Will the FED Ever Pull The Trigger Under The Obama Administration? RE: Fixed Income Markets?

“Liquidity crunch” is the watchword in the bond trading market that threatens to cause deep rifts in the financial market. The fixed income market in the U.S. finds itself suffering from the unintended consequence of injecting half a trillion dollars in the market in the forms of corporate and sovereign bonds.

Companies in the US have offered record number of bonds this year with the assumption that the fed rates will remain low and investors will still have an increased appetite for fixed income financial instruments.

And up until now they have been spot on in their predictions about the federal rates. On September 17, 2015, the Federal Reserve members had unanimously decided to keep the rates low at 0% to 0.25%. But with the U.S. corporate bond ballooning by an astounding 47% from $5.4 trillion at the end of 2008 to $8 trillion currently, the stage looks set for the bursting of the bond market bubble.

Liquidity Crisis: A Fling or the Real Thing

The size of the corporate bond market in the U.S. has increased by $2.6 trillion in the past seven years. However, most of the growth in the market has been concentrated in three types of buyers: i) Foreign Investors, ii) Mutual Funds, and iii) Insurance Companies, according to a report by Citigroup.

bonds

This represents a serious concern that can have a significant knock-out impact on the entire US economy. If the Fed pulls the trigger and increases the rates for the first time in nearly a decade, it could result in increased selling – much more than the market could absorb – leading to what experts are calling a severe liquidity crunch in the U.S.

The current situation in the bond market has the potential to bring the next financial crises that could have a ripple effect in every major industry in the U.S.

The lack of liquidity that currently exist in the fixed income market is something that the bond buyers, sellers, and regulatory authority need to be concerned about. In the past there were more than 23 different type of investors but now we have only three. And that according to analysts is the main reason that the bond market could pop.

All that is needed is a spark in the form of a fed rate hike that would fuel liquidity crises when the investors flee bonds. This shortage of liquidity could result in a fall in asset prices below their long run fundamental price, thereby deteriorating external financing conditions, a reduction in the number of market participants, or simply difficulty in trading assets.

But, how did the liquidity crises started in the first place? Well, in the past big banks took an active part in the bond market. They acted as a market maker facilitating trade between the bond buyers and sellers. They maintained stability in the market by buying when the market wanted to sell in large lots, and selling in the case of the opposite situation.

However, the new regulations and higher capital requirements meant that banks had to curtail their bond trading activities. It doesn’t makes financial sense to trade in the market anymore. As a result the liquidity has all but dried up in the bond market.

Liquidity in the context of bond market reflects how easily buyers and sellers can transact the bonds. In a liquid market markets can easily trade the bonds and at low transaction costs. An illiquid market, on the other hand, would lead to wild and instantaneous swings in the prices.

A Single Spark Could Lead to a Liquidity Crunch

According to an estimate by JPMorgan Chase about five years ago, you could trade around $280 million worth of bonds in the U.S. treasury market without affecting the price. Now, that figure has gone down to just $80 million, which represents a decline of more than 70%.

Reduced liquidity represents a warning shot according to JPMorgan CEO Jamie Dimon as when the panic sets in there won’t be anyone buying the bonds. The lack of demand for the bonds serve is the main crux of a liquidity crisis.

A single hiccup in the market like the fed raising its interest rate could lead to great strain in the market especially for small bond owners. Without adequate liquidity, the sellers will not see lower prices. In fact they will see no prices at all as there won’t be anyone major market mover stepping in with the intention of stabilizing the prices, a part that has been played by banks in the past.

The mutual funds and Wall Street money managers do not have that much funds to purchase depreciated bonds.

International Warnings about the Bond Market Collapse

Earlier this year, Robert Stheeman, head UK Debt Management Office, warned that the gilt market has been threatened by falling liquidity in the bond market.

Recall the unprecedented “flash crash” of the Germany’s 10-year Treasury yields whose primary factor was its faltering liquidity. The sudden drop was extraordinary because the Treasuries are supposed to be the most “liquid” market on the globe.

The most pressing problem is occurring in the corporate bond market where the post-financial crisis era’s ultra loose monetary policies (pursued by the European Central Bank, the Federal Reserve, and the Bank of England) caused a torrent of bond insurance during the recent years as companies tried to capitalize on the rock bottom interest rates.

Imagine the state of the European and British companies (excluding banks) who sold a combined $435.3bn of investment-grade debt last year, and $458.5bn in 2013. This was possible because of the high level of issuance during the post-financial crisis.

These issuances have occurred in the primary market (where they have grown). However, they are not assured the required level of liquidity in the secondary market to insure a balance. As liquidity dries up, an imbalance in the secondary market has been created, caused ironically by the regulations aimed at averting the 2008 crisis.

The Bank for International Settlements has also cautioned that conditions in the less liquid securities is deteriorating as liquidity concentrates in the more readily traded securities whereas Edwin Schooling-Latter from Financial Conduct Authority pointed out (earlier this year) that the reduced liquidity in corporate bonds now warrants “careful regulatory monitoring”.

However, the most impacting warning had already been delivered November last year when a survey of traders, analysts, and investors of the European corporate bonds by the International Capital Market Association (ICMA) concluded that “meltdown” of a global credit markets was unavoidable

Now, we come to the main question that given the present market position. Will the Feds ever pull the trigger under the current Obama Administration?

The answer to this looks like a complete No. Although market pundits were predicting, rather praying, that the fund rates would rise this month, the Feds took the opposite decision and decided unanimously to maintain the rates for the time being.

The reason is that it will not just be the corporate bonds that would be hurt by the collapse in bond prices. The sovereign bond will also be hit with unprecedented and ‘flash’ crash.  The sudden drop in yields will be more significant for Treasury bonds as they are considered the most liquid all over the world.

