Fighting the Demons

While the Bank of England's actions yesterday morning are not repetitive of 2008, per se, in terms of Bear Stearns, then Fannie Mae/Freddie Mac, followed by the great fall of Lehman Bothers, it does indeed rhyme with 2008.

In other words, my view is that we are not only headed into a deep, consumer-led recession with corporate profits plummeting into 2023, but we are also in the early stages of a sovereign debt criss for the developed economies. 

Consider all of the bad debt from 2008 which was not washed out to sea like some Viking ceremonial burial but rather transferred onto the ledgers of taxpayers and Central Banks as liabilities. At some point, that all comes home to roost. And inflation is the great kryptonite which sets the crisis in motion. 

At some point, likely in the final act of the crisis, the world finally sees the true value of gold as a currency which has stood the test of time, pre-dating Ancient Egypt as recognized currency. Yes, crypto may very well have its place, too, and I am not going to dismiss its out of hand. But gold wins in the very long run, as history has told us time and time again, for good reason--It has intrinsic value and is far more immune to the dark side of human nature than fiat currency has been, even for republics and empires which consider themselves above or impervious to the fatal flaws of prior civilizations. 

In the end, we all suffer the same fatal flaws as a civilization. 

And so the Bank of England trying to fight the "demons" of finance by preventing several pension funds in the U.K. from going belly-up yesterday may actually be the demons themselves--Transferring more liabilities to taxpayers in due time and putting another dent in public trust of both markets and banks. 

Gold miners are showing some relative strength this morning, as one of our Members flagged. The GDXJ, ETF for junior gold miners, below, on the daily chart, is flattish as I write this as the broad market gives back most or all of yesterday's gains. 

If we do knock out a broad market range into early Q4, I am warming back up to gold miners, for the first time in many, many months, as a long swing trade above $29 on GDXJ as an initial rejection by the market against central banking bailouts and demons.