Manipulation and lies

Despite being incredibly bullish on gold & silver in the medium to long term, I believe significant short term price risk exists due to central bank manipulation of the US dollar. With the US bailout plan likely to pass congress this week, market manipulating central banks will be in full force making it appear as though all is well. That means rising stock markets and a strong US dollar. I caution anyone from making big investment bets on gold in the near term and suspect better entry prices after US elections. If gold prices do continue to rise into November be very worried, it spells big troubles and soon.

The long term case for gold (& even more so silver) just continues to build with every rescue plan, bailout, shotgun merger, liquidity injection, rule change and rate cut.

I wonder who is keeping score of the muppets at the US Treasury and federal reserve?

Aug07 – Northern Rock isolated incident - subprime crisis is contained time to buy financials
Mar08 – Bear Stearns was the problem, now all is fine Fannie/Freddie well capitalised – buy financials
Jul08 – Fannie Mae /Freddie signal end to crisis – buy financials
Aug08 – Indymac bank nothing to worry about banks are safe
Sep08 – Lehman Brothers failure needed to cleanse market
Sep08 – Merryl Lynch goes bust – shotgun marriage to Bank of America financial system safe
Sep08 – Next day AIG bailed by Govt but all is fine
Sep08 – Next day run on money market funds in US & Asia syndicated global liquidity all will be fine now
Sep08 – Next day run on Morgan Stanley / Goldman Sachs – Buffet steps in with $5bill. Evidently Buffets $5b will save system!!
Sep08 – Next day Washington Mutual goes under
Sep08 – Fed & US Treasury force Bush to make speech about the dire position of the financial system
Sep08 – Fed & US Treasury put gun to congress and ask for min $700b (but really open ended check) to fix all our problems.

Believe its fixed? No way. This is a $90 trillion, yes thats trillion dollar problem. They are pissing in the ocean. We are only at the end of the beginning
Next problems credit default swaps (ie insurance on company debt), credit cards, auto loans etc. All the muppets have achieved to date is short term stabilisation in ever diminishing time periods. The market wants to unwind all this excessive debt but the central bankers must keep the credit flowing to survive.

Remember central banks mission is to protect the banks and the system not people.

Governments and central banks have only two choices here:

1. Let the system implode on itself causing an immediate depression magnitudes greater than the 1930's
   
2. Print money to debase currencies, hyperinflating away debt Zimbabwe style.
   

Unfortunately both end in social and economic collapse but at least the latter gives a bit more time and can be blamed on other factors. Hyperinflation has been the preferred path of governments for hundreds of years this time will be no different. Except this time its global.

The coming weeks will provide an opportunity to unload any toxic financial stocks you may own. Speak to your financial advisor about reweighting your portfolio mix more into hard assets. Spread your cash around in top tier banks (not second tier). Try not to exceed govt guaranteed $20K in one account. Bring forward any necessary large purchases as prices are going to dramatically increase on everything you need (except houses)
We are living in extraordinary times, please make an effort to improve your understanding of issues beyond the propaganda supported by mainstream media.

Remember in the middle of difficulty lies opportunity, but only for those who are well prepared.

You still have plenty of time so start preparing now.