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A Commodity Bear Says ‘I Told You So!’

By Rick Ackerman Posted on November 4, 2011, 2:29 am EDT Last Updated November 4, 2011, 2:59 pm EDT

[Back in July, Cam Fitzgerald asserted here in a guest editorial that policymakers would eventually succeed in stabilizing the global financial system, triggering a huge bull market in stocks. He also asserted that commodities and precious metals would not participate in the rally. In the essay below, Cam shouts “I told you so!”  Readers may find themselves disagreeing, however, especially since precious metals have shown signs of life in recent days. RA]

“Remember you read this. I am right, and I know it.” Those haughty words were my parting shot when I responded to comments about a guest essay I’d written here in July, “Commodity Bear Says 2012 Election Holds Key.” I had gone out on a limb, expressing my honest opinions that day and the next without a shred of doubt showing under my wrinkled shirt. It was my vision of the future. Commodities were going to fall along with gold, while stocks, particularly blue chips and defensives, would rise sharply in the months ahead. Not satisfied with that prediction, I dug a deeper hole for myself. There would be no QE3, I stated. Commodity speculation had already brought us to the brink of a new recession. Ben Bernanke would not make the mistake of trying that approach again. Instead, I asserted, policy tools would be employed to jump-start the recovery we needed, and this time it would not cost billions to achieve. At the heart of these efforts were the odds that some strategic efforts would pay dividends in improving the electoral chances of the president.

I wondered at the time whether I’d regret my boldness. The responses that followed overwhelmingly rejected my theory. The local crowd dumped on me with glee. Mob rules. “Who are you going to position yourself with, Jim Rogers or Cam Fitzgerald?” one forum regular shot back ruthlessly. “No offence Cam, but only one of you two can ever say, “I am right, and I know it.” And it ain’t you.” “But it is me,” I answered meekly in a follow up post. I barely got through reading the 40 negative responses, and then I stopped posting on Rick’s site. In the weeks that followed, though, most of my predictions were actually coming true. As August wore on into September, I got some redemption when gold fell off a cliff and margin calls drove it lower still. And so I finally returned to that old article last week and read it again for the second time. What had I said that got the crowd so irritated, I wondered? Was it my cockiness, or just the arrogance of going against the wisdom of the crowd?

A Little of Both

A little of both, probably. The suggestion that the Government and the Fed might engineer a recovery, if only commodity prices could be knocked down and the speculative fever chilled was just too much for Rick’s regulars. The idea that politics could be behind it was outrageous (are you people all sheltered or something?). It suggested a conspiracy, when all I was alluding to were the use of legitimate policy tools. I could easily imagine that political will could enact measures to blow the froth off oil prices for example, exactly as we had just seen with the release of millions of barrels of oil from the Strategic Oil Reserve in June. So later that day in July I wrote more specifically: “There is no question whatsoever in my mind that policy tools and the cooperation of governing bodies can put a deliberate chill on speculative forces in the markets in order to achieve an outcome that does not consume untold billions of tax dollars or require more easing to institute. I believe that is exactly what is about to unfold”. And it did. Then we got The Twist instead of QE3.

By now, most of you will also be familiar with the position limits that regulators have recently approved covering all 28 commodity categories of the Commodities Futures Trading Commission (CFTC). Three Democrats versus two Republicans on the commission carried the day. If that does not tell you that efforts are under way to reign in speculative forces, then nothing will. Do not doubt that pressures will be brought to bear when the stakes are so high. We need stimulus but we also need to prevent outbursts of commodity price growth, and so pressure is being brought to bear right on the source, in the CFTC itself. Furthermore, the margin calls on Gold and Silver that were brought into play exactly at the moment those two commodities were in decline should not really have been a surprise (despite shocking many old timers). Few could recall such actions taking place during a price decline.

Anti-Fiat Outlaws

This, I believe, is part and parcel of the same program designed to flatten bullishness in that trade and discourage some of the excess speculative fever. I will add that as a secondary goal it sent a shock wave through the gold camp and silenced some of those voices which were at the forefront of negativity when discussions of the dollar or recovery came up. I could not have been more pleased. That small band of anti-fiat outlaws representing a tiny fraction of the investing population were responsible for the vast majority of negative commentary that I saw daily on many websites. Shutting them up for a while came as a happy relief.

Anyway, my original argument was merely that by reducing commodity-induced inflation threats, that discretionary spending could rise and thus assist in bringing about a recovery. Speculation was taxing our disposable income at exactly the wrong moment and harming chances of a recovery. Evidently, some in positions of authority agreed with that assertion, even if Rick’s crowd did not. If every attempt to resuscitate the economy resulted in a backfire from a commodity price explosion, then policymakers would have to deal directly with that issue before proceeding further. That smelled all too conspiratorial to most here, though, and suggested the powers that be really had the ability to change the trajectory of the markets.

Joined at the Hip

Well, of course they do,  notwithstanding.one forum argument that went as follows: “Commodities and stocks have been joined at the hip for 4 years. How are ‘they’ going to kill commodities while the stock market soars? If the dollar rallies and commodities tank, I have to think stocks will tumble too.”  And so they did, before staging a stunning comeback this past two weeks that took most people by surprise, even as commodities lagged. Nor should it seem so weird that the dollar rocketed recently while commodities plunged. Nobody saw that coming. I keep reading that same refrain on many sites, yet it is plain wrong. Many saw the dollar rise coming and gold falling. I was one of them.

In fact, only two short weeks passed before my first prediction began to rock a few of the crustier boats. Oil fell off a cliff, copper tanked and shortly thereafter gold took a face-plant in the dirt that is now recognized as one of the most severe drops in decades. The dollar meanwhile shot higher to gasps of “this cannot be happening!” So how manly was that?

Retirees Have Retreated

Not to be outdone by myself, I had also claimed blue chips and defensives would soon rise, leading all markets higher. I hope you have been watching the daily charts. That is exactly what is taking place and while the dollar is now in modest decline versus the euro this week, that claim has not failed to achieve climax and satisfaction. There has been a tremendous shift in sentiment amongst serious investors in the past few months. Dividend stocks of our best companies are seen as solid cash sources and a better option than so-called secure bond offerings and Treasurys at near-zero interest rates. High yield and junk bonds have lost their appeal except for the most savvy risk-oriented professionals. Retirees meanwhile have retreated to cash and bank certificates paying less than the rate of inflation. That has left the field wide open and markets rose on thin trading as bulls took control and bears covered like mad.

The world awaits a real European financial solution meanwhile that will almost certainly be inflationary and far reaching. Markets are already pricing that in even as the notion of QEIII is quietly being suggested in the background. You all know how this will end I hope? The big guns meanwhile are getting positioned to protect themselves from the reality that Europe is indeed much deeper in debt and much more in trouble than even the business media acknowledges. They know that the only real solution at this late stage is to print Euros, monetize debts and thus bring about a serious devaluation of  the currency. With it comes a lower living standard, less ice cream and fewer holidays abroad. It can be no other way. The smart money knows it, but we will likely see a real crisis before those events happen.

Euro Cannot Fail

The euro meanwhile will not fail because it cannot fail. It is after all the prototype for a global currency and still in its formative stages where the mechanics of making a single currency function between a group of differing nations is still in the developmental process. They have merely encountered their first major snag but it is becoming clear Europe will find a resolution to its issues despite the negativity expressed towards their actions to date. On that note, Euro Bonds are certainly not out of the question in the medium term nor is the idea that extra powers be granted the ECB to directly monetize debt in much doubt as I see it. The major member states may have ruled it out for the moment but those options will be returning in good time if major debt restructuring is the only choice remaining. Greece meanwhile will remain a part of the Union. They are going to default but it will be with the assistance of the collective of nations and a fresh new haircut. Betting on a Euro failure meanwhile is very bad bet to make. The resolve exists to find solutions and we will just have to be patient as the idea evolves further over time and grows.

We never did get QE3, as I’d predicted. Check. We got the Twist instead and this surely falls under the heading of policy tools as no money is actually printed or bleeding into the wider economy. This program amounts to a swap and it is achieving its stated goal with flying colors.  Markets rose on the news. Were you surprised? Across the pond in Europe, Timothy Geithner has been strongly promoting a leveraged (EFSF) European Financial Stability Fund to head off a financial crisis there and he is getting his way despite being rebuffed early on. Indeed, I read tonight that leverage will take the fund to just over a Trillion Euro, about half what most wanted. Simultaneously he has mounted pressure on China to float the Yuan and received support from within the House to bring on trade sanctions if China does not cut the Yuan free. More policy. Improves the chances of an Obama re-election too as some blame for our current troubles have shifted outside our borders. It may be cynical but it is effective.

China Relented

And then right out of the blue a week or so back China relented somewhat and boosted the Yuan by the largest single increase in many years while Nicholas Sarkozy and Angela Merkel nearly simultaneously announced a confident plan to rescue European banks was in the works. Policy led efforts of the Treasury with regards to China and Europe have in fact been effective on both fronts. We are seeking a dollar devaluation here at home in the longer term and so a strong Europe benefits us as does a strengthening Yuan. Check and check.

Consumer spending is up meanwhile and is improving as the dollar has strengthened simultaneous to commodity price declines. Recent retail figures have surprised to the upside. Consumption, although tepid has been rising for many months. Disposable income is also increasing. This is benefiting the economy now and leading to the first real signs of improvement as discretionary spending is seen as key to renewed confidence. This usually leads to better sentiment readings although we still await better news on that front.

Bull Market Coming

So what is coming next? One hell of a bull market, that is what, and it has already begun. I hope you took my advice of July 7. You would be sitting pretty already and sweetly basking in the afterglow that only comes from a close brush with a bouquet of fresh greenbacks. You might well have been watching for a good opportunity to short Gold and then seen that perfect double top when it appeared.

In the meantime, we are about to go seriously inflationary. I am having trouble squaring this with some of my past remarks though as the Tea Leaves get a fresh look. Many of you will know me as a hard core deflationist (with a near pathological loathing for the hyperinflation camp). How was I going to reconcile my new inflationary beliefs with what I was actually seeing without violating my past principles and views though? That was the rub. With comment layered upon comment, I had trapped myself into a single way of thinking. On a daily more personal basis I found myself resorting to finding excuses to blow off the evidence that kept emerging to the contrary. Reading Chuck Cohen’s piece yesterday gave me fresh energy though and renewed my conviction to just let the past slide. The funny thing was I have been seeing many of the same things he was discussing but have been unwilling to articulate that since my piece back in July brought such a backlash. My arguments from that time are supportive of an inflationary outcome.

Why We Dump a Dog

I guess we need to allow ourselves more flexibility. Investing demands we change course when we know we have made mistakes or the environment has changed to alter our earlier decisions. That is why we dump a dog that we know is a losing bet instead of holding on and going down with it. And that is why I have modified my deflationist views to accept that inflation is going to be a big part of our future. There is no other way.

And so my last comment is saved for Brad, who shot back after reading my overconfident claims “One thing I have noticed over the years is that statements like [yours]…tend to humble people. Let’s wait and see”.  Indeed. Glad you waited, Brad. I am humbled. But allow me this small indulgence…….I told you so.

***

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  • mario cavolo November 7, 2011, 5:47 am

    HI Cam, I’m jumping in late….

    Will you be coming to China as mentioned earlier?…Would enjoy catching up, you can email contact me through my website, don’t want to put my email here as spammer robots seek and find…

    I appreciate your comments, I agreed with you through the summer if you recall that I also sensed that “they” can’t keep pushing all prices up, for stocks to continue up, commodities prices would need to come down and that is exactly what happened. I’m not as sure as you whether this upward move in stocks will continue or is a bear market rally, however I appreciate your article and points.

    You know that I have written many articles for Rick more related to similar issues with a China-centric point of view and I think you are writing with a bit of defensiveness and arrogance that you don’t need to position yourself with.

    I’ve always submitted my feature articles to Rick knowing and expecting that the purpose is to debate its contents. A professional author and friend once said to me “a book is your argument” .

