Gold Flags

I haven't blogged for a while as most of the stuff I've written is coming to fruition so its pointless writing "see, I told you".

• US debt spiralling out of control and the debt fuelled recovery stalling as the election looms.
• European debt is spiralling out of control and the Monetary Union is simply imploding and civil unrest spreading as austerity triggers a poverty and economic spiral. 
• UK debt spiralling and this week, officially in recession.
• Australian property continues its slide (1.15% fall a month for 5 years is 50% off!) as the mining myth remains a mirage for the simpletons in suburbia as Australian debt approaches 270% of GDP (Australian Debt).
• The Chinese bubble deflating rapidly.
• Japan is just a train wreck.

So what next? If you think that Europe or the USA are going to pay their debts, you are delusional. Next step is an attempt at hyperinflation. They'll just print money like confetti in an attempt to make that $15Trillion debt today look like a $15 fifty years ago. It will cause chaos and spiralling unemployment but f*ck the little people, as long as the banking kleptocracy stays high and dry.


The strategy involves central bank simply printing money and buying government securities...

...and the government then drops its new money on the financial sector (M1, broad money supply) like confetti...

In 1980 the Zimbabwean dollar was worth more than the U.S. dollar, with ZWD 1 = USD 1.47. Throw in some money printing and on 18 July 2008, a report on Zimbabwe's inflation, said that an egg costs ZW$50 billion (GBP 0.17, USD 0.32), and it showed adverts for prizes of Z$100 trillion in a Zimbabwean derby and ZW$1.2 Quadrillion ($1,200,000,000,000,000.00: approx. GBP 2,100; USD 4,200) in a lottery. It also showed a monthly war pension currently is ZW$109 billion (GBP 0.37, USD 0.74), shops can only cash cheques if the customer writes double the amount, because the cost will go up by the time the cheque has cleared, and people can only withdraw a maximum of ZW$100 billion froman ATM.
http://en.wikipedia.org/wiki/Zimbabwean_dollar#Exchange_rate_history

In 2008,  thirteen US cents (yes 0.13c) got you...

Has the USA had hyperinflation before? It certainly has, Hyperiflation in History (with 32 cases).

If the USA tries to hyper-inflate, gold is going polaric. Even this week the  Bank of Japan announces fresh stimulus to boost growth.

Some signals.

1. Fed Signals No Need for More Easing Unless Growth Falters (and growth WILL falter eg The Second Foreclosure Tsunami Is Coming, And Is About To Kill Any Hopes Of A "Housing Bottom")
2. Risk off? Having Sold Most of its Own, IMF Now Lauds Gold as 'Safe Asset'
3. Peter Schiff - QE3 is coming

Gold in a Bull Flag?

Firstly, some Technical Analysis 101. What is a Bull Flag?
Bull Flag Pattern 1
Bull Flag Pattern 2

Is Gold in a bull flag like in the links above? I think so.

How high could gold go? I came across this interesting piece of analysis. Ambitious? Maybe (or maybe not).

Global Central Banks Ring Gold Buyers' Bell

Peter Schiff is one of my most respected financial commentators, he called the sub-prime collapse and the equity crash of 2007-2009.

Today’s unprecedented announcement by the world’s most powerful central banks was a loud and clear bell ringing to buy precious metals. The move, disguised as an attempt to help the fragile state of the global economy, is in reality a move to prop up failing banks in Europe and the US. By reducing interest rates paid for dollar swaps, central bankers are in effect increasing the quantity of global dollars in circulation.

Taking Out A Dent

 (h/t Leith Van Onselen aka "Unconventional Economist" at macrobusiness)

Harry S Dent is a well known author and founder of HS Dent Investment Management, an investment firm based in Tampa, Florida. Dent writes a regular economic newsletter and has written seven books analysing demographic trends and their affect on the economy and asset markets.

Harrry is "downunder" and is stating the bleeding obvious IMO regarding a 50% house price correction BUT he has stirred up a hornet's nest.

Australia's best finance experts? Incredible. If they are our best, we are toast.

