By The Mogambo Guru

03/14/11 Tampa, Florida – Charts from contraryinvestor.com show that, as of right now, there is going to be almost $1.8 trillion in US Treasury debt maturing this year, and all of it will need to be “rolled over” by issuing new debt.

Perhaps it is also instructive that they also note that “Just shy of 50% of UST debt ‘rolls’ within three years.”

What this means, in practical terms, of course, is that We’re Freaking Doomed (WFD). “Why?” you ask. “Because,” I helpfully explain, “rising rates of inflation mean higher rates of interest that borrowers, especially deadbeat bankrupted governments, must pay when they try to rollover such massive amounts of debt!”

And what were interest rates three years ago when half of all Treasury debt, now rolling over, was first issued? I don’t know exactly, but the graph of “US Treasury Bond Interest Rate History” at observationsandnotes.blogspot.com shows that interest rates were higher in 2008, and lower now in the range economists call “squat,” meaning that rates have nowhere to go but up.

Well, perhaps you would be interested to know that the interest rate on these bonds is lower than at any time since the ’50s, and is just inches away from the all-time, record-low of 2% set in 1940.

Or perhaps you would be staggered, clutching your heart and screaming, “Nooooooo!” when you learn that the average interest rate over the years was somewhere just under 6% ever since the low of 2% set in 1940, which means that interest rates would have to double – double! – from here just to get back to the average interest rate paid on bonds since 1971!

And why was 1971 the big inflection point where interest rates went nuts? Because that was when volatility in interest rates really started Going Freaking Nuts (GFN) because, not by coincidence, Nixon severed the last threads of connection between the dollar and gold.

And there is a personal reason, too for picking that date. Before 1971, I was a fresh-faced kid, his whole bright future ahead of him, but who decided to make one idiotic, disastrous decision after another until I ended up here, decades later, a bitter little man wearing a bullet-proof vest and a tinfoil hat, hiding in the closet under the stairs and typing out hate-mail to the Federal Reserve (“Dear Federal Reserve morons, I hate you! Signed, Hateful in Florida”) and the Congress (“Dear Congress morons, I hate you! Signed, Hateful in Florida”).

And even before that, back to 1900, interest rates were low, and swings in interest rates were much more muted, too, because the dollar was mostly on the gold standard, which are two of the beauties of the gold standard, as we are seeing by just standing up and going over and looking out at a world on the verge of panic and ruination thanks to the Federal Reserve creating So Freaking Much Money (SFMM) for So Freaking Long (SFL).

And when the people of the world do panic, they will run to gold and silver, and their prices will soar, making this investing stuff so easy that you just gotta say, with every bit of earnestness you can muster, “Whee!”

The Mogambo Guru
for The Daily Reckoning

Read more: US Treasury Bond Interest Rates: Nowhere to Go But Up http://dailyreckoning.com/us-treasury-bond-interest-rates-nowhere-to-go-but-up/#ixzz1GncfoU5A

That being said, I will add on this breakout. I’ve previously noted that in bull markets double, triple, and quadruple tops are useless technical indicators. In fact, multiple failures to breach resistance increase the likelihood of an eventual break out. I will probably close out on a failed breakout somewhere between $1400 and $1420.  These moves are meant to crush those without discipline: don’t make the mistake of going on leverage without stops. The profits will take care of themselves without leverage.

We are nearing the period last year that ushered in a rally that totally caught people by surprise. If you recall, a steep correction in February resulted in heavy losses for gold investors. Sentiment was near Fall 2008 levels and people were talking about another 80% crash in gold stocks. I stated at the time that it was not very likely for us to see another forced selling event of that magnitude. That was a once-in-a-generation type panic sell-off that you just had to recognize at the time.

Let’s get this out of the way- the S&P is not going to 100. In the severe stagflation of the 1970′s, stocks also collapsed in a very short period of time. After a monster rally, stocks fell once again but still remained at least 25% above their 1974 lows. In a pure fiat system, you are not going to see Depression-style double crashes as long as the government is determined to print. So many companies that should have gone to $0 have regained some semblance of profitability due to massive taxpayer bailouts. Of course our public balance sheet is now one huge mess, but this is separate from the stock market–for now.