    The point of an article is to create, build and argue an approach. For myself especially, I know that on the subject of China of which American’s compared to any other country are more ignorant, misguided, arrogant and biased than virtually any other subject that I can think of. However, I let the argument flow and intelligently respond with realistic facts. I admit a few times I have gotten too emotional too, I think one time I bruskly asked Robert if he was “on ludes” (sorry Robert…:) Other people who write rudely, don’t even deserve a reply except if you can superbly, precisely tear them to shreds with razor sharp reality…

    Enjoy the arguing in the spirit of intelligent, sparring arguing and know we will both give and take a few blows along the way…that’s why we’re here and Rick does a fine job of creating that venue here in my opinion…

    Cheers, Mario

  • mava November 6, 2011, 7:07 pm

    Steve, where you want to stomp out communists, I’ll always support you. I wanted to jump on that, but I couldn’t find what you referring here to.

    Cam, is a practic. He knows that the people were made to pay debts of stock gamblers. He knows that there will be currency devaluation and pain of inflation. I think I have no problem with people like Cam.

    One time my friend put it to me like this: you’re in a pipe with someone else and a shotgun. Would you rather hold the barrel because it is a right thing to do, or the stock because that is the only other choice?

    Meaning that while theoretically we may be here or there, practically we always have to find the trend and ride it. That’s what Cam does. He is looking to make money, no matter whether he likes the current development or not.

    I disagree with his estimate, but that is my opinion. No one knows for sure. My goal right now is not to be “a weak hand”, i.e. not to be caught without means and be forced to participate in stock market which is going to take more pounding, and possibly can be legislatively locked as a measure of capital controls.

    Return of capital above all. So, I am willing to wait and see how people dive in it and loose their shirts.

    Like Bob Moriarti says, “all debt is going to be paid,…” … and I add, that it is going to be paid by creditors. This means that there are going to be much more malinvestment, no real gains in stocks, just chasing inflation, and there are far more superior instruments for chasing inflation than stock markets.

  • david casciano November 6, 2011, 7:58 am

    this got a little confusing rick,not sure was as productive as per your format…this works on zerohedge not sure here.you should think hard on what your looking to accomplish.

  • Mark Uzick November 6, 2011, 7:35 am

    Dear Benjamin:

    “……….The rest of this post is for the purpose of showing what a midget-brain you are. That’s the only reason I’m wasting my time with you………..”

    I know. People like me and Robert, who have faith in liberty, are such are such pea brained fools, so undeserving of your attentions. Thank you for prefacing your explanations that way, so that we’ll all know what a strong argument you have waiting for us; with your inspiring words, there may yet be hope for us mental midgets.

    “……….1) Vicious competition to rush X to market, resulting in medicore to negative returns (too many people doing the same/similar thing because no one can know who is going to do what). ……….”

    Yeah: “Let’s empower the state to crack down on wasteful competition. The state is so wise and efficient; the free market is so foolish and inefficient.”

    “………2) Capital idles in the face of instability and/or uncertainty………..”

    I see: So free competition means that capital will either be wasted in a mindless frenzy of competition or it will freeze up in mindless fear. The free market will never respond to price signals or even begin to approach a virtuous mean between these two extremes because we’re all such fools in need of the enlightened supervision of bureaucrats, who have only our best interests a heart.

    “……….3) Both. ……….”

    At the same time?

    “……….The only thing that matters is that the unity isn’t done by forceful means, but rather by mutual agreement. ………..”

    Voluntary borders?

    “……….But go ahead and shake your fist at that barbarous relic of an idea (which isn’t even mine). You’d at least have a half-reason for doing so. Borders, unions, treaties, and countries are indeed concepts as old if not older than farming and gold and silver money themselves………..”

    Tyranny, xenophobia, genocide, poverty and war are all an integral part your grand old traditions that you conveniently forget to mention.

    Where ever there has been progress; where ever living conditions have improved; where ever there has been peace and good will or at least tolerance, it has occurred only to the extent that free trade and travel are permitted.

    Just because destructive institutions will not vanish overnight is no reason not to oppose them and to educate people about their futility and evil consequences.
    Human society will continue to evolve and progress toward liberty in spite of set backs and dead ends. There is no justification for your cynical world view, but pay no attention to me; I’m just a pea brained liberty lover.

  • Rob Torres November 6, 2011, 4:29 am

    Once Central Banks start off loading gold then I’ll be convinced that the Bull market is finished. Until then I’ll hold my gold for awhile.

  • Seawolf November 5, 2011, 3:41 pm

    If you think the insults are bad here you should check out “Europe’s Insult Diplomacy” here: http://www.businessweek.com/magazine/europes-insult-diplomacy-11032011-gfx.html

    The graphic is great.

  • jeff kahn November 5, 2011, 2:53 pm

    Gee, being “right” over a few months in this type of market is pretty worthless. Over the last ten years gold has gone from 300 to 1800. Stocks are flat to down. I’ve haven’t heard a single reason why that should change over the next ten years. Who cares what happens next month?

  • Buster November 5, 2011, 12:47 pm

    “…..first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.”-Thomas Jefferson

    The game is now so efficiently managed that while your assets are being hit with deflation, your necessities are inflated out of your reach. When the sheeple place their bets on red, the table tilts to black….You can place your bets on inflation or deflation…. they’ll take your money off you either way.
    This is not chaos; this is a man made environment. Just as the markets are moved the opposite direction to your bets, computer generated money can bid up the cost of food and destabilise whole countries for corporatist objectives.- Gaddafi should have done the math & got out whilst he could.
    So I urge anyone who can understand what I’m saying, get out whilst you still can, Babylon is going down sooner or later. The waters are gradually drying up….

    GoldStockBull.com:
    “Today is “Bank Transfer Day”, when thousands of people will be moving their money out of big banks and into local community banks or non-profit credit unions. This week alone it is estimated that 65,000 people in the U.S. will move their money from the big banks into credit unions. This is more people in a single week than switched during the entire year of 2010. Navy Federal Credit Union, the largest credit union in the country, says new account openings in September and October were up 38 percent from a year ago. Given the degree of leverage in the fractional-reserve banking system, even a small percentage of people withdrawing funds is likely to have a huge impact. ”

    I care little for ‘flation arguments, or hard/soft currency really, other than the problems over their abuse by the corrupt & greedy. The schemes of men will mislead even the best attempts at straightening out this mess, so more & more people will continue to suffer worldwide, whatever. It’s baked into the cake, plans designed by the corrupted minds of men, with a little help from the naïve & hopeful…and the many who can’t connect enough of the dots to see the picture!

    Here’s a very little picture for those who think we’re advancing with a positive attitude BTW:
    http://stgvisie.home.xs4all.nl/extremedeformities.html

    The world cannot go back over old ground. We are locked on the end game so as to come to the conclusion. One world government with one world currency, all managed to the extreme is where we’re headed fairly soon (I estimate within max 15years). I surmise that with the fall of the old covert control of Babylon (ie the centuries old clandestine control of the Elitist’s Banking/Religious-Media/Military Industrial Corporatist complex) the world system has to advance to the more out in the open totalitarian control of the New World Order manifesto. It’s the logical conclusion in the long advance of the dreams (nightmares) of men who rule the Earth.

    Stop the Earth….I wanna’ get off….please!!!
    …….though I do calculate that help is coming soon after.

  • TC November 5, 2011, 8:19 am

    Shame Rick.. finding a bull who managed to make a bullish call at almost the exact day of the market peak and then have him post a bunch of “I told you so’s” to elicit comments.

    Wow, the market is almost back to where you went long and started getting hammered. Great job!

    Damn, I got sucked in! 🙂

    • Cam Fitzgerald November 5, 2011, 9:15 am

      I wrote the piece several weeks ago TC. Time decay has created a problem as the original context is lost in light of the recent moves. Don’t make too much of the comparison between Fridays action and my commentary appearing on the same date because too much is going to get lost in the translation.

  • Robert Rhoades November 5, 2011, 4:18 am

    Fantastic read for a Friday night! Thanks to all who posted.

    • Cam Fitzgerald November 5, 2011, 7:08 am

      It has been fun. Hopefully it carries on tomorrow. There is so much left to say. Where is Mario by the way? He almost always has input I appreciate.

  • BigTom November 5, 2011, 12:42 am

    Rick – would you please monitor your website and not let it degenerate into the world of garbage….wow. i always liked your posting on gold-seek, they are short and to the point. but your website, i’ll say it again….wow!, think I’ll stay away from this…..

    • Rick Ackerman November 5, 2011, 5:36 am

      An interesting challenge, Tom, and I’ve taken you up on it, stripping all posts from this thread that attacked without enlightening. (Please note as well that some innocent posts that referenced offending comments, and which would have been “widowed,” had to be deleted as well.) RA

    • Cam Fitzgerald November 5, 2011, 9:11 am

      It is unprecedented in my memory. I cannot recall any time that as many as a couple dozen posts (30 perhaps?) that were wiped away with the flick of a few keyboard strokes. What is the point of that suddenly? Every article here on your site offers some controversy and the back and forth debate allowing venting by all parties is not silenced. Why now? We see unusual comments and perspectives every single day here. Surely you are not making this effort to protect my feelings because that makes no sense and is not in your character. Shall you go back and correct all your past articles too and make history disappear there as well, Rick? I imagine this post will now vanish too and perhaps that is your intention. Good to muzzle your guests when they stop agreeing with your point of view and start offering objections. I cannot see giving any more of my time to this thread though since we are effectively getting a rewrite by exclusion of commentary and it is a waste of my time to post when I never know if my efforts are going to be vapourized.

      &&&&&&&

      Mostly, Cam, I got tired of the who-struck-John exchanges between you and Steve. Trust me, they won’t be missed.       RA

  • Steve November 5, 2011, 12:17 am

    Don’t forget for one second that I made a factual statement that the theory you presented was communistic yesterday. I made it short by “commie tripe”. And, what did Cam do in personal libel? Get to the facts Cam in regard to communistic statements. You see Cam, I know communistic writing. The financial theory Okay, I made my admission. History, I made my point.

    &&&&&

    Steve, speaking as your friend, might I suggest that you please give it a rest?     RA

  • Chris November 5, 2011, 12:10 am

    Hi Cam.

    I have been reading with interest the debate (or should I say exchange of insults). I am a social scientist, and what strikes me about you is that you are a contrarian at heart and love a good stir! I think that this has upset some of the contrarians in this site!

    Given that a sh@t stir was your possibly your goal, I wonder whether you even really believe in your prediction for a bull market, and I doubt that you seriously intend to invest your money on that basis. Nevertheless, if nothing else, you have stimulated an interesting debate in this epistemological melting pot. I think it is safe to say that most participants in this discussion are bearish! Hopefully though, the out bursts of emotion on both sides doesn’t reflect the approach one takes to trading and investing!

    Whilst you have presented your views, I am yet to be convinced. I make decisions on evidence, which I feel you have not provided to the extent I would like if I were to give serious consideration to your point of view and then adopted your position.

    Can you answer this one question: what do you see would be the drivers for a serious bull market?

    The fundamentals don’t see to support your hypothesis that we are going to have a strong market recovery i.e. poor outlook for spending because of shifting demographic trends and crippling debt levels; declining populations in the West, which is anti-growth and deflationary.

    I would be interested in your response and am certainly open to other perspectives that might counter my current one.

    Respectfully, Chris.

    • Cam Fitzgerald November 5, 2011, 7:15 am

      Sure Chris, happy to oblige when I get a reasonable response. I do feel optimistic about our future prospects. Very optimistic actually. That is not just rhetoric or words to stir controversy. We went off the rails a little here today but I am hoping we will clear our minds and start fresh again tomorrow.

      Anyway, when I look at the economy overall I do so from a standpoint of where we are going, not where we have been. We are not technically in a recession (yet) and I do not believe one will materialize as predicted by the ECRI and David Rosenberg despite the firm pronouncement that it was a done deal and there was nothing anyone could do to stop it.

      On the contrary I believe efforts are afoot to improve the outlook and stimulate job creation. We have never been in a situation quite like this one and there is no question it has been hard on people. From a policy standpoint, the discussions around reducing student debt loads, attracting foreign investment in housing and the creation of infrastructure programs to directly employ people are a good start. Unconventional tools are being applied to unconventional problems.

