. . . . . . . . REALITY VERSUS FANTASY
This period of the long-term investing cycle is all about reality versus fantasy, but on several different levels. The system has been turned upside down by using “paper derivatives” that can be expanded to infinity for “price discovery.” Even paper money is a “derivative” since periodically in the long-term cycle, like today, the world must turn to REAL MONEY GOLD to bail out the paper currency system.
Think about the themes that have dominated the news over the last decade, so.
1) We have been brow beaten by the Fed and Treasury Department droning on about a “Strong Dollar Policy.” That has been pure fantasy as the Fed and Treasury Department orchestrated a crash in the value of the US Dollar of over 60% to date, with much more to come.
2) “The Dow Stocks will crash on the price charts.” Again fantasy-The price of the Dow Stocks has been volatile, yet today, the Dow is about 25% above the year 2000 highs and only slightly off of the all-time highs in 2007. The truth is that the Dow HAS crashed in “value” during that time with your investment in Dow Stocks losing around 75% of your purchasing power due to the devaluation of the US Dollar. Many are still calling for a Dow crash in “price”, but it cannot happen as long as the Fed continues to print and to devalue the Dollar because the Dollar is the “denominator in the price equation for the Dow Stocks.” It is a mathematical impossibility! The current relationship, like all of the different asset classes, except for Real Estate are tracking the late 70’s in true fractal form. [Yes, I know we had a “deflation scare” into late 2008, but it was just a scare that I described in advance as early as early to mid-2007 including coining the term “deflation scare” for it at that time.]
3) CNBC has pretty constantly told us that Gold is an old relic investment that pays no dividends. True, BUT STILL FANTASY! Gold is up over 700% in price over the last 12 years. Who needs a dividend with an investment that is performing so well?
4) “Paper Gold Futures Market would default.” FANTASY– Paper anything can be printed to oblivion. That is the reason that we have NO real markets for physical items like Gold, Copper, or the other commodities- so the “price” of those items can be “managed” until it is time for them to go parabolic free-rise with the cycle! Back in 1980 when Gold and Silver went parabolic the paper futures market didn’t default; when things got too hot AFTER GOLD ROSE TO $850 TO BALANCE THE US BALANCE SHEET they simply announced in the paper silver market that “no more buy orders would be accepted.” Down went the price of paper silver. We have a very long way for Gold to go before any such consideration need so be considered by my calculations- probably Gold $10,000 to $12,000, or higher. The important point, here, is that the price of Gold and Silver have been “managed”, just like the late 70’s- to prevent Gold and Silver from going into free-rise before all of the debts have been moved onto the Federal Balance sheet so they can be “devalued” as Gold goes into free-rise.
5) The Fed is losing control. Complete FANTASY, the Fed is aggressively printing Dollars to devalue the debt. The Debt will be devalued by approximately 90%, just like at every similar K-Winter cycle point as today. That means Gold will fly from this point forward. The Fed has full control as long as they “control the money– the World’s Reserve Currency- the US Dollar.
6) A very long-time, ago, a Rothschild Banker said, “Give me control of a nation’s money supply, and I care not who makes its laws.” He was saying that with control over the money, one gained control over the lawmakers due to the dependence of elected to get re-elected. Thus, control of the money IS also control of the politicians, AND it is also indirect control over the people as the people seek “entitlements” from the politicians. Can you live without money?………….FACT.
7) The reality appears to be that all of this was planned for this K-Wave Winter of the long-term cycle for a very long-time. Greenspan wrote a paper back in the 60’s telling how he wanted to be the Chairman of the Fed at the next K-Winter because he thought he could fight the deflationary portion of the long-term cycle off by printing enough Dollars and by forcing interest rates low enough. Sound familiar? The Fed is printing Dollars out the wazoo, and interest rates are around zero, FACT!