QE3?

The long-term effects of taking on so much private debt onto our balance sheet will be frightful. In the near-term, a halt to the Fed’s program of quantitative easing would be bearish for stocks. I think the chances of the program being suspended permanently are very small. QE may be suspended for 6 months or so, but not permanently- the repercussions will be too large. This is something Bill Gross suggests in his latest piece.

The chart below from PIMCO shows how the composition of debt purchases has changed dramatically. The Fed is now the primary buyer of Treasuries. Has anyone in government asked who will buy our debt when QE2 ends? Has anyone asked what the effects will be on the economy if short and long rates rose substantially? This is the elephant in the room until June. Where do you want to be hiding before then? Would you rather be in U.S. Treasuries, the dollar, or gold?

2011 is lining up to be a very important year. We should be seeing the demise of municipalities and more civil unrest. People will realize that quantitative easing is a never ending story and they will react accordingly. The situation in states is not improving. The situation at the Federal level is not improving. Pension and Medicare liabilities are rising. Where does this all end? How does gold not rocket launch when people wake up from their self-imposed slumber? There is not much time left; as always, gold will be your leading indicator.

Source: Gold and the End of QE2

Currently, stocks are performing well as are commodities led by energy. As a result, some investors feel they won’t need to invest in Gold if the “conventional” options are performing well. I expect this to continue in the early part of Q1 in 2011. This is partly why the precious metals complex is consolidating or correcting.

Interestingly, stocks and commodities have continued higher and higher making new recovery highs. Precious metals on the other hand, diverged and experienced a routine but significant correction. Gold has underperformed for months. We believe this is a healthy divergence which could be the very beginning of something important.

Bears and deflationists like to champion the “all one market” theory. While this can be true from time to time, it is incorrect in the larger picture. First of all, since 2000 stocks are in the red while Precious Metals (2nd row in chart) and Commodities (bottom row) are significantly higher. Moreover, check the performance during each bear market in stocks. Precious Metals gained during both bear markets!

Thus far, stocks are actually following our forecast. We are looking for sizeable gains but a peak in April/May. Higher interest rates and inflationary pressures will cause a mild bear market similar to what we experienced in the late 1970s and from 1910-1914.

We’ve written often about the implications of higher interest rates. A highly indebted nation that is already monetizing debt can ill afford higher rates. That produces higher costs of servicing old debts and higher costs of financing new debt (deficits).

The chart below shows the 30-year Treasury Bond. The market is breaking down and is likely to test support at 115. The good news is that the bullish consensus was recently 20%, which means there are too many bears and bonds should bounce. However, the market is now below the long-term moving averages and dangerously close to breaking to multi-year lows sometime in 2011.

A breakdown in Treasuries means higher interest rates across the entire spectrum. This means higher borrowing costs for homebuyers, homeowners, corporations and Uncle Sam. Increased monetization from the Federal Reserve will put upward pressure on input costs for most corporations. As a result will we see a mild bear market in stocks with continued inflationary pressures. The factors that will cause the new bear market in stocks and bonds, are the same factors which will drive an acceleration in Precious Metals.

With stocks and bonds in a bear market, your friendly neighborhood investment professional and his ilk will have nowhere to turn but to Precious Metals and hard assets. You see, until what will be a few months in the future, there were other options (aside from Precious Metals). Treasuries performed well from 2000-2003 and from 2007-2008. Stocks performed well from 2003-2007 and from 2009-2010. This is why even 11 years into a bull market, the global allocation to Gold is only 1%.

Fear not fellow gold bug! Our time is coming. Three to six months from now, bonds and stocks will be in a simultaneous bear market for the first time since the late 1970s. Yet, this time around the fundamentals for Precious Metals are even more powerful and sustainable. Even those who trumpet the “stocks are an inflation hedge” argument will be forced to chase performance in the coming bubble and mania in precious metals.

In the meantime, speculators and investors are best advised to do their due diligence in order to uncover the value and growth plays in the junior mining sector which may explode in the coming years. We certainly are for our subscribers.