      I would like to see much more done in the area of direct investment in young entrepreneurs and small business and a greater emphasis placed on the reduction of regulatory obligations and red tape that is inhibiting new business development. All in good time. There is no question we have difficulties now though. Nobody is in denial about that and I am certainly not wearing blinders. Debts are beyond belief yet despite that I have begun to modify my position on direct interventions in the economy. Some will say that is what got us here in the first place and they may be right. But that was then and this is now. What we do need to do is be forward looking and start finding the solutions that are needed to rebuild confidence and spur growth.

      Tearing down some of the walls of regulatory barriers is a great start and creates a more competitive field. This is a globalized world we live in and if we want to avoid the harsh reality of wage arbitrage coming home to roost we have to seek alternatives that lower costs of business here at home. That or impose burdens on the competition overseas that raises the bar for them and demands higher levels of environmental compliance in their home countries before their products can be shipped here as just one example.

      That being said, I see some optimistic signs emerging that we may be turning the corner. GDP numbers have recently surprised to the upside, spending is once again on the rise and discretionary income has increased. The debt deleveraging process, while not complete, has come a long way and if I am not mistaken household debt to income ratios are now somewhere in the range of 128% (off the top of my head) which is quite an improvement over the 148% ratio that was seen at the height of the credit and housing bubble.

      During this time savings rates have improved markedly while credit use has declined. The US it should be noted was amongst the first of Western nations to see its housing bubble burst and looking at the recent charts you can easily see that the greatest damage is well behind us already. Merely from a trend perspective we can surmise that the worst of the damage is already in the past. No depression, no Kondratieff winter, no doom and gloom ending for all. That is not in the cards anymore as the likelihood of recovery over the longer term outweighs the odds of descent into economic purgatory as many here are prone to speculate.

      Housing prices meanwhile, if not actually rising are stabilizing and it is not a far reach to suggest that a turn around is nearer now than it was five years ago. When prices might begin to show signs of appreciation again is anyone’s guess but I suspect that will be coincident with the expectations of rising inflation, the growth in the new landlording class who are buying and recent incentives to take some surplus properties off the market.

      The recovery begins at the margins. Small steps first, bigger ones later. It is notable that construction is rising though and permits were recently up which is encouraging. Above all it is essential that the public begin to feel confident again. That is a tougher nut to chew on as we have seen sentiment readings are still quite low. In this environment though, business ( and here I am referring to our publicly traded companies) has been quite good. Forward looking earnings projections were generally positive and this last earnings season surprised many as the majority of companies beat expectations.

      With healthy balance sheets and a positive outlook we can surmise that at least the private sector is alive and doing well and this is encouraging. The money is there now to be deployed if and when the economy warms up again. I think nascent signs of warming are in progress. Business has all the ammo it needs but is really awaiting direction from policy makers before entertaining expansion and new hiring.

      Clearly, it is critical that the issues in Europe be resolved so we can begin to build some momentum if we are to pull out of the funk we are in. That is a work in progress and I am very optimistic that solutions will be found. In particular, Europe needs an independent Central Banks with the teeth to add liquidity to the system at will, control interest rates, stabilize the banking sector and print when necessary.

      This is a precondition and a component to a form or fiscal union. The insanity of having to process each change on the fiscal front through majority votes of each parliament across all the member nations and then depend upon unanimity to make each change is impossibly difficult. I am utterly amazed that Europe even functions as these decisions are all being undertaken at the political level rather than through an independent and arms length institution. More trust is needed. Germans will have to feel assured that such an institution will not run amok and end with a hyperinflation (very unlikely to recur).

      Europe, as we have seen, has been thoroughly rebuffed in its recent attempts to secure financing from the worlds major lending nations. That is a good thing. They already have the tools available at their disposal to print unlimited Euros through the auspices of the ECB and that is what they should be doing to resolve their own difficulties. Germany alone seems to stand in opposition to the idea but that will not last.

      Pundits who proclaim that this will never happen simply know bugger all about politics. It will happen or the euro will fail. As failure is not an option it is an easy conclusion to draw that we should anticipate some serious inflation coming down the road and perhaps a deliberate devaluation of the Euro itself. This once again feeds into my thesis that markets will rise on that belief and that equities will be commoditized as an outcome. I think we are now nearing the acknowledgement that there is no other options available and so power will be vested in the ECB to direct some fiscal policy on behalf of all the members of the European Union.

      So here we are back discussing markets again. Companies of course are not the economy are they? So here you will and appreciate that my bullish outlook is on the investment side despite the wider economy still wallowing in problems from the past. As you will have noticed I have been frequently mentioning inflation and on this front what I now see occurring is that markets are beginning to price in expectations that are currently being reflected in stock values.

      This is happening very quickly too as the realization dawns on investors that Europe will have no choice but to introduce stimulus if they are to escape the debt trap they have fallen into. There simply is no other option available anymore so I don’t concern myself with the details of when and where but rather with positioning before it actually happens. My bet is we will see action early in the new year. That is how fast things are going to change.

      Our good buying opportunity was just here in my opinion and good quality companies were on sale. No question about that. There are still good deals as I see it but that is a stock pickers business now as prices have come up substantially in the past few weeks. In any event my bias is clearly towards holding quality blue chips and defensive’s provided there is a dividend stream.

      I do not concern myself with whether prices might fall again next week or next month. All I need to know is that on the day I made a purchase it was the right decision given the mix of fundamentals such as earnings, growth potential. ability to withstand the winds of change and a good history of paying out to shareholders. The rest is left to fate. There is nothing I can do about the future in any case.

      Some of the reasons for my positive outlook though are actually coming out of Europe itself right now as I have already mentioned. When I hear for example that Christine Lagarde, the new chief of the IMF is calling for bold fiscal action in Europe while telling us that we need be less concerned over inflation than declining growth then I know what is coming next. Inflation is already running ahead of itself in many European countries despite low growth. Inflation is almost out of control in some developing and emerging markets too. What should that be telling us?

      Added stimulus will therefore quickly appear on markets in the form of rising prices to offset declining buying power. All of us in the West are getting a haircut now. That is not even a joke. By its very definition, the activity of debt monetization is resulting in a steadily falling standard of living and that will increase as time goes by both here at home and across the pond in Europe. I realize of course this process of erosion has been going on steadily for a hundred years and I am not endorsing it by any means. Just making observations.

      So yes, I am bullish on stock markets but not necessarily for the reasons we usually get excited. I do not see massive growth in the cards anytime soon in most Western countries. Just growth albeit small which is good enough to drive business and keep the money flowing. The big picture now tells me that we are trending toward recovery here despite all the negative sentiments and the coming inflation will eventually result in rising home prices, rising wages, demand picking up for services and continued improvements on the export side and balance of trade issues. Expansion lies ahead.

      I think too that China has been signalling a willingness to appreciate the Yuan and we have seen how a recent move on that front was welcomed when the Yuan did rise in its biggest one day gain in years. Nobody wants a trade war but all parties can acknowledge that the US is in a difficult position now and maintaining balance in international markets is critical if we are to get our house in order.

      The US is still the worlds largest economy despite the silly remarks you read on some blog sites. It is still the primary driver of the global economy and it be-hooves no country to defeat the efforts being sought to correct past imbalances. Domestic deficit reduction meanwhile is finally being taken seriously here and while the debt is insanely huge it is not necessary to pay it down as many suggest. Managing payments on the debt is still well within reach and that is the bar we use to measure whether we have gone too far or not.

      As inflation finally kicks in we will discover that even the debt is only relative once some helpful devaluation has taken place. Too much emphasis is being placed on the debt in any case and it distracts from efforts to instill confidence, stimulate the economy and get growth going again. Doomer’s have got it all wrong. That is not our real worry. The real worry is whether growth can be conjured up and I firmly believe we are heading in that direction.

      You are right that my opinions are not welcome here on this site. That is a shame. I get the feeling even Rick sees me a bit of an idiot (he has never had to sit through a bar discussion with me yet nor listened to me once I hit my third pint to know the real truth though) The cup half empty crowd meanwhile really gets me down. They never see any hope or opportunity and with attitudes like that I don’t know how they can get through a day in peace. I just don’t want to be one of them anymore.

      Cheers

  • Brad November 4, 2011, 11:01 pm

    In fact the scenario where commodity demand declines is the gloomy scenario. Your giddiness is contradictory to your outlook. So I re-iterate that you are confused.

    But since you seem to believe that obvious statements are worth discussing I thought i would state that “sunshine plays a major part in the day time”…

    • Cam Fitzgerald November 4, 2011, 11:44 pm

      Why don’t you just go back and read the original post of July 7th Brad and maybe admit you were incorrect in your past criticism. Comprehension seems to be the major stumbling block with guys like you. You did not get it then and you most surely never will get it in the future. Are your investments paying off friend or do they wallow in short covering fear as markets rise despite your negative views? Did you bail on gold or did you hold? Hmm?

      &&&&

      Cam, I think you’re the one who needs to re-read what you wrote. As far as anyone in this forum can tell, Brad has summarized your forecasts accurately and honestly. Here is your July 7 prediction, quoted word-for-word:

      “Commodities will decline and so will the commodity induced inflation threat. This is not bullish for metals. Gold and Silver, which closely parallel those other speculative indices, will decline sympathetically.”

      With respect to two key commodities, gold and oil, you’ve missed the broad side of the barn. Nor has the huge bull market in stocks materialized. Exactly what is it that you are claiming to have predicted correctly? If you choose to answer that question, please do so with a direct quote from your original commentary. RA

  • Brad November 4, 2011, 10:49 pm

    I think you are very confused. Claiming that the election in 2012 is key IS NOT A BOLD STATEMENT and that is not what I was referring to. Every election is key to the time period following.

    I said let us wait and see in regards to your prognostication that the blue chips would lead the market higher and that gold and commodities would fall.

    Oil is $94 a bbl. Gold is $1750 an oz and the DJIA is below where it was when you wrote your comments.

    Im glad you having fun writing today. Im sure your boss at the local supermarket was happy to give you the day off.

    The fact of the matter is gold has not fallen below where it was when you posted. The blue chip stocks are not higher and oil is about the same.

    I am only speaking facts, but you are trying to act like you have some crystal ball in claiming that the 2012 election is key? Reading both your posts has been a huge waste of my time.

    Lets make some money for a change? I guess if I had bought the DJIA the day you posted I would be up? You are a fool.

    None of my response is predicated on gloominess. The remonetization of gold is a positive aspect and as long as it continues it is a great and positive trend, not a gloomy one. Personally I think the Export Land Model points to lower oil prices in North America than in Asia and Europe. I actually think this will revive NA manufacturing, but I also think gold and oil will stay strong, not because I am pessimistic, but because I am a former geologist that helps manage a hedgefund, and from our research we see demand increasing faster than supply. Increasing demand is not a gloomy trend.

    So I repeat I think you are confused individual who thinks that because he identified that the next election is key, is now trying to hedge his forecast.

  • BigTom November 4, 2011, 10:24 pm

    Cam – back on july 7 you made a bear prediction in the pm’s. Stockcharts show gold approximately at $1525 then, it’s at $1755 today as I write this. even after ‘falling off a cliff’ as you gloatingly state, pm’s are still way up. You figure out the percentage! I guess if you predict something long enough eventually it will come true at some point while you wait drooling in the dark to pounce on the ‘i told you so’. So what. And ‘I told you so?’….if that doesn’t qualify for grade school yard like mentality i don’t know what does…..come on Rick. We all know this is a fake drugged/dragged out pm market and controversy does make readership, but this guy???

  • Paulie November 4, 2011, 9:07 pm

    …”all recessions eventually end…” True enough. It’s just that all recessions/depressions/whatever, by whatever standards they are measured, don’t end in a recovery. Some end in chaos, war, dictators rising, collapse and/or anarchy. They all end…one way or another. I’m ordering more popcorn. Oh, and thanks for the gold/silver warning; it was nice to trade that dip and end up with more shares than before. Only a fool would be without some heavy metal as we wait for this recession to…”end”…

    • Robert November 4, 2011, 11:15 pm

      Ahhhh, But Paulie-

      You forget that the famed and acclaimed Nobel Peace Prize winning Paul Krugman has defined “war” as “recovery” for us….

      According to the esteemed Dr K.- seems it’s either gonna be war or aliens that usher in the new prosperity this time.

