Jobless Recovery??? What Recovery???

Two things:

ONE - things getting worse at a slower rate is not a recovery.

TWO - things are not even getting worse at a lower rate. These so called "economists" on the payrolls of the banks who are praying people think economy is recovering and the others on the Fed's and other financial institutions payroll indirectly through their universities being sponsored by them or through doing consulting work for the Fed are doing whatever told by these corrupt lying institutions that are the cause of the problems we are experiencing now and have experienced in the past. These "economists" either make their projections too high so when the number looks better than "expected" -as if their expectations means jack- or they go and revise the past numbers and people just swallow the lies since they only look at the most recent numbers.

Don't be fooled by these scams.

There is no jobless recovery and things are only getting worse and will continue to get worse as the reality keeps sinking in. Without jobless recovery in an economy of 70% consumer spending there can be no real recovery. Economy growing through inflation, debasing of currency, and government creating money out of thin air and spending it and spending it for the wrong people -the fat corrupt banks- and then counting their activities in the "growth" of economy does nothing for you nor for me. What do these crooks think - that hungry jobless people will watch TV and see the made up news of recovery and forget they are starving and that even the tape warm in their stomach is divorcing them after the wife already took the kids and went to her farmer parents' and that starving guys will cheer that the economy is growing????!!!!! GET REAL!!!! You're not fooling anybody!

Bubble in the Amazon

Amazon is a great company that I personally love using, but similar to a lot of Wall Street love stories, this one makes no sense in terms of valuation either. Its earnings and expected earnings growth are very unrealistic as they have been in 2007 and many times before, but times seemed to be good for the stockmarkets and Wall Street and this is one of the loved names. Similar to other retail names it is hard to short a momentum stock especially one touted repeatedly. Times are similar now to 2007. Market is in bubble territory and bad news are ignored or are spinned to be good news in the most ridiculous way imaginable. It can only end one way. It could start any time or last another year or two, but how much more this stock can go is probably not more than up another 20% or so, but the downside is much bigger. All the same is true for Priceline, too. Wall Street Love Stories always end bad, and so will these. The fundamentals make no sense. You just have to give yourself enough time and not get run over by the continuation of the frenzy. Out of the money put options is a good way to go with these names. Just give yourself enough time and you will see these stocks down more than 50%.

Jacksonian Democracy and His Fight Against The Second Bank of United States

We need a new president similar to Jackson, a common virtuous strong man who is honest and does not bend in the face of personal gain or any other form of corruption. His love of sound money and hatred of paper money as well as the corrupt private central bank of the time (similar to current central bank operations) led by a greedy banker (similar to Goldman) named Nicholas Biddle. I highly recommend everyone to read more about Jackson and his fight against the private central much like the fight between the private Fed and Ron Paul. I highly hope for the sake of our children's future that Ron Paul wins this fight starting with more transparency into the Fed's operations showing how illegal a lot of the activities they are engaged in are and are meant to profit its owners, Wall Street banks. And that hopefully leads to the end of the freak of nature in what is supposed to be the land of the free.

Goldman’s Laughable Publicity Stunt:

Recently Goldman teamed up with its new partner in crime Warren Buffett and launched a new publicity campaign in the face of criticism about its ridiculous bonus levels. A company who was saved by the taxpayer’s dime by corrupt unelected officials should not be giving outrageous bonuses. It is a slap in the face to the taxpayers whose votes obviously do not mean anything as evidenced by the arrogance and obnoxiousness of the bonuses these people hand themselves. Another obvious fact is that these people do not care about shareholders. The employees of the firm are not there for the shareholders, but vice versa. What ridiculousness this is. These people have no shame. They were and still are bankrupt. They have been funneled tens of billions through the alphabet soup including the scapegoat AIG where Goldman was the only reason anything was done and where they received majority of the money even in cases such as being made whole on contracts (CDS and other) where Goldman would have been paid if AIG went under – which technically it didn’t. What kind of a circus is this and how on earth does Bernanke get a second term and how on earth does Geithner with no credentials (he is not even an economist) was at the helm of NY Fed and now the treasury. People of America, WAKE UP!!! This is outrageous and is done at your and your kids’ expense.