Good Luck!

Jordan Roy-Byrne, CMT
Jordan@TheDailyGold.com
Subscription Service

Government finances have reached a point where default and/or bankruptcy is unavoidable. After all, we’ve already started to monetize the debt. The inflection point is when total debt reaches a point where the interest on the debt accumulates in an exponential fashion, engulfing the government’s budget. When this occurs at a time when the economy is already weak and running deficits, there essentially is no way out.

Significant runaway inflation and currency depreciation result from a government that essentially can no longer fund itself. It starts when the market sees the problem and moves rates higher. The government then has to monetize its debts to prevent interest rates from rising. Let me explain where we are and why severe inflation is unavoidable and likely coming in the next two to three years.

In FY2010, the government paid $414 Billion in interest expenses which equates to 17% of revenue. When you account for the $14 Trillion in total debt, that works out to be 2.96% in interest. In FY2007, total debt was $8.95 Trillion, but the interest expense was $430 Billion and 17% of revenue. That accounts for an interest rate of 4.80%. Luckily, rates have stayed low for the past two years.

However, in the next 24 months the situation could grow dire. At least $2 Trillion will be added to the national debt. At an interest rate of only 4.0%, the interest expense would be $600 Billion. Even if we assume 7% growth in tax revenue, the interest expense would total 22% of tax revenue . An interest rate of 4.5% would equate to 26% of the budget.

As far as what level of interest expense is the threshold for pain, Russ Winter writes:

Once interest payments take 30% of tax revenues, a country has an out of control debt trap issue. When you think clearly about it, this just makes sense, as the ability to dodge, weave and defer is pretty much removed, as is the logic that it will be repaid in a low-risk manner. The world is going to be a different place when the US is perceived to be in a debt trap.

Is there anyway out of this? Either the economy needs to start growing very fast or interest rates need to stay below 3% until the economy can recover. Clearly, neither is likely. As you can tell from the calculations, interest rates are now the most important variable. If rates stay above 4% or 4.5% for an extended period of time, then there is no turning back.

Judging from the chart below, the secular decline in interest rates is likely over. It is hard to argue with a double bottom, one of the most reliable reversal patterns.

In 2011 and 2012, the Fed will have two new problems on its hands. First, the Federal Reserve will be fighting a new bear market in bonds. They will be fighting the trend. They didn’t have that problem in 2008-2010. Furthermore, the interest on the debt will exceed 20% of revenue, so the Fed will have to monetize more as it is. Ironically, the greater monetization will only put more upward pressure on interest rates, the very thing Captain Ben and company will be fighting against.

As you can see, there is really no way out of this mess, which also includes the states, Europe and Japan. This is why Gold and Silver are acting stronger than at any other point in this bull market. They’ve performed great when rates were low but are likely to perform even better when rates start to rise. This is why we implore you to at least consider Gold and Silver. We’ve created a service that offers professional guidance so that traders and investors can protect themselves and profit from this amazing bull market. Consider a free 14-day trial to our service.

Good Luck!

Jordan Roy-Byrne, CMT
Jordan@TheDailyGold.com

Long term treasuries are unable to find support at the 50 day moving average.  I highlighted a few weeks ago that treasuries appear to be making a top as the Chinese cut back on U.S. debt. The massive efforts from Washington to prevent a double dip appear to be putting a respite in the decline in equity markets.  It also appears that  The Fed will continue to easy monetarily during this crisis as they meet tomorrow and is expected to accommodate further.  The Fed has already stated that they will keep interest rates low well into 2011.  This is very bullish for silver and gold.

Efforts to deflate the currency have succeeded and now the dollar is challenging new lows and breaking through support.  Treasuries have corrected considerably along with the dollar.  Although the policy makers in Washington have revived the equity markets, the long term effect on the dollar and long term debt will be detrimental.  The markets are at resistance now and are very overbought.  I would consider being careful on this rally as a deteriorating currency and high unemployment will put pressure on the consumer.

