Scary Monsters
Capitan Hook

'Scary monsters, super creeps, keep me running, running scared.'

Borrowing this sentiment from David Bowie's classic we have a message all would do well heeding moving forward in this rapidly debasing society – be afraid – be very afraid of what I call – the bureaucracy. And while it may not be accurate to wrap such a complex ideological around one term, which includes not only ever so hungry bureaucrats, but also ever so unprincipled politicos, business leaders, and high-level bankers – the terms plutocracy or kleptocracy don't quite cover it due to the wide spread nature of the rot (although these elements are of course primary perpetrators), so we went with bureaucracy because what we are talking about here is too broad to blame just the 'powers that be' even though they are the ultimate cause / enablers of our deteriorating condition. (i.e. because we are all enablers in our apathy.)

Because we are all to blame; and there are many different varieties of scary monsters and super creeps to be found in this embroil. However a preponderance of blame should fall squarely where it belongs, on a corrupt establishment (unprincipled politicos, business leaders, and high-level bankers), selling moral bankruptcy in order to maintain the empire. And honing in on what we will label the 'ultimate perpetrators', we have the moneychangers, with the Federal Reserve at center (think Creature From Jekyll Island), who have literally devastated the larger economy for their own benefit, primarily reflected in extremes being our youth and retirees. Because no matter who is really behind the curtain pulling the levers, ultimately it's Fed policy that has sponsored the serial bubbles witnessed over the past 15-years that has also destroyed the middle-class, although most still don't know it – or are in denial.

Along this line of thinking, the moneychangers think they are 'real cute' right now because money printing just is enough money to keep prices stable so they can continue milking the masses. That's the game bankers have played throughout the ages, sometimes moving to extreme (think usrery), like right now. How the situation is being contained (prices stable) is the Fed pays its commercial banks interest on deposit with them so they don't lend this money into the economy, controlling the effects of QE. And the commercial banks are happy to speculate with excess reserves in the financial markets, leveraging off their balance sheets, rather than have price inflation skyrocket at the consumer level by making credit available to the little people. This will change when they see the need for increasing inflation down the road, likely after a deflationary event possibly coming in 2014 (which will re-ignite precious metals as well), but it's not here yet. (i.e. because in addition to the monetary base growing, money supply growth would accelerate as well.)

So the scary monsters are quite clever (but not wise), amazingly orchestrated (via the larger bureaucracy which they control), hell bent on global domination, are nothing more than confidence men; and again, you should be very afraid of these creeps, because if left unchecked, they will be the end of us all. This is why super creeps like Obama run around trying to start wars on a regular basis, not only to feed the US imperialist machine, but on a more sinister level, to feed (re-enforcing their power) the bankers, bureaucrats, and politicos. For the bankers it's just more tide; and for the politician's it's the power. (i.e. to tax more, spend more, etc.) Because at some point these characters are going to make a mistake, and if history is a good guide, it's likely to be a duesey. And when one of the chief scary monsters tells you it's time to be afraid again, something tells me you should listen.

What's more, stop listening to all the bullshit (BS) stories these guys are telling you if you want to survive. These people are trying to keep you perpetual debt and tax slaves forever. So please, don't let this happen to you. What's worse, they are willing to wage war to do it, using the Syria situation to create such a high degree of obfuscation, distraction, and misdirection nothing else will matter in the mainstream. Did you think 'Syria' was over? Think again. Despite an apparent agreement reached over the weekend, the conditions each side has imposed will be easy to default on, giving reason for re-escalation in the not too distant future. So, when the timing is right, meaning more distraction and tension is needed, expect Syria to flare up again. Perhaps this will be when the stock market begins to fall again, with the idea being price managers wish to attract more short sellers to squeeze them out like this past week.

That's why most people can't figure out 'what the f**k is going on', because they either don't understand or believe the system is set up to screw dumb speculators, and is why the 'powers that be' promote speculation (via CNBC et al.) so much. They fail to realize they are viewed as consumers, taxpayers, and fuel for the machine. They fail to realize Wall Street views them as rubes to be exploited, surface dwelling morons to be parted from their money. Of course at some point this unconscionable farce will backfire on these perpetrators because they are going to get everybody thinking it's Alice In Wonderland time again, which will halt the short sellers / put buyers for quite a while, causing the bottom(s) fall out of stocks. And this time, no matter how bad the news, which will be hard to beat compared to current events (and especially if the lying gets worse), the hedgers (rubes) won't be back. No, this time, once stocks drop enough, they will turn into actual sellers, putting stocks in jeopardy of repeating 2008 / 2009, or worse, 1929 / 1930. 

