House of Cards

"You cannot multiply wealth by dividing it."

Adrian Rogers                    

WHAT HAPPENED AND WHAT DO I DO NOW?

The most recent largest single day decline was 780.87 points on October 15th, 2008, as part of a multi-week stock market crash; that is the key. This crash that I have been warning you about is far from over. With the aid of the Government's PLUNGE PROTECTION Team, we could easily have a one to three day rally, but any rally from this point on should be used for selling and shorting.

There was and will be a lot of hype from the perennial Bullish Wall Street and Media Cheerleaders suggesting that the decline was a computer glitch of some sort, a mistake or a bunch of other nonsensical reasons. Just continue to ignore them. The truth is that last Thursday saw an all out selling panic, the fourth 90% down day in two weeks, an identical situation to what we witnessed just before the stock market crash of September 2008.

Thursday's drop was inevitable and predicted by the all time high BULLISH EXHUBERANCE levels that I have been warning you about. It is difficult to be more precise when the levels of manipulation are so high that they interrupts Elliot Wave analysis that is based primarily on swings in the public's emotional mood and sentiment.

HUMTY DUMPTY has fallen off the Wall and all of Obama's men will not be able to put him back together again.

WHAT DO WE DO NOW?

NO need to panic since by now you are all loaded up with Gold and Silver as well as your initial short positions you took last week or early this week. Maintain your 10 to 15% Trailing Stops Or you can buy some out of the money Call options as insurance to protect your profits. More importantly, relax start you weekend early and plan your strategy. ACT, DO NOT REACT. If in doubt, go back and re-read my last few letters. You can also put in some {BELOW THE MARKET) orders to either buy some Gold and Silver stocks that did not really participate with yesterday's rise in Gold Bullion and/or Above the Market PUT buys should the market rally 100 to 250 points. But whatever you do, do not get cute and try to play the market from the long side.

The U.S. stock market has lost over $1.0 trillion during the past two weeks. That is equal to all the gains made over the past 2 months. I have been warning for months now as I analyzed for you the true Government statistical reports that something was very wrong with all major stock markets and economies including China. More danger lies ahead. That does not mean that bounces cannot occur from time to time, but patterns are warning that serious risks to economies and global stock markets lie directly ahead. Everyone the world over will try to white wash and paper over with a lot more Fiat money creation, further strengthening the reasons to buy Gold.

It's hard to believe, but Thursday's decline didn't even put a dent in the overbought level of the markets which are all now solidly on sell signals. This suggests we are going a lot lower over coming weeks and months.

It is highly probable that Catastrophic Supercycle Degree Wave (III) or if you prefer, Wave (C) down has started.

WHILE NO ONE WAS WATCHING

The Financial Media has finally noticed that total Government interest costs have been declining even though total debt has increased dramatically. However, what they did not notice is that the US Government has steadily reduced maturity duration over the last few years to obfuscate the growing debt problem. The issue is compounded by the rapidly increasing levels of roll-over funding now being required. The question is: How much shorter can debt maturities go and how much longer will it be before it continues to go unnoticed? We have all witnessed what can happen when one continues to borrow at ever declining interest until they hit 0%; so what will be the consequences now that the we are borrowing the bulk of our required funds at ZERO in 30 day maturities? IS THERE NO END TO THIS SCHICANERY? Cash flow is the main reason why small businesses fail unexpectedly. It is also why sovereign governments fail abruptly. Think of the consequences when interest rates start to rise as eventually they must. We cannot stay at zero for much longer.

DID YOU EVER ASK YOURSELF "WHO LENDS MONEY AT ZERO INTEREST RATES? Do I hear someone say "MONITIZATION?

WATCH OUT: Rising Interest rates are on the horizon.

THE FED HAS DONE IT AGAIN

The FED'S have created another Equity Bubble; they even used the same manipulated ULTRA low interest rates to do it and once again nobody noticed. To tell the truth, even I did not notice it at first since I could not believe that the analysts and investors would get sucked in by the same mistakes over and over again. But was or is it really a mistake? The Government has been using its Treasury Bonds to rape its citizens for the last 100 years by paying interest rates that were lower than the TRUE inflation rate and then taxing their miniscule returns. Even though Greenspan has now been vilified for creating the bubble by keeping rates too low for too long, we are repeating his exact same mistake all over again before even fully recovering from the last Real Estate and Financial debacles. Everyone knows that keeping interest rates too low for too long creates the perfect environment for excessive risk taking, thus creating bubbles to be followed by CRASHES.

This time it's the stock markets that are in an EXPLODING BUBBLE.

SO WHY STOCKS THIS TIME?

The banks have basically found their version of NIRVANA since they now have the ability to:

  • Hide their losses via "extend and pretend."
  • Borrow at zero Interest Rates. They can borrow from the Government at zero and then lend it right back to the Government by buying 30 year guaranteed FHA Bonds that pay 4% and don't require any reserves be held. If all that is not enough, they are then allowed to hide their losses with phony accounting. As the profits roll in, a large portion of these newly created profits (taxpayer gifts), after paying back TARP, begin to flow into highly liquid stocks.

