Gold update....

 When we last discussed the topic of Gold in late February we suggested Gold would have to spend more time in correction mode. Sure enough, that is what we have seen the last few months.  Apathy is beginning to take root in the hearts of all but the staunchest bulls. We here at Mytwocent$ believe there is a real possibility the intermediate bottom in Gold - meaning one that will hold permanently - is in at $1525. Reasoning as follows:

  Gold traded a whole summer last year around $1525, plus or minus a few percent. In a bull market, once consolidation levels are decisively broken to the upside - the bull doesn't look back. Battle tested Gold veterans remember the fight for $425-$450 back in 2004 & 2005. It took FOREVER for Gold to breach it, but when it did, it was "off to the races".  The battle for $1000 back in 08-09 also seemingly took forever. Again, once it was broken to the upside, the Gold price never got close to $1000 again - see why 2 paragraphs down.  Whats important to remember from the 20 month struggle in 04-05 to best $425-$450 level is the bears could never sell it off more than about 15%.   For 20 months in 08-09 Gold struggled with the $1000 level. In that correction the bears managed to sell it off no more than 24% from its march 08 high. 

   We would suggest the $1900-$2000 level will prove similar to the two levels mentioned above. As of this moment Gold has been sold off 22% from its high in that range last fall. The good news is the 22% off sale is certainly deep enough to qualify as a correction. The bad news is we are only 10 months into the correction. Prior bull behavior (20 month consolidations) suggests we may not see new highs until next spring. WAIT!! Where have I heard that before - Oh, I know - right here. 

 Round numbers, like say $1500 weigh heavily on investors minds for psychological reasons. As Gold takes out one of those round numbers it garners attention. After spending considerable time above those round numbers, those same round numbers start to look like a steal. Who wouldn't want to own Gold at $500? or a $1000?  In like manner, I suspect there is a whole cadre of folks Looking to get long at $1500.  Methinks they will be left standing at the station, waiting for a train that never comes. This will keep the proverbial bull traveling light. 

   Keep in mind also, 3 years running Gold has made important lows in the summer. This pattern is likely to continue, meaning we will likely get another test of the support at $1500 before summer is out. Bagholder believes the reason this Gold Bull makes bottoms in summer is because the bears have to work summers to pay for their poor investment philosophies. In the mean time, Gold bulls are on vacation during the summer - as only they can afford to take vacations, thanks to their wise investment philosophy. Stated another way, in the summer, when the cat is away - the mice will play. 

   Bagholder apologizes for the lack of attention given to his blog recently - he is pre-occupied with starting his own business. A daunting task in this environment, to say the least. Thanks for your understanding. I will post some thoughts on Silver soon.

Its About Time

      Just about everything we do has an element of Time to it. We work for X dollars/Hour. We pay bills a month at a time.  We take a weeks vacation. Even money has a Time component, commonly known as interest. Gold has often been compared to money in a negative light because "Gold" pays no interest. While that fact mat be true, it fails to take into account the time component of Gold. Understanding precisely how Gold & Time interact is critical to comprehending why the dollar price of gold, over the next decade, will continue accelerating to the upside. 

  Gold has a very unique property in that it captures the value of the increased productivity of individuals over time. For example, Gold bought a lot more cotton after the cotton gin was invented, because the productivity of your average cotton farmer skyrocketed.  Increased productivity is really just a savings in Time. Less Time required to produce the same amount of goods. A stable currency (like Gold) allows the savings in Time to be captured by anyone.  Paper money is supposed to function the same way. Yet, we live in a world where our paper money buys less and less. The reason Gold is able to capture value where paper money loses it, is because the supply (thanks to mother nature) of Gold is very stable. In like fashion, an exponentially growing supply of paper currency enables the paper aristocracy to steal all the value from the productivity gains of the working class. 

  A basic tenet of economics states: price (value) is a function of supply and demand.  If you have a stable supply of something, like Gold - you effectively change one of the 3 variables in the preceding equation into a constant. As a consequence, the two variables left will move in tandem, meaning either both go up - or both go down. So, lets plug in a real life example into the above tenet. Lets say the productivity of the working class is in demand & we are trying to determine what it should be valued at in terms of Gold. Since we know the Gold supply is a constant, The two remaining variables (productivity & value) must travel in the same direction. Find a way to increase productivity and the value of Gold must go up. Thanks to technological advances and more efficiently run businesses, the increased productivity of the working class guarantees Gold will buy more in the future than it does today. 

