If you have seen any of David Attenborough's excellent nature series, you have seen this phenomenon repeatedly occuring in the animal world. Wildebeest crossing a river in huge numbers while the crocodiles literally lie in wait. A huge ball of herring or sardines all striving to get into the middle while predators attack the periphery. A ring of elephants with their babies in the middle staring down a hungry pride of lions. Safety in numbers is real, and in many facets of existence, it works. If there is only one of you surrounded by three hungry predators who want their dinner, you're in trouble. If there are one thousand of you, your individual chance of not ending up on the menu is greatly enhanced.
But safety in numbers doesn't work in a situation in which the numbers are imaginary, although the danger is all too real. It doesn't matter how many people "believe", or pretend to "believe", what they are told about a given situation. It doesn't matter whether that situation is literally putting their lives at risk or if it is "merely" putting what they have spent their lives working towards at risk.
If the false information is accepted, either out of ignorance or (much more often) because it seems "safer" to believe it (because everybody else seems to believe it), the situation is MUCH more dangerous than it otherwise would be. When it comes to political or economic phenomena in the human realm as opposed to real, immediate and direct threats to life itself, the majority is almost always WRONG.
They are wrong because it is a tragic fact of history that most people would rather go along with what they think others think than make the unpopular and lonely effort to think for themselves. Charles Mackay described this in the title of his famous work "Extraordinary Popular Delusions and the Madness of Crowds". But the sad fact is that popular delusions are by no means "extraordinary". They are much more the rule than the exception.
There are large numbers of knowledgable, erudite and undeluded commentators both on the internet and even in the mass media who are starting to become pretty strident in their denunciation of the fabrications being trotted out in front of the "electorate" by those in political power. "Nobody believes Bernanke's 'green shoots'!" "The US employment numbers for July are delusional on purpose!" "Wall Street is living in a dream world!"
All true enough, but beside the point. A person who truly believes that all that is necessary to procure a prosperous and "growing" economy is to borrow and spend cannot be helped by any rational argument. Neither can a person who truly believes that in the unlikely event that such an economy should experience a "liquidity crisis", the solution is to borrow and spend multiples of what was borrowed and spend in the past. The fact is that this is the essence of modern economics, the essence of what has been taught - as gospel - to three generations. Politically and economically, it is holy writ.
To question such economic and political orthodoxy is heresy. We who do so are heretics. The ones who do so by ridiculing the entire situation by exposing its essence are the worst of all. If you want to expose a folly, take it literally. The most devastating exposure of the Bush Administration's absurd search for "Weapons of Mass Destruction" in Iraq was a one liner by a US comedian: "They don't need to look for them, they've got the invoices!"
If you want evidence of the fact that such heresy is spreading, in the US and elsewhere, consider the current attempts by the Democrats and Mr Obama himself to deflect cogent criticism of their "health care" policy by attributing it to the "lunatic fringe". Heretics are lunatics. The REAL ones go much further than attacking a patently absurd policy with an even more absurd "price tag" as calculated by government. The REAL ones challenge the basic premise upon which the entire tottering edifice is constructed.
The financial crisis is and always has been inevitable. No financial system can be built on quicksand. Without a viable money, it cannot stand. There is no viable money in the world today. There are no unencumbered markets in the world today. There are no unbreachable safeguards to individual freedom and liberty in the world today. Economic and political orthodoxy does not recognise the concept of a sovereign adult individual human being who owns his or her life and accepts responsibility for his or her actions.
Those of us who ARE adults, be we 9 or 90, must be heretics today. That means preserving, protecting and defending our right to our own individual lives and everything that is precious to us in living our own indivdual lives. We will say it as long as we have the breath to get it out. Gold (as money), Freedom, Liberty, Prosperity. These are indivisible. Outlaw one and you outlaw all.
Isn't it refreshing to see that this heresy is slowly - but surely - spreading?
(Chart appears here in original analysis)
A new low was hit on the chart when spot future Gold closed in New York at $US 705 on November 13 last year. This pushed the chart two "Xs" below the $US 715 support level established in late October and equalled early in November. Then came the first big turnaround - and upturn on the chart - of November 14. The region between $US 700-720 firmed as SOLID support for Gold. That support "zone" was emphatically confirmed as Gold rose by just over $US 110 between November 13 and November 28 last year.
On February 20, as you know, Gold made it all the way back to its previous all time highs. But it did NOT break through the $US 1000 barrier. Since then, Gold retreated to just below the $US 900 level in three moves down. What is being traced out on this chart is a gigantic "reverse" head and shoulders formation. The trading range between $US 900 and $US 1000 was broken early in April. Over the month of April, a tighter range between $US 870-910 was established. Gold went straight up on this chart for six weeks - from the start of May until early June. The close below $US 955 on June 9 turned the chart down. Six weeks later, Gold falling just below the $US 910 level. Last week, we had the upturn we've been waiting for on this chart. And this week, despite all the frenetic action during the week, the chart has not budged. The question now is how much longer will the right "shoulder" of the immense reverse head and shoulders on the chart last.
We began the table below in 2007 and have extended it into 2009, even though Gold in all four currencies in the table remain well above their 2006 highs. The all time highs for Gold which occurred in 2008 have remained intact in US Dollars and in Yen.
But in terms of the Euro and especially the Aussie Dollar, the situation is very different. Gold hit new all time highs in both currencies on January 30 with situation being duplicated by Gold in terms of MANY other currencies. On February 20, those highs were taken out when Gold hit $US 1000. They were not taken out when Gold hit $US 1000 again in May. Right now, Gold in US Dollar terms is much closer (about 5 percent) to its all time highs than it is in terms of any other major currency..
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