The precious metals long term uptrend is in fact the best place to be during this ongoing debt crisis.  Now there is a massive flow to silver and gold.  I would not go chasing it now with the masses.  There will always be corrections and sales on gold and silver in a bull market as I highlighted to my readers four weeks ago right before the rally. Silver is especially overextended and could have a  healthy pullback.  There will be sales in the future as profit taking is imminent as it is overextended over its 50 and 200 day moving averages.  Subscribe to my free newsletter for trading signals and strategies at http://goldstocktrades.com.

It appears that the strategies from the central bank are now reflating the economy as gold, silver and base metals have reached new highs, while the dollar and U.S. treasuries are correcting considerably.   I believe the trend of sovereign debt defaults will continue and central banks raising their positions in precious metals.  This is the beginning of a major rush into gold and silver

We are currently seeing a huge transfer of capital into gold, silver and mining stocks.    I believe the best way to invest in emerging markets is to buy gold, silver and base metals that these countries are now importing rather than exporting.  I also see the possibility of the equity market, dollar and treasuries decoupling from silver and gold as they have made extremely upside breakouts since our bullish call on precious metals at the end of July. It has made an explosive move and is extended way above support and moving averages so a pullback is inevitable.  I am a long term silver bull but at this point would wait for a healthy pullback and secondary buypoints will be alerted to my readers first at http://goldstocktrades.com.

Graceland Updates 4am-7am

www.gracelandupdates.com

Email: s2p3t4@sympatico.ca

1.   Welcome to the Big Leagues.  I keep telling the gold community that the Chinese people and Chinese corporations should not be confused with the Chinese Gman scumbag.

2.   Stratfor, one of the most respected information services in the world, announced that the head of the Chinese central bank might be missing, and now it’s hitting the mainstream media, although the spin machines are in power mode downplaying the situation.  Imagine Ben Bernanke running away!  That’s the magnitude of the situation!  I told you, repeatedly, that the Chinese central bank/Gman had massive losses on their US dollar and bond positions they bought in a crazed price chase, from the banksters.  Almost nobody listened.  Instead, they told me what a master investor the Chinese Gman was, while I called him a bustout. Let’s repeat the issue today, in a different way:

3.   Knock, knock.  Anybody home?

4.   The horrific bottom line is that it appears that bank chiefZhou Xiaochua lost “only” $400 billion.  Why would he buy bonds (in US dollars!) in that kind of size, after 30 years of a bond bull market, and at the end of the US dollar bull market? Sadly, I suspect only his personal tooth fairy knows the answer.

5.   $400 billion of Chinese taxpayer money burned up in flames.     If I was in Zhou’s place, I’d try to run away too.  So much for him “dictating” to Helicopter Ben.  Speaking of helicopters, I wouldn’t be surprised if the banksters offered Chief Zhou a ride in the Bre-X company helicopter, for his “getaway”, if you know what I’m saying…

6.   I also told you, again repeatedly, that the Chinese US bond position was about as worrisome as a fly to Ben Bernanke,   when compared to the abyss of hundreds of trillions of dollars of worthless OTC derivatives garbage.  Now you see the reality.  The Chinese bond blowout, in terms of hilarious stupidity, is topped only by the Chinese Central bank’s microscopic gold position.  “After five thousand years, we’ve managed to accumulate one, maybe two, maybe even three  thousand tonnes of gold.  Honestly, we’re pro-gold for our people, we promise!” The Chinese banksters have zero intention of putting any serious gold holdings in the hands of the people, unless it is at sky high prices.

7.   The global banksters, including the Chinese banksters, who are 100% in on the game, use gold to control the paper money system. There is no intention to replacepaper money.  The game is to dilute the common person and lock debt levels.  There is no strategy to end debt.  Why would the banksters want to end debt just as rates are set to soar, set to make the average person almost a financial slave?  The banksters are slobbering for the end of the bond bull market.  “My golf ball advisor told me there wouldn’t be any more bear markets in bonds.  It’s a new growth with safety era, he read directly from the company’s research report and that’s what it says, and he’s highly respected.  I’m putting my stock market carcass into growth with safety.  I can’t take another hit with anything risky.  I made 15% last year in bonds, and my dog promised me that will continue forever.  My golf ball advisor has me fully diversified in 35 growth with safety investments.  I’m very happy with my new safe strategy” – Elmer Fudd, Master Price Chaser, Aug 31, 2010.

