Gold – the Bounce
Of course those biased toward gold will relay the rally as big volume, as if this were some sort of fresh buying that warrants cheering when in fact it is a short-cover rally. This is the bounce our computer has projected without bias or passion, minus the hyperbole. We can see that the Energy Models turned at the low and bottomed on July 23. The Daily Bullish Reversal stands at 1109 and a closing above that level will confirm the rally.
This is what Socrates wrote that was provided to the beta testers:
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SOCRATES:
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NY Gold Nearest Futures remains currently trading neutral within our standard deviation envelop defined as 1169.20 to 1079.00. Breaking outside this envelop on a closing basis will often signal a sharp move will follow in the direction of that closing. Combining this with our Reversal System provides a powerful tool to ascertain a change in immediate trend.
NY Gold Nearest Futures remains currently trading neutral within our standard deviation envelop defined as 1169.20 to 1079.00. Breaking outside this envelop on a closing basis will often signal a sharp move will follow in the direction of that closing. Combining this with our Reversal System provides a powerful tool to ascertain a change in immediate trend.
On the DAILY level of our model we remain LONG 1 position. The last LONG position was taken on the close of 4th at 109070. At this time in basis points, our net profit is 11909.50 since Jan. 2, 1975. Our general target objective would be to Sell new high on in first week of September against 1144.00-1155.00. We would use a PSXCO at 1084.00 on a DAILY closing basis. Reversing into a short position should be considered if 1084.00 is penetrated on a weekly closing basis.
INFLATION – Multi-Dimensional Confusion
The old idea that inflation is created by an increase in money supply has distorted the minds of many people. Inflation is caused by numerous factors for it is not a one-dimensional aspect. For example, the current bird flu has rendered half of the egg production to be worthless, which has sent egg prices soaring. This has nothing to do with the quantity of money. So obviously, a decline in the supply of some service or commodity can also lead to rising prices.
Then there can be cost-push inflation as we saw during the 1970s due to OPEC. The first OPEC price shock was October 1973 from where we should see the next low in 2016 (43 years later). The sudden rise in oil sent a shockwave through the economy, driving up prices because the entire economy had to readjust to higher energy. This was not the result of an increase in demand nor an increase in the money supply.
When gold was used for money during the 19th century, it fell sharply in value with each new discovery from California, Australian, and Alaska. There inflation rose because there was a dramatic increase in money supply, which is exactly what took place in Europe when Spain brought back ship after ship of gold from the New World. The sudden dramatic rise in the supply of money unleashed inflation and during both periods money (gold) failed to provide a store of value.
Steady slow growth in the supply of money does not lead to inflation waves. We find that major waves of inflation are often tied to waves of speculation, which differ with each wave moving from real estate, commodities, stocks, or bonds, constantly rotating over decades within a domestic economy and then this movement of capital takes place internationally.
Inflation is not a single one-dimensional aspect. It moves up and down between the rise and fall in the demand for private assets vs. hoarding and uncertainty.
Chicago Wants to Tax Video & Music on Internet
Governments are the worst possible invention of humankind for they merge the rule of law with their self-interest to exploit the people for their own subsistence. Chicago is broke because it cannot fund its pensions. The obvious solution is to privatize everything and stop government employment as much as possible since their constitution prohibits reducing government pensions. Instead, they want to raise property taxes by 30% and now have an idea to tax watching movies on the internet. Chicago wants to tax the subscription fees of Netflix, Hulu, Spotify, and other services to pay for their pensions. Chicago is desperately trying to raise revenue and beginning September 1, and anyone who wants to stream video or music online will have to pay more because they want to tax it.
Hello from Mumbai/Bombay
I received a lot of emails after announcing that I would be in India this coming week. Here I am, updating from Mumbai, which was Bombay up until 1995. Mumbai is the 9th largest city in the world and home of the most expensive house in the world, located right here in the heart town. Mumbai is the wealthiest city in India. New York City has a population of about 8 million whereas Mumbai is about 20 million.
I have stated before that after Rome fell, the financial capitol of the world moved to Constantinople in Turkey. After the Byzantine Empire fell, that financial capitol moved to India. It was because of the importance of India that Columbus set sail on a mission to India based upon a wrong calculation of the size of the earth. Columbus relied upon the calculations of the earth from Ptolemy. Ptolemy influenced Strabo who in turn reduced the 250,000 Stadia of Eratosthenes to 180,000, and then stated that half of that distance came to just 70,000 stadia, making India reachable by sailing West. So India has played a very important role for Europe bumped into the Americas by trying to sail to India.
So yes, I’m here for important meetings with institutional clients. Living in London, how could you not enjoy Indian food? India will be a core economy along with China, offsetting the decline in the West. In Asia, they believe in cycles as part of their religion so there is no need to explain that one exists. They will be far ahead of the Western linear idea of manipulating the economy for the benefit of the political class at the expense of everyone else.
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