The Fifth Dimension

"There is a fifth dimension beyond that which is known to man. It is a dimension as vast as space and as timeless as infinity. It is the middle ground between light and shadow, between science and superstition, and it lies between the pit of man's fears and the summit of his knowledge. This is the dimension of imagination. A dimension not only of sight and sound, but of mind. Next stop, the Twilight Zone

    We here at Mytwocent$ always like to acknowledge excellence. With that in mind we will dedicate today's blog to one of the most influential television shows in Bagholder's life: Rod Serling's the Twilight Zone The show routinely explored all facets of human frailty, often from multiple perspectives.  Many of the episodes had an obvious psychological bent. In like fashion, today's blog will have strong psychological overtones.

CUE: Rod Serling's voice….

  When running an empire, Its one thing to enslave the masses into a life of servitude.  Its something all together different to make them content with that life……

  Consider, if you will, Gas prices.   While most folks think its market forces which dictate those prices, we here in the Twilight Zone know better.   The powers that be (TPTB) raise prices while simultaneously  conditioning the masses into willingly accepting the higher prices.  TPTB understand its not high or low prices that affects the national mood one way , or the other. Much more important is whether prices are rising or falling. Stated another way, prices could be low, but rising; and the masses will be complaining. On the flip side, prices could be high, but falling; and people will be content. At first glance this might not make sense, as it is very counter-intuitive. Think about it this way: nobody would be happy to pay $4 Gallon for gas today. However, run the price up to $5 for a month or two & then they let it fall to $4, and just like that, the masses would be happy to pay $4 a gallon.  TPTB get what they want - $4 gallon with content customers …. while the masses get what they want - falling prices and healthier psyches (specious though it may be). 

 In true Twilight zone fashion, Its a mind game TPTB play over & over, and yet the masses never catch on. Another example is Unemployment which spent most of the last decade hovering around 5%.  This means  an unemployment rate of 7.5% throws 50% more people out of work. Nobody would be happy with that. Unless of course, TPTB run the Unemployment rate up to 10% first.  Then they let it fall back to 7.5% and everybody is happy.  Same game as the gas prices, and the same result. More people out of work, but the masses are ok with it. These are examples of applied herd  psychology with the intended purpose of making the masses more content (less trouble) in their servitude. Precisely because of that fact, Bagholder can guarantee both gas prices & unemployment will be high, but falling come election day.  TPTB do not stop at numbers games either, they run just as many games with words….

  Directly from the Hitler playbook of "the bigger the lie, the more they believe";  we have the recent settlement between Gman and the US banks who raped & pillaged the mortgage market for the last decade. Gman, with his infinite wisdom, has traded away future prosecutions for Robosigning, foreclosure fraud, or any other crimes related to the collapse of the real estate market for a paltry $25 billion. Even worse,  only 5.8 billion is payable now.  JP could pay the 5.8 by themselves with about 2 weeks of revenues. By the time the fine gets divided amongst all the banks involved, JP's share of the fine will equate to maybe 2 hours of revenue.  In essence, their punishment is a slap on the wrist. Yet,  Obama actually had the temerity to gloat about how he was sticking it to the US banks for their despicable behavior.  The masses are spun psychologically to feel better because banks are supposedly getting their "comeuppance", but those same masses are too dim-witted to realize the fine is nothing more than a "get out of jail free card" , the cost of which ($25 billion) is a microscopically  small fraction of what their misdeeds warranted.  

  As you might expect, here in the Twilight Zone,  TPTB also use word games for the purpose of multiplying their wealth. Consider this Zerohedge post which says Gold bugs are now classified by the FBI as Extremists.  This qualifies them for a government paid, middle of the night, black bagging & whisking off to Guantamo whenever Gman decides we need more up close & personal psychological conditioning.  While Gman probably won't resort to that extreme, the possible effects of the extremist label on Gold are worth considering. The new classification will be recognized by critical thinkers as Big brother  propaganda designed to keep a healthy slice of the non-critical thinking populace out of the Gold market. Those same non critical thinkers, meaning the masses, will unknowingly - in the back corners of their mind -  associate owning gold with criminal behavior. This is just another piece of MSM propaganda, no different than any of the other tired old lines like Gold is a barbarous relic, Gold is risky, Gold is a popped bubble, Gold is only owned by evil speculators, etc….  Oh well, it keeps the Gold Bull traveling light.  

