Treasurys Head to Record Lows Gold breaks above $1800 & Politicians Refuse to Yield

Gold and US Treasurys trading together illustrate the point that the BIG money has not begun to move and is still parking. Corporations are at record highs with over $2 trillion in cash holdings also parking in Treasurys fearful of investing with the future so uncertain. Those who try to predict the future with fundamentals get their head handed to them without exception because they become fixated largely on a couple of issues that are more often than not too domestic. Lacking worldly experience, they become just deer in headlights.

A closing tomorrow on the Dow BELOW 10906 will warn that next week we may again drop sharply. Even a closing BELOW 11280 will keep the Dow in a weak position (which was achieved today). There is support down to 10320. However, a monthly closing BELOW that level will then point to a retest of the of the 2009 low with support picking up again at the 6952 level. Those who keep praying for a 90% decline as it was in 1929-1932, fail to realize HOW that took place and WHY. It is NOT the private sector that is the problem – it is the public sector. Some stocks are paying great dividends that you cannot obtain in bonds, or any that you might think of buying. So it is just not as plain and simple as some portray buying gold and nothing else. The time is not ready for a stock market recovery just yet. That is certainly true of the economy as well. We have the collapse of SOCIALISM and that means that unemployment will rise, but largely from the collapse in government employment at all echelons right down to the local municipal level. The longer politicians refuse to reform, the worse this will get...

ArmstrongEconomics.com. Martin Armstrong, author of the Economic Confidence Model based on an 8.6 year business cycle theory. His development of this model is provided in his Biography. Armstrong was the founder of Princeton Economics International, Ltd., which became the largest international corporate and institutional advisor in the world with offices in Paris, London, Tokyo, Hong Kong, and Sydney Australia. He was called in during many crisis events affecting the global economy and was the first independent advisor to be invited by China during the Asian Currency Crisis. His work was summoned by the Presidential Task Force investigating the 1987 Crash and by 1990, he advised on global assets equal to half the value of the United States national debt. Armstrong is not an academic operating purely in theory from some ivory tower. He was the first global adviser who has even testified before Congress regarding his firsthand knowledge acquired by working with multinational banks, manufacturers, brokerage houses, shippers, and government around the world. He directly assisted major multinational corporations on their global strategies and helped to develop hedging strategies. He was name economist of the decade by Equity Magazine, the most prestigious research firm in America by the New York Post, and the highest paid consultant in the world.

i have one very interesting, but not funny, thought about the “price of gold”:

What does the “price of gold” really tell us?

Is today's ounce of gold any different from an ounce of gold 10 years ago, 50 years ago, a hundred years ago? No; an ounce of gold is still an ounce of gold.

If the “price of gold” has gone up (a change) but the physical property of that ounce of gold hasn't changed, what has changed?

That's right folks - it is the purchasing power of the monetary unit. 40 years ago I bought a 3 ounce piece of gold jewelry for $ 350; gold was going for around $ 40 an ounce so the “price of gold” made that piece of jewelry worth about $ 120 if I smelted it down. Want to guess what that very same piece of jewelry would cost today? Around $ 3,800 just for the gold, the craftsmanship would, of course, be extra.

...Princeton Economics International, Ltd. established offices in Paris, London, Tokyo, Hong Kong, and Sydney, Australia employing about 240 people around the world. In 1983, the Wall Street Journal cited him as the highest paid advisor. He became one of the top currency analysts and his work was requested by the Presidential Task Force (Brady Commission) investigating the 1987 Crash. The firm rose to be perhaps the largest multinational corporate advisor in the world and by the 1997 Asian Currency Crisis, Armstrong was invited by China and he flew to Beijing to advise the Central Bank. After discovering that staff at Republic National Bank were illegally trading in the company accounts, Armstrong through counsel threatened to file suit if the funds were not returned within one week. Instead, Republic went to the Commodity Futures Trading Commission and alleged that Armstrong had conspired with their own staff to hide trading losses from his clients in Japan. The allegation of a $1 billion fraud caused the government to rush in and admit in open court that they had filed charges solely based upon what Republic told them and had not bothered to contact any alleged clients in Japan. They admitted that Armstrong was not in default of any obligation to Japanese investors. When it became clear that the accounts were simply unsecured borrowings of Japanese yen, mostly at fixed rates of interest, and outright purchases of Japanese portfolios from public corportions and were NOT solicitations for managed accounts. Armstrong was thrown in contempt of court for an allegedly missing $1.3 million out of $3 billion. When friends offered to put the entire sum of money up for bail, the court denied bail at any price at the direction of a receiver, Alan Cohen of Goldman Sachs and Tancred Schiavoni of O'Melveny & Myers. They kept Armstrong in prison for more than seven years denying him a trial, a right to a lawyer and freezing all funds. They claimed the contempt was "civil," not criminal and thus there were no rights normally afforded criminal defendants. Ultimately, Republic National Bank pled guilty and all its directors received absolute immunity provided they return $606 million. Despite the fact that the deal was that all alleged victims be made whole, Cohen and Schiavoni refused to allow Armstrong to be released and he was held for another 5 years in prison on contempt of court. Armstrong was only released after the Supreme Court ordered the government to respond to a petition, which replied that the contempt had been vacated. Armstrong was held in contempt of court for nearly 7.5 years. The government agreed to drop all the charges except for a conspiracy count, telling Armstrong that if he pled, he could argue for time served. When he took the deal, the government then argued that the court had no power to provide such a credit and refused to release him once again. Armstrong is still on appeal in Washington, DC and the case will no doubt go to the Supreme Court. After spending more than 7 years in prison on contempt of court, Judge Keenan ruled Armstrong owed no restitution whatsoever... Armstrong from Wikipedia

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