  This property is what makes Gold the Ideal storage facility for your labor. In a way, Gold is a place to keep Time, which is all we really have. With each passing day, the time we have left on this planet diminishes. In paradoxical fashion, this has the effect of making our remaining time, more valuable. And like Time, Gold will just become more valuable the longer you live. 

**********************************************

  There is another very under rated feature of the current Gold bull market which manifests itself as a form of timing. The movements of the 21st century Gold bull, on the surface, may appear random & chaotic. But like most living things, there are discernible patterns of movement repeated over and over. Cycles, or stated another way, this Gold bull has Rhythm.  Look at a gold chart above for the last decade, and pick out the last 5 major peaks. (sep 2011, nov 2009, mar 2008, may 2006, dec 2004).  Pay particular attention to the Time between each peak. They are all 19-22 months apart. If that is not rhythm, I don't know what is. 

 Long term, the fundamentals in a given market will determine what direction a market trends. In the short term however, movements within a trending market are driven by the emotions of those involved. Long rallies ignite GREED, sharp pullbacks turn that greed into FEAR, and then sustained sideways movement turns that fear into APATHY.  Once apathy takes root, you can be sure another rally is on the way & the cycle has begun anew.  The last 8 years in the Gold market has seen this greed-fear-apathy cycle playout many times. Right now, the Gold market is in between fear & apathy. A few more months of sideways trading will increase the level of apathy to a point where a long rally is imminent. 

  Breaking down the 19-22 month cycles Time-wise within a bull market, you get about 1/3 greed, 1/3 fear, and 1/3 apathy. The irony of that split lies in the fact that, despite being a bull market, the bulls are getting what they want only 1/3 of the time, while 2/3 of the time - the bears are having it their way. Because bulls don't spend much Time getting what they want, many get demoralized, and ultimately thrown off the bull. The bears, meanwhile, are energized by a market giving them what they want, most of the Time. So the bears get sucked in to the wrong side of the market, while the weak handed bulls get thrown off. Classic bull market action.  

   Considering the last major peak was Sep 2011, the Rhythm of this beast suggests the next major peak will be in spring 2013 - a little over a year from now.  The way we see it, here at Mytwocent$ - there will be about 4-6 more months of apathy breeding. Followed by about a 6-8 month rally, taking Gold to new highs sometime next spring. Having seen this bull move Time and Time again, Bagholder can attest; higher prices are on the way.  With human nature as a constant, you can be sure - this Time - will be no different.

As American as Apple Pie

Senator, we are all part of the same hypocrisy - MC  

  

 We are a nation of criminals - have been since the beginning. Our founding fathers made their bones thumbing their nose at the (Kings) rule of law. Even today, We celebrate criminals by writing books and making movies about them. It should then come as a shock to no one,  the people who run this country are some of the brightest minds the criminal class has to offer. While the size & scope of their criminal behavior rarely surprises Bagholder, their brazen manner of late (MF Global) is rather disturbing. They steal, in plain sight. No prosecutions, no perp walks, no one held accountable. In the parlance of our time, WTF?   

   Where is the media with explanations as to why some of the victims have been made whole, while others have to feed attorneys to make their claims for justice - a Sisyphusean task if there ever was one.   Where are the regulators  with the criminal indictments - or does the clown who ran the company & his minions get a pass, because he is a friend of Obama. Where is the public outrage over this nonsense? While some of you are thinking OWS movement, Bagholder would suggest there is a substantial difference in outrage between the Chinese guy who stood in front of the tank  and your average OWS protester. 

   Even more disturbing, is the why of all this. Why is JP allowed to cut to the front of the asset liquidation line, seizing physical metal in the process & leaving paper longs holding the bag, so to speak.  Lets be honest here, Jp and their ilk are the Paper Aristocracy who write the rules under which the rest of us plebs have to live. They have the power to loan unlimited amounts of cash into existence.  So, can it really be about the money? They have the political connections to write (and selectively enforce) their own laws. So, why thieve in broad daylight? 

