one of the things i follow is investor sentiment.  at the bottom of 3/09 we were at 2% bulls.  both at the 2007 top and May of 2011 we were at 98% bulls.  when conditions get this extreme with P/E's in the mid 20's (never did to single digits like at most recession bottoms) it becomes extremely difficult for the primary dealers to book profits and indeed we saw a horrendous earnings season for the financials.  they have been in decline since February.  that by itself is a HUGE red flag.  most of their profits the last 2 yrs have been from TRADING.  meaning to me that they were using Fed pomo money to destroy the shorts on an unprecedented ramp to May.  believe me, i know.  progressively more shorts closed their position and went long to "not fight the Fed".  so now we're in a situation where the primary dealers can't make money anymore being long.  so whats the next logical step from their standpoint?  go short and ramp volatility.  traders always say they love volatility.  well, here you go.  we've seen the VIX go to the high 30's this last week and probably higher.  everyone's on the inflation side of the boat and i'm alone on the other side altho i'd bet the primary dealers are over here with me just waiting for the panic as am i.

as i write this gold is up modestly, stock futures are down BIG and Bitcoin has just SOARED  to 8.5.  two out of 3 i'll take and i bet gold will soon plunge.

how can something thats never been done before and that has been threatened but never executed umpteen times be priced in?

mine is definitely the contrarian view.  personally i think the Fed realizes it's got to get the metals prices down otherwise they will truly destroy their monopoly on money creation.

its called CAPITULATION baby!

yeah and the price is up what 33%  since he did it?  LOL!

i've got a huge short on the metals in place...

edit:  and INCREASED my position in bitcoin over this weekend.

emotionally this sounds correct.  but unfortunately we live in a system that is allowing large, corrupt dinosaur-institutions such as Citibank, BAC, JPM, GS, MS to feed off the rest of the productive economy.  we are slowly being turned into debt slaves to prop up these bad actors.  the facilitators have been Wall St and the captured politicians.  unfortunately it will take a disaster to wipe these punks off the map.  i myself am ready for this (i think) and want it to happen so we as a nation can get back to honest work.  i also think that most Americans would be better off

a good argument for this is the depression of 1921 which took a short 2 yrs to complete itself b/c the gov't and the Fed got OUT OF THE WAY.

i'm a big follower of Calculated Risk.  here's one of his graphs that puts things into perspective.

+1

thats really stupid.  of course it does.

i believe Austrian economics has been quite predictive about what has happened the last 11 yrs.  Its been quite useful for me since 2005 when i started buying gold, silver and as well in 2007 when i shorted stocks.

i did quite well during those times but did get hurt in my portfolio of mining stocks and energy.  i used a stagflationary approach except that the -flationary part got hurt quite badly with the gold/silver/energy stocks getting literally destroyed.  i went back and studied very hard as to why and came across Robert Prechters theories as well as Mish's whose theories played out extraordinarily well.  that is, one of absolute deflationary forces imposed on the market at that time.

since then we've not had the washout we should have had.  according to Prechter he thinks the Dow goes to 400.  extraordinary call i admit.  but with the greater distortions that the gov't/banks have created since 3/09 and the increasingly bold corruption of the banks enabled by crooks/criminals like Geithner, Bernanke, and Paulson (these guys should go down in history as traitors and should be jailed) we've entered an extremely dangerous phase of the crisis.  the forces for a great deflationary washout feel large to me.  

i'm not necessarily a believer in Elliott Wave Theory technical analysis but it does provide a fascinating potentially useful predictive framework on which to see what might happen.  its based on psychology and wave formation.  Prechter is calling for entry into a devastating wave 3 down right about now.  he's been off on his timing but overall i think he might be proven correct.  the fundamentals certainly support it.  i am a believer in cycle theory and we've just had the most powerful stock rally since 1932 with about a 79-80% retrace from the bottom exceeding all Fibonacci levels to the upside.  extraordinary.  i've been getting hurt short alot of the way up but its payback time.

ultimately i do believe Austrian Theory will be proven wrong in its position on gold/silver.  maybe it had a chance before Bitcoin came along but i'm also a big believer in the Internet and Bitcoin fits extraordinarily well into a high technology age.  too many ppl are on one side of the boat on this one and central banks are no exception.  i view their position as a negative surprisingly; Gordon Brown of the Bank of England sold tons of gold at the bottom in 2000.  yet another stupid criminal.  all of them did on the way up and smart guys like Eric Sprott would say that private investors like me were happy to take the gold off their hands.  so i've made extraordinary profits since and i decided to cash them all in this year and exchange into Bitcoin.  could be the stupidest move of my life but i think i'll be fine at the least or extraordinarily rich if i'm right.

