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08 September 2008 @ 06:22 pm
financial insanity  


This is a picture I took Saturday night at the Dayton Greek Festival at the orthodox church on the street behind my condo. This event must be extremely popular with younger adults because it seemed like nine out of ten persons in the huge crowds were college age. This is the 50th year of the festival.

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Today, I suddenly decided it was necessary to do the biggest movement of money since I first became a "hands-on, active investor" over five years ago.

Everyone knows things are getting very weird, but if you are a precious metals investor, things look much more than just weird -they are insane.

Basically, to protect myself from any losses, I sold almost all my stock and ETF purchases made in the last 2 and 1/2 years, so all this money is now "cash".

It doesn't really matter what is behind the sharp collapse of the price of silver -whether it was orchestrated by the central banks to rally the dollar or whether instead it is just irrational sentiment caused by a failure to realize that all fundamentals point to severe inflation ahead.

(Jesse Livermore said "The market can remain irrational longer than you can remain solvent.")

What matters is that I don't lose any of my savings because of the silver price collapse.

So, as of today, all of my large gains from 2003 to 2006 are safe and still diversified, but I basically gave up on all the bets I made after mid 2006 and moved all that money into cash while I could still have sure net gains instead of possible losses.

When will I re-invest that money? It could be a few days from now, or it could be over a year from now.

However, I've decided there will be no new trades made until I have selected and begun following the advice of one of the technical analysts who monitors the cyclical indicators and who is also an expert on the weekly COMEX Commitment of Traders reports.

The latter are the "smoking guns" that indicate when the central bankers and their partner firms in New York are preparing to crash the silver price to keep people from fleeing the dollar and then to shoot it back up to enrich the New York firms as a reward.

The thing that finally convinced me beyond any doubt that the market is permanantly rigged this way was the size of the big bank short positions this July, the timing of the takedown, and the fact that there is actually a severe silver shortage right now and it takes months for delivery of new purchases. So, supply and demand indicate silver prices should be going sky high. But since the silver market is so tiny compared to all other sectors, it is extremely easy for giant players like the Fed and JP Morgan to distort the price by way of futures contracts. Of course what they do is illegal, because it involves collusion on both sides of the trades. But the COMEX regulators for some reason refuse to stop it probably because they don't want to take on the Fed.

In the final analysis, all that's really important are these facts:

The only way the government can keep from going bankrupt in the next several years after all the bailouts they are undertaking will be to slowly destroy the purchasing power of the dollar to decrease the inflation-adjusted size of the government's debts.

We already know that both Clinton and Bush changed the way the CPI is calculated so true inflation is much, much higher than the "official" numbers.

Because most of the financial press does not want to raise a fuss about this, for reasons I never will understand, there will be lots of irrationality in the markets, because most of my fellow baby boomers listen to these fools when they make investment decisions.

...So, I can't stay in cash because the true inflation rate is about triple what I can earn in CD interest AND the alternatives to cash are dangerous because the general public does not recognize their value as inflation hedges.

This means they remain tiny markets. As long as they remain tiny, it is easy for the central bankers trying to support their currencies to rig them.

Finally, now that I have lost all doubt that international gold and silver prices are rigged, I have calmly chosen to simply join the crooks because I can't beat them. Of course what I really mean is that I will closely follow the moves of the crooks from now on and move back into cash when they are ready to make a price takedown and move back into metals when they are ready to jack the price back up to take their own profits.

This is NOT speculation or day trading at all.

Instead, it is simply a more refined form of long-term, conservative investing based on fundamentals.

Corrupt manipulation by central bankers is just another fundamental fact -as important as supply and demand.