  • Rick Alexander November 4, 2011, 8:19 pm

    “Screw doom. Lets get positive and make some money for a change.” I read that twice, thinking my eyes were malfunctioning. There you reveal yourself in your true guise, you’re a blind, self-serving, materialistic humanoid, lacking any vision and real wisdom. Make some money for a change? As a change from what? As a change from exhibiting some emotional intelligence? “Just can’t stop laughing but not sure why?” That’s an easy one, you’re just a bit dumbed down, that’s all. And what would you do with this money? Another 42 inch flat screen for the spare bedroom? An upgraded Merc for the driveway? Somehow I doubt very much that this money you’re so keen on would go to any worthy cause outside your own life, but correct me if I’m wrong.

  • Dave W November 4, 2011, 8:06 pm

    I’m no economist. I have been in gold and reader of Rick’s Picks since 2002… Its been a great ride from $260 gold. My crystal ball prediction? Parabolic blow off at somwhere above $5000 within 2 years.

    But anyways… 2 questions for all you learned intelligentia:
    1) Why are all the politicians (or are they bankers in Halloween costumes?) so mad at Greece for calling a referendum? (ya its off again for now) I thought the guy pulled a great move. Called the European bankers/politicians bluff and put his own government and population on the table to face up to their responsibilities – put up or shut up. And let his people decide – not Sarkozy and Merkel bankers in far away land. Anyway, why is Europe so mad about his move? Well it’s because they have far more to lose than Greece. Yes, Germany has been getting a huge benefit out of the Euro. If they went back to Deutschemarks, their exports would dry up. Isn’t 35% of Germany economy in cars? And aren’t they like #5 exporting nation on the planet? A high Deutschemark would kill their economy. If the Euro folds due to the dominos falling, it’s Germany and France who will get the biggest hit. I doubt if these countries give a damn about Greece per se. As for France… well always hard to tell how much is just show and pomp versus reality. My bet is that they are barely any better than Italy financially.
    2) All this deflation/inflation, doomsday stuff…. Zooming way out, if the fiat Monopoly money turned to toilet paper tomorrow, presumably the banks would fold and big turmoil would result. But for how long really? Would we still be able to get groceries, fuel up the car, surf the internet, navigate with GPS, take a plane? Would technology that keeps the planet running smoothly today all stop? No. Why wouldn’t all that paper money and the derivative debt bombs just get written off and flushed and the world starts a new day with new ‘money’. Sure there would be some big “-” signs on some bankers accounting sheet. Maybe some of those a-holes would help the world and jump out their windows. Wouldn’t affect the daily lifes of the 99% if the banks shut down for a few weeks while they flushed those electronic files and started new ones. Corporations? Well they would be muddled up for a few weeks too until the new money system rose from the ashes. But they would survive and keep those supply trucks rolling. The rulers should get together and start setting up ‘new money’ and roll the planet over in a concerted move – kinda like the juniors do with their roll backs and reverse takeovers.
    Cheers!

    • Robert November 4, 2011, 11:11 pm

      Dave-

      How dare you bring reality into this discussion…?

      You get -1 point for understanding the reality of human nature- Today’s robot trading infested markets have no use for that.

      (excellent post, BTW )

      I thought it was not only interesting that the elites who all stood and applauded when the Arabs starting acting like free people, then went 180 degrees when the Greeks tried to employ a little democratic process (in the home of democracy no less); but it was also interesting how many GREEKS were railing against exercising their personal right to have a say in how this thing should resolve itself…

      I saw a greek guy in an interview screaming “What did we elect them for? To make these decisions for us; and now they want us to vote on it…”

      GOOD……. GOD.

      My head is gonna explode. I guess it’s only fair that Democracy should die in the same bed it was born in… right?

  • Brad November 4, 2011, 6:28 pm

    What am I missing? You said stocks will be higher lead by blue chips…But the Dow is lower and gold would fall, but it’s the same level. I never doubted no QE3 or the 2012 election is key…so how are you right?

    But you did at admit you are humbled in your new post, so I was right!

  • david casciano November 4, 2011, 6:08 pm

    Cam, Thank you for your sincere work.I will keep this simple.If one has a 5 to 7 year time horizon,it does not matter what the paper market says the price of gold and silver are.I do not consider gold or silver commodities but rather money.Note even the banksters consider it money as the trading desks do not trade gold or silver on their commodities desk but their currency desk.Nevertheless,the issue that you unfortunately missed is the divergence of the paper(phony manipulated comex and lbma) and the physical market are about as similar as FELIX and OSCAR.As pressure in the physical market continues and stronger and stronger hands demand physical delivery on their paper contracts ,one wont worry about TPTB.Eric Sprott,did a great interview where he said he waited months for 350 million dollars of AG.Some of his AG received was made after,i said AFTER his request was made.His second point was that their is equal amounts of dollars being invested in AG as AU and that it is mathematically impossible to have AG be priced so far below AU.Buy and hold physical so you can pay for exorbitant energy and food bills in the future and maintain purchasing power as the slow death of fiat unfolds. Blessings to all.

    • Robert November 4, 2011, 7:42 pm

      Endeavour Silver increased silver inventories in Q3, refusing to sell at current price levels:

      http://seekingalpha.com/article/304943-endeavour-silver-corporation-s-terrific-q3-results

      Mining companies have traditionally been run by great geologists who are good at processing dirt, but are financially inept. (reference: massive hedging activities at decades low price levels)

      The Miners seem to be waking up to the fact that the Bullion Banks are not out there working in the miners interest to get them the “best price possible” for their product.

      Endeavour, GPL and others are opening their own online bullion stores where they sell finished bars and token coins; and I have frequently noticed that whenever silver prices get smashed that their stores start returning “page cannot be displayed” errors…

      coincidence?

    • Cam Fitzgerald November 4, 2011, 8:53 pm

      Thanks for your kind remarks David. I am as enthusiastic about the future of Gold as anyone here. My biggest worry is that I have not deployed enough capital early enough to take advantage of that very clear trend and catch the upside. Better late than never though.

  • Robert November 4, 2011, 5:44 pm

    Cam-

    I’m only going to offer the fact that John Corzine was also tooting his own horn at a dinner last Tuesday night in NY.

    You and I agree that the US markets are not going to crash. We are in for a multi decade Japanese style slide where politics will allow monetary policy to be JUST inflationary enough to to slow the rate of unemployment’s rise, but unemployment IS going to continue rising, and productive economic activity is going to keep decreasing.

    Reflecting back on yesterday’s commentary by Rick, and using Japan as a framework, investment in pornography, prostitution and video game related businesses is probably prudent- businesses that cater to the alternative interests of idle young people when there is no real work to do (and what work there is available is being performed by the non-retiring older generations who can’t retire due to fact that they can’t figure out how to generate income on their nominal savings that only seem to be able to buy less and less with each passing year.

    And don’t expect the Gen-Xers in the middle to do anything about it… because we’ll be too busy waiting for idiocracy.gov to get out of the way so we can start new businesses (businesses we REFUSE to start when the governemental and policy barriers to entry are so great)

    I’m going to clue you in the key to the whole castle- My generation wants nothing but FAIRNESS. Read Matt Taiibi’s articles in Rolling Stone- he nails it down pretty well.

    I’ve said it before- I’ve paid hundreds of thousands of dollars into a social security system that will never refund a single dime to me, and I’d be perfectly willing to walk away from that loss and let the thieves KEEP EVERY PENNY if they would simply agree in exchange to leave me to my right to conduct business without borders, taxes, policies, regulations, codes of conduct, and uniformed FDA/TSA/ATF/DHS/DOJ/DOT/DOE/DOD/DOA/FBI/CIA/DOHUD “agents” from getting in the way.

    Jesus- I’d even promise not to do my commerce in all those”evil” agricultural by-products if the idiocracy would simply lighten up and trust markets to regulate themselves…

    The boomers and the Gen-Y’er care nothing about fairness- they only want what suits their generational agendas- in fact the young and the old are locked in mortal conflict- the Gen-y’ers (and the Gen X’ers to a lesser extent) are ready for the boomers to retire and go the hell away… Yet the boomers prefer to keep their own power structure in place- a power structure that is destroying their own future, as 1/3 of the boomers are do-good policy makers trying to steal the wealth of another 1/3, who are feverishly trying to make sure that every new dollar the Fed prints goes straight from the output tray to their pockets, while a 3rd group of boomers are busy making sure that every natural form of savings and capital generation are subverted (and perverted) by something they call “monetary policy and progressive economics”…

    I find it supremely ironic how the boomers are reacting so aggressivley toward the young people who are conducting the occupy movements, when the young people are almost mirror images of those same boomers circa 40 years ago…

    But sure- I’d be willing to grant you the possibility that somewhere in there we’re going to have a generational bull market in equities… good luck with that.

    I said we’d be in a multi decade Japan style slide- I actually hope that that’s ALL we are in for, because it does certainly beat the alternative.

    • Robert November 4, 2011, 7:27 pm

      Re: employment

      http://www.zerohedge.com/news/us-needs-generate-262500-jobs-monthly-return-pre-depression-employment-end-obama-second-term

    • Cam Fitzgerald November 4, 2011, 7:38 pm

      Robert, I do not agree with the sentiment that productive economic activity will continue to slide although you and I are on the same page in many other areas.

      I feel certain we are now in for an inflationary burst that will drive down the unemployment numbers and send equity markets flying. Yes, inflation will hurt and the effect will lower living standards but that is always a natural outcome of rising inflation and dollars in devaluation.

      Where markets are concerned, the prospect of a big crash is off the table now as I see it. Just won’t happen as you seem to also suggest and in fact it looks to me like markets are going on a tear to account for rising inflation expectations alone. They are in fact ahead of the trend and this is one time that I can see very clearly how markets price in ideas and expectations well before the average investor has grasped the change in dynamics.

      But why would we be surprised. The whole globe is inflationary already and for that matter, interest rates have reached ungodly highs in many nations as this evolved. Just look at Brazil, Russia and China as examples. Inflation is rampant and rising. The very idea that markets might suddenly crash in such an environment while earnings are good and balance sheets healthy is insane.

      The rest of your post was awesome by the way (if you care for my opinion). You are right on so many points. The inter-generational war has just begun and I could not agree more that Boomer’s stand in the way of real progress.

      Seems they had it all. They lived through the single biggest growth period of economic activity that the world has ever witnessed as we came off the hardships of the second world war. They were positioned to benefit at every turn and they have selfishly exploited the opportunities given and then wasted them all at the same time.

      Easy come, easy go. Someone else will fix the mess.

      Now they stand ready to defeat every good idea through their power at the ballot box and crush the idealism of youth (their own kids) with the power of numbers. The incredible selfish self interest of that generation is beyond belief. And they are hard to fight. Older people vote more than the younger folk do. Guess who will win.

      I am actually very supportive of empowering our youth to take up the baton and begin building the enterprises of the future. If we have so many dollars to spend on so many failed ideas and dead banks then surely we have the ammunition to support the ambitions of our new, young energetic and very well educated entrepreneurial class.

      I say, give them the tools and let them rebuild as they see fit. I would like to see a program entirely devoted to renewing domestic industry, farming, services and technologies and assisting the small business and start-ups that are so often undertaken by the countries young people. They are up against some bitter competition from abroad and could use all the help they can get at this time.

      And if our young people are not encouraged to make the efforts and take the risks to create the jobs that are required to support the aging population, then who will do it?

      Rich immigrants maybe….not likely.

      Thanks for that terrific post. You made my day.

    • Mark Uzick November 4, 2011, 8:31 pm

      Robert: Great post, but I have to disagree with the analogy between America and Japan. There are similarities in our actions, but great differences between our circumstances: During Japan’s gradual decline it was an exporter, selling high quality goods into a market of rapidly growing world prosperity that was hungry for them. Japan’s decline, from this point on, will cease to be gradual as the world is in the early stages of a deflationary depression just as they’re running out of savings and will soon be calling in their international loans.

      If America continues to follow Japan’s policy of papering over its debt crisis with new debt, it doesn’t have the domestic savings that the Japanese had to do it with and, with a world wide depression becoming evident, the days when we could borrow from foreign investors has ceased.

      We face either massive price inflation that masks price deflation in terms of real money or we face a deflationary collapse and the bankruptcy of major private and state institutions, both local and Federal.

      In the first case the decline will be acute, but it will be cleansing and allow for an immediate recovery. In the second case the decline will take longer, but it will not be as gradual as Japan’s.

