Black Swans on Final Approach

Gary Christenson - Deviant Investor

There are several potential disasters that could disrupt the financial and political status quo, much like what happened after an Archduke was shot 100 years ago.

Brutal Facts:  From Simon Black regarding the experiences of US Navy Pilot James Stockdale in captivity in the “Hanoi Hilton” in the late 1960s.

“Who didn’t make it out?” 

“Oh, that’s easy,” replied Stockdale.  “The optimists.”

“This is a very important lesson. You must never confuse faith that you will prevail in the end – which you can never afford to lose – with the discipline to confront the most brutal facts of your current reality, whatever they might be.”  (emphasis mine)

 

From David Stockman on Zerohedge:

“Our foreign policy is collapsing everywhere and yet the Washington war party keeps wanting to do more of the same.  This confrontation with Putin is utterly out of hand and unnecessary.  Now we have a trade war going that is going to ricochet through an already fragile European economy.”

“So those are the factors that will ultimately cause a major collapse.  It’s just a question of when the black swan comes flying in, or when the confidence in this whole central banking illusion finally breaks down in the markets.”

 

From Ron Paul on US sanctions on Russia:

“The US government’s decision to apply more sanctions on Russia is a grave mistake and will only escalate an already tense situation, ultimately harming the US economy itself.  While the effect of sanctions on the dollar may not be appreciated in the short term, in the long run these sanctions are just another step toward the dollar’s eventual demise as the world’s reserve currency.”

 

From Zerohedge and Steve Forbes’ new book on money:

“Unstable money is a little bit like carbon monoxide: it’s odorless and colorless.  Most people don’t realize the damage it’s doing until it’s very nearly too late.”

 

CONCLUSIONS:

  1. Skip the unfounded optimism, forget “hope and change,” ignore the media hype and face the brutal facts:
  2. The world is overwhelmed with debt; far more debt than can ever be repaid with current dollars, yen, euros or pounds.  The choices are massive inflation and/or default.
  3. The rumblings from the “drums of war” are reverberating across the globe.  War benefits bankers and military contractors so anticipating another large war is a reasonable expectation.
  4. Sanctions, trade wars, currency wars, and shooting wars are destructive to almost everyone.  Ask the French, Germans or English in 1919 what they thought about the First World War.  Ask the Ukrainians, Palestinians or Israelis of today how much they like the current war.
  5. The global economic system is heavily dependent upon confidence, especially confidence in the global reserve currency, the US dollar.  This utterly essential confidence in the dollar is weakening, particularly as confidence in foreign policy decisions and global hegemony is deteriorating.
  6. Unstable and devaluing money, exacerbated by too much debt, welfare and warfare, Quantitative Easing, leverage, derivatives, and weakening confidence will aggravate a long list of existing economic and political problems.
  7. Markets, elections, and the media are managed and manipulated to ensure the survival of the status quo, the treasury market, and the stock market.  But the S&P can be levitated only so long, and gold prices cannot be suppressed forever.  The reversal time for both is near.
  8. Gold shines in the face of unstable money, weakening confidence in the reserve currency, trade and currency wars, fear of another shooting war, crude oil supply disruptions, and destructive foreign policies.

Choices:

Door # 1                                             Door # 2

Gold                                or                 US dollar

Peace                             or                 War

Diplomacy                      or                 Fighting

Free trade                      or                 Sanctions

Assets                            or                 Debt

Stable money                 or                 Colored paper

 

There is still time to protect yourself from some of the dangerous consequences found behind door # 2.  Consider hard assets, gold, silver, and land.

More Valuable Reading:

Andy Hoffman:  The Ultimate End Game – World War III?

Bill Holter:  No Offer From Another Viewpoint

Deviant Investor: Gold Prices 1971 – 2014

Bo Polny:  $2,000 Gold in 2014

SRSrocco:  How the Global Financial System Will Collapse

Warner:      Today’s Parallels with 1914 are Very Worrying

 

GE Christenson

The Deviant Investor

 

 


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2 thoughts on “Black Swans on Final Approach

  1. Yes, I would prefer to have a standard for what our currency is worth, Yes, I am sure that the Keynesian economics of gvmt spending to prime the pump will eventually launch the black swans. Even Keynes himself never wanted to use big gvmt spending as a permanent fix to a deflationary collapse. It could take quite some time before the chickens come home to roost. However, in the mean time, I like to make money off the wonderful daily volatility of the leveraged gold mining ETFs, ticker symbols NUGT (the bull fund) and DUST (the bear fund). Each day I fire up Yahoo’s 5 day plot of these two ETFs. For technical indicators to plot, I plot MACD, Relative Strength, and Slow Stochastic Osc with the default parameters. Then, every now and then, during the day, I watch both ETFs and wait for the Relative Strength on one of them to get below 30, (below 20 is better yet) with a Stochastic that is simultaneously bottoming out, and an MACD that appears to be making a minimum. When I see this on either ETF, I’ll quickly buy about 100 sh of NUGT or 300 sh of DUST, as the case may be. Then, I watch for these three indicators to start going up and to peak out. When they appear to do so, I’ll sell. Often when NUGT peaks out, then it might be time sell it and then to look at buying DUST, or visa versa. Even with these small positions, I can usually make anywhere from $80 to $250 a round trip. I do two or three round trips a week. Sometimes, I do get whipsawed, but I make enough at other times to overcome a whipsaw and supplement my income nicely. Before you take the plunge, take the time to learn about these indicators and get some chart time under your belt. I must admit that I’ve been using these indicators for years. I have also used these indicators (especially MACD divergences vs price) to get me out of stocks at market tops, (I use 3 month plots for that) so that I can live again to play another day. Remember, this advice might be worth what you paid me for it.


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