War is the health of the Deep State
By Greg Canavan in Albert Park, Melbourne Once again, all the action was in the precious metals markets overnight. While the main stock indices stood still, the US dollar gold price surged another 1.5%, to around $1,420 an ounce. The various gold stock indices shot up around 3.5%. As I said yesterday, you should expect to see some short-term strength in gold following last week’s breakout. But keep in mind, there will be a pullback to follow, so be prepared for that. That’s especially the case for Aussie dollar gold. Overnight, it traded as high as $2,040 an ounce, up from a low of $1,775 in mid-April. The market needs to correct a little to restore some short-term balance. To show you what I mean, have a look at the chart below. It shows the Aussie dollar gold price, along with a key momentum indicator called the relative strength indicator (RSI): Not including the overnight move, the RSI for gold is over 90! That is an extreme reading and suggests that a short-term pullback is imminent. ..............................Advertisement.............................. | Introducing Greg Canavan’s three WILDEST stock speculations for 2019 The last time this niche energy sector roared to life, clued-up investors had the chance to sock away short-term stock gains of up to 73% or more, at times up to 7,542%...in as little as 12 months. If his analysis pans out, history could be about to repeat. Click here to access Greg’s three specky ASX energy punts before they likely go BESERK! | .......................................................................... |
With all eyes on gold, let’s take a look at what’s happening in other major markets. After all, gold’s not operating in a vacuum. The same forces are driving asset prices everywhere. That is, a global central banking shift to ‘dovishness’ on interest rates means investors want to be anywhere but in cash right now. The common refrain is that there is lots of cash ‘sitting on the sidelines’ and it’s now moving into equities. That is true to some extent. But the cash doesn’t disappear when you buy a stock. It just goes into the sellers account. And then they use the cash to buy something else. The better analogy is that cash becomes a hot potato in this type of market. No one wants to hold it, and they pass it onto the next person as quickly as they can. This is reflected in greater trading volumes, more volatile share price moves, acquisitions and share buybacks. Anyway, let’s have a look at how the major equity markets are going in this hot potato market. We’ll start at home, with the ASX 200. Like gold, stocks are seriously extended here. The index is well above the 50-day moving average, which is unusual. Also, the move over the past few weeks has been vertical, which is not sustainable in the short-term. Don’t get me wrong, this is a bullish looking chart. The fact that it’s driven by RBA negligence of our currency is neither here nor there. But it does have the feel of a melt-up scenario. That is, it’s a move driven by investor fear of missing out and fear of sitting in cash. I could be wrong, though. So ignore me, and listen to the market. As long as the index can hold above support around 6,350 points (green line), the market remains bullish. Moving over to the US, let’s have a look at our old mate, the NASDAQ. I’ve said for a while now that this is a key index to follow, given its tech heavy nature. Tech drove the bull market higher, and it will likely lead on the way down, too. Right now, the chart is inconclusive. The recent rally hasn’t managed to break to new highs (unlike the S&P 500, below), which suggests it could still be in a topping out phase. At major peaks, volatility often picks up as investor indecisiveness kicks in. This is known as distribution. If the NASDAQ can’t break through support, and turns down again, it will increase the probability that distribution is taking place, and that a top is forming. If, on the other hand, the rally can punch through to new highs, it suggests the bull market has more legs. You’ll find out soon enough. The question for investors now, is who is the leader here? The NASDAQ, or the S&P500? If it’s the latter, the situation looks a little better. Last week, the S&P500 broke out to a new all-time high. As you can see below, it’s not convincing yet, but it puts the index in a bullish position. It doesn’t matter whether it’s a breakout based on a dovish Federal Reserve, or increased corporate earnings. A breakout is a breakout. But as I said, it’s not convincing. And not (or net yet, anyway) confirmed by the tech heavy NASDAQ. So, this could be a trap for the bulls. While I lean toward a bearish outcome, given where we are in the business cycle, never underestimate the power of cheap money. While a continuing stock market rally might seem absurd at this point, keep in mind the absurdity resides in central banking policy. Investors are just responding rationally to irrational policymaking. Regards, Greg Canavan, Editor, The Rum Rebellion ..............................Advertisement.............................. | REVEALED: The REAL reason Elon Musk was smoking weed on the Joe Rogan podcast It might SHOCK you. But it could also make you stock gains up to 349%...right up to 1,264% (or more). | | Source: Millennium Post | Click here for all the juicy details. |
