Cognitive Dissonance and The Markets

Okay. It’s not my term (cognitive dissonance) but I like it. Dr. Jim Willie has used it in reference to what he believes to be malaise and the failure of 90 per cent of us who are failing to connect the dots in respect of the current shift underway pertaining to the economic “reset”. In his August 4th interview with X22 Report Spotlight, Jim metaphorically and substantially and endearingly refers to dialogue with his father as being someone as part of the 90 per cent group. As a music hobbyist, I’m familiar with dissonance as being a sound which clashes within a key and I relate to its contextual use. Jim displays noticeable frustration by those who have difficulty seeing the implications of events simply as they are with perhaps the luxury of not having lived through the great depression. One particular example of dissonance is official government statistics of inflation compared to your neighbours street feel assessment of inflation. 

At every turn in the news right now we are inundated with the political bizarre and I can’t help but wonder if folks have become so distracted with the Washington drama that they’ve been numbed by potential underlying distress of the financial system.  Consider this. Is it possible that there is actual good work going on in Washington unbeknownst to you and withheld from you because of the larger implication of crisis which could unfold should you be notified? Have you been prepared by your system of education to understand risks inherent to the financial system? If the system is in fact at risk and the risk has grown, what do you know about how to protect yourself? What about 2015 Greece, 1923 Germany, 2002 Argentina, 2018 Venezuela? What did their citizens believe regarding their economies prior to dramatic negative economic events. 

I’m writing about this because it’s not that difficult to create a hedge against something bad happening. Remember what your investment advisor said when your portfolio collapsed 30 per cent back in 2008? Don’t worry, it’ll come back. Well it may have taken 10 years so I guess they were right. Have you ever heard an investment advisor talk about the opportunity cost of 10 years of lost compounding?

   

Nazareth in Calgary Aug 18, 2018

The only member left from the original member is bassist Pete Agnew but this group plays cohesively led by front man Carl Sentance. In fact it was remarkable to hear how easily Carl hits the high pitches typical of Nazareth’s hit tracks from the seventies. Original vocalist Dan McCafferty’s voice was raspier but I actually prefer the tonality of Sentance.

The band surprisingly brought “This Flight Tonight” and “Razamanaz” early in the set. Lead guitarist Jimmy Murrison made good use of his slide in “This flight” and Sentance got the place hummin’ with the quick tempo of “Raz”. The vast experience of Agnew on bass in concert with son Lee kept exquisite rhythm throughout the evening.

Although, never a big fan of classic “Hair of The Dog”, its signature guitar riff was unmistakable and had the audience standing at attention. “Love Hurts” was beautifully played and coloured the evening with a melancholy calm. 

“Shanghai’d in Shanghai” was one of my favourites of the evening along with an unidentifiable transcending rock rhythm piece.

Sentance donned an acoustic electric guitar for one song titled “Sunshine”. It was probably the one pronounced track of the evening which would have been better presented in studio.  Ironically it was this part of the evening where stage lighting encountered technical difficulty.

My sense was that Murrison may not have been at his best on this night having missed a particular guitar piece but it’s hard to criticize his chops. 

Certainly, many throughout the Grey Eagle Resort’s event centre were ill prepared with no ear protection. Smaller venues with big bands mean big sounds and the requisite for ear protection in lieu of no apparent decibel regulations. Thankfully, I was equipped and thoroughly enjoyed the experience.       

 

Staying Inspired

How are you staying inspired? Who has the best staying power? It’s those who complement their training with influences of those who have achieved. It takes a continual dose and then an expanded repertoire of sources. You know why? It’s because you’ll get stuck. You’ll hit a plateau. Your mind will wander off. Hence; if you’re committed to continual improvement, you can schedule in your exposure to influence. You can make it a priority. 

I had no clue what I was getting into upon stepping into a musical journey with the purchase of an electric guitar having experienced an introduction to music theory through piano. I sensed that those rock icons were high school dropouts with some finger dexterity learned through rudimentary practice.  Well, I was delightfully short sighted.  It’s true that rock guitarists may spend much of their soloing time in the pentatonic scale with fundamental chords derived from the Circle of Fifths. However; many other accomplished guitarists are in fact versed in music theory with ear training to facilitate improvisation. The instrument itself has the potential to extend into all genres of music.

Then there’s the concept of “what to practice.” There’s a propensity toward practicing what you know instead of building, switching, alternating, completing, stretching, expanding, and redirecting.  I’m thinking that my guitar journey’s pathway to development is no different than any other pursuit in developing competence leading to mastery. What if we document practice sessions for planned later date reinforcement? What if we engage interpersonally with those who can supplement ideas? What if we intertwine the learning experience from our hobbyist pursuit with other facets of existence? Staying inspired inherently means not only the act of interpreting a production which compels but also looking deeper into the person behind the piece.    

First of all, are you spending the time? Secondly, are you spending it the right way? Thirdly, are you manifesting enjoyment of your pursuit through applied education? If you don’t have the time now, will you be sufficiently inspired at ground zero with the onset of retirement?     