Janet Yellen, the Fed Chairman, has not given any timeframe as to when the Feds would raise the rates. “I can’t give you a recipe for exactly what we’re looking to see,” she had said airing her views about the fund rates.

However, the reasons for the feds reluctance to hike the rates are not that hard to decipher. The inflation is running low, unemployment and the real wages remain flat. Unless these two factors start to spiral out of control, the Fed has no incentive to strengthen the rates at the moment.

In addition, concerns about economic situation in China, which is the biggest bondholder, is also what is holding the current administration to increase the fund rates. Any further strain in the worlds’ second largest economy could lead a global economic meltdown and would hurt U.S. exports, which had exceeded $116 billion on average in the past five years. It would greatly hurt the American manufacturers and may well lead to another economic recession in the U.S.

Final Remarks

Regulators have tried real hard to insure that the economy and financial system could avert, or at least withstand moments similar to 2008, when Lehman crashed; 1994, when US rates rose aggressively; and 1987, when stocks crashed.

Given that the bond market is much larger than the equity market, and that investors have piled into fixed income in the recent years, the fears of a bond market liquidity crunch are very real.

Therefore, it’s important that the Feds take steps to prevent a mass selloff of bonds in case it decides to raise the rates. Because if the credit investors attempt to sell their bonds in masses, and head for the exit, the liquidity in the market has the potential to create a rift similar, if not larger, in magnitude to the recent credit crunch experienced in 2008 that shook the very foundation of the global financial  market.

Learn more and get my trade alerts to profit from this mess: www.TheGoldAndOilGuy.com

Chris Vermeulen

 

 

The Calm Before The Storm

Monday, September 21, 2015, the SHEMITAH – the 7 year cycle started its reign.

Yesterday, Tuesday, September 15, 2015, The US Treasury market suffered a steep sell-off.   This was primarily due to the fact for the first time in 9 years The FED is going to raise its benchmark interest rate.

The Fed must pull the trigger on a rate hike tomorrow, or it will lose all credibility.  It will risk “negative interest yields” on more of their trading securities in the US Securities Market as currently in place in Europe. The yield of the two-year Treasury had jumped by 8 basis points to a new four-year high of 0.8 per cent and the 10-year Treasury climbed 10bp to a six-week high of 2.29 per cent.  The fear and reality of the downturn in liquidity have unfortunately spread to what was before considered the most liquid bonds in the world.

bondliquidity

NYSE MKT Stocks - ISHARES 20 YEAR TREASURY BOND ETF - 16-Sep-2015 02:42

NYSE MKT Stocks – ISHARES 20 YEAR TREASURY BOND ETF – 16-Sep-2015 02:42

Every seven years is a Sabbath year also called a Shemitah year.  This is a year of rest, just as the seventh day of the week is a day of rest.  Every seventh Shemitah (7×7=49) is followed by a Jubilee year, a year of celebration. This Shemitah of Shemitah’s has also had a Tetrad of four Blood Moons all occurring on Jewish feast days, which has not happened in 2000 years!

During a Shemitah Year, God can raise up nations or tear them down. These raising up or tearing down effect all sectors of a country.  It can effect a countries’ economy and wealth, its military preparedness, its leaders, and the health and wellbeing of its people.

 

Elul is the last month of the Jewish calendar year.  During this month of a Shemitah year, God declares all debts must be forgiven: the financial ledger wiped clean. This forgiving of debts often causes the Stock Market to fall.  The first week of Elul (Aug. 17-21, 2015) the Stock Market dropped 1061 points.

 

Sept. 28, is the last Lunar Eclipse of this Tetrad which occurs on a Jewish feast day.  This Blood Moon will also be a Super Moon meaning it will appear at its largest possible size in the sky. The Eclipsed Super Moon ends setting in the west as seen in Jerusalem, Israel in the early morning of Sept. 28, 2015.
In early October 2015, Brazil, Russia, India, China, and South Africa, The BRICS Nations, will have an economic summit where they plan to set up an alternative monetary standard to the U.S. petro-dollar.  Shanghai, China will be the location of the headquarters of this new banking system.  If the Chinese Yuan becomes the new world standard of exchange, it will have disastrous effects on the U.S. economy.

 

This Shemitah of Shemitah’s year could change the economic global power causing greater shifts in our future.  China has toppled America to become the biggest economy in the world.

 

The US has been the global leader since it overtook Britain in 1872, but has now lost its status as the #1 global economy. The Chinese economy is worth £11 trillion compared with £10.8 trillion for the US.

 

You certainly do NOT want to miss a day without our market updates.  I will do it slowly so you can follow along. This is barley the tip of the Iceberg.

US Government Is Going To Monitor All Your Financial Transaction Very Soon

Ever since Nixon took the United States off the gold standard, the US dollar has continued to lose it’s redeemable for gold or silver. Now, money derives its value purely from faith, a dogmatic faith in our government and the laws of the land.

This no good given how many rights we’ve already lost.

Even as the Federal Reserve tries to maintain control over the physical cash system, various companies (IT giants and financial backers) are hacking at the system, trying to kill it in an attempt to make a ghost of its former self.

It will create a digital ghost, one that would then roam in the new cashless society.

At one extreme are the world’s leading IT giants and financial companies tirelessly working to completely replace paper money with a wireless payment system for the smartphones  Apply Pay set to drive contactless payments up to $300m by 2016, rivaling with Samsung Pay, and Google Wallet, to name a few. On the other extreme are the technology giants such as  IBM developing highly sophisticated biometric systems that create a highly unique personal ID using (do hold your breath) a person’s eyes, fingerprints, face, facial expressions, voice, heartbeat, and more.

The end result is the same: loss of not just paper money, but also plastic money.

It will lead us into a new world order with a cashless society.

It may sound fantastic, and within this cashless system are various traps ranging from loss of our freedoms and rights to leaving a significant part of the society in a tough situation.