8.    Prediction: The US dollar will blow out the lows and send Public Investors (who I term, “Elmer Fudd”) into a terror that will rival the terrors of 1929, as the news headlines (operated by the banksters) scream, perhaps by the hour, “The End of Paper Money?!”.  It will be at that point of terror that the banksters begin a massive accumulation of US dollar paper money, while Fudd hits the bread lines with no job, his “growth with safety” bond and paper money cash scheme in a bonfire.  He and his price-chased pipedreams will be 100% broken, mentally and financially, by the banksters.  How totally horrible.

9.   At that point the world would not look good.  Professional money managers would be buying the stock market out of fear, not optimism.  The stock market will soar, but Fudd won’t be a player, not for another 50 years.  The news headlines will talk openly of real hyperinflation.  The double dip will have turned into a vertical nose dive for the common person.  Commodity prices, except home prices, will be in the stratosphere, and gold juniors will be “beyond stratospheric”.  While the t-bond might not have collapsed (unlikely that it doesn’t), the junk bond markets (Fudd’s growth with safety clownshow) are likely to be inArmageddon Mode.

10.           All of that is without even mentioning the horrific geopolitical situation developing in, and enveloping Iran, Turkey, Lebanon, and Israel.

11.           You will soon witness a transition of “lead man” in this crisis from Ben Bernanke to Mr. Tim Geithner, head of the US Treasury, for the gold revaluation stage.  QE will be kept alive as a tool, as low rates are kept alive as a tool now, but gold revaluation will take the big stage.  Remember, if Helicopter Ben devalues the dollar without the Treasury’s permission, he heads to the clink.  It is the US Treasury that has sole power to devalue the dollar against gold.  Sole power to devalue most of the world,while the banksters screech with laughter.

12.           Silver.  A firestorm of “Silver Breakout, Buy!” calls occurred as silver rose above the supply line of the symmetrical triangle.  I sell all upside breakouts.  There were “only” several dozen opportunities to buy silver a full dollar lower than the breakout point.  Few did.  Now, as we approach the Jobs Report, aka The Bankster Games Report, all the price chasers are on board with their overleveraged futures contracts, ready for the silver moon shot.  There must be a very large number of stoploss (takeloss) orders in the silver market now, and the bankster hunter-killer algo robots will be in full seek and destroy mode, looking to take those long silver positions for themselves.

13.           If silver gets hit here, will you be a buyer, or part of the takeloss inferno?  Here’s the chart. Silver Chart. I am the very first to say the triangle looks excellent.  The better the look and the larger the size of a chart pattern, the more reliable it is, and the more the banksters are going to want to hog all the profits from the move for themselves.

14.           Let me be crystal clear on my position that Gold is the world’s most powerful financial market.  Silver and Gold Stocks, particularly Gold Juniors, are preparing toconfirm gold’s move to new highs.  I would be concerned about gold if silver went to new highs but gold didn’t.  The reverse is the case here.  While gold is the world’s most powerful financial entity, it functions as a control mechanism, and only asserts its power when push comes to shove.  No asset, except perhaps arguably food, can defeat gold in a market death fight, but most of the time there is no death fight, even now.  In a death fight, gold goes to infinity against paper money and paper money goes off the board.  End of Story.

15.           The silver triangle is part of a much larger head and shoulders bull continuation pattern.  Here it is, with the Kitco chart providing the best illustration of what is going on:

Silver H&S Bull Continuation Pattern. Notice how I’ve drawn the neckline.  The neckline in the head and shoulders is not started from the high at 21, but from the rally high after the decline from 21.  Head & Shoulders bull continuation patterns are not understood by most investors, with many actually believing they are top patterns.

