Editor’s Note: For updated information on the topic, check out our resource page on gold investing…
Welcome to the “great pause.”
It’s sort of like those noise-canceling headphones that are supposed to be the bees’ knees on long cross-country flights.
All morning, the wires have been buzzing with talk of Greek debt default destroying the French, English, and German banks that were kind enough to prop them up. This was supposed to lead to a massive jump in gold and the U.S. dollar and a concomitant collapse in U.S. stocks…
Didn’t happen though.
We did see an initial head fake in that direction, but then the whole thing just “paused,” puzzling the living, um, “daylights” (oh so polite, eh?) out of more than a few analysts who were already reveling in premature Schadenfreude.
Bad IS Bad
This uncanny pause is created to be the stalemate between two critical memes.
On the one hand we have “things stink — sell everything.” This is a fairly obvious position, wherein a banking crisis will evaporate available capital, causing European commerce to shrivel and die.
And on the other hand, we have “things stink SO BAD, the central bank itself will have to step in” and rescue everyone with newly invented euros, much like the American Fed’s endless QE123etc. program, which continuously acts to undergird the American economy and market.
As I sit to write, no one know can decide if bad is bad or bad is good.
Let me help them out: Bad sucks. And the sooner you figure this out, the happier you’ll be.
Logical Perversion
Some call this whole “bad-is-good” a logical inversion. I call it an out-and-out perversion, the specific poisonous meme that is leading to the demise of American stocks.
Once this thought virus infects a sufficient number of investors, they begin to buy and sell shares — and even entire markets — for the worst reasons.
Once, we envisioned participating in an ownership stake in a company because we felt that said company had intriguing products that competent management could profitably sell to willing customers.
Putting the Mob to Shame
But once “bad is good” sets in, folks only want to trade shares of companies that can fool the public for a quarter or two. By the time the truth is out, these wise guys hope to be long gone, leaving only rubes and idiots holding an empty bag.
I’m not naming names here, because too many of these outfits have insidious legal departments that put mob extortionists to shame. If I was indemnified by one of the really big news channels, I might be braver. But I am a lonely scribe with fantasies of feeding my family, putting kids through college, and retaining some wealth on which to retire.
Thus I resort to such pejorative substitutes as “Wise Guys,” “Cheerleaders,” and “Axis of Weasels.”
The Infection Spreads
Left untended, logical infections like this inevitably fester, penetrating deeper and deeper into the crowd’s collective psyche.
Every time some horrid bit of news comes out, hordes of stock-buying zombies appear out of nowhere hot to buy up the market as a whole because now the Fed will step in with more free money.
It seldom occurs to folks to ask what these companies will actually do with this largesse. Most simply assume that they will expand their businesses — buy new machines, hire more workers, sell more products, record more profits — ever onward and upward.
The Snake Eats Its Tail
This idea of a genuine expanding economy is a hangover from the days when growing, building, making, and selling were the best businesses a body could be in.
Now, after decades of logical poison, many of the grand blue chip outfits have found that employing workers to grow, make, and sell stuff is a mug’s game. It’s so much easier — and indeed more profitable — to play banker and use these phenomenally huge wads of capital to trade in U.S. government debt.
Thus the snake eats its own tail, employment dries up, and GDP growth grinds to a halt.
Teetering on the Brink
Today the market has paused as it finds support at the bottom line of the recent sidewards price channel. But it is not “the pause that refreshes” (look it up); rather, it is another of those moments when we teeter back and forth on the brink.
Quite frankly, most of my signals are indicating that the markets will fail here and start down the slide into another strong 13%-15% retracement, readjustment, retrenchment — whatever euphemism for DOWN that floats your boat.
The Fix is In
But maybe I’m wrong. Maybe the Cheerleaders will somehow manage to convince enough of the herd that “bad” is still somehow “good,” and we will cycle back to the top of this channel for the third time in as many weeks…
In the end, it doesn’t matter. Because the poison has set in, both here and in Europe.
And even the most addled investors are slowly realizing the dire nature of our circumstance.
Now, I have pledged to my publisher that I would never leave you fine folks hanging on dour news like that. Heck, you can get that sort of stuff from any number of editorial pages…
Deployable Intel
Wealth Daily is more than a simple soap box from which disgruntled old guys might spew bile. Rather it is an essential source of usable information. So here’s some immediately usable info (larded with just a tad of bragging).
Here in Wealth Daily, I continue to recommend calls against the Physical Gold SPDR (NYSE: GLD).
Some have said that this chant has become monotonous. The heck with them! Every single round of these calls has eventually moved into triple-digit gains.
A Strong Suggestion
Over the past few weeks, I’ve asked readers of my Viral Investing column to buy puts against an exceedingly well-connected investment bank. This outfit stood at the very center of the recent economic collapse, and now stands charged with all manner of malfeasance by the Feds, their clients, and even their own stockholders.
As I sit to write, those puts have gained over 183% over the course of some 30 days. This is not merely the best revenge one can extract from weasels like this. It is also the best protection against the havoc they have wrought upon us all.
Now, was this gain some kind of fluke?
Over the past few months, every play but one I have recommended to VI readers has generated gains. (And that one “loser” is actually looking pretty good right now, too). Most of those gains are well into triple-digits.
Should the pattern I just showed you play out as predicted, the most recent round of recommended put option contracts against several key retail players will also rise in the same rapid fashion.
I’ll show you exactly how to get in on these puts in the next 48 hours.
Whether you join me over at Viral Investing or stay here and just ride along with my gold series, I would ask you again today to immediately add this essential tool to your arsenal.
Adam Lass
Editor, Wealth Daily