Let’s start with stating the cases being made for the cashless society, identifying the proponents, and dissecting the reality of it all.

The Cases for Cashless Societies across the globe

Cashless is gaining momentum. It is often portrayed as an ode’ to progress and development…

Here are the primary cases being made for a cashless society, let’s start with the one’s given by its biggest proponent, the United Nations’ Better Than Cash Alliance who has partnered with  Bill & Melinda Gates Foundation UNCDF, CITI, MasterCard, Ford Foundation, USAID, Omidyar Network, and Visa Inc., and offers the following reasons:

  1. Transparency — In a cashless society where payments can easily be tracked and traced, theft of payments and hence corruption can be dramatically reduced
  2. Security — The money goes where it is meant to. The biggest threat to a digital transaction is the loss of information. Hence in case of the digital payment systems, it is extremely easy to shut down a digital wallet if it gets stolen whereas in case of biometric, your ID is yours alone and very hard to copy.
  3. Financial inclusion — The unbanked of the society will be able to create a record of their timely payments, allowing them to get other services including loans for instance
  4. Cost savings —Digital payments reduce bank processing fees

Apart from these, early adopters have a lot to say about convenience.

There is no doubt about it, the system does offer convenience. Money simply becomes another function of the smartphone, an app that eliminates the need for carrying and protecting cash or plastic money and which allows payments at the touch of your fingers.

If you think the case for the cashless society is becoming longer, then bear with me. Because only from knowing all these “pros” can we see the new methods of surveillance they are establishing.

Now from the perspective of the economy, a cashless payment system will:

  1. Enhance our tax base because the government can easily trace almost every transaction throughout the economy from a centralized location.
  2. It can put down the parallel economy, especially one based on various illicit activities.
  3. Increase GDP and perhaps employment by forcing people to convert bank savings into either investments or consumptions, and
  4. Create an environment where people start adapting cashless and wireless technologies.

Despite how it sounds (an easier and more convenient method of purchasing goods and services) fear is in the air across the globe.

Why?

The Problems with Cashless Society

The risks posed by the new cashless society go far beyond simple loss of money or an inability to use the system.

Yes, let’s not go into the debate that the technology is not perfect, not yet, and that hackers could easily get into it or that your information can be stolen.

It’s more than that now.

Let’s begin “Google Wallet makes it easy to pay – in stores, online or to anyone in the US with a Gmail address. It works with any debit or credit card, on every mobile carrier.” That means more and more information about you is being centralized and gathered at a single place.

As Bill Gates makes a case for cashless society yet again in his 2015 Annual Letter “By 2030, two billion people will be storing money and making payment with their phones.”

And here’s the most alluring part “Already, in the developing countries with the right regulatory framework, people are storing money digitally on their phones and using their phones to make purchases, as if they were debit cards.”

The regulatory frameworks are very important to this debate.

So what happens when the society goes cashless?

  • We Go Greece — in a cashless society, the government loses a robust alternative for paying debts. We’re already observing how Greece’s unwillingness or inability to print more Drachma bills to pay its debt (a precondition for securing the euro loans) has put it on the plank
  • We Face Incremental Risks — The only incremental risk paper money carries with it is physical theft. However, when you move to a cashless society and convert it into bank deposits you not only pay a fee but are also exposed to negative interests, and a substantial loss in case of bankruptcy. I mean, by going cashless we’ll be giving our currency that was backed by the central bank and swap it for a currency backed by the local bank.
  • Consequences for the Retirees and Poor —   What do you think will happen for the people incapable of transacting using plastic money? The retirees who have liquid savings will have to bear a disproportionate costs for holding it in bank accounts, whereas the poor who have no access to the banking system will become dependent (more than ever) on government handouts.
  • Unemployment — What about illegal immigrants? They’ll be out of job creating significant civil unrest.
  • Cyber Risk — The cashless society is solely dependent on electronic forms of transactions, if any form of disruptions occurs, the economy will come to a halt.
  • Penalties and New Regulations — How will the new government mandates for a cashless society be enforced? With a ban on cash transactions right? This implies penalties which in turn means more stringent regulations, compliance costs/penalties, disclosure requirements, and even jail.

But consider how banning cash transactions will affect the position of US dollar as the world’s reserve currency. It will roll the downhill.

This would mean that regulatory frameworks are being implemented on the world. A much different approach than simply forcing it on just US citizens. What do you think the foreigners will think and do with their US dollars?

Dump the bills and flock to the new currency capable of offering the needed liquidity.

It is true that the cashless society trend is rising and at an alarming rate because of its convenience:

Image curtesy of Highcharts.com

Cash seems to be dying slowly.

Countries such as Denmark (which has already become the first developed country moving towards becoming a cashless society and is followed suit by Sweden), the people believe in the system for their security, and unlike us (or the rest of the world) are much less concerned about what the NSA revelations had meant for us.

For US citizens that is the biggest problem.

A cashless society with implanted microchip with a new mode of discipline and monitoring people, tearing what remains of our privacy after various customer tracking technologies have been implemented for retargeting ads and tracking behavior.

With the fast paced lifestyle and faster creation and deployment of technologies, we will soon be at a standoff, where the market itself will only have technologies that offer no other alternative but a cashless payment system.

The United Nations, alongside the Bill and Melinda Gates Foundation, is already moving across the globe wanting societies to forego cash for more virtual transacting. It is playing its trumpet: of a cutting costs and improving transparency.

The stakeholders are already working with the private sectors and governments to create the new market for the new regime.

Here’s a list of the various constitutional rights we’ve already lost, a showcase of the government’s power (including the right to indefinitely detain and assassinate any American citizen without charge).

Now it’s come to a cashless society and near total surveillance using our digital transactions.