  Today, there is no way to avoid the 24/7 onslaught of psychological conditioning by TPTB.  If you can think independently, their propaganda will be recognized for what it is - Lies, intended to misdirect.  If you can't think independently and you believe what you are told,  you will be condemned to a life of perpetual angst.  Psychologists call it a cognitive dissonance, In layman's terms - one of the leading causes of personal stress is when a disconnect exists between what we sense (see & hear) and reality.  For example, Obama says he is punishing the Bankers, people believe him. Yet bankers continue on, business as usual. That is a Disconnect. We are told there is no inflation, yet anyone who has been to the grocery store knows better. That is a disconnect. We are told Gold is a risky investment not worth buying near an all time high price - yet its up 11 years running. That is a disconnect. We are told ours is a better nation because we have open elections where we can choose between two parties, one that represents higher taxes & bigger government and one that represents lower taxes & less government. Yet, no matter who is in charge, government just keeps growing and taxes just keep going up. Just another disconnect - in fact - they are everywhere you look. 

  The societal disconnects that exist today as well as the resultant national angst are products of the 24/7 propaganda/conditioning by our masters.  The disconnects are too painful for the psyche to acknowledge directly, so people just live with the resultant stress.  They walk around angry, and can't figure out why. They are victims trapped in a psychological never-never land of wondering just what is true, and what isn't. Its a miserable place to live, because the only way out is a path too psychologically painful for most folks to follow. So they are condemned to a life, 

in the Twilight Zone……..

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. 

How many times you gotta be told?

  Corporate America just wasn't for me. Bagholder's lone venture into corporate America was as a teenager (pre-internet days) working at a call center for a major Hotel chain. In a 40 hour week we would routinely handle 4000+ phone calls to get about 800 reservations. In those days, average room was $50 times 800 reservations meant each agent routinely typed up $40,000 worth of business per week while getting paid about $400. As a corporate drone, I dreamt of ways to turn those 4000 calls into $40,000 for me, instead of a faceless corporation…. 

 As luck would have it, Bagholder was working on that very problem one Friday in September just before week 1 of the NFL football season when the phone rings. Guy with a heavy foreign accent says "bet the Broncos" - and then hangs up. Most folks I know would just dismiss the call as a prank, Then laugh Sunday night when they happen to notice the Broncos won. Oh well, life goes on….

 Week 2 Friday night, phone rings again - guy says "bet the Vikings" - and then hangs up. Anyone who has been on this planet for more than 10 minutes knows "If the world tells you something, you listen". Bagholder goes long the Vikings right here. Most normal folks at this point, would still dismiss the call as as a prank - but make no mistake; they will go looking for that Vikings score on Sunday.  Sure enough the Vikings win.

 Week 3 Friday, phone rings. At this point most folks would begin looking the gift horse in the mouth - with something like "WHO IS THIS?". But the voice says "Bet the Raiders" & hangs up.  Most folks would still do nothing, but a healthy percentage of people would find a way to get a Benji or two down on the Raiders. Even the ones who don't bet will keep an eye on the Raiders - who of course, win. 

 Week 4. If you are like Bagholder, come week 4 you are sitting next to your phone waiting for the call. It comes with the words "Bet the Browns". Anyone who bet week three will be upping the sperm count this time. Those who didn't bet week three have to be questioning themselves. Some of those will rationalize along the lines of : This guy has been right 3 weeks in a row, I should try it. Browns win.  

 

 Week 5. There are people I know, who after being handed 4 winners in a row, would be emptying their checking accounts (fck the mortgage) after the phone rings with "bet the Rams". To be fair, there is a large percentage of people at this point who would still not bet the Rams, for a myriad of reasons - most of them psychological. Maybe they don't have gamble in them, or they are to lazy to make a bet, or perhaps they just do not believe. No matter, Rams win.

