Tuesday, July 10, 2012

WARNING: The World’s Financial Market is Undergoing Total Collapse

It has begun the unofficial collapse of the Euro that I have announced back in late June has started to run into the massive canyon like fissures of the financial world. As web site after web site and expert after expert talk endlessly about the failing frame work of the whole western financial system; they over look one main point. That point is this; when a patient is brain dead, you may debate that there is still blood coursing through their veins, that their heart still beats, that there is still a modicum of respiration still occurring. The fact remains though the vestigial systems of the organism works, it's main source of control that dictates every one of its voluntary mechanical operation IS DEAD. So it is with Western Banking. There are still "signs" of life, the ATMs work (for most anyway) online transactions are for the most part operational (again for most) but the arguments of liquidity and solvency rage because of the simple lack of omission that the very needed rudiments of the financial system, it's modus operandi, it' s organized brain of safeguards and cognition has ceased functioning.

The Unofficial Euro collapse has hastened the hemorrahging of various sectors around the financial world. Lets start with a few shall we.

Derivatives- I have documented that the real loss of JPM's previous London trade debacle is not the purported intial $2billion or the now admitted $9 billion but $150 billion total loss. This coming from a Zombie Bank that recieves 77% of its profits from the government trough. The IR Swaps that are played in this field is astronomical and is accounting for more than 85% of all derivative trades. So what does this mean? I stated many times, when people have asked me, "what is THE SIGN of a financial collapse?" I have always said that it will begin in the derivative market first. After all we have an unsustainable world wide derivative debt that is in the Quadrillions. $1.4 Quadrillion by most estimates. What does this mean and how will it play out? (more)

Japanese government could 'run out of money' by October

Bill to allow the government to sell bonds to fund the budget is languishing in parliament
• If it is not passed, government spending will grind to a halt
By Damien Gayle
Japan's government could run out of money by the end of October because a standoff in the country's parliament has blocked a bill to finance the budget deficit.In a crisis that echoes ones felt by other countries like the U.S. and Greece, all state spending - including salaries, pensions and unemployment benefits - could be halted if no solution is found.

A new bill to allow the government to sell bonds to fund almost half the budget has languished in parliament as the ruling Democratic Party tussles with an opposition-controlled upper house.Shinjuku, Tokyo: Japan's government could run out of money by the end of October because of a standoff in the country's parliament

If the bill is not passed, government spending would grind to a halt, the world's third-largest economy would be put in jeopardy and its standing among credit ratings agencies could suffer.'Without this bill, the budget will collapse,' Jun Azumi, Japan's finance minister, said earlier today, pleading for cooperation from the two largest opposition parties. (more)

$15 Trillion To Be Added To Money Supply & Gold To Ascend

from KingWorldNews:

KWN has been getting bombarded from readers around the world on the Michael Pento piece titled, “This Major Fed Move Is About To Cause Gold To Skyrocket.” Today we followed up with Michael Pento because there was such tremendous interest in knowing more about this major move he expects from the Fed. Today Pento told King World News that this move he is predicting could add a staggering $15 trillion to the money supply.

Pento, of Pento Portfolio Strategies, also said that if this move happens, “you will see the gold market fly far past its nominal record high in extremely short order.” Here is what Pento had to say: “So let me put it together for your listeners. We have $1.42 trillion of excess reserves. We are now going to be told that there will be no capital reserve requirements on owning sovereign debt. You will have commercial banks flooding the market with the purchase of sovereign debt. Not just US debt, Portuguese debt, Spanish debt, Greek debt, all of that debt will have zero capital requirements.”

“Let me be clear on this, I’m not saying it could increase M2 money supply to $15 trillion, this could increase it by $15 trillion. So we’re talking perhaps about $24 trillion. It has the potential to increase to rapidly increase the global money supply, and it would be a tremendous boost to commodities, oil and precious metals.

Michael Pento continues @ KingWorldNews.com

Merrill Lynch`s Bullish/Bearish Stock Indicator

Financial Astrology: Gold and Silver Update

By Karen Starich

On August 1st last year I wrote in an article titled Gold Breakout Is Here illustrating a Saturn transit to the chart of the Federal Reserve that had the potential to propel the metal to a new high of $1650. I also described how gold would continue to move higher within days. Gold broke $1650 the next day, and it did keep going all the way up to $1900 on August 22nd. Since then the metal has lost it’s momentum falling back to under $1550 for most of 2012. Silver has likewise not been able to maintain it’s highs in 2011 and continues to limp along under $29.

Pluto rules mining and is currently retrograde in the sign of Capricorn since April 10th of this year, and will continue to produce effects that are like an undertow in the economy until September 17th when it will then move direct. In January 2013 Pluto moving direct will enter 10 degrees Capricorn for the first time since 1767 when the original Tea Party was gaining momentum.

In the Fall, after Pluto moves direct, there could be a very positive change for both gold and silver, gaining new momentum to make new highs. I will also add that Pluto at 10 degrees Capricorn is very positive for the United States, the economy, and mining, and we could see some very powerful moves that could propel gold over it’s previous high of $1900.

For the short term we could see a pullback in both metals from their recent gains. Beginning July 5th- July 19th we could see a pullback for gold and silver with an opportunity near July 20th for a long position into the end of July. Watch out on August 2nd, there could be another big drop of $100-$150 on gold.

For the long term, the pullbacks can be great opportunity to purchase the metals at a discount.

The Gold Silver Ratio As An Early Warning Indicator

acting-man.com / Pater Tenebrarum / July 6, 2012

The Gold-Silver Ratio and Credit Spreads

We recently presented a long term chart of the gold-silver ratio. Traditionally it has been a leading indicator of credit spreads, as during times of declining economic confidence silver, which has a large industrial demand component, tends to fall against gold (which is what this ratio depicts, only vice versa).

