Friday, March 15, 2013

Hedge All Bets – Silver Update – Collapse of Empires

Fantastic-4 image-2

From an Elliott Wave perspective, the big bullish bet for newcomers into the Silver market rests with the prospect that the 2012 low of $26.07 marked a fantastic (4) wave-basing opportunity. Despite the impulsive rocket launch to the $35.44 level last October, the market has been trending lower ever since. Recently, the market briefly dipped beneath the last common Fibonacci retracement level noted at the $28.07 mark.

Silver 3-14-13 update

The modest move higher from last pivot low of $27.96 appears corrective thus far, suggesting that lower lows remain plausible.

Back in December of last year when silver was trading north of $32, we shared a downside price-target window for wave “2” down between $29.61 and $26.65. Since then, price has breached halfway into the belly of that window, and remains there, currently hovering just north of horizontal support/resistance near $28.37.

Despite the persistent downtrend, the move down from the $35.44 pivot high is clearly corrective, suggesting that a sustainable and tradable low may be near at hand. The downward pattern is taking the form of a falling wedge, which is typically a bullish formation.

If the recent low at $27.96 terminated the “e” wave of “2” down, we should soon witness the commencement of slow, steady, and relentless rocket launch to the upside, which may or may not look back upon speeding past our standing upside price target of $47 dollars per ounce.

Should the current downside correction complicate further, another up/down sequence is likely to finish it, completing a “double-three” corrective pattern ( a,b,c,x,a,b,c ) for wave “2” down. Amid such complication, price must not breach the standing low of $26.07 or else all bets are off for a 2nd wave down.

Until silver is able to sustain trade and closes north of $31, prospects of reaching the working downside price target noted at $26.23 remains quite possible. If upon a retest, price does breach the standing low of $26.07, wave “2” down is off the table, and such lower lows shall then become replacement candidates for the fantastic (4) terminal.

Given all of the technical and fundamental evidence in our view, opportunity remains ripe for the continued accumulation and acquisition of physical silver. With that said, one should still consider…

Hedging All Bets

Happy Hedgehog

In market lingo, we all know about the nature of bulls, bears, and pigs, but surprisingly, no reference to Hedgehogs, which could be associated with the prudence inherent in “hedging” one’s bets and long-term investments.

Bulls win and lose fortunes, bears win and lose fortunes, slaughtered indiscriminately are the pigs, and it may be said that hedgehogs remain solvent and profitable with strong hands throughout.

Whether you prep, stack silver, hoard cash, or invest in stocks and bonds, it is never a good idea to go “ALL-IN” in any one thing.

A far better approach to consider is making certain that you have all bases adequately covered in order to prevail and prosper amid any potential future outcomes – good, bad, or ugly.

Uncertainty is Afoot

Although unequivocally flawed, the fraud of debt-base paper money, along with the associated assets and values it deceptively measures, is likely to remain forcibly imposed for far longer than any of us could possibly imagine.

Until freed from its total enslavement, it is impossible to dismiss debt-based paper money and all that it currently values and accounts for. Although we can and should seriously consider opting-out of the fraud to every reasonable extent practical, there is simply no possible way of totally walking away and breaking free from the forcible imposition to transact in this god-forsaken currency system of perpetual bondage.

Though we can make compelling and educated guesses as to why, how and when a great monetary reset may occur, the truth is, no one knows.

When in Rome

The decline and fall of the Roman Empire took four centuries to unfold. As such, it is reasonable to consider that the decline and collapse of the Anglo/American Empire may or may not occur in our lifetimes.

Given the undeniable conditions that persist, the withdrawal pangs of entropy are well underway, and are likely to manifest in a multitude of varied iterations over the next several years and decades.

In any event, the only thing certain is that uncertainty shall continue to reign. Prospects for long-term stability and broad based societal optimism, abundance, and prosperity are slim at best.

Given this harsh reality, do not bet the ranch on an impending collapse, and do not dismiss the resiliency of a corrupt global debt-based money system – no matter how loudly it screams PONZI-SCHEME and inevitable mathematically assured failure.

Whatever you do, don’t be fooled again, and hedge like you’ve never hedged before.

