Prettifying Toxic Waste

The promise of something for nothing is always an enticing proposition. Who doesn’t want roses without thorns, rainbows without rain, and salvation without repentance?  So, too, who doesn’t want a few extra basis points of yield above the 10-year Treasury note at no added risk?

 

The yield-chasing hamster wheel… [PT]

 

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Fun and Regret Ex Nihilo

The price of gold dropped last week, but not calamitously. From $1514 to $1459, or -$55. The price of silver dropped. Calamitously. From $18.08 to $16.75, or -$1.33. -3.6% vs -7.4%. Once again, silver proves to be volatile relative to gold.

 

Silver jumped off a cliff again last week – the chart formation nevertheless continues to look corrective. [PT]

 

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Beta-driven Fantasy

The decade long bull market run, aside from making everyone ridiculously rich, has opened up a new array of competencies. The proliferation of ETFs, for instance, has precipitated a heyday for the ETF Analyst. So, too, blind faith in data has prompted the rise of Psychic Quants… who see the future by modeling the past.

 

Gandalf, quant of Middle-Earth, dispensing sage advice. [PT]

 

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Two Interesting Recent P&P Interviews

Our friend Maurice Jackson of Proven and Probable has recently conducted two interviews which we believe will be of interest to our readers. The first interview  is with Brien Lundin, the president of Jefferson Financial, host of the famed New Orleans Investment Conference and publisher & editor of the Gold Newsletter – an investment newsletter that has been around for almost five decades, which actually makes it the longest-running US-based investment newsletter focused on precious metals. Its staying power speaks for itself.

 

Brien Lundin speaking at the 2012 New Orleans Investment Conference.

 

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Everybody Has a Plan

Not too long ago, we wrote about the so called Modern Monetary so called Theory (MMT). It is not modern, and it is not a theory. We called it a cargo cult. You’d think that everyone would know that donning fake headphones made of coconut shells, and waving tiki torches will not summon airplanes loaded with cargo. At least the people who believe in this have the excuse of being illiterate.

 

A few images documenting cargo cults on the island of Vanuatu. Left: a wooden plane made by the John Frum cargo cult, which is going strong to this day and has actually become a political party. In the middle is a ceremonial cross erected by the John Frum cargo cult. According to one of the cult’s leaders, its members consider John Frum their Jesus whom they expect to return one day (with a big load of cargo). Even funnier are the guys to the right, who belong to a different Vanuatu-based cargo cult, the Prince Philip Movement, which worships the Duke of Edinburgh whom it considers a divine being. Apparently members of the Yaohnanen tribe in Tanna saw how much respect was paid to Queen Elizabeth during her visits to the island and concluded that her consort had to be a being from their legends, the son of a mountain spirit and a “brother to John Frum”, who is also widely expected to return one day (with cargo). Prince Philip was long unaware that he is revered as a god, but since he has learned about it, he frequently exchanges gifts with the movement (he usually sends them signed photographs of himself, and they send things like traditional pig-killing clubs and other useful implements in return). What the members of the John Frum and Prince Philip cults don’t know: they clearly have what it takes to become modern-day mainstream economists. A second career path is open to them. Your cargo awaits, brothers! [PT]

 

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The Rise of Total War

Prior to the modern age, when war was engaged in, combatants, for the most part, acted by a code of conduct which attempted to minimize civilian deaths and the destruction of non-participants’ property. With the onset of the democratic age and the idea of “total war” such modes of conduct have tragically fallen by the wayside, the consequence of which has made warfare far more bloody and destructive.

 

Iranian Seiji-2 missile. Of course, we cannot really be certain whether or not the mullahs running Iran are fibbing about their nuclear ambitions – but the fatwa against nuclear armaments discussed below does indeed exist. [PT]

Photo via farsnews.com

 

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The Sky is Falling

 

“We believe monetary policy is in a good place.”

– Federal Reserve Chairman Jerome Powell, October 30, 2019.

 

The man from the good place. “As I was going up the stair, I met a man who wasn’t there. He wasn’t there again today, Oh how I wish he’d go away!” [PT]

 

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The Most Comprehensive Collection of Gold Charts

Our friends at Incrementum have just published their newest Gold Chart Book, a complement to the annual “In Gold We Trust” report. A download link to the chart book is provided below.

 

As of late 2019 an ounce of gold will get you 115 liters of beer at the Munich October Fest – a 7-year high. Cheers!

 

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The Strongest Seasonal Stock Market Trend

Readers may already have guessed: when the vibrant colors of the autumn leaves are revealed in all their splendor, the strongest seasonal period of the year begins in the stock market – namely the year-end rally.

 

Will Santa wake up this year? Last year he was clearly missing in action – but that is actually the exception, not the rule [PT]

 

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Bitcoin Gets Juiced

The prices of gold and silver were up $19 and $0.48 respectively last week. But that’s not where the massive inpouring of groceries went.

 

When Friday began (Arizona time), Bitcoin’s purchasing power was under 75 grocery units (assuming a grocery unit is $100). By evening, speculators added 25 more grocery units to the same unit of bitcoin.