Buffett of course is just playing his book as he has a lot invested in Goldman and a lot in the US stockmarkets that Goldman seems to be heavily manipulating – even if in a legal manner. Besides Buffett was hurting badly and facing very dire consequences due to his short puts on the markets, yet another reason for Buffett to team up with the shameless Goldman Sachs. Buffett as respectful an investor he has been up to a few years ago is completely losing this by being part of corruption schemes. He did not exit American Express which was thought to be bankrupt by a lot of people –rightfully so- possibly because he knew that it would be saved by the Fed. One wonders what kind of deals these people high up managing our kids’ futures are in. I have one thing to say about it all. It is disgusting.

Goldman – Stop Saying You Were Fine Even If AIG Collapsed

Goldman was recently exposed in a government report –let’s hope the people preparing the report do not lose their jobs because of Government Sachs- about how they would have suffered badly if not gone under had it not been for the government bailing Goldman out. Did I say Goldman? I think it is officially AIG being bailed out. At least that is what we are supposed to think.

Here is the link to the news on the report.

Gold Suppression on CNBC!!! How Unexpected!!!

Of course it is by the only respectable speaker on CNBC, Rick Santelli who does not fear yelling “the king has no clothes!” It is very refreshing to see someone smart and honest like Santelli on bubble-TV considering the others include the likes of the corrupt bubble-maniac trend-monkey Jim Cramer, pretend economist with no real economic background (similar to the current treasury secretary) Steve Liesman, the alleged adulterer Maria Bartiromo, and the not-a-sign-of-brilliance defendant of the establishment Larry Kudlow.

On November 23rd, Santelli mentioned how the current economic-advisor to Obama had a paper on how gold price should be manipulated –remind you that is illegal and against the nature of free-markets and democracy.

Here is the link to the talk. It starts at around 7:30 mark in the 10 minute piece.

Here is a link to the same topic at GATA.

Holes in the Apparels:

There is an obvious logic-defying bubble in financial stocks. It is very hard to short these stocks with the Fed (ruled by the banks themselves) doing anything possible at the expense of the taxpayer including borderline illegal operations (reminder: Marc Faber, among others, called Bernanke a “criminal” on Bloomberg TV). Even though these large banks are all insolvent, if you had to go through every item in their books and not just book to model or “comparables” (I have heard instances where CMOs were considered in the same league as treasury bonds or were hedged using treasury bonds), they are being kept alive through liquidity provided by the Fed as well as outright transfer of wealth from taxpayers through funnels such as AIG (read Goldman receiving tens of billions) along with the usual fiat money trick of dollar devaluation and erosion of the purchasing power. It is hard to go against the almighty Fed or the almighty God’s representative on earth Blankfein’s Goldman. So one is left with trying to find some other place where there isn’t as much manipulation/corruption and a place where there is less direct government aid outside of a fiscal stimulus package targeting the consumer directly.

The obvious place is retail and especially apparel stocks, many of which are trading at 52 week, if not close to all time highs. These include names such as J-Crew, Urban Outfitters, Abercrombie and Fitch, and Lululemon as well as department stores such as Macy’s. Despite increasing unemployment, which is already at high levels (and we all know that the real unemployment is a lot higher than the 10.2% government number), decreasing income and wealth, an eroding dollar, and a huge recession that is still going on where home prices are still under huge pressure with more to come as foreclosures and delinquencies are properly handled over time (rather than being swept under the rug as they are now trying to give the impression things are getting better) and the resetting mortgages in 2010 and 2011, these stocks are at incredible levels. It is almost as if nothing happened in the last couple years and the go-go momentum years were continuing. Some of these stocks (there are a few others not mentioned here) have P/E values ranging from low 30s to high 70s. These are obvious shorts. Of course it is hard to go against the go-go nature and the optimism that authorities and bubble-TV tries to present to people (such as when 520k people lose their jobs in a week and bubble-TV spins it as a positive that it was less than the 530k that was expected without talking about revisions to prior weeks that transfer some of the losses to prior weeks). So shorting prematurely could be painful. Besides with retail stocks it seems as if the momentum in a certain name lasts for a while as we have witnessed with Lululemon and Under Armor in the past. Similar trends were visible with Urban Outfitters and J-Crew, too. So one would need know how bad the economy will become before pulling trigger. Or you would have to wait to see (as if it already isn’t for someone with half a brain or for someone who is not a liar) the markets go into a downturn again or the company specific bubble to burst as a result of a bad quarter or bad same store sales number, which we have seen with these names being ignored. Considering all this might take a while one can think of utilizing options to participate without tying up too much capital in a couple of different ways.

