GOLD 006: YOUR TWENTIES

We first championed Your Twenties back in January in our hot tips for 2009 feature and now six months on we're thrilled to be bringing their sophomore single into the world on Neon Gold. Having cut his teeth in the London indie scene as the bassist and keyboardist in Metronomy, frontman Gabriel Stebbing has recently left to focus on the Twenties full time, and the results have been nothing short of brilliant. Debut single "Caught Wheel" dropped last fall to rapturous praise and quickly flew off the shelves and "Billionaires" - their next offering and first on Neon Gold - looks primed to do the same. Produced by the legendary Stephen Street (Blur, The Smiths), "Billionaires" soars on the wings of sunny ooh-ooh-oohs and big, driving guitars and sounds like the perfect soundtrack to a classic American summer. Your Twenties have discovered the formula for the feelgood anthem of the year and this is it.

MP3: "Billionaires" - Your Twenties

This perfect slice of breezy indie pop will be coming at you on 7" vinyl July 27th and is available for preorder now from the Neon Gold Shop and London's Puregroove Records. Limited to 500 copies and featuring some of the best artwork we've had yet done by the band themselves, this is a hot ticket and should look mighty fine on the mantle where you no doubt proudly display all your other Neon Gold releases. We're pretty sure this is the perfect summer single and we hope you'll agree.

Gold - It's Just Time

To borrow a phrase from a recent piece by Martin Armstrong, “it’s just time” for Gold to shine and revert to its role as money. Of course, the powers that be and their minions laugh in contempt at such a concept. Wall Street laughs at the investment that has no growth potential and pays no dividends.

And yet, these are the people who didn’t see this economic crisis coming and now declare that it is over! It may be over for them, since they have lined their pockets with taxpayer funds to mitigate their losses, but for the rest of us, the pain is just beginning. Economic depressions are a process, not a one-time event.

Japan has been in an economic depression for 19 years now, yet you won’t see pictures of soup lines on Japanese television. Their government has a printing press, a fiat currency and has ramped up government debt to levels relative to their GDP that make The United States look like a model of government restraint. Yet, debt deflation still reigns and the Nikkei Japanese stock market index remains 75% below its 1990 peak 19 years later.

Will we repeat this two decade depression (which is not over for Japan by a long shot)? Of course. The only wild card is our currency. History tells us that the U.S. Dollar will hold up well during a deflationary depression and is a good place to put one’s money if one does not wish to trade the bear market. But the reserve currency status of the US Dollar is at risk and the calls for a replacement grow louder every day. If a geopolitical event dethrones the US Dollar, an immediate and significant devaluation of the Dollar will occur.

So, why is it Gold’s time? Many reasons, but here are the main points to consider:

• Gold is an international currency and store of value, not a commodity. Cash is king during deflation and Gold has been chosen as the best form of cash by civilizations over the past several thousand years. Apparatchiks cannot decree otherwise with any lasting success.

• Growth for stocks in aggregate is negative, dividends are being slashed rapidly, and dilution via new equity offerings is coming at a rapid clip. This wipes out the reason for taking a risk with equities right now.

• Gold provides a hedge against a rapid currency devaluation, which many governments around the world are trying to achieve. A holder of fiat cash or government bonds is not automatically hedged against this risk. Gold cannot be successfully debased by bureaucratic decree.

• Other asset classes besides cash will do poorly over the next decade and will likely produce negative returns, while Gold will hold its value. Everyone and their grandmother, with the exception of underwater bankers and real estate industry employees, knows real estate is poor investment and the bottom won’t be in for at least 2 more years (the wildly bullish scenario). Stocks and corporate bonds are dead for the next decade, trading opportunities aside. Commodities will be crushed by the deflationary scenario that has started if it continues as anticipated.

• Trust is evaporating and fear and pessimism are the new long-term sentiment. People underestimate the importance of this concept. Gloom and doom are gaining a head of steam. The future is not looking good for at least 70-80% of people in the U.S., Europe, and Japan. Gold thrives in this setting.

• Gold is in a long-term bull market that demonstrates no signs of being over. In fact, Gold made new highs in 2009 in multiple currencies, including the Euro, Swiss Franc and Canadian Dollar (among others). Here’s a 10 year weekly log scale chart of the price of Gold relative to the Swiss Franc, people’s traditional fiat currency “of last resort”:



• Finally, consider the Dow to Gold ratio, or a ratio of the “price” of the Dow Jones Industrial Average divided by the price of an ounce of Gold in US Dollars. This ratio will absolutely reach 2 before this secular bear market is over (the bullish scenario for those who are anti-Gold) and could fall below 1. In other words, maybe Gold won’t make you rich in deflation but it will preserve your wealth and allow you to buy a whole lot more shares of the Dow Jones once the dust settles. This ratio filters out the effects of inflation or deflation, since the ratio hit 2 in the deflationary 1930s and 1 in the inflationary 1970s. Here’s a chart of the last 30 years of action in this ratio on a log-scale weekly chart:



Now the ratio could reach 2 with the Dow at 4,000 or 20,000 (I think the former is much more likely) and either scenario is bullish for holders of Gold and indicates a higher return for Gold relative to holding the stocks that make up the Dow Jones Industrial Average (or the S&P 500).