 Week 6 Call comes "bet the Colts". Those emptying their checking accounts last week are now paying their mortgage AND pounding the Colts. The ranks of the non-believers are shrinking as more and more people, after being told 5 times in a row, begin to listen.  Think about most men you know and how they would react in this situation. After being given 5 consecutive winners half the men I know would be betting the Colts - many of those would be wagering $$ well outside their comfort zones. Its OK, because Colts win.

 Week 7 Call says "bet the Lions". Many guys, including yours truly, would be booking suites at Caesars Palace by week 7.  Meanwhile the non-believers rationalize away the pain of lost opportunities with thoughts like: This is not possible, nobody could have information like this, why are they sharing with me, this is crazy, etc… Then again, how many times do you, as an individual, need to be told something before you listen? five, six, seven?  …. Oh, Lions win.

 Week 8 By now, there are some people to whom that Friday night phone call is a Religion. Their worlds revolve around that voice on the phone which says "Bet the Eagles".  Some folks I know would be doubling up their bets every week, while others would now be emptying their brokerage accounts for wagering capital. Meanwhile the non believer pool shrinks some more as all but the most stubborn non-believers start to listen and bet the Eagles.  Eagles win.

 Week 9  Phone call comes, guy says "I've given you 8 winners in a row, I can't carry you forever - this is the last winner you get for free. Next week you wire me 10 grand or we don't talk again. Got it? Now, bet the Jets." The non believers are screaming "I knew it, its a scam, they just wanted my money". While all that may be true - the voice gave 8 winners in a row. In short, he produced. In fact, make that 9 as the Jets win. 

  At this point there are a couple of questions which need addressing: 

What week would you climb on board?

Would you wire the money for the week 10 call? 

 For the record, Bagholder would wire the 10k.

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

   While you might think the above scenario could never happen, all that is required is a devious mind willing to make exactly 4096 phone calls week one - telling half to bet the broncos & the other half bet their opponents. Because the broncos won, come week 2 you call only the 2048 people who were tipped the "broncos" and tell half to bet the vikings & the other half to bet their opponent. Repeat until after week 9. By then you will have handed 9 winners in a row to 8 different people (some of whom have elevated you to GOD status). Assume 1/2 are astounded enough to cough up the money for a week 10 pick, and that is how you turn 4000+ phone calls into $40,000.  

Disclaimer: Do not try this at home…. For the record, the above tale is complete fiction - bagholder knows nothing about the list of 5000 Gamblers Anonymous members whose phone numbers went missing back in the 80's.

Commodity markets & how to play them.

  A guy named Moe calls you with a business deal. He says put up 100 grand for 25% stake in a widget company. He tells you how the company will be building widgets for 50 cents, while the wholesale market is paying a dollar.  Sounds like a no brainer, until you meet him and  his two partners Larry & Curly.  At this point, most people I know would not come up with the 100k, even if they could. No sane person would willingly go into business with stooges - no matter how compelling the business model may seem. Now Imagine a second example. Same widgets, Same risk,  Same rewards, but this time the phone call comes from Warren Buffet , Mark Cuban, & Bill Gates.  Most people I know, would be looking for ways to beg, borrow, or steal 100k just to get a piece of that deal.

The only difference between the two deals is the "structure". In other words, who is on your side of the trade. Stooges or moguls? Structure is very often overlooked by most people,  who spend their time looking at other fundamentals like risk, price, model, return long before ever considering structure. While that thinking might fly in the stock & bond world, In the commodity world (read Gold & Silver) STRUCTURE is everything. Nothing else even rates - not price - not risk - nothing!!

