31 Oct 2012

The Invisible Hand Is A Master of What the Public Ignores

By Jim Sinclair: Here is a good recap of the countries that have abandoned the dollar as the world’s currency in the last few months.
CIGA Yahn
The Invisible Hand Is A Master of What the Public Ignores CIGA Eric
Those frustrated by timing gold have two choices.  Remove opinion and emotion by (1) turning off the quote machine and refrain from using leverage going forward, or (2) through mathematical study of money flows, confidence, and time to interpret the market.  The latter is much harder than the former.
Those expecting gold to transition from the power D-wave decline (DOWN) to C-wave advance (UP), thus, skipping the AB transition fail to recognize the importance of price management by the invisible hand to prevent what Jim Sinclair describes as follows:
The more money you create, the more money you must continue to create until it goes to infinity. You go cold turkey on money creation, you unleash the economic wrath of hell in the entire Western world. It all comes down in one great implosion. [1]
Russia and China would act immediately economically to take full and powerful advantage of your error in application. You have to wean a drug addict off the drug in order to not kill him in recovery. [1]
The stakes of this monetary game, not widely understood or well-played, are extremely high.

clip_image002The secular bull market follows a basic ABCD cycle.  AB transitions [1] transfer ownership of the trend from weak to strong hands before the powerful C-wave advance due to start in 2013.  While the investment world tends to focus solely on price, they completely ignore money flows [1], confidence (chart 1 and 2), and TIME [2].  The invisible hand profits from a rising trend without heavy long side exposure because its the master of what the public ignores.

Chart 1:  University of Michigan Consumer Expectations (CE) and Gold:  A Correlation Study [3]
clip_image004Chart 2:  London P.M. Fixed Gold (GOLD) AND Gold to University of Michigan Consumer Expectations Ratio (GOLD/CE) or Gold to Confidence Ratio. [4]
Headline:  Consumer sentiment highest in five years
WASHINGTON (MarketWatch) — Though down from a preliminary report, final consumer sentiment in October reached a five-year high amid brighter views on future and current conditions.
The final reading of the University of Michigan/Thomson Reuters consumer-sentiment index edged down to 82.6 — the highest final reading since September 2007 — from an initially reported 83.1.
Economists polled by MarketWatch had expected a final October level of 83, compared with 78.3 in September. See economic calendar.
Source:  marketwatch.com [5]
More… [6]

Austerity Will Not Be The Path To Prosperity in Western Economies CIGA Eric
Hubert Hoover chose austerity as the path to prosperity in 1930.  This choice handed the 1932 election to Roosevelt.
Roosevelt proposed in his first "hundred days," a sweeping program to bring recovery to business and agriculture, relief to the unemployed and to those in danger of losing farms and homes, and reform, especially through the establishment of the Tennessee Valley Authority.
Gold hoarded as a hedge against poor centralized management needed to be confiscated in order to devalue the dollar.  Confiscation and revaluation of the gold from $20/oz to $35/oz (or devaluation of the dollar) in 1933-1934 functioned in a similar manner as today’s QE.
Headline: Spain retail sales decimated by VAT hike
MADRID (Reuters) – Spanish retail sales fell at their fastest pace on record in September as already battered consumer confidence took another hit from a hike in value added tax, driving many shoppers to trade down to cheaper products.
Sales fell 10.9 percent year on year, Monday’s National Statistics Institute data showed, reflecting an economy struggling through its second recession in three years and plagued by chronically high unemployment.
The drop was the biggest in calendar-adjusted terms since current records began in January 2004, and marked the 27th monthly decline in a row.
Spain has been in recession since the first quarter of the year and is not likely to grow again until late in 2013, according to official estimates that many economists consider optimistic.
The country had the highest unemployment rate in the European Union in August – 25.1 percent – according to EU data.

That figure is expected to rise further as a large public deficit forces the government to implement deeper spending cuts and further tax hikes to persuade markets it can control its finances. It increased sales tax on September 1.
Source:  finance.yahoo.com [7]
More… [8]
URL to article: http://www.jsmineset.com/2012/10/30/jims-mailbox-1081/
URLs in this post:
[1] The more money you create, the more money you must continue to create until it goes to infinity. You go cold turkey on money creation, you unleash the economic wrath of hell in the entire Western world. It all comes down in one great implosion.: http://edegrootinsights.blogspot.com/2012/10/sobering-up-western-world-economy.html
[2] TIME: http://edegrootinsights.blogspot.com/2012/10/gold-managed-but-not-controlled.html
[3] Image: http://3.bp.blogspot.com/-MJ60MS99Lr4/UI63STUN8rI/AAAAAAAAK4c/-d9DB1CovbU/s1600/CE%2Band%2BGold.PNG
[4] Image: http://3.bp.blogspot.com/-nQI-SMn2r5E/UI63XadNGHI/AAAAAAAAK4o/rV7zoXYu2fY/s1600/GLDLvsGLDLCER.PNG
[5] marketwatch.com: http://articles.marketwatch.com/2012-10-26/economy/34740241_1_gauge-of-consumer-expectations-consumer-sentiment-fiscal-cliff
[6] More…: http://edegrootinsights.blogspot.ca/2012/10/the-invisible-hand-is-master-of-what.html
[7] finance.yahoo.com: http://finance.yahoo.com/news/spain-retail-sales-decimated-vat-092927949.html;_ylt=AiF4qwVG7CupIUHgCm010aKiuYdG;_ylu=X3oDMTNydW5waW1iBG1pdANGUCBUb3AgU3RvcnkgTGVmdARwa2cDNjYwYjk2M2MtYmNhNS0zMTQ4LTliZjgtYTAxNzFlMDJmMzQyBHBvcwMxBHNlYwN0b3Bfc3RvcnkEdmVyAzY4MDJkMzAwLTIxYmMtMTFlMi05ZWFlLTM0NmJhMDE1NWUyYQ--;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3
[8] More…: http://edegrootinsights.blogspot.ca/2012/10/austerity-will-not-be-path-to.html

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