  The elephant in the room is this:  they have not overturned the laws of the universe. As such, the Paper Aristocracy  does not have the power to will physical metal into existence. With that in mind comes this incriminating fact: those with cash in their MF Global accounts have (for the most part) been made whole. In the mean time, those paper longs & persons with actual physical metal on deposit are still victims. .

  The sum total of physical seized might be a few thousand tons of silver. Why would JP even stoop for such a pittance?  Having traded physical metal for decades,  Bagholder is well aware the physical market is stretched tight;  But not so tight, JP would resort to stealing scraps of silver in broad daylight. In the rare event Bagholder has misjudged the tautness of the physical market and JP has been forced to thieve in plain sight  - then the whole thing reeks of desperation. It also means the inevitable silver moonshot  will unfold over the next 18 months. While we believe this to be possible, it is not likely. We here at Mytwocent$ are of the opinion there is only one way JP's behavior makes sense. The MF Global seizing of assets is a trial balloon  for something much larger down the road. The crime itself (of jumping the bankruptcy line) is whats important here. Assuming this goes unchallenged, it becomes the roadmap for future confiscations. The precedent being set here, is the real danger.   

  At this point it should be obvious we live in JP's world. They show up,  in true mafia style, taking what they want. The 140,000 clients of MF Global are forced to squabble over what remains. The JP's of the world play under one set of rules, the rest of us saps are controlled with another set. The hypocrisy is astonishing. It seems Orwell had it right, as some are MORE equal than others. Those playing by the double standard should be exposed. Instead, our MSM seems complicit in the cover-up. Those playing by the double standard should also be prosecuted. But no prosecutions are likely, as the people who run this country are members of a select  lifelong club, all with licenses to steal.  

   With no punishment for their obvious crimes, going forward you can expect more of the same, only on a much grander scale.  The real lesson to take from all of this is to buy and hold physical metal. Futures accounts, brokerage accounts, GLD & SLV are all just paper claims. When push comes to shove, and it inevitably will - those claims will be denied by the Paper Aristocracy. Just ask MF Global clients. Don't be left holding the proverbial bag - buy physical today - while you still can……

  On a completely different note: the parlay of the day is  the Patriots & under 55.5 this Sunday. In the interest of full disclosure & spoken like a true gambler, Bagholder has lost 3 Super Bowls in a row - so I am due!!!

   

Popped Psychology

  Bubbles are a fascinating subject to us here at Mytwocent$. When inside one, it is often difficult to realize it. Human nature as well as flawed perspective makes spotting bubbles very tricky - doubly so, when you are in them. Rather than focus on historical precedents in identifying a bubble, it is much better to study the behavior of  market participants in an objective manner. Human nature is a constant. As such all bubble participants, regardless of the underlying subject,  exhibit the same behaviors.  Identify those, and you can spot a bubble. 

  For starters, participation is always widespread. When people who have no connection to a particular industry are piling in - its a bubble. Secondly, most participants are leveraging their way in, meaning they are borrowing (OPM) other peoples money just to participate. Third, the growth rates are mathematically unsustainable, yet participants in a bubble turn a blind eye (some due to greed, others due to ignorance) to the compelling math, with emotional justifications like "this time is different". Fourth, and perhaps most importantly - you can't reason with participants on any fundamental level, because it is faith driving their decisions - not rational thought. 

 Viewed through this lens, it becomes easier to differentiate between Bubbles & Bull markets.   Since most big  bull markets eventually give way to blowoff bubble tops before collapse, the value of being able to tell the difference is priceless. 

   We will examine eight of the largest bubbles in existence today, and then one market - which obviously does not qualify - no matter what the MSM says. 

  

1. Government spending  - all four bubble elements are here. Unsustainable widespread use of other peoples money, seemingly with no rational thought.  Government spending is over 40% of this nations GDP, and growing exponentially.  Our universe abhors a vacuum, as such it does not allow anything to grow at an increasing exponential rate indefinitely.  That means, either they get spending under control or the whole system collapses under its own weight. There is no third alternative

2. Educational costs - College tuition in this nation is out of control. It has grown in cost, exponentially,  for decades, seemingly with no end in sight. Gman (using OPM) forces up tuition costs through their student loan programs, to levels much higher than what the market would support if students actually had to pay their own way upfront.  They also saddle our brightest youths with massive debt burdens in the process.  Is it any wonder our universities teach almost everything except independent thought?