With all this said, there are ways to protect our capital, assets, and investments and we can actually prosper from the change if you understand how to take advantage of the system.

Follow My Analysis, Insight and ETF Trades and Prosper: www.TheGoldAndOilGuy.com

Chris Vermeulen

A crucial cycle is presently occurring!

A crucial Shimitah cycle is presently occurring! It is a cycle that was first observed by the Jewish people while living in the Holy Land. Every cycle culminates in a Sabbatical year, (7th year) known as Shemitah; literally translated means “to release.”  This Shemitah 7 year cycle is occurring at the same time that the American economy appears to be “on life support”.

After so much excitement within the last couple of weeks, the markets have been somewhat anticlimactic. Which way will we go? Bullish or bearish? I believe, we are totally CONFIRMED bearish, and expecting a re-test of previous lows. We may even see, within the Dow Jones Industrial Average, a lower low, down around 15,000. Lately, the volatility has stabilized and THE MARKETS HAVE BEEN CONSOLIDATING. The base is about 1,000 points so that when the breakout does occur, I expect a move of about that same size. When I decipher my charts, it looks as though this breakout should happen within the month of September, and/or early October 2015. If it breaks bearish, the news media will likely blame it on the FOMC meeting, and if it breaks bullish, they will, most likely, blame it on the Federal Reserve.

This nation has never experienced six years of hyper-low interest rates before! What impact has this had on the restructuring of the balance sheets of insurers and banks? In striving to match assets and liabilities, across 24 consecutive quarters of near-zero rates, what deception might financial institutions have inflicted (reaching-for-yield through derivative positions) that could backfire, and trigger a financial crisis!

It will result in a strong price movement. If the market thinks honestly, the investment community seems much closer to panic and hysteria than it does to euphoria and optimism. It would not take much more to depress the markets further;  however, it would take a lot to make it feel confident and secure about the Fed’s ability to stay ahead of “the curve” and manage the transition smoothly.

The SPX is very similar, in structure, in relation to the Dow. It appears as if it was ready to complete its triangle formation, but the pattern has continued to expand into a symmetrical triangle.  A triangle normally forecasts a continuation of the trend, which existed prior to its formation; more weakness ahead continues to be the logical forecast. This is also supported by important cycles which should not make their lows until late this September and/or early October 2015.

Since the SPX reached 1,865, it has worked its’ way into a consolidation pattern, which has the appearance of a triangle. If it is a symmetrical triangle, the odds are in favor of a continuation of the selling, after the pattern is completed. This could happen as early as this coming Thursday, September 17th, 2015, when the Fed will announce its decision on interest rates, but since the indexes could also stage a surprise move, in the opposite direction, it is best to wait until we are past that critical period and before hazarding a short-term forecast.

The NASDAQ has a slightly different formation. This one looks like an ascending triangle. Statistically, there is not much difference between ascending and descending triangles. Outside of this triangle formation, the NASDAQ looks like the others do, for the most part. The 100 and 200 simple moving averages have not yet crossed bearish; however, they are headed sideways. I am foreseeing the area around 4,850, as resistance.  Otherwise, I see much of the same signals as the other two indexes.

Global Stock markets had modestly rallied last week, following their most serious dramatic plunge since 2011; which lasted from July 20th, 2015 into August 26th, 2015 (declines of over 15%) which occurred in that brief  five week period within most of the world’s indexes. Some were much worse. The German DAX, for instance, fell nearly 21% within that time frame, and down nearly 25% from its yearly high, in April 2015. The Chinese Shanghai Index plunge was even more disturbing. Prices dropped nearly 45% from their yearly high of June 15th, 2015. Thus, a rally from that first leg down was well overdue, which has now lasted nearly three weeks.

However, the markets’ form has been unimpressive, and more indicative of a corrective retracement within a bear market, rather than the start of a new bull campaign. This week’s highly anticipated Fed announcement of a rate hike, which is due out on Thursday, September 17th, 2015, nearly guarantees that the bullish or bearish argument in equities, around the world, will be revealed. One course would set the indexes on a bullish trajectory and the other on a bearish one.  The rallies off of the lows of August 24th through the 26th of 2015, seem to be losing momentum. Not that they ever had very much to begin with. There have been sharp up days, but, in almost all instances (like last week) they were quickly followed by sharp down days. We are all currently waiting for Dr. Yellen’s announcement.  This should be a rather shocking announcement to hear, globally! If one thinks that some world leaders have been judgmental in their policies and behaviors, then you have not seen anything yet, unlike what you are about to witness now, well into 2016, and even into 2017.

While the stock market appears to be on hold during this week’s Fed meetings, gold and silver were also unimpressive. Gold fell below $1100.00/oz., again, during Friday’s session, September 11th, 2015. GLD should retrace itself down to 100 before any BULLISH/BUY confirmation will be given.  Silver tried to rally above $15.00/oz., but could not do so after Wednesday, September 9th, 2015, and began a retreat down to $14.25/oz. during Friday’s trade.

Bearish trends of this week are extremely potent. They coincide with the Fed meeting this Thursday, September 17th, 2015, which is expected to result in dramatic market moves. These spurts may still be short-lived, but the amplitude, in any direction, is likely to be both sharper and greater than it is, in any given day. Possibly, two or three days.

The Bank of China devalued the Yuan and depegged it from the US Dollar, most likely, because the leaders of China did not want the Fed to raise US interest rates. Higher US interest rates mean a higher US Dollar value. We are still in a global race to the bottom in currency values, as well as we are in the currency wars  zero interest rates policy era of the continued quantitative easing. A rising currency is seen as hurting a nation’s balance of trade. Hence, the unexpected surprise move made by China, has temporarily worked, on a short-term basis. It had paralyzed the Fed’s expected action to raise interest rates. The Federal Reserve has delayed the expected rate hike, until now. If they do not raise their bench mark interest rates, the US risks the possibility of negative interest rates.

