A brief but very important post today. The S&P 500 appears as if it’s ripe for a significant pull back right now. However, anyone that’s been following us for years now knows that we don’t believe technical charting patterns alone are good predictors of future stock market or asset behavior due to its “completely-rigged-by-the-PPT” nature.
Follow this link and you’ll find incontrovertible visual proof that the big Wall Street banks have been using their HFT algorithms to artificially pump US markets higher. Combined with the bearish rising wedge formation above and the very low daily trading volume that’s easy for the HFT machines to rig, one thing about fraud never changes. Fraud can often last much longer than one would be believe to be possible, but growth based upon fraud is unsustainable and will always eventually break down. Due to these rigging games, it’s become incredibly difficult to predict the timing of these inevitable sell-offs, but right now, the dam looks ready to break. Of course, if its imminent break is countered by the Feds funneling trillions of new dollars into the market, either covertly or openly, any possible continued rise in the market can only happen on the back of rapidly devaluing dollars, which in the end, means one will just have a greater amounts of worthless USDs.
Consequently in real terms, if a continued rise in US markets is accomplished through these means, ironically one will grow poorer as the nominal dollar amount of one’s US portfolio rises, as possession of greater amounts of USD will translate into a lower standard of living as one will be able to purchase less goods and services with greater amounts of devalued dollars. Just ask citizens of Zimbabwe if they were ecstatic during the years the Zimbabwe stock market was the best performing stock market index in the world courtesy of hyperinflation of the Zimbabwe dollar.
That’s why, despite sentiment still being ironically low in gold and silver, gold and silver will still serve as your best protection to preserve and accumulate true wealth. Stay invested in broad global stock market indexes and you have lost as the S&P 500, the FTSE 100 and the ASX 200 have respectively lost -14.32%, -15.72% and -30.50% over the last 4-1/2 years, not including the devaluation of the Euro and USD during this time. Stay invested in broad global stock market indexes, and rise or bust over the next few years, and you will continue to lose, likely at an even greater pace than during the last 4-1/2 years. Greater amounts of worthless fiat currency will not preserve your wealth as politicians and bankers continue down their path to destroy the USD and Euro.
About the author: JS Kim is the Chief Investment Strategist of maalamalama, a fiercely independent consulting & research firm with a relentless drive to uncover the truth about global capital markets. Last month, in January 2012, the maalamalama Crisis Investment Opportunities newsletter posted a one-month +28.51% rise.
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