Conventional stock markets: are they in a bubble or not?

November 16, 2013
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It has been an interesting week at least in political circles. The weaknesses of the ACA continue to be in the news with even Former President Clinton questioning it. The financial markets, on the other side, were not nearly as interesting with the main question relating to the conventional stock markets.  Are they in a bubble or not?
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    Nov 16, 2013 16:05 AM

    Al to start with let’s get the chestnut recipe out of the way!!

    1 lb chestnuts, 1 tablespoon of oil, 1 onion, 2 pints light flavoured vegetable stock
    Pinch of brown sugar, small cup of cream, plus seasoning to taste.
    Make a slit in each chestnut, boil for 10 mins. Drain & remove skins while still hot. Roughly chop skinned chestnuts & onion and cook for a few minutes in the oil. Add stock and seasoning to taste. Simmer for c 1 hr. Pass through sieve or liquidiser. Bring to boil again and stir in sugar & cream just before serving.

    Sorry folks for kicking off like this. But whilst I’m at it I’m sure we’re all grateful to Sarah for spending hours in reviving Al’s site earlier in the week!

      Nov 16, 2013 16:49 AM

      You know you hit the BIG time when you site is attacked…Who done it?

      Nov 16, 2013 16:40 PM

      Many thanks Reverend! I will make sure that Sarah and Kyle get this! They are two of the greatest cooks in the world!

      Nov 17, 2013 17:55 PM

      Thanks Rev! “Chestnut Soup” is outside my experience. I just bought new cookware, and this gives me an excuse to putter over the holidays.

      This site is just full of surprises. (grin)

    Nov 16, 2013 16:36 AM

    Are we in a conventional market bubble subject to 2013 resource sector tax loss selling?
    Where is the 2013 resource sector tax loss selling drum beat?

      Nov 16, 2013 16:43 PM

      Probably not much left to sell Big D!

    Nov 16, 2013 16:53 AM

    Off Topic: In segment 6 at the 4:15 mark, Big Al states ‘confiscate all your
    retirement assets’… someone lets out a loud belch or throws up?
    I cannot stop laughing, thanks I needed that.

      Nov 16, 2013 16:38 AM

      That was funny. Ya just never know what kinda sounds we gonna hear.
      Good interviews tho.

        Nov 16, 2013 16:53 AM

        Lol, probably that”studio dog”

          Nov 16, 2013 16:45 PM

          Rapidly becoming our Studio Fourth Daughter!

      Nov 16, 2013 16:44 PM

      Nothing wrong with a little humor!

    Nov 16, 2013 16:24 AM

    According to Greg Hunter’s meetings with Fund Managers, apparently it’s common knowledge that QE is way higher than $85billion a month. More like $125 billion and rising.

    Have decided to exit my J P Morgan Japanese Investment Account. Not only is there the whole morality question of being with JPM, as far as I’m concerned I’ve pushed my luck with Japanese QE as high as I’m prepared to go.

      Nov 16, 2013 16:46 PM

      Interesting Reverend!

        Nov 17, 2013 17:57 PM

        I need to broaden my financial horizons internationally. (sigh)

    Nov 16, 2013 16:31 AM

    “How do we fundamentally change something but keep it the same?”

      Nov 16, 2013 16:47 PM

      How would I know Big D, I am just a simple err bumbling!

    Nov 16, 2013 16:44 AM

    QE increasing will put more short – term PRESSURE on paper gold prices. More stress in the repo market means more gold leasing, more selling pressure until the system blows up.

    Why doesn’t anyone talk about the ele The money printing and financial stress is causing pressure to secure quality collateral. When the GOFO rate rises and the repo market is under stress, gold get hit. Like clockwork. Same thing in April 15th, same thing in 2008, etc. Why Cory and Al haven’t picked up on this is beyond me. Ask any person working at a bullion bank. When gold leasing increases, gold paper supply increases and gold prices get slammed. Who knows when it reverses?

    On November 15, 2013 at 6:48 pm,
    John Chew says:

    It doesn’t matter in the near-term what the premium is for gold. The physical gold market is divorced from the paper market.

    More currency debasement and QE will cause problem for interbank lending and obtaining quality collateral so there will be more gold leasing for collateral. Gold has no liability risk. Gold can be lent out 50 to 1 or 50,000 to one ounce of physical gold. Supply limitless until the tide reverses.

    So welcome to Alice in Wonderland. The more printing, the lower the price of gold in the near-term.

    Google: Alhambra Investment and Gold Collateral.

    “While it is acknowledged that bailing in interbank liabilities may carry certain risks,” officials write in the document, seen by Reuters, “on balance, it is preferable … that these liabilities are not excluded from bail-in”.

    If this overall interpretation of angst in European funding markets is correct, then the cumulative effect of everything from SNS to Anglo Irish to Cyprus to the EU memo is potentially a large shuffling of funding, particularly for banks that are perceived to be the weakest. Not wishing to be a liability holder in the crosshairs of bail-ins and deposit haircuts, counterparties to these weak institutions may have removed themselves in full or in part (to get below the €100,000 insured limitation for individuals). In turn, that may have forced these firms to find funding substitutions at short notice, eventually appealing to whatever collateral relationships they could find including gold-based.

