The following is commentary that originally appeared at Treasure Chests for the benefit of subscribers on Monday, July 11, 2016.
Bubbles are bursting everywhere for the Truman's of this world today, previously coddled in whatever version of reality TV they resided - waking up to the scary truth we are trapped in a forgotten episode of the Twilight Zone (but never forgotten by Orwell) - the one where psychopath fascists take control of the world and kill us all. That's what happens when you're a naïve idiot like Truman, getting all your information from a bankrupt society attempting to preserve itself through lies, script, and authority. This characterization of 'life' for increasing numbers of the disenfranchised middle class is much like Truman's awakening as the lies were exposed, again, much like what you should be seeing in your circumstance today as the psychopaths attempt to take complete control of our lives.
I say 'attempt to take control of our lives' when the deed has already been done, because they have accomplished this is spades. What's happening now is the undoing - with no more colonies to conquer and exploit they turn on their own - you - until that party gets too violent as well. That's the authoritarian part of the story, the part where they show you how crazy they are and why you should be afraid. That's why the cops keep shooting people and they have been getting away with it up until now. But they can't get away with their bulling ways on the other 'big boys' in the game - China and Russia. Their astute leaders are too smart for that. They have been on to the vulgarities associated with American Empire since the 'financial crisis', echoes of which are becoming visible again with the resurgent credit binge post 2008.
As you should know, the status quo has been on a 'mission from hell' since then to turn the world into their own version of the Truman Show, so they can continue on in the dream world in which they reside. But times are getting tough even for these types again, never mind honest and civilized people, so they are becoming increasingly desperate. Because not only is the real economy in trouble, the subsidized economy (think ZIRP. NIRP, etc.) is visibly feeling the pain now despite all the money printing, reminiscent of the 2008 financial crisis. But so far the status quo has been able to stay ahead of the curve, stepping up the interventions, leaving any vestiges of reality in the rear view mirror. The stock market at all time highs is testament to this fact - a fiction completely removed from reality by the machines.
This is what the whole Hillary thing is really about - maintaining the dream. This is why America allows sociopath Hillary to continue in her wicked ways - because the show must go on - no matter what the cost. Were you really surprised sociopath Hillary walked? Come on - this can't surprise you. Too many bureaucrats, party operatives, and other sorted cake eaters depend on the dream being maintained. The Truman Show must be maintained at all costs you know. Come on - you knew that - right? Only thing is, all this will accomplish in the end is intensifying unexpected outcomes on both sides of the equation, where the police state will go 'full fascist', and the status quo will be voted out in November - assuming the vote's not rigged - because the people are becoming increasingly angry.
The question then becomes is Trump just more well disguised status quo? Like Obama, we won't find out the answer to that question until afterwards, but if he is a two faced liar like Bo, well, I can assure the American public won't take it in stride again. Because the economy will tank in coming years from debt implosion no matter who gets in, and what is, or is not done. At least if Trump puts people back to work on domestic infrastructure projects like roads, bridges, and walls, they will be working, and things will appear better for a brief period until interest rates rise sufficiently to take their toll. Thing is, if Trump does half the stuff he's talking about, he will need to print boat loads of money to do so, and bonds won't like that picture at all.
What about more QE? Won't that keep bonds buoyant indefinitely? All I can say to that is what about money multipliers? If people start going back to work in the States, and spending money, won't money in circulation accelerate? The answer to this question is 'yes', causing the velocity of money to turn higher, which will cause a problem for bonds no matter what? It's either that or deflationary collapse. That's what those 'in the know' are worried about right now apparently. Guess they haven't been paying attention to what's been happening to money supply since 2008, or the fact the crazies in charge keep getting crazier, because they must stay ahead of the curve if one is running the economy via a 'bubble strategy'. Failure to do so would be devastating. But we would need to see gold, led buy the shares head lower for that to become a reality - right? (See Figure 1)
Actually the answer to that question is 'no', because there's a growing scasm the real and subsidized economy in case you haven't noticed this as well. But still, it's hard to imagine precious metal shares ripping higher at a record clip, as evidenced in the chart above if inflation were not alive and well, or at least on the way. I mean it's only been six-months and the monthly Dow / Philadelphia Gold And Silver Index (XAU) Ratio is already close to hitting the 155-month exponential moving average (EMA) (trend definer) and ultimate support, which is quite the inflationary signal for a supposed deflationary world in which the psychopath's in charge are about to fall behind on the money supply creation curve - no? Is it just me, or are any such concerns 'Tom Foolery'? And then we have this next minor technical detail to consider in this regard as well - heavy on the sarcasm. (See Figure 2)
Here a chart that in no way is demonstrating a bullish configuration, which in real terms means unless stocks top out very soon, precious metals will be going on a 'Mars Mission' of their own. All we need is a clear monthly break of profound Fibonacci resonance and moving average (MA) supports, which as you van see are in the same vicinity (in yellow), and precious metals should be heading for the heavens, which is definitely not signaling a deflationary prognosis moving forward. Because again, in order for central authorities to stay ahead of the 'collapse curve', they will need to be proactive in the currency debasement department, something that will become increasingly obvious to them as the Globalism thingy continues to crumble. Acceleration in this regard is being seen on the economic and political fronts in core countries already - and this will spread to America in November. (See Figure 3)
Technical Note: Notice the indicator breakouts above. Don't listen to any birdbrains telling you this rally in stocks doesn't have legs. It's The Trueman show and Hillary needs a new pair of shoes. The SPX is going another 100 points higher to pay for this, maybe even 200 to test the underbelly of the long-term channel again, seen here in Figure 1.
After November, no matter who wins, the global monetary order will see radical change as de-globalization (decentralization) turn into all out nationalism movements (already underway) as newly energized local politicians both capitalize on this sentiment, with incumbents attempting to change tack. (i.e. once they realize the status quo can no longer be maintained with imploding economies.) In terms of ultimate signals one is advised to watch the banks, where those barraging Deutsche Bank will likely be proven correct initially, followed by the sector globally, right to core US institutions. The S&P 500 (SPX) / Financial Select Sector (XLF) Ratio has been making a huge contracting triangle since 2008, where when it breaks out to the up side, one should expect to see a lasting break lower in stocks. First though, one should expect to see stocks hit new nominal highs (SPX 2200 to 2300), as well as the above (see Figure 3) denoted sinusoidal vexed.
And it's this 'staying ahead of the curve' mentality that will continue to drive both stocks and bonds higher, again, at least in the interim. That said, wde therefore cannot be surprised with Deutsche Bank's Chief Economist calling for a bailout of European Banks given the situation. At this point, with sentiment conditions none-supportive of higher stock prices , this accounts for the continued rise not only here, but in precious metals as well. Of course the resurgence in key precious metal open interest put / call ratios across the sector late last week didn't hurt as well. Apparently market participants have not had enough of the hedging thing yet. No telling when that will happen other than to point out resistance on the Gold Bugs Index (HUI) at 280 is fast approaching (and may have failed prematurely), so one must keep this in mind regarding any new purchases moving forward. Surely there will be a better time to accumulate.
Good investing is possible in precious metals on pullbacks.