• Bouris (an Aussie sub-prime home lender – founder of Wizard home lender now Aussie), 
• The “Pascometer”* (The world’s No1 contrarian indicator) who is wrong 95% of the time (eg buy Westpac in May and Gold-is-a-bubble  in June 2010),
• Craig “sandwich-board-for-hire” James, a spruiker with Australia's riskiest bank with the most exposure to the Real Estate Ponzi.
• Ingrid Just from Choice, she should stick to comparing bogroll texture vs anus abrasion vs price on A Current Affair, a wannabe rocket scientist who just doesn't get it (halfwits who can't smell bullshit)

Some gems like "Australia doesn't have vast tracts of land" (hmmm Sandwich Board, get on a fucking plane in Sydney and fly to Perth and for all but the first 20mins and last 20mins of the 5 hour flight you are over the GAFA - Great Australian Fuck All).

"We don't have empty houses, we have a housing shortage" says Sandwich Board. Really? What about this and this?

More than two-thirds of the government’s shortage estimate arises by including people who can’t afford housing, such as the homeless or those living in trailer parks, Sayce said. Collyer at tax-reform lobby group Prosper Australia says there’s actually a surplus of more than 250,000 dwellings after 15 years of overbuilding, while Keen argues the shortage estimate is swollen by inflated demand from handouts to property buyers of as much as A$21,000 ($21,700).

Banks in Australia have more than A$1 trillion of housing loans outstanding, with the four-biggest lenders accounting for about 87 percent of the total. The Australian Bankers’ Association said it doesn’t have a position on the so-called housing shortage myth and declined to comment. 

More than 100,000 properties lie vacant across Australia, 46,220 in metropolitan Melbourne alone, according to Karl Fitzgerald, director of Earthsharing Australia, a subsidiary of Prosper. The group’s estimate is based on the number of homes that used less than 50 liters (13.2 gallons) of water a day between July 1 and Dec. 31.

Australia has the most unaffordable homes in the English- speaking world, Illinois-based consulting company Demographia said in January, with homes costing 6.1 times the average annual income.

And, "we have a growing population" yep just like in 2006 where  California had a housing shortage with a growing population (some parts of California are beyond 50% falls), and Florida, and Ireland, and Spain and....

“The Californian Building Industry Association (CBIA) continues to express alarm over what it calls an ongoing housing crisis in Southern California. Alan Nevin, the association’s chief economist, projected in a 2006 CBIA Housing Forecast that only 185,000 to 205,000 building permits will be granted this year, far short of the 240,000 new homes needed each year.”

“Southern California has been experiencing a massive population boom in recent years and it’s believed that 6 million new residents will be living in the region by 2020. The population increase, coupled with the housing shortage, has the CBIA worried that it will be increasingly difficult for first-time homebuyers to find a moderately priced unit.”

What about "Steve Keen's prediction's of 40% falls in the GFC were wrong". Prof Keen predicted 40% falls over 10 or 15 years. Yes, he was wrong IMO and looking at the data on my post acceleration we'll get those falls in under 5 years, we are waaaaay ahead of schedule.


Later that night, another video that is a little more circumspect with some good points regarding bank funding from oversees and mortgage rate resets from 2008 'fixing' (note Bouris' dramatic change of tune).

Now look at the video below with clips of Peter Schiff over 2006 and 2007 and note the ridicule he encounters in the similar vein to our own "experts'. Property specific begins at 2:34. This video is worth 10mins of your time. I've added Peter's blog to my list on the right.

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*Some Pascometer gems:
Gold price a bubble waiting to pop 
(when he wrote that, Gold was $500 lower @ $1255 and has since risen 40%)


Banking on dividends
(since he wrote that, Wespac shares have fallen 20%)

Instructions on using The Pascometer: 

1. When Pascoe says buy you consider selling/shorting. 
2. When he says sell you consider buying. 
3. Whe he says fundamentals are good/sound, its possibly rooted.
4. When he says buy gold, its time to dump it!