The Start of the Economic Armageddon

Things have been going crazy in the world, now Syria is in problem as i predicted, Gold is now at 1550 USD/Oz reaching a all-time international, all history high. The gold Bull run is well underway full steam ahead.

Now the mainstream media is shockingly quiet about the true news that affect the world, smokescreens have been pulled over our eyes.

Here is the top 3 news that seals the fate of the world economy on a downward spiral (the Start of the End of the United States) and why gold/commodities will go even higher.

1. The Dicussion for Bretton Woods III
Now why is this important? The Bretton Woods agreement is a historic agreement whereby world currencies are discussed upon and where a new global currency is decided. (Whether the US dollar will remain the global reserve currency)

Big names like George Soros are attending, if this new world currency is gold backed even by 10%, the price of gold will easily exceed 3000/Oz. If a new fiat currency is agreed upon, then gold/commodities will still rise because fiat currency is still funny (magical) money.

Every 30-50 years there is a new monetary system, and it has been at least 40 years now.

For your Viewing Pleasure: http://www.youtube.com/watch?v=3bnL9L5jT1M

2. China Will Surpass US Economy by 2016

The IMF finally admits this, after so long, this has been baked into the cake at least a decade ago. Although China might experience a property bubble soon (its massive construction of Ghost Cities), its nothing compared to the Parasitic effect the US economy has on the world.

Do take a Read: http://www.thenewamerican.com/economy/economics-mainmenu-44/7263-imf-chinese-economy-to-surpass-us-by-2016

3. The US Federal Reserve's Chairman's Statements

Ben Bernanke said nothing conclusive about the Federal Reserves movements. Although no further Quantitative Easing is expected (printing money), interest rates are still kept at a nominal Zero. Real interest rates are still very negative.

'Those invested in precious metals saw something special—gold climbing to uncharted new territory to over $1522 an ounce as Bernanke sparred with reporters. By the end of the day, silver was up $2 near levels not seen in 31 years. You could feel the symbolism in the air as Bernanke, the keeper of the U.S. dollar, lost ground in real-time to the only money that can't be printed by an overzealous central bank—gold and silver'

-Mike Maloney

psssst, S&P Downgraded US credit Rating :)

The Gold Bubble or Is it?

Is Gold in a speculative bubble? Is the bubble going to pop anytime soon? 1420++ USD/oz, what a ludicrous price isn't it. From 350 USD just almost a decade ago. Introduce gold into my portfolio? Are you crazy?



If gold is in a bubble, i would call it in phase 2, the exponential phase isn't here yet, so there is still time to breathe. But won't it spell great news if Gold isn't in a bubble yet? I personally believe gold is developing bubble like-symptoms but hey, the markets could always prove me wrong.

Lets look at Charts from The Aden Sisters, Mike Maloney & Jordan Roy-Byrne.

1. The Aden Sisters' Chart

'The rule of thumb is, when gold’s rise reaches a new high for the bull market, it’s a super strong market. And as we’ve just seen, when it’s combined with the stronger phase of the bull market, it makes for an explosive rise.

And explosive it has been! With gold now approaching $1500, it’s near our first important target level for this stronger phase. Gold will most likely resist near $1500 before moving clearly above this level into the next phase of the bull market.

In the big picture and on the upside, once $1500 is well surpassed, the $2000 area will then be the next target. Will $5000 - $6000 or more end up being the final target?

As good as it’s been, gold is far from being in a bubble. And you must admit, it’s been the quietest bull market in history. Just ask the average person.'

- Aden Sisters

2. Mike Maloney's Charts

'The top chart shows global financial assets and gold’s nearly miniscule role. While many have called gold’s early bull run a bubble, they fail to note the bubble levels still present in stocks (equity securities on the chart) and debt (private and government debt on the chart).

The second chart below shows gold’s role in the global financial system as a percent of the total. Ten straight years of increases in the price of gold and gold is still hardly past half of one percent of all the paper assets floating around. The world really is awash in a flood of paper assets, and these charts prove that fact today.'

-Mike Maloney


3. Jordan Roy's Chart

'As you can see in the chart, Gold was in a steady uptrend for the first five or six years. It was contained within lines 1 and 2. The market began to accelerate from the very end of 2005 into 2008. The retracement in 2008 bottomed essentially at line 2. The fact that the market held above it meant that the market remained in a new acceleration mode, which started at the end of 2005. Following the 2008 bottom, the market slowly but gradually accelerated its way past line 3.

