Additionally, there are escalating issues with Russia in the middle, where things are quickly getting nasty, with our side lead by enemies within.
The housing market seemingly everyone is cheerleading is a mirage, as home builders and home sales are crashing.
Physical gold is elusive; however, big money is chasing it. Big money is also betting on increasing rents, which is a signal the economy is far from healed. Potential home buyers are unable to pull the trigger on purchases of new or existing homes, as median income is stagnant and full time employment growth is non-existent.
Then, there is the stock market, where too many dollars are chasing too few performing assets, creating inflationary values based on nothing. Retail sales, and manufacturing, have also collapsed.
With conflicting information everywhere, it is tough to decipher propaganda from reality. Look no further than the lack of inflation in the market, or so we are told by our government and their media partners. In many ways, they seem blended in ironic mesh.
But make no mistake, real trouble is near. The market knows; soon, we all will.
Procuring physical gold seems to be a rather problematic and time-consuming
process.
While most of America was fully immersed in the Christmas holiday, Glenn Beck and his team noted a troubling story presented on the fantastic financial website Zero Hedge.
The story centers around a request from the German government to repatriate portions of their gold reserves held in America by The FED. There are many tentacles to this story, which would leave many of my readers deep in the weeds, but the story itself from Zero Hedge offers a strong overview of the situation, complete with opportunities to seek additional depth on the story. Please see the Zero Hedge blogpost HERE.
There are seemingly logical reasons for the retrieval of physical gold to issue plagued. Perhaps foremost on the list is covered at the end of the Zero Hedge piece, in that China and India are hoarding physical gold. An overview of the reasons behind this demand shines a spotlight on the real elephant in the room.
Meet the theory of hypothecation.
David Buckner joined Glenn Beck back a year or so ago to effort to explain hypothecation in what most would consider English. Please take a listen:
In reflecting on the Christmas season, the wonderful Frank Capra movie Its A Wonderful Life comes to mind when attempting to provide a basic overview of hypothecation.
The Bailey Building and Loan Association, of which the central character George Bailey was the president, engaged in mortgage lending, lending out portions of monetary deposits to qualified buyers in an affordable housing project. Provided the association retained proper reserve requirements without commingling funds, this was a quite ordinary and profitable enterprise for such a loan association. Failure to adhere to regulatory banking laws would appropriately lead to fraud likely commensurate with incarceration upon conviction.
Enter The Federal Reserve. The FED, as the holder of the physical gold, may lend to banks, and others, utilizing the gold as collateral, provided the depositors have consented to such an agreement. An agreement in this regard would certainly have reserve requirements, although the FED, not being a public company and a quasi-governmental firm, has no regulatory requirement to publicly release terms of such agreements or asset balances.
Back to the request by Germany to obtain portions of their physical gold deposits from The FED. The Zero Hedge piece noted the agreed upon amount of the first batch to be delivered was short, and Germany noted it was not the same gold initially deposited, as it was marked.
Why was did The FED short the batch size, and why were the gold bars not the original ones deposited? Glenn Beck asks some legitimate questions about the batch and potential reasons for the alteration of the originally deposited gold bars, and the conclusions drawn are hair on fire troubling.
Has The FED deviated from common banking guidelines with respect to collateral requirements of gold reserves? Does The FED actually possess the physical gold? Are adequate reserves in place to accommodate the subsequent levels of hypothecation?
Where would these reserves be if not in the possession of The FED. The financial crisis of 2008 was the greatest theft in history, and we still wonder who got all the loot.
If the gold is not possessed by The FED, given gold the position gold holds as the cornerstone of finance, the result would be catastrophic for everyone, and global collapse would be imminent.
The situation is fluid, but we conclude terrorists have attacked America in Boston. We will have plenty to say in the future, but for now, please keep our Bostonian friends, race competitors and their families in your prayers.
Contrary to the opinion of the Obama administration, we have been and remain in a global war on terror, both militarily and economically. In times of a crisis, when attention is directed in appropriate fashion in a particular arena, our eye is temporarily taken off many other, and perhaps more important, issues
While we keep our Bostonian friends, race competitors and their families in our prayers, we must watch the other hand. There IS something to see here.
Kevin Freeman over at Secret Weapon has all the tentacles of the gold collapse covered, it is well worth your time to get up to speed over at his Global Economic Warfare site.
The economy is not doing better, and whether it is the Obama administration of Goldman Sachs informing you it has, they profit from delivering false information to you, so eliminate the noise.
Financial analysts are all over the place, and due to excessive market manipulation, guidelines from past history are out the window.
On top of this, we had what appeared to be a natural landslide the other day at Rio Tinto’s Kennecott mine in Utah which erased a large portion of Silver mining production for what may be years to come. Silver joined gold in tanking today.
Could these events possibly be related? What does the immediate future hold?