THE OBJECTIVE OF THE FED HAS ALWAYS BEEN………
Through history there are junctures in the long-term cycle where the economy weakens. The worst point in the Kondratieff Cycle where that is true is during the Deflationary portion called the K-Winter. We are at that juncture now, just like we were in the 1929 period. Yet, in the 1929 period the Dollar was tied to real value Gold at a fixed exchange rate. Thus, when the economic weakness and huge debts hit the wall, the Dollar could not be devalued so the markets fell in a waterfall decline of about 90%. And with the fall, the debts were extinguished, or failed, to the tune of about 90%. In the K-Wave WINTER it is all about decreasing the debt to a manageable level that appears to approach a debt decrease of about 90%, but that 90% haircut in debt can be either in “price” as in the 1929 Era, or in terms of “Value” like today. THE MOST IMPORTANT CONCEPT AN INVESTOR, TODAY, NEEDS TO UNDERSTAND IS ABOUT “PRICE VERSUS VALUE” BECAUSE DURING AGGRESSIVE PAPER CURRENCY PRINTING “PRICE AND VALUE DIVERGE! (Find the first 2 parts on my article series about “price versus value” linked at the end of this article.)
Today, we have a fee-floating Dollar that is not tied to any kind of value. Thus, the Fed as Greenspan suggested back in the late 60’s, has the ability to devalue the Dollar by 90% to devalue the Debt by 90%; and that is what they are in the process of doing. Due to the high intrinsic value of Gold, Gold rises dramatically as the Dollar is devalued, or as Jim Sinclair always says, “Gold is the inverse of the Dollar (not the dollar index.) The government holds Gold that is rising dramatically in price. Per Jim Sinclair, the Fed will print Dollars so the market bids up the price of Gold until the price of the government’s Gold is high enough to “balance the budget.” We have a long way to go. Thus, Dollar printing to devalue the Dollar, and the debt equals- MUCH HIGHER GOLD!
We recently saw Central Banks heavily buying Gold along the Log Channel Bottom on the Gold Chart. They needed to buy Gold so the rising price of Gold will balance their budgets as they print paper currency to devalue their debt. Thus, “Gold is a no-brainer.” That is, unless the Central Banks quit printing the paper currencies- but that is a non-starter.
OTHER GOLDRUNNER ARTICLES THAT YOU WON’T WANT TO MISS!
GOLD IS ALL ABOUT VALUE!
SUPER FRACTAL GOLD- 45 DEGREE RISE
BIG PICTURE GOLD- PART 1- THE ONLY GOLD CHART THE LT INVESTOR NEEDS
BIG PICTURE GOLD- PART II- GOLD BULL PARABOLIC GROWTH
BIG PICTURE GOLD PART III- GOLD BULL LOG CHANNEL
BIG PICTURE GOLD- PART IV- SUPERBULL GOLD RIDES THE WAVES OF THE MOVING AVERAGE ENVELOPE
BIG PICTURE GOLD PART V- SUPERBULL GOLD CUP FORMATION
A much more extensive writing on Gold and Gold charts, where Gold might be going, and when; is linked, below, to Jim Sinclair’s site. You will have to scroll about half way down the page, but the article is there in its entirety.
PRICE VERSUS VALUE
My article on THE SILVER ROCKET is linked, below
The Gold version.
And finally, if you need a break from all of the negativity, you might want to take time out to read the following story to a younger loved one in the family.
Goldrunner maintains a subscription site that covers Gold, Silver, and the Gold and Silver Stocks that can be found at GOLDRUNNERFRACTALANALYSIS.COM
Goldrunner is also starting a new and free public newsletter that will review some of the fractal work and be delivered via e-mail, called “Goldrunner’s Fractal Corner.” If you would like to receive this newsletter, you can send an e-mail to Goldrunner at [email protected]
For the moment,
Please understand that the above is just the opinion of a small fish in a large sea. None of the above is intended as investment advice, but merely an opinion of the potential of what might be. Simply put: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. In the interest of full disclosure, GOLDRUNNER is personally invested in the Precious Metals sector including various Precious Metals and other individual stocks. GOLDRUNNER reserves the right to modify or eliminate any or all positions at any point in time.