Alternative Assets: The Coming Silver Short Squeeze!

Last year, total mine production of silver was 819 million ounces, but demand for silver was 1.1 billion ounces.

Therefore, there was a 262 million ounce shortfall in silver. Thus far, the shortage has been mostly met by using recycled silver and from government stockpiles. Even so, the shortage is there.

Looking At The Numbers

Recently published data points argued that recycled silver cannot continue to meet the gap between supply and demand. The supply of recycled silver dropped 24% last year, which is the largest decrease on record. Supply is also falling. Seven of the ten leading silver mines produced less silver in 2013 than in 2012. Production in the Silver State, Nevada, is down 70.4% over the past 16 years. The US Geological Survey reports that ore grades have collapsed 90%, which means that far more ore has to be mined in order to produce the same amount of silver. Exploration has also come to almost a complete halt due to higher financing costs, so there is little chance of new finds of sources of silver.

On the demand side, physical demand has increased 13%. Last year the U.S. Mint actually sold out of silver products, reports said. China’s use of silver for solar panels was less than 1 million in ounces in 2005, but in 2013 China used 35 million ounces just for solar panels. In 1999, the amount of silver used in solar panels in the United States was not even reported. By 2015, 100 million ounces of silver are projected for solar energy use.

Some 62% of silver is used for industrial applications, 21% for jewelry, and 12% for coins. Given these used, the data argues that “95% of all silver consumed is gone, never to enter the supply side again.”

Even so, “A real shortage in the physical markets is being completely ignored.”

The paper silver market, Comex, sells 100 ounces of paper silver for every single ounce of physical silver available. The Comex price has been depressed by shorts, which are near record highs. The shorts are not held by producers locking in prices. The shorts have been purchased by banks, the CFTC, US Treasury and the Federal Reserve. The shorts have, “Crushed the price of silver,” and mining shares.

Given the demand for silver, however, low prices cannot last forever. “The silver shorts will be squeezed because of the real physical shortage that is upon is,” the story argues. When that happens, the price of paper and physical silver will rise dramatically. Today investors have an opportunity to own silver at a price less than the cost to produce it. The upside potential for silver is tremendous due to the huge and growing gap between supply and demand.

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The Equity Management Academy recently reported that “Right now there is a severe shortage brewing in the silver markets that could easily double or triple your money in 2015.” Learn more here. 

The VC Price Momentum Indicator Weekly Futures Swing Trading Instructions August 15, 2014

 

Signals are automatically generated by integrating electronic weekly statistics with proprietary algorithms.

GOLD

WEEKLY MOVING AVERAGES

The December gold futures contract closed at 1306. The market closing above the 50 day MA (1297) is confirmation that the weekly trend momentum is bullish. A close below the 50 day MA would negate the weekly bullish short-term trend to neutral.

WEEKLY MOMENTUM INDICATOR

With the market closing above the VC Weekly Price Momentum Indicator of 1307, it confirms that the price momentum is bullish. A close below the VC Weekly, it would negate the bullish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 1292 – 1287  levels and go long on a weekly reversal stop. If long, use the 1287 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1321 – 1336 levels during the week.

SILVER

WEEKLY MOVING AVERAGES

The September silver futures contract closed at 19.61. The market closing below the 50 day MA (20.64) is confirmation that the weekly trend momentum is bearish. A close above the 50 day MA would negate the weekly bearish short-term trend to neutral.

WEEKLY MOMENTUM INDICATOR

With the market closing below the VC Weekly Price Momentum Indicator of 19.80, it confirms that the price momentum is bearish. A close above the VC Weekly, it would negate the bearish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 19.38 – 19.15  levels and go long on a weekly reversal stop. If long, use the 19.15 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 20.03 – 20.45 levels during the week.

RUSSELL 2000

WEEKLY MOVING AVERAGES

The contract closed at 1.142. The market closing above the 50 day MA (1.135) is confirmation that the trend momentum is bullish. A close below the 50 MA would negate the weekly bullish short-term trend to neutral.

WEEKLY MOMENTUM PRICE INDICATOR

With the market closing above The VC Weekly Price Momentum Indicator of 1.141 it confirms that the price momentum is bullish.  A close below the VC Weekly, it would negate the bullish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 1.130 – 1.118  levels and go long on a weekly reversal stop. If long, use the 1.118 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1.153 – 1.164 levels during the week.