3. Medical costs - This is another market driven to stratospheric levels because of the widespread use of OPM. When Mom gets sick and has to go to the hospital, she deserves nothing but the best. Cost is no object. That attitude is prevalent, because of OPM. If people had to pay as you go for medical care, market forces would push costs down to a fraction of what they are today. Once again, its widespread use of OPM that drives up costs, saddling the sicker members of society with massive debt burdens in the process. Despicable. 

4. Military complex - As a nation, we spend 10x more $$ on a military, than any other nation on the planet. The Imperialistic ways of  empire & maintaining the paper con are to blame. Do you really believe other nations would take our paper in exchange for their goods, if it weren't for our military? Saddam said no more dollars for oil, he had a rope around his neck in less than three years. One of the chief causes of the collapse of the Roman Empire was maintenance of the oversized military.  It will contribute to our undoing as well.    

5. Wars - I'm calling a bubble in wars also. Iraq, Libya, Afghanistan, the drug war, war on poverty - I'm tired of it. Gman could never fund all these wars without the widespread use of other peoples money.  The only group who benefits from war are the bankers. Everyone else suffers. This is why Ron Paul represents the only alternative to the status quo in the next election. He, unlike ALL the others,  wants to end these wars. His is clearly the moral high ground.  

6. Paper dollars - Of all the bubbles on this list, this one amazes me the most - due to the sheer number of people taken in by it. Equally amazing is how futile it is to reason with those whose faith is placed in paper dollars. Even a casual glance at history shows ALL paper currencies eventually collapse once the victims get spooked & lose faith. Fact is, when you hold a dollar - you hold a claim backed by the full faith & credit of the US Government. I ask you dear reader, what could that really be worth?

7. Corruption - It is the oil which lubricates the economic engine of this country. The problem is corruption is so widespread, said engine is submerged. Its everywhere you look, and it always involves OPM. Ponzi schemes, rigged bids, kickbacks, political donations, earmarks, bailouts, legalized theft (MF Global), Manipulated markets, hidden taxes, short sales,  the list is endless. Corruption is a moral cancer which has taken over the host organism (our country). Like all things in nature which grow at an exponential rate, the cancer as well as the host, will eventually die.  

8. Bonds - this is, by far, the most dangerous of the bubbles listed here. When this one pops, all the other bubbles listed here will pop too. Buying Bonds today is no different than playing the childhood game of musical chairs. There comes a point where interest rates can't go any lower, meaning Bonds can't go any higher. That is where the music stops , and you either have a chair, or you don't. BTW, chairs only come in two types, Gold or Silver. 

9.  Gold market - There is no widespread participation. Nor, are there people leveraging their way into gold. Well paper gold maybe, but not the real deal. History would suggest the growth rate in dollar price is plenty sustainable for another decade. Gold bulls do not own gold because of any blind faith, they own it because logically & fundamentally its the place to park your wealth. Bagholder would argue, it is misplaced faith in Gmans paper by 99 percent of the populace that will make the 1 percent of us long gold, wealthy beyond the dreams of avarice. Since none of the bubble criteria exist here, its obvious Gold must be in a Bull market instead. Come get you some!!!!

Charting Greatness

    Above is the 2011 chart For Gold. Below are 13 of the most important observations to draw from it.

1. Gold was up again, for the 11th year in a row. Still the masses cannot recognize a trend for what it is. (How many times you gotta be told?)

2. Notice the advances of (April, July- Aug, and late Oct) all came on the heels of a month or more of sideways movement in price.  Sideways breeds apathy for both bulls & bears. This keeps the proverbial bull traveling light.

3. Gold Bulls had their greed ignited with a six week 28% mid year rally - only to spend the last four months of the year getting kicked in the junk with two big selloffs in September & late Nov-early Dec. 

4. Gold Bears have lost for the eleventh year in a row, yet they end the year feeling a little giddy after those two big selloffs. 

5. In essence, Gold was up for the year - yet bulls feel sick & bears giddy. Common sense would suggest thats not possible - yet here we are. 