    I have little doubt that this kind of pressure on gold was cascaded into other selling pressures, including running preset stops. However, I do think the impetus for selling, particularly in the wake of continued and unprecedented central bank debasement activities, is a window into interbank liquidity problems. If we add in the collateral actions of various QE’s, the pieces connect here all too well for this to be ignored.
    phant in the room? Forget bears or manipulation. Look at the GOFO rates!

      Nov 16, 2013 16:52 AM

      Our monetary policy going forward can be best described as being looser than a horny hooker short of cash.
      No offense Janet.

        Nov 16, 2013 16:19 PM

        I happen to agree with you Big D

      Nov 17, 2013 17:43 PM


      That is some interesting work by Jeffrey Snider at Alhambra and I think gold being used as a last resort collateral is worth looking at, but if you look at GOFO and gold corrleations over multi year timeframes you don’t see the sort of relationship he talks about holding up.

      The other thing I question in Jeffrey Snider’s articles on this issue is the idea that gold repos involve selling. My understanding is that the bank is just borrowing cash secured against gold. The trade is booked as a I sell you gold now, I buy gold back from you in future, but there is no actual selling of the gold, the transaction is price neutral.

    Nov 16, 2013 16:46 AM


      Nov 16, 2013 16:13 AM

      AGREED. The NuLEGACY interview with James Anderson was a breath of FRESH AIR and a very succinct and ACCURATE portrayal of what is ahead for us PM and resource investors. He didnt mince words and he didnt get involved with elaborate and detailed macro economic/political factors which, by themselves, is very compelling. ONLY, when BIG MONEY comes back into this incredibly beat-up (outrageously so, BTW) sector – it will be measured by WEEKS/MONTHS NOT YEARS – AMEN to that! And SPOT ON.

      Nov 16, 2013 16:20 PM

      I happen to agree with you SilverMan!

      Nov 16, 2013 16:24 PM

      As we used to say in the car biz, “there’s an ass for every seat”, personally, I prefer winners!O:-)

    Nov 16, 2013 16:05 AM

    Jeff – never knew that about Obama’s past pot smoking. We know from the experience of a near relative that smoking too much marijuana destroys enzymes in the brain, along with those dreams that your average young person has of making a go in life. Their emotional brains never recover leaving them underneath as classic under-achievers, even if they sustain their bluster to compensate . Now I understand how the fatuous mantra in Obama’s case of ‘yes we can’ is no different. Thanks as always, A

      Nov 16, 2013 16:34 AM

      Andrew, have you heard that Obama was a crack-smoking ____ from video of Mia Marie Pope, who was a high school friend of Barack Obama(aka Barry Soetoro) in Hawaii during the 1970`s, Barry identified himself as a foreigner in high school and was known as a crack-smoking homosexual. its 3:54 in length – – What`s pot compared to smoking crack, except that your money, silver, & gold would be gone the next day, for his next fix.

        Dennis thanks for the post…………….OBAMA THE CRACK HEAD,,,AND LIAR…..,,,man are we in deeper doo doo….than we can imagine………..

          This guy o is SICK…………….

          Nov 17, 2013 17:21 AM

          I would not necessarily call him a trailhead. That is not really fair. Regarding the second characterization, he is just a politician who says what he wants people to believe. Sad, very sad but that is what they do.

            do not condone a liar………that is not good for your standard……..there is one thing the Lord does not care for and that is a liar…………

            this is like condoning the actions of the office staff ,,,that steals the rubber bands,paper clips and copy paper……..

      Nov 16, 2013 16:59 AM

      Andrew, the full version was on this video its length was 26:37, which she said he was a smoked crack, and was quite into lying a lot then. – I guess old habits are hard to break.

      Nov 16, 2013 16:00 AM

      Rev- he was a well known pot smoker. Google “Choom Gang.” Hilarious but pathetic how (in an age of zero privacy) the media left his past totally uncovered during the 08 campaign.

        Nov 16, 2013 16:15 PM

        Yikes Dennis and Jeff: Talk about Barry Jekyll and freaking Dr Baruch Hyde.

        Yet he still has his following: This pm on Channel 4 – wha’s that actor called who plays alongside Michelle Pfiffer in their latest film? He was singing Obama’s praise saying he was doing his level best to help the nation!! Robert de Niro – that’s the one.

          Nov 17, 2013 17:24 AM

          If I had his money, I too would be an unrealistic idealist!

        Jeff…………What about this LARRY SINCLAIR…and the claims that he was involved with BARRY…OBAMA…….

        Jeff…..I blame the congress men,,,and anyone who knew,,,and did not tell the American people………..Politicans are a sneaky breed………….

          hey bird…………go check out the video …..and get us a reply……..

            Nov 17, 2013 17:32 AM

            Can’t help you Jerry. My connection is so dismal I never even try video links anymore. Is there something special about this one I need to know about?

            there is plenty….but, you would need to view,,,in order to discuss….

          Nov 17, 2013 17:29 AM

          Amen, Amen and amen!

        Nov 17, 2013 17:22 AM

        Welcome to the world we have evolved into.

      Nov 16, 2013 16:19 PM

      I allways wo seandered why I turned out this way!