UCO

WEEKLY MOVING AVERAGES

The contract closed at 32.52. The market closing below the 50 day MA (34.12) is confirmation that the trend momentum is bearish. A close above the 50 MA would negate the weekly bearish short-term trend to neutral.

WEEKLY MOMENTUM PRICE INDICATOR

With the market closing below The VC Weekly Price Momentum Indicator of 32.96 it confirms that the price momentum is bearish.  A close above the VC Weekly, it would negate the bearish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 31.40 – 30.27 levels and go long on a weekly reversal stop. If long, use the 30.27 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 34.09 – 35.65 levels during the week.

The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts.

TRADING DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

 

The VC Price Momentum Indicator Weekly Futures Swing Trading Instructions August 8, 2014

Signals are automatically generated by integrating electronic weekly statistics with proprietary algorithms.

 

GOLD

WEEKLY MOVING AVERAGES

The December gold futures contract at 1311. The market closing above the 50 day MA (1299) is confirmation that the weekly trend momentum is bullish. A close below the 50 day MA would negate the weekly bullish short-term trend to neutral.

WEEKLY MOMENTUM INDICATOR

With the market closing above the VC Weekly Price Momentum Indicator of 1306, it confirms that the price momentum is bullish. A close below the VC Weekly, it would negate the bullish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 1288 – 1265  levels and go long on a weekly reversal stop. If long, use the 1265 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1310 – 1327 levels during the week.

SILVER

WEEKLY MOVING AVERAGES

The December Silver futures contract closed at 19.98. The market closing below the 50 day MA (20.72) is confirmation that the weekly trend momentum is bearish. A close above the 50 day MA would negate the weekly bearish short-term trend to neutral.

WEEKLY MOMENTUM INDICATOR

With the market closing below the VC Weekly Price Momentum Indicator of 20.12, it confirms that the price momentum is bearish. A close above the VC Weekly, it would negate the bearish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 19.69 – 19.40 levels and go long on a weekly reversal stop. If long, use the 19.40 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 20.40 – 20.81 levels during the week.

RUSSELL 2000

WEEKLY MOVING AVERAGES

The contract closed at 1.131. The market closing below the 50 day MA (1.132) is confirmation that the trend momentum is bearish. A close above the 50 MA would negate the weekly bearish short-term trend to neutral.

WEEKLY MOMENTUM PRICE INDICATOR

With the market closing above The VC Weekly Price Momentum Indicator of 1.124 it confirms that the price momentum is bullish.  A close below the VC Weekly, it would negate the bullish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 1.115 – 1.099  levels and go long on a weekly reversal stop. If long, use the 1.099 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1.139 – 1.148 levels during the week.

UCO

WEEKLY MOVING AVERAGES

The contract closed at 33.87. The market closing below the 50 day MA (34.24) is confirmation that the trend momentum is bearish. A close above the 50 MA would negate the weekly bearish short-term trend to neutral.

WEEKLY MOMENTUM PRICE INDICATOR

With the market closing below The VC Weekly Price Momentum Indicator of 33.95 it confirms that the price momentum is bearish.  A close above the VC Weekly, it would negate the bearish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 33.21 – 32.55 levels and go long on a weekly reversal stop. If long, use the 32.55 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 34.61 – 35.35 levels during the week.

The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts.

TRADING DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

 

The Coming Financial Collapse?

Summary

  • Unsustainable Debt Record Levels And Rising Costs.
  • Americans Are Flat Broke.
  • The Coming Stock Market Collapse.

America-Is-Broke-265x300

The Equity Management Academy, who produced the Trading Talk video of “America’s Debt Crisis” in 2012, is predicting an even bigger collapse in the very near future. In this new report exclusive for the Equity Management Academy,  EMA highlights signals that a collapse is imminent and suggests ways to protect your assets.

The enormous US debt bubble is on the verge of collapse. It is a greater threat than when the internet and housing bubbles burst. In 2008, the stock market fell 47% and EMA foresees up to a 50% loss in the value of many assets when the current crisis strikes. EMA predicts that many jobs will be in danger, thousands of businesses will close, government services will be drastically cut, and social security checks may stop coming. At the same time, EMA predicts that prices will soar for everything from gasoline and milk to bread and flour.

EMA sees major signs of the coming financial collapse:

UNSUSTAINABLE RECORD DEBT LEVELS

The first sign EMA sees are staggering debt levels. In 1980, the US national debt approached $1 trillion, which was a figure President Ronald Reagan called “incomprehensible.” Today the US national debt is more than $17.6 trillion. EMA argues that the total US debt level of nearly $60 trillion has reached a “critical tipping point,” and is about to cause massive problems.