Unrest in Public Square

The Austrian School Take on the Collapse of the Roman Empire

From Wikipedia: Historian Michael Rostovtzeff and economist Ludwig von Mises both argued that unsound economic policies played a key role in the impoverishment and decay of the Roman Empire. According to them, by the 2nd century AD, the Roman Empire had developed a complex market economy in which trade was relatively free.

Tariffs were low and laws controlling the prices of foodstuffs and other commodities had little impact because they did not fix the prices significantly below their market levels.

Enter Inflation

After the 3rd century, however, debasement of the currency (i.e., the minting of coins with diminishing content of gold, silver, and bronze) led to inflation. The price control laws then resulted in prices that were significantly below their free-market equilibrium levels.

It should, however, be noted that Constantine initiated a successful reform of the currency which was completed before the barbarian invasions of the 4th century, and that thereafter the currency remained sound everywhere that remained within the empire until at least the 11th century - at any rate for gold coins.

According to Rostovtzeff and Mises, artificially low prices led to the scarcity of foodstuffs, particularly in cities, whose inhabitants depended on trade to obtain them.

Government Losing Control

Despite laws passed to prevent migration from the cities to the countryside, urban areas gradually became depopulated and many Roman citizens abandoned their specialized trades to practice subsistence agriculture.

This, coupled with increasingly oppressive and arbitrary taxation, led to a severe net decrease in trade, technical innovation, and the overall wealth of the Empire.

Bruce Bartlett traces the beginning of debasement to the reign of Nero. He claims that the emperors increasingly relied on the army as the sole source of their power, and therefore their economic policy was driven more and more by a desire to increase military funding in order to buy the army's loyalty.

Rome Burns

Economic Collapse

By the 3rd century, according to Bartlett, the monetary economy had collapsed. But the imperial government was now in a position where it had to satisfy the demands of the army at all costs. Failure to do so would result in the army forcibly deposing the emperor and installing a new one.

Therefore, being unable to increase monetary taxes, the Roman Empire had to resort to direct requisitioning of physical goods anywhere it could find them - for example taking food and cattle from farmers.

Civil Unrest

The result, in Bartlett's view, was social chaos, and this led to different responses from the authorities and from the common people. The authorities tried to restore order by requiring free people (i.e. non-slaves) to remain in the same occupation or even at the same place of employment.

Eventually, this practice was extended to force children to follow the same occupation as their parents. So, for instance, farmers were tied to the land, and the sons of soldiers had to become soldiers themselves.

Roman Soldiers

Opting Out/Walking Away

Many common people reacted by moving to the countryside, sometimes joining the estates of the wealthy, and in general trying to be self-sufficient and interact as little as possible with the imperial authorities.

Endgame = Feudalism

Thus, according to Bartlett, Roman society began to dissolve into a number of separate estates that operated as closed systems, provided for all their own needs and did not engage in trade at all. These were the beginnings of feudalism.


History has numerous valuable lessons. Unfortunately, too few understand these lessons, and too many dismiss them. More profound is the total lack of proper education relative to the critical and existential importance of such lessons.

Life is a series of measured risks. All autonomous or coerced decisions made by individuals are nothing more than purposefully assumed risks carrying varying consequences and rewards at every level of magnitude.

To every extent practical, for most, the balance, timing, and nature of such decisions should be simplified and well hedged, especially in an increasingly complex world of conflicting information/propaganda overload.

Just as the astute insure their wealth with relevant apportionments of precious metals, and just as its prudent to be otherwise prepared and fully aware, so too is it necessary to maintain a certain level of tactical and select exposure to traditional financial assets. At present, in far too many realms of endeavor, we have no choice other than transacting/investing in traditional financial assets.

Unless you have amassed an extraordinary level of wealth that allows you to swing for the bleachers with a large all-in bet that you can comfortably afford to lose, too much concentration in any single asset class, theme, or conviction can place you in a rather uncomfortable box if things do not go as generally anticipated.

In closing, keep an open mind; be aware of all discernible truths, and follow your own rational logic in adequately hedging all of your life’s most critical bets.