Favorite Game: BS, Let's Call Out The Fed.... Again

The dollar is down 1.20 cents vs the euro at 1.4527 today and the goldprice is on the rise as it should be with a tanking dollar.  However, the following is the intraday chart for gold (chart from goldprice.org).

One can't help, but ak, why on earth on no news and witrh everything going for it gold would tank 12 bucks from the highs of the day when it was poised to go up much higher. You guessed it!!! Had we been playing bluff or BS as it is otherwise known with a bunch of players including the Fed, this is when we would confidently call BS!!!!! Because it is utter and complete manipulation by the Federal Reserve - possibly through NY Fed, the most evil one of them. There is a reason -such as this- that people like Ron Paul and Chris Bunning keep calling for the abolition of the Fed and for complete transperancy. This manipulation is completely illegal and punishes prudent decent people who want to take their futures and their kids' future into good hands by buying gold.

Economist: "Bubble Warning"

Even the economist is talking about bubble warnings at this point. The article says the fundamentals do not make sense and that something has to give. That is not very supportive news for the markets especially coming from a generally optimistic Economist magazine. Government stimulus has been the major reason behind this rally according to the Economist and that it cannot continue keeping the bubble valuations where they are for ever. I personally started shorting the markets in my retirement earlier last week and will continue to add to my shorts if the rally continues. The valuations are rediciulous by more than 50% in my opinion. The Economist seems to agree in an optimistic tone saying they are overvalued by 50%. Enjoy the upcoming crash.

The Steel Stock Bubble

Steel stocks such as Cleveland Natural Resources (CLF), US Steel (X), AK Steel (AKS), Reliance Steel and Aluminum (RS), Steel Dynamics (STLD) to count a few are all rallying with the steel stock upgrade by JPMorgan and idiotic speculation about an economic recovery increasing demand fro steel. Part of it is, also, an increased demand for hard assets and companies that are rich with hard assets. As much as being a big proponent of the hard asset theory, from a valuation standpoint the prices of these stocks makes no sense especially with where the economy stands and will stand over the next few years. I am personally starting to build short positions in some of these stocks. Given how moronic most investors of these stocks are as we have witnessed in the crash in the last couple years in the prices of these stocks, I am starting with small short positions. Part of it is, also, hedge funds such as Harbinger build positions in these stocks (Harbinger did this during the last crash of these stocks and mostly in CLF) and then try to support and push the prices of these stocks up as long as they can until it all crashes on them and they almost go bust as did Harbinger during the crash. The same thing will happen, but we do not want to stand in the way of the train if these people can keep the bubble up. My bet is they cannot keep it for more than a few more months, but who knows. If the price keeps going up, I will continue building bigger positions in these stocks because I have high conviction the economic reality will catch up with the markets eventually. I am making my plans assuming this can last close to two years, which most likely will not happen. One of the ways I am putting my shorts on is using my usual put option strategy of buying out of the money puts a few months out and continuing to add to these or roll them according to market action.

Unemployment is Horrendous and Yet Markets Still Not Going Down

History repeats itself. Market is manipulated and complacency abounds. People still do not seem to understand that there is no jobless recovery, nor even a slow down in the increase in unemployment. Also, the real unemployment rate is nowhere near the low 10% number that is being told to the public, but rather a grizly 17%+. The latest report today, Jan 8, showed 85k more job losses. The real number is even higher considering this number is calculated from a survey of a selected group and given all the other little games we have witnessed from the economic data from the Labor Department there is no way that group was selected randomly.

This just points that the economy is horrendous, there was no recovery whatsoever, and the economy will continue getting much worse. What does this say about the stock markets? They will eventually crash given that fundamentals eventually win over any manipulation or complacent stupidity.

GS vs Meredith Whitney: How Shameless GS is and How They are Saying They Do Not Care About Laws

Meredith Whitney lowered her estimates on Goldman Sachs, which is still bankrupt despite all the money it was illegally given by Bernanke and Geithner. SO what did GS market manipulators do to their own stock to stick it to Meredith Whitney? They rose the stock 6.5% on no real news that could make the stock go up that much in a very obvious manipulation of the stock just to show that they "are doing god's work" and they do not care about anyone or laws. They are basically shamelessly saying that they are unstoppable thanks to an illegal Federal Reserve and crooked treasury secretary that is in their pocket along with a bunch of other politicians including "Mr. Change - Yeah Right!!!". How is this allowed and nobody does anything in a democratic country that pretends to be the defender of democracy on earth (we are not even going to go into detail about how it supports undemocratic activities through other undemocratic activities of its own pushed by corrupt power hungry psychotic politicians and evil corporations that want profits at any cost to human life or preservation of nature) is beyond me. America was formed by great people. It is time these people wake up and get rid of all these unlawless bastards. It would be a shame to lose the greatness of this country to a bunch of crooked lawless arrogant bastards.

Shorting SHLD - Sears Holding

Eddie Lampert is a smart guy for sure, but like many finance people I am sure his ego is as high as the Burj Dubai. His biggest holding that he uses as a bank is trading at lofty 59-60 times 2010 "expected" earnings. We surely know that "expectations" will not happen. The market expected $77 for 2009 and we came in with a whopping $56. Similarly the market expects $76 for 2010 and that, too, will not happen. Lampert is known to have shorted his competitors stock in the past through Sears to hedge Sears' finances. Which can be brilliant and shows a complete lack of a good management at a major retail company. With that kind of volatility, this company surely deserves a much lower P/E ratio. On top of personal negatives like that, we have the whole retail bubble issue. Consumer is dead and hence is retail. There are so many shortable stocks in this whole area and Sears is surely one of them at close to the highs before the crash down to where it belonged around March of 2009.