  • Rick Ackerman November 4, 2011, 5:12 pm

    The use of “it’s” where the possessive “its” is intended is the error I’ve been trying to expunge from the forum. Maybe I should allow wiki editing?

  • DG November 4, 2011, 5:08 pm

    I guess I look at data differently than this author. First, this is a very unrealistic timeframe to judge such a thesis. It is tantamount to the kid that calls the game the moment he gets one run ahead…many innings short of the whole game.

    So lets deal in the world of truth. Since July 7th 2011 this is what has transpired:

    universally hated gold has risen 10.5% (even with its “cliff-dive”)
    The DJIA has fallen 5.5%
    copper is down 18%
    wti is down 5.5%

    Even in this unrealistically short period of time gold has outperformed “defensive” stocks.

    Here is where it gets interesting. oil. Our domestic oil producing equities are on fire. Since July 7, many of the bakken oil companies are up 30 to 50%. BEXP, one of the larger new players got bought at a price that was a 20% premium. By Statoil of Norway. A) the Norwegians know their oil. B) Why buy now? Do they see a currency opportunity, oil price opportunity? both? US strength?
    I doubt they see a big drop in the price of oil.
    I imagine the Bakken equities are leading the price of wti. Something to watch.

    No QE3? Who knew what QE was 3 years ago? It is all money printing, so lets just call it MP. Give me a break. Call it QE3, mortgage buying, mark to fantasy, whatever you want….the feds own the punchbowl and they can dilute the debts however they want. The price of gold could not care less what the name is. It doesn’t matter if you own gold in rupees, yen, euros or dollars…

    I suspect that time will prove you wrong and your current chest pounding will look silly in the fullness of time. You will be partially right.
    I suspect that commodity prices will continue to rise simply due to the government debasing currencies around the world to prop up debts for banks that should just die….but they won’t…. Interest rates will rise, just like they did for the entire decade of the 70’s, always trailing the rise of their beloved (poorly calculated) inflation targets…stocks will rise, but less than gold…some technology companies that are innovative will do exceptionally well, probably outperforming precious metals.

    One other sidenote. I think the MF situation is a watershed event. I have an account there, small in the scheme of my assets, but significant. At first, I was pretty upset at the realization that MY money was “borrowed” and pissed away….and then the lightbulb went on…RA has stated that this thing could vaporize in a moment

    …and that is what happened there.

    It was no longer hyperbole -it happened. Do you think that MF is isolated? This puts an exclamation point at the end of Brooksley Born’s concern about the safety of the the American people’s capital…where is your money? It “appeared” to be there yesterday…yet, it was borrowed and lost. oops. The nutjobs who were burying their gold in their backyard or buying Sprotts PHYS all of sudden did not look so stupid.

    Suddenly, all is in play. Nothing is safe, but unencumbered hard assets. We all just got a giant wake-up call (BTW, looks like somehow that money will be replaced and MF account holders will be made whole….(sarc on)….surely this is NOT a QE-like move. It’s just new money that didn’t exist before……)

    History rhymes for a reason: humans never change.

    • DG November 4, 2011, 7:19 pm

      Cam: If you don’t want to be accused of chest pounding, then quit pounding your chest with “I told you so.”
      If gold got knocked on its ass, stocks got knocked on their ass and pounded into the basement. My point is your data analysis sucks.

      What is exhausting is this inflation deflation argument, when it is obvious that stocks are stuck and have been for more than a dozen years, commodities are up between 400 and 600 percent, depending on whether you like lead, zinc, silver, oil, corn, gold, etc…

      and yet the chorus keeps crawling out from under some rock, screaming “commodities suck, buy stocks!!!”

      Gold did not participate. If anything, it has lead every stock rally for the last decade. And that is not opinion. It is fact. Bottomed first in late 2008, stocks not til Spring of 2009. Ditto for the dotcom aftermath. Ditto for now.

      The whole purpose of the general rise of the stock market is to confuse the general market into thinking that “hey, its not that bad.” Meanwhile, gold outperforms and their purchasing power gets decimated. After 10 years gold has outperformed stocks by what? 1000%.

      I am not suggesting stocks will fall. They likely will tread water with a slight rise, just to keep the suckers at the table…

      You may want to consider that we are not “missing your point,” since there are so many of us exhausting you. Maybe your point is poorly made.

    • DG November 4, 2011, 8:44 pm

      Well, you have now thrown the insult punch, telling me to grow up, which implies my comments are juvenile. Nice. When your logic fails, throw the insults.
      I will let my response fit the accusation.
      Your argument is void of logic, facts, and frankly, idiotic. Which makes you an idiot.
      Like my physics teacher told me in high school, you’d have to be an idiot to argue with an idiot. Which would make me an idiot.
      I choose to not be an idiot.
      You win, I am leaving. Sorry Rick.

      &&&&&

      Take a well-deserved rest, DG — and come back soon on another topic!       RA

  • Rick Alexander November 4, 2011, 5:03 pm

    I’m not as negative as I might appear, I just cannot avoid the daily cognitive dissonance! But I try to live each day the best way I can, which is not to be constantly trying to be richer than my fellow citizen, which is unfortunately a subtext within Western culture.

    You say, “Who ever won a battle by going into war…” but with that phrase you betray the insecurity that underlies our cultural mindset. Where is the war, exactly, other than (for some of us) the daily battle to survive on limited funds and resources, to pay the rent, the bills, to keep a job, to keep a roof, to put food on the table, and so on? I would say that ultimately the war is within ourselves, as in Pogo (I have met the enemy and he is us) and we truly have to move on and evolve to a higher elevation which is all to do with letting go of selfishness, consumerism and the rampant materialism which is our real internal enemy and which has become our major dominant problem.

    About that last gibe about what I would do with my time if the economy improves: no, nothing to do with peak oil (which is an agenda that doesn’t altogether convince me), but making do with less consumption because I’m pretty confident that I was not put on earth merely to consume or possess. But keep trading, if you think that a great bull market in stocks is the way forward for the future happiness of the human race.

    • Cam Fitzgerald November 4, 2011, 6:42 pm

      I appreciate your post and have very similar feelings and views to yours. The war is for our minds as some one out there keeps saying and I would agree it is mostly an internal conflict that drives our public views. Perspective is everything, isn’t it? I did not change my spots or my world view by the way, I simply recognize that we are in another time of shift and this time we are inflating as others have warned in the past. They were wrong too right up until they finally became right if that makes any sense at all. I really worry that too many people are not appreciating just how much trouble we are headed for over the coming years (not referring to site members who actually have a very good handle on all the crap in the world) and often feel at a loss to do anything constructive about it. Life is not easy, I agree. For myself, I am just trying to take a more positive view and not allow the doom to get under my skin like it used too. Just can’t live with so much negativity anymore and it has accomplished nothing for me while often costing me money too. I cannot believe how much better I feel when I stand back, take a deep breath and just meditate a little before coming to a conclusion.

    • Robert November 4, 2011, 10:45 pm

      Cognitive dissonance…. Hmmmm, now THAT might be a legitimate “new normal” that I can plant a flag on…

      That would be so much easier than clinging to the false logic that “I have black skin, and an awareness that some people with white skin hate people with black skin, so I will therefore use that as a license to hate all people with white skin…”

      Cognitive dissonance exists in a realm of much better taste…

  • ken horn November 4, 2011, 5:02 pm

    Just a quick change of subject. Do the Occupiers really want a poster boy? You’ll never find a better choice than Jon Corzine. Rose to top dog at Goldman, thrown out on his ear (with 500 mil) for terrible decisions by Paulsen, loses the governorship in NJ to a Repub (almost impossible to do), & finally goes on to CEO of MF Global, makes a bet on Sovereign debt that a 5 year-old wouldn’t have made, leverages it 40-1, uses co-mingled customer funds as collateral, resigns & hires a high-profile criminal lawyer. Also, he is in line to receive a $12 mil bonus. What a putz! If this doesn’t put a face on crony capitalism, what does? Also, I hope the GOPers will show Obama desperately stumping for Jonny Boy to be re-elected as gov. as often as possible. I just had to get that off my chest. Yo, I’m from Jersey (actually, I grew up with our man, Rick in case anyone out there needs some dirt on him).

  • Wisco November 4, 2011, 4:56 pm

    Why didn’t we hear from you when the Dow was below 11K in late Sept/early Oct? Oh, you were wrong then but you’re right now???? My bad.

    Why Rick gives [Cam] space is beyond me. You’re nothing but a gambler. Brag on your wins and silence on your losses.

    • Cam Fitzgerald November 4, 2011, 6:20 pm

      Rick invited the commentary. A little controversy makes the world go round too and keeps us on our toes and hey, it sometimes even improves site ratings. We don’t all have to agree but there is no need for so much hostility when some one makes a comment or writes and article that is contrary to your own views, now is there? Ever heard of two sides to a discussion.

      Like I said, someone has to take the other side of the trade.

  • Shpfee November 4, 2011, 4:28 pm

    Also I will stick with Jim Rogers opinion’s on Commodities all day long. One of my friends stated Gold would never cross $1000.oo ounce, and that Gold at $1900 is the end of the bull market and he still does not own Gold, but he sure was buying houses & Rental properties from 2002 til 2008, and he is bathing in those losses, so when he tells me he has bought gold & Silver I will sell him mine. Corrections come in Bull markets and the larger the move up the steeper the decline to base build for launching forward. The fundamentals have not changed nor has the FED changed course.

    Another theory of my own, why are American Corporations sitting on Trillion’s of dollars in savings. My theory is, expectations are that their market valuations will crash, and that they are positioning themselves for devalued equity values and will buy their shares & others on the cheap, and then they can stoke future profits. Think about it, why are they not putting this money into play and creating jobs, which based on the economic philosophy of the US now is that the consumer drives the economy. If the consumer drives the economy, why are Corporations not stoking the consumer???

  • Shpfee November 4, 2011, 4:20 pm

    Ron Paul has the Economic answers to why Commodities will rise.

    http://www.youtube.com/watch?v=q3SOlXxUBLk&feature=pyv

  • Rick Alexander November 4, 2011, 3:36 pm

    Sorry, this is complete nonsense. Where to even begin? “All recessions end, eventually.” We are NOT in a recession, that should be completely obvious. The ‘R’ word has been part of the deceit and media manipulation for what seems like years: we are actually in the early stages of a deflationary depression, and the shock and awe of a fully evolved Depression is coming, NOT “one hellavuh bull market”: every indicator is screaming red, and more recently the first stirrings of social unrest on US soil should send a chill, if not the latest figures for the numbers of citizens on food stamps. What universe are you living in, Cam? This is the Kondratieff Winter, early stages, this is the Fourth Turning, this is the Great Unwinding, and we will witness shortly, via massive bank losses, the Great Haircut. And then the world will change, very visibly. You seem to have a very linear and limited view, as if no great cycles exist. Onwards and upwards, seems to be the mantra. Get that bull market moving! But the world is now so saturated with debt on every level, private, municipal, city, state, and sovereign that it seems unbelievable that in your article you use the word “debt” just three times, and then only in relation to Europe, and again, in a casual, almost dismissive way, as if it is no more than an irritating gnat that needs to be swatted away before we get on with the serious stuff… And again, no mention of the great derivative time-bomb, nor of the outright fraud, corruption, or regulatory capture at the highest levels. You cannot ignore these aspects of our reality! Allow me to quote others who are rather more insightful to the true nature of the crisis:

    Europe: Nothing has changed and absolutely nothing has been accomplished. There is no “solution” to the crisis that will not result in massive pain, confusion and wealth decimation.  The reason is patently obvious. At least half the continent is completely and helplessly bankrupt. There are only two outcomes to the entire situation. Either the sovereign debts are written off aggressively and the banking system declared insolvent and restructured or the ECB decides to turn on those printing presses to the tune of trillions and destroys the purchasing power of the union in Zimbabwe-like fashion.

    Remember, there is a very good reason that no “definitive solution” has been announced.  There is none. What the Eurocrats are trying to do is pretend that lifelines to bankrupt nations will be enough to tide them over until strong growth allows them to wiggle out of the problems.

    So there are two choices and no one can be totally certain which outcome it will be but either one will result in massive wealth destruction.

