The year of the Snake has every ability to be a real doozy. Time will tell if any of that comes to fruition. For my money, I'm still firmly in the camp that says gold and silver is the single best long term wealth protection you can own.
China welcomed the arrival of the Year of the Snake with raucous celebrations on Saturday, setting off a cacophony of firecrackers in the streets and sending fireworks blazing into the sky to bring good fortune. The Chinese zodiac which repeats every 12 years, has deep spiritual meaning for the hundreds of millions that live in the Asian Countries. Many is the family that will plan weddings and even the birth of their children around the mystical "powers" of the various creatures that symbolize their astrology.
The "age" that just passed was that of the dragon, and the dragon is often thought of as lucky, a "good time" so to speak. But the snake... now that's a different animal. If we look back in history we see that some very not nice things took place under the sign of the snake. The 1929 market crash took place under the snake. The Japanese attack on Pearl Harbor, which dragged the US into a pacific theatre of war, was during the time of the snake. The killing of over 3000 students in China's Tiananmen square was during the year of the snake. And just 12 years ago, our own disaster known as September 11th, was also under the eye of the snake.
"This is a disaster year... a lot of things will not go smoothly," said Singapore's "Grand Master" Tan Khoon Yong of geomancy consultancy Way OnNet Group. "The European Union may split, the euro may be in trouble," the 59-year-old said, adding that the bloc would be threatened by division in May.
Hong Kong astrologer Chow Hon-ming said a disharmonious May would see an ongoing dispute between Japan and China possibly escalate into a "brief" war, as two "snakes" are going to clash according to his reading of the Chinese almanac. "May is known as the 'snake month' and it's the Year of the Snake so between May 5 and June 6, these two snakes will meet. "This is why things will be very intense between Japan and China. Tensions will rise to a peak and they will possibly go to war."
It seems Snake years are marked by major transformation and change -- and sometimes great upheaval. But can we really place any credence in some astrological sign? Isn't astrology supposedly made up of cultists and quacks with no bearing on reality? Not so fast. Don't forget the first book of the New Testament starts with Matthew and not far into the book you learn that "Wise men" from the "East" had seen a star, and knew to come search for the baby king. Do enough research and you'll find that most reliable indicators suggest they were "Magi" of which the word Magic comes from. They were Eastern Astrologers. Obviously astrology played a big part back in the regions of that time. Oh and for the "ultra Christians" that will already be screaming at me and suggesting astrology and signs in the sky are "anti Christian" and Satanic, please open your Bible to Genesis 1:14 for it reads:
"Let there be lights in the firmament of the heaven to divide the day from the night and let them be for signs, and for seasons...." Did you see that? God said he put lights in the sky and one of the reasons for them is for "signs". Hey, don't bark at me, I didn't write it, I simply read it. If you are a true Christian who believes in the Bible as the Holy word of God, you have to deal with "wise men seeing a star" and "lights in the sky that will serve as signs". That my friends, is the study...or at least the observation of astrology.
So is that what's in store for us in 2013? Are we going to be witness to great upheaval? I'd say the chances are pretty good and if you take a quick glance at the sheer lunacy that's developing around the world it would be hard to NOT imagine something ugly this way coming. In the past two weeks we've shown you incredible examples of fraud, manipulation, collateral that's been leveraged 30, 40, 50 times, bogus cabinet appointments, you name it. Yet the most amazing part of what I do each day is that "it never ends". Not a day goes by where I don't read a paper, or a web posting that just sends me into a blather. For instance I mentioned Obama's Interior Secretary Nomination last week. I told you how she was an oil company insider in the past and she isn't being represented to the masses as to her real reason for being selected. But here's something new to ponder. She is also involved as CEO with REI a high end outfitter of outdoor goods. They have dozens of retail outlets, with sales of get this... over 2 billion dollars. Okay, so what's wrong with that? Oh nothing... except she petitioned Obama and guess what? She got her business a waiver from Obama care! You got that right folks, our New Obama Sweetheart, our Interior Secretary doesn't have to deal with Obama Care like the rest of us Peons do. Imagine that.
