed its Goodbye kiss.

• The Spanish IBEX has completed its Goodbye kiss and fallen through a double bottom.

• The S&P Retail index has fallen through a triple bottom.

• The Nasdaq bank index has fallen out of a triangle.

• The Broker index has fallen out of a triangle.

• Citigroup, Deutsche Bank and UBS have fallen through a double bottom.

• Merrill Lynch has fallen out of a triple bottom.

•  If the Dollar fails now, it will fall out of a bear flag and we will see a new bottom.

Posted on June 27, 2008

Fortunes to be made and fortunes to be lost II

Now, not tomorrow, is the time to realign one’s savings and to prepare for (hyper)inflation.

Nobody seems to understand what is about to happen to Banks, Brokers and Insurance companies once interest rates are pushed upwards by the (hyper)inflation?

So far, the financials have only been cursed by some of the 7 plagues: the CDO subprime, a Credit Crunch, the deleveraging and the issuing Garage sale that is still taking its toll on the sector. In the US, the financials have been sliding since the beginning of 2007. In the EU, it took longer before the debacle started . The huge reversal/top/distribution patterns are showing their muscles and we have passed the point of no-return.

As the credit crunch unfolds and more and more defaults are seen, interest rates will move up, and more and more credit extended people will run into default and make the bank earnings even worse. A dangerous vicious circle.

Traditional so said fool proof investments like Real Estate and so said blue chips like Banks, (re)Insurance Companies (to name some), are sliding into the night where they will (in the best case) stay for years to come. In the worst case, they simply could disappear.

The recession is so alive it is getting more and more media coverage...click here for more...

Posted on June 24, 2008

Markets in silent expectation for what the Oracle is to announce today.

Wednesday has become the Oracle day where the Gods communicate their will to the people through the voices of Bernanke and the media amplifiers. Since the truth has been cooked (in the USA) or is hidden (in the EU), less and less people understand what is being said or meant.  It is like navigating in the north hemisphere where the magnetic north is degrees away from the true north. If the route is not corrected, the vessels end up nowhere. Black boxes start to fail because the input is incorrect and short term technical analysis is being distorted by the daily interventions of the Plunge Protection Teams and the market volatibility.

 Gold Prices will reach $8,500 and/or a level at par with the Dow Jones. In the long-term it does not matter what central bankers say. What matters is what they have done in the past. Gold and oil are going to go a lot higher. The people start to realize inflation is eating away their real spending power. The inflation genie is out of the bottle and it’s going to be impossible to get him back in.”…it is too late for that. Pandora’s Box has been opened. We have come to a point where it does not matter what Bernanke, Pres. Bush, Paulson and Trichet say. What matters is what they and their predecessors (remember it was Nixon that closed the gold window) have done. Gold and oil are going to go a lot higher. But how high?. Perhaps $8,500 for gold and $400 for oil.” Hard to tell…Today, the price for Gold and Oil in Zimbabwe is already more than a billion Zim-dollars.

 The world is also realizing that we have seen the end of cheap food. In other words LOCG – low order consumer goods will be favored during the coming 10 to 20 years. Food commodities will become important again as the basis cost of nourishment is pushed up both by expensive Oil (energy and fertilizers) and runaway inflation. The pendulum of Globalism has swung too far. Expensive energy will become a huge handicap for all items that are produced in low-cost countries (China, India, Mexico, Vietnam, e.o) and where basic commodities like steel and the finished products need to be shipped back and forth. This is the end of the $ 100 Hamburger and $ 50 salad.  Expensive energy will also mean the end of the complex society (EU).

Wheat has doubled in price to 400 dollars a ton. Corn is exceeding world records. One well known food index is at the highest it has ever been since 1845. Just before the French Revolution, when the people were standing at the gates of the Royal Palace in Versailles shouting there was no bread to feed the children, Marie-Antoinette replied that they should eat cake. Today’s politicians are not better off. Life goes on but few people learn from history and their mistakes...Months ago, as the Spanish people complained about the price of pork meat, the prime minister Zapatero replied in a similar way they should eat Rabbit instead! 

Posted on June 23, 2008

• Markets keep on sliding and many (North America, Europe) indexes are a dot away of breaking through their spring bottoms. The Far East keeps on falling towards the point where the parabolic rise was initiated.

•  Gold, Silver and Gold shares keep on playing hard ball on their trend lines as the Plunge Protection Team keeps on coming in each day around the same hour.

•  The CRB futures index has confirmed the breakout of a triangle formation and Copper is again trying to break out through the neckline of what can be a huge Head and Shoulders formation.

•  Many Gold shares show triangle formations and last Friday huge volumes moved into certain stocks (ex. ASA).

•  The news issued by Transoceanic (RIG) pushed the Oil exploration and drillers once more on the hit lists.

•  The Financials keep on being slaughtered. I wonder what they will find to stop this ugly slide. After all, this is all about Fractional Reserve Banking, Real Estate, Hedge funds and derivatives. A real weapon of mass destruction!

•  There are further indications that Inflation is pushing interest rates upwards. Let’s hope, central banks can succeed in keeping them low for some more time.

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