If you haven't traded in the silver market before, the best way of following the structure is to familiarize yourself with the commitment of traders reports, the COT for short. In any industry, its the insiders - the people who deal in it everyday -that know which way a market is headed. Because its their business to know, they have the most accurate info on which to trade. The COT calls these folks the "commercials" - think moguls. Another group tracked are the "speculators".  These are people with no connection to the industry,  just looking to make a quick buck - think stooges. The COT is kind enough to split the speculator camp into large specs (hedge funds), and the small specs (gen public).  COT tracking of positions of these different groups (commercials & specs) over time enables us to get a feel for the structure of the market.

  If you are a veteran of the silver market, then you know back in the eighties the general public was getting long in a big way. They came in with rolls of cash and walked out with bricks of silver. So many bricks in fact,  we were routinely buying bullion off Banks and selling it to the public. The cash was going uphill to the suits from the public, while metal went downhill from the suits to the public. More than enough time has passed to see who got the best of that trade. Anyone who got long metals in the eighties was annihilated.  The suits, as usual,  cleaned up. 

  About 1990, after a ten year ride from $50 down to $5 where the public was getting long the whole time, The structure of the silver market changed. The public began selling as much, or more silver than they were buying. By the mid nineties there were 20 sellers for every buyer. The public sold relentlessly, right on cue at the bottom,  for 15 years straight into the teeth of one of the biggest generational bears in our lifetime. About 2005-06 there was another major structural change. The ratio of buyers to sellers became more balanced. 

This makes perfect sense if you look at structure as a pendulum that swings a generation at a time. Lets review the general publics behavior in silver for the last 30 years. 1980's was all buyers & no sellers (one extreme). Early nineties things balanced out (pendulum is back at 6 o'clock) and then began 15 years of all sellers (other extreme). 2005-06 market back in balance again (pendulum back at 6 o'clock). The last few years we are starting to find more & more buyers of silver - as the pendulum heads back to the all buyers extreme. This is how commodity markets function - they swing from one extreme to the other in structure - over and over again in generational long swings. 

I'm not sure where I heard it, but every deal made has two players - a fool and a thief. If you are going to play in the commodity world and expect to make a buck, you best align yourself with the thieves.  Problem is, thieves aren't exactly known for transparency; so how do we find out what they are doing? Its a fact, a select few (read: thieves) make all the money in commodities and they do it trading opposite the masses (the fools). Its the suits who bought up all the publics silver from 1990 thru 2005. Now that the pendulum is swinging back it will be those same suits (who are long now and still getting longer) that will be selling - and the public, I mean fools,  who will soon be looking to get long en masse. Thats an enviable position those suits are in as anybody who understands structure knows, that trade can only end one way. The only question is, how many zeroes will silver add to its price as the structure pendulum asserts itself & the general public becomes relentless buyers over the next decade? I have given a lot of thought to that very question.  In 2003, with silver at $4, I decided the answer was 3 zeroes. It has added one already - still time for you to snag a couple for yourself over the next decade. 

Confessions of a never convicted Felon

Gambling is not as destructive as war or as boring as pornography. It is not as immoral as business or as suicidal as watching television. And the percentages are better than religion. - Mario Puzo


   I have always held a special place in my heart for sports betting and the people in that market. When you bet a sporting event you are given the illusion of choice (power?) in determining your fate. Then follows a couple hour unscripted drama complete with heroes & goats. When you are on the right side, the high is, well, orgasmic. When you are on the wrong side, well there are always the goats to blame. Sports betting does reside among lifes -EV behaviors. Your losing wagers cost you an extra 10 percent (on straight bets), while your winning wagers are free. So, if 50% of your bets are losers and the other 50% winners, in effect you are giving up 5% to the house with every wager. 5% doesn't sound like much - but give a banker 5% and enough time - and he will own the planet. In theory, the man who can pick 53% winners and 47% losers has the 5% covered. Sounds easy, after all a monkey with a purple crayon should be good for 50%. In reality though, the math is against you and as we all know, math is even less forgiving than, say, Lord Vader.