David Rosenberg on How The Stock Market Became a LAGGING INDICATOR

Here is a great excerpt from David Rosenberg's comments:

No doubt that the global economy appears to be on a firm footing, but much of this has reflected dramatic fiscal stimulus, overbuilding and credit extension in China. Only the future knows how sustainable this is.

We do know that just about all the growth in the U.S.A. in Q4 is coming from inventory restocking; and that every basis point of growth in Q3 came from government stimulus, directly and indirectly. The same stock market that couldn’t see a recession coming in late 2007 even though it was two months away, doesn’t see how low-quality this “recovery” is since there is nothing organic about it. The market is relying continuously on government support, so much so that nearly 20% — by far a record — of U.S. personal income is now coming from Uncle Sam’s generosity in the form of transfers. This deserves a lower-than-normal price-earnings multiple, but it may take time for Mr. Market to figure this out, just as it took several quarters for it to see the effects of a housing recession and credit collapse two years ago. The stock market, in other words, has managed to become a classic lagging indicator.

Here is the link for the full article.

Federal Reserve Stock-Market Manipulation Yet Another Cause for Full Public Audit and Abolishment of Fed

Here is a great article from Zerohedge Blog on explaining some of the weird movement up in the market that I always talk about as I did yesterday pointing out that the 1.6% first day of year rally was complete BS. They point to how the "market recovery" of the last few months is completely manufactured and is a result of smoke and mirrors and continues to be supported in the same manner at its lofty levels. You should start shorting this market slowly. They could keep this up for a while, but a lot of people are waking up to all the illegal crap that goes on at this institution and some other private ones such as Goldman Sachs and it is only a matter of time until they will have to stop. I would start building a short portfolio slowly. Start with at least a 5% of your portfolio right now and keep adding according to economic data and market action. By market data I mean the real data and not crap that we are told that is completely wrong reported by the same corrupt people.

Volcker and Gold Suppression by The Federal Reserve

Here is an excerpt from Paul Volcker's memoirs -of course only published in Japan and no US media- on events of February 12, 1973:

"That day the U.S. announced that the dollar would be devalued by 10 percent. By switching the yen to a floating exchange rate, the Japanese currency appreciated, and a sufficient realignment in exchange rates was realized. Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake."

The full report can be found on GATA's website. They are doing a great job.

Auto Sales and Housing Numbers

These two numbers that came out earlier today were again terrible numbers reminding us of how bad the real underlying economy is. Cash for clunkers and new homebuyers tax refund have done a little bit to hide how bad the real economy was. Well, not really, but part of it. A lot of the housing data is also filled with foreclosures and people flipping these foreclosed homes, so there is still a bit of double counting. You can imagine the real number is much worse, which only makes sense considering how real estate is so much more affordable and both relatively and nominally cheap elsewhere in the world. When you look at a place like New York City you easily realize longer term there is only one place to go for a lot of overvalued US based real estate: DOWN. That in turn will take down the US stock market bubble along with its international counterparts. Some obviously will go down less than others, so it makes to make pairs trades. For the longer term that trade is long international and emerging markets as well as Africa and shorting the US markets along with its Japanese counterparts.

New Year Pretend Rally

The first trading of 2010 saw markets go up by about 1.6% on no real news. The nature of the rally was even more questionable with low volume and a forced futures led move up. This is very similar to the rally that people saw and were not able to explain during the "recovery" months from the market bottom and which led Senator Bunning ask Ben Bernanke about in his questioning. If today's rally happened for a real reason such as takeover news, markets would have gapped to highs at the open instead of starting at lows and then being forced up. In a similar fashion the move up did not coincide with any major news, which again points to the fact that this rally looks more and more manufactured. The main reason for this would be to give the impression that now that last year is over people are not just going to just dump everything or short the bubble. This market is rallying on manipulation, pretences, false optimism, and lies. Surely, they can continue to raise the market a little more, but at these hefty levels, your risk reward does not justify to be long equities. I would recommend you get out of at least most of your equity holdings before the unavoidable crash comes.

Palladium Continues To Shine

Palladium, platinum's undervalued cousin, continues its run to above $400. There is roughly 10-14 thousand metric tones of palladium ever mined compared to 8-12 thousand for platinum and 150-160 thousand for gold. The demand picture of both platinum and palladium is of course very different than that of gold which has been the main monetary metal along with silver for thousands of years. Platinum and palladium, which have existed in ancient South American civilizations, have been discovered in the early 1800s. They were not been valued that much in the earlier days. They have been used to make "silverware". Later on they were used in medical devices which is one of the major uses still. Most people know them in the context of their use in car catalytic converters to clean up exhaust fumes and reduce emissions. This has been and is what most investors have been concentrating on and for a good reason considering all the legal and political changes that have been going on due to global warming talks. Jewelry is an increasingly important demand factor as well. However, the main demand recently is the fact that the USD and paper money as well as paper assets are going down in value and will go down a lot more. We might even see the end of paper money in the next decade or two at the latest at least in terms of acceptability as an investment or store of value as the whole world is about to experience the Weimar Republic. These very rare precious metals are both great investments as more and more investment demand comes into the market. Given their similar rarity and very similar looks and chemical properties, I would recommend palladium over platinum. Of course palladium will be the more volatile metal, so this is not for the faint of heart and is a long term investment due to the volatility.

One major surprise demand that many people have not paid any attention to will come from alternative energy. These metals are an integral part of fuel cells and any other type of catalytic use, so as these technologies improve and become more liable the demand for these metals will skyrocket. Like always, I recommend you get your hands on a whole bunch of physical metal and not paper receipts that could easily become worthless as the gold scam of the US Federal Reserve and Comex comes to daylight. I repeat: Physical metals is the way to go.