      Nov 17, 2013 17:17 AM

      I have a friend who definitely falls into this category, Reverend. Sad but true.

    Nov 16, 2013 16:06 AM

    Big Al K.
    I agree with you that there are no fundamentals behind this market, it is in a bubble but this bubble is held together by trash fiat currency to the tone of ONE TRILLION DOLLARS per year and soon to be more so the bubble will not burst.

    A year ago a friend of mine asked me if this market was going to crash and I said NO. It’s going to keep going up and not because of the economy but simply because the illegal Federal Reserve is interested in keeping the market pumped up with fiat trash. This is like a titanium bandaid on a ever growing balloon.

    As for me, I’m not feeding this corrupt propaganda machine with my hard earned money. I hope the market and its propaganda index (the DOW) keeps going higher because once gold hits that 1:1 DOW/Gold ratio as it did in the 30s and the late 70s, I will have made my money with ease and leisure. I don’t sweat over charts, I just sit and wait.

    There’s a reason why “there’s no other game in town”. The Federal Reserve is leading everyone by their respective nose-rings like water buffaloes to their slaughter house (the stock market). An enormous wealth transfer will take hold by prudent, patient and very astute investors. Remember, the big money is buying gold and silver, not only China and India. Central Banks are accumulating in the background, and it’s nice to say that I’m my own Central Bank.

      Nov 16, 2013 16:16 AM

      I COULD NOT HAVE SAID IT BETTER MYSELF – GOOD, NO……GREAT JOB! Now I wish I could put your comments on a massive media campaign and tell people to WAKE UP! Oh well, aint gonna happen.

      Nov 16, 2013 16:29 PM

      Very well put Big Al. I’m like you – not sweating over charts! A

      Nov 17, 2013 17:32 AM

      That is a great comment The Other.

      Being realistic; however, there is money to be made there if you are very careful.

      Nov 17, 2013 17:16 PM

      The PE of the S&P is at around 19.5 where the mean is 15.5 and median 14.5. PEs over 20 is running out of head room.

      Thinking the 19.5 PE would already be much higher were it not for all the cost cutting (layoffs). The problem going forward is how do they increase top line revenue since they’ve pretty much exhausted all else that leads to the bottom line.

        Nov 17, 2013 17:56 PM

        And that, BJ, is just the tip of the iceberg in my opinion!

    Nov 16, 2013 16:30 AM

    1. When the money for Medicaid coming from the Fed. gov’t dries up, then the states will be stuck with another unfunded mandate. Don’t be surprised when that happens–and a good reason why many governors chose not to set up their own exchanges.

    2. If you think Medicaid was in trouble, and in more trouble today because of Obamacare, just wait until Sen Rubio throws in with Obama’s immigration ‘reform’ initiatives to give millions of illegal aliens access to Medicaid via Obamacare.

    3. No mention of the $billions being looted from Medicare to fund Obamacare. It’s there and continues to fly under the radar. Notice not even the Rs are trying to stop that theft.

    Of course the ‘solution’ to all this will be a single provider system funded by a “Forbes Flat Tax” that eliminates the ceiling on payroll taxes. Remember payroll taxes are taken off the top before any deduction, loops holes, whatever.

    But as far as Obama being stewed in his own juices like Bush for his lies about Iraq: Obama became a lame duck last January when when to avoid the sequester, then a cooked goose when he tried to exploit a local tragedy to subvert our 2nd Amendment, and now, with Obamacare, a LEFTover turkey and it’s not even Thanksgiving yet.

      Nov 17, 2013 17:35 AM


      There is no question that he is in trouble. I would love to hear some of his private conversations!

    Nov 16, 2013 16:54 AM

    ObamaCare Update, Russian Lawmaker Pushing to Make Accepting the U.S. dollar illegal. – Greg Hunter – published Nov. 14, 2014, its 14:25 in length –

    Nov 16, 2013 16:56 AM

    The million dollar question is how long can the USA and their axis of monetary evil keep gold down…1 year maybe two….anyone think they can do it for longer? Al if you are capable of doing a poll on this site I would love to see how long the readers think this can go on….I believe the median will be close.

      Nov 17, 2013 17:26 AM

      Sooner rather than later Tom. By that I mean mid 2014 and we’ll start to think it’s beginning to be worthwhile. But mid 2014 is only the beginning of the end.

        Nov 17, 2013 17:47 AM

        No-one wishes for a premature black swan event. The good Lord knows there are enough of them waiting to fly in centre stage. But I remain deeply sceptical about Israel and Iran. Netanyahu can’t stand Obama, and is paranoid as hell over Iran’s nuclear programme. Saudi Arabia feels isolated too. Egypt’s kicking off with al Qaeda aiming RPGs at shipping going through Suez, where one missile at a carrier full of liquid gas and that could do it. Quite apart from Iran, Israel ain’t happy either to north or south. Any moment soon surely Israel must respond(notwithstanding Putin’s meeting with Israel’s leader) if Israel isn’t to lose credibility as the Middle Eastern strongman.

          Nov 17, 2013 17:13 AM

          Interesting questions Reverend.

          Nov 17, 2013 17:58 PM

          Good point Reverend.