So, don't be fooled by rising stocks. Because the scary monsters are bound to do something at some point to upset the apple cart, whether it be war breakout in the middle-east, to nothing (when speculator exhaustion sets in), removing the wall of worry (short squeeze) stocks are to be climbing right now. When will the 'wall of worry' hit the wall? Returning to our thinking on this subject matter that originated earlier this year, this will be when the Dow / Gold Ratio hits the 233-month exponential moving average (EMA), now at approximately 14.5 and falling. As espoused previously, in terms of Fibonacci numbers, 233 is the most important in terms of defining a secular trend, which makes it a natural to be tested at some point in its present bear market. So here too, don't be fooled by the precious metals perma-bulls as well, no matter how dramatic the news. Chances are gold will vex the lows at $1180 to $1100 (channel support) one more time coincident with the Dow above 16,000 at some point in coming days before the present cyclical counter-trend moves are spent. (See Figure 1)

Figure 1

Because at some point soon (think when the Dow / Gold Ratio hits the 233-month EMA), debt markets will likely signal the trigger point in the next round of systemic crisis (fiat currency economy destruction), brought on by financial innovation and stealth re-leveraging since then. And as process becomes apparent, expect this time will be more profound than 2008 in terms of reach, degree, and impact. Again however, and although we could be close to such an occurrence in a seasonal inversion of the annual pattern, we could in fact be quite close to this point, where confusion associated with the numerous bogies (the taper, European election, debt ceiling, etc.) over the next month could do the trick. You may remember I thought the S&P 500 (SPX) / CBOE Volatility Index (VIX) Ratio needed to close at or above levels reached in 2007 before we could confidently think any sort of top was in for stocks, and we are still looking for such a monthly close – possibly this month. (See Figure 2)

Figure 2

In terms of timing then, it appears a top(s) of significance in stocks, and bottom(s) in precious metals should be expected sometime between October and early next year at the outside, where a more drawn out scenario is possible the more wave structures continue to subdivide. Right now, and although not shown on the chart below, gold for example looks to have just put finished the first wave down of a larger sequence that began at the turn into September, opening the likelihood that the ultimate low of the entire cyclical counter-trend move that began some two years ago now will be completed this fall assuming both corrective waves up and the two other wave down required to produce a five-wave affair are within the same dimension, is of course probable. What's more, purely from a wave structure perspective it looks like worst case scenario what one should expect at the lows is a test, either slightly above or below June lows. (See Figure 3)

Figure 3

Hot off the press we have Larry Summers withdrawing his name for becoming the next Fed Chairman, which when combined with a Fed tapering announcement this week, should give rise to a short-term top in stocks and bottom in precious metals. It appears the machines have been programmed to grab hedger positions right away and squeeze these fools out into anticipated bad news, giving rise to a 'relief sell-off' post the event. (i.e. opposite to what most were expecting.) Again, this is why price managers must keep a solid flow of controversial and concerning news coming, with the idea being it will take increasingly bad news to get rubes to buy puts and short stocks in order to keep the larger degree squeeze alive and well, where we are already in record territory in this regard.

For this reason, and with the German election coming on the weekend, tension in the markets will likely remain high this week post Wednesday's Fed announcement, so although volatility might increase, still, don't be surprised if a month end 'jam job' develops next week to give us a monthly close on the SPX / VIX Ratio closer to all time highs, again, which we view as a precondition to a lasting top in stocks being put in place. Furthering this view it should also be noted the Dow / Gold Ratio has returned to trend-line resistance rapidly (Monday), where it will likely consolidate this week, with stocks down and gold up, before pushing through this hurdle, again, moving up into the 14.5 area (think 233-month EMA) as early as next month in a perfect world. (i.e. the SPX could literally go to 1750 – 1800 over the next few weeks.)

Again, in terms of timing, one might consider that because these are 'blow-off moves' interval contraction should be expected, meaning the amount of time between waves will get shorter and shorter until final climaxes are reached. This is of course why we may in fact see these extremes next month as process continues to unfold. As alluded to above, while stocks may sell-off once any tapering is announced Wednesday, remember, don't expect any such selling to last long if open interest put / call ratios continue to rise into options expiry at week's end. Then, next week expect to see tech stocks out-perform post expiry, where AAPL should take the lead once again. It's being held back by low open interest put / call ratio this week, seen here. In order for me to get fundamentally bearish on stocks I first need to see tech stocks bounce from their present oversold condition; and again, along with the SPX / VIX Ratio at least matching previous all time high monthly close in the 140 area.

Finishing up with a few more comments on precious metals, with the open interest put / call ratio for NUGT rising rapidly this past week in percentage terms, don't be surprised to see big gains in precious metals shares post the Fed's announcement Wednesday. Again, once options expiry passes this week however, correspondingly don't be surprised if they are taken down next week as price managers push their agenda to prop stocks / suppress precious metals into month's end. I am not forecasting such an outcome, but these guys are greedy and desperate thugs so nothing should surprise you.

Take advantage of any weakness however because the next few weeks will probably be the lows for the larger correction, with gold set to push past $2,000 at some point over the next year or so. And while the bottoming process could take some time, you have to ask yourself, where else can one find value other than in precious metals these days, never mind any kind of security given the degree of thievery by scary monsters world wide. So do like many of the scary monsters (financial elites) then, and secure your wealth in precious metals too. Because you should realize that while it cannot be proven it's likely these characters buying up precious metals with their ill-begotten-gains, because they are not stupid, and know what could happen to gold (think precious metals) once confidence in central bankers comes into question once again – not to mention the super creeps are leading us down the road to WWIII.

Because where else does one put their money – in the bank?

Don't be ridiculous. Most Western banks are insolvent – and the scary monsters and super creeps (think high-level bankers, et al.) know it.

So, one must ask, where are they putting their own money?

See you next time.

Captain Hook 

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