Note the change in the market’s character. At the first phase of the acceleration (2005-2008) the market saw sharp impulsive advances and long consolidations. This time around the market is showing more strength. Although the impulsive advances are smaller and shorter, the ensuing corrections are comparatively shorter and smaller (relative to 2005-2008). In other words, the market is gaining strength because the corrective periods are shorter. The final resistance is channel 4, which parallel to 1,2 and 3, connects the 2008 high and highs of late 2010. Channel 4 at present is ~$1,460 and increases to about $1,600 at year end.

A strong move past channel 4 means the market has little in its way until $2,100 and $2,300. There is a strong Fibonacci target at $1,500 which intersects with channel 4 in early summer. That could mark a top.'

-Jordan Roy

The American Military Adventure & The Japan Quake (Part 2)

Noble Peace Prize Winner Barrack Obama has declared war on Libya through a coalition allied attack with NATO and her allies like the french. The air in Washington has perhaps the thickest level of hypocrisy since the ousting of Saddam on WMD (weapons of mass destruction) that somehow didn't exist.


“For generations, the United States of America has played a unique role as an anchor of global security and as an advocate for human freedom. Mindful of the risks and costs of military action, we are naturally reluctant to use force to solve the world’s many challenges.”

-President Obama

It seems like a real unnatural co-incidence that Libya has the world's top 25 Gold Reserves and is a major oil exporter and oil-well.

'Libya has the largest proven oil reserves in Africa with 42 billion barrels of oil and over 1.3 trillion cubic metres of gas. With only 25% of Libya’s surface territory explored to date there is every chance that actual reserves could see this figure dwarfed in coming years.'

-oilandgaslibya.com

It is true that Gaddafi is perhaps a mental-case and is oppressing his people, but does it give USA the right to challenge the nation's Sovereignty?

What is US's True agenda?


'Military intervention in Libya has cost the Pentagon an extra $550 million so far, mostly for bombs and missiles'

- The Washington Post

Adding to its already massive debt of 14-15 Trillion Dollars (Which excludes unpaid liabilities and the Freddie Mac & Fannie Mae Govt Debts), half a billion dollars and counting just for bombing Libya is the worst way to spend tax-payers money. Interest rates are still near zero, Real interest rates are negative. Where is Washington going to get the money to continue funding this war? 2 options, print more money or use more tax payers money.

Gold Simply reacts to the chaos that America: War with Libya/ Operation Odyssey Dawn started around the 18-19th of March. When markets reopened on the 21st (monday), Gold shot up almost instantly 10-15 dollars.

'The way to crush the bourgeoisie (middle-class) is to grind them between the millstones of taxation and inflation'
-V.I.Lenin

Japanese Quake & Another American Freedom Crusade (Part 1)

What is in the headlines lately today? The horrible tragic quake that rocked the long Island near the ring of fire, and the 'land of the free, home of the brave' launching yet another war on an oil-rich nation.

Cryptic talk, cryptic messages and perhaps a hidden agenda lies below the rubble of all these chaos, but enough speculation, lets look at the 2 theatres and how their events though separate contributes to the same inevitable outcome of the economy.

The Japanese Theatre: The Earthen God Awakes

We all know what is affecting the Japanese peninsular, but is the Japanese government taking the right measures to help save the Japanese Economy?

"It's panic-selling … Everybody just wants to dump shares," said Retela Crea Securities general manager Yosuke Shimizu in Tokyo. The Nikkei closed 1,015.34 points lower at 8,605.15, having fallen as low as 8,227.63 intraday, when it was down more than 14 per cent

-TODAY online

Suffering a massive plunge, the Japs had a few routes to choose to help prop back their economy. Instead of choosing the proper monetary actions, it chooses to practise the Keynesian dance by printing and flooding the market with cash.

TOKYO - Japan's central bank continued to flood money markets with cash yesterday, bringing its total emergency funding to ¥55.6 trillion (S$882 billion) as it tries to soothe fears about the economic impact of the catastrophic earthquake, tsunami and unfolding nuclear crisis.

-TODAY online

Is such a move justified? In my humble opinion, partially yes, after such a catastrophe, the government should take actions to prop up its economy. But lets ask ourselves, where did the money come from? Did Japan really sell ALL its gold reserves which is estimated to be around 765.2 tons of gold or 46-50 Billion dollars worth of gold.

NEW YORK — Commodity markets reeled on Friday as the massive earthquake that hit Japan sent oil, softs and grain prices sliding on fears over its impact on demand, deepening their biggest decline in months. -Reuters

So even if the Government did sell ALL its gold reserves, where did the rest of the 800+ Billion dollars come from? Tax Payers money? Or did they use the Zimbabwean School of Economics route of unnaturally lose fiscal policy and a quick draw Quantitative easing/ Printing money/ stimulus package solution?