But that's just fraud and malfeasance, we're witness to that daily. What about the "upheavals" that the year of the Snake can bring? Well, look around the world. We just saw Venezuela announce they were devaluing their currency by some 46%!!! Yes you read that right. While the entire world is printing money and devaluing their currency, Venezuela comes out of left field and says "let me show you how you devalue a currency". In one brief statement the fine folks of their nation just saw their buying power crash as the 4.3 Bolivar peg just went to 6.2 Bolivar to the dollar. Blammo. Well, guess what? They aren't the first and won't be the last. So do you think that nations devaluing their currency by 46% might be cause for an upheaval in 2013? You bet.
Look at the under the radar headlines Japan is creating. By announcing they're tired of 20+ years of deflation, they have targeted a 2% inflation as their goal. But to get there, they've got to print trillions of yen, which does what? It lowers the value of the yen in circulation. Just like Venezuela. Are the US car companies, especially "Government Motors" going to stand by and watch Japan sell Toyota's at a steep discount to the US rivals? Hardly. They'll have Obama's thugs in Bernanke's office screaming for him to build more computers so they can print digital dollars faster. I'd call that an upheaval.
What about war? Some are thinking Japan and China might get into a scuffle. Some are thinking the lunatic midget that runs North Korea might actually not be bluffing and toss a nuke at someone. Just Tuesday night North Korea set off its 3rd nuclear "test" which registered on seismic machines around the world. They also miniaturized their bomb, making some believe they can now put one in a missile. Some are thinking that over in the Middle East a rogue band of mutants might set off a dirty bomb. Is any of this possible? That's a great question. Once we actually saw the power of what a nuclear blast could do when we dropped two of them on Japan, the world has decided that the best use of nuclear power has been as a "bluff". Everyone knows that tossing a nuke would mean retaliation in the form of more nukes, so instead of using them, they build more of them and "talk tough" about how they might use them. They are the ultimate bargaining chip. But I say to you and I mean this... we have been incredibly lucky that so far even nukes in the hands of lunatics have not been launched. Why not? Usually because of unsung "sane" hero's that are close to the leadership. But all that said, I do believe in my heart that if Hitler had nukes, he'd have used them. Am I to believe that Adolph was the only "Hitler" this word will ever see? Sorry, I can't believe that.
There is more and more evidence that in some areas of finance, assets have been pledged as collateral 50 times or more on the same exact unit. Now call me crazy, but what could possibly go wrong with that sort of finance?? In the gold universe, we can gather that there's been bullion bars pledged and repledged as collateral 100 times. All of this functions because like fractional banking, everyone doesn't rush to get their asset at the same time. But if they did, they'd soon discover their asset belongs to 100 people if it's even "there" at all. How's all that going to work out? Not perfectly is my guess. Which brings up Germany. They have recently decided to "bring home" their gold, but they have given a 7 year period of time for all their gold to actually reach Germany. Why the 7 years? Why not just pick up the phone, call the NY Federal Reserve and the French depository and say "yo fella's, Germany here.... you've got several hundreds of tons of our gold in your vaults, we're sending a few ships to pick it up?" Why the 7 years? Because they DON’T have it. Basically Germany is "being nice" and letting the central banks save face. They know the golds been hypothecated and repo'd, pledged, leased, and sold. They're letting the banks have time to work it out, instead of panicking the world.
Speaking of Germany, how about Europe as a whole? Word has it that in Greece; the Austerity has made so many people so poor that folks are NOT HEATING THEIR HOMES. They can't afford the oil. So in many households they're "freezing" and wearing multiple layers of clothing just to get past winter. Then of course we have Spain and Italy with their banking problems concerning fraud and "bad derivatives" that were being hidden by "connected" politicians. Could 2013 usher in some wicked bad upheavals in Euro land? I'd be awful surprised if it didn't!
Shall I go on? No, I don't have to. You all get it. The year of the Dragon just passed, and the dragon is usually lucky. I'd say we've been lucky to steer around the disasters this world faces. The year of the Snake is not "lucky" it's cunning, sly, and mischievous. Things go bump in the night. And, when I look and see where the markets are, and think about the real world situation, it is almost a "given" that something is going to go really wrong. Stick with me here a minute...
All the Central banks are printing money. They've used all manner of twisted buy back schemes to try and "sterilize" it, meaning basically "put it in the system without causing too much inflation". But as more and more countries decide that they're tired of the US doing any damn thing it pleases ( Like China, Russia and now Venezuela) there's going to be a renewed "currency war" and the first shots have already been fired. If you remember back to the discussion we just had about the "velocity" of money, you realize that at some point a huge percentage of that cash is going to rush forth and flood the system. We're going to get our semi hyper inflation. The only question is when? Could 2013 be that year? You bet it "could".