+1

and all that speculation in commodities actually hurts the avg person.  look at the Middle East explosion.  its over food and financial repression.

i just had dinner with a highly successful multimillion dollar hedge fund manager and i picked his brain about the economy and the future of our country.  he actually is as pessimistic as i am and said whats happening is typical for a empire starting a long decline.  he thinks the youth in our country will have a great burden to bear and won't have our lifestyles.  he said our administration is doing all the wrong things with Obama being 3x worse than Bush.  and Bush was bad.  he has a crapload of CDS against all PIGS, Japan, and US debt.  he is VERY bearish on CMBS and has CDS against them as well.  he says commercial RE is heading into the crapper and will suffer greatly in the coming decline.  he said we should have let the system implode in 2001 and 2008 but our admins wouldn't allow it.  and now we have to pay.  we disagreed in that he thinks the gov't and Fed will continue to inflate and he holds a large portfolio of gold mining stocks.  i pointed out they'd been getting killed but he said the fund has had them for many years so i guess he means since back in 2002 b/c thats the only way they'd still be up.  they also have a small holding of bullion.  they are buying farmland and select residential and strip malls but only if he can get them for cents on the dollar.  he thinks they should buy guns too.  i asked him about the gov't losing control and deflation setting in and he said no one knows for sure whats going to happen.  couldn't argue about that.

i'm with you JCBit.  normal cyclical variation.

i can feel Wall St accumulating...getting ready for the derivatives explosion.

forgot that one Curbside.  yes, pay off debt!  i personally am debt free and loving it.  and i do have a lot of assets.  i use cash to play the markets in stocks, PM's, and btc.  Its way too dangerous IMO to play the debt game assuming Ben will inflate it away.  why would you depend on that criminal?  also, why would the bankers allow him to do that to their assets=loans?

yes, if my scenario above plays out.  i'm not your financial advisor and you have to realize mine is a contrarian view.  but at least its logical IMO.

http://www.youtube.com/watch?feature=player_embedded&v=xSLIDJ3HZHA

the safest way to prepare for deflation is to go to cash and then wait.   if we have the Great Depression 2, assets will be selling for pennies on the dollar at the bottom.  this could be the opportunity of a lifetime.  the other way, more risky, is to go short the stock market.  a tremendous amount of fast money can be made to the downside.  WAY more risky.  but if you don't use leverage you should be fine.

look what inflationary Fed policies have done to the Middle East.  soaring costs of food and financial inequities are what drove the revolutions in these countries IMO.  i followed the Egyptian revolt realtime via Twitter and AlJazeera and there is no question in my mind these were the tenets behind the younger generations revolt. 

central banks cannot continue on the same path of monetizing debt.  the markets are screaming for a correction via deflation.

a nation that issues more debt plus currency than its productive capacity to solve their problems.

we do indeed.

we agree on more things than we disagree.  i also think Japan is a template for whats going to happen to the US.  we are "pushing on a string" and failing to clean out the overindebted banks just like Japan.  their problem is that the savings are now exhausted.  especially in light of Fukushima.  several authors/investors like John Mauldin, Kyle Bass, Hugh Hendry are betting Japan is about to go over the edge.  i agree.  look at the EWJ/Nikkei.  they do some great demographic analyses and there does not seem to be enough workers to pay for the retirees.  i think the bond vigilantes are finally going to have their day in Japan.  just this last Thursday they tried another currency blast to try and stop the advance of the yen.  it looks to have failed already.  why this odd dynamic?  Strengthening Yen in the face of worsening debt?  how does that work?  i will explain below in terms of USD's.


you are not alone in this thinking.  i however as well as some great thinkers, Prechter, Mish, Shilling, Rosenberg, Foss think we've already had our "hyperinflation" so to speak which topped in 2008. the ramp from 3/09 to now is the last gasp IMO.  during that time we've doubled the national debt in just 3 yrs compared to the prior 250 yr.  they've tried all sorts of wacky zero interest bound stimulative efforts like HAMP, TARP, QE 1&2, auto discounts, suspending mark to market, bailouts, and all of the worst corruption and manipulations the world has ever seen. to the US apparatchiks, its never enough.  it didn't work.  these were all inflationary stimuli and now we have to pay the piper.  