I don't know what I am having for lunch on Tuesday, much less the direction of equity and precious metal trading in the capital markets, but I do know the market is being manipulated by the FED and that the economic fundamentals (yes, I know many companies are beating much lowered earnings expectations) are not good at all.
Farage, flying against strong headwinds, has been a very vocal leader in opposition to the European Union as freedoms of the citizenry diminish due to incompetence of central planner and bankers.
Become acquainted with him in the following video of approximately three years ago as he lambastes in stunning fashion the EU Parliament for their incredible arrogance.
Farage absolutely nailed it in his address, calling out the technocrat elites who seek control over the masses and, as Farage appropriately put, are very dangerous people indeed. That was three years ago.
It won't, and has not, worked, as evidenced by the continuous bailouts of bankrupt countries which make up the EU, often referred to as the PIIGS.
Movement along bailout boulevard led to event this past weekend which should send shivers down the spine of not only investors in foreign markets and currencies, but the average citizens right here across the fruited plain.
The government of Cyprus, absolutely bankrupt and seeking contingency operations, attempted to make a move which many thought may be the catalyst to European collapse; the application of an mandatory tax on the countries bank depositors of a minimum of approximately 7%.
In many areas, such as the US government and our mainstream media, you were informed there was nothing of relevance to found by further investigating the tentacles of the story. Nothing to see here, move along.
However, after the story blew up on social media Saturday, many alternative media outlets flexed their muscle and alerted the world to the evil ripple effect of the proposed action.
Don't think for a moment if cannot happen here. In fact, violations in the rule of law took place immediately into the Obama administration when contract law regarding the positions of bondholders was violated in the auto bailouts. In my mind, they continued with the 3.8% investment tax we found in the Obamacare legislation when we got around to reading it. One can argue the artificial intervention in interest rate levels is stealing investment returns from those, particularly the elderly, who hold investments in seeking returns in interest.
Then there was the sordid affair of malfeasance and theft over at MF Global, where Jon Corzine, former Democrat Governor of New Jersey and Goldman Sachs president, allegedly used funds in customer accounts to arbitrage on European currencies and lost big, causing MF to go bankrupt. As of today, the depositors have not been made hole and Corzine is chasing skirts in the Hamptons.
Russia Today caught up with Farage for commentary on Cyprus and where we the EU stands on the boulevard to bankruptcy. Go:
The EU is destined for collapse, and as Farage noted back three years ago, we should all hope the market collapses before the citizens are robbed to pay off, as Freeman put it, the excessive debts of profligate governments.
Once the lynch pin is pulled, these governments, run by elites who lack respect for the rule of law, will stop at nothing to preserve their power. This includes theft and robbing the citizenry of their freedom and independence, collective action in many a regard.
Time is precious for the United State to avoid similar economic issues given the immoral spending by our government. However, we elected the wrong guy if fixing these issues was on the agenda. They are not, and truthfully, the actions of this administration point to nudging the masses to assist in crashing the system in the vision of Cloward and Piven.
With cheap money seeking the highest level of return, the stock market is artificially pumped significantly above standard levels of relative strength and at some point soon, the casino of choice will crash to the level where buyers and sellers are in legitimate competition finding an equilibrium point influenced in future movement by speculation.
Should a catastrophic event occur in the capital markets, the action of the confiscation of funds has already been established. The United States would not be exempt from such action under similar duress. Gold was confiscated under FDR, and the Obama administration has been investigating how they can gain access to the 401K accounts of the citizens.
In the aftermath of an event, action will be embarked upon by government "for the good of the people", which translate to your loss of freedom and assets for the preservation of power of the progressive elites and ruling class.
Shore up your investments promptly, avoiding Shore Bank, before you wake up one morning and find portions of them confiscated, prompting a global bank run. That will conclude the greatest heist in history.
If I could get a handle on all the lines of action going on on Wall Street, not only would I be a ventriloquist, I would be beyond wealthy. I am not.
The FED has increased the money supply by engaging in monetizing the debt, otherwise considered printing money, and that has resulted in excess money chasing too few assets, pushing the asset prices higher.
Due to the abysmal housing market, which cannot gain ground due to a horrendous job market and extensive regulation through Dodd-Frank, real estate investing has not been the avenue of choice for investors. Gold and the stock market has.
A review of the NASDAQ after the close today shows the index increasing five year highs, and this has been a great run if you have been along for the ride. Take a look, but note the market level variance from the relative strength:
Weekly NASDAQ chart/Investors.com
While markets are forward looking and do not always reflect the current status of the economic realities on the ground, given our economy, it is reasonable to conclude the stock market should not be lurching into a parabolic assault on historical highs. With an employment participation rate having retracted to levels not seen since the Reagan administration, a manipulated unemployment rate parked at levels not witnessed since The Great Depression, governmental assaults on small business, class warfare on the wealthy and putrid growth in the Gross Domestic Product, one has to wonder why the dichotomy between the capital markets and the reality on the ground.
