Do You Support "Individual Freedoms"?...

Then guess what - according to a study done by a West Point "Think Tank" funded by none else than your own taxpayer money, America needs to be warned against you and those like you! Think I am making this idiocy up? Read the following link:

http://www.washingtontimes.com/news/2013/jan/17/west-point-center-cites-dangers-far-right-us/

Yes, instead of studying the tactics of Islamic terrorists or digging deeper into the brilliant strategies of Alexander the Great, Genghis Khan, Julius Caesar, Hannibal, etc., what apparently is the now pressing need of US military officers is how to deal with all those folks who actually subscribe to something called "A Bill of Rights"!

My goodness, this very phrase, "Bill of Rights" is terrifyingly dangerous now is it not? It sure as hell closely resembles that dangerous belief cited in the study as "individual freedoms" YIKES!

Here in a nutshell is the conclusion that this nonsensical study has come to... are you ready? Here it comes:

LIBERALS/PROGRESSIVES = GOOD
CONSERATIVES              = BAD

It wasn't enough that the left has taken over the schools and institutions of higher learning and used those to spread its political correctness lunacy. One would have thought that at least the military academies would be immune from this. Apparently not.

Wake up folks.... the day appears to be coming sooner than many of us expected where even allegiance to the basic freedoms and rights prescribed in our Founding documents is enough to make you an enemy of the state.

Yes, if you cherish individual liberty, limited self government and a system of Federalism as laid out in the Constitution, you are now included in the same class as those who would advocate a violent overthrow of the US government.

Commodity Complex Showing Signs of Life

The following chart of the Continuous Commodity Complex or CCI, shows a downtrending channel that has held the complex for the last several months. In November of last year, the index broke through the 50 day moving average and remained ABOVE it for more than a week before succumbing to selling pressure heading into the end of last year.

Early this year it was trading below both the 50 day moving average and the 200 day moving average. As of today, it is now back above both and is also nearing the downsloping line that marks the top of the trend channel. It is no surprise therefore to see SILVER looking very strong on its chart right now especially with the very bullish patterns on the platinum group metals showing no signs of abating for the immediate near term.

Were it not for the weakness in the grain complex this morning, the CCI would be right on that line at the top of the channel. Let's watch this action very closely as it will indicate whether these incipient signs of life in the commodity complex are the beginning of a period of sustained upward trending moves across this sector.

Keep in mind that in spite of the massive injections of liquidity by the Central Banks of the WEst (I include Japan in this category), commodity prices have heretofore been rather unresponsive. The reason has been that traders were initially more fearful of a global slowdown than they were of any inflationary result. Based on the jobless claims number this AM here in the US and data from other global regions, that the slowdown fears are receding and growth expectations are solidly in place. In other words, it appears that for now, the Central Banks have won the battle over deflation.

So what does this mean for commodity prices? Simple - based on the charts, and the action in the interest rate markets (more on that later), traders are speculators are beginning to transition towards the growth play (RISK ON) and away from the slowing global growth scenario (RISK OFF).

Watch that solid blue line that I have marked as RESISTANCE near 575 - 577. If this index pushes FIRMLY past that line, we will know that the price of wholesale commodities in general are going to begin a sustained rise higher. This should further unleash bullish forces in the precious metals but especially in silver compared to gold.

With this in mind, take a look at the chart I have constructed below. It is a ratio chart comparing the level of the S&P 500 ( a broad view of the US equity markets) to the level of the US Long Bond. I use this as a type of indicator to help me discern where money flows are heading and whether or not speculators have an appetite for risk.

Notice since late in 2011, the trend has been in favor of equities over bonds. Yes, there have been periods within this trend where RISK has been out of favor leading to money flows out of equities and back into bonds, but the trend is pretty solid. What I wish to point out especially however is that the ratio is accelerating and has been since late spring of last year. It has increased even more sharply since fall of last year. Any wonder why the equity markets are shooting higher? Hot money is flowing into equities at the expense of bonds all in anticipation of GREATER RETURNS in this ultra low interest rate environment.