6. The last 5 months of the year, gold has posted a series of lower-highs & lower lows. This has the effect of getting Technical traders (those who follow charts) on the short side of the market.

7. With Gold falling the last 5 months of the year and breaking below the 200 day moving average, Momentum traders are also piling on the short side of the market. 

8. As we all know, markets move in a manner which hurt the most people. With Bulls currently timid, bears giddy, technical & momentum traders on the short side - a massive upleg must be near. 

9. Before the upleg comes though, there probably needs to be some more sideways action first - for apathy sake.

10. Gold closed the year 19% off its all time high. For those looking to ride this Bull - that is about as cheap as it gets - historically. 

11. This is the 3rd consecutive year Gold has posted an important bottom between late June & late July. Expect this pattern to continue.

12. If history is any indication, $1900 will not be breached the next trip up - it will probably have to knock on that door at least three times. 

13. The five month selloff to end the year is testing the convictions of bulls as we speak. The more experienced among us, have seen this movie before. It ends with higher prices!!!!

Attention Kmart Shoppers

  Kmart Blue-light specials. They came without warning, they didn't last long, were good while supplies lasted,  and were very often ridiculously low prices on something you didn't want (but occasionally needed).   As marketing gimmicks went, It was one of Bagholder's favorites. It was economics in action at a very base level.  Sell shampoo for a dollar that normally cost $5 - and it will fly off the shelf.  Thats how free markets work.  The Gold & Silver market today is reminiscent of a Blue light special. 

  Gold is on special today by any reasonable standard. Relative to its 200 day moving average, its the cheapest its been in 3 years. In fact, It is below its 200 day moving average for only the 3rd time in the last 7 years.  Its trading about 17% off its all time high, only twice in the last decade has it traded lower. As with all blue light specials, this one on Gold won't last much longer. The fundamentals underlying the price advance in Gold the last decade are stronger today than they have ever been. 

  If you understand nothing about the Gold market, Know this: Checking the structure of the market (who is on which side of the trade) we find the most bullish COT report Bagholder has ever seen. Right Now, the Paper aristocracy (banksters) is the longest they have been in decades. Meanwhile, man on the street is the Least Long he has been in decades. We  may have to depart for the emergency room soon - as looking at this weeks COT report gives Bagholder  one of those 4 hour Hard-ons.   

 Gold is a better deal today at $1600, than it was ten years ago at $265. A decade ago Central banks were dumping 400 plus tons a year on the market, today they are net buyers. A decade ago Gman man wasn't  printing $$ with reckless abandon, today - not only is he printing - he has openly admitted it. Ten years ago real interest rates were positive and falling, today they are negative and falling (better yet). Ten years ago, the US Government wasn't obviously bankrupt; today they are beyond bankrupt, both morally & financially.

  The powers that be are running a Bluelight special on Gold, solely to increase confidence, temporarily, in Gmans paper. Do not expect the special to last. Gold has returned 22% per year for ten years running. We here at Mytwocent$ are well aware of how bull markets progress, consequently we know the % return the next ten years will dwarf the 22% of the last ten. For the record, another decade of 22% per year gets us north of $10,000/oz by 2020. Bagholder believes $10,000 will be taken out well before 2020. 

Pay No Attention to the Man Behind the Curtain

It is well known in Literary circles that Baum's masterpiece The Wizard of Oz is an allegory for monetary reform cleverly disguised as a children's fictional tale. Oz was written in the late 1890's when the single biggest political issue, by far, was monetary reform. Baum himself, placed a disclaimer in the introduction of the book stating "OZ" was just a children's tale. Thinking logically, why put a disclaimer in the book at all, unless its known, in advance, people will perceive the story to be something more than a fictional tale. The characters & the symbolism within are much too dead-on to be a mere coincidence. It speaks to Baum's Genius that he could condense the political/monetary landscape as well as all the players of the 1890's, into a fictional tale to which anyone could relate. His genius is further evidenced by the timelessness of "Oz". While the present political landscape is certainly different than the 1890's; The players and the lessons to be learned are even more applicable today.  