As the excellent blog Zero Hedge accurately pointed out, many economic measures are breaking down, and while the Case Schiller Housing Index has shown signs of life depending on how you analyze the data, even though a shadow inventory remains, the housing market remains bottoming.
If housing is improving, with the state of the economy, one must conclude rising investor participation as first time home buyers are scarce. If investors are becoming more interested in real estate, what market has fallen into disfavor and why? The stock market?
Paul Miller, a bank analyst with FBR Capital Markets, cautions against reading too much into the Fed’s weekly data. “It’s a noisy database,” he says. No kidding. With a media complicit in propaganda, and the FED intervening in market action in unprecedented levels, it is most difficult to accurately value equities. It is the FED behind the curtain who is crowding banks out of the mortgage
origination market and setting unreasonable credit requirements for lending practice, handicapping the housing market even with manipulated easy money.
But is there a correlation between rising housing investment and what looks to be a topping out of the DOW and NASDAQ? Further, in anticipation of a market collapse, would tangible assets such as real estate become the favored investment?
Without government interaction, even though they have been replenishing their balance sheets borrowing free money from the Fed, banks could not withstand a major economic collapse. Further, unwinding the hypothecation would be catastrophic. If the clients of Jon Corzoine at MF Global are any indication, get your money while you can. Maybe investors are.
No matter what market developments lay in store for us, a few things are certain in my view. The housing market remains broken and cannot recover without a recovering job market. The market has been compromised and true evaluation is not possible. And, unfortunately and most notably, the rule of law and trust of the marketplace, integral for the survival of a
free market capitalist system, has been violated.
As I have previously mentioned, until the rule of law is reestablished with the government becoming a
bystander, allowing the FED to resume normal open market operations, the market place will remain
compromised and a playground for the crony crowd.
Given the increasing turbulence, while I don't know what I am having for lunch tomorrow, I sense a major storm brewing both port and starboard. Caveat Emptor.
This sign, reportedly located in north Central Florida, is most telling.
Please allow a moment of digression. Elements of the left wing, under the premise of assisting those in the lower levels of economic stature to purchase a home, applied pressure to banks to lend with potential charges of false racism to lend to this group of individuals. Certainly, you recall ACORN.
The easy money position taken by The Federal Reserve helped fuel and create an environment of easy lending to all levels of economic status. Coupled together, we all now know how catastrophic this series of moves was.
In response to the crash, the FED balance sheet has been expanded to allow for banks to reset. Initially, public thought was that the banks would lend this money out to the public to help restart the economy. Instead, banks have been hording the money.
Are the banks still trigger shy to lend to the small businesses and individuals that make up most of the economic growth in the community? Given the economic environment created by this administration, one which seemingly encourages people to escape their financial obligations, I would be.
Are banks not convinced of the stability of the underlying value of the collateral used to secure loans, such as real estate? I am.
Are banks saving up because they see what lies ahead in the future, which is the possibility of another crash. Could be, as a double dip recession is already underway and we can see bubbles in several areas, such as gold and silver.
If I had all the answers, I would be floating around on my Hatteras in the Bahamas.
Currently, the dollar is at near term low. One of the four pillars of Reaganomics was sound money, which includes a strong dollar, which puts our economy in prime position to function at high levels. With oil prices pegged to the dollar, a weak dollar is one of the main reasons gas prices are soaring. Another reason is the Obama administration, who set out to investigate what role speculators are having in causing prices to rise.
If I know demand is steady at a minimum and Obama is restricting oil production, adverse to increasing our domestic supply from drilling, is assisting in creating havoc in the oil rich middle east which disrupts distribution and is placing a heavy hand of regulation on the profitable energy sector, I recognize investment opportunities.
Investors are indeed speculating on higher oil costs. The way to derail the speculators is for the policies regarding oil to change, and that would heave to come from the very folks investigating potential speculation.
Recently, China has been decreasing bond purchases from the US and selling at a discounted rate, as the Chinese are not confident they will get paid what they are owed. This action devalues our economy, as does our government using quantitative easing (printing money) as stimulus.
High levels of inflation has already arrived in some areas (food), but will become an all encompassing issue in the coming years. The FED will work to quickly offset the inflationary pressure by restricting the money supply, which should include a rise in interest rates.
What will the playing field look like when this starts happening. Will the gold bubble burst. Will the much talked about municipal bond crash become a reality? Where will investors run to?
Perhaps the answer is Real Estate, a tangible investment which as adjusted has historically low prices. Due to high levels of vacant units nationwide and new home construction nil, a reset is not expected until about 2016.
If it does come full circle, I hear Exxon-Mobil is entering the home financing business. Just call me Agent Speculator!
BAHL is a REALTOR, Real Estate Investor and Residential Real Estate Appraiser in Orlando. He holds a BS degree in Economics from Florida State University.