In this light, can you understand why we now have a top in the US Long Bond? As mentioned in a post a while back, I would be surprised by a RAPID, SHARP DROP in the long bond as the economy is certainly not strong enough to sustain any pressure from rising rates. At the same time however, I expect to see a SLOW GRADUAL GRIND LOWER which will accelerate as the impact from all the liquidity created by the Fed's QE programs begins to gather steam and inflation expectations increase.

I want to also emphasize that I expect significant difficulties to arise once the Fed attempts to unwind its balance sheet. Personally I am beginning to wonder if they are ever going to be able to do so?

Note on the chart that bonds have fallen to major chart support but managed to eke out a return above that level and are currently holding. However, their rally off the level looks weak. Watch out if this support level gives way on a weekly basis close, as it will entail the definitive shift away from deflation fears and shift the balance of power to the hands of those looking for inflation as the next worry.

Once such an event occurs, I would anticipate a solid move higher in silver in particular.

Quiet Day in Silver

Not much in the way of upside for Silver in today's session but not much to the downside either before dip buyers came in. The action is suggesting more of a pause in a market that is attempting to gather enough force to take out the overhead barrier. You can see that level marked on the chart as RESISTANCE.

Bears will be in trouble if this level gives way and especially if the 50 day moving average gives way.

Downside support lies first at this week's low near the $31 level followed by the 200 day moving average near $30.65

RSI is tracking sideways but remains above the previous peak, a friendly development.

Well Done Governor Perry

Statement by Gov. Perry on President Obama’s Executive Actions

Wednesday, January 16, 2013  •  Austin, Texas  •  Press Release

 

Gov. Rick Perry released the following statement regarding President Obama's executive actions:
"The Vice President's committee was appointed in response to the tragedy at Newtown, but very few of his recommendations have anything to do with what happened there.

"Guns require a finger to pull the trigger. The sad young man who did that in Newtown was clearly haunted by demons and no gun law could have saved the children in Sandy Hook Elementary from his terror.

"There is evil prowling in the world - it shows up in our movies, video games and online fascinations, and finds its way into vulnerable hearts and minds. As a free people, let us choose what kind of people we will be. Laws, the only redoubt of secularism, will not suffice. Let us all return to our places of worship and pray for help. Above all, let us pray for our children.

"In fact, the piling on by the political left, and their cohorts in the media, to use the massacre of little children to advance a pre-existing political agenda that would not have saved those children, disgusts me, personally. The second amendment to the Constitution is a basic right of free people and cannot be nor will it be abridged by the executive power of this or any other president."

http://governor.state.tx.us/news/press-release/18060/

It All Begins in the Public Education System

If you want to know why or how this nation can have raised a generation that is so appalling ignorant of its own system of government, a system of checks and balances designed to prevent any one individual or institution from lording it over the people, please read the following quotation.

"[A]bout a hundred years ago, Professor John Dewey of Columbia University came up with a very different conception of education -- one that has spread through American schools of education, and even influenced education in countries overseas. John Dewey saw the role of the teacher, not as a transmitter of a society's culture to the young, but as an agent of change -- someone strategically placed, with an opportunity to condition students to want a different kind of society. A century later, we are seeing schools across America indoctrinating students to believe in all sorts of politically correct notions. The history that is taught in too many of our schools is a history that emphasizes everything that has gone bad, or can be made to look bad, in America -- and that gives little, if any, attention to the great achievements of this country." --economist Thomas Sowell

Let's take what any citizen/patriot understands - the United States is NOT A DEMOCRACY. It never has been nor should it ever become one. The Founding Fathers despised democracy which they regarded as nothing but RULE BY THE MOB. Being the students of history that they were, they had learned the lessons of the city states of ancient Greece and were thus determined to prevent such a system of government from developing here in the new nation that they were constructing.

As I mentioned in a previous post - one of the fears of the Founders was the TYRANNY OF THE MAJORITY. That is why they gave us a system of checks and balances and a separation of powers within a REPUBLIC, based on a system of FEDERALISM - The fact that this is not widely understood nowadays is a testimony to the ignorance of this generation.

Here is the pertinent clause in the US Constitution:

Article IV, Section 4

The United States shall guarantee to every State in this Union a Republican Form of Government, and shall protect each of them against Invasion; and on Application of the Legislature, or of the Executive (when the Legislature cannot be convened) against domestic Violence.

Note well - it does not guarantee the States a DEMOCRATIC Form of Government.