How it affected Commodities/Gold market: Yes, Gold took a temporary tumble from around 1415 all the way down to below 1370, almost a fifty dollar tumble within a few days. But with the middle eastern problem getting worse, and the loose fiscal policy the Japs have, more money is added to the money supply. Where is gold today? Almost breaking the All time High @ 1440 per ounce.

What the Japs should have done: Raising interest rates and contracting money supply, divert resources from consumption to the rebuilding efforts! Expand liquidity when an economy expands, contract the money supply when the economy contracts, the earthquake flatten lots of the Japanese industries, if that isn't a contraction, i don't know what is. The best move they should have done was to escape and cash out the US T-Bills ($900 Billion worth) or Bonds, what good are those treasury bills when your not even going to use it for emergencies!

The Keynesian World

Lets get down a bit to economics. Its futile to understand markets, finance and even gold without understanding the underlying ideologies and thinkings of macro-economics.

'We are all Keynesians now'

- USA President Nixon ,1971 after abolishing the Gold Standard

Oh how true, this 5 words caused the start of almost all the monetary crisis of all the world.

What is Keynesian Economics? How does it affect us? What does it predict for the future?

Keynesian Economics is a subset of Macro-economics

Keynesian Economics:
A belief that the private sector decisions leads to inefficient macroeconomic outcomes, they advocate active policy responses by the public sector. They encourage and embrace monetary policy actions by central bank, government deficit spending and fiscal policy actions by government to stabilize output over the business cycle.

- Keynesian Multiplier & Deficit spending
- Interest rates manipulation

Lay-man Terms:
A system that believes government need to intervene and lead the economy of its nations together with the private sector. Its the governments responsibility to bring about stability in the financial world through policies.

-Lowering interest rates, printing money, stimulus package.

Most Western governments and developed countries are practicing Keynesian economics to one degree or another. But none as prevalent as USA. US economics is almost totally Keynesian.

A very interesting article i found explains quite a bit about why Keynesian rules are chipping away on the economic health of the world: http://ilene.typepad.com/ourfavorites/2010/10/niall-ferguson-explains-why-keynesian-policies-are-dooming-the-world-economy-to-round-after-round-of-asset-bubbles.html

The most Important Quote of this article is:

'Remember what Keynes wrote in the 1930s about stimulus and the way in which government could get an economic going again really applied to a post-globalization world in which trade and capital flows had largely broken down, and most economies were quite isolated units.'

Keynesian thinking might be good in the past, but now the world is facing a great monetary deficit that might not be able to be paid off, the world economy are now interlinked with each other, no longer are bankruptcies the bane of companies, but also a threat to nations. What if the USA becomes bankrupt?

How Government Actions have plunged the world to crisis. (Keynesian Style)

Remember the 2008 Housing Mortgage Crisis

The crisis was caused mainly by mortgages and loans that went bad. That trickled down into the mortgage-backed securities being sold by banks to investors to : Reduce credit risk and replenish funds to loan out more money to housing buyers amongst other things.

Why would banks lend money to people who can't qualify for loans or meet the income brackets? Simple, the US government created Freddie Mac & Fannie Mae (Govt linked entities) to assure and guarantee all these loans and debts taken. With the government assuring your loans, greed took over most people and many began taking loans far beyond their means.

Banks gained the guts to lend more loans to risky people since the governments guaranteed it. Once those loans turned bad, the domino effect of disaster happened.

Stimulus Packages

Or Quantitative easing as the officials call it. In simple terms, its flooding the economy with money that is meant to stimulate the economy only if the money is put into good use. However most of these money never reaches its intended venues. Most of it is used to rebuild government infrastructure or to create jobs that DO NOT create any value or production in the USA.

That money should be given to the private sector, entrepreneurs to revive dying sectors that can improve the real production of America and not used as bailout money.

The next Bubble i call it the Credit Bubble, thanks to Keynesian thinking and government intervention (with good intentions but poor execution), the money supply of the world is going out of hand.

'Because the liquidity just leaks out, and that's why another round of stimulus would not stimulate in the promised way. It would stimulate the wrong things. And those things, commodity markets and emerging markets, are already overstimulated to the point of being nearly bubbles.'

Why is gold still strong and set to soar? Simple, because the world is Keynesian.

