Animal Spirits

  Science would tell you, Man, when you get right down to it, is an animal. Bagholder, a big believer in science, could not agree more. The behavior of most members of the animal kingdom is relatively simple to predict. The reason for that is the governing behavior of any given animal is usually a primitive one. Pigs can be counted on to be gluttonous, Dogs are unusually loyal, etc. While individual animals are usually driven by one or two such primitive desires, human beings are usually governed by multiple primitive desires at any given time. In other words, we here at Mytwocent$ believe who you are depends on the mix of animals that makeup your psyche. 

   Consider an individual who exhibits  all of the following:   opportunistic (raccoon),  changeable (chameleon)  parasitic (leech), crooked (snake), predatorial (vulture). You might say this individual would make the perfect politician.  Or, how about this guy:  close minded (ostrich), compliant (sheep), terrified (chicken), quiet (mice), gullible (fish), paranoid (deer). The way Bagholder sees it, this describes the current working class here in the United States - you know - the ones who pay the bills.  Contrast with the folks living off the Government tit: gluttonous (pig), parasitic (leech), loud (coyote), lazy (sloth), blood sucking (mosquitos), detached (cat), fornicators (rabbits). Stereotyping groups by the animal traits they exhibit is just the beginning. 

 The real fun is considering individuals as most people have a dozen or more animals in their psyche. The entire mix of animals is relatively tough to put together - even if you know the person. Much easier is identifying the one or two animals that are usually running the show.   After all its one thing to have a touch of paranoia (deer) as part of your psychological makeup. It is something completely different for that paranoia to to be plainly visible in every facet of your life, like a deer. Lets consider someone we all know - Obama. The way Bagholder sees it, he is crooked  (snake), vain (peacock), detached (cat), lazy (sloth), mischievous (monkey) - to name just a handful. The real question is which one of that group is "usually driving the bus" so to speak?  

  The answer to that question, now that he has been the central figure on the political landscape for over four years, should be obvious. Everything the man does is choreographed, everything he says is carefully scripted & delivered in a smooth & disarming manner. However, when pressed (to think on his feet) his true animal ruler takes over. The fact the man can't speak publicly without a teleprompter tells you all you need to know. It is more important for him to control his words (by using a script) than to be himself - and speak his mind. The habitual emphasis on control emanates from one place & one place only - the Ego. Stated another way, vanity, or a peacock,  is the current leader of the free world. 

   The next time you see him talking down to Republicans, as though he is some how more holy. Think peacock.  Next time he delivers a planned speech with his pious smile & nose so far up in the air that - well lets just say if it was raining & he kept his mouth shut, he would drown. Think peacock.  Next time you hear him taking all the credit for the good, while blaming all the bad on others, think peacock. His opponent (Romney) in the upcoming election is really no better. He is, at a minimum opportunistic (raccoon), irritating (fleas), slimy (worm), conniver (bear), with a forked tongue (lizard). He hasn't been around long enough for Bagholder to figure out for sure which animal is running the show - at this point it looks like it could be the raccoon. 

  So the 2012 election is shaping up as a contest between a peacock & raccoon. In the real world I would take the raccoon - in this election, my money is on the peacock. 

Poker Faces

     Bagholder spent much of the last week in the Silicone implant capital of the world - sunny Las Vegas - playing No limit Holdem.  While most people consider Holdem a card game played with people, those of us in the know understand its a people game played with cards. The key to winning consistently at the game is understanding the psychological makeup of your opponent. If you can do that, the cards don't matter.  Today's blog will discuss some of the more common personalities found at the poker table.

1 Liars. You would think natural born Liars would have a distinct advantage in Poker because deception comes so naturally to them. There is extreme difficulty determining when they are lying, because they are so good at it. Having said that, they lie way more than is necessary. They check monsters, and put money in pots when they don't have cards to justify it. They have their default set to Lying. Properly played, poker requires mostly honest play, with the occasional lie. Liars, as we all know, engage in much more than the occasional lie. This makes them easily recognizable as well as very predictable. At the poker table that is a very lethal combination.

2. Nits.  They do it by the by the book. They raise when they have cards, they fold when they don't,  as a consequence - they usually get their money in good. They are disciplined and patient, as such their actions  tend to be calculated & deliberate. They are also pretty easy to spot - after just a few showdowns - you will have seen a dozen of their decisions. That is a large enough sample to stereotype someone as a Nit. Sharks will tell you, when it comes to hand reading - nits are the easiest group to predict. As people, nits lack creativity & vision. Consequently, their play is the well trodden path of play BIG cards. Many old-timers & most women fall into this group. While its the Liars who have the most deceit in their game, its the Nits who are the most genuine. 