      Nov 17, 2013 17:37 AM

      I will ask Sarah to look into this Tom.

    Nov 16, 2013 16:42 AM

    Its all supply and demand Tom.
    Eric Sprott has repeatedly stated he doesnt know where the gold is coming from. (He looks into these things,and he knows how)
    That, to me, suggests he doesnt know where its coming from,(duh) which would mean its from a source some people dont actually want known.(more duh)
    My point, we dont know how much supply is available, therefore we cant really make a truly educated guess at how long the manipulation can go on.
    We can only guess useing the info we have, my guess, until the Chinese and cohorts are ready to move to another reserve currency.
    As this has happened many times,people have had alot of practice doing it, therefore I excpect a relitively smooth transition for people that have prepared.
    Just my thinking, and I hope Gary is right about the drop to $1000.

      Nov 16, 2013 16:26 PM

      True, we don’t know how much supply is available, but we do know it’s leveraged. Unfortunately, we don’t know how leveraged. A few good audits would clear the air. Problem is that entrenched incumbents in both the House and Senate don’t want the audits. I wonder why…..

      Nov 17, 2013 17:43 AM

      I gotta tell you, B, I just don’t see that happening!

        Nov 17, 2013 17:29 AM

        I have seen gold “smashed” too many times to discount it being hit again.
        I figure these guys with their unlimited dollars can put the price wherever they want it. How many times have we seen it down hundreds in a couple days? At least Gary is taking it into account and coming up with a guess.
        A major down move, flipping positions and up it goes seems logical to me.
        These guys have gotten so corrupt and so powerful they dont care who sees them anymore.
        The video “rodski” provided showing who owns the federal reserve says it all.
        Imagine, the house of Saud owning it and all the interest being paid on every note printed going to them. The american military being used to support them, being the only people allowed to fly on 9/11. They are powerful corrupt and they couldnt care less who knows it. As Paul Craig Roberts noted, no investigation for 9/11 is telling.
        Garys point that they could make fortunes flipping from short to long makes sense.
        Greed drives these guys. And if it doesnt go down to $1000, A person can still buy at Garys $1362, gold is at $1300 now, what % is the loss?
        But sinse I am hopeing it goes down I would suggest to everyone to buy now. lol
        My record hasnt been too good these last couple of years.

          Nov 17, 2013 17:01 PM

          I agree completely about flipping from short to long. It is all about making money Ian’t it

    Nov 16, 2013 16:09 PM

    Segment #5, great interview with James Anderson,

    Nov 16, 2013 16:42 PM

    I personally always wanted a single payer social insurance program, not the crazzy quilt ACA idea. ACA can work, and may work. I think rather than having a complex system where different people are treated and charged different amounts , depending on current income , or what state they live in. pay as you go social insurance[like old age pension SS] where you only pay a percentage of your wages when you work. We need something . by the way where is Mitt Romneys health plan ?? he was going to reveal it after the election day ?? S

      Nov 17, 2013 17:46 AM

      I agree that a flat tax makes a lot of sense.

      Don’t hate me, but it just seems fair.

    Nov 16, 2013 16:23 PM

    The question was “Are stock markets in a bubble”?
    And the answer?……Ha Ha Ha….don’t make me freakin laugh, man! Of course they are!!!

    Just the fact people are asking should be a worry. This one is pretty obvious. We are not yet in a mania though. That comes later (so stay tuned). When the end comes though it really should be epic. This after all is 1929 all over again and that should be pretty easy to read for anyone paying attention.

    Look at the similarities. Extreme and record breaking leverage being used by market participants. Record breaking new highs in the Dow, market euphoria, lack of fear, a certainty this time was different and all the usual sentiment readings that typically should be setting off alarm bells.

    Of course, the reason “it is different this time” is because this time the Fed has your back. It is a no-lose proposition. All you need to do is be ready on the sell button the moment the signal comes the Fed is going to pull out and you will walk away with all your gains intact. Easy peazy, man.

    Back in the Roaring 20’s meanwhile credit had been growing rapidly. Same as today. Asset bubbles appeared across the economy as land prices roared ahead. In the background though jobs growth was weak and a disconnect developed between stock prices and the general economy which was suffering.

    Then as now the country was heavily burdened by debts accrued during the prior credit boom and much of this was never going to be paid back in full. Agricultural land and farm prices had fully disconnected from reality before the crash setting the stage for a vast migration from country to city as banks repossessed where loans went into default.

    Basically, there was inadequate collateral backing the amount of loans that were issued. Bubble priced land was soon to meet its Waterloo where even modest debts could exceed the new appraised velue of lands when harder days came around. Ninety percent declines in property prices meant that even those who were quite conservative and only borrowed 10% against inflated property were suddenly fully underwater.

    Cash vanished of course. Buyers went into hibernation. Assets plummetted.

    Commodities were in decline even as equity markets entered a period of nosebleed speculation more akin to gambling than investing. Earnings stopped mattering as stocks rose against fundamentals. All sounds pretty familiar doesn’t it? That is only half the story of course but the many other parralells are uncanny.

    So what happened next? Well all hell broke out of course. Just not at once though. First there were market declines as the wheels fell off overseas in London. The usual relentless climb in price day after day started to come to a close. Then there were more declines and selloffs as the lights started to blink in a few brains.