Gold Swaps

Follows is a discussion of gold swaps. Over the past week or so, the S&P 500 has been forming a topping chart pattern and today has seen simultaneous down moves in both the S&P and the gold price. Gold price suppression theorists will cite this day in their argument that there are artificial forces working on the gold price. Apparently a down move in the indexes back in 2008 during the financial crisis correlated similarly with today’s gold action.  

Inquiries made by the Gold Anti-Trust Action Committee toward the Federal Reserve and the Bank of International Settlements regarding the derivative trading of Gold Swaps conducted from underlying U.S. gold inventories have not been absolutely transparent. On the one hand, the Federal Reserve has responded with “in connection with your appeal, I have confirmed that the information withheld under exemption 4 consists of confidential commercial or financial information relating to the operations of the Federal Reserve Banks that was obtained within the meaning of exemption 4. This includes information relating to swap arrangements with foreign banks on behalf of the Federal Reserve System and is not the type of information that is customarily disclosed to the public. This information was properly withheld from you.  (letter dated Sept 17, 2009 from the Federal Reserve is associating with Freedom of Information). On the other hand, they have recently made a simple assertion that gold swaps are not executed with U.S. inventoried gold reserves.   

Bill Murphy of Lemetropole has been beating the drum of gold price suppression since 1999. Although not a subscriber to this site over at Lemetropole, I have had the privilege of witnessing his fervour in person at conventions here in Calgary over the years. In fact, he was instrumental in a presentation showcased by the Gold Anti Trust Action Committee to congress some ten years ago regarding evidence of surreptitious trading patterns associated with the gold price.

 Through my own education of derivative markets, I came to learn of short selling and naked options.  Gold swaps fit right in to this category of financial instruments. Chartered accountants certainly didn’t Know much about them during the 2008 financial crisis having failed to ensure disclosure during audits. What if the U.S. government has over extended itself in its interest in gold swaps when inventories don’t support the trades? Then what?  

Jim Rickards has recently been leading the charge to help the public understand surreptitious gold trading through his most recent book “The New Case for Gold”.     

Canadian Trade Talks

Should Canadian farmers be selling wheat and barley to Saudi Arabia when Saudi Arabia has historically oppressed women and still does to this day? Does a country conducting international trade compromise its values if profiting from a country from which values conflict? Should politicians in high office frustrated by diplomatic overtures abroad turn to twitter to voice grievance? Should a Canadian confident in his /her position that we have a weak Prime Minister contend that all policy initiatives by the federal government will commensurately be weak? Is it fair to impact the livelihood of commercial operators because of international political grievance?

The above questions arise in the context of a spat between Saudi Arabia and Canada over this past week. It’s frankly unsettling to witness such weakness. My position is that Canada has been compromising its values over time with respect to trade and shouldn’t be surprised that a peculiar twitter remark should be received with outrage from an internet platform limiting in its communicative power from a nation bereft of bestowing respect upon women. What’s even more surprising is that Ms. Freedland seems like an intelligent woman who should have known better. She should have know that the incarceration of women’s rights advocate is a sensitive matter and that a frustrating social media appeal could actually undermine diplomatic efforts to liberate the woman.

Our country, Canada, has some soul searching to do with respect to trade policy in the context its values and protectionist sentiment arising from the U.S. New alliances are forming and Canada has a place at the tables but must affirm its position with clarity complemented with trade deals rooted in the fabric of cooperation with partners of whom it can look dead straight in the eye.     

Being In The Know

We often think we’re in the know when we really aren’t. We come to know because of what we’ve been told but who has been doing the telling and why? In spite of the profligacy of information on the internet, we are deservedly suspect. The question becomes “what do we do and where do we turn?” if information has relevance in designing our lives. 

Conspiracy theorists appeal toward our insecurity of knowledge. Through their inflammatory portrayal and oftentimes sharpness in intellect, they can even dislodge us from sound judgment. We can only harbour outlook through experience, education, reason, and observation. However; what we lack is information deliberately kept from the public domain.

From the period 2004 to 2007 I took the time to digest insights from speakers adept in the field of Austrian Economics. Having studied basic economics through my financial education, I have been rather fascinated about the contrast in the Keynesian model versus this Austrian model and whether there would be any implication to me directly in the context of these models duelling alongside future economic events.

This brings me to Jim Willie of his Golden Jackass website. Jim is a no nonsense fellow with a P.H.D. in statistics. Jim showcases himself as an economist without the credentials of an economist. He has an interest in world affairs as they relate to our monetary system and speaks with an inflammatory style typical of someone imbued of conspiracy yet logical and charismatically intelligent. His stories mostly correlate to postulations. One wonders about the worthiness of his sources but his ability to incite in my estimation supersedes any laxity inherent to his research. 

He was one gentleman that struck me the deepest during this period of my economic inquisition. This weekend with the Dow Jones Industrial Average approaching a double topping chart formation, I wonder if elements key to Jim’s world view will trigger the next market correction.

During the past two weeks, I have immersed myself in learning specific market trading mechanics pertinent toward portfolio protection. I’m happy to share. Simply subscribe.