    The first choice is the one I prefer (hard defaults and a declaration of insolvency of the banking system followed by restructuring) because it will place the majority of the losses and pain on the elites that led us to this ruin and who own most of the financial assets in the world.

    The second option (massive inflation and loss of purchasing power) will kill the poor and middle classes as well as the wealthy but financially illiterate. The ruling oligarchs will be fine (until the masses come for their heads) as they understand what they are doing and will move to protect their assets. Since the same criminal, crooked and morally bankrupt financial oligarchy is still pulling the strings worldwide you have to assume they will opt for choice number two, although unforeseen social and political events could throw a wrench into their twisted plans. Gold is the only asset that should outperform in either scenario.
    –Mike Krieger

    It’s taken almost two centuries for bankers to pull the wool over Americans’ eyes, but today you and I are working for intrinsically worthless paper that can be created by bureaucrats — created without sweat, without creative ability, without work, without anything but a decision by the Federal Reserve. This is the disease at the base of today’s monetary system. And like a cancer, it will spread until the system ultimately falls apart. This is the tragedy of the great lie. The great lie is that fiat paper represents a store of value, money of lasting wealth.”
    – Richard Russell

    The money men and their cronies directed the peace dividend into their own pockets. And now that hard times have come, they wish to not only keep their gains but multiply them, and visit hardships on the very people whom they have defrauded. Their greed and hypocrisy knows no bounds.
    – Jesse, at Cafe Americain

    We live now in a strange world where a gradual reduction of deficits (ie an INCREASE in debt) is called austerity. This is a joke. A bailout means more extend and pretend, more illusion of prosperity while politicians pretend they are running a semblance of austerity measures. Smoke and mirrors. Real austerity means no deficits AT ALL allowed. That’s what a default means in practice as the country can’t get any external sources of financing for at least the next 5 years. So at least, please, let’s be clear about what austerity really means. We haven’t seen nothing yet, not in Greece, not in the UK , not in Ireland, nor anywhere else. Everywhere it’s been extend and pretend.
    Chrisina (Zero Hedge)

    The significant problems we face can never be solved at the level of thinking that created them.
    – Albert Einstein

    The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title.
    – Anonymous

    The problem facing the world today is the fraudulent nature of the global central banking system and the monetary units they peddle
    – The Daily Bell

    All governments can do is print, borrow, or steal from taxpayers. These are exactly the policies that created a loss of confidence to begin with, and now they are pledging to restore confidence by doing the exact same things.
    – Simon Black

    By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.
    —John Maynard Keynes

    No QE means no tomorrow. QE equals an inflationary to hyperinflationary bunch of tomorrows. Eventually, either way, in time the piper must be paid. No QE and the piper arrives immediately
    – Jim Sinclair

    No warning can save a people determined to grow suddenly rich
    – Lord Overstone

    Roughly speaking, the mess we are in is the worst since the 17th century financial collapse. Comparisons with the 1930’s are ludicrous. We’ve gone far beyond that. And, alas, the courage and political will to recognize the mess and act wisely to reverse gears, is absent in U.S. leadership, where the problems were hatched and where the rot is by far the deepest.
    – Dean Harry Schultz

    The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.
    – Lenin

    The US has been led down a dark alley and strangled in what history may recognize as a financial coup d’etat, and a campaign of economic war against the common people.
    – Jesse, at Cafe Americain

    The creeping unification of Europe … since the time of Jacques Delors [has been] managed by the bureaucrats from Brussels behind the back of the continent’s population, behind the back of the citizens of individual member states.
    – Václav Klaus, Second President of the Czech Republic, Former Czech Prime Minister and Finance Minister. (Article in the European Journal, Dec 2003)

    Europe’s nations should be guided towards the super-state without their people understanding what is happening. This can be accomplished by successive steps each disguised as having an economic purpose, but which will eventually and irreversibly lead to federation.
    – Jean Monnet, Founder of the European Movement, bureaucrat at the League of Nations. 30 April 1952.

    Of all the contrivances of mankind for cheating the laboring classes, none has been more effective than that which deludes them with paper money.
    – Daniel Webster

    Never forget that currency is simply an IOU. For what? For gold. That was the original intent. IOUs can be traded for other things like food as long as there is gold supplying value. Otherwise it’s just swapping food for paper. If the US ever sold off the gold reserve, the dollar would lose reserve status immediately and would play second fiddle to the next dominant currency. [And is there ANY gold left in Fort Knox???]
    – Caviar Emptor (Zero Hedge)

    “The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress.”

    If you refuse to believe the above, please read “The Creature From Jekyll Island: A Second Look at the Federal Reserve” by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.
    – Dave in Denver

    If you want to know when a society is set to vanish, watch the money. Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of moral existence. Destroyers seize gold and leave to its owner a counterfeit pile of papers.
    -Ayn Rand

    Big things are happening. This sometimes seems like watching a tsunami approaching in slow motion, while most of the people are still playing on the beach, without a clue as to what is coming for them.
    – Jesse, at Cafe Americain

    • Cam Fitzgerald November 4, 2011, 4:20 pm

      We can’t all hold negative views on the world, the economy and the future. There would be no balance. Someone always takes the other side of the trade. I appreciate you long response and agree with many of your remarks. I don’t live in a cave and I do acknowledge there are a lot of problems that need to be overcome but primarily I object to the excessive negativity in sentiment that has become so pervasive in the blog world that it deprives hope of even the little oxygen it needs to survive.

      Who ever won a battle by going into war saying “we are lost” and “all is a hopeless”? Perhaps we are in a super cycle-wave and heading into a Kondratieff winter. I don’t pretend to know. I refuse to let all the doom and gloom get me down though. I have been feeling downright positive lately though and I just don’t think things are getting worse anymore.

      What the heck will you do with your time if we actually stage a recovery and the economy begins to improve? Oh yeah, almost forgot….peak oil.

      The sky is falling.

    • Ian November 4, 2011, 8:22 pm

      Fantastic Rick, I’ve never seen anyone lay it out better. You are absolutely on the money. Are you sure you are not my twin brother, I’ve never agreed more with anything I have seen written. Congratulations.

      Ian.

  • Dinger November 4, 2011, 3:23 pm

    . You are right about one thing Pat, keep it simple. Prognosticators can wave their flags of victory and claim victory, pointing to periods of time when they get it right. Cam had a good read of the tea leaves. So lets visit Fiat 101 to keep us grounded and pointed in the right direction.

    As we all know, money creation and expansion is the critical component to the fiat system. When the mechanisms to expand the money supply through safe and legitimate means have been wrecked, and your customers have no ability or desire to participate, the system fiat system must print or die. Print they will. Ignore the trickery and and especially the financial shell game along with it’s professional level of media coercion. The math says it all.

    The poisoning of the mechanism lies in the derivatives. The financial alchemists continue to create and distribute the derivative drug but buyers ignore the dangerous side effects, and worse, do not care about the symptom. Go ahead and buy the snake oil and see what it gets you. Remember, the very engine you feed is sputtering, and the mechanics have no tools.

    Yes Cam, traders must figure out how to be right. I hope you put your money where you mouth was. As for me, I’ll draw a line in the sand and side with history and the “old guys”. I’ll sit tight and sit right with gold.

    • Cam Fitzgerald November 4, 2011, 4:00 pm

      Yes, I put my money where my mouth was Dinger and it paid off nicely. So much for being 95% wrong. HaHaHa. good one.

    • Steve November 4, 2011, 9:33 pm

      Dinger, ya got to get the money into the hands of the people in the form of wages – get it? Print all the fiat you want. The top 1% can only spend so much. The rest are going backwards. The riot is just starting. Okay, the fed is going to buy stocks to leverage the stock value you have and, at the same time the fed is going to plug the holes of debt that americans are creating again on credit cards because their real wages are going down. If the market does go up how many boomers do you think are going to cash out and spend recklessly ? 20% out of work and corporate numbers like are being reported – I don’t think it is anything other than legalized number playing.

  • Brad November 4, 2011, 3:14 pm

    Weird, my charts have gold and oil at the same levels as July.

    But if you are humbled I guess I get to say I told you so too.

    • Cam Fitzgerald November 4, 2011, 3:22 pm

      I think you are misunderstanding what I wrote. Both times.

  • dumbmoney November 4, 2011, 2:52 pm

    Wheeeee!!! Perfect, I thought the Gold and Silver were going to leave the station before I had a sufficient pile. Thank gawd for the gov’t, how else could I buy G&S at such cheap prices!!!

  • Pat November 4, 2011, 1:50 pm

    Cam, you convieniently didn’t address the fact that the market is DOWN from when you predicted a new bull market .

    Real simple….$ falls, everything, including commodities, go up. $ rises, Euro, and everything else, falls.

    • Carol November 4, 2011, 3:24 pm

      Right on Pat and I would add – NO market goes straight up or straight down. Every trend is temporarily interrupted in order to catch as many on the wrong side as possible, this is the markets job and it has succeeded here as well.

      Also Cam how on earth can you say out of one side of your mouth that commodities and PMs are getting hit and this will continue but then say that inflation is going to hit hard. Those two points are opposites and cannot exist together at the same time.

    • Cam Fitzgerald November 4, 2011, 6:06 pm

      Carol, the problem here is that my remarks from four months in the past should not extrapolated into the future. My contention has always been that high commodity prices drove the risk of returning us to recession (official numbers) and that excess speculation was having a negative influence on economic performance. My views have not changed in that regard. What has changed is the dynamics of the political environment and those changes have turned me from bearish on equities to bullish while leading me to conclude that we are indeed set for some significant inflation. If I have made a mistake it is only to have addressed the past mob responses in the same post that I discussed my future views.

  • kodiak November 4, 2011, 1:43 pm

    Ain’t it amazing how we all want to be right and beat our chest about it.

    Markets prove everyone right and everyone wrong in different windows of time.

    World economic leaders/dumbasses are going to “fix” everything until they can’t.

    Oh, and nothing in this Universe is too big to fail.

  • Dale November 4, 2011, 1:17 pm

    Congratulations, Cam, on a well written, fodder filled article, and for being right so far. But three months is a very short time to measure. Remember that it is possible to win a battle, or even a series of battles and still lose the war, One can be, or guess, right in the short term and fail miserably in the long run. There is often a flare up, before the flame out (happens every time I turn off my gas grill). The US stock market as well as the USD may well be in the flaring stage of flame out.

    That “all recessions eventually end” is true enough. But end how? Most often they end in a “recovery”, occaisonally in a “depression”. This time it will be one of unfortunate depresssions”, I fear.

    “Disposable income is also increasing”. Where did that come from? No one I know has any extra pocket change. You must be referring to all those former home owners who are now squatters, or the financial heavy weights who are stealing from their depositors and/or investors. My raise this year was 0.8%, following a year when my salary was “adjusted” down 19%. So I guess if you don’t go back too many weeks, my disposable income went up as well.

    I agree that you were relentlessly attacked on the former article (and when all is said and done, your fate may be the same here today) and as Clinton was fond of saying, “I feel your pain”. This forum is home to many intelligent people and intellectual debators, but unfortunately, some are a little lacking in manners. I attribute it to a “generational” phenomena. Attack the ideas that you disagree with, and any perceived false persona if you must, but let’s try to keep it beyond the personal attack level. It is not easy at times, especially when invited with inflammatory statements such as “I had a hell of a good laugh the day gold stunned…” to an audience made up largely of precious metal traders, several of whom may have taken significant losses while being laughed at. What kind of reaction should one expect?

    Continue posting, Cam, we must all keep our friends close and our (sparring partners) closer.

    Dale

    • Cam Fitzgerald November 4, 2011, 3:20 pm

      If you knew me you might guess know how hard I laugh when I read comments like yours. Thanks for the chuckle, man. Always happy to fill ones day with fodder. The nice edit was Rick’s, not mine. Give him some credit.

    • Dale November 4, 2011, 3:45 pm

      Thanks,”laughing man”, you underscored my point magnificently. As for Rick’s edit, knowing him as I do, it was to make your statement less inflammatory or obnoxious.

  • Mark Uzick November 4, 2011, 12:49 pm

    Cam: Do you really believe that the state’s policies can be used to control commodity prices for more than a moment?

