Wednesday, November 30, 2011

Its your money, or what do I do when the bank pays next to nothing

This is reprinted from my blog "ITS YOUR MONEY TODAY" and deals with the stupid returns we get from banks on our savings and how to combat that situation............Its about a year old but the situation just keeps gettting better.........

Whats in your Treasury ?

Top coin is the American Eagle with Walking Liberty on the front.                         The next coin, under the banknotes, or greenbacks, is the CANADIAN SILVER MAPLE.               Under that is the MEXICAN LIBERTAD.                  The American and Canadian's have been minted since '86 & '88 respectively.       All of the coins are ONE OZ. of  PURE SILVER, within everyone's economic reach.                                                                                                             
Well you could ask:  " Whats in your wallet ? ", like the Credit Card commercial, thank  you Capitol One.   I would more ask what do you keep in your family treasury?     Further, contemplate this:  " How much interest have you made since 1986 ?"   How do you provide for your family?   How do you hedge ?         Federal Reserve Notes?  Bank of Canada paper money?                                                                                            SAVING $10 per week since 1988 in the form of Silver coin.
Which would have yielded  your family greater wealth and protection, saving paper or saving silver? 

American Eagles and Canadian Maples
back  in the day 
sold for silver price + coin premium.               

Since you could own them legally as savings anchors for your family, you need realize that they now go for $22 & $23 respectively including the coin premium. Author Note, Today we speak of Maples and ASE's in the 35-40 dollar area, at local coin shops.

Since interest rates have tended downward during that time, to approach ZERO on any funds deposited while all your basic items purchased increased in price, as the value of your Federal Reserve Notes stayed static,  you would have been at a terrible economic disadvantage only holding banknotes, greenbacks or cash.

Saving for something, means, IMO,  you must save something of value to later have the value that  you were saving for.  If the price of what you were saving for, increased faster than your savings value, it would have been moving backwards economically despite the increasing numerical value of your savings.
SO THE REAL TRUTH is NOT "DONT LOSE MONEY", the REAL TRUTH is "DONT LOSE VALUE".

So if you had a $10K Certificate of Deposit, denominated in Canadian or US dollars in 1990, it would have bought you 2000 American Silver Eagles or Canadian Silver Maples.  Today, that same certificate would buy  you 444 of them, so the value of your savings would now be about 4.5 times greater than where you started.  Lets compare compound interest.   Had you had $10 K on deposit, over the same period @ an average of 5% compounded it would have returned 2.7 times its face.

In reality, you must ask  yourself what kind of risks you take, when offered "Deals" on savings.  I do think the real value is in thinking for yourself.

Inflation ? HyperInflation ? CRACK-UP BOOM ! ! !

Inflation - Grocery, Hardware Store, Auto Shop MY INDEX

 
  Ok, lets look. Last night I thought I'd find equivalent Laptops down in price from 2 mo ago. WRONG, UP, prob due to Chinese Yuan pricing.  OK,   now to to snow tires,  Not quite double from 2 yrs ago.  Car Battery ->  On sale, $87.  Whats wrong with that pix?  3 yrs ago, I thought $59 was outrageous.   Hardware store, nails to hang pix, $4 bux, double 2 yrs ago.  Wifes clothes shopping, up about 20% for the same items NOT on sale at Walmart.  MY INDEX IS UP.  Oh grocery store ?  You dont want to talk about that or go there, no way Jose.  Remember when wheat spiked and came back down HALFWAY ? -> Look at your bread prices now.  Buy some beef, pork or chicken and see what you think.
 
  Now I know we are told these are "Temporary" Increases, but the problem is that I am paying for them with fiat that PERMANENTLY leaves my wallet, so  its permanently distressing to my budget.
 
  Lets see:  these are some of the groceries and products that I know have gone up, from buying them on periodic basis:
Honey
Maple syrup
Cream
Motor Fuel
Motor Oil
Firewood
Tim Horton's
McDonald's
US Post
Canada Post
AA & AAA Batteries
Dollar Store items
Benadryl
Ibuprofen
Cut Flowers
Purolator Courier Svcs
Cucumbers
Books at Chapters.
 