3.  The benevolent. These are the people who repeatedly check the river in position with hands that should be bet for value. As people, the benevolent are more interested in ending hostilities, than engaging in aggressive behavior. As a regular in LV cardrooms the last 2 decades, Bagholder can attest - there are plenty of these folks out there. You can sit down at a table, strike up a friendly conversation with guy on your left. Next thing you know, he is checking the nuts on the river - because he likes your seemingly friendly nature. In life, the benevolent are among the finest human beings on the planet. Problem is, there is really no place for these people in Poker. You simply cannot make money at this game long term without the willingness to rape & pillage your opponents at every conceivable opportunity. 

4. The temperamental. In poker, just like in business - emotions cost money. Decisions in poker, if they are good ones, must have a logical foundation. Inject emotion anywhere along the line, and you are destined to fail. Poker players call it going on tilt. Even the most seasoned pros struggle with controlling "tilt". Emotional tilt comes about because human beings have a tendency to personalize more than is warranted. Some of the biggest evils in the history of planet earth have been perpetrated by powerful people who have personalized something they shouldn't. In life, they call it one of the 7 deadlies - Wrath.  Somebody puts a bad beat on you, and most folks will go out of their way to return the favor. Its human nature to start pushing in marginal situations,  becoming obsessed with evening the score. That is not a recipe for winning poker, in fact its a one way ticket to the poor house.   

5. Gamblers.  They are going to see more than their share of flops. They will push their draws harder than most. They will also call off their stack lightly. They live & play, seemingly without fear. All this makes them seem reckless & aggressive.   The psyches of most gamblers are riddled with the seven deadlies. In fact, At any given moment, anyone of those seven deadlies is probably running the show.  In the real world, this often makes them the life of the party. At the poker table, They are both a blessing and a curse. A blessing because they will put their money in bad, and a curse because because you cant push them out of pots with anything less than a stick of dynamite. When these guys are catching cards, they can book some huge wins, putting sick beats on people in the process.  While gamblers can wreak havoc on your bankroll at the poker table, in life they are usually a pleasure to be around. 

6. Psychopaths. More specifically the anti-social types. In society, psychopaths are less than 2 percent of the populace.  In poker, its probably more like 15%.   Psychopaths, by definition, lack empathy. As opponents, they are ruthless, fearless, and deceptive. Psychologists would tell you due to their callous detached disposition, they have an extraordinary talent for lying. In layman's terms, they believe their own bullshit - so they bet the same way when they have cards & when they don't.  As people, psychopaths are completely incapable of connecting with others on an emotional level. So their relationships can only be defined by exploitation and manipulation. Seemingly a perfect fit, for the poker table as all this makes them very difficult opponents to read. Their greatest asset however (their detached nature) is also their biggest weakness. Simply stated, they cannot read you. They cannot sense even primitive emotions in others like greed & fear. So they are left incapable of playing their opponents.  

7. Fish.   These folks are easy to spot as all their decisions are based on their own two cards. You will never see them 3 bet preflop with deuce-seven, nor will you see them fold QQ  preflop under any circumstances. In other words, they are playing checkers, while the sharks are playing chess.  As such they have no chance to win long term. They do not understand Holdem is a people game - they think its a card game. So they play the cards they are dealt as opposed to playing their opponents. In terms of sheer numbers, this is most populated group as anyone new to the game starts here. The downside is there are no long term winners in this group, because their understanding of the game is very rudimentary. Worse yet, most folks don't ever progress beyond this group. 

8. Math geeks. Their decisions resemble those made by fish, with one big exception. The very close decisions are governed based on the math of a given situation. For example, they will not chase flushes or straights unless the pot is laying proper odds. Most folks would not have a clue what the proper pot odds should be to chase a straight. Make no mistake, the math guys know - and their decisions are made accordingly. This fact makes them easily manipulated by those who recognize them for the math geeks they are. Savvy players can simply price them into pots when they want them in, or price them out of pots where they want them out.  You can pretty much count on one or two of these guys at every table in Las Vegas card rooms. 

9.  Narcissists are defined as egomaniacs with an over-inflated sense of self worth. They believe themselves superior to others. In life, as well as poker, this feeling of superiority prevents growth, because narcissists look outward (rather than inward) for the solution to their problems.  These are the guys cursing rotten luck when they lose, but crediting their skills when they win. They are easy to spot, as they belittle others, and often yearn for others to fail - even their own friends & family. They do it, because it reinforces their feeling of superiority. They believe external forces are to blame for their woes. Since they don't look inward, they repeat their mistakes over & over. Their power of Denial is legendary.  This makes them very profitable opponent to have in a card game, because they are among the most stubborn folks on the planet. In real life, denial prevents spiritual growth, in poker it enables savvy players to charge narcissists the max on made hands - because they just won't listen.  