   The great and powerful Wizard of Oz himself, is the symbolic representation of Government (Gman). In todays world, Gman is looked to for answers to everybody's problems - just like the Wizard of Oz. He is seemingly all-powerful, unless you are fortunate enough to get a peek behind the curtain - where Gmans deceptions and ineptitude are made obvious. Truth is Oz, just like Gman today, has no answers. Gman is little more than a giant complex wealth re-distribution machine created to mislead people into believing the cure for what ails them requires looking to Gman, instead of an inward looking examination of self. This was a minor problem in the 1890's, today its an epidemic. 

 Then we have the Wicked Witch representing the interests of the Paper Aristocracy. They seek to control people - plain & simple.  The Witch used flying monkeys to further her cause, today's Paper Aristocracy uses the MainStream-Media (granted, they don't fly, but they are monkeys none-the-less). The Witch used a crystal ball for clairvoyance, todays Paper Aristocracy simply make the headlines. The Witch used fear as her chief instrument of control. Today's Paper Aristocracy has gathered most every form of human frailty known including fear, greed, vanity, power, and ignorance; and forged them into the finest instrument of control mankind has ever seen - paper money.   

  Dorothy symbolizes the will of the people, the electorate. As a group - they are not particularly savvy - but they do have common sense. Dorothy, like the US electorate is not perfect, as her reasoning is easily swayed by emotion, distraction, and specious tales of woe. Dorothy was a lost soul looking only for a way back home, to a simpler more black and white world.  She buys into the proffered nirvana of the Emerald city (read: green paper) just as the US electorate bought into the Bankers pitch of fiat paper money.  Dorthy and her companions obsession with the Emerald city (and its supposed answers to their problems) is no different than peoples blinding obsession with paper money today. Just think how many folks you know who would tell you their lives would be so much better if they just had more, green paper. The victims come from all walks of life too. Farmers (scarecrows), industrial kings (lions),  workers (Tin men), and munchkins (poor) all have their share of wretched souls lost beneath a sea of paper money.

Once Dorothy gets to the Emerald city, she realizes immediately the system is fraudulent. She and her companions discover they held the answers to their problems, all along. In her case the Ruby slippers, which are not Ruby at all. Hollywood made them Ruby red to stand out on screen, taking advantage of the fact Wizard of Oz was among the first color films ever made.  In the book they are silver slippers which gave Dorothy the means to go where she wanted. In other words, to be free. Free people, by definition are not controlled, which explains why the silver slippers were so coveted by the witch. The key to Dorothy's freedom was silver. In today's world, buying physical silver is the only way to unlock and remove the shackles of paper money. Slaves keep their money in paper, free men keep theirs in Silver. 

   In Oz, the yellow brick road is the path to nirvana. Everybody knows it, but until Dorothy comes along - nobody follows it. Is Gold really any different today? History is clear, a Gold standard is the answer to todays economic woes. Just like the munchkins of Oz who wouldn't follow the yellow-brick road, the masses today continue to play the rigged games (stock, bond, and money markets) of the paper aristocracy, becoming more impoverished every day. Gold was the path in the 1890's, it is the path today. The Paper Aristocracy (just like the wicked witch) is doing all they can to push people off the Gold path. They know Gold is the anecdote to the paper disease they spread. 

  Perhaps the best lesson to be taken from Oz is While the yellow brick road may have led into the Emerald city, it also led out. Emerald city, like paper money, is one giant con. It has only the power we give it. Real power, the power to change the way things are, lies within. You are not obligated to play the fiat money game, any more than Dorothy and her companions were required to stay in the Emerald city. You have the power to buy precious metals and take control away from the Paper Aristocracy.  Dorothy needed the Lion, Scarecrow, and Tin man to make her journey. In like manner, you need  brains, heart, and courage to recognize Gold for what it is - the only way out of the FIAT paper hell.

 Remenber, In Oz, the yellow brick road was not without scare.  In today's world, we have msm monkeys screaming "bubble" on every Gold rally & "popped bubble" on every pull back, hoping to push the lost souls off the yellow brick road!! Do not be fooled, this is a clear cut case of life needing to imitate art. Follow the yellow brick road!! Follow follow follow follow follow the yellow brick road!!

The great and powerful Bagholder, hath spoken. 

