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GATA is a beacon away from the financial swamp, not a stock picker

Section: Daily Dispatches

By Michael Ballanger
Wednesday, August 5, 2015

Last night I was moored in a tiny pocket in a part of Georgian Bay called Port Rawson Bay in about 10 feet of crystal-clear fresh water, with huge pines and cedars around the shoreline and rocks jutting 40 feet out of the water but without a cell phone or Internet signal, and that was scary. (Almost as scary as the legions of mosquitoes that blanketed the mesh screens that separated us from them, thanks to hockey socks stuffed into holes in the canvas and citronella candles that the little bastards detest.)

It was unusual at first but after about three hours with the brightest full moon illuminating the water with a glorious and almost haunting sheen, I decided to dig up my old iPod, where I had stored a bunch of audiobooks. I sat and sipped a fine pinot and listened to "When Money Dies" by Adam Fergusson, written in 1975, which provided an incredible account of the Weimar hyperinflation of 1921-1923.

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I had read it twice before but last evening, with no distractions other than the mournful loons calling each other, I came across a passage that I want to share with you:

"What really broke Germany was the constant taking of the soft political option in respect of money. The take-off point therefore was not a financial but a moral one; and the political excuse was despicable, for no imaginable political circumstances could have been more unsuited to the imposition of a new financial order than those pertaining in November 1923, when inflation was no longer an option. The rentenmark was itself hardly more than an expedient then and could scarcely have been introduced successfully had not the mark lost its entire meaning. Stability came only when the abyss had been plumbed, when the credible mark could fall no more, when everything that four years of financial cowardice, wrong-headedness, and mismanagement had been fashioned to avoid had in fact taken place, when the inconceivable had ineluctably arrived."

Think about the "constant taking of the soft political option in respect of money" and "financial cowardice, wrong-headedness, and mismanagement."

Here is a magnificent book written 40 years ago about the abuse of fiscal power that sent extremely wealthy families into ruin and despair because of the blatant destruction of "currency," and those sentences above describe exactly what we have been living since 2001.

When you are in the northern part of the southern part of Canada, where Mother Nature truly runs the show, you are humbled. If you have even a minor breakdown (which I did), you are immediately instilled with terror: You have no one to call; you have nowhere to go; and you have nothing to bail you out. You are at the mercy of the weather and your own ingenuity and whatever courage you can summon.

No light, no heat, spoiled food, and bugs everywhere, but the very experience of finding a way by rigging a battery from the port engine to the systems engine so you can get the lights on and rowing to shore in a kayak to build a fire so you can fry up the big pike you caught using the spoiled food as bait -- well, it is at once as humbling as it is important.

We have all been through a nightmare since 2011 and after reading Bob Moriarty's assault on GATA the other night --

-- I was immediately overwhelmed with the concept of the term "grave dancing." I don't know Bob well but I think I can call him a friend and as much as I was a tad taken aback by his piece, what hit me was the inaccuracy of his premise.

For me GATA is not nor has it ever been a stock picking Internet site; it is not a market-timing tout sheet; it is not a financial blog.

GATA is, at least for me, a beacon -- and a wonderfully simple, uncompromised, independent light that began to shine on one thing and one thing alone: the constant taking of the soft political option in respect of money.

On this point GATA is undeniably on the money.

Further, has anyone in the financial blogosphere been more emphatic than GATA's Bill Murphy and Chris Powell in highlighting financial cowardice, wrong-headedness, and mismanagement as they pertain to the way central bankers and their political bum-boys have "managed" things since 1998? Multiple bubbles, flagrant violations of the rule of law, bailouts, bail-ins, TARPS, QEs, ZIRPs, and massive manipulations in all financial markets, all intended to protect the upper tenth of 1 percent of society from one thing: accountability.

So when I forgot to check the three marine batteries in the boat and had a power failure the other night, I could not get down on one knee and beg the Georgian Bay Congress for a "rescue package." I had to get in the dinghy, row to shore, build a fire, cook that bony pike, get eaten by mosquitoes that could be superstars in the Calgary Stampede, row the food back to the boat, and feed the family. It's called accountability, and the price was paid.

I just wish the Pest Protection Team could have saved my tender flesh from the onslaught of mosquitoes just as the other PPT stick-saves the billionaires from even a 10 percent haircut on their precious portfolio of NASDAQ start-ups.

I have no charts to provide tonight; I have no "actionable ideas," to use the old stock-flogging phrase of one of the big retailers a few years back. I have no doubt that in terms of time, we are at a major bottom in the precious metals markets. But as you have seen, if you are early in this game, it is just the same as wrong because at the end of all parabolic moves (up or down), when they go vertical (think Shanghai), you are near the end of the move.

Shanghai completed a vertical up move in June; had you shorted it in March, you had bleeding eye sockets by May. If you had the U.S. Treasury meeting your margin call and survived the drawdown, you are now up.

Gold and silver are now meeting all the parameters of a vertical down move, but that is only in terms of the X axis, time. The Y axis is price, and since we don't have the U.S. Treasury as our sugar daddy, we have to trade only in the cash market and cannot use leverage. Eye sockets that bleed are no fun, especially when your eyes were taken out eight months ago and the blood bank won't even let you back in the building.

One last point: When you think of the cretins who are managing markets these days, all you have to do is look at this:


Michael Ballanger is a market analyst based in Toronto who specializes in mining. He writes frequently for GATA Chairman Bill Murphy's

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