   Now my friends, I know this is all TEMPORARY, but so is human life, so how do we deny we have inflation in what we buy to sustain our lives on a daily basis ? ? ?

Let me burst your and a lotta other Peeps bubble about Technical Analysis

  and that includes Guru's and Spewers and some many leeches in this business.
 

" In fact, if T/A had the ability to forecast the PM Manipulation , I would probably use it .. but it doesn't. "
 
  Technical Analysis can no more forecast the markets, than a dolphin can tell which way your boat turns before you turn it.   Let me say it again,  Technical Analysis can no more forecast markets, than a dolphin can tell which way your boat turns before you turn it.   Quote me on that each and every time  you wish, please !!
 
  What I do with Technical Analysis, in just a few forms of its infinite variations is DETECT CHANGES.     Changes in any number of measures you , yes YOU can create using formats like I did in the previous post, which I then use to attempt to figure out what time it is in any given stock or market.  As you have seen me divide the qualities ascribed to two kinds of oscillators,  in another division of labor it is the job of Fundamental Analysis to attempt to set scenarios of what MAY happen if various fundamental situations come about, A, B, C, et cetera.  
 
    So what I attempt in my TA is Detection, then assessment, then determinant.  You and I know if it is spring, things grow easily.  We know what crops grow in the winter.   It is no simpler than that, and anyone who attempts to portray that it is so, IMO, is a charlatan. 
 
  Like John Wayne, (Marian Morrison) said : "Life is tuff, tuffer if your stupid", to which I add, and worse yet if your lazy.

Apologies, but I can start out with a chart I like, showing what I watch

When I bumped into LQD it was using it as a second part in a two part Liquidity Measure

 
  and over time, I found it useful to track money representative of that which comes in and out of the  money, oft on a cyclical basis.  So its LQD, and here is the link to its Yahoo Profile  LQD . IT tracks the price of Investment Grade bonds in an I-Shares configuration.  So I use it a lot as a base measurement.   To help me track the flow of money into and out of LQD, I use the measure known as Chaiken Money Flow, whose definition can be found here  -> CMF here on the Stock Charts.Com site.    The third item I use building this chart, is Mr.Nasty©, or $NASI which for lack of a better description is the 39 DMA of the cumulative advances and declines of the NASDAQ  market.  It is often described as being composed somewhat different but that it is the  39 DMA of advances minus declines ( breadth ) is the short answer.
 
  On the chart below, we have the SLOPE(20 periods) of  CMF of LQD plotted with the actual LQD price as Invisible , so you can develop a sense for how fast or slow the inflow of funds is coming into or ebbing from LQD via the CMF.
I have to give credit to an assistant of mine, simply observing that the CMF was like the blood pressure of a stock, so therefore, the SLOPE is kinda like the Green Line on the screen of the oscilloscope that beeps when you flatline.
 
Since $$ are the precursor of volume, and volume tends to drive price, these measures while directly linked to market moves, have variable lead times.  To track  how these inflows or outflows impact the more general market, I use Mr.Nasty©  as a background check, lead time considered to see if we have direction right.  Thus as  you see I have also used the SLOPE(BLUE) for MR.NASTY© ( RED dashed half-tone line), with the BLACK line of the LQD CMF SLOPE showing us how fast or slow the money was coming into or out of  LQD.
 
       Bascially these guys are in formation, going down but entering a space where they slow down previous to changes or reversals.   The phrase I remember and work with is "Neutrality Pre-Sages Change" and so I look for places where neutrality is manifesting and reversals can begin to appear.
So this is the kind of "SIMPLE" Chart that I like that conveys a lot of information, and the interpretation is pretty straight up -> When the money flows back into the market, LQD goes up and the rest of the market will likely go up as well. Here is where I look for changes if and as they occur. 
 
   So, combined with a bunch of other charts, this is how I am developing the feeling I want to position for this market, both Gold and Silver Miners as well as others, before it actually goes up. I get to be early at times but I am ok with that.............

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