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War Is the Health of The Deep State By Bill Bonner in Dubai ‘There is, indeed, nothing in all this world that can match war for popularity. It is, to at least nine people out of ten, the supreme circus of circuses, the show beyond compare, it is Hollywood multiplied by ten thousand. It combines the excitements of a bullfight, a revival, a train wreck, and a lynching. It is a hunt for public enemies with a million Dillingers scattered throughout the woods. It is the dizziest, gaudiest, grandest, damnedest sort of bust that the human mind can imagine.’ HL Mencken, Peace on Earth — Why We Have Wars, 1936 Mencken was too polite to mention the money. But war is the ultimate win-lose enterprise. One side wins; the other loses. Overall, people die, buildings are blown up, and real wealth is destroyed. Still, it’s entertaining for the masses…like the super-est SuperBowl. And some people get rich. The young grunts and GIs doing the fighting get brass and silver medals — if they survive. But the old profiteers, ideologues, and warmongers sit in comfy chairs far from the violence and danger…and go for the gold. Boeing, Lockheed Martin, Google, Amazon — the Pentagon buys big data and big guns. And it needs planners, consultants, and PR firms, too…It needs shills and jackasses, anyone willing to beat the war drums and cash the war checks. No real winner Our beat is money. And there’s a lot of money in war. But it’s not like the old days. Before the modern era, you could make war, and if you were victorious, victori sunt spolia — you could take the losers’ money, their possessions, their homes, and their land. The survivors, along with their women and children, could make good slaves. But modern warfare is different. Slavery hasn’t been a paying proposition since the mid-19th century. Neither has war. You can beat someone in a war, but it’s very difficult to gain any material advantage from it. The North got nothing from conquering the South in the War Between the States, except 620,000 dead and 80% inflation. All the participants in World War I were bankrupted — save the US. American industries made millions selling food and materiel to France and Britain. But the US threw away its gains when it entered the war itself. Neither did any combatant in World War II come out ahead. The losers — Germany and Japan, principally — were flattened. England was drained. And the US had spent four years depriving its citizens of consumer goods. While the war was going on, sugar, automobiles, tires, gasoline, butter, meat, penicillin — almost everything was earmarked for the military. The pent-up demand led to a big boom after the war, not during it. Korea, Vietnam, Iraq…the wars cost money and lives. But they are win-lose deals with no real winner. War has become a hollow thrill and rank amusement — like the gladiator fights in the Coliseum; full of blood and guts but signifying mostly nothing. Wealth-transfer scheme But for the few, war is immensely profitable. Like almost any other government project, war is mostly a transfer scheme…to move wealth from the middle classes to the privileged few. Economic warfare, too — sanctions, tariffs, and currency manipulation (proposed by Elizabeth Warren) are ways to achieve the same goal, without the human losses. At least, not on our side. In the 5th century BC, Pericles imposed sanctions on the city of Megara after it sided with Sparta during the Peloponnesian War. More recently, in 1941, the US used a form of sanctions against Japan, effectively cutting it off from the energy supplies it needed to continue its programme of regional domination in Asia…and goading the country into a colossal mistake — attacking Pearl Harbor. And now, Iran is the object of the warmongers’ fury. Search for ‘Iran attacks oil tankers’ online and you will get more than 100 million results. That is a lot of hits for something that is probably not true. The Iranians saw what happened to Saddam and Gaddafi. The last thing the Persians would want is to give the US a pretext to ‘Bomb, bomb, bomb…bomb, bomb Iran.’ Japan, whose ship was attacked, wisely asked to see the evidence. War mode But US Secretary of State Mike Pompeo and national security advisor John Bolton were already in full-throated war mode, determined to give the fans a good show…and keep the money moving. And Senator Tom Cotton isn’t in the mood for a trial. He wants to move directly to the punishment. He appeared on Face the Nation over the weekend: ‘Republican Sen. Tom Cotton of Arkansas, one of the most hawkish members of Congress, urged the Trump administration to order a military strike against Iran over recent attacks against oil tankers in the Middle East — a move he said will send the government in Tehran a message that the US will not stand idle as commercial shipping is threatened.’ Bad guy theory We leave it to future historians to argue about when America became the world’s bad guy. We’re only trying to connect the dots. You’ll recall our Greed/Fear gauge — the ratio of the Dow to gold. When civilisation advances, generally, people favour profit-making businesses that give them a stake in the future. They want win-win deals, peace, and prosperity. When it declines, they want police, win-lose, and war. Our guess, to be proven right or wrong over the next five to 10 years, is that the pendulum began to swing 20 years ago…away from greed and towards fear. Disguised, delayed, and denied by fake money…the trend is nevertheless unstoppable. The world wants more protection…more ‘economic patriotism’…and more claptrap. Soon, it will want more gold, too. Regards, Bill Bonner ..............................Advertisement.............................. | The Truth behind Australia’s Record-Breaking Economy: THE COUNTDOWN IS ON Why our ‘prosperous’ economy has put us all in danger Click here for the full story | .......................................................................... |
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