Trader Note

Avoid position on Releases (Price moves FAST).


Texas-exit will be the next indicator of a loss-of-confidence.


A market crash occurs when there is a lack of confidence in markets. In 1929, they called it Black Tuesday, but it really started much earlier. There was an initial shakeup earlier in the year that was bid up so that it wouldn’t become a complete collapse. Then there was a hiccup on the Thursday that started the slide. This move lower continued until it bottomed on Black Tuesday with no buyers coming into markets.

In modern markets, prices are constantly bid to keep markets from collapsing. Central banks are printing money at an alarming rate. They are buyers of bonds to the point that yields are negative, which for a normal investor is a waste of time. It is better to just sit on cash than pay to NOT have access to your money unless you are a central bank or required to hold bonds. Many corporate bonds are being scooped up in this same buying frenzy. This has allowed corporations to print bonds and then buy shares of their own companies to fatten their pockets (CEOs get massive bonuses from higher share prices).

It is possible that the central banks and corporate buybacks have created a market place where there are no more investors. In a market of only bankers, a big move will have to have a strong catalyst. If it was normal investors, it could be rumor and innuendo to move lower. This is how a normal market should function. However, if the entire market is big buyers with no care about losses mixed with HFTs sitting between you and market, then a collapse will need to shake them both.

For such a collapse, it would take a big event, like an EMP which would wipe away many computers and collapse the grid. A failure of the real estate market would also have that impact because these big players do not have the reach to buy all of the potentially failing properties. A meltdown in the 100 Trillion dollar derivatives market would be so large a bailout would be impossible. Such a derivatives failure would take banks and their insurers and every deal they have their fingers into. A failure to deliver on the precious metals market would create a lack of confidence that would cause a central bank scramble for gold. So there are many places that a failure could occur.

Timing failure is the next challenge.

I believe that a failure in the UK property market will be a starting point. This will happen when the real estate funds open up again for redemptions. After the lockup, only a foolish investor would leave their money in the fund when the potential for massive losses is so great. This means that these funds will be dumping properties to try to cover the withdrawals. When people are leaving your business forever, then the fund managers probably don’t care how much money they lose. So after losing 20%, if markets track to a 50% loss, then the fund managers can just call it timing loses and move on. Such a loss will flow on to every investor and creditor in such a market, especially when coupled with a failing pound sterling (which cannot even buy half an ounce of real sterling silver anymore).

Americans can be isolationists. USA markets have been the place that money flows when other countries in the world are in turmoil. Thus, a loss of confidence in the USA would likely have to accompany any major move elsewhere in the world.

With elections coming up, that may happen. I think Trump will win, and that will be an awful thing to happen to USA politics because it will prove that facts and policies do not matter. Trump is more likely to get the USA into a war than Hilary. Hilary is more likely to be impeached while in office. I wish more Americans would vote (only 40%), rather than just the highly motivated fundamentalists. The two party system is failing, but Americans don’t realize that they can vote for other parties so the status quo will be maintained. In the USA, this election may see the general disillusionment of the masses vs. the ruling elite.

Texas may finally leave the USA, after getting a nice border fence to Mexico. Alaska and Main would follow, with Arizona failing to get the votes. Puerto Rico might finally get to be a state, to fill an empty slot on the flag of 50 stars. Texas would probably take Oklahoma with them, too.



Texas is bigger than half of Europe with more oil and cattle. If they wanted to be independent then their economy would still outperform most European nations. As Texas repatriates their gold, a secessionist vote becomes more likely. Texas has been trying to be independent since the 1880s, so maybe now is the time for them to finally leave.

Independence worked for the UK, didn’t it?

Loss of confidence has already occurred with the general population and government. Once the general population realizes that those pieces of paper in their wallet ARE the government, then they will have lost confidence in the currency. This will require pegging currency to some item like gold. If the USA did that, as the old gold standard of ounces vs. currency in circulation then the gold price would be over $50,000 per ounce. Perhaps the USA will just use a petrol-dollar peg like $100/gallon petrol because the whole nation seems to be very dependent on their cars.

Hedge your trades accordingly buy putting some money away in physical gold. Don’t bet on your bank account surviving a calamity. Don’t expect your currency to survive a loss of confidence and eventual peg to some REAL item. If you live in Austin, you might want to move before the Tex-it.

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