    The smart ones starting bailing out quick as they could. Confidence dropped pretty quickly from there and despite emergency interventions to prop up price the crash came anyway. By 1932 the Dow had lost pretty much 80% of its 1929 value.

    Here is the bad news for the Goldbugs out there.

    The Dow/Gold ratio did not fall below 2. until 1932 which means it came AFTER the stock market crashed. Put another way, it was not rising gold that floated up to meet a high market where the “one to one” ratio materialed. Oh no, friends, it was stocks blowing off almost a decade of speculation that began in the ealry 1920’s and concluded with Black Tuesday on October 24th.

    The big event had been preceded by rising volatility and unusually high volume days leading up to the first of the crashes. Warning signs were everywhere but folks just preferred to ignore them. Kind of like today except now we are smarter, faster and more connected!

    Ha Ha Ha!!! Don’t make me laugh man! Nuthin ever changes.

    A Dow/ Gold ratio of 1 to 1 suggests the next market crash will take us down 85 to 90% before that magic number is reached. A 90% fall in the Dow (from 16,000) suggests 1600 dollar gold versus an 85% decline equating to 2400 dollars.

    Just saying… is not going to rise to meet the Dow. That is pure fantasy.

      Nov 16, 2013 16:16 PM

      What ever happens though will probably be revealed between 24 and 36 months from now IF my theory that equities will decline sharply to meet gold prices near parity versus gold rising to meet the Dow. The Dow/Gold ratio chart has a little while to run yet before it hits bottom in any case. I think its party on for stocks for awhile yet before we even get to the euphoria stage that really makes a bubble worth popping. What that really suggests is higher prices for gold than noted above if markets really take off.

        Nov 16, 2013 16:27 PM

        You kinda crack me up. You write so eloquently and confidently that you want to make me want to follow you to war. However, then like a cold slap in the face – you bring me back down to earth saying…..IF my THEORY that…….A HA..that is it! welcome to another theoretical submission by Mr. BIrdman. GREAT…..however, here is a historical fact: GOLD has been MONEY and a store of VALUE for thousands of years……that is a fact not theory…with this hellacious financial collaspe we are sailing into to..I will keep my gold, silver and stay away from the suicidal musical chairs of fools..thank you very much.

          Nov 17, 2013 17:50 AM

          There are good reasons we compare our cicumstances today to those that existed during the credit expansion of the 1920’s and the massive public debt growth that followed, SD.

          There are also legitimate reasons to be concerned about how the default outcomes finally played out as well as municipalities fell, bond issues failed, employment skyrocketed and business bankrupted. We need to wonder what is in store for us as the setup is now in play for a repeat of all of the above plus another housing bust to boot. Take note that farmland is in a bubble in many regions of the country. Does that tell you we have learned anything from the bursting of the housing bubble just a few short years back or that the excess of the past has yet been cleared?

          Some have argued that our time now is more akin to the period during the Great Depression when public debt rose dramatically during the lean years leading up to the Second World War. I kind of doubt that though because so many latent threats remain extant that are more closely associated with a stock market induced depression rather than the period of slow rebuilding and recovery.

          For example, the public is not really deleveraging at all. Credit has continued to grow and savings are still weak. So these aspects don’t jive with what followed the crash of 29. We also know we have a pension crisis ahead of us and that it will begin to manifest as the globe continues to slow and retiree numbers grow in the coming few years. We already have a problem with aggregate demand and it is not being helped by all those who will be leaving the workforce. We are still in a weak state pretty much everywhere and in fact are still decelerating globally….not yet showing signs of renewed growth.

          It is past indebtedness itself that must be resolved before we can move on to the next stage though. That has not happened yet except where US housing (in particular) is concerned but it did not seem to slow credit growth significantly anyways. Although there are obviously great differences between back then (the Thirties) and now some key aspects are worth bearing in mind and one of these is the long run debt cycle that typically spans a human lifetime.

          We are overdue for that generational correction and kept aloft by little more than Central Bank magic.

          It is my belief that what is happening now in regards to excess credit and the buildup of debt has more in common with the 1920’s than it does with the late 70’s (the point at which we saw the Dow/gold ratio bottoming for a second time in a century). If in fact there is any validity at all to the Dow/Gold ratio theory then we need to be concerned.

          Here is why… HAS NOT hit bottom yet!

          Pretty close but we have about two years left to run by my guess. So during this coming period two or three things must happen in order for there to be a ratio where the Dow equals the price of one ounce of Gold.

          1) Gold rises to meet the Dow …..Woohoo…we are RICH! (Gold bugs, that is)
          2) The Dow crashes to meet the price of gold….so basically we are all screwed including the bugs.
          3) Something else in between happens where gold rises and the Dow falls.

          The third scenario is the most probable but it is certainly not guaranteed. The reason is that if we are indeed in a stock bubble during a time of falling gold then the only alternative outcome available to meet the conditions necessary of Dow/Gold ratio of “one” is crashing equity markets. Uh Oh.

          Alternatively, as the market takes a face-plant then capital floods into the PM space and we see a meeting at some other point. All I was noting in my posts above though was that during the Great Depression the D/G ratio hit 1.6 due to falling stocks and not due to rising gold.

