Gold v Dollar
The traditional mumbo jumbo is dollar up, gold down. However, we may be entering a completely new phase. Gold and the dollar may no longer be archenemies. They are actually now moving to the same side of the fence, for the common enemy is the rapidly approaching electronic money, with so many analysts at banks now calling to abolishing paper money. What is interesting is that paper money places a check and balance against central banks from moving deep into negative interest rates. At some point, more and more people will just withdraw their cash and hoard it, which has already begun.
Right now, gold enthusiasts are closely watching the statement expected for this week from the Federal Reserve policy makers on Wednesday. They are clinging to anything, looking for any clues that the Fed is becoming less likely to raise interest rates. They fear that raising interest rates will support the dollar, but there is really a lot more going on behind the curtain.
Creating Market Depth: The First Step in Creating an Economy
Exchange at Amsterdam
Some people have difficulty rationalizing selling something they do not yet have. Of course, nobody complains when they buy contracts in the future’s market, but have no intent of actually taking delivery. This entire line of thinking has been so distorted, particularly by those who claim “paper gold” has suppressed the price of physical gold. Those same “paper gold” contracts are also what pushed the price up in 1980 and into 2011. Nobody complains about buyers. The first step in understanding anything is to be objective, not slanted to one side.
The futures exchange is what provides DEPTH to any market, and makes even the production of the commodity or farming secure KNOWING that they can sell the item into the free market. Aristotle called brokers, “Men who made money from money.” True, they changed the villa economy into a market economy. They approached farms and told them to produce more than they needed for themselves to sell it overseas. They transformed Athens into the financial capital of the western world.
There has to be a common market – a place where things are exchanged. This extended into ancient times and provided the first step in creating a civilization – people coming together for a common cause. It has been this narrow thinking process that lead to authoritarianism, if not communism. We see the same craziness erupt in the stock markets. Governments have often outlawed short selling and the market has fallen even more. Why? It is the short player who has the courage to buy during a panic, for he is taking a profit.
Understanding the vital necessity of allowing two sides to a market is critical. For if we do not understand that aspect, then we will always seek to blame others because we do not understand the existence of the business cycle. Shorts were not dominant in Japan, nor in the U.S. share market collapse during the crash from 1929. Without a two-sided market, producers cannot raise capital to fund their operation be it cultivation or mining. Buyers need liquidity. They need to have confidence that if they buy something, they can raise money when they need it if necessary. With a functioning market, then and only then will there be buyers and sellers in a sufficient quantity to facilitate planting or mining. Without a deep market, it is risky to produce anything if there is no common place to trade. Only those who buy and lose will naturally blame shorts. There are many other factors that come into play.
It was the first exchange place in Amsterdam that enabled Europe to expand its economy. Insurance was developed and many traveled to Amsterdam to buy insurance for a voyage that then facilitated international trade. There must be a central place to trade; without that, there will be no market economy and the Dark Age will prevail.
We absolutely NEED shorts to bring depth to the marketplace. It is only with that depth that production will be stimulated. If you cannot freely sell something, then you cannot have an economy emerging from a civilization, which is the collective capacity of everyone coming together in a common bond.
Climate Change – A Fraud to Justify More Taxes
The global climate change crowd really needs to be imprisoned. They have been deliberately creating a giant fraud that is just amazing. The low in the energy output of the sun was during the late 1700s. They have attributed everything to man and ignored long historical evidence that demonstrates that there is a cyclical beat to the sun, just as there is to your heart.
Anyone with a background in electrical engineering can tell you the difference between DC (direct current) and AC (alternating current) is straightforward. AC is adding a cycle to the energy that can be transmitted over distances. DC is a constant output at one level. As in economics, where people want to eliminate the boom and bust cycle to create a DC economic world. The problem is that resistance will wear down the current, and as soon as it declines ever so slightly, it ceases to function.
Everything in the universe functions to a cyclical beat. That is the supreme design of everything. This is not the Theory of Everything – it is the Fact of Everything. The global warming con artists are clever, but reveal either their stupidity or their total dishonesty. There is no in-between here. If they have not done their research historically beyond 1800 AD, then they are complacent, or have done so and are trying to find post-1800s examples to suit their tactic to get money.
So they are either stupid or criminal, but it is starting to look like the latter. A commission is starting to investigate their manipulation of data to adjust it like the government does to CPI, unemployment, and GDP. The British newspaper, the Telegraph, has led the charge in exposing the duplicity of the global warming crowd. I for one, think that they should be criminally prosecuted for what they have done.
Duke University Disagrees with Global Warming
Duke University has parted from the other universities who benefit from collecting money to further global warming theories. Duke has done what I have argued, they conducted a study based on 1,000 years of temperature records. They analyzed the whole thing and compared it to the most severe emissions scenarios by the Intergovernmental Panel on Climate Change (IPCC). What they discovered is simply that global warming has not happened as fast as expected. The research claims that natural variability in surface temperatures over the course of a decade can account for increases and dips in warming rates. Hence, this is not a man-made trend.
Unfortunately, everything we have input into our computer warned that we were turning back down toward colder weather – not warming. On this score, Duke University seems to be far more objective than those seeking to create propaganda for global warming that the government can use as the excuse to raise taxes.
When it Rains it Pours Oil
A major new discovery in oil was been made in Britain by Gatwick airport (as reported by BBC). They appear to have discover about 100 billion barrels of oil ONSHORE in Britain. The North Sea Oil has produced 45 billion barrels in the past 40 years. This may be significant for Britain.
While an annual closing below $41 will be bearish and an annual closing below $31 will be profound, an annual closing BELOW $25 will be devastating to the long-term prospects for crude oil. That would suggest that in real terms (adjusted for inflation) we are not likely to see that high exceeded for at least 26 years and perhaps more like 37 years.
This would be similar to what took place in gold from 1980. That high in REAL TERMS has still not been exceeded, even during the rally into 2011. Hence, the discovery of oil in Britain and elsewhere appears to be in line with the long-term cycle. For now, this is feeding into the deflationary cycle currently in motion.
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