Our comment below the chart went as follows:

The ‘fly in the ointment’ chart. In spite of the big party the markets threw on Friday, the gold-silver ratio has broken through a long term downtrend line this year. This bodes ill for the medium to long term outlook for stocks and junk bonds, as the ratio tends to work as a proxy and leading indicator for credit spreads. Note in this context that junk bond issuance has recently diverged bearishly from the stock market (namely at the early April high in the SPX). This is a phenomenon that was last observed in 2007.”

This prompted a reader to ask us to clarify this comment further in an e-mail exchange. We thought it might also be of interest to other readers and our further thoughts on the matter follow below:

Per experience, major trend changes in this ratio precede credit distress with a lead time varying from a few weeks to a few months (as always, this is more art than science). It is a heads-up that ‘risk assets’ of all kinds could get into trouble as the year goes on, provided the ratio does not reverse convincingly.

Since the AU-AG ratio’s peak during the 2008 crash, it has been in a long term downtrend – since the downtrend line has recently been breached, a warning signal is currently held to be operative.

The industrial and fabrication demand for silver has remained fairly constant (or rather, has grown very slowly) over the past decade. The loss of demand from the photography sector was more than made up by demand growth in other sectors. What growth there has been has mainly come from investment demand.


Weak Jobs May Mean More Printing and Higher Precious Metals Prices

Gold (GLD) is consolidating after hitting a two-week high. Investors are witnessing renewed strength in precious metals after the Fed announced the expansion of Operation Twist until at least the end of the year.

Similarly, gold and silver (SLV) have been recently moving higher based on the eurozone and stocks are breathing a sigh of relief as the summit came up with a purported solution to reduce funding costs, particularly for Italy and Spain, worth $149 billion. This may stimulate the eurozone. In addition, precious metal investors appear to be optimistic as the European Central Bank, Bank of England and the People's Bank of China concurrently ease interest rates to stimulate global growth in the depressed eurozone, which is experiencing record unemployment. So optimism is returning to Europe while the U.S., which has heretofore been a safe haven, is beginning to show signs that unemployment may be lurking higher.

U.S. jobs data on Friday was lackluster. Weaker numbers going into the election could once again restart discussion of QE3. A possible coordinated stimulus by the ECB and China could be a catalyst for fund managers and traders returning from their 4th of July holiday vacation.

This week should be quiet but next week could be exciting, especially if we witness this worldwide coordinated effort to stave off a pandemic meltdown before the 2012 U.S. presidential election.

Over the past three years we have seen positive reversals in gold bullion in the summer months. The second half could represent an explosive move in the yellow metal as a coordinated worldwide stimulus begins. Nations such as Japan, EU, England and the U.S. are attempting to devalue their currencies in order to create growth and payoff soaring debts. Austerity is unpopular and the only solution is to continue to monetize the debt.

$GOLD (Gold - Spot Price (EOD)) CME

Gold is regaining the 50-day moving average at $1600 and $1640 would be the next area of resistance. Traders are looking to see if silver gets to $29 regaining the 50-day moving average and breaking the four-month downtrend to the upside. Gold is moving into the favorable third quarter, which has proven the past three years to make powerful reversals higher. This may also benefit the wealth in the earth undervalued gold producers (GDX) and the bargain-priced junior explorers (GDXJ) which are hitting multi-year lows.

In conclusion, increasing amounts of money is being printed worldwide. Inflation may be the only recourse for governments in trouble. We raise an unimaginable consideration. Could it be that the bankers and Federal Reserve Board eventually must devalue the dollar to keep pace with other nations to pay off soaring debts? We are fully aware that such a scenario might exist somewhere down the fiat paper road. Just a thought.

The Black Hole of Debt - Steve Keen

Eastman Chemical Co. (NYSE: EMN)

Eastman Chemical Company, a chemical company, engages in the manufacture and sale of chemicals, plastics, and fibers in the United States and internationally. The company operates in four segments: Coatings, Adhesives, Specialty Polymers, and Inks (CASPI); Fibers; Performance Chemicals and Intermediates (PCI); and Specialty Plastics. The CASPI segment manufactures resins, specialty polymers, and solvents that are used in the production of paints and coatings, inks, adhesives, and other formulated products. The Fibers segment offers Estron acetate tow and Estrobond triacetin plasticizers used in cigarette filters; Estron natural and Chromspun solution-dyed acetate yarns for use in apparel, home furnishings, and industrial fabrics; and cellulose acetate flake and acetyl raw materials for acetate fiber producers. The PCI segment offers intermediates; performance chemicals; and complex organic molecules, such as plasticizers, diketene derivatives, specialty ketones, and specialty anhydrides for medical, pharmaceutical, fiber, and food and beverage ingredients. The Specialty Plastics segment primarily offers engineering and specialty polymers, specialty film and sheet products, and packaging film and fiber products.

Before discussing potential trading opportunities, please take a look at the 1-year chart of EMN (Eastman Chemical Company) below with my added notations:

As you can see from the chart above, EMN has a very important price level at $50 (red). Not only was that $50 level a support back in March and February, but it was also resistance in May and June. Now that the stock has broken back above that level, $50 is acting as support again. The $55 resistance (navy) would be the next key level if the stock were to move higher.

The Tale of the Tape: EMN has key levels at $50 and $55. A long trade on a pullback to $50, or on a break above $55, with a stop placed under the level of entry would be advisable. However, if the stock were to break below that $50 level, a short trade could be made.