 

Bitcoin, daily – shortly after breaking below an obvious lateral support level, Bitcoin did an about-face on steroids and rallied $3,000 from low to high in the space of a few hours. Interestingly, this rally was presaged by a number of subtle technical signals – bullish divergences with several of the major “alt coins” emerged on occasion of the seeming break-down on October 23, while concurrently a stealth rally in BSV that had started a day earlier refused to be derailed by the sell-off. These are the types of signals we tend to follow in the cryptocurrency markets – we consider them to be traces left by the biggest traders in these markets. Both breakouts and break-downs of resistance/support levels always have to be closely examined for divergences. Note that technical analysis is the only sensible approach to trading in cryptocurrencies, as it is impossible to gauge their “fundamental” value. The latter depends on all sorts of assumptions, all of which could be wrong. Clearly though, cryptos remain an excellent playground for nimble traders. [PT]

 

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Wildfire Surge

The hillsides are always brown in the land of fruits and nuts come autumn.  After baking away all summer long in the hot sun, the dense sage and chaparral covering the coastal hillsides and canyons are dry and toasty. Though, before conditions get better, they must first get worse.

 

California is ablaze again… as every year.  [PT]

Photo credit: Noah Berger / AP

 

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Ominous Pronouncements

The prices of the metals barely budged last week. It is interesting to note that last week, more than one central banker felt it necessary to say something about a possible next crisis. And at least one of them said something about gold.

 

Lost as always, and apparently slightly nervous these days… [PT]

 

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Most read in the last 20 days:

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      The Sky is Falling   “We believe monetary policy is in a good place.” – Federal Reserve Chairman Jerome Powell, October 30, 2019.   The man from the good place. "As I was going up the stair, I met a man who wasn't there. He wasn't there again today, Oh how I wish he'd go away!" [PT]   Ptolemy I Soter, in his history of the wars of Alexander the Great, related an episode from Alexander’s 334 BC compact with the Celts ‘who dwelt by the Ionian...
  • Incrementum 2019 Gold Chart Book
      The Most Comprehensive Collection of Gold Charts Our friends at Incrementum have just published their newest Gold Chart Book, a complement to the annual “In Gold We Trust” report. A download link to the chart book is provided below.   As of late 2019 an ounce of gold will get you 115 liters of beer at the Munich October Fest – a 7-year high. Cheers!   The Incrementum Gold Chart Book is easily the most comprehensive collection of charts related to or relevant...
  • The Golden Autumn Season – One of the Most Reliable Seasonal Patterns Begins
      The Strongest Seasonal Stock Market Trend Readers may already have guessed: when the vibrant colors of the autumn leaves are revealed in all their splendor, the strongest seasonal period of the year begins in the stock market – namely the year-end rally.   Will Santa wake up this year? Last year he was clearly missing in action – but that is actually the exception, not the rule [PT]   Stocks typically rise in this time period. However, there are questions, such...
  • Riding the Type 3 Mega Market Melt Up Train
      Beta-driven Fantasy The decade long bull market run, aside from making everyone ridiculously rich, has opened up a new array of competencies. The proliferation of ETFs, for instance, has precipitated a heyday for the ETF Analyst. So, too, blind faith in data has prompted the rise of Psychic Quants... who see the future by modeling the past.   Gandalf, quant of Middle-Earth, dispensing sage advice. [PT]   For the big financial outfits, optimizing systematic –...
  • Maybe the West Should Adopt Iran’s Nuclear Weapons Policy
      The Rise of Total War Prior to the modern age, when war was engaged in, combatants, for the most part, acted by a code of conduct which attempted to minimize civilian deaths and the destruction of non-participants’ property. With the onset of the democratic age and the idea of “total war” such modes of conduct have tragically fallen by the wayside, the consequence of which has made warfare far more bloody and destructive.   Iranian Seiji-2 missile. Of course, we...
  • Bitcoin Moonshot - Precious Metals Supply and Demand
      Bitcoin Gets Juiced The prices of gold and silver were up $19 and $0.48 respectively last week. But that’s not where the massive inpouring of groceries went.   When Friday began (Arizona time), Bitcoin’s purchasing power was under 75 grocery units (assuming a grocery unit is $100). By evening, speculators added 25 more grocery units to the same unit of bitcoin.   Bitcoin, daily – shortly after breaking below an obvious lateral support level, Bitcoin did an...
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      Everybody Has a Plan Not too long ago, we wrote about the so called Modern Monetary so called Theory (MMT). It is not modern, and it is not a theory. We called it a cargo cult. You’d think that everyone would know that donning fake headphones made of coconut shells, and waving tiki torches will not summon airplanes loaded with cargo. At least the people who believe in this have the excuse of being illiterate.   A few images documenting cargo cults on the island of...
  • Maurice Jackson Interviews Brien Lundin and Jayant Bhandari
      Two Interesting Recent P&P Interviews Our friend Maurice Jackson of Proven and Probable has recently conducted two interviews which we believe will be of interest to our readers. The first interview  is with Brien Lundin, the president of Jefferson Financial, host of the famed New Orleans Investment Conference and publisher & editor of the Gold Newsletter – an investment newsletter that has been around for almost five decades, which actually makes it the longest-running...
  • Volatility Galore - Precious Metals Supply and Demand
      Fun and Regret Ex Nihilo The price of gold dropped last week, but not calamitously. From $1514 to $1459, or -$55. The price of silver dropped. Calamitously. From $18.08 to $16.75, or -$1.33. -3.6% vs -7.4%. Once again, silver proves to be volatile relative to gold.   Silver jumped off a cliff again last week – the chart formation nevertheless continues to look corrective. [PT]   In standard vernacular, the metals lost purchasing power this week. Purchasing power can...
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      Prettifying Toxic Waste The promise of something for nothing is always an enticing proposition. Who doesn’t want roses without thorns, rainbows without rain, and salvation without repentance?  So, too, who doesn’t want a few extra basis points of yield above the 10-year Treasury note at no added risk?   The yield-chasing hamster wheel... [PT]   Thus, smart fellows go after it; pursuing financial innovation with unyielding devotion.  The underlying...

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