Financial Sense Blog

Just picking up a daily newspaper can show you how news is biased, letter writers are not exactly with it and some things are just dumb.

There are three primary reasons why the US is suffering from structurally high unemployment: a pervasively irresponsible monetary policy, the continued attenuation of our manufacturing base, and an overleveraged consumer who must now reconcile his balance sheet. In reality, the latter two conditions are a direct result of the first. They are the result of a government that seeks to micromanage the cost of money and the rate of economic growth.

The Gulf of Mexico disaster has changed U.S. priorities, costs, and energy supply sources for years to come. But the fact that the U.S. needs energy isn’t changing anytime soon, and as mass sources of green energy are still a while away, the most likely alternative might be the most surprising one.

The following chart shows the weekly picture of the S&P 500 with the MACD indicator from July, 2002 and suggests a divergence between price and the MACD has been forming since late 2009. The tug of war between the bulls and bears has resulted in a market that has chopped back and forth since May. The "bulls" need to be more convincing with other than beginning-of-the-day gap openings to the upside, up Mondays and last hour afternoon rallies. The "bears" need to more convincing with follow through to downside.

When a government official, who can have you executed, tells you to lend, obedient bankers lend. The Chinese authorities can hide the truth for a period of time, but the bad debt caused by the Chinese stimulus and malinvested in office buildings, condos, malls, and cities will eventually lead to a monumental collapse in the Chinese real estate market.

Stockcharts.com.au says that if 100 people begin trading the market, after a year only 20 are in the black, and after five years, only 5% are in the black. I view that as likely an optimistic number. Secular bull markets totally distort the reality of the markets, most of which were designed by the banksters as wealth transfer mechanisms, from you to them. I think the numbers are more like 1 out a 1000.

Two mines are under development in British Columbia, with several more set to move forward. After decades in the doldrums, the province’s mining industry is gaining momentum. Recent discoveries are adding to numerous deposits that were found in decades gone by. Exploration programs throughout the province hold promise of further discoveries.

Evidenced by Tuesday’s drubbing of gold and silver into COMEX (paper market) options expiry for the metals, which is an all too common occurrence that goes unchecked by regulators, it’s apparent the banking cartel’s resolve regarding suppressing metal’s prices is particularly strong...

Central banks money printing is out of control. The constant printing of all the world’s currencies is just another way for countries to default on their debt – the repayment of a creditor occurs using a currency whose purchasing power has been reduced. Gold’s price will continue, has to continue, too rise in value against all depreciating paper currencies.

Dialing out to the monthly view shows all appears to be well with the Dow. America’s most watched index held an important support level after faking a breakdown at the end of Q2. Also of note is that the Dow remains above our long-watched EMA 20, which supported the entire cyclical bull market (2003-2007).