16.           When gold formed its own H&S bull continuation pattern, I got a plethora of emails from readers who got their technical analysis education from every book except the Edwards and Magee “bible”, informing me that gold was topping because a head and shoulders top was in place.  The top callers were destroyed (They lost, & I won for you).  A head and shoulders pattern can be a reversal or a continuation pattern.  Reading the cover page of Edwards and Magee doesn’t make you a head and shoulders master, unfortunately.  You actually have to read the book, numerous times.

17.           In regards to the stock market, paid subscriber Ironman points out the latest Hulbert numbers showCorporate Insiders are more bullish on the stock market than at any point since the March 2009 wipe out lows, the point where Elmer Fudd Public Investor accelerated his great “growth with safety” expedition in the bond markets, that he started in Oct 2008.  Here’s the daily chart for the Dow.   Dow Daily Chart.

18.           The insiders are on the buy, yes.  The technicals are becoming oversold, yes.  Elmer Fudd Public Investor wants nothing to do with the stock market, check.  Still, September is stock market hurricane season, so you want to keep in mind that while the Dow “looks good”, we could easily drop a thousand points lower and the insiders would likely be joined by the banksters on the buy side while the funds freaked out and liquidated.

19.           It’s important that you see the Dow as a ten dollar stock.  Not a ten thousand point monstrosity, a 10,000 foot cliff with you teetering over the edge with your only support being a stoploss on a pile of SP500 overleveraged futures contracts. View each thousand point increment like a dollar move on a 10 dollar stock.  You buy a little at $10, and if it falls to $9, do you freak out and run to mommy?  No.  If you are using my Pgen, your buys are kicking in while you are in yawn mode, just as a veritable machine gun firing of profit booking kicked in from 9000 to 11,500.  Relax, that’s all the Dow is, a little ten dollar stock.  Take control, with precise allocation of risk capital, not pot shots with your granny’s life savings.

20.           Here’s a much bigger picture look at the situation, via the Dow Monthly Chart. You can see that in the big scheme of things, it’s just a ten dollar asset, and whether we bottom here, or drop thousands of points, it doesn’t matter, provided you are not trying to take on the bankster aircraft carriers with an overleveraged popgun.  There’s a zillion products available to play the Dow in small increments, including allocating 30% of your risk capital to a shorting component.  Trade smaller than you know is rational, and you’ll start booking wins, while your competitors book themselves a spot on the bread line.

21.           What about gold?  My partner “GoldArtist”, who trades like Jim Sinclair’s father, with no charts, just an understanding of people and a sort of 6^th sense about the market, notes that the short covering move up to the 1230 area happened very fast, and his “sensing” is the banksters want gold higher before their next hit.  He’s called for 1240-1250 from the 1160 area, and that’s where we are now.

22.           Our sell orders in the 1240 area were hit, and there’s more up to $1250.  I’m happy whether gold rises $100 from here, or falls $100, and nobody in the gold community should have themselves positioned so they freak out if gold fell $100.  Quite the opposite.  You have to be prepared now, to buy when such a hit occurs.

23. Here’s the Gold Chart. Note carefully the 4,8,9 MACD series.  It’s starting to roll over, and has given a sell signal, and the 8,16, 9 series is on the verge of doing the same thing.  Whether that is voided, or it carries into the 12,26,9 series that is obsessed over by most technical traders, we can’t know.  “Don’t fall asleep at your gold wheel”, is the theme of this week.  Just because gold is quiet now, does not mean we end the week in yawn mode, not at all.  We had $110 of weakness that was bailed on by many in the gold and fund community, and now we’ve had $90 of strength, that has been bought by the same people.  Do NOT buy strength.  Booking profit is the story of any and all action you are taking, here and now, with your trading positions, while tightening the vice on your core positions.

24.           Here’s the GDX Chart. I’ve heard the talk, got the emails, on the supposed head and shoulders top.  There is no top on GDX.  There’s rectangular consolidation.  You could also draw it as an ascending triangle, but the demand line angle is so slight it’s a waste of time. The bottom line is that when price rises into either a rectangular consolidation or into an ascending triangle, you have about a 66% chance that your gold stocks breakupside. Juniors could go berzerko if we take out 55 on the GDX!  First, however, we need to make it thru the Bankster Games Report, aka the Jobs Report.  Use any hits the banksters unveil to add to core and trading positions, and use any “breakout” above the $55 area highs to book profit on trading positions, not to chase price and buy a core of toilet paper while the banksters sell.  We’re going higher, way higher.  The question is, are YOU going to be onboard for the ride?  If you chase price, the banksters will grind you up like hamburger.  Stay professional, lock your core down, and put on your Golden Space Helmet!