    Commodity prices weakened because most the world has entered into a depression. Increasing margin requirements may reduce volatility but it has no long term net effect as it works against both the long and short positions equally. Besides, it’s usage and, in the case of monetary metals, long term accumulation that, in the long run, create the demand side of the price equation, not speculation.

    I think you are right that there will probably be massive price inflation in terms of fiat, but in terms of real money, we are already in a deflationary depression brought about by the collapsing credit bubble, where debt is being defaulted on by a means that protects special interests by socializing the cost, a method that is otherwise known as monetary inflation. That’s the QE3 which you don’t believe will occur; I hope your right, but then we’d both be wrong about future price inflation.

  • donniemac November 4, 2011, 10:28 am

    Cam,
    I am in your camp!

    But I don’t think that Rick’s lead-in was all that negative. At least he did not post a picture of my brother in law with your essay. 🙂

    • Cam Fitzgerald November 4, 2011, 3:12 pm

      Perhaps you are right. I might have been getting a little touchy yesterday after reading the usual batch of negative responses. The real question for Rick is this though, if he disagrees with 95% of what I wrote why on earth would he publish on the site and why offer me such friendly encouragement to offer my views? Come to your own conclusions.

      &&&&&

      Cam, anyone who knows me is going to conclude that you’re just a wee bit paranoid. I encourage all points of view in here, even those of optimists. RA

    • Cam Fitzgerald November 5, 2011, 8:18 am

      Good enough for me. I have always liked your style to be honest. You are outspoken and genuine. I just don’t like being made a fool of for site entertainment. Especially when I have made an effort on behalf of the site. That is not paranoia, it is a very legitimate expression that goes to the heart of trust.

      Stop deleting my posts, by the way. I don’t appreciate it.

  • Steve November 4, 2011, 8:36 am

    Cam, expressly to today’s writing. Prophets should step up to the plate with the Law. If one issues false prophetic words the consequences should be fatal. If one is just guessing then a simple admission of truth seems to work best. Seems to me to be a bit like Clinton – what is the definition of the word “is”, and I didn’t have sex with that woman one time – I just poked a bit with a cigar, and did it a bunch of times instead of just ‘once’. The article reminds me of others I have read full of bravo bravo charlie. No need to puff – let words commend while silent.

    I even guess right sometimes Cam.

    When one impungs the character of another using the internet recklessly and falsely it is a libel. The open implication that I have received govenment checks, or any other benefit of the federal corporate state falsely it is a libel. Stating that I support communist theory or practices of democracy is an falsehood insult in defamation publically is a libel. That the prior Cam article theme came right from the Communist Manfesto is factual ‘everyone according to their ability, everyone according to their need’. If I wasn’t busy in court already fighting private contract, and estate title to a freehold I’d give you a go just for the fun of it. I won one today against the BANK OF NEW YORK AS TRUSTEE FOR THE CERTIFICATE HOLDERS CWABS, INC. ASSET-BACKED CERTIFICATES, SERIES 2005-9, IT’S SUCCESSORS IN INTEREST AND/OR ASSIGNS, whoever that is of the 62 Bank of New York listed with the Comptroller of the Currency.

    I used the gold contract as an example for all others on how to construct a basic private contract in money. One can insert any form of money they choose – gold, or partly digested green like is in my pasture. Cam highjacked the thread, why not me with something useful like a basic contract by private right using any form of money they choose.

    It is always the way of the liberal, the belief that they can misrepresent and spew false testimony in defamation without regard to consequences.

    All the bulls are about ‘all in’ again, and euphoria should scare the pants off of anyone who knows that the crowd is always wrong in the end. What is that called Cam, a BEAR TRAP. Positive tailwinds throught tomorrow I’m told. I have no idea how the positive tailwinds affect this week. But, if the market goes up tomorrow I’ll be right -sure/right someone else will be right I just spewed and won a 50/50 odds chance.

    I tend to forget that Canada is a nation of subject persons who will fight and die to have a Queen rule over them as inferiors. I tend to forget that Liberty has been boiled out of the british subject. Remember the pots of oil during the Reformation. Indulge in a little brainless movie watching with Quigly Down Under – he said it well.

  • mava November 4, 2011, 8:34 am

    Cam, you’ve got to be kidding.

    Chalk me up into a row of those who says you’ll be wrong.

    • Cam Fitzgerald November 4, 2011, 5:55 pm

      You mean wrong that equities are actually in a bull market now and that there will not be a big fat market crash. Sure, I chalked in your name. No market crash is coming this year. If you want to sit on the sidelines like so many others and cower while markets continue to rise then be my guest. you will lose that bet.

  • Ian November 4, 2011, 7:10 am

    And if you won’t try a Steven Kaplan subscription Cam maybe buy an Eckhart Tolle book and read about ego and being right or wrong.

  • larry November 4, 2011, 5:13 am

    Rule 1: Politcians can never survive a deflationary environment. Don’t ever forget that.

    Rule 2: Always always always bet on inflation when politicians have enough levers to defy the downward pull of real market values.

    Rule: Until there is a major political crisis, those who own the printing presses, in the short term, make the rules.

    • Cam Fitzgerald November 4, 2011, 5:19 am

      Good logic Larry. You seem to get it.

    • Carol November 4, 2011, 3:10 pm

      “Rule 1: Politcians can never survive a deflationary environment. Don’t ever forget that. ”

      I see NO evidence that such is the case. Look to the US in the 30s and Japan since 1989, nothing happened to any of those politicians, so where do you get this “rule”?

      “Rule 2: Always always always bet on inflation when politicians have enough levers to defy the downward pull of real market values. ”

      We all know and recognize that the “players” can tinker around the edges but there is NO WAY they can change the direction of the trend LONG TERM!

  • Bob November 4, 2011, 3:51 am

    “anti fiat outlaws” ?
    I , too, was struck by that one. A real gem of a twist on reality. Good work, Cam. Keep that up and you’ll be a fit spokesperson for the Washington Spin Team in no time.

    But about that inflation theme. You still haven’t answered where or how the people are going to get the money to chase prices up. That is an insuperable glitch that will force deflation until you solve it. (gotta find jobs that have lots of pay raises for all those people)

    In any event, you’re a good and entertaining read….(anti fiat freaks?….anti fiat wackos?….anti fiat hoodlums?…luddites maybe?….Ah! I have it now! Ron Paul supporters! Texas, wouldn’t cha know.) Hope we hear from you again. :))

    • Cam Fitzgerald November 4, 2011, 5:18 am

      You have no idea how much I mean it.

    • Robert November 4, 2011, 10:05 pm

      Everyone’s an outlaw…

      When there are more laws than there are people- someone is guaranteed to have something on everyone else…

      Outlawry is the only “new normal” that I can see, quite frankly.

      But hey- If John Corzine manages to stay out of jail, then I guess there’s hope for us all….

  • Pat November 4, 2011, 3:50 am

    BTW, the Dow was at 12,700 on July 7th when you told everyone to “get long” . Its at 12,100 now, 600 points LOWER !

    Sorry, no “bouquet of greenbacks” bro. And any bull market in stocks will also bring a new bull market in commodities. Everything is still basically trading as “one market” and all hinges on the $/Euro.

    DEflation will rule !

    • Cam Fitzgerald November 4, 2011, 5:27 am

      Nonsense. Deflation is dead on this cycle. Even I can see that and I am a deflationist for gods sakes. Better take a closer look at what is happening before you make the wrong bets. Rick too, who seems to take an objection to my point of view and penned a forward to todays article that was not quite a fair representation of my views. A negatively biased lead-in assures the local sheep fan-club will do the usual dog-pile though. Same as last time.

      You all remember last time right? When you were all wrong?

    • Rick Ackerman November 4, 2011, 2:45 pm

      Cam, although I disagree with about 95% of what you’ve written here, I gave you the broad benefit of the doubt in letting you crow about predictions that did not pan out nearly as precisely as you’ve claimed. Under the circumstances, my intro was pretty gentle on you. As to its accuracy, I’ve now linked your original essay so that readers can judge for themselves.

  • Pat November 4, 2011, 3:38 am

    Improving economy ??? Where! Misery index at 35 year lows, consumer confidence near all time low, 46 million people on food stamps, people protesting in the streets all over the country (and world for that matter), 400K new jobless claims every week. Disposable income rising? … I don’t know where you read that, its been falling for decades. Home prices still falling, personal bankruptcies rising again, foreclosures picking up again.

    Yup, sounds like the making of a bull market allright LOL And everything is just dandy in Euro-land too !!

    • Cam Fitzgerald November 4, 2011, 5:45 am

      Stop watching the bloody TV and start thinking for yourself Pat. If you have not noticed, housing prices have bottomed and are stabilizing relative to the actual fall from the peak.

      Consumption is up more than eight months in a row despite terrible sentiment readings. So I suppose people feel bad but they are spending more money and that is a big deal as this economy is 70% dependent on consumption. We care too because we are heading into the Christmas season.

      Discretionary income has increased too. GDP is rising, quarterly earnings were terrific, companies are sitting on a cash hoard and thinking of stock buy-backs and mergers, China is slowing but since when is 9% growth a poor figure and even the rate of employment is flattening on the curve.

      Big changes come in small steps. Did you really expect we would just go from being in a deep recession to high growth overnight? Give it time. Even slow growth is growth and we are still posting positive numbers.

      Of course if you sit and read the doomer blogs everyday then there really is no hope at all. We are cooked according to them. Finished. Do I care? Not on your bloody life, and here is why. Most of that pulp is bullshit and anyone with half a brain that uses it should know better.

      See, being an inflationist actually makes you more positive about the world. Hell, I feel a lot better already.

  • gary leibowitz November 4, 2011, 3:28 am

    Where to begin. The dollar: I do agree that the dollar will rise from here. Can’t support equities though as this happens. In fact every single time a bullish trend starts with the dollar equities swoon. It will do well simply because most other economies will do worse.

    Inflation: Not going to happen. I stated this 7 years ago, even before anyone saw the housing collapse. Debt saturation world wide has occured. The only relief from this is deflation. Thats why housing keeps falling. No joint conspiracy here.

    Consumer: Dead. Spending is rising but not from discretionary income. In fact for the first time in 30 years income has fallen 10 percent taking into account cost of goods. The credit card use is back. Never a good thing with one in four homes with negative asset value.
    Jobs are as dead as housing. In fact both with show an acceleration of the down trend.

    Equities: Rises on earnings and its expectation for the future. Nothing else. Earnings had to be pulled back 3 times this last quarter by analysts in order for them to “beat” the estimates. In fact earnings going forward does not look good. Announcements of next quarters expectations was cloudy at best. The assumption of a GDP over 3 is the only reason why they have such high hopes for next year. The Fed already said they are reducing expectations for next year. A 3 year doubling from the bottom and you think it continues? In fact we should know this month. A breakout or breakdown is likely to occur.

    Government austerity by reducing jobs, and keep the one trillion per year tax break for the very wealthy is not a prescription for growth, nor inflation. QE3 will not happen simply because there is no more political will to do so. A global debt problem that is on the brink of collapsing the EU and you think this is inflationary? Inflate private sector by reducing jobs and services?

    One year from now we will still question where the jobs are, where the income growth is, and why bond yields remain at historic lows. if we didn’t pull out of this mess in the last 3 years what on earth will be the catalyst to do so?

    • Cam Fitzgerald November 4, 2011, 5:11 am

      Sure. I see your perspective Gary. Some days I feel there is no solutions too because of the overwhelming number of problems on the burner. The thing you need to keep in mind is that all recessions eventually end.

      This one will too.

      As far as inflation is concerned, be prepared because it is coming. We are importing inflation right now from our many trading partners and it is worth noting that inflation is already running hot all over the globe right now.

      Your biggest concern is that the highest inflation is in the countries we do a lot of consumer trade with. Specifically, China who is suffering a rate of 6.1% that many agree is just a manipulated low-ball number. The true figure is likely much higher although getting hard data is never easy where China is concerned.

      Look, our turn is coming, Gary. We are not exempt. We are only the last to suffer the consequences and that in itself is odd as the source of much of the worlds inflation actually originated in Fed policy and stimulative actions here at home.

      Stock markets meanwhile do not sit still and wither as inflation rises. As companies respond to market forces this is usually reflected in valuations. Earnings matter as you pointed out and as we see rising inflation earnings will generally grow with them. This is an effect that merely passes on the new rising costs to consumers which is another way of saying that companies themselves do not always suffer directly.