Total-Debt

AMERICANS ARE FLAT BROKE

The second indicator of the coming collapse according to EMA is that “Americans are flat broke.” Some 47.6 million Americans or 1 in 7 are now on food stamps. Poverty is not just affecting the uneducated, either. According to government statistics, 28% of food-stamp households are headed by a person with at least some college training, up from 8% in 1980. An astounding 15% of Americans are on food stamps.

(click to enlarge)

THE COMING STOCK MARKET COLLAPSE

According to EMA, the third indicator of the coming collapse in the US stock market, which EMA argues is artificially inflated. Corporate officers, who know their own companies the best, are more bearish than they have been in 25 years. EMA argues that the Federal Reserve pumped up the stock market, while keeping oil prices high to cover the cost of shale oil and reduce dependence on foreign oil. Stocks, however, EMA predicts, are about to fall. One of Warren Buffet’s favorite indicators, the market cap to GDP ratio, is at its highest level in 50 years.

GEOPOLITICAL CRISIS

EMA argues that President Obama “has no ability to stop the coming collapse.” With crises in Ukraine, Syria, and Iraq, the US administration has lost influence over events.

Obama’s approval ratings are at historic lows, with 54% of respondents stating that they do not believe Obama can “get the job done.”

INFLATIONARY DEBT LEVELS

The financial collapse is already starting according to EMA. In 2008, the US national debt was 62 cents of every dollar of GDP. By 2013, US debt exceeded GDP; we owe more than we produce. Worse, US debt has been growing at 6 to 8% a year, while the economy is growing at only 2 or 3% a year-an unsustainable situation.

RISING DEBT COSTS GROW EXPONENTIALLY

In such a situation, a slight rise in interest rates will change everything. The current cost of debt interest is $415 billion a year, which is nearly as much as the government spends on Medicare and about the same percentage of the budget as we spend on education. The Fed has kept interest rates at near zero, allowing the government to borrow at 2.4%. But, every 1% increase in interest rates means an increase in debt payments of $170 billion. Therefore, a 1% rise increases our debt payments to $585 billion, similar to the size of the US defense budget. Unfortunately, the Fed may soon have to raise interest rates to avoid inflation as occurred in the 1970s.

Worse, the Fed no longer controls interest rates on debt. Foreigners hold 47% of US debt, up from 19% in 1990. China and Japan hold the largest share of debt, and if either demands higher interest rates, US debt payments will skyrocket. Just a 2% increase in the interest rate will lead to an additional $340 billion a year debt payment.

GOVERNMENT SHUTDOWN

If interest rates rise and debt payments increase, the government will have to drastically slash spending. Such cuts could lead to “chaos and riots,” and inflation. Food and gas prices are already rising. We may be near a situation similar to Germany in the 1920s, when a loaf of bread went from 1 mark to 200 billion marks between 1921 and 1924. Today in the United States, $1.36 is equal to what a $1 bought in 2000. With inflation, retirement savings are worth much, much less, as are bonds.

(click to enlarge)

Ultimately, gold and silver will weather any deflationary storm embracing its long – term secular bull market, regaining once again the integrity of its historical valuations as the most undervalued currency in the world.

CONCLUSION

In this “nightmare scenario,” EMA argues that investors must protect their wealth. One way, is to invest in precious metals instruments and in particular physical gold and silver bullion, which often hold their value during inflationary periods.

The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts.

TRADING DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

The VC Price Momentum Indicator Weekly Futures Swing Trading Instructions August 1, 2014

 

Signals are automatically generated by integrating electronic weekly statistics with proprietary algorithms.

GOLD

WEEKLY MOVING AVERAGES

The August gold futures contract closed at 1293. The market closing below the 50 day MA (1299) is confirmation that the weekly trend momentum is bearish. A close above the 50 day MA would negate the weekly bearish short-term trend to neutral.

WEEKLY MOMENTUM INDICATOR

With the market closing below the VC Weekly Price Momentum Indicator of 1295, it confirms that the price momentum is bearish. A close above the VC Weekly, it would negate the bearish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 1278 – 1263  levels and go long on a weekly reversal stop. If long, use the 1263 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1310 – 1327 levels during the week.