Once the stock bubble starts, just like every other successful Ponzi scheme, it needs ever increasing amounts of money. The propaganda machine then gears up using manipulated government statistics to suck everyone else in. It certainly helps if the Fed also takes away all other investment options. Investors (especially senior citizens) are desperate for yield. By dropping rates to zero, the Fed has wiped out CDs, money markets, and Treasuries as solid, safe and reasonable yielding investment options. This essentially forces the public and fund managers into buying stocks and junk bonds in a desperate search for yield because the "safe" investments pay them nothing. The higher the market goes, the more investors get sucked in, just as they are in every Ponzi scheme.

Eventually, the ever expanding bubble turns into euphoria where everyone believes that we have entered into a New Paradigm where the market only goes one way, UP. Everyone Wins and Nobody Loses.

NIRVANA: That is until the game ends as it always must. We have already entered deep into the euphoria stage, but one thing is for sure: Bubbles never end well.

Just look at chart of the S&P 500 over the past 10 years. It looks like a giant roller coaster ride, so much so that after 10 years, long term investors are right back to where they started and that's using non-inflation adjusted dollars. Investing in a zero interest rate environment has now changed the whole game. It turns the market essentially into a speculative casino where investors are desperately trying to find safe yield.

The average person in this country doesn't want to invest in a roller coaster ride that gives them nothing but a couple of heart attacks and zero returns. The Fed's policies however, tell us that they could care less about the average person as they claim. It's all about taking care of themselves and their Wall Street and Banking buddies.

THE BOTTOM LINE

I know one thing for sure: Buying stocks because there are no other good options is a fool's game and a long term recipe for disaster.

BUY GOLD!

Are earnings not up substantially? Maybe they are, but look at what they are being compared to. And more importantly, what inflation rates are being used. They may be up, but not in real dollars. Even if you are an average company, you should be beating earnings hands down especially after downsizing and its resulting increase in (false)productivity. Companies also have the opportunity of repaying their debts in depreciated dollars and/or rolling over their debt at greatly reduced rates. Like any other bubble, this one will blowup as well; and when it does, there will be no place to hide. Recovery will be a long time in coming, because the Fed will have used up all of its ammo as well as the last of its credibility.

SIGNS OF THE END

  • The Bond Vigilantes will come back to life as interest rates start to rise
  • The mark to fantasy game ends bankrupting many of the banks.
  • Interest rates rise march higher as the risk of default rises and foreigners buy less and less of our bonds as we continue to play "hide the losses" in the latest Ponzi finance game that peaked with the housing bubble.

You should all be in either Cash and/or Gold and start taking short positions as you watch all the lemmings approach the cliff that lies directly ahead.

All battles are won BEFORE they are even fought. Not only is that true in war, but it's also especially true when it comes to trading and investing.

GOLD

Gold's Parabolic Move Coming Soon....or has it already started?

You probably already know that I am a big believer in the coming rise in Gold and Silver. My recent letters project the Gold price to hit between $1,550 and $2,500 and this could happen by January 2011 only 8 months from now. Long term, my target remains $6,250 by 2017.

DON'T MISS THIS MOVE

I look forward to you joining me on this journey and I look forward to having you as a one of my most valued subscribers as we all not only survive the coming disaster, but prosper financially while the world goes crazy.

For my current subscribers, I greatly appreciate your business and trust you are positioning your portfolio to profit handsomely in the coming months.

I've said it before and I'll say it again: The chaos you're seeing right now in Europe is a rare gift; a rare sneak preview of what's about to happen right here in the United States - including...

  • Fiat paper money losing its value at a near-record pace - and likely to plunge dramatically lower, gutting the purchasing power of your dollars ...
  • Gold surging to $2,000 per ounce and beyond ...
  • Long-term interest rates going through the roof ...
  • Key stock market sectors swinging wildly, 3% ... 4% ... 5% and more per day ...

If you want to know what happened yesterday, buy the Wall Street Journal; if you want to know what to do now, STAY WITH AUBIE.

GOOD LUCK AND GOD BLESS

Market action from March 2007 to March 2009 highlights quite succinctly why projecting the Consequences of today's Government actions into the future is so important for your overall investment success. During the last five years, I have demonstrated how to incorporate projected consequences of government actions and contrarianism into your investing by pinpointing the best contrarian investments that can both protect you and make you money during times of adversity. If you're serious about investing, you don't want to miss out on the information revealed by UNCOMMON COMMON SENSE.

 

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UNCOMMON COMMON SENSE
Aubie Baltin CFA, CTA, CFP, PhD.
2078 Bonisle Circle
Palm Beach Gardens FL. 33418
aubiebat@yahoo.com
561-840-9767
10 karat gold is 41.7% pure gold.