10. Players. These are your long term winners. The players single greatest gift is the ability to adapt their behavior to fit the context of a situation.  When their opponents play scissors, they have an uncanny knack for showing up as a rock.  They relentlessly attack weakness. As extraordinary empaths, they are experts at spotting said weakness. They understand people better than most folks understand themselves. This insight into people makes them exceptionally skilled at hand reading. Precisely for that reason they seemingly always get their money in good. They take the best traits from all the above groups and forge them into an incredibly tough opponent, capable of almost anything. They have the patience, humility, and self-discipline required to continue growing as both a person and a poker player. 

Political Stench

  There are only a handful of places on earth that have its own, one of a kind, smell. One of those places for me, was Sportsmans park Racetrack in Cicero Illinois.  The scent in that place was an unmistakeable mix of moldy wood, stale smoke, and of course, horse manure.  It was built nearly a century ago as a Dog track. In fact, Al Capone used to fix races there by feeding grease laden hamburger to all the dogs in a race , except the one he was going to bet.  You have to admire his moxie.   Bagholder spent many a summer night playing the harness races there. Being an older facility, in a poor part of town they didn't have much for public restrooms. The few they did have, had very few stalls & they sure didn't clean them very often. If you needed one of those stalls, it was difficult to find one habitable. It usually ended up being a game of deciding which toilet stall was the least compromised. You open one stall & think, no fckn way - until you open the next one. 

  As of this writing, it seems the remaining choices for the next President are limited to Obama, Gingrich, Romney & Santorum.  The remaining field vying for the right to become our next president is very reminiscent of being at Sportsmans park & needing to take a dump.  The choices range from stalls with an overflowing sea of disease & pestilence, to just plain full of shit. Examining the final four……

Santorum.  The flavor of the month.  This guy reminds me of Thomas Carcetti, the fictional mayor of Baltimore in HBO's epic series, the Wire. Like Carcetti, he is in touch with his feminine side, leaving him about as uninspiring as a politician can be. Although, it appears, he has been blessed by the Evangelicals. Perhaps its because he is the only candidate of the four remaining who actually believes what he says, notwithstanding the fact some of his beliefs are extreme.  While the other three are just salesman with a pitch, Santorum's message is much more consistent; thus he comes off as more genuine. Having said that, I have seen much of what comes out of his mouth … in those stalls at the racetrack. 

Romney. We have said it before, but it bears repeating; there is no discernible difference between this guy & Obama, except Romney could have his hands on the wheel for eight years. This scares the daylights out of Bagholder. Sure, he would aim money at more traditionally conservative causes, but get spending under control - not a chance. Stop this nations imperialistic ways - no way. Shrink the size of Gman - not happening.  Cut taxes - guess again. While this guy speaks a like a Republican, his deeds would say otherwise. Combine his serial hypocrisy with  his neatly manicured image, and a strong argument could be made he is at best, an egomaniac - and at worst, a complete psychopath. 

Gingrich.  While he is the most dangerous of the four candidates, he also has the most upside. Of the four, he is clearly the most ethically challenged, which is telling, when you consider we are talking about four politicians. It does appear the US electorate has sized him up & then rejected him.  I find Irony in this country rejecting him for his baggage. We did elect Clinton, an obvious reprobate.  So why does Newt's personal baggage matter?  His message much scare a lot of people. At this point it time, it does not appear likely he can get the nomination.   Then again, there were some stalls I never thought I would use either...

Obama.   After 3 plus years of his command, a few things are obvious. He is no visionary.  He is no agent of change. He is the choice of the establishment. He is more interested in himself, than this country - evidenced by his multiple extensive vacations.  If re-elected, he would no longer need to keep up pretenses of caring about the direction this country is headed. Vacations would come even more frequently, and last longer. The country would be moving more from existing momentum, than from his guiding hand. It has to be viewed positively, that unlike the others, he is guaranteed gone in four years. In light of that fact, when compared to the other three stooges above - he just might be the shiniest Turd in the punchbowl. 

  While the electorate seems satisfied with playing  which stall is the least compromised, Bagholder knows there is no winning that game. We here at mytwocent$ will continue to endorse the only true agent of change, the most philosophically consistent candidate, the only candidate who would actually get us out of wars, and the only candidate who would actually cut spending. We refer to the 24 karat candidate - Ron Paul

  Nothing to fear from this 24k commode..... Vote Ron Paul

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.

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……..