SILVER

WEEKLY MOVING AVERAGES

The Sep Silver futures contract closed at 20.41. The market closing below the 50 day MA (20.80) is confirmation that the weekly trend momentum is bearish. A close above the 50 day MA would negate the weekly bearish short-term trend to neutral.

WEEKLY MOMENTUM INDICATOR

With the market closing below the VC Weekly Price Momentum Indicator of 20.55, it confirms that the price momentum is bearish. A close above the VC Weekly, it would negate the bearish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 20.20 – 19.98 levels and go long on a weekly reversal stop. If long, use the 19.98 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 20.77 – 21.12 levels during the week.

RUSSELL 2000

WEEKLY MOVING AVERAGES

The contract closed at 1.115. The market closing below the 50 day MA (1.132) is confirmation that the trend momentum is bearish. A close above the 50 MA would negate the weekly bearish short-term trend to neutral.

WEEKLY MOMENTUM PRICE INDICATOR

With the market closing below The VC Weekly Price Momentum Indicator of 1.124 it confirms that the price momentum is bearish.  A close above the VC Weekly, it would negate the bearish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 1.098 – 1.080  levels and go long on a weekly reversal stop. If long, use the 1.080 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1.142 – 1.168 levels during the week.

UCO

WEEKLY MOVING AVERAGES

The contract closed at 36.35. The market closing above the 50 day MA (34.25) is confirmation that the trend momentum is bullish. A close below the 50 MA would negate the weekly bullish short-term trend to neutral.

WEEKLY MOMENTUM PRICE INDICATOR

With the market closing below The VC Weekly Price Momentum Indicator of 36.92 it confirms that the price momentum is bearish.  A close above the VC Weekly, it would negate the bearish signal to neutral.

WEEKLY PRICE INDICATOR

Cover short on corrections at the 35.78 – 35.21 levels and go long on a weekly reversal stop. If long, use the 35.21 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 37.48 – 38.17 levels during the week.

The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts.

TRADING DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

What Could The End Of QE Mean For Markets?

The end of quantitative easing (QE3) in the next few months, could lead to a drop in asset prices followed by yet another QEround, more debt and a further devaluation of paper currencies.

The QE economy —which started in 2009 and has continued through 2014 — saw the banks buying stocks, bonds, and real estate, while loaning money to Wall Street, which sparked an asset bubble. That economy is coming to a halt.

The crisis in Ukraine, pro-Russian rebels in Ukraine shooting down a passenger airliner and the conflict in Syria have not affected asset prices. No matter what happens globally, people go out and buy stocks. Even bad economic news, such as negative GDP in the first quarter and the addition of $7.5 trillion in publicly traded debt since 2008, has not affected the stock market. Investors need to get out of cash because cash pays zero.

To read more click here.

Gold and Silver Past, Present and Futures Swings

Gold and Silver Past, Present and Futures Swings

After a friendly opening on Monday, gold and silver came down into the expected swing low weekly levels of support previously posted and distributed for the Equity Management Academy membership last Saturday.

In this report I said, “With the market closing below the VC Weekly Price Momentum Indicator of 1315, it confirms that the price momentum is bearish.”

I also said, “Cover short on corrections at the 1289 – 1267 levels and go long on a weekly reversal stop. If long, use the 1267 level as a Stop Close Only and Good Till Cancelled order.”

For silver I said, “With the market closing below the VC Weekly Price Momentum Indicator of 21.03, it confirms that the price momentum is bearish.”

Additionally I said, “Cover short on corrections at the 20.53 – 20.13 levels and go long on a weekly reversal stop. If long, use the 20.13 level as a Stop Close Only and Good Till Cancelled order.”

The weekly low on gold of 1287.5, and 20.35 for silver  made on Thursday completed and satisfied the projected swing low as it tested the levels of posted last week and confirmed higher prices yet to come. Our live trading room members went long October gold at 1291 with a 1305 Weekly Stop Close Only. Long December silver at 20.65 with a 20.77 Stop Close Only.

The strong reversal on Friday confirms upside targets of 1322 – 1336 for October gold and 21.19 – 21.59 for December Silver. Use the weekly swing levels of resistance to unload and lock in some profits as we come into next week.

Let’s take a closer look at the weekly technical landscape for gold and silver and see we can Identify some trading/investing opportunities next week

GOLD

The August gold futures contract closed at 1308. The market closing above the 50 day MA (1300) is confirmation that the weekly trend momentum is bullish. A close below the 50 day MA would negate the weekly bullish short-term trend to neutral.