          To me this is very suggestive of our future and it is something we need to bear in mind as the ratio continues to fall month after month. Check the ratio and charts for yourself. The point here obviously is that we can predict an event that most likely includes a serious equities correction to within at least a 24 month period. It should be significant too but maybe that is not important. Crashes come and go but I think this one is going to be for the record books and I really am beginning to doubt gold will benefit all that much until AFTER it happens.

          In other words, AFTER most investors have already been wiped out!

            Nov 17, 2013 17:09 PM

            Great commentary Bird, and now I am really convinced we need to get a bit of humor over to you.

            By the way, I think you meant to say “unemployment skyrocketed”.

            Nov 17, 2013 17:57 PM

            But that was humour, Al. You should hear me when I get serious! Good catch on the “employment” error. I must be typing too fast.

      Nov 17, 2013 17:03 PM

      Gotta get a little humor over t o Africa. Lord knows you guys don’t get enough of it over there!

    Nov 16, 2013 16:16 PM

    Bird: DOW smashed in 1929 into 32. Gold went from $17 1932 to $34 in the next few years. Gold shares rocketed as well. 400% return on Homestake.
    Gold Peaked 1980 and then months later gold stocks flew off the shelves.
    Who knows exactly how she plays out!? Armstrong has a good global picture and you have to have it to have a clue.

    Nov 16, 2013 16:21 PM

    Bird, your makin alot of sense. One thing a little differant this time is the demand from the east for gold.
    But your $1600 sounds logical.
    So whats best then? Any asset there is no debt against?

      Nov 16, 2013 16:43 PM

      Zero debt, a secure revenue stream and plenty of cash are fairly good strategies as we get closer to D-day. Nobody really takes them seriously though. It seems to take real discipline and fortitude to clean up credit card debt, pay off the mortgage or sell big risky assets and cash-out beforehand just in case. Of course it also sounds crazy as bats. That is why pretty much nobody normal employs such ideas because we all know depressions are just outlandish fiction from the deep, dark past. Everybody knows we will never get one again.

        Nov 17, 2013 17:16 AM

        Never get one again Bird?

          Nov 17, 2013 17:07 AM

          That was sarcasm of course, Al. Like when I wrote the Fed has your back and making money on stocks was guaranteed while getting out was “Easy Peazy”! Fact is that there is no “Bernanke Put”. That is a great big myth that is very dangerous to believe. When a person accepts that idea they are in effect saying “this time is different”.

          But it is never different this time. There are no stock investing guarantees.

            Nov 17, 2013 17:11 PM

            I do agree except that the difference here is quantitative easing!

            Nov 17, 2013 17:51 PM

            Don’t buy it Al. You know those little CPR paddles they use to bring the patients heart back to life after it quit pumping? Think you can just keep doing that to the economy over and over or maybe it does not work anymore after too many zaps?

    Nov 16, 2013 16:21 PM

    When the stock market starts intermediate declines you will hear from the prognosticators that we are in a period of readjustment and this will not develop into major movements as forecast as a business depression.

    The word taper will be replaced by one of “hesitation” to befuddle the masses.

    The White House will enter the fray by stating that the levels of margin are not too high, giving sponsorship to the inflation which might worry the rest of the undecided and sober minds that might still be left. DT

    I like JAMES ANDERSON…… a man with a great mind…and a great mine……….

      Nov 16, 2013 16:09 PM

      I’ve said it before, The US economy is a like a Hostess”Twinkie”, soft on the outside, softer and creamy on the inside, and wrapped in cellophane for all who wish to see. DT

    Nov 16, 2013 16:40 PM

    Found this link over on 321 Gold.
    Great visuals for those who like charts and play off the 50 dma. for Au & Ag.

    Nov 16, 2013 16:12 PM

    The best 10 minute description of what QE is, clear & simple.

    Nov 16, 2013 16:13 PM
    Starting @ the 10 minute mark, Jim Comiskey tells who owns the Federal Reserve from its inception to now.

      Nov 17, 2013 17:00 AM

      Robski. I found that really interesting, thanks.

      I wonder if Hitlers banker had anything to do with Germany not invading England, the Bush family makeing billions supplying the nazis etc There are incredible ramifications,
      in any case, it sure makes obvious we go to war for bankers.
      House of Saud? Maybe thats why they could fly on 9/11 or such interest in the U.S. putting so much preasure on Syria. Do they owning the fed have anything to do with the american military being over there?

        Nov 17, 2013 17:12 PM

        Another interesting point B.

    Nov 16, 2013 16:50 PM

    Predictions…..Janet Yellen increases the level of QE twice in 2014 and by mid 2015 there is no defined level of QE. The result is Quantitative Whatever it takes.

    Kevin Hogan pulls out a Victory for the Stanford Cardinals in exciting fashion.
    Brent Musberger is close to tears.

      Nov 16, 2013 16:34 PM

      Dennis – All Blacks beat England yesterday, so it’s normal service resumed as usual. England’s victory last year was just a freakin’ accident!