I foresee the “hidden signs” that the Federal Reserve will slightly raise its bench market interest rate, which will result in the selling of stocks, following their announcement.

Trade with me and profit from this cycle: www.TheGoldAndOilGuy.com

Chris Vermeulen

A Dirty Game of Numbers

The newest addition of the Bureau of lies’ newest falsified and manipulated document about the employment figures is now out, available for viewing of the ignorant masses. The makers of the report will make sure that they drum it up for the whole world to hear, so that their plans of treachery and deceit stay well on course. Even the mature financial minds at Wall Street will accept it, because they are always in search of positive news to help their financial interests in the market.

TV screens and websites are being used as tools for this grand manipulation with both flashing news that ultimately adds up to one big lie. Here is what the headlines on television and websites read:

The US Economy Added 173,000 Jobs in August Alone

The US’s Unemployment Rate Falls To 5.1%

 

Has anybody noticed? It’s rather unfortunate that the majority of Americans are busy making sense of their latest iGadget, frantically looking to make up their roster at fantasy football, or have just been a victim of the so called Public Education System. They are simply unable (or unwilling) to understand how only 173,000 jobs could decrease the unemployment rate so drastically.

How did this happen then? Well it’s pure and simple, the Bureau of Labor Statistics looks to have blatantly lied. How they do it, they tell the general public who are experiencing unemployment first hand that they (hundreds and thousands of Ordinary Americans) no longer need to work. Convincing many of them that they have enough in their lives with finances that they can live off their assets for the rest of their lives. This all comes down to one word, deception, pure and simple.

Why do they do it, well it is simple, Jean Claude Juncker said to those who are struggling and to our US congressman and politicians, which all have seemingly taken it to heart. He said:

“When The Going Gets Tough, You Have To Lie”

 

Unmasking the Truth

If the Bureau of Labor Statistics really believes that the unemployment rate at the moment is at 5.1%, which they proudly are declaring the lowest since April 2008, why is the interest rate kept at 0% by the Federal Reserve? The Federal discount rate in April 2008 was 2.5% and the economy was only growing at a paltry, 2%. If their numbers are to be believed, the growth of the economy today is 3.7%. If that was the case, the Federal Reserve’s wouldn’t have kept an emergency level interest rate going.

The Survey done by the establishment shows that there were only 173,000 Jobs added in the month of August. But, you won’t be hearing CNBC or Fox telling you that the total number of fake guess birthdates created on spreadsheets only in the month of August was 111,000. We can talk about this in a future article though…

So there have been hundreds and thousands of jobs created, at least that is what they say. That would mean new businesses opening, and old ones flourishing, but the number of businesses closing down is higher than the number of businesses opening which does not jive with the strong growth numbers they are reporting. But the Bureau of Labor Statistics (BLS) does not work with reality that is visible on ground; it continues to make use of the historical data to predict jobs being created.

The reality is far, far from what is being told to you through the media. Instead of creation of 173,000 jobs, 111,000 have been created as hoax, not existing in reality and another 50,000 jobs are being closed as a result of scores of small businesses closing down each month. If the BLS had tried to be truthful, it would have outlined that the total number of jobs that have been produced amounts to near zero.

 

Unemployment Rate Down By So Much…Really?

The government wants you to believe that the state of the country’s economy is taking a turn for the better. That riches in the economy are so abundantly available that 1.5 million Americans have decided to voluntarily drop out of the workforce. And while that was happening, 835,000 American have got jobs, which have brought the unemployment rate down by 0.6% from 5.7% to 5.1%.

And to put it politely, and to sum up the discussion, the number of people in the US that are receiving food stamps is a whopping 45.5 million. I find this number insanely huge. That is like all of Canada’s population plus another 50% with no job, no money, and a bleak future. Scary stuff and worse part is that this number continues to climb.

I think the crash of the US economy is in sight and with all due credit to the Federal Reserve. The more they artificially support the market the harder the crash will be.

Get My Daily Trading Analysis Videos, Trades and Economic Updates: www.TheGoldAndOilGuy.com

Chris Vermeulen

Week of Sept 8th – Market Forecast

For some time now, I have been observing bearish “cracks” appearing within the stock markets. The speed of the market’s drop, during the month of August, came as no surprise to me.

The bear market rally ended last week, after it had a 50% retracement of its initial decline. By Friday, September 4th, 2015, the index was trying to hold on, so as to support that which was created by a critical short- term trend line that had already been violated. The DJIA weekly chart gives a good argument by expressing the view that a bear market may already have begun.

The signs should be very obvious! The prolonged uptrend that ended in a large congestion pattern, and which was followed by a sharp decline, which sliced through three important moving averages (30 week moving average, 90-week moving average and 120-week moving average), simultaneously, violated a 6-year trend line. The momentum indicators are also in a steep downtrend with no apparent sign of deceleration or divergence.

I believe that we should be prepared for an imminent resumption of the decline. Cycles are not due to bottom out until the end of this month, as I have further elaborated in this analysis.

After a long period of distribution selling, which capped a 6-year uptrend, the stock market has entered a corrective phase, which, at a minimum, should result in a significant decline. If the total amount of BEARISHNESS, which has been stored up during the distribution process, is released, it will manifest itself as a lengthy downtrend and reach a price level which is most likely inconceivable to most investors.

We are currently in wave 5 down on the DOW. Then, although wave 5 may not exceed the wave 3 low, due to the fact that they were quite steep (the wave 3 lows), there is a possibility that wave 5 may be truncated. After the wave 5 down is completed, and there is a corrective bounce, to the upside, I expect much lower prices, as explained further, in this analysis. Therefore, we shall remain on the sidelines and hold our current positions, for now.