One would be to buy some close to the money the put options over a period of 6 months to a year (which hopefully should be enough time for the current bubble to burst, as 2010 will be a horrendous economic year) every month or every two months and making a budget for this period, continuing to spend that amount of money with discipline – we know this is tough. The best way might be buying two front months and continuing to roll as the front month options expire or when there is an opportunity to capture a drop in vol. God knows there have been plenty of chances where the market rallies on bad news.

The second way would be being buying a long-dated out of the money put option. The advantage of the first method is that if you get a signal that the markets are starting to go in the direction they should and the it becomes apparent that crisis is not over, you end up having more leverage and you can add on to your position more aggressively. The reason you would be doing two month rolling options is that if the crisis resurfaces and things start moving too fast, volatility and options prices will increase rapidly – you may not be able to buy at the level you want at the price you want. Besides the intrinsic value of the options could fly very quickly all of which would make the puts very expensive and if the front month is close to expiration you might only participate on part of the drop in prices. Whereas if you have the two front month puts, even after the initial month expires, you continue to participate in the drop in prices which is very likely to happen in rapid fashion.

A third way might be to buy the front month option and sell the second month 1x2 or 1x3 ratios fairly wide if you’re concerned about watching all that premium expire. This will lower the cost (somewhat) and as long as you roll every month before expiration and are wide enough in your spread, you are likely not to get trapped on the naked leg. Moreover, unless you’re really unlucky, the second month vol is not likely to spike as much as the first month providing you with ample opportunity to protect yourself.

The Beginning of the Current Bubble and Scams:

The world markets are in a huge frenzy over a phantom “recovery” that defies all logic. The current rally started in March from the 666 level in the S&P after Citigroup CEO Vikram Pandit and Bank of America CEO Ken Lewis said ‘if you don’t count our loses, we are making money’. They might not have worded it exactly that way, but that was essentially what they said. Anybody that works in a fee-based industry makes money if you don’t count their losses. The losses were all the writedowns on their ridiculous balance sheets that are still – even after the Fed hosed them on to the taxpayer – on their books. There is no way to clean those balance sheets when they have multi-trillion dollar notional derivative exposures (see table below for data from the Office of the Comptroller of the Currency) on relatively very little assets. I realize these products are not delta one, but anyone who works in derivatives knows that these banks were never really hedged, especially not against the gap risk, which was realized at immense levels the last few years. And when was the last time you hear a bank talk about the costs to stay hedged? Basically, there is no way all of these banks are not completely insolvent to the tune of multiple trillion dollars. Of course, the Fed is keeping them alive –as the Fed is a private institution owned by the very same banks it is regulating. The board members of the Federal Reserve banks are all from the major banks. Everyone will remember Mr. Friedman from Goldman Sachs who, despite being on the board of the NY Fed, was allowed by the current Secretary of Treasury Timothy Geithner (henceforth called little Timmy) to buy GS stock right before the Fed bailed them out and used AIG as a scapegoat (after god’s representative on earth Blankfein being the only private person present at a Fed and Treasury meting on the AIG meeting) to funnel tens of billions of dollars to mainly Goldman and a small portion to a few others. (Those few others got whatever they got after Goldman got the bulk because it was impossible to just give it to Goldman without complete scrutiny by the public or possibly one of the other banks blowing the whistle on that scam.)

The market celebrated in the overly volatile days around the March bottom the comments by the CEOs of bankrupt banks who many times stated that there was nothing wrong with them. Mr. Market seems to have a short memory about all the things these guys said over the last few years and how a lot of them were just plain wrong. After there was a little ignition, there was a futures led jump in the markets for the next few weeks where we saw some entity support the markets through futures transactions – which became ever more evident at any possible weakness in the market – and the markets kept rallying. It felt as if the plunge protection team was at work heavily manipulating the stock markets in addition to their usual work of manipulating the gold market. Goldman in the same period increased their principal to ridiculously high levels becoming a big portion of the trading in the US markets and in the meantime making a bunch of money on the taxpayers’ dollar. One wonders maybe they knew of the ploy, so went with it without fear and even if in a legal way, they manipulated the market as they knew the big guy was there to help them if need be.

