Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stop Believing The 'Economy' Is The Same As The Stock Market - 12th Jul 20
Spotify Recealed as The “Next Netflix” - 12th Jul 20
Getting Ahead of the Game: What Determines the Prices of Oil? - 12th Jul 20
The Big Short 2020 – World Pushes Credit/Investments Into Risk Again - 11th Jul 20
The Bearish Combination of Soaring Silver and Lagging GDX Miners - 11th Jul 20
Stock Market: "Relevant Waves Vs. Irrelevant News" - 10th Jul 20
Prepare for the global impact of US COVID-19 resurgence - 10th Jul 20
Golds quick price move increases the odds of a correction - 10th Jul 20
Declaring Your Independence from Currency Debasement - 10th Jul 20
Tech Stocks Trending Towards the Quantum AI EXPLOSION! - 9th Jul 20
Gold and Silver Seasonal Trend Analysis - 9th Jul 20
Facebook and IBM Tech Stocks for Machine Learning Mega-Trend Investing 2020 - 9th Jul 20
LandRover Discovery Sport Service Blues, How Long Before Oil Change is Actually Due? - 9th Jul 20
Following the Gold Stock Leaders as the Fed Prints - 9th Jul 20
Gold RESET Breakout on 10 Reasons - 9th Jul 20
Fintech facilitating huge growth in online gambling - 9th Jul 20
Online Creative Software Development Service Conceptual Approach - 9th Jul 20
Coronavirus Pandemic UK and US Second Waves, and the Influenza Doomsday Scenario - 8th Jul 20
States “On the Cusp of Losing Control” and the Impact on the Economy - 8th Jul 20
Gold During Covid-19 Pandemic and Beyond - 8th Jul 20
UK Holidays 2020 - Driving on Cornwall's Narrow Roads to Bude Caravan Holiday Resort - 8th Jul 20
Five Reasons Covid Will Change SEO - 8th Jul 20
What Makes Internet Packages Different? - 8th Jul 20
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

Deleveraging Delusions, Denial, and Disorder 

Stock-Markets / Credit Crisis 2008 Sep 22, 2008 - 12:34 PM GMT

By: Captain_Hook

Stock-Markets Best Financial Markets Analysis ArticleWhen first conceptualizing this piece I thought long and hard on an appropriate title. The first one that came to mind was ‘Deer In The Headlights – Desensitized To Risk'. And most certainly, this title does capture the essence of what has happened to the vast majority of the investing population. Through years of propagandized conditioning sponsored by corporate America, its self-serving financial institutions, and the governments they have put in place, the media has been used to desensitized investors to the risks associated with the financial markets, debt (excessive borrowing), and a fiat currency system designed to enslave the unwary. (i.e. and serve the elite.)


Usery has been used since ancient times as a means to enslave the poor, ambitious, and loose minded, but never before has it ruled the very lifeblood of an entire world like is today. To say the banking elite got their money's worth back in 1913 when they bought the Fed's right to control the debt based currency system in the States is putting it mildly when you consider all new money must be borrowed into existence through them, meaning they not only have a monopoly on currency issuance, but also an unparalleled pension of interest income and influence.

The following is an excerpt from commentary that originally appeared at Treasure Chests for the benefit of subscribers on Tuesday, September 9 th , 2008.

And then I thought that instead of focusing on the ‘leveraging up' of the system, which is essentially old news considering what is about to happen (a deleveraging), the title ‘Hope Springs Eternal' came to mind in relation to the apparent unrelenting ‘optimism' investors have with respect to the stock market these days. At least this is what a logical man must conclude sentiment is concerning the stock market given investors continue to increase / carry healthy margin balances with their brokers today in spite of everything else going on out there suggestive participants should be paying off debt, not increasing it. But this is the delusion many are living with, where the term ‘optimism' should perhaps be replaced with word ‘desperation' above, as some investors apparently think they can insist stocks higher because they need the money. It's important for you to realize that for this reason alone, the stock market has never been more dangerous, and that until this reckless crew has been purged, the general direction for prices will remain down.

In arriving at the appropriate title for this analysis then, I finally came up with ‘Deleveraging Delusions, Denial, and Disorder' in an effort to capture why in my opinion, the delusions (think misplaced optimism discussed above) and denial associated with the massive deleveraging in the financial / credit markets currently underway has increased investing risk considerably moving forward, potentially putting in place the underpinnings for a ‘disorderly unwinding' or ‘event' in the not too distant future, possibly in the historic season of discontent the Fall has been in the past. (i.e. think stock market crashes [ex. '29 and ‘87].) Does this title capture the essence of what is happening in the financial markets well? I think so, where we could have added another word starting with ‘d' perhaps, that being ‘dysfunctional' to describe how all this is affecting prices in financial markets, particularly with respect to aiding in the suppression of precious metals prices within the larger process. Of course many would contend the primary reason precious metals prices are falling is due to price fixing efforts in paper markets perpetuating by the banking cartel in an effort to preserve their present monopoly in money, and perhaps they are correct. One can gain further insight into this complicated issue by listening to the third hour of the Financial Sense Newshour attached here this week.