It many cases it is not the fault of the teachers but rather the school boards and the administrators which dictate what can and cannot be taught in the classroom. Based on what we see in today's society, the teachers' unions, school boards and administrators have raised a generation of dupes. If we want to take back our nation from the grip of those on the left who would impose their version of utopia upon the rest of us, then we had better start looking at what we allow our children to be taught and even more importantly, make the time to get involved in their education.

They are our children and the future of our nation; not wards of the state to be indoctrinated against our own values and traditions.

Silver Builds on Previous Gains; Nears Breakout Point

Both silver and gold are moving higher today as they add to gains made in yesterday's session, gains which I might add, tremendously improved the technical chart picture for silver.

See the chart posted yesterday evening in reference to silver but note also the following chart detailing the strong move higher in the Continuous Commodity Index.

It is closing in on its 50 day moving average which closely corresponds to the level near 565, the line marked, "initial resistance" on the chart.

As you can see, since September of last year the entire commodity complex as a whole, has been trapped within a defined downtrending channel. This is important to note because it has enabled the idea that the Fed's easy money policy are not proving to be inflationary, to gain credence. After all, if wholesale prices of basic commodities are trending lower, it is difficult to make the case that an inflationary episode lies just around the corner.

This latest move higher in the index must therefore be closely monitored as any change in the technical posture of this chart, will be the first sign of inflationary pressures beginning to surface in the economy at large. If, and this is a big, ""IF", the index pushes past BOTH resistance levels noted on the chart and breaks out of the channel, especially if it clears the region near 578, expect to hear increased chatter about inflation. This should especially benefit silver, which is much more sensitive to inflation pressures than is gold, or least has been if recent past is any indication.

Quite frankly, I have been a bit surprised that it has taken so long for the sector to see much in the way of money flows, especially with the equity market moving so strongly higher on the thesis that the global economy is recovering. If it is, especially in the case of China, then commodities as a whole would also benefit under such a scenario. Throw in the fact that a Yen Carry Trade, or even a Dollar Carry Trade, could easily be used by aggressive hedge funds to leverage themselves up to the gills once again to try to take advantage of the ultra low borrowing rates to fund such a carry trade, and the ingredients for a rally in this sector should seemingly be coming into vogue.

Moving back to the silver chart, it pushed through the 200 day moving average in yesterday's trade but instead of falling back below that level, it has added to gains and is now threatening a  breach of what has been tough overhead resistance near the $31.50 level. If it takes that out, it will make a try at the downtrending 50 day moving average just shy of the $32 level.

The RSI looks good as it has pushed through the peak made in that indicator coinciding with the first push to $31.50 at the beginning of this year.

Incidentally, the Platinum group metals are both putting in strong performances today; this is helping silver as it tends to feed into an impulse to buy industrial metals.

Gold is strong today as it works towards its overhead resistance first near $1685 but more specifically near the $1696 level. That level also happens to be where the falling 50 day moving average comes in. Expect some opposition to the metal if it makes it to that point.

Gold needs to put a handle of "17" on itself if it wants to get any excitement going in terms of sparking some short covering and more momentum oriented buying. If it does, all of those fresh hedge fund short positions that were added below $1650 over the last two weeks will be in serious trouble.

Response to Texas Secession Requests Settles Nothing

I found the White House official response to the Petition on its website requesting that the state of Texas be allowed to peacefully secede rather comical.

Invoking Lincoln, as if to lend credence to its dogmatic denial, settles nothing.

First of all however, before I get to that, I wish to state that no state need ask "permission" to secede. Secession in and of itself, is the last resort of free people whose unalienable rights are no longer respected or protected by a runamok central government - Such a government which regards itself as superior to any document limiting what it can or cannot do according to that founding document. Take away that right, and no people can be said to be truly free for what you have in effect created is a FORCED/INVOLUNTARY UNION from which no man or woman can ever hope to be separated, irregardless of any future circumstances or chain of events which might arise in the future.

Does any rational individual believe that under such circumstances, those who are the oppressors would graciously accede to any "request" from the beleagured citizens to depart? Hearkening back to the time of Israel in its bondage in Egypt, , one might just as well have expected Pharoah whom when COMMANDED, not requested by the Most High, to let His oppressed people go free, stubbornly refused.