Non-Technical but Supporting Arguments for a Bear Market/Market Crash

grain-of-saltThis info below is to be taken with a grain of salt. I only talk about it because it falls in line with my technical outlook.

This past weekend´s and next weekend’s updates, are likely to be, the most important ones, of the entire year of 2015. We are approaching the last week of the Jewish year “5775”, and the last days of the “Elul”. The 29th of Elul will fall on Sunday, September 13th, 2015, which is on the same day that we will observe a New Moon and a Solar Eclipse.

Markets are closed on the Sunday prior, but on Monday, September 14th, 2015, (which is the first day of the Jewish New Year) it will be a very critical day within the US markets. This will become a very volatile day for all assets. I believe, we see September 14th, 2015, as the most likely day for a “US stock market crash” in correlation with the Shemitah cycle (as I have extensively discussed in several previous articles). Potentially, this “stock market crash” could become much more severe than the one we had experienced on August 24th, 2015.

The Jewish Year 5776, which begins, on the very day of September 14th, 2015 is exactly 4000 years after what some refer to as the “Year of the Devil”, while others refer to it as the “Year of Lucifer”.

During the next critical trading days, the last trading day of Elul is September 11th, 2015 which corresponds exactly fourteen years after 09/11/2001! I forecast that September 14th, 2015 will become an important closing price swing low for US Index’s and it should also become a strong declining day for stocks. On September 15th, 2015, the SPX is likely to trade lower than it will, on September 14th, during some point of time, but the index’s are likely to close higher. September 16th through September 18th, 2015, will then become BULLISH, and it is my belief that the index’s will invert into a swing high.

The big picture will show that September 14th & 15th, 2015 are the most important turning points for US stocks occurring during the month of the “Shemitah”. Once we hit a low on September 14th and 15th, 2015, as I am forecasting, I recommend that you follow my daily updates.

I believe that there are “hidden signs” that the Federal Reserve will raise its benchmark rate during its next meeting on September 16th through September 17th, 2015. Contrary to popular belief, this will help the US stock market because the bad news will be out of the way. A rate hike is clearly positive, as I project that a rate hike or MODIFICATION to the current rate, is on the horizon. As the Federal Reserve does not publish their upcoming policies, I will call it a “high probability prediction”.

I project along with my forecast, and stating that September 14th, 2015 will become the most important day during this cycle. Possible target prices for an SPX CLOSING price on September 14th, 2015 will be 1833, 1809, 1777, 1718 and 1666.

I expect major volatility, within the markets, to continue for at least the next two weeks, if not longer.

Take Advantage of the Market Crisis and Profit: www.TheGoldAndOilGuy.com

Chris Vermeulen

Lost Treasures of Quebec waiting to be Discovered in the “Eldorado of Canada”

**********OCTOBER 26th – UPDATE***********

This company is called Golden Hope Mines Ltd. I have met with them in Toronto and they are an awesome team, and have a very simple and effect approach to mining their gold. They are going to be a GREEN gold company meaning no mill, no chemicals…. And if they go in the direction I think they are headed they will produce gold must like the guys on the show “Gold Rush”. Just run the pay dirt through the machines and let gravity do the job. It’s simple, fast and affordable and does not require any expensive permits or slow paperwork/approvals.

You can see my special report Below on them which proves there is big potential and the fact that this team has a an X Gold Corp. key employee who knows everything there is to know about gold, mining, equipment, and has the connections to make things happen fast and efficiently has me really excited.

The reason for this email is to share with you the fact that Golden Hope Mines is doing a Private Placement right now meaning you get shares at a discounted price, plus options I would expect meaning if price skyrockets in value over the next couple years you can still buy more shares at this discounted price which can be highly profitable…

If you want more information to get into this private placement let me know and I can connect you with the right person at Golden Hope Mines.

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A few weeks ago I shared some information about Golden Hope Mines which is a small company I recently purchased shares in. They have been active in the Beauce Region and have been very successful with their Bellechasse-Timmins Deposit and Champagne zone. Now Golden Hope is in the gestation stage for the next epoch of gold production in the Beauce Region.

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Fifty years before prospectors invaded the Klondike, the Beauce Region of Quebec became the home of Canada’s first gold rush, discovering two of the largest nuggets ever found in the country.

In 1835 the first gold nuggets were discovered in Quebec in the Beauce Region. In 1846, 20-year-old Clothilde Gilbert was crossing the shallow, sandy river later known as the Gilbert River when she noticed a shiny, yellow rock about the size of a pigeon egg. This turned out to be a 2.5-ounce gold nugget. By 1847 the first alluvial gold is mined in the Beauce. Many times prospectors have claimed to find the source of this gold, but to this day it still eludes their keen senses for the elusive yellow metal.

Just like that, gold fever spiked again. People came to the area from across the United States and Europe, and nearby Saint-François-de-Beauce became a boomtown that would eventually be known as the “Eldorado of Canada.” A railway line was even built through the town and connected the region to the industrial and transportation hubs further north, which brought more eager gold-seekers.

Robert Kilgour found a nugget weighing 52 ounce on the north branch of the Gilbert River, a tributary of the Chaudiere River in 1866. Another 46 ounce was found in the same area by Archibald MacDonald. And in 1877 the Boissonneau brothers discovered a 42 ounce nugget.

In total, an estimated 1.5 to three tons of gold came out of the Beauce region during this gold rush, half of it from the Gilbert River.

In 1988, geologist Michel Gauthier completed a data compilation that recorded a total of 3 tons of gold which were extracted from rivers of the Beauce region by placer mining activities that took place from 1847 to 1912. Although a few scattered gold occurrences have been found in the region to date, the source has yet to be discovered.