Unemployment ... Users Guide

 There is a growing angst in this country which manifests itself differently for everyone. The unease is palpable as very few can put into words the exact source of it, but they know its there. This is part and parcel of what the OWS (occupy wall street) demonstrations are all about - misdirected angst. In our last blog we discussed how rising prices are not possible in a capitalist society with sound money. Today we will discuss another little known fact about a capitalist society with sound money, Unemployment is not possible either. Did you know the word unemployment was not added to Webster's dictionary until the 1930's. For centuries, with the using of sound money there was no such thing as unemployment.

 It took the creation of the FED in 1913 less than 20 years to generate a problem (unemployment) where there never was one before. Now, just like with rising prices - people think rising unemployment is the natural state of being; when in fact it is created intentionally by the "haves"  to lower the real wages paid to the "have nots" here in America.

It wasn't too long ago where a college degree guaranteed a job for life. Nowadays, not only does that degree not even guarantee work - but it usually comes saddled with a student loan the size of a mortgage which is not erasable by bankruptcy. In other words, you have to pay it. As we all know - debt is the money of slaves. So in effect, those with student loans outstanding lucky enough to find jobs, are little more than indentured servants of the state. And you thought slavery was abolished - lolol

  As the best & brightest this country has to offer graduate College (in debt to their eyeballs), they tend to gravitate towards one of the 3 power professions - Politicians, Lawyers, and Bankers. Problem is, none of those professions create anything tangible as they are all parasites feeding off those who produce. Meanwhile, the people who actually make things (and create jobs) have to kiss the rings & line the pockets of said parasites long before ever opening a business and/or producing anything.  Until this fact is addressed, unemployment will continue to grow like a weed. 

  My apologies in advance if this comes as a shock, but wages paid in this country are much too high.  If you are an employer, then you know what I mean. If you are an employee, chances are you lack the proper vantage point (and education) to understand why real wages paid in this country are headed significantly lower (including yours). Looking big picture, why would any employer hire an American worker (with an obscene list of Gman given rights) for 10 bucks an hour, when there are Billions of people worldwide willing to do the same job for 10 bucks a day. Oh, and without all the Gman granted employee rights...... 

Most of the world is willing to work today for the paper equivalent of a dollar an hour. Market forces will demand wages paid here in the US get more in line with wages paid around the world. If they don't, Unemployment will continue to grow. While it may seem unimaginable today, within a decade labor here in America will be working for the equivalent of a dollar an hour, just like the rest of the world does today. If you expect unemployment to fall there really is no alternative, as the Haves can either pay a 150 million Americans less - or pay billions worldwide more. You don't need a Doctorate in Economics to know how that will progress.

  As if high real wages & obscene government regulations aren't driving jobs overseas fast enough, the intellectuals in Washington currently have the corporate tax rate set at the 2nd highest of any nation on the planet. Only Japan (another comatose economy) has a higher tax rate.  I doubt seriously, our leaders will even acknowledge there is a connection between high tax rates & growing unemployment.

  Perhaps the most sinister element of  Gmans behavior is his marginalizing of the problem by changing the way the "unemployed" are counted.   John Williams at shadowstats claims unemployment today stands at 26% if measured like it was in the Jimmy Carter era. Those are depression level numbers.  So rigging the unemployment percentage down to, say 9% - like they claim it is today - has the effect of defending the "haves" from insurrection by convincing the "have nots"  things are not as bad they seem. Goebbels would be proud.

   For those who care to look at history, unemployment skyrocketed in the 1930's & 1970's.  Immediately following the rise in unemployment came HUGE US Dollar devaluations and ultimately a sharp fall in real wages paid to employees. Historically, its a familiar script.  Those playing the "great game" need a rise in unemployment today, to properly foment (ignorant) demand for the coming devaluation tomorrow of our beloved dollar.  The devaluation is necessary to bring the US labor market back in balance with the rest of the planet. We can't just start paying people here a dollar an hour as they would not accept the pay cut. What they will do however, is allow themselves to be boiled slowly like the "proverbial frog" as the US $$ is devaued by 90 percent over the next decade.

   The net effect a decade from now, will be to pay workers everywhere the equivalent of a dollar an hour. Sure, it will be called ten bucks an hour - but the purchasing power of that ten bucks a decade from now will be the same as one dollar today. Working man does not comprehend what is happening to his wages because he does not understand the distinction between real wages & nominal wages. This is the source of the national angst. Working man is focused on how many $$ he gets for his work (nominal) instead of what those $$ can buy (real). So he loses ... in spades. To properly comprehend what is happening to you, it is imperative you understand the distinction between nominal & real. 