This is the story of how the current bubble started.

How To Buy Physical Gold

There are several forms of physical gold you can buy. You could buy big bars if you have a lot of gold to buy and you want to do it in bulk. The better way to buy physical gold is to buy coins for a variety of reasons. For one if you wanted to sell only a small amount of gold at some point, it is easier to sell coins and that way you don’t have to sell more than you have to. However, the more important reason is the cheap call option on the collectibility/numismatic value of the coin. That is assuming you do not pay a huge premium on the coin you are buying.

The premium on the coin depends on several factors such as what country and date the coin is from, what mint it was minted in, the condition of the coin, and how many of them exist to count a few. It, also, depends on where you buy them. Coin dealers will most likely charge you a high premium. Jewelers that don’t concentrate on the numismatic value of the coin, but only on the gold value can provide a better place to buy as long as you know your coins.

My suggestion would be to buy older coins from the US or other countries that have been used as money at some point in the past. Most of these coins go for the price of gold both on online auction sites and at jewelers. If you decide to buy online, however, you should pay attention to a lot of factors such as what platform you use (such as eBay), who the other party is. Platforms such as eBay provide a lot of data on the sellers such as the feedbacks of other buyers. Before you buy a thousand dollar coin from some random person on eBay, you should confirm a lot of positive feedback and check to see that they have sold similar items to others with a lot of feedback – hopefully proving that these people know what they are doing.

Another way to buy online is to use reputed online dealers that are either approved by the US Mint – there is a list of approved dealers on the mint website – or on the numismatic agency websites (such as PCGS and NGC). Bullion dealers such as Northwest Territorial Mint. One of my personal favorites (including the low level of premium on coins and bars as well as the availability of other bullion products such as palladium, platinum, and silver) is Gainesville Coins. There are a lot of other places to buy from online, so do not feel the need to use any one place. You are probably better of to buy from several different sources anyways. Diversification is a good thing in any type of portfolio construction in terms of risk reduction.

