Thursday, April 4, 2013

What Happened In Cyprus Will Happen Everywhere: Marc Faber

Growing wealth inequality means that the wealthy have nowhere to hide and that events like those in Cyprus will happen in more countries around the world, including developed nations, said Marc Faber, the contrarian investor and publisher of the Gloom, Boom & Doom Report.

"It will happen everywhere in the world, in Western democracies," Faber said "Squawk on the Street" on Tuesday. "You have more people that vote for a living than work for a living. I think you have to be prepared to lose 20 to 30 percent. I think you're lucky if you don't lose your life."

"If you look at what happened in Cyprus, basically people with money will lose part of their wealth, either through expropriation or higher taxation," he added.  (more)

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Jim Rogers: The Yen will be the First to Collapse in the Currency Wars

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Eric Sprott: Investment Outlook (April 2, 2013)

by Eric Sprott & Shree Kargutkar, Sprott:
If there is a risk in a bank, our first question should be: ‘Ok, what are you the bank going to do about that? What can you do to recapitalise yourself?’ If the bank can’t do it, then we’ll talk to the shareholders and the bondholders. We’ll ask them to contribute in recapitalising the bank. And if necessary the uninsured deposit holders: ‘What can you do in order to save your own banks?’” – Jeroen Dijsselbloem, March 26, 2013 1
A deal has just been struck with Cyprus. However, it was not the deal that Cyprus saw other countries receive. This was not the deal received by Greece, Italy and Spain. There were no bailed out banks in the aftermath. There was no transfer of risk from over-levered banks to the taxpayers. The risk was pushed back onto the banks. Their equity was wiped out. Their bondholders were wiped out. Their uninsured depositors saw their accounts raided for additional liquidity. It wasn’t just that the rules of the game had changed, the game itself changed. By raiding the depositors’ accounts, a major central bank has gone where they would not previously have dared. The Rubicon has been crossed. Going forward, this is expected to be the “template” for dealing with risky, over-levered banks and the countries which support them.
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The Euro is Dead – Long Live the Dollar


Our phones have been in meltdown mode and sleep has been rarer than gold around here. Whatever politicians could do to screw up the world, trust me, they are diligently at work to accomplish that goal even ahead of schedule. The logic coming from the ECB, France, and Germany leaves a lot to be desired. Policies of hunting down the rich, the French refusing to reform, the Germans insisting upon austerity, and the ECB advocating the confiscation of depositor’s money setting off bank runs which are starting to emerge in Southern Europe, are all combing to present a picture that if it were used for a movie, nobody would believe such events were even possible. (more)

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McAlvany Weekly Commentary

All Markets at the Cusp

About this week’s show:
-The Fed – watch what they DO and not what they SAY
-Equities and Real Estate – new bull market?
-Gold and Silver – New York’s negative bias
Read | Subscribe@iTunes

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Chart of the Day - WR Berkley (WRB)

Today's Chart of the Day is W R Berkely (WRB).  In the last month the stock hit 17 new highs and is up 6.66%.  It also has a 96% Barchart technical buy signals and a Trend Spotter buy signal.  Since the Trend Spotter signaled a buy on 1/18 the stock is up 10.41%.

 The Company is an insurance holding company which operates in all segments of the property casualty insurance business: regional property casualty insurance; reinsurance; specialty lines of insurance; alternative markets; and international. The company's regional insurance operations are conducted primarily in the Midwestern, Southern and Northeastern sections of the United States. Reinsurance, specialty insurance and alternative markets operations are conducted nationwide.

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Gold Volatility Index Back To Bull Market Lows

Gold has been declining for the past 6 days as it heads into its 1st DCL.  It sits 26 Days into this Cycle and therefore into the timing band for a DCL.  Technically the oscillators have clearly turned lower since the Cycle closing high of $1,614 set on March 21st, and this confirms the final DCL decent is in progress.  The (closing) high was set on Day 20 and as a DCL is now expected, both pivots should occur comfortably within expected Cycle time-frames.

On the Daily chart I see that gold is holding up fairly well here.  It has resisted the negative price influence of what has been a hot dollar rally and is now consolidating in a controlled bull flag like decline.  Because this Cycle was generally flat and the bid appears to be bullish, I’m working on the assumption that this mini consolidation is going to be mild and resolve itself by moving strongly higher.  The Gold volatility index ($GVZ) is also back down to bull market lows and depressed volatility is always associated with Cycle Lows.

So this means that any new rally from this point forward will most likely mark the beginning stages of a 2nd Daily Cycle.  I’ve resigned myself to a lower set of price expectations for the time being, so I’m not going to offer any price predicts here. We will be better served by just sticking to the key Cycle pivots and focusing more on the timing.  Obviously if the 1st Daily Cycle is any indication, then we’re in for a similar lackluster performance out of the 2nd Cycle.  But that’s not a guarantee; we often find that a quiet Cycle is backed up by a much more volatile Cycle.  If we’re to see any upside out of this Investor Cycle, then you would always expect it from the 2nd Daily Cycle, these are historically the best performing.

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