25.           Special Offer for Website Readers: Send me an Email to freereport4@bell.net and I’ll rush you my free Golden Popcorn report!  Watch my top five juniors priced under 50 cents being readied for takeover and upside explosion!  Note that in my last free report, one of my computers crashed and some of your emails were lost.  Sorry about that.  Please resend your email and I’ll get it out to you if I missed you.  Thanks!

Thanks,

Cheers,

St

Thank-you

Stewart Thomson

Graceland Updates

Graceland Updates.

www.gracelandupdates.com

Email: s2p3t4@sympatico.ca

Risks, Disclaimers, Legal
Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualifed investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is: 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:

Are You Prepared?

A move past the 2008 highs would be an important breakout. However, it is important to note that in both Silver and various large-cap gold stock indices, resistance actually dates back to 1980. For the gold stocks we are looking at a potential breakout from a 30-year base, while for Silver, we are looking at a potential breakout from a 29-year base.

Ladies and gentlemen we are looking at the inception of a historic move in precious metals and precious metals companies. Don’t believe me? Consider that at the end of 2009, 0.8% of global assets were in the precious metals complex. Folks, this was above 20% in 1981 and over 30% in the 1930s. Despite what you may read or hear, virtually no one owns precious metals, and those that do don’t own enough.

As you can see from the picture below, folks are rushing for safety in Treasury bonds.

Sad to say but most folks don’t get it. Those that continue to stick with crappy stocks and bonds that aren’t going anywhere deserve their own fate. Those that get involved in the precious metals will be wealthy when its all over.

Debt default is unavoidable. Inflation or deflation doesn’t matter. What matters is that the US, Europe and Japan CANNOT grow their way out of the debt mess. A new currency regime is unavoidable. The worse the economy gets, the faster we move towards sovereign default, bankruptcy, hyperinflation and a new currency. It has happened before numerous times and will happen again. Don’t be left behind. The train is getting ready to depart the station.

Consider a free 14-day trial, which entitles you to future updates as well as updates from our recent past.

Go here and read the Zero Hedge piece Chinese Treasury Dump Brings Holdings to 1 Year Low if you have not already seen it: http://www.biiwii.com/analysis

If England is allowing us to monetize our debt under some kind of covert agreement, it is probably not much different than the tools that the US would use to directly monetize its own debt, given the cozy relationship with our friends in the UK.

What is next, the seemingly way out there prospect of Congress directing individuals to hold these treasury instruments in their IRA’s? You hold an IRA, you are in bed with the government as they extend to you tax benefits in exchange for your compliance and adherence to convention.

A couple years ago we put an addition on our house. How’d we fund it? A loan? Ha ha ha… regular after tax brokerage savings? Are you kidding me, I worked hard for that ‘money’ and paid my taxes on it. It’s mine. No, I liquidated funds from the IRA’s and paid the penalty and taxes up front.

I have not contributed squat to the IRA’s since my financial awakening. After a financial adviser lost us 60% of our IRA’s in 2000/2001 and I yanked them away to learn portfolio management on the job, they are up about 240% – adjusted for withdrawals and what not. This is the NFTRH “Speculative” (as opposed to “capital preservation”) portfolio.

The main point is that I do not regard IRA’s as serious investment accounts (although they are mighty convenient vehicles up until liquidation) and have been on alert for years as to stirrings in Washington about policy that may target these massive repositories in waiting should the inflators become yet more desperate for treasury buyers. England is a lurch in that direction if what Zero Hedge speculates is at all near target.

Either way, this is inflationary. The confidence in the long bond is not what the chart says it is.

Source: http://biiwii.blogspot.com/