Golden Hope Mines
GNH:TSXV
7.06 million shares outstanding
www.GoldenHopeMines.com

For More information on Quebec’s Gold Rush see:
http://magazine.cim.org/en/2015/May/mining-lore/Quebec-gold-rush.aspx

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In the Beauce Region there are a few active juniors, but only Golden Hope Mines Limited has a 43-101 compliant resource with many multi-ounce drill hole intersections.

Golden Hope Mines, a Toronto based mining has discovered gold in Beauce

Here is an interview with Golden Hope Management team ith Kerry Lutz on the Financial Survival Network:

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Back in 1990, Golden Hope attracted St. Genevieve Resources to spend $2 million to earn an option of the property. From the December 17, 1990 Northern Miner, “Golden Hope Resources continues to uncover high-grade veins as it strips back overburden from the Bellechasse deposit southeast of Quebec City. Sampling four shear zones within a 300×300-ft. area on the 88 zone, Golden Hope encountered several quartz veins containing visible gold and ranging up to 193.8 oz. per ton”

After a limited five hole drill program in 2003 conducted by Golden Hope, a joint venture was entered into with Osisko Exploration, which permitted Osisko an earn-in of up to 60% on the Bellechasse claims, then comprising 80 contiguous claims of 1969 hectares (4866 acres). However, the connection of Osisko to the Bellechasse property actually began many years before.

In 1993, a graduate student at Queen’s University submitted his Master’s Thesis on the Bellechasse gold deposits; he’d been doing work on the project since 1988. That man, John Burzynski, more recently Vice-President of Corporate Development at Osisko. Earlier, in 2003, he became VP Exploration for Osisko, just after Osisko and Golden Hope entered into the previously mentioned JV agreement. In June 2003, Osisko published a 43-101 compliant Technical Report on the Bellechasse deposit, and proceeded with staged drill program beginning in July of that same year.

In July in 2004, Golden Hope reported that the joint venture had been dissolved, and all claims had fully reverted back to Golden Hope. The termination resulted from the failure of Osisko to fulfill both its financial and technical obligations under the terms of the Agreement of May 21, 2003. It was in 2004 that Osisko got their opportunity to explore and then develop their Malartic project, and it’s kept them rather busy in the meantime.

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Back 100% in the hands of Golden Hope, exploration continued in including more drilling and bulk sampling. Below are some highlights from the 2011-2012 drill program from the Bellechasse-Timmins Deposit that has a the 43-101 compliant resource.

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Activity was essentially dormant for the periods 1994 to 2002, and again from 2013 to mid-2015. For the last three years, gold has been in a bear market. Money has been close to impossible to find for both majors and juniors. The Bellchasse-Timmins Deposit has had little new work completed on it.

Golden Hope is now ready to relaunch with a revised share structure (less than 10 million shares out) and some added technical strength to its board. Without question, the district contains multiple Bellechasse-Timmins type deposits. To Golden Hope’s credit, they have kept expenses down to an absolute minimum. The potential for Golden Hope is very high but they will need money and top-notch technical people. And I think they have the people, now they just need the working capital. Welcome to the “The Klondike Beauceron” and Golden Hope Mines.

I plan to spend a couple days on the property to see the results and do a little gold panning of my own as its something I have always wanted to do. I will shares photos and videos if it happens!

FREE Hidden Gem Stock Picks: Click Here

Chris Vermeulen

Round Two Of Global Melt Down – Watch This Unfold…

Within the United States, the US Federal Government and The US Federal Reserve Bank interventions have failed.   These manipulations, by the central bank, in order to maintain the current stock bubble, and the real estate bubble, are currently reflecting the acts of failed monetary and fiscal policies, as we are presently experiencing.

The reality is that the US economy has already been in contraction for many years now.

The government intervention is failing in Europe, Japan, and now apparently also in China.  Government interventions globally are currently becoming more vulnerable The US, Europe, Japan, and China have all been experiencing failures.  We are currently witnessing the results of total failures, right under our noses.  I believe, we are closer to that point of the Global Financial Meltdown than anyone else may realize.  This collapse in China is a major shock, which has triggered a major market sell-off within the US markets.

Over $2 trillion has been lost in the U.S. market alone within the past week of August 24th through August 28th, 2015.  Globally, I estimate $5 trillion has been lost, in total, during the same time period. A domino effect has been caused by affecting economies globally rippling all simultaneously.

We are currently deal with the unspoken deflation problem.  Commodities prices and oil are down sharply the past year. No major economy looks even close to true real expansion.

What is taking place right now, in the stock market, is just a precursor for what is about to happen, shortly.  This is my view of foreseeing a pre-crash, and I believe that we should all be aware that this is looks to be the “real deal” and could occur take hold in more serious way before the end of October. This seems to be a bubble of historical proportion.  Raising interest rates today is impossible because the market is way too fragile, at present.

We are experiencing times, as we have never before experienced in our life time. This will cause us to experience a major shift with in our culture, our civilization, our social lives and our belief systems to some extent.

The rally in gold is going to be stupendous. Gold will be the strongest currency in our future or at least for a few years as the Great Financial Reset takes place. The SDR (Special Drawing Rights) in which, I have written about in past articles, is nothing more than an index of currencies.  In 2015, it will not be able to provide liquidity within the global markets, as it provided during the 2008 bear market.

The stock market has been experiencing a technical oversold rebound following its steep drop.  Major damage has been done, and the stock market clearly remains BEARISH. The stock market decline was so extreme, that stocks rose as they” backed and filled” last week.   When this volatility is over, the situation will become even graver, as the bear market will stay in force for many months to come.

The Fed’s role, as the custodian of the world’s reserve currency has ultimately failed, as it has ignored its responsibility to the World. Bond-buying has allowed the U.S. to levitate asset values, even though it has failed to stimulate the real economy.

There are currently over $500 Trillion in interest rate derivatives. THEREFORE, how can the FED ever be expected to raise interest rates in a meaningful way? I don’t believe they can!  I see the FED currently working on QE 4 into Infinity!!