Why You Should Buy Physical Gold

The best way to go long gold is to buy the real thing itself. If anything, you are helping your investment by taking more physical gold out of the market and helping break the back of the gold-suppression scheme employed by several central banks led by the Fed. Unless you know a good Alchemist, physical gold cannot be created out of thin air or lead unlike paper gold that the Fed can create through the exchanges such as Nymex. The only good Alchemist I knew was the novel by Paulo Coelho and to a lot of people’s disappointment it did not give you any secrets about alchemy and ways to become rich. It sure is not through paper gold, however. If any of you have been watching how paper gold is traded in these exchanges, you would see some very interesting patterns. “Someone” comes in at certain points when liquidity seems to be drying or there is an upward pressure in the price of gold and sells roughly 2-5% of annual global gold production in less than one minute and BOOM, the price of gold drops 10 bucks or 20 bucks if this “someone” is lucky. If you do the math, the financial institution or person that is selling this gold is selling anywhere between $1-10 billion of gold. Assuming 20% margin being put up, that is $200-2,000 million dollars being sold in less than a minute with no regard for the price. Now who has that much gold or would not care about the price assuming this is not their full position? I am not aware of any financial institution that can do that besides the Fed or a very big financial institution other than JPM, which, along with Goldman Sachs, is doing “god’s work” for the Fed. Arguably, the Fed is managed by these institutions anyway. And this is in addition to all the other evidence of manipulation, such as no one ever seeing the gold that Fort Knox or the NY Fed claims to hold, rhetoric by Greenspan and Volcker about controlling the price of gold and how it should be done – talking about democracy and a free market economy (yeah right) –, the anti-gold propaganda we see everywhere, and the information from the Bank of International Settlements showing that there is over 20k metric tons of gold short. It is common knowledge that it is mostly the NY Fed that leases out or shorts gold –which happens to be more than the approximately 8k metric tones of gold the US claims to have in supply. GATA (gata.org) has a lot of good links and information on this if you would like to do further research on the topic. The most accessible forms of paper gold available are gold futures – which you can buy in the Nymex or the other exchanges that offer them – ETFs (the most popular being GLD for all the wrong reasons – more later on why you should steer away from GLD soon), and other derivatives such as swaps or notes. It is heard time and time again that the futures exchanges give you a lot of trouble when you ask for delivery of your gold and a lot of times almost fail on delivery and get bailed out by central banks that support this scheme. The problem is that the paper gold market is a Ponzi scheme. There are more claims than there is physical gold in the warehouses. That is an unsustainable situation and one that is exploited by the gold-suppression scheme to hold the price of gold down –which is the reason gold is not in the $2-5k range right now after the financial system blow-out. You never see the price of gold being brought down by the sale of physical gold. It is always through the paper/futures market. The IMF bluffs and threatens to sell gold over and over again to bring the price down and never really sells the gold. It was very amusing to watch the BRIC countries, and surprisingly India rather than the expected China, call that bluff and say that they want to buy any physical gold the IMF has to sell; the IMF was forced to sell it to save face and not make it common knowledge that they backed out of their bluff. And what happened to the price? The price went from slightly over $1k to around $1140 so far and it is still rising and will rise more. Just a couple days ago Blackrock commodities fund manager Evy Hambro came out and acknowledged that central banks around the world will be net buyers of gold. That is good news for gold holders because the overhang for the gold price is being removed on top of the extra demand from such strong institutions. As a gold holder you should do your part to help your own portfolio and buy physical gold and help end the scheme that is keeping the price of gold down. Another reason to buy physical gold is the confiscation risk. It could be a remote risk but it did happen in 1933. FDR confiscated all gold from people of this country and the next day devalued the dollar (revalued gold) by almost 70%. In a free country people were not allow to own gold. Free market and democracy, right???? Still to this day, the anti-gold propaganda exists in this society from the media (owned by the same interest groups that want fiat money to be the form or just plain stupid) to our textbook and professors sponsored by the same financial institutions. US is the only country where it is hard to buy physical gold. In any other country, you can go to a bank or post office or some other location and buy gold bars or coins. The Fed and the Treasury do not want you to buy physical gold because that will stop the supremacy of paper money which they easily print and distribute to their friends as they did to the banks (Goldman – god’s hand – hear me!) and dilute you similar to diluting shareholders by printing more shares. They decrease our buying power and would rather help insolvent banks than the people they should be giving the trillions to and shutting down those banks that are ruining this country and our children’s future. Moral hazard be damned. That’s why you should buy physical gold! Now, let’s mention a few things about GLD, which claims to be backed 100% by physical gold, but most likely is not. For one thing, they do not even audit the gold properly, rely on third parties, and spend too much time stating that if the auditors and the custodians do something wrong they are not liable. They must know something is wrong if they spend so much time covering their “donkeys (click here for the prospectus)”. The funniest coincidence of all is that their custodian HSBC’s gold derivatives book is very close in size to what GLD claims to own in physical gold (click here for the derivatives position of HSBC reported by the OCC as of March 31st then go to page 30). That’s too big a coincidence if you ask me. I was once at a meeting with some executives from the commodities exchange and GLD managers. They say that they hold the gold in a vault in London, but they trade in the paper market in New York. When I ask them if they take physical delivery, they said yes. When I asked them how they transfered it to the vault in London if they were taking delivery in New York [??], they were puzzled. I had to clarify myself by asking if they flew it, shipped it with transatlantic ships, or trucked it over the ocean or had Olympic swimmers tie bars on their backs and swim across the Atlantic with them. They had no answer. Other people in the room were starting to get very curious, so the exchange managers felt like they had to step in to save the GLD mangers by saying that they keep the gold in the exchange’s warehouse. But wait a minute, I thought they kept all the gold in the London vault, no???? Apparently Einhorn of Greenlight Capital had enough issues with GLD that he sold his whole position and bought physical gold . There are several other ETFs that claim to hold physical gold. Some of these say they store the gold in the Swiss Kantonal region. Another less known US exchange traded ETF is SGOL managed by ETFSecurities which claims to hold its physical gold in a vault in Switzerland. If you are determined to go paper you are better off buying the Kantonal ETFs or SGOL before you buy futures or GLD.