Computers can't hear you scream when stocks collapse
Should the ‘little guy’ start buying stocks? This question is being posed by pundits on financial-casino channels like CNBC who apparently feel sorry that individual investors (who are still down 45% from the net worth levels robbed during the 2008 crisis) aren’t ‘participating’ in this rally.
The question is backwards. The question should be, if the public is not investing in stocks how are stocks trading at all-time highs?
Buyers in stocks come from several sources; companies buying back their own stock, mergers and acquisitions, institutional investors (like pension funds) and algorithmic trading bots - that constitute over 85% of all trading on the New York Stock Exchange.
Do you see what I see? Stocks are trading at all-time highs because computers are buying stocks for other computers; funded by borrowed money lent to them by government computers - kept artificially cheap - thanks to central bank’s computers keeping a lid on interest rates at ½%
Unless you are a bot, or a drone, this is not the time for individuals to be buying stocks. This is the time for individuals to buy Gold, one of the best performing asset over the past 12 years, set to continue outperforming for another 12 years.
There’s never been a better time to buy Gold. The money supply (and supply of debt) has never been higher in either America’s 238 year history or in Britain, going back to the time of the creation of the Bank of England in 1694.
Computers are pushing prices for bonds and paper currencies higher despite this historic moment of unprecedented increased supply: an economic impossibility that can only occur - as it is now - via massive, coordinated market manipulation by governments and their computers. The price of Gold and Silver - during this period of record shattering global demand - has been trading down. Again, an economic impossibility that can only occur via massive government intervention using computers programmed to override price discovery.
Don’t get caught up in the hype of the recent Dow Jones spike. Remember that up until just a few months ago shares in Warren Buffett’s Berkshire Hathaway, despite all the recent hype, has been ‘dead money’ (no price gain at all) for a decade. Apple and Google are higher, but the NASDAQ is still about 2,000 points beneath the high it reached in 2000. Stocks have been going sideways for more than a decade even though the government in the U.S. has injected more than $16 trillion in fiat currency coupons to bailout thieving 'banksters' and corrupt politicians.
Getting back to Gold, adjusted for the increase in money supply, Gold is now cheaper at $1400 than it was at $500. That’s right. There are exponentially more uncollateralized Federal Reserve Notes (aka US dollars) electronically circulating through the dying beast known as the US economy now relative to the supply of Gold than back when Gold as at $500, while debt has increased by hundreds of percentage points and wages are up less than 1%. Margin debt (the money that is borrowed to buy stocks) on the New York Stock Exchange is at an all-time high. The global debt and derivatives pile recently topped $1 quadrillion.
The only buyers of stocks are computers who are buying for other computers. And when the market crashes again as it most certainly will, the computers won’t really care much.
Remember, on the stock market, when High Frequency Trading wipes out your net worth; computers can’t hear you scream.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.