And one can gain further insight into why the sentiment backdrop in the market is so dangerous right now by reading Alan Abelson's comments found in this week's Barron's column entitled ‘A Moratorium on Optimism?', a piece that discusses the ‘knee jerk bullishness' with respect to every dip in stocks these days, as follows:

“Maybe it's time for a respite from knee-jerk bullishness… the sudden burst of mass disenchantment was rooted in a kind of exhaustion of bullishness. Investors have been worn out responding to false sightings of bottoms and have gradually and somewhat grudgingly experienced a kind of epiphany as to the true, dismal state of the stuff that drives markets higher. Stuff like corporate profits, which are shrinking rather alarmingly (and, in the process, dangerously inflating P/Es), to consumer confidence and consumer wherewithal, both of which, not unrelatedly, have been badly mauled.”

In the months leading up to the Black Thursday of the Crash of 1929, the markets experienced a series of terrific ups and downs that ‘left everyone feeling exhausted.' So you see it's when this exhaustion finally takes hold of sentiment, that's when stocks can crash, and we have such a set-up potentially just ahead, right in front of the election which just about everybody views as an impossibility. This is of course a dangerous set-up from a contaraian perspective because of this election related complacency, where once this Government Sponsored Enterprise (GSE) bailout jam job has petered out, as per our analog comparison analysis presented a few weeks back , once any bounce into mid-September has run it's course, a real meltdown in stocks into the Fall (possibly extending into winter) should transpire if history (imbedded human behavioral tendencies) are a good guide.

Be that as it may, my focus associated with this vein of thinking is more practical with respect to capital preservation in your portfolio, that being most investors, including knowledgeable precious metals participants, do not realize just how dangerous the margin debt situation really is, and that until a more profound deleveraging in the stock market takes place, their paper related gold and silver investments remain at risk and subject to intensifying volatility. What's more, and in spite of the likelihood the US will increasingly lose price-setting capacity with respect to precious metals moving forward as the dollar's ($) reserve currency status evaporates due to inflation , along with cover clause requirements being imposed (see related comments attached here ), until American paper pricing mechanisms are substantially removed from the formula, this will ALWAYS remain a big risk. Please, do not kid yourself in this respect.

What do you think will happen when (not if) the stock market continues to plunge and over-leveraged hedge funds are forced to cover their margin positions? Do you think they will be prone to selling illiquid holdings first, or those that remain liquid and have held value better than their bad speculations? You can bet the margin clerks will be demanding prompt payment, so my money is on liquid issues being under pressure, which is where GLD comes into the picture. Unfortunately, SLV the silver ETF, does not have the liquidity to qualify for this distinction, so like other less liquid issues it's already suffering from dramatic price swings, such as the 5-percent drop just this past Friday for no apparent reason other than somebody had to blowout a position into thin market conditions. So you see even if these ETF's are not forced to actually sell metal holdings, paper market related machinations will continue to force prices lower during illiquid times, with periods of accelerating deleveraging creating price vacuums despite the tight conditions in the physical markets. How's that for a serious example of irony?

Here is a snapshot of the monthly gold chart, where you can plainly see that volatility has now rolled over, which at this point trumps all other considerations associated with technical conditions concerning any timeframe / measure. Not that indictor supports are holding or anything, as you can see below. Additionally, and what is not shown below due to presentation constraints, is that gold is holding it's long-term trend-line now coming in at approximately $780 spot, which if broken, would usher in a spike to new lows. At this point it may prove wise to remember the mid-term correction in gold witnessed during the 70's saw a 61.8-percent retracement, where if duplicated today could potentially send it all the way down to the $550 mark. And while such an outcome may appear possible at this point based on the way precious metals shares are trading, added to our discussion on paper pricing mechanisms above, I would be surprised at such a result given the tight conditions in the physical market. (See Figure 1)

Figure 1

Unfortunately we cannot carry on past this point, as the remainder of this analysis is reserved for our subscribers. Of course if the above is the kind of analysis you are looking for this is easily remedied by visiting our continually improved web site to discover more about how our service can help you in not only this regard, but also in achieving your financial goals. For your information, our newly reconstructed site includes such improvements as automated subscriptions, improvements to trend identifying / professionally annotated charts ,   to the more detailed quote pages exclusively designed for independent investors who like to stay on top of things. Here, in addition to improving our advisory service, our aim is to also provide a resource center, one where you have access to well presented ‘key' information concerning the markets we cover.

On top of this, and in relation to identifying value based opportunities in the energy, base metals, and precious metals sectors, all of which should benefit handsomely as increasing numbers of investors recognize their present investments are not keeping pace with actual inflation, we are currently covering 70 stocks (and growing) within our portfolios . This is yet another good reason to drop by and check us out.

As a side-note, some of you might be interested to know you can now subscribe to our service directly through Visa and Mastercard by clicking here .

And if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line . We very much enjoy hearing from you on these matters.

Good investing all.

By Captain Hook

http://www.treasurechestsinfo.com/

Treasure Chests is a market timing service specializing in value-based position trading in the precious metals and equity markets with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested in discovering more about how the strategies described above can enhance your wealth should visit our web site at Treasure Chests

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, as we are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.

Copyright © 2008 treasurechests.info Inc. All rights reserved.

Unless otherwise indicated, all materials on these pages are copyrighted by treasurechests.info Inc. No part of these pages, either text or image may be used for any purpose other than personal use. Therefore, reproduction, modification, storage in a retrieval system or retransmission, in any form or by any means, electronic, mechanical or otherwise, for reasons other than personal use, is strictly prohibited without prior written permission.

Captain Hook Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules