Gold Versus the State

It really is a war of this proportion. It really is the Gold holder versus "The State" when there is a paper fiat currency system in place. The U.S. Mint has suspended American Gold Eagle coin production AGAIN, citing rising demand (link here).

My comment from the last piece I did when the U.S. Mint pulled this crap (see the link here for a decent rant from a year ago) remains appropriate in my opinion:

Gold is an alternate currency. It competes with the paper promises of panicked politicians, which throughout history have yielded less than a junk bond and harbored three times the risk. Which investment do you think will hold up better going forward?

Since that prior rant over a year ago, Gold is up about 35% or so and our currency is down around 9% - and I don't even have a PhD in paper economics like Paul Krugman! I am an adult with an education, not a vapid 6 year old child. If demand is too high for American Gold coins, BUY SOME MORE FREAKIN' GOLD TO KEEP UP WITH DEMAND! This, of course, is the mandate of the U.S. Mint, but anyhoo...

Of course, anyone with the appropriate intellectual and analytical skills knows the high demand is not the problem for the U.S. Mint. The problem is that Gold ownership is anathema to a paper fiat regime, particularly in its later stages (i.e. towards the end of the road, as all fiat currencies go away and are replaced). If everyone starts clamoring for Gold and it's easy to get, then gosh darnit, fewer people will need to rely on the government for everything in their lives! This is bad for Big Government, Inc. - a menacing corporation that has shown a wonderful propensity for aggressive growth in any economic environment and regardless of whether democratic or republican "candidates" are in control.

Why does the U.S. government not want to make it easy for you to own Gold? Because Gold is the enemy of the fiat state. Don't believe me? How about Sir Alan Greenspan (see here for more info on this classic piece before Greenspan "sold out"):

...The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against [G]old. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the [G]old standard.

OK, so now we know what the past chairman of the federal reserve thinks about Gold and why it is the enemy of the state. Expect more artificial shortages to be announced by the U.S. Mint as this Gold secular bull market rages onward and upward. And make no mistake, the shortages are unequivocally artificial and intentional. Against the War on Terror? Then you're a terrorist. Against the War on Drugs? Then you're a drug pusher and/or user. Hold physical Gold over U.S. Dollars? You have (knowingly or not) become an Enemy of the State as it currently exists. Funding the bankstaz physical metal short position by buying the paper GLD or SLV ETF? Good boy/girl!

Gold is the money of choice in the "free" world. This process was intentionally subverted to benefit a select few. Gold is not always a good investment (there are times to be in cash [Gold] and times to invest in productive enterprises). Gold sucked as an investment from 1980 to 2000. But it is Gold's time now and you are advised to buy some physical Gold on the next correction to be held outside the realm of prying government eyes if you haven't already. It is not too late. Things will get worse before they get better and all global fiat currencies will be debased further before this secular stock and economy bear cycle is over.

The only safe cash is that which cannot be debased, which eliminates every national currency in the world right now. Once the Dow to Gold ratio gets to 2 (it may well go below 1 this cycle), it will be time to start looking around for other opportunities. Until then, join the dark side of the investment world and put on a tinfoil hat (they're quite stylish really...).

Gold In the Hands of the Public

According to Adolf Hitler:

"Gold in the hands of the public is an enemy of the state."

I wonder what he meant by this? Was Hitler retarded? Did he have a childhood marred by parental beatings with Gold plated items? Why would he say such a thing?

Here's another Hitler quote on Gold:

Gold is not necessary. I have no interest in [G]old. We will build a solid state, without an ounce of [G]old behind it. Anyone who sells above the set prices, let him be marched off to a concentration camp. That's the bastion of money.

Such a hatred of a shiny metal seems irrational, doesn't it? Is a piece of metal that harms no one really an enemy of any government? Perhaps Gold represents something more important than bling bling. Perhaps Gold allows people to opt out of a system when that system no longer functions as advertised. The extreme lies and misinformation coming out of the highest levels of our government have become Orwellian in scope and character.

The United States now advocates "Wars" against military tactics instead of real enemies (i.e. The War on Terror) and against certain chemicals while profiting enormously from other chemicals (i.e. The War on Drugs). We are now told that our country must go further into debt to support Wall Street and banks or our economy will collapse. Our private, non-federal, for profit corporate central bank (i.e. the federal reserve) has now purchased over $1 trillion in distressed mortgage debt paper and placed it on the balance sheet that backs the U.S. Dollar because it is "needed" to prop up home prices even though 59% of Americans do not have mortgage debt.

In a situation that I consider along the same lines, we are told that the U.S. Mint cannot keep up with demand for Gold and silver coins. In 1999, due to the fear surrounding the so-called Y2K crisis that was going to cause a systemic meltdown, the U.S. Mint produced over 2 million 1 oz. Gold coins to meet demand. In 2008, the Mint produced less than 1 million 1 oz. coins and reported inability to keep up with demand. The same official story is being repeated this year with multiple shortages occurring due to "demand."

But is it inability or unwillingness to keep up with demand on the part of the U.S. Mint? Can't the U.S. Mint buy more Gold on the free market? Can't they find another manufacturer to get around their problems? Can't they extend a little effort to meet the public demand, since that is their mandate? Don't they actually make a profit by selling these coins? If they don't, can't they just raise premiums and keep up with demand and thus generate a little revenue for the public coffers (we all know the government could use the money...)?

Why is it that China is encouraging its citizens to buy Gold and silver and the corporately controlled U.S. media laughs at/ridicules Gold at every turn? Are we devolving into the same fascist state that Hitler sought to create? Isn't the definition of fascism the union of big business and government (i.e. Mussolini's "corporate state")?

Would anyone performing an honest assessment of what's wrong with America truly deny that corporate interests are now the main force driving government policy? Corporations seek to control government (i.e. Goldmun Sucks and JP Whore-gan) and government seeks to control corporations (i.e. Degenerated Motors [GM], AIG, Fannie, etc.). Does anyone deny that Goldman Sachs and JP Morgan have completely infiltrated the highest levels of the government to create policies benefiting Wall Street? Does anyone deny that the insurance companies and pharmaceutical companies are the main drafters of the health care bills floating through Congress? Does anyone deny that there are more private "gun for hire" (e.g., Blackwater) soldiers in Afghanistan than actual official U.S. military soldiers? Does anyone deny that pompous windbags like Barney Frank and Christopher Dodd are beholden to housing bubble interests due to heavy financial support from this industry including the Fannie and Freddie fascist frankensteins? Does anyone who reads history doubt, knowing that we already have an FBI and a CIA, that "Homeland Security" is a new government program taken directly from the Hitler playbook?

So, yes, I do believe that Gold is the enemy of the United States. When debt becomes unmanageable, it is destroyed through default and/or paid back in worthless dollars (i.e. deflation versus heavy inflation/hyperinflation). Capital flows in the fiat era, as Martin Armstrong has pointed out, may have a bigger say than in Gold standard monetary situations. This makes the inflation-deflation debate more nuanced than at first glance, as we are not in a closed, academic system consisting of rational behavior. The current regime of U.S. "czars" seeks to maintain a fiat grip on the world to maintain and aggrandize their power, reality and the best interests of the sheeple be damned. If U.S. citizens turn to Gold en masse, ain't the gig up at that point for the Dollar?

Thus, I believe "official" sources of Gold and silver will remain scarce. I also believe the futures markets based in the U.S. will continue to ignore market manipulation and heavily concentrated short positions that are the definition of manipulated markets when it comes to Gold and silver. In fact, I would argue that such a situation is ignored because it is government policy and is sanctioned by the highest levels of government. Keep in mind that Madoff could not have had his scam last as long as it did without the express blessing of the highest ranking members of the SEC, since "rank and file" SEC employees like Harry Markopolos saw Madoff's Ponzi scheme years in advance and rang the alarm bells repeatedly [EDIT: Markopolos was as an independent fraud investigator, not an SEC employee] but were intentionally ignored.

The last job of a central banksta is to tell the truth. Thus Bernanke sees the recession as being over, denied the housing bubble when others with an understanding of markets saw it as inevitable, and thinks it is appropriate to purchase private assets with counterfeited money (illegal, by the way) and put them on the balance sheet backing the U.S. Dollar. Widdle Timmy Geithner didn't pay his taxes even though he was elected as the Secretary of the U.S. Treasury. These and other examples while "extend and pretend" (to steal from Jim Sinclair) requires a willful suspension of traditional and rational accounting practices for every banking institution in the United States, so that we can all pretend banks are solvent when the truth is the opposite.

Now, I am not trying to pick on the U.S. government. We are the worst country except for all the others. I understand that in an anchorless global paper currency system that the least ugly currency wins and I understand that for brief periods this may be the U.S. Dollar. But Gold is the currency that will ultimately win. People who think Gold is no longer money also think Bernanke is going to get us out of this mess. I consider such thoughts to be religious in character, not rational. Gold is the antithesis of paper. A slick Wall Street brochure and "can't lose" sales pitch versus an immutable member of the periodic table of elements that doesn't try to sell anything. The pendulum swings both ways.

Investing in Gold is not a vote of confidence in the near-term future, for sure. However, investing in hype when the Wall Street promoters are broke and desperate ain't such a grand long-term plan. And, no, it is not the end of the world. If I thought it was, I would advise taking your Dollars and converting them into bullets and cigarettes. Gold and Gold stocks can thrive without a total collapse of the system, just like in the 1930s and 1970s (perhaps we are a dealing with a 40 year cycle, suggesting the 2010s are a time to be all Gold buggy and what not). Every asset class has its turn in the sun and the torch is being passed from U.S. government debt to Gold (stocks peaked in 2000 and haven't been the "choice" asset class for a decade).

Gold is a protector of wealth during periods of government insanity and instability. Our current regime in the U.S. has passed the point of no return. Bush was our Hitler and Obama is our Chavez. Democrat versus Republican is about as meaningful as blue versus red or purple versus green. The highest levels of our government are composed of corporate whores, so the only difference between candidates is which corporations own them. Obama the war president is the Nobel Peace prize winner. Orwell is doing cartwheels somewhere in the universe.

Our debt cannot be sustained so it won't be. Debt repudiation will occur via any combination of frank default and/or currency devaluation. Gold will protect one's savings during this situation, while the U.S. Dollar is unlikely to do so. I can't side with Prechter on this one. Commodities, government bonds, stocks and corporate bonds, in aggregate, require one to guess correctly on the inflation-deflation debate while Gold doesn't.

The Dow to Gold ratio will reach 2 (and may well go below 1) before this cycle is over. I get caught up in the short-term swings too often as someone interested in trading to augment long-term returns, but my physical Gold is not for sale at current prices. Gold is the best vote I can cast against a government out of control, since votes at the local booth, faxes, phone calls and letters to officials accomplish nothing. I have a feeling that my understanding of Gold and my zealous intention to spread its word will prove to be the most valuable civic duty I am able to provide in the midst of a now seemingly perpetually corrupt regime no longer interested in the ideals of a free people or the country's Constitution.

Dangerous Paper Bubble Dynamics

The paper debt tickets (i.e. currency units) that most of us work for are nothing but a concept. That concept is mutually agreed upon. That concept is being abused and will likely be destroyed before a new secular stock bull market can begin.

The paper bubble dynamics are growing more and more unstable with each attempt to stave off pain using the debt press. The debt piles higher and higher and becomes more and more unstable as the deflationary forces in the economy are beat back into submission. But once a critical mass of people realize that the debts are unpayable, what exactly do the debts mean? The United States is unequivocally bankrupt in the traditional sense of the word, as is Japan and most of Europe. And yet, the United States is the largest backer of the IMF and the IMF purports to bail out Greece.

This land of illusion is starting to shatter. The paper fiat international monetary system is one of deception and control. It requires no discipline and is funded by the blood, sweat and tears of those who still produce. Somehow, despite total insolvency by "old school" metrics, the U.S. can now afford universal health care. This is on top of perpetual warfare against imaginary third world enemies, a war against drugs that are less toxic than those prescribed by your physician, social security and all of the other government-sponsored programs/departments/branches and their associated pension benefits that are growing at an exponential pace.

New debt will continue to be piled on top of old and unserviceable debt. Since the private sector is exhausted in aggregate, the government is picking up the slack. But what happens when almost every major economy in the world is the same as Greece and the majority of market participants know it? We are entering the dangerous phase of the paper debt bubble.

This is the phase most beneficial to Gold (and to a lesser extent silver) as the only form of "real" money that can be easily stored/hoarded. People who say we can't go back to a Gold standard are not only wrong, but they are also neglecting the fact that it is already starting to happen in the way that it must to restore balance. This is an optimistic message and one to be embraced by those who actually understand what freedom truly means.

The fiat paper debt hamster wheel forces everyone into serfdom. The greatest years of economic growth and prosperity in the Anglo sphere were during the years of a "hard" Gold standard. I am not delusional enough to expect governments to willingly go down the path that leads to having sound money. I rather trust the free markets to force it upon governments.

I don't see Gold as something to eat in your log cabin while playing with guns, I see it as a way out of the debt morass. Private firms like GoldMoney.com and Bullionvault.com are already paving the way. For now it's Gold storage, trading and limited Gold payments to those who have managed to break thru to the other side of the Matrix. But how long before a firm like Wal-Mart embraces the concept of a digital Gold-backed currency? Why hedge currency risk with the vampire squids when you can use digital Gold and avoid the problem altogether?

What of a world where government-issued currency is but a transient thing that is purchased at the last second only to pay the government their taxes? Don't get me wrong, again, I am not delusional. This is something governments will have to be dragged into, kicking and screaming the whole way. But Gold investors need to focus more on the positive aspects of the future of money, for it has the potential to be bright indeed.

When you think of the convergence of advances in alternative energy that allow people to live "off the grid," couple that with the power of the internet and the virtual interconnectivity of the world, adding a global digital Gold-backed currency that allows people to store real money without worrying about its debasement is a natural next step. Though my thoughts may seem quaint and overly naive to the typical (rightfully) cynical Gold bull, there is a real chance the monetary system will begin to be re-pegged to Gold in some manner within the next decade or so. After the next major train wreck in the financial markets destroys the credibility of those who think they can control asset prices, a significant number of people may be ready to call for and embrace this type of scenario.

This is especially true since the next train wreck in the markets, unlike the Great Fall Panic of 2008, will see the Gold price rise as fast as it fell in the fall of 2008. The deleveraging when the government support-of-everything bubble fails will be out of the Dollar and into Gold rather than the other way around. When it is our turn to have a Greek-style crisis here in America, Gold fever will break out with a vengeance.

But what will quash that Gold fever once it breaks out? The most ardent manipulation attempts have done nothing but slow the rise of Gold over the past decade. What happens when 20% of the American population goes looking for an actual Gold or silver coin (no, not the paperbug GLD and SLV ETF versions, the actual shiny stuff)? Once everyone gets back into the Gold and silver bull mind set that caught hold of the American public back in the 1979-1980 time frame, how will it be quashed this time? Because I can tell you without a doubt that America cannot tolerate 15-20% interest rates given the amount of debt we owe to foreign creditors.

Criminal sanctions, capital restriction, heavy capital gains taxation (more than the current punitive 35% rate), attempts at confiscation of paper or even real metal (perhaps in the name of counterterrorism) - nothing is off the table. Gold remains the enemy of the state for now, but things have a way of changing when tyranny goes too far and becomes too oppressive. But it is easy to see this darker side of the evolution that I believe is to come.

What comes next, however, may be an era of prosperity and peace the world has never seen. And Gold is unequivocally a part of this vision. Paper money backed by nothing is the relic, for it is horribly unjust and defies logic. Those people who don't understand why Gold is perfect money are the ones who need to defend their position, not Gold bulls. The idea that money can be created by printing up pretty paper tickets and/or typing in electronic entries without one iota of effort is preposterous. It is a fairy tale (horror story?) told to children who still believe in Santa Claus and will be looked upon as such in the next era.

Imagine how foolish those who follow us will think we were for not having sound money! For humans are filthy and nasty enough animals as it is. They cannot resist the temptations of money created out of thin air any more than a dog can resist chasing a cat. Something for nothing is a proposition hard to turn down. Of course, paper money benefits a certain class of folks who have every right to engage in whatever means necessary to maintain their status quo. It is wrong to assume that dinosaurs became extinct without a fight.

The dangerous paper bubble dynamics now in place are sure to cause much economic hardship when they finally pop. The uncertainty and fear will cause people to delve into their collective psyches and reach for the financial rock that still acts as the anchor of stability for our monetary system today. No, I am not talking about Paul Volcker, I am talking about Gold. When the dust settles upon this secular stock bear market down the road, Gold will still be there. Just maintaing its value and looking all shiny and what not.

Enough people will finally come to question why they would ever want to hold their savings in the stock market or in paper currency that real change is likely to come about this go round. At this point, so many will hold Gold (and silver) that many will question why they should ever let it go. Perhaps, in the future world I envision, they won't need to until it's time to go to Wal-Mart and buy a loaf of bread with their digital Gold currency card.

Keep Your Eyes on the Golden Prize

Gold's bull market is starting to get warmed up again. The gains ahead in Gold are going to be greater than what we have seen since the secular bull market began at the turn of the century. Gold will continue to outperform general stocks, real estate, bonds and most if not all commodities.

Paperbugs will hate it, will question Gold every step of the way and will produce vehement rants against the wisdom of investing in Gold during a secular credit contraction/economic depression. People like Nouriel Roubini, who haven't a clue as to why Gold has outperformed the U.S. Dollar since the transient deflationary collapse in late 2008, aren't going away any time soon. Krugman and his ilk will remain the economic philosopher kings of paperland, on that you can be sure. But it is your choice as to whether or not to listen to the siren song of those who claim to be able to create prosperity for all using nothing but magical debt tickets backed by nothing.

Investing in Gold is in and of itself deflationary. If you put your fiat paper cash into real money and don't make the bankstaz any money, you are the enemy of all that is righteous and holy on Wall Street. You also deprive businesses of capital they need to pursue expansionary-type activities. This then deprives the government of much-needed tax revenues. This is why Gold is the enemy of the state. You can get back at the "powers that be" for screwing over your and your children's financial future and profit handsomely at the same time!

Gold is the vortex of a deflationary spiral once the point of no return has been passed. All other asset classes spin out of control around it, while Gold just sits there looking all shiny and disinterested. For those who point to the Gold price in November of 2008 when disparaging Gold, I point to the Gold price in February of 2009.

The smart thing to do is stay in physical Gold, wait for the inevitable financial asset collapse to deepen, then buy good cash-producing financial assets in the rubble for pennies on the dollar. This is the surest and safest way for an investor to grow wealth during an economic depression, if that is your goal (if not, you can always eat your Gold). The U.S. Dollar cannot be the ultimate safe haven that Prechter wants it to be, because it is a flawed irrational instrument and is no longer looked upon as trustworthy by much of the world. I am not saying that the U.S. Dollar can't outperform the stock market or real estate market going forward - it can (no guarantees, though!). But to think the U.S. Dollar or T-Bills will outperform Gold over the next few years is laughable to the point of being absurd. We are not a creditor nation with a Gold backed currency in the midst of a global Gold standard abandonment like in the 1930s. Not even close.

Though it may seem as though paperbugs are winning again because turkeys in the general stock market are flying higher than Gold and Gold stocks, this is a short term phenomenon. Gold bulls need to remember to stay focused on the longer term. For your interest and entertainment, I am going to show you a series of powerful bull markets, one right after the other, to prove a point. I have deleted the identifying information and year that these bull markets occurred, but the following charts represent the actual price action in several historical bull markets. Please bear with me as you briefly peruse the following seven charts:









Want to know what each of these impressive bull markets have in common? Well, I can show you in just one chart:



Think you could have played these swings using technical analysis and captured a good chunk of each of these cyclical bull markets to make it a profitable secular bear market? Maybe you're right, but maybe not. Wouldn't it have been better to just stay in cash? In Japan we have the only example of a major economy and stock market undergoing a secular economic depression since the day when Nixon broke the final link between the international monetary system and Gold in 1971. So, has the Yen been a better bet than Gold over this time period since cash is king during deflation? ABSOLUTELY NOT! Granted, it took Gold a while to catch up to the Yen, as the global Gold market was mired in a secular bear market during the 1990s. However, here is a chart of Gold priced in Japanese Yen from 1990 thru today (chart courtesy of goldprice.org):



Now, I don't want to get bogged down in the semantics of deflation versus inflation. I understand that Japan has been taking on more and more debt in the public sector to offset private credit contraction (sound familiar?). In other words, the Japanese government has been fighting deflation with repeated bouts of fiscal and monetary policy madness in an attempt to stoke inflation. Just as in the 1930s, it didn't work other than to spread the collective pain over 2 decades instead of one or less. And no, Japan's secular stock bear market is not yet over even after 20 years.

Gold has trounced the U.S. Dollar since the secular stock bear market began in 2000 as well as essentially every other investment class over the past decade and we are set for a repeat decade of Gold bull delight. The difference this decade is that the Gold secular bull is now going to enter its' wilder, more volatile phase. As Bob Hoye has pointed out, bull markets are born stoic and die epicurean. In other words, bull markets end in a much steeper uptrend and rise far above their fundamental value before they collapse upon the weight of the herds' optimism and greed. This remaining Gold uptrend could last 1 year or 10. When it is all said and done, an ounce or two of Gold will buy the entire Dow Jones Industrial Average.

