Stock markets in the US, once London closed, headed south last night (UK time). Has the long awaited burst of the debt bubble started to impact on the world? The Fed is not raising interest rates yet, but is talking tough about inflation and a booming economy which needs cooling. That’s a joke. The real economy is tough with no end in sight (Main Street). Only asset prices, commodities and stock markets have been booming (Wall Street), fed by so-called Quantitative Easing of $2 trillion a year worldwide.
The Fed has said they will reduce QE next year to $1 trillion world wide. That starts in October 2018, the US 2018/2019 financial year not the calendar year. A fall in stock markets, which are at record highs after 14 years since the rise began, would seem inevitable before long. This might be the start of it.
Talk of raising interest rates seems like overkill, and that is what’s shaking the tree right now. Most people are only able to maintain the level they are at through taking on debt, and the real economy hangs on that thread.
Interestingly gold didn’t fall hardly at all – not at all in sterling terms. Sterling tends to fall when stock markets fall, and it fell a bit yesterday while the markets fell. Silver took a small tumble in $s with selling kicking in at the same time the stock markets fell (again less so in sterling terms).
This selling is usually futures selling designed to stop people buying spot or real silver for immediate delivery by making it look like a bad investment. The last thing the powers-that-be-want is people buying precious metals. That’s theirs. Not yours. Precious metals could be made to fall at this stage using futures-trading techniques.
If so, don’t be put off, would be my advice. All the publicity surrounding cryptocurrencies suggests this is where they want people to put their money as they exit stock markets. The timing of the publicity in the weeks leading up to a deliberately engineered stock market peak suggests to me this is two step operation. Push you out of shares as they fall. Pull you into cryptocurrency as they apparently rise. Stories of people making quick returns are in the media. Beware.
You would be better off, in my opinion, for whatever that’s worth, with a tangible asset like silver, even if it’s falling at this moment, than you would with bits of paper promising you that you own some electronic data somewhere in the planet. It could all just be another electronic con like the millennium bug. The cryptos serve to keep us more confused while the big events go on, and the larceny of private wealth by the central banks through market manipulation goes into the killing phase. It’s not called ‘making a killing’ for nothing.
The stock market declines are expected. The insiders will have sold out by now and now be looking to buy back maybe 50% lower down or even 80% or more, if this turns into a big one. Hopefully the world will find a way to keep going through this nasty phase. Keep on battling folks. That’s all we ever do anyway.
One byproduct of mass liquidation in U.S. equities is a flight to cash and the liquidation of other hard assets to cover potential losses. This is most likely the scenario that is currently playing out, inasmuch as today’s lower gold prices have a larger selling component (percentagewise) then the decline created from a strong U.S. dollar.
Chart of US dollar index
Although most analysts and investors were cognizant of the fact that a major equities meltdown could occur at any moment, and that that occurrence is long overdue, today’s equity meltdown still took many participants by surprise.
Although U.S. equities as well as gold and silver are trading off of their intraday lows, the damage is done, and we could very well be at the beginning of a correction in U.S. equities.
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Wishing you as always, good trading,