Legitimate buyers of US Treasury Bonds have largely vanished. There has been a huge decline in official bond holdings and purchases by our typical traditional former allies; China, Russia, Japan and the BRIC countries have actually turned into net “sellers” of US Treasuries since 2011.  This created what could have been a huge financial disaster for the Federal Reserve, to whom they were selling large amounts of US Government securities, in order, to absorb the excesses in the market place.

They continued to expand their largest and most secretive Ponzi scheme, in history, to include Belgium, Luxembourg, Ireland, The Cayman Islands, and Switzerland.  The US Fed is using currency swap arrangements to secretly serve as a backstop liquidity facility, with the above mentioned countries.  QE is being exported through a secretive global integration process by using several front offices, which are under their control.  It involves permanent reciprocal currency arrangements, whereby these foreign central banks have been given large lines of credit, by the US Federal Reserve Bank, in order that they can purchase US Treasuries. The manipulation of the central banks of Belgium, Luxembourg, Ireland, The Cayman Islands, and Switzerland have been used to keep these purchases off of the balance sheet of the US Federal Reserve Bank. These manipulations have been a new proxy entity that have been designed, solely for this purpose.  This undisclosed “systemic risk” is being spread to secondary nations, without the benefit of knowledge to the general investing public, throughout the Financial World. This will come to be known, as what I believe to be, the Greatest Fraud perpetrated on the American public taxpayers.  It will be the systemic failure that will totally bring down our current existing global financial system.

Central banks around the world have entered into a multitude of bilateral currency swap agreements with one another since the financial crisis of 2007.   These agreements allow a central bank in one country to exchange currency, its domestic currency, for a certain amount of foreign currency. The recipient central bank can then lend this foreign currency on to its domestic banks, on its own terms and at its own risk.  Swaps involving the U.S. Federal Reserve were the most important of all the cross-border policy responses to the crisis, helping to alleviate potentially devastating dollar funding problems among non-U.S. banks.

The swaps have been used by central banks to obtain foreign currency to boost reserves and to lend on to domestic banks and corporations.  These swap agreements are designed to protect both central banks involved due to fluctuations in currency values. There is risk that a central bank will refuse or be unable to honor the terms of the agreement.  Currency swaps is a meaningful sign of trust between governments.

QE is not a stimulus, but rather a death sentence of the US Dollar.  This will bring about the return to the “GOLD TRADING STANDARD”. With my Predictive Trend System Analytics, I shall immediately inform you as to when the bottoms of Gold and Silver have been CONFIRMED, at which time, you will be able to start purchasing these two precious metals, at historically low prices.

Quantitative Easing was implemented when the US Federal Government and the US Federal Reserve stepped in and manipulated monetary policies, in order for them to levitate asset values. This was to artificially increase asset prices and enhance the wealth effect.  They were trying to postpone the inevitable crash that we are currently witnessing.

There has not been any economic growth since 2007. This perpetrated fraud will bring down the whole western financial system, and ensure its future devastating collapse.  I currently envision the Petro- Gold and the new “Scheiss Dollar” to become a new vision.

Thus, the Global Currency Reset; the new “Scheiss Dollar” will be launched.

S&P 500 Monthly Chart – 7 Year Cycle

The SP500 index (US Stock Market) has now officially exited its up trend. It can be argued that the stock market is either in a stage 3 topping phase or a stage 4 decline. Either way, it’s not good for buy and hold investors.

The major trend line on the chart below has been broken in a big way. The AlgoTrades INNER-Market Analysis tell us to be sitting pretty in cash, or short the market so you can profit from falling prices over the next 6- 18 months.

I do fear a global economic collapse is possible which I talk about in our ETF Trading Newsletter – TheGoldAndOilGuy. In August we started investing in funds that will rise as the stock market falls in value. If you need help with this be sure to check out that newsletter.


S&P 500 Quarterly Chart – BIGGER PICTURE

This chart I feel provides a great perspective on the overall market trend and price patterns. This is the 70 year historical chart. I hope something like this unfolds. Fingers crossed to a nominal 12 month correction/bear market. This will build a new base for the next super cycle.

US Dollar has now reached the upper resistance trend line… we could see weakness in the dollar going forward… Keep in mind this is a quarterly chart, lower prices may still be a few months away.

Stock Market Rises with Fewer Stocks – RED FLAG

Since mid 2014 the US stock market has become move volatile. Fewer stocks participating in the markets move up. This can be seen by comparing the percent of stocks trading above their 200 day moving average and the S&P 500 index.

Last issue I stated “Once the stock market comes to a complete stall it will drop violently.”

What we saw from August 20 – 24th was the break of the bulls back… The market always has a way to keep average investors bullish and left holding the bag of overprices stocks when the music stops. The market could very well rally here and test recent highs or possibly make a new high to be sure investors remain bullish to buy into the next wave of distribution selling.

 

INNER-Investor Monthly Conclusion:

The months of July and August were incredible months for our automated trading systems as you can see from our recent results. The frustrating part is that it takes some time for us to move and integrate this improved system into the platform to trade everyone’s account. Our trading system has done incredibly well during on the toughest market conditions we have experienced in years, users of our system did not have these trades executed in their accounts as that starts/started on September 1st 2015. It is tough watching all this money being made day after day and the trades are not executed in our users accounts, but the good news is that our systems are live and trades will be executed in users accounts now!

The stock market typically falls 3-7 times faster than it rises, which means we can make more money, and make it faster during a falling market then we can make from a rising market. Now that the trend has turned down we should be off to the races with outsized trading gains once again.

The simple solution to profit from this market is to become a user of our Automated Trading System so these trades are executed for you, allowing you to enjoy the finer things in life like spending time with family, friends or your own business.

Chris Vermeulen