And for those who say that Helicopter Ben and widdle Timmy Geithner are going to succeed and that we are headed into a hyperinflationary depression, my only regret in this scenario would be that I own more Gold than silver. Gold is real non-debaseable money and ignorant apparatchiks have no ability to change this fact by decree, though they may sneak in a little tungsten if you're not paying attention. Our wily so-called financial masters of the universe also cannot change a long-term trend once it is set into motion. The secular financial pendulum continues to swing away from financial assets and towards Gold. Physical Gold will be money long after the cast of dimwits and thieves who claim to be our leaders are but dust in the wind. And shiny, real cash will continue to be king for conservative investors during this ongoing secular credit contraction. Keep your eyes on the Golden prize.

Barbarous Relic Back From the Dead

Another day, another new nominal high in the U.S. Dollar Gold price. Paperbugs hate it and can't explain it other than to say it is a bubble and will collapse any second. Short-term noise aside, of course, the truth is actually the opposite. Because it will be the non-believing paperbugs who will eventually pile into the "long Gold" trade and push us to incredible higher highs. Though it remains fun for me to guess and speculate on when such moves may occur, my core physical Gold position is never traded. I simply like to buy more physical Gold on decent price dips. I am not buying Gold at current prices but I would be if I didn't already have a large Gold position.

Gold is not going away. Gold is giving its warning that the Kondratieff Winter is in full force. Gold is the money of choice, not paper debt tickets backed by apparatchiks and bankstaz. Debt is a cancer during a secular credit contraction. The cold of a K-Wave winter squeezes those who have leveraged themselves against declining asset prices. Gold is debt-free money and the enemy of the state.

The concepts of money and debt are powerful and have been warped and corrupted now to the point where most people alive today actually believe that "this time is different," just as most believed in past fiat regimes. The end of the world is not at hand, but the end of the current monetary system is coming and that ain't good for those stuck with U.S. Dollars when the change comes. And no, you will not be notified in advance. And yes, Gold will be the best item to hold through the transition.

Let Roubini eat Spam and paper fiat notes right through the transition. The market continues to speak the truth of what is to come and what is to be valued over the remainder of this cycle, which will continue until the Dow to Gold ratio hits 2 (and we may well go below 1 this cycle). It's just a Gold secular bull market, as the financial pendulum of history continues its swing away from the Wall Street casino.

To say the barbarous relic is back from the dead is to state the obvious. Gold always comes back from the dead when it is needed because it never dies. It remains the anchor of the international monetary system because Gold, unlike the promises of compromised men and women, never changes. All paper promises and asset classes decline relative to physical Gold during a K-Wave Winter. This trend will continue and is not close to ending in either time or price.

Ummm, Really?

My worst trading performance has been when I have gone short. I have made big money (like when I was leveraged short during the fall of 2008 as documented here and here), but I have also lost large amounts of money fighting the hoards of determined bulltards still stuck in last century's paradigms. The tsunami of paper depreciation unleashed upon us over the past decade makes shorting any market much more hazardous than being long. Trust me, I have learned my lesson in this regard the hard way.

Right now, my subscribers and I are short senior Gold stocks as a scalp trade (after catching the high in the GDX ETF on February 2nd). So far, so good. It is almost time to flip back to going bullish on the precious metals sector. When I look at the general common equity markets, I see rabid paperbug froth everywhere. Just a few minor points of extremely bullish sentiment to point out.

First up, here's a chart from a piece by sentimentrader.com, which examines the ratio of money flowing into a Rydex bull mutual fund versus a bear fund (i.e. examines retail money flows into bullish bets versus bearish bets):





Next up, a chart of a proprietary NASDAQ sentiment indicator from Market Harmonics:




Record highs, eh? I can see why, what with the super-strong economy and what not. And here's the opinion of the trusted and revered investment advisors that always buy low and sell high for their clients (sarcasm off). Following is the NAAIM (National Association of Active Investment Managers) sentiment survey thru last week:




I am thinking a sharp chop lower in common equities followed by a drunken and staggering final charge into a March peak. After that, we'll have to see. But for now, risk is exceedingly high in common equities. There's rarely a need to tell a Gold bull about such risk, as those who have crossed over to the dark side and embraced the secular bull market that is the enemy of the state rarely need reminding that we are in the cycle where paper declines relative to real/hard assets.

Own physical Gold and sleep well. When the Dow to Gold ratio hits 2 (and we may well go below 1 this cycle), consider waking up from that comfortable financial sleep and looking for something to buy with your bling bling. And if you're interesting in speculating in the paper markets after you have established a core position of physical metal held outside the banking system, consider trying my low cost subscription service.