So that brings us full circle to discuss the way to deal with all this. One thing we know is that the market has doubled from its lows because of rampant money printing. The only reason we're challenging the all time DOW highs is the trillions of fiat money they've "Magi'd" out of thin air. So, we have to take a dual prong approach to dealing with our future. One tine of that fork says that as long as they keep shoveling 85 billion a month to the banks, the market has to continue up. Yes it will have fits and starts, corrections and pull backs, but that money "has" to go somewhere and it usually ends up in markets. So we need to lean long into the lunacy. But path number two, is that when the "end" comes it can unravel quite quickly depending on which string unraveled. In other words, if the end is simply monetary velocity picking up steam, we'll have time to back away, where as a dirty bomb dropped on Israel will cause an immediate market crash. It's worries such as that, that keep me up at night.
When the market tops out, whether that is at DOW 14,500 or DOW 16,000 we will need to "go short" the resulting "crash". We have been around a fairly long time and we did very very well back in the late 90's buying tech stocks that had a habit of going up 20 dollars a day. But the single best "income" year we've ever had was being short the financials and the overall market back in 2008 when everything went into crash mode. We had put options that gained "thousands" of percent. We had short sales that made over 80 dollars per share. It is my guess the lions share of our "all time" income will once again be on the "way down" from what ever peaks we end up at.
With that in mind, if you don't understand put options, if you don't know how to short a stock, go learn. Don't listen to your Uncle Charlie tell you its too dangerous for the average person, that's simply Wall Street blather to keep you in the dark. It's not complicated and it's no more dangerous than being long. I can make the argument it's MUCH safer than being long. The supposed risk of being short is that a stock can theoretically go up "forever". Well, tell me how many do you know of that has done that? Not many. Now, how companies have been bought "long" that went to 0? Thousands. Some spectacularly. (Back in the tech crash, an incredible 250 stocks that traded over 200 dollars per share, went to 1 dollar or less, that's what I call dangerous!) So you're going to have to learn the short end of the market to capitalize on the next massive crash.
Naturally I'm going to talk about the metals. A lot of folks are getting "mislead" in the metals market because of platinum and palladium. Yes both have made spectacular gains lately. But is this where you should be placing your money for the long term wealth protection? NO. Sorry folks, I don't mean to yell, but these two metals are not flying higher because of money printing. They're not going higher because they're a safe haven from Central bank lunacy. They are going higher because of the demand for new cars is high right now as the system is being pumped full of cash and everyone is being told the fiscal crisis is over. So the manufacturers need Platinum and palladium to use in the catalytic converters. Secondly, with some of the political unrest in the mining countries, a lot of production is now off line. So they're getting scarce and demand is high.
They will come back down when demand stalls. In other words, unlike gold and silver which will remain strong and rise higher when global troubles mount or inflation goes hyper, Plat and Pall, will fall off. No one will need either as there will be not auto demand for them. In history, although both have held decently high prices because of their inherent rarity, they are NOT a medium of exchange. No one comes into the local grocery store with a pocket full of Platinum coins to exchange for bread. No, its silver and gold that function as money, not palladium. Keep that in mind okay? You can trade these metals, but do not own them like you would gold and silver as your wealth hedge. You'll get burned.
The year of the Snake has every ability to be a real doozy. Time will tell if any of that comes to fruition. For my money, I'm still firmly in the camp that says gold and silver is the single best long term wealth protection you can own. As these countries play currency wars, the older folks who remember their parents living through the depressions, living through the Nazi war atrocities, living through the dozens of currencies that went to zero...will continue to hoard these metals. The Central banks can keep an artificial lid on the prices by using the same bullion as collateral for hundreds of transactions, creating the illusion of more gold than actually exists, but that game like any ponzi can only go for so long. Jim Rickards is one of the brightest men I've ever met, and he feels gold will eventually settle between 3500 and 7000 the ounce. I have to reason to doubt that. Meanwhile I look at silver, sitting at 30 dollars and "'know" that it is incredibly misspriced. In the end, all things will go to their market value. For me that means silver has a date with at least 70 dollars.
2013 is the year of the Snake. Tread carefully. Watch where you step. Snake bites hurt.