Unscripted Excellence

 Yesterday was one of those days for Golf fans, that just don't come along very often. The two best golfers  (Mickelson & Tiger) of the last 20 years paired together on the last day at one of golfs most cherished venues.  The tournament was on the line Sunday at Pebble Beach,  a course they have both "owned" earlier in their careers.  What an unexpected treat. It was a matchup for the ages.  The 30 foot putt Mickey made after Tiger's chip-in, is proof enough, this universe has balance. 

   Congratulations are due Phil Mickelson, who won going away. It is the best I have seen him play in quite a while, giving credence to the argument he may yet have a Major or two left in him.  As people go, Mickelson just oozes class.  Always has. The first decade of his career he was known as the best player never to win a major. It was branded on him, like a scarlet letter. He took it like a man. When he finally got that monkey off his back  at the 2004 Masters with an array of Birdies & Eagles in the final round, well,  it brought tears to Bagholder's eyes. Yesterday, he again had the whole package on display. He was striping drives, his irons were precise, and he was making 30-footers like they were tap-ins. He, unlike his opponent, was master of his domain - nuance intended.  We here at Mytwocent$ could not be happier for Mickelson. 

  As for his opponent, Tiger, many would claim he is broken man. Tiger is an  exposed fraud, with the removed veneer leaving him a mental cripple, or so the argument goes.  Consequently, most believe his days of dominating the PGA tour are over. I disagree. As an investor in greatness, I am going long Tiger Woods right here. He simply has too much talent & he is the best clutch putter I have ever seen.  Anyone who understands what it takes to play Golf at the highest level would tell you, the game is a mental one.  Yet, Tiger was able dominate the tour while living a duplicitous life.  Juggling multiple women is hardly a recipe for a clear head. In fact, it would have to be a living hell. His career golf accomplishments are staggering, when you consider he did it while his inner demons were running the show.

  I suspect, Tiger has spent the last couple years with some of the best shrinks money can buy. Hopefully, his spiritual healing has taken root and he is no longer on the road to Dante's 8th level of hell where a gilded lead suit awaits him. High priced psychiatry makes it likely he will be teeing it up in the future with a lot fewer personal issues. When you combine the best natural talent WITH a healthy psyche, there is no limit to what can be accomplished. With that in mind,  Bagholder is now on record as stating he  believes Tiger has a minimum of 6 more Majors in his career & will again dominate the tour.  

 Of course, I have been wrong before…In that vein, congratulations are also due the New York football Giants.  They were the better team last Sunday, Sorry Patriot fans…..

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!!!!

Silver Bullets

  Last week we discussed the 2011 chart for Gold. This week we look at the Silver chart for the last 2 years.....

1.  Silver, unlike its stodgy cousin Gold, is a MANS market. The 28% mid year rally in Gold was dwarfed by the 60% rally in Silver the first four months of 2011. In fact, that 60% rally was really the last half of an 8 month 150% rally which began in Aug 2010.  

2. Of course the pullbacks are Mansize too. We have two drops in 2011, which by themselves are both over 30% - in a matter of days. That is as vicious as it gets. 

3. Looking at this chart, Silver has only 3 gears - Long steady rallies, sharp corrections, and sideways trading. Note: there are no long steady declines or sharp rallies - like you find in bear markets & popped bubbles. 

4. Long sustained rallies punctuated by ultra-sharp pullbacks is textbook Bull market behavior. Price action like this is how we know silver is not in a Bubble, but rather in a still very young Bull. 

5. From peak to trough this year, Silver has corrected only about 40%. The last major correction in Silver (in 2008) was closer to 55% off. This suggests silver could correct further.

6. In terms of Time, silver has spent 8 months correcting. Prior corrections in this bull have lasted 8-12 months. This suggests another few months of down is a very plausible scenario.

7. The 8 month rally which culminated late April was so hypnotic it had the effect of sucking in newbies to the Silver Market. Bagholder is personally aware of multiple newbies who got long in the $40's. Until most of those folks get flushed out - this Bull is too heavy to resume its upward path. 

8. Despite the 60% rally to begin the year, silver finished the year down - giving new meaning to the word volatility

9. Having now given back 2/3 of the gains since the last bull upleg began (in Aug 2010), Fibonacci would suggest the Silver correction has run its course. 

10. If the January 2011 bottom of $27 holds on this current correction, It would make a technically beautiful double bottom (11 months apart) on a long term chart. 

11. A 150% rally from $27 would put us at $67 - while that may seem light years away, history says its as little as 8 months away. 

12. Downside risk from here is probably minimal as there is tremendous long term support in the $19-$20 range. 

13. Bagholder is of the opinion this Bull is so strong the next upleg will be bigger in percentage terms than the last, the only real question is will it commence from the $27 double bottom, or after a trip down to $20 to test the Aug 2010 breakout. Either way, Silver is poised for a big year. 

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!!!!