        Nov 17, 2013 17:44 AM

        Morning Andrew……Rugby..Football..Cricket….Englands national teams are made up of overpaid players who lack , “NATIONAL PRIDE”..& imo that’s why they perform so badly…..Look at the athlete’s who competed in the British Olympics , now they were proud of been British…So until our national teams show the same kind of patriotism to their country , they will never perform well on the international stage……..BTW I hope you & yours are keeping well

          Nov 17, 2013 17:01 AM

          You’re right Tony – Our rugby players are in danger of becoming like our footballers – overpaid prima donnas! Good to hear from you again. Silver’s break-out getting closer, I can sense it!! A

      Nov 17, 2013 17:27 AM

      A victory for Stanford? They lost by three.

    Woe to the country, who’s king is a child…………(.repeat.. worth repeating.)….

    seg.8…..the healthcare site will not be fixed,,,for at least six(6) months…..according to McAfee……………

    Nov 17, 2013 17:11 AM

    As far as the conventional stock market, my friend just showed me his stock portfolio and he has lost some 3 million dollars in just 1 month, 2 months before was $60,000-, 3 months ago was $100,000-; are we in a bubble at these losses you tell me. As far as had he invested in gold, I think he be in a better standing today. I told him to get to high ground like put his money into gold, but his advisers told him the opposite.

      Nov 17, 2013 17:29 AM

      Always worthwhile to have a bit of gold for the Korelin family!

        Nov 17, 2013 17:43 AM

        AL…..& always good to have a bit of silver for the Mc Dade family.

          Nov 17, 2013 17:14 PM

          Trust me, we have much more silver than gold Mr Irish!

      but….his adviser….was making a commission….that must make him feel real good..

        Nov 17, 2013 17:47 AM

        Jerry….I’m going to start charging commission for the tit-bit of rubbish advice I give on here……..”WHEEE” I will make a fortune…….!!!!!..what.

          me too………………

            Nov 17, 2013 17:25 PM

            Jerry, I want our mayor Rob Ford to go to Washington to fix the screw ups in The Affordable Care Act, maybe he could stay there while he’s at it and your President could give him some free counselling. You know Rob Ford likes to smoke the peace pipe and he is an animal lover particularly the feline variety. MEOOOOOOOOW! DT

    Why is it that I brought up the bubble last week ,,,with a visitor,,,and said the ratios were to high….and only one guy….which was Matthew,,,,,even had the b…s to take up the issue………….

    Nov 17, 2013 17:55 AM

    The next phase I figure will be in bail-ins for our failed banks, while their transferring their money out of their system into their shell companies, so to clean their depositors out of their money.

      Nov 17, 2013 17:15 PM

      Everyone has to look out for themselves!

    Nov 17, 2013 17:08 AM

    Russian Lawmaker seeks to ban US dollar, predicts 2017 collapse I think the crash is going to happen sooner than that kind date of 2017, with the BS coming out of this administration, its off to the moon for them. Of course they have insider info. de Rothschild`s central banker pulling the strings in the horror show. – – – – – – Just wondering what if we could Impeach the crooks, go for reparations for FRAUD done by these Banksters Ponzi scheme, the house of de Rothschild looks deep enough for a redeposit back into our countries general fund, these guys have in excess of $500 trillion dollars plus ripped off gold in their personal vaults.

      Nov 17, 2013 17:17 PM

      2017 is certainly possible, unfortunately!

    Nov 17, 2013 17:45 AM

    Armstrong models say 2015.75 for US to turn tail. The trajectory that we are on is obvious. Nothing good ahead. We have sociopaths at the helm.

      Nov 17, 2013 17:35 PM

      I wonder if Martin knows that Dorothy’s magical ruby slippers were originally made of silver.

        Nov 17, 2013 17:41 PM

        yes i wonder ye much will wonder !

    Nov 17, 2013 17:07 PM

    I think most of us agree the conventional markets are destined to go off of a cliff and probably soon. I would like to hear the question answered by someone as to what do you think the earliest sign of a collapse would be and how will gold and silver do in that collapse phase. How can we recognize that the collapse has arrived?

      Nov 17, 2013 17:20 PM


      If you mean a collapse in the conventional markets, my opinion is baring a real big black swan the time frame is more mid term than short term. I am convinced that in the short term the easing will keep it going. Just my opinion.

    Nov 17, 2013 17:28 PM


    Nov 17, 2013 17:52 PM

    Al you were right !!! Obamacare is hitting it’s first major critical issue and already people are blaming Obama’s race!!! Only this time it is YOUR Co-host Jeff Deist who is throwing stones first!!!!! What a disgusting comment Deist makes and what a disgusting man he must be!!! First, and perhaps sadly, most teens have experimented with drugs. What does that have to do with Obama??? Bush, Clinton, Gore et al have acknowledged illegal drug use. As a Harvard grad I can tell you that even IVY LEAGE folks used marijuana !!!! ( Not me of course!!!).. Why does Deist mention affirmative action and Obama’s admission to Harvard? What about affirmative action and female admission to Harvard ? What about athletic talent and admission to Harvard? What about being the son of a powerful alum and admission to Harvard? Deist, you need to look inward at your ugliness…. Just stick to the facts!!!!!! Don’t guess about that which you know nothing!!!! State the facts and let your argument stand or fall. Leave race baiting and admissions statistics out of it!!!