With the market closing above the VC Weekly Price Momentum Indicator of 1305, it confirms that the price momentum is bullish. A close below the VC Weekly, it would negate the bullish signal to neutral.

Cover short on corrections at the 1291 – 1274  levels and go long on a weekly reversal stop. If long, use the 1274 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 1322 – 1336 levels during the week.

SILVER

The Sep Silver futures contract closed at 20.80. The market closing above the 50 day MA (20.79) is confirmation that the weekly trend momentum is bullish. A close below the 50 day MA would negate the weekly bullish short-term trend to neutral.

With the market closing above the VC Weekly Price Momentum Indicator of 20.77, it confirms that the price momentum is bullish. A close below the VC Weekly, it would negate the bullish signal to neutral.

Cover short on corrections at the 20.38 – 19.95 levels and go long on a weekly reversal stop. If long, use the 19.95 level as a Stop Close Only and Good Till Cancelled order. Look to take some profits on longs, as we reach the 21.19 – 2159 levels during the week.

The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts.

TRADING DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

Revised GDP, A Bottom In Gold And A Looming Catastrophe

Many analysts are blaming the recent GDP revision-the largest since 1976-on the weather this past winter. It was the worst winter in many years. Even so, that even such a brutal winter can probably only account for about half of the decrease in GDP. Furthermore, with plenty of quantitative easing and record low interest rates, it shouldn’t have been that bad. Even if you cut the current 3% figure in half and make it only minus 1.5%, That’s still terrible…way off the estimates. Worse, estimates for the second quarter have been downgraded from a 4% increase to 3%.

The consumer price index is also weak. The most recent figure was 0.2% after being flat in April and consumer spending accounts for 2/3rds of US economic activity. Two thirds of your economy should not be based on spending but instead on manufacturing. Adjusted for inflation, consumer spending actually fell. With such figures, we don’t know what’s really going on. We do know it’s weak…We see in number after number…very weak growth.

Stagflation is also increasing in the US, even though it is not being acknowledged as a classic threat and symptoms of inflation – slow growth, high unemployment and inflation are present. Recent economic data shows weak US factory output and home building data suggests that the world’s largest economy is slowing down again.

Official inflation numbers in the US remain benign as the Fed’s continue to make many adjustments to the methodology of calculating inflation in the last 20 years. The many adjustments made in the last few years is a clear indication that the consumer price index formula previously used is no longer an accurate measure of the real level of inflation.

What do the numbers mean?

Expect a rise in interest rates by the first quarter of 2015. The current artificial low interest rates are robbing the average person of the future. The ability to put money in a savings account for a rainy day is a thing of the past.

Who is benefiting?

Equity markets, since investors can borrow money for almost nothing.

Who’s borrowing the money?

Mergers and Acquisition companies. M&A activity in the last 6 months has been averaging $10 billion a day, or nearly $2 trillion in total. Such figures are similar to those seen in 2007, before the Panic of 2008. Cheap money is also fueling the real estate market. It’s being engineered from the top. However, when interest rates rise, as I believe it will occur early next year, the economy will go down again.

The downbeat of media coverage about reasons why gold should go down is another way to manipulate prices. At the same time Latin American countries pawn their gold with Goldman Sachs.

The Fed’s goal is to keep you in currencies that aren’t worth the paper they are printed on. When interest rates go up…[it will] strengthen the dollar, in theory, [but] even if does, [it will be] short term. Why? Because, when interest rates rise, the economy goes down as there is less available spendable income due to the rise in the cost of money They’ll come up with another scheme to try to pump up the economy under another name.

Chart: Copyright 2011 by Bloomberg.

In China, the real estate bubble has already burst and money is flowing out of Hong Kong into the United States.

Where are we headed?

The days before 9-11, President Bush’s popularity hovered around 50%, with the recent dot.com bubble collapse and a recession. After 9-11, the Federal Reserve lowered interest rates to 46 year lows, which ignited another boom. Look out beyond the economy to geopolitics. The destabilization of the Middle East, in Syria, Iraq, Yemen, and Bahrain destabilized, as well as the crisis over Ukraine as threatening a possible war. But, the US can’t afford a war, neither can the world. With recent spikes in oil prices, however, this is the perfect recipe for economic panic. If there is economic panic, it may be an excellent time to invest in gold.

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