 What is perhaps most interesting about the con is working man knows he is getting shafted, but cant figure out who or what or how - because he can't see it.  His nominal paycheck is as high as its ever been, but that check does not go as far as it used to - because the purchasing power of the actual wages paid is falling. In my parents era, it was possible to work a menial job, like say a janitor and support a wife & kids on that salary. Today, there is no chance of that for a janitor - because real wages paid in this country are falling at a staggering rate. Even worse, the current rise in unemployment portends that the falling rate of real wages paid is about to accelerate to the downside. Fcking Brutal.

 For 200 years in this country, It was part of the American dream that while the woking man toiled - he did so secure in the knowledge his children would have it better.  Ours may well have been the last generation in America to be raised by parents who believed that.  Despite the negative tone of today's blog, the news is not all bad. Now that you know about the coming dollar devaluation, there is nobody to blame but yourself if you do not start storing a signifigant portion of your wealth in something other than US dollars. Gold & Silver are ideal. Buy an ounce…take the ride.  

GOLD...Its Bigger than US Steel

  Friday's Gold price intraday drop of over a hundred dollars per ounce seems scary to most. However,  In the immortal words of Hyman Roth " its small potatoes". Gold is now trading at a 15% discount to its all time high. Since the bull began in 2001, Gold has not offered many discounts. For those looking at Gold for the first time, 15% off is an excellent entry point. If you want to make money in Bull markets, you buy weakness & sell strength. 15% off is weakness. 

  Could it get cheaper, absolutely it could. In 10 years, Gold has only offered 3 discounts over 20% (summer 2004, summer 2006, fall 2008).  The sharpest discount was 29% off in 2008. If this 15% off sale were to get as bad as 2008, Gold would fall to $1375. While that is possible, its not likely as Gold should find plenty of support at its 200 day moving average (currently just under $1500). Bagholder is of the opinion, the powers that be, can't get it that low as there are simply too many buyers at these levels. Even if they do get the price down there, it won't be for very long. 

 This can be said with certainty, as ALL the fundamentals for Gold are as Bullish as they have ever been. Consider:

- Real interest rates are Negative, That is a dream scenario for Gold, as it  ALWAYS rises in that environment. 

- Even better, Benny has been kind enough to pledge keeping those rates negative indefinitely - woohoo - lets party!!

 - The worldwide supply of Dollars  continues to grow unabated. 

 - Economically, the future is bleak - as the only things certain are more wars, more taxes, more inflation, more unemployment, and more regulation. 

 - The days of dollar hegemony are nearing an end (this is what the wars in both Iraq & Libya are all about)

 - Bankers are buying at these levels, while the public is selling - That can only mean higher prices ahead. 

 - The commodity pendulum is swinging in Golds favor. 

  The MSM, would have us believe Gold was in a bubble & that bubble has now popped. They play this same story over & over again, not because there is a bubble - but rather as a scare tactic. You see, the MSM does the bidding of the people who run this country. Those people are piggish. They want the metals trade for themselves. So, their lap dogs in the media trot out the Gold is a bubble story to scare new money away. Remember, they are trying to get 99% of the masses on the wrong side of the trade. There is a growing number of folks looking at Gold for the first time in their lives. They see 11 straight years of rising prices and think, hey - maybe this is a good investment.  Until the MSM trots out the bubble talk, which exists only to assuage the egos & reinforce the incorrect thinking of those who feel they may have missed the move. 

  Make no mistake, Gold is headed higher - much higher.  Of course it could (and probably will) trade lower first. 15% off is a nice size pullback, and like all pullbacks in a bull market - needs to be bought. Looking big picture, the outlook for Gold is as bright today as it has ever been. There is no fundamental reason for Gold to have changed its trend. The trend is up. The pullbacks are sharp - because thats how they come in Bull markets. Long term, gold will continue to power higher until some of the fundamental issues listed above are properly addressed. 

We here at Mytwocent$ are grateful for this 15% off sale.  We prefer to take the Kevin Bacon approach from Animal house…….THANK YOU SIR!!  MAY I HAVE ANOTHER!!