      My point is, markets will rise to meet the new regime. There is no stock collapse coming as many predict. On the contrary, stock prices could rise very dramatically and this bull market could carry on for a long, long time. I would not be going short given the current environment except as a very short term trader who is in and out.

      Your biggest concern now is that inflation expectations alone will raise equity values and that could happen well before actual increasing inflation rates are being reflected.

      This is happening already in my opinion. Many of you who believe in the market collapse theory may just find yourselves priced out of the market and not knowing where the new top will be.

      It could be a very long wait for the collapse thesis to pay off.

    • Rick Ackerman November 4, 2011, 2:38 pm

      A nice summary, Gary. You’ve said all that I might have wanted to say myself.

    • Tom Paine November 4, 2011, 3:09 pm

      Gary,

      You make a good case for deflation. Do you see the possibility of a continuation of the trend in the US of price deflation on items usually purchased on credit or manufactured in foreign sweat shops and price inflation on items that we usually pay for in cash and cannot be imported?

    • Robert November 4, 2011, 10:00 pm

      “Robert, what happens to the DNA pool when everyone who is not willing to die for the King is killed, and only the ones who fought and did not die, but; were willing to die to serve the King as a subject; breed? Is that called evolution?”

      I guess it could be evolution; if the common goal was indeed what I have lately termed “terrestrial dolphinhood”

      I need to trademark that term. 🙂

      I personally would not call it evolution- I would call it Uniformitarianism: a concept that was fairly completely abandoned by science with the “shocking” discovery that the rocks beneath our feet are always moving, and that this movement was where earthquakes come from, and that an “angry God” concept was not at all required to make the ground shake.

    • Robert November 5, 2011, 1:37 am

      I guess I should elaborate on the “terrestrial dolphinhood” term for those of you unmotivated to go on a wild goose chase for past posts (I don’t blame you one bit)

      1) Dolphins are highly evolved intellectually. Depending on whose research you lend more credibility to, they are #2 or #3 to Humans on in the Earthly intelligence curve.

      2) Dolphin society is well ordered and uniform, if not sexually aggresive and somewhat violent. In Dolphin society, the bosses know who the bosses are, and so does everyone else.

      3) The order within Dolphin society is only disturbed by the external threats of Killer Whales (which they run from) and sharks (which they typically face down, attack, and kill on sight)

      The rest of their time is spent swimming, jumping, nurturing, fraternizing, and looking for the next school of sardines for dinner.

      This is what the progressive mindset believes our species can become if we’d all stop hating each other and just accept that peaceful uniformity is a most worthy and noble goal for humanity.

      There are those of us, however, who believe that there is a greater purpose than chasing sardines…. we seek bluer oceans to swim in, and we refuse to stop learning about what it means to be more than we currently are.

      I will never be a terrestrial dolphin. Uniformity violates certain uncorruptable laws of the Universe (Thermodynamics number 3 being my personal favorite)

    • SD1 November 5, 2011, 2:28 am

      Why can’t the dollar and equities rise together, Gary? They used to and could again. It’s only been ten years since the markets and the dollar became inverse. Why must that inverse relationship continue? You may find the world’s money flowing back into the US and that money could very well make its way back into the stock market. It’s sad that so many Americans have given up on their own country.

  • Ian November 4, 2011, 3:27 am

    You should quit while you are ahead Cam and buy a subscription to Steven Kaplan’s True Contrarian. He, Erik Hadik and Rick (and Harry) get it right more times than most. Entertaining article to read though, maybe you could write some fiction on things other than the financial markets.

    • Cam Fitzgerald November 4, 2011, 4:50 am

      Fiction? Maybe you need to get some reality. Go back and read my original piece and take note that virtually all of the predictions came to pass as I told you they would (that means you were wrong). Here is the link.

      http://www.rickackerman.com/2011/07/commodity-bear-says-2012-election-holds-key/

    • Divergent Opinion November 5, 2011, 7:45 pm

      This is the nuttiest article I have ever seen RA allow on his site. Must be loyalty, to a sad, lost, obviously senile, long term poster. So hey, no problem, I rate loyalty way over any logic. So go go go, whacked out dude C.F., let them all know what it’s all about, in your ancient, lonely, totally looney, distorted mind world.

      I concur with Ian, what you write is mostly fiction, and even insane fiction.

      Totally self-deluded. And nearly laughable, if it wasn’t so self-deluded. As a matter of fact, I feel as I skim through it, that I am reading science fiction, about the mad ravings of a senile ex-investor, that has just been released from his straightjacket, so he could jot down all the market jibberish inside his head, before he is placed back into his straightjacket. Sounds like a movie I would watch. Maybe I’ll write the script. Good theme, ex-stockmarket decrepit investor goes raving mad, spews out ancient dribble endlessly, like an old ticker tape from the 30’s.

      C.M., I will just touch on 1 theme of your “great brilliant call” thesis, and that’s that there is a bull market in stocks, right now.

      Where do you get that crazy idea? Just because there has been a 1 month violent bear-trap rally?

      FYI, a bull market is not called until you exceed the primary high (DJI 14,093, Oct. 2007), or at least the last prior high of DJI 12,810, which occurred this past May, which number has not yet even close to being exceeded—since the DJI right now is battling hard the 200 day moving average, plus the neckline of a multi-month large head and shoulders formation, and these are 2 historical MAJOR resistances (and BTW, it’s an eerily similar chart formation, to the one in late2007/early2008, and what happened after that, WASN’T bullish, C.F.).

      Plus, on top of that, your bullish call was made on last July 7th, is the WORST possible market bullish call I have seen (and I’ve seen a lot), for the market CRASHED shortly after you made that whacked-out call (falling TWO THOUSAND DJI points in only 2 weeks, between July 22 and August 8).

      Additionally, the stockmarket has not yet even RECOVERED fully, from that huge fall; which makes you, and your misguided, chest-pumping article above, well, totally pathetic.

      Since, C.F., what the charts show NOW, and what the world fundamentals also show NOW, is that what we have (STILL) here NOW, is an EXTREMELY OVER-EXTENDED 2-1/2 year BEAR-market equities rally; a short-covering rally that is already foaming at the mouth, totally exhausted, waiting for SOMETHING MAJOR, to finally put it out of it’s weezing misery.

      And the first DJI leg DOWN has already begun (and right after you made your TERRIBLY-timed July 7 call; plus, it is in the same exact way, that you are NOW making another terrible call, in calling for a new bullmarket, in high-dividend “blue chips”).

      Because, C.F., until 12,810 DJI is solidly taken out (which I extremely doubt will ever happen, and for at least for 2 or 3 more DECADES) all we have RIGHT NOW, is just a violent BEAR-trap rally (of which RA probably already noted to his subscribers, that most market advisors are NOW getting very bullish, and just like you, whacky C.F., at the WRONG time, since all this current November seasonal bullishness is very BEARISH—because waterfall drops always happen, when nearly EVERYONE gets all bullish and all drippy happy, like you are right now).

      Only thing I agree with you, is that there wasn’t gonna be a Q3. For it’s all over now, you see, with the phoney-baloney, Wizard of Oz “hyperinflationary central-bankers in-control” scenario. No more BS, coming soon, to your TV set. And you ain’t gonna like what you see.

      For all that is straight ahead, is massive deflation, a devastating depression for 20 to 30 years, due to cascading dominoing stratospheric world debt defaults, in banks, nations, states, municipalities, pension funds, etc, etc. The party-hangover philosophy of nearly 7o years (’44 bretton woods) of ballooned, manufactured fiat-cash, plus easy-credit, to obvious non-payers. It’s over. So kiss your whacked out decrepit looney azz good-bye. And smile. For at least, RA is your friend. ‘Til the bitter end.

      &&&&&

      Yeah, I’m nothing if not a loyal friend, D.O. Thanks for setting the record straight regarding the stock market. RA

    • Divergent Opinion November 6, 2011, 1:19 am

      RA, though I totally disagree with CF on a stockmarket bull, I agree with him on all commodities, including gold and silver, which will all dive south very soon, and in synchronicity, with the overall stockmarket, once it does.

      Gold and silver prices are based solely on inflationary liquidity and easy credit, despite all the differing “real money” palaver ever spewed on your site, by the historically obssessed goldbug diehards herein. Gold mania is over. $1920 gold will hold for at least 2-3 years, and I’ll bet on it. Plus I see a retest of low $1500’s gold soon, and of under $30 silver also.

  • Tom Paine November 4, 2011, 3:17 am

    OK, Cam, is it? You were right, and this is a good article, if a bit long. Just one thing I want to comment on.

    You said, “That small band of anti-fiat outlaws representing a tiny fraction of the investing population were responsible for the vast majority of negative commentary that I saw daily on many websites. Shutting them up for a while came as a happy relief.”

    Anti-fiat outlaws? Isn’t it the masters of fiat that are the outlaws, stealing the wealth of the thrifty through inflation?

    As for gold and silver, sure, they can knock down the paper markets with their margin hikes, but that hasn’t and isn’t going to stop the surge in demand for the physical commodity, being bought as one of the only defenses against the theft by inflation by the fiat masters.

    And you do see inflation, now?

    I agree, it may not end with hyper inflation. If the masters get it right, they might be ale to balance out the deflation from imploding debt/derivative bubbles and bring us back to some sort of equilibrium. Then again they might fail, and hyper inflation is a possibility, even if somewhat remote. Another nasty bought with deflation could also come almost at any time if they let off the money printing peddle too much.

    I’m looking for stock market surge here, too, but I’m keeping a close eye on the situation in Europe. It could get uglier than we know faster than we think.

    • Cam Fitzgerald November 4, 2011, 4:43 am

      All great points Tom. You won’t hear much argument from me where Gold is discussed. Given my strong beliefs now in an inflationary future, Gold will be a stellar investment for many years to come.

      Just be prepared to get out before rates rise.

      I am not partial the band of crazies that get on the gold bandwagon, by the way. They come across as fanatical extremists and seem unaware that even gold will have its day and be done. Yeah, it is coming eventually.

      They have been far too negative on the issue of the dollar and the economy (and dead wrong lately too, by the way). I began to worry. After reading so much of the overwhelming negative sentiment expressed by that crowd of half-baked gold-hugging lunatics that their ideas were actually becoming detrimental to the conditions needed for a recovery to take place.

      Their thinking was a reflection of the fears in a bad ending for all of us but it was becoming infectious. Even normal people I knew began spouting the same crap to me as if it were gospel. The gold camp had the ears of media consumers on the web. They were leading the charge of negative sentiment much as our MSM leads the thinking of the sheep.

      I am not so far off on that mark.

      It seemed every article and commentary I came across for awhile spewed the same deranged ideas of financial Armageddon. I did not agree with them. I still don’t.

      Much of the blather, if not the majority, was penned by a small dedicated group of people who swore by gold and decried every attempt to remediate the difficult problems the economy was facing. They are still a minority of voices if I am not mistaken. Do more than 1% of Americans yet own gold? And yet they overwhelmed the blogospere every day.

      It became obvious that every half-wit with a laptop, an attitude and an internet connection could expound profusely on topics they did not even understand fully, yet end up being taken as seriously as some of our best economic minds.

      As far as I was concerned we all benefited by shutting up their negative rantings for awhile and naturally I was more than pleased when the price of gold fell through the floor. Of course, it was predicted and it did come to pass. I had warned you that trouble was brewing and I had a hell of a good laugh the day gold stunned all those whacko’s and fell like a rock.

      Don’t get me wrong. I like gold. It is a good investment right now. I just don’t enjoy the rantings of people whose mission in life is to live in the bush with camp-stoves, guns, gold, canned tuna and squirrel recipes.

      So all summer long I watched as the dollar traded in an odd sideways pattern. I was convinced it would bounce hard once it finally broke out and my rationalization was that the trauma underway in Europe would determine the direction. I was in fact proven absolutely correct in that assessment. The bounce was explosive; a surprise to most (not me) and gold took an overdue face plant.

      And all the loons shut up for just about two weeks which was a very nice short term relief as their rants had just about made the daily experience of reading business bogs a waste of my time.

      See. I like gold. I just don’t like crazy people.


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