The Dow
There have been a number of questions about the Dow and isn’t it a major high when the central banks are buying? No! There is a huge problem in the reserves of nations as this is why there will eventually be a massive short-covering rally for the dollar. Google dollar devaluation and what you see is page after page of how the dollar will collapse any day now simply because Bernanke increased the money supply. I have warned that there is ABSOLUTELY no relationship that remains constant on a one-to-one basis. The theory of increasing the supply of dollars means it must decline is absurd. That ignores DEMAND! The two are balanced.
Why are central banks buying equity? The Euro is all but dead. The political risk is far too great in Europe for Merkel has lost the whole austerity game. Not even France is willing to follow Germany despite the fact they keep their mouth shut. Just look at the actions. The ONLY currency right now is the dollar. That means the central banks have to diversify. I know the dollar haters will email me on that one. The dollar will collapse, but not until all the dollar shorts lose their shirts. TheMAJORITY must always be wrong because they are the fuel that creates the opposite move.
The resistance in the Dow is at the 15731 level with extreme spike resistance at 16647, which is unlikely to be seen on this move. The Dow remains within the advance channel since the major low and has been performing rather nicely. There is a short at a high here in May or June with a retest of support thereafter. Watch for the test of the top of that channel.
The Mad Max Outcome
A number of readers have asked doesn’t gold survive a Mad Max event? Historically, the answer to that is no. Dark Ages seem to be the total collapse of all economic activity on a collective basis. This is why there are huge gaps in the monetary history in Greece, Western Europe after the fall of Rome, and even in Japan. The duration is rather consistent – 600 years. What happens is civilization swings to its opposite – no-civilization where just enclaves emerge with little to no interaction with others. There must ALWAYS be two opposites – male & female, God & Devil, cold & heat, fertile & desert, and winter & summer just to mention a few. This nature. It is a swing back and forth between two extremes that we seen even in social behavior, which is why there are democrats and republicans or labor and conservative.
The Mad Max outcome is the swing back to barter where the dominant object of value first becomes food, then tools (bronze), and only after all that becomes stable, we see the return to luxury which is when gold and silver come back. You cannot eat them. They are valuable only based upon the demand of others. If they want food, sorry even gold goes off the map during such periods. It is typically grain or in the case of Japan bags of rice.
We can catch a glimpse of the dangers of the Mad Max event. Just look at Egypt as all investment collapses because once there is no rule of law, nothing has value! This is why people just walked away from property causing the abandonment of major cities. That not only impacted Rome, but many of the Mayan cities were abandoned with no sign of fire, war, or some natural event. They just left. This is why the corruption in New York is so dangerous. The handling of M.F. Global was an international disgrace. The repeal of Glass-Steagal was outrageous. Letting the NY boys have their way with the courts and control the reins of prosecutorial power is the destruction of all investment. If they can make money trading and have to rig the game, the end is here.
So the object is to blink before we go that far. But government is digging in its heels refusing to reform or relinquish the slightest amount of power. That is our problem. When they start to pay attention to government instead of the latest sports figures and scores, then things will start to get interesting. Historically, society waits until it is too late and then they just massacre the protesters.
Broadcasting From Switzerland – Free At Last
Everything has been moved to Switzerland for security purposes where a new day now dawns. We NEVER sell client names, and will always defend the privacy of our clients. As the world turns increasing toward Fascism-Totalitarianism, we decided to move to a country that is outside the EU and USA political systems for as things get much worse and the total lack of any Rule of Law, nothing can be certain. We have set up a number of non-US domain names as well to ensure that not even they can be turned off for political reasons.
The backlash against Microsoft’s Windows 8 from the “user” perspective has forced them to backtrack. However, the covert reporting of ALL third party software being installed despite their claims that can be turned off, leave a HUGE question of TRUST when the operating system also has a self-defense mechanism that prevents you from erasing it and re-installing Windows 7. This has NEVER been undertaken before. WHY? That can only lead to further questions that means weCANNOT trust Microsoft anymore. They may be forced to put back features of Windows 7, but that does not mean they remove the covert reporting and their new self-defense mechanism. What else lurks in this monster who knows? But with the new laws saying the US government no longer needs a search warrant, they could walk into Microsoft and demand an image of what is on your personal computer. No thanks!!! This is the very reason Rome collapsed – the destruction of the Rule of Law.