    Nov 17, 2013 17:31 PM

    Kudos for getting Bron on the show Big Al.

      Nov 17, 2013 17:10 PM

      Actually Bron is becoming a friend. I have a lot of time for him.

    Nov 17, 2013 17:45 PM

    Did you not notice that Deist was also critical of the Clintons and Bush? If Deist were to pull his punches because of a politician’s race, THAT would be wrong.
    Harvard’s alumni includes Obama, Dubya and D Martin. That can’t be good for enrollment.

      Nov 17, 2013 17:03 PM

      Think Dubya went to Yale, but am sure Yale would be happy to have us thinking Harvard!

      Now ref above D. Martin’s ‘bullying’ of Deist:

      Mr. Martin,
      Even Yale is willing to educate the privileged beyond their intelligence–case in point: Dubya. But if you’re not privileged and have to pay your way on your own way AND you’re not a minority try finding an academic scholarship or grant–and good luck!

        Nov 17, 2013 17:06 PM

        Also, didn’t Obama get a Fulbright scholarship? I wonder how he managed to qualify for that!!!!!!!!!!!

          Nov 17, 2013 17:49 PM

          Or was it a Halfbright scholarship?

            I think Obama …got the full bright ….when he switched on the batteries to his neon shoes………….(those shoes can be seen in the film presented by Dennis)

        Nov 17, 2013 17:49 PM

        Dubya attended Harvard Business School in 1975. He attended Yale in 1968.

        The only way you get into Harvard or Yale… to be from another country or planet……

    Nov 17, 2013 17:11 PM

    I am pretty sure he would not do that. (Change that to absolutely sure!)

    Nov 17, 2013 17:35 PM

    Since I`ve just got around to hearing on the segment on silver, I found an article dated Nov. 4, 2013, EPA Shutting Down Last-standing U.S. Primary Lead Smelter in December of 2013, this will cost more jobs, plus batteries will cost more, Zinc will cost more too, Ammunition will certainly skyrocket. These environmental Nazi`s will be the death of American industry. The closing of hundreds of coal-fired electric power plants will increase our likelihood of rising of cost of electricity, energy production will need to come from somewhere in the very near future or we will all suffer from brownouts/blackouts. Plus the potential attack of an EMP, be it from a solar flare or from rogue elements is certainly going to happen. And since our country could be strengthen from an EMP for a billion dollars, but the President refuses to do anything to fix this problem is alarming, for so little investment in its safeguard. – If there were an attack be it from anywhere in the near term it could lead this country back to the horse and buggy days of the 1840`s. — You kind of wonder what`s going on in Washington DC. It must be in sack & plunder mode ?

      Nov 18, 2013 18:31 AM

      There cannot be a return to horse and buggy days, Dennis. Two percent of Americans own a horse and there might be as few as 7 to 9 million total animals in all the US. It might take 15 years or more to build that population up so that we could all have a ride again. See that’s how we know that when the energy runs out society will collapse. It will not have enough motive power to serve anymore than just a tiny percentage of those who live on farms. Most would be employed delivering cargo or plowing fields anyway. Also….there are about zero functional buggies available.

        bird…..the usa….is now into growing lamas…..and buffalos……just harder to control

          Coal is being undermined, it has been getting the shaft for many years…………and plus, it is getting a bad rap at Christmas time…..who, want to get a lump of coal in their stocking…………………..ootb

    Nov 18, 2013 18:24 AM

    Would gold be acting like bitcoin right now if it wasn’t for the manipulation?

    Nov 18, 2013 18:56 AM

    Tom, my take on bitcoin for what it’s worth is that it’s not the new gold, rather a case of the multitude following a rush after fool’s gold. For people will do anything to avoid the ‘barbarous relic’, until such time as the rush turns into all out panic. Naturally over the short term wouldn’t we all have loved to have got in when the bitcoin equated to a single dollar?!

    Nov 18, 2013 18:19 AM

    Bird says (The question was “Are stock markets in a bubble”?
    And the answer?……Ha Ha Ha….don’t make me freakin laugh, man! Of course they are!!!)
    I say A bubble carries a few specific features. Irrational exuberance and a move to the parabolic stage are the most important. THESE DO NOT EXIST end of story. NASDAQ 2000 and Housing 2007-08 are good examples. The bears are being crushed…

      Nov 18, 2013 18:07 PM

      Actually you are correct, Billy. This market does not yet meet the technical criteria for a bubble but then again that is part of the reason we cannot know a bubble with certainty until after it has popped. It is the corrective move down after the peak (the blowoff) that defines the bubble as much as the move up. Typically we do see a parabolic rise first though and we are not yet there. I did note we are not yet in a mania yet but that I believe that is coming. What I am seeing is just that the market has broken from fundamentals and is behaving in a way that is not entirely rational. There is no question though that there are bubble aspects to some of the more recent IPO’s and to certain share issues (like Tesla) although that has yet to feed through to equities as a whole. Perhaps it is the mood more than anything else that is sending warning signals. This is something beyond complacency we are seeing now. You will no doubt agree that the use of leverage is at all time highs I suppose. If that does not suggest a shape worth popping I am not sure what does.