As an action junkie who wanted to be on the right side of the math, I did the only logical thing I could do.  I became a bookie. I didn't have a lot of clients - maybe it peaked at 30 - but there were some ballers on my client list. 5 figure envelopes were common place.  What fascinated me though, was not the money (which rolled in), - but rather the behavioral betting patterns of my clients.  You had "the chasers".  They would stick a toe in on saturday with a few $100 college football wagers - if they won - they would bet light all weekend - nursing a win so to speak. Its when they lost, the real fireworks started. Sunday Mornings when these people were behind they'd call in a $500 wager or two - trying to get unstuck. By Sunday afternoons, it was a Grand on this team, another grand on the under - $500 parlay or two - and before you know it - they would be stuck 3-4-5 grand.  This was the routine for these people. By Monday night their nuts were in a vice - week in, week out. Some weeks they escaped - other weeks they got buried. Their cousins "the pressers" have the exact opposite problem. They can't stand prosperity. Win a couple of bets for hundred each, and in their mind they are hot and now have a license to bet $500 a game. Win those and they are betting a grand a game. Eventually their hot streak cools, they pick a loser or two - and now they too are stuck. Then there are the habituals. They bet the same way every week. There is value in knowing ahead of time what your client likes.  If I know a guy likes Monday night dogs, why not put the line at 3 instead of 3.5? That half point doesn't usually come in to play - but when it does, its free money. Speaking of half points, and just to show it wasn't all wine and roses as a bookie I present the following:


1997 superbowl Patriots-Packers. When the line was first released the Pack was favored by 14. As the week before the game progressed, bets started to come in on the Patriots, and then more on the Patriots. In fact by Saturday morning (30 hours to kickoff) I had over 22 grand on the Pats catching 14 and a paltry $450 on the Packers. At the time, I had some regulars who I knew wanted the packers - but I was worried they might take their action elsewhere.  So I did what any reasonable businessman would do…… I offered the Packers -13.5.  The packer money piled in - big time.  Parlay this, tease that, yeah two of those , three of that. Before you knew it I had close to 25 grand on the packers.  I had to go back to 14, just to stop the flood. At kickoff, I had 30k on the Pack & $29,500 on the Pats, and I was looking forward to a 3 grand payday - as long as that 1/2 point didn't matter. First half went smooth, Packers up 13.  Patriots put up a quick touch to start the 2nd half - followed by a bolt of lightning. The Pack (Howard) returns the ensuing kickoff for a touchdown and then decide to go for 2, which of course they get. So now they are up 14.  The problem with 14 is I have to pay the Packer betters who laid 13.5, but I can't collect Patriot money which ties at +14. Good news is They have the rest of the third and the whole fourth to get off 14. They had already scored 56 points combined - surely there would be more scoring in a quarter and a half. Uh no. It got so bad, the Packer field goal kicker (Jacke)-who had a pro bowl 30 for 32 regular season - missed a chip shot 33 yd field goal late. The game ended 35-21 &  I lost 30k on that sick 1/2 point beat. 


   When you are a bookie one of the things you strive for, just like in life, is balance. Equal amounts on both sides = risk free payday for the book. When you are a major casino or sportsbook, because of the large number of people betting every game, balance is usually a given. When you are a small outfit, like I was, there were many games where I had big bets on only one side. When I first started out the lack of balance used to bother me. What I came to understand about lopsided situations, is they are fraught with risk - but also opportunity. The wealthiest people on the planet are invariably people on the right side of a lopsided trade. For example, Paul Mcartney is worth zillions because millions of people will pay money for his albums. He is on one side of the trade - the masses are on the other - he gets rich. As a bookie, its the same way. When the masses all bet one way - the game (and wealth) invariably goes the other. The herd always loses. This lesson was valuable as a bookie, but in the investing arena recognizing lopsided trades is priceless. Today I am no longer a bookie, in fact I haven't done it in close to a decade. Online books took many of my clients, the rest I let go. If it weren't for the fact, most prosecutors I know would take everything I have - including my lunch money - without thinking twice - I would probably still book today. It was the easiest money I had ever made in my life.  That is until I discovered the most lopsided trade on the planet, Hello Gold & Silver……..but thats a blog for another day…..