SP500 Stock Market Crash No Depression Followed

Without government corruption and intervention, dynamism or recovery would return to the markets in all forms

The housing prices would sink to the required level for clearing the market. Somewhere in the neighborhood of 1-2x the average take-home salary of a two family household which I think is slinking around $60k pre-tax, and around $48k after tax. That leads to average home prices between $50k – $100k, requiring a further 30-40% drop from where we are now. Dropping that much more is unlikely with the government owning the market essentially for mortgages. The most depressed areas are already experiencing such drops with shadow housing inventories kept off the foreclosure rolls, that would otherwise further sink the average housing price to the market clearing level.

With government intrusion, the dollar will continue it’s downward trek in value until the sheeple finally convert out at the last moment into tangibles. Either that, or the China and Russia tag team might shove the diminished greenback off the forex ledge, then government’s power for intervening will crack along with the illusion of wealth and prosperity we have all grown accustomed to. Thing eggs splattering on a hard floor of reality for the image of the dollar crashing.

The other possibility, though dim, is actual revolutionary conquest by the forces for freedom within the U.S.

This may shape up as a surprise passage of the Ron Paul bill for auditing the Fed. Then a firm and invasive audit of the Fed’s corrupt system will have to be carried out by the G.A.O. and all the dirty laundry aired, along with trials, jail time, and destruction of the corrupt Federal Reserve system. Entertaining, productive, and exciting as this process might be, I also think it incredibly unlikely. Wish I could believe that peaceful methods could restore order for this generation and destroy the monopoly bankers and their fake wealth.

The unfortunate fact is that only force will stop the evil force pervading the system.  This makes the depression stock market and commodity market prediction involve the variables of government intrusion, revolutionary push-back, and eventual economic stagnation.

Predicting Depression for the Stock Market and Commodity Market

1. Both the stock market and commodity markets will see closures before or during 2012 because of some form of violent disruption.
A. U.S. government created fake terrorist attack within the U.S. is very likely.
B. U.S. government sponsored attack on Iran, Pakistan, etc. could launch a larger scale conflict with Russia, China, or their allies.
C. Conflict with Tiawan against China, or even the former Russian satellite states.
2. U.S. secession or revolution movements begin evolving into violence with the offensively attacking police forces, or military of the U.S. government or federalized state, city, county governments. Pittsburgh’s G-20 meeting showed this in process.
3. International banker government bodies such as the U.N., New World order tools will be employed against the U.S. economy and citizens, possibly shutting markets down and turning to a new currency.

Generally, stock markets world-wide will be bad places for preserving or enhancing wealth. Productive farm land will be a better place to invest but outside the U.S. perhaps.

Intermarket Relationship for Gold to USDX for Stock Market Crashes

As the above Zeal chart shows, gold prices glitter with a dollar crash in the form of the USDX. Nearly a perfect long range correlation between gold prices rising and the dollar sliding. Profits are greater than the inflation slide in the dollar value. Meaning, prices generally are not rising with the gold price though that will eventually change. Jim Rogers of commodity billionaire fame believes that while gold will tag $2000 per ounce, other commodities are a better value. I could not agree more.

Eventually, general commodities will soar way beyond their inflation adjusted peak because of the global ice age that is already here.

The SP500 still has legs to run, even if it might look more like a wobble than a sprint. With $2 trillion or so in cash sitting in funds who have itchy “buy” trigger fingers , there is plenty of fuel for more liquidity excitement above today’s price of perfection.
Gold prices have stretched their legs above the moving averages based partly on rumor and less on the fundamentals of the True Money Supply and credit contractions. Perma bull speaking here, so I cannot be painted with the gold hater brush like Dennis Gartman, or anyone else talking down gold prices from the $1000+ shelf.
Fortunately, I bought in early enough that all the gold moves are still in profit territory. My hope is that anyone reading this is in this same boat riding the gold profit rapids with me.  There will be a floor put in, because China and Russia and the OPEC countries are nailing the gold price much higher than when fundamentals alone levitated gold at $800+.  Now the Sovereign Funds can keep gold prices anywhere they want them, so long as it is north of $800 per ounce. My best guess is that gold will sustain above $900, before it sees its’ next high in the $1200 area.

Where is the Gold Price Floor?

Soon though, we  will all discover what that floor is. Within a few months, end of Q2 10 at the latest, gold, as well as most of the commodities and the general markets, will be sucked into a liquidity vortex. Then the current floor for gold will be defined. Not the current low point for the U.S. stock market, nor even commodities, just the wide swath of stocks that have been relentlessly marching higher along with the king of coin, the mother of money, the magical monetary metal, the ruler of all who do not possess it, the fever producing mother lode: GOLD.

After this washout, then will be a great time to buy gold. It will not be the time to go short the market. Too late for that. Unless we buy a short fund and can sit tight for even 6 months or more, going short has fools gambit all over it.
Inflation will begin in earnest as Bernanke and the other Banksters pump liquidity in biblical proportions.

Just as Robert Precter begins looking 100% correct, the mask will come of the true intent of the Central bank swindle: destroy the constitution, destroy the currency, destroy the country.
Depending on how the brewing revolution unfolds, they may not get a hat-trick. All up to us.

Why Buy Gold Now?

Buy gold now for the safety of it, not the profit. Buy gold now so you have something left over after the conflagration of the stock market, bond bubble, and currency corruption runs the due course.  Buy gold today, and tomorrow, and future tomorrows only if you understand that buying gold is not a profitable move from every point forward, though it is never a fully money losing move. Never.  Buy gold for sanity. Do not buy gold for selling gold later at a huge profit.

Buy gold for solvency because that is the one promise gold has always kept even while floundering on delivering a fortune, it has delivered from the depths of impoverishment that fiat currencies always promise, and always lead to.

Markets are staying steady. That is a recipe for a big downside surprise in this environment.  Put options hedging for all markets anyone?