if the ECB were going to throw the Euro under the bus, why are they letting such tough austerity plans go forward in Greece, Ireland, Spain, Italy?  these are extremely dangerous so why not put the fire out with more monetization?  i would argue b/c they can't.  the debt ceiling has been hit and deflation is screaming to gets its due turn.  i say that central banks have lost control like they did in 2008.  it doesn't matter what they do, the market will dictate otherwise.  they've done a tremendous job trying to reinflate to now but Mr. Margin must be paid.  defaults are on the horizon and i agree Greece will default.
 

by stopping QE2 and not doing a QE3 like everyone expects.  and this is what they've done.  when everyones on one side of the boat like they are with this theory that Bernanke will do a QE3, 4,5,6,7, etc. it probably won't happen.  its too dangerous to assume that he will.  my belief is that QE2 was to allow the banks one last chance to unload their bad debt to the public and sell off underwater stock.  to get their balance sheets in order in preparation for the inevitable which is a cleansing of the debt.  also what you'll see if this happens is a paradoxical RISE in the USD and UST's.  how so?  b/c the liquidation of the bad debt causes a scramble for cash USD's and a decrease in the amount of debt based USD's worldwide (virtual USD's).  people like to say "flight to safety".  i prefer "forced scramble for currency USD's" (cash).  this is how the US debt based system differs from Zimbabwe hyperinflation.  they didn't have a mature bond market so they just printed up the money to pay their debts.  those printed monies couldn't be easily removed from the system as their productive capacity continued to decrease so hyperinflation ensued.  compare this to our debt based system.  those debt based loans will vaporize on default thus reducing the total amount of USD's (debt plus currency) worldwide.  60% of debt worldwide is USD denominated.  this would be deflation.


agreed.


avoid BTFD.

except they can use BitPay who supposedly will provide USD to merchants instantly.

netrin:  everything you say certainly has merit.  it comes down to the fact that you see things in terms of an inflationist.  i, otoh, think we live in a boom bust cyclical society where you swing btwn extremes of inflation and deflation.  you think the central banks can continue to inflate by devaluing their currencies.  if you look at the stock mkt since 1929 as perhaps an indicator from a broad view you could be considered right. the inflation of the monetary base also argues in your favor.  so why won't everything except currencies continue to go up?

personally i think we've hit a ceiling in how much debt can be taken on.  i clearly am in the minority and could be wrong as the last 100 yrs of history argues against me.  perhaps i am stupid to bet against the current system of inflationary forces.  sometimes i question myself.

but looking back over the last 11 yrs with 2 stock mkt crashes and one ultimate housing bubble crash, i can't but help something is different this time.  as Rogoff and Reinhart argue "this time is different".  this is the contrarian viewpoint no doubt.  but when i look at whats happening in Greece and the other PIGS i don't think so.  who ever would imagine that a sovereign nation would have to consider selling off their islands to "allow" them to take on even more debt?  how insane and immoral is that?

look at the price of gold.  there is something seriously wrong. look at zero bound interest rates.  how sustainable is that?  look at the mountain of 1.7 T in excess banking reserves at the Fed.  why would banks hoard?  they don't think its worth it to lend the money out even tho they get a measly 0.25%.



it looks to me with the recent stock mkt plunge we're going into phase 2 of the financial crisis which never was really cured.  the ferociousness of the selloff is an indication of the gross imbalance our Fed/gov't cabal has built to an even greater degree since 3/09.  anyone in stocks now hoping for a reversal or anyone BTFD stands to get reamed big time just like the dip buyers back in 1930.

watch the gold price.  if it can continue to power forward then you'll be proven correct.  if it starts to drop, i would head underground asap.  i personally think Bernanke and the bankers realize they have to get the gold price down since leveraged investments are heading into gold and not the real economy as they would like.  the Fed can provide free cash to the system but they can't control where it goes.  i wish i could find that link to that article someone here on the forum provided about how the banks are complaining to Bernanke about the drop in the dollar b/c of alternative currencies such as btc.

no, the examples i gave are where they are paying out less than they should or by cutting back payements.  it has nothing to do with debt monetization; it has to do with increasing austerity.  its going on all over the world.  look at Europe.