The response to any "response" from the central authority is taken directly from the founding document of these United States.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, --That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

Appealing to Lincoln and his warped vision of such a thing as a "perpetual union", settles nothing in the matter. The South was subjected by force and brought back into the union against its wishes. We might as well argue that had the British defeated Washington's army at Yorktown and captured his officers thus ending the war, that the attempt by the colonists to "declare their Independence" and "secede" from British authority was also null and void. Force only settles one thing - that a governing power bent of crushing the unalienable rights of its citizens can and will succeed given enough force of arms even thought it may be resisted.

The whole idea of a Constitution creating a system of Federalism with limited power to the Central Authority and checks and balances upon the three, co-equal branches of government, was to prevent the TYRANNY OF THE MAJORITY. The Founders well understood that a purely democratic system of government would eventually fail to secure liberty since the ultimate outcome of such a system would be the permanent subjection of the rights of the minority to the whim of the majority.

Unalienable rights are God-given, meaning that they cannot be infringed upon by government. Indeed, government exists only to SECURE or PROTECT AND MAKE CERTAIN, these rights are not violated or transgressed.

Here then is the main difference between those on the left and those on the right. The left wishes to create their version of utopia here on earth. The right believes that while a well-ordered and peaceful society is the ultimate purpose of any government, here, in a fallen and sin-corrupted world, no utopia is possible. Given the nature of men, steps must be taken to ensure that they never hold sufficient, unbridled power with which they can usurp these unalienable rights.

The left, in its attempt to create its paradise, takes whatever steps it deems necessary to bring it about, EVEN IF IT MEANS PUSHING ASIDE GOD-GIVEN UNALIENABLE RIGHTS. You see, a large part of the problem with the left is that many are either agnostic or are true secularists. (As an aside - there are some who are agnostic who still understand something about human nature and thus liberty and the need to preserve it from governmental overreach but such are few and far between.)

This poses an immediate clash with those of us who believe in a God, a Higher, Supreme Power, to which all men must answer and who is the bestower of certain rights. If there is no God, no Hgher Power, then the very idea of unalienable rights derived from Him becomes an archaic, utterly meaningless concept.

I will go so far as to declare that many of the left see the state in the role of God, the Higher Power, to which all must submit and that it and it alone is that which dispenses "rights" to the citizens or subjects. It may thus grant or withdraw any such rights that it grants depending on that which it aims to achieve. This is why you will see constant attacks on the Constitution by those who hold it up to ridicule as outdated or insufficient to deal with our modern times. The simple fact is that it stands as an obstruction to their grandiose schemes.

What happens however when the check on power which the Founders built into the Constitution is pushed to the very edge or even disregarded? What are free men to do when their own central government begins to whittle away at their unalienable rights all in the name of achieving some leftist nirvana (income equality, equality of outcome instead of equality of opportunity, reduction of violence, free medical care, etc.)? What are they do to if their voices are no longer heard nor represented in the halls of power in a far away district? What course can they take if they find themselves in the MINORITY now subject to the whims of a ruthless majority which feels no restraint upon its quixotic quest for an earthly paradise?

The answer should be as "SELF EVIDENT" as it was to the author of the Declaration of Independence who deliberately chose those words to describe a sacred truth - namely - they have a right, nay a duty, to cast off such a government, separating themselves from it and pursue that system of government which can best secure those unalienable rights.

This is what secession means and why those in power will always detest, despise and condemn it. I have said it before and will say it again - the FORCED UNION of Thomas Jefferson and Karl Marx is doomed to failure. One side will eventually vanguish the other as there is no common ground between them both. It is best to let them both peacefully go their separate ways.

Silver Chart

Silver finally managed to get a close above that stout resistance level at the $31 level. On a day  in which the platinum/palladium group metals were all moving to the upside, it is refreshing to see the grey metal finally going along for the ride.

The ideal technical price action now would be to see additional upside movement up and away from this level without surrending its gains and falling back down below $31 again. Even at that, you can see the very short term uptrend that has formed in silver over the last week+ of trading.

A sharp push now through the $31.50 level will spark some decent short covering and serve to bring in new momentum based buying.

We will see if silver can do just that.

Downside support remains slightly above the $30 level.