Silver as an investment

A Permanently High Plateau / By CAPTAINHOOK / 17 April 2017

Margin debt hits fresh new highs, but according to status quo puppets, nothing to worry about because its different this time. (i.e. just like 1929 – in the words of Irving Fisher, “a permanently high plateau” [of prosperity].) And in a sense such talk is correct, because the markets have never been more rigged, however even with this, the bureaucracy’s price managers will fail at some point (stocks usually peak a few months after a margin debt peak), as all faulty and unfair systems self-destruct from within eventually. In the case of the stock market, as with all other previous episodes since 1987, it’s speculator exhaustion that develops, where while the present sequence is pushing the extremes, it too will end.

That said, the extreme could always get ‘more extreme’. According to Martin Armstrong (his computer?) the Dow could go to 42,000. In looking at the monthly CBOE Volatility Index (VIX) below, I’m afraid I can’t agree with Marty this time, at least not with his cavalier call for a doubling of the Dow from here. Yes, if speculator betting practices don’t change as we head into summer, maybe the Dow could grind up to 22,000 based on the numerics previously discussed on these pages; however, the possibility of a doubling from here appears unlikely. Indeed, as you would know in reading these pages these past month, a move to 22,000 (2450 on the S&P 500 [SPX]), is best-case scenario as far as we can project. Anything past these metrics cannot be long for this earth.

How could such a move happen? What is his computer suggesting? It’s suggesting the European Union (EU) will break up this year, and money will flow from the Eurozone to the US in a ‘safe haven bid’ because the ‘big money’ can’t buy gold (or bonds apparently). They can’t buy gold because the market is too small, so the geniuses who manage money will be forced to buy stocks. That’s a nice story, and knowing people, he will likely be right to an extent. However in circling back up to the margin debt situation, some people might consider paying off their debt in a time of increasing uncertainty – and this is the key (and key fault of Marty’s argument) – especially if stocks are falling.


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