Gold (Stage 2 & Why)

This should be renamed the smart, the scared and the dumb. It would be naive to just keep going pro-gold all the way. I always do an anti-gold research at the same time. Many people are as anti-gold as those pro-gold. However their reasons are unfounded, more or less based on fear.
Fear profits no one, but fear itself. Lets recap an investment boom stage 1 & 2.

In stage one : Prices have gradually begun to rise, but not sufficiently enough for most people (including professionals) to take an interest. Only a few are making profits, the media doesn't care much.

In stage two: The mentality of most people is 'the market has gone too far too quickly'. The media has some references to the investment boom, some are proponents, others are opponents and demonizes that investment class.

This is why i say it is in stage 2. I will prove it to the best of my ability using not only the media, but world events as well as charts.

My analysis and response is in red color.

How the Opponent Media of Gold sees it:


Omg, i cannot believe CNN money actually said that. Bubbles are the Perfect time to make money, in times of crisis, the wealth transfer from the poor to the rich, the unsuspecting to the prepared is tremendous. The only great event other then a crisis/bubble is striking the lottery.

http://money.cnn.com/2011/01/10/pf/investing/investing_in_gold.moneymag/index.htm Excepts from CNN money: 'Unlike a bond, gold doesn't promise to pay you back with interest; unlike a stock, it doesn't have any hope of generating earnings over time. If gold were a house, it would be one you couldn't live in or collect rent from.'

True bond gives dividends, but many of these AAA bonds turn out to be junk. Remember the housing crisis of 2008. People don't really learn. Gold doesn't pay back interest, so? The recent capital gains from gold over time trumps any interest in the market as of yet. The time for bonds is over, there will be a time for bonds, it is not now!

'Right now, though, there's no sign that inflation is about to rear up anytime soon. For all the Fed's efforts to inject money into the system, the folks who have it -- banks, mostly -- have been reluctant to do much besides sit on it, leaving too few dollars chasing too many goods.'

CNN money has its head buried in a hole. Prices of items, goods and everyday products are slowly going over the roof. No sign of inflation rearing up? They must be living in the twilight zone.

Event a major media like CNN money is naive, how much can you trust mainstream media to give you a proper financial outlook?

Lets look at a recent statement by the Federal Reserve

'WASHINGTON, Feb 28 (Reuters) - A top U.S. Federal Reserve official said on Monday the U.S. economy should do well in 2011 and that oil prices rising on tensions in the Middle East are not currently a drag on the recovery. "We're in very good shape for 2011, the only wild card now is the Middle East." St. Louis Federal Reserve President James Bullard said on CNBC.' http://www.cnbc.com/id/41825136

What i like about the Fed's statements is that to see the truth you just need to turn their words 180 degrees around. Oil prices are not a drag on the recovery? Are you sure? Thats fed speak for saying a jobless recovery is still a recovery! The economy should do well in 2011? Which Economy? Mars?



I have analysed quite a few bubbles in the past, from the south-sea bubble to the dot-com bubble. We are long past stage 1, we can't go back. Prices are going up quite quite significantly now.

Best Case Scenario: Gold hasn't seen a bubble yet: It is just naturally revaluing itself to all the credit and currency floating around the world.

Worse Case Scenario: Gold is a bubble: We are at mid stage 2.

Conclusion: Whether it is a bubble or revaluing itself, its time to make money.


Gold is at 1420 USD/Oz. Up 10 dollars from 1 day ago. Have you bought gold yet? :)

Asset-Trends (Identifying the Next Big Thing)

Today although gold is still an underperforming asset, more and more people are consuming the yellow lustrous metal like never before. It is still not greatly shown in the media, but prices are gradually climbing. You can call the climb of gold taking 3 steps forward and 2 steps back.

I believe Gold is in the Mid-phase 2 of an investment boom. There is still ample time to invest into this metal. However what is the next investment opportunity? What is the current asset class that is still in phase 1. What is under everyone's radar?







Lets recollect: Phases of an investment boom

Phase 1: Stealth phase; only those with time, analytical skills and great knowledge can identify it.

Phase 2: More identifiable, but only those with foresight and emotional stability will enter it.

Phase 3: The whole world knows; this phase is motivated by greed and those entering here thinks they know everything.



I seek to find what it is.


p/s: To those who have not participated in riding the gold wave, please do yourself a favor and start now. It will not last forever, the wave will build up higher and higher and participating in a wrong time (phase 3) is not only dangerous but it might even be disastrous. Do not chase yesterday's news.

ssshhh gold is past 1410 USD/oz :)