I think the intermediate-term low for Gold is already in and we are set to re-challenge $1000/ounce. We may or may not make it through on this attempt, but the time is growing short for the breakout above $1000/ounce to occur. Once $1000/ounce becomes support instead of resistance, the final stage of the bull market in Gold will be set to begin. Based on the recent events in Europe, I would say that by the time ATM machines in the U.S. are installed to allow people to buy Gold from ATMs in this country, then it will be time to start thinking about the bull market in the Gold price coming to an end. A sentiment event like this, coupled with a Dow to Gold ratio at or below 2, is when I’ll start looking to trade Gold for something else. Until then, Gold is the safest and best no-brainer investment and wealth preserver out there.

And don’t get me started on the Gold miners, because once this cyclical bear market in equities is just about over (we’re not close in time or price yet), this will be the go to sector and will strongly outperform other investments, including the price of Gold. Those looking to buy in to the Gold stock bull market are advised to be patient, as good buying opportunities will come along later this summer.

Don't believe the noise; Michael Jackson was the father of his children

The news reports this morning about the circumstances of the conception of Michael Jackson's children are suggesting that the information might impact who gets custody of the children. But that just shows ignorance about the difference between legal parenthood and biology. They do not always go together and there is nothing new about that.

So let's start with what's simple. Debbie Rowe gave birth to the first two children. That makes her their mother under California law. An egg donor who intends to be the parent of a child created using her eggs can also be a parent, but obviously the egg donor in this instance, if there was one, had no such intent. That person, if she exists, also never functioned as a mother, so that avenue for claiming legal parenthood is out. Rowe can relinquish her parental rights if the children are adopted, or a court could terminate her parental rights over her objection if certain statutory criteria are met.

Michael Jackson was married to Debbie Rowe when the children were born. That makes him their father. Nothing new or revolutionary about that. If donor semen was used, and the insemination was performed in a medical facility, the semen donor is not a legal parent. Again, nothing new. These laws have been in place for decades.

As for the third child, Jackson was his father because he brought the child into his home and held him out as his own. That's a basis for presumptive parenthood in California, and a case I blogged on just last week held that this does not have to be a biological parent. And, of course, his name is on the child's birth certificate. Again, the use of donor semen in the child's conception gives no legal status to the man who donated the semen. Surrogacy can result in a child having only a father's name on a birth certificate (as apparently happened here). (Here's a Maryland case with that result). I do suspect that Jackson's lawyer went through a legal process to obtain this result.

Anyway, the press may have an endless appetite for the details of the conception of these children, but none of it has anything to do with their legal parentage. Because of that none of the facts complicate the decision on who gets custody of them. Debbie Rowe can ask for custody of her children and will get some preference, but she will not automatically win. I cannot imagine any judge splitting these three children up, so where the first two go, so goes the youngest. For him, anyone wanting custody is a nonparent, so the best interest of the child standard will govern. But his best interest will almost certainly be with his siblings.

All the talk of sperm donors and DNA testing is sensational and must sell advertisements or it wouldn't be getting air time. Even the supposedly reputable CNN is asking: Who is the father of Michael Jackson's children? But no court will order DNA testing, and the results of any such testing would have no legal meaning. The answer to the question is simple. Michael Jackson was the father of those children. Period.

TOTALLY MJ.

The world lost the greatest entertainer of all time while we were off at Glasto, and it's only just beginning to settle in now that we've returned to the real world. Glasto had it's fair share of ill advised MJ tributes, so it's nice to see a worthwhile celebration of the King of Pop back in London this week. Head down to Punk on Thursday for Wonky Pop's celebration of the man and his accomplishments, featuring a headlining DJ set from Ellie Goulding remix hero Jakwob. Free entry for anyone dressed as the Gloved One himself, all the info you need is here.

MP3: "Beat It" (Jakwob and Jestar's WakoWob) - Michael Jackson [exclusive]

Chart Porn - Fear is Gone

I have been obsessed about the Volatility Index ($VIX) like many traders, as it doesn't seem possible for fear to drop this low. The hubris before the fall is palpable despite everyone knowing that economic conditions are grim and collapsing further in front of our eyes. Perhaps a P:E ratio of 500 is in the cards (we'll get to infinity before this secular bear market is over if Japan is a decent guide)?

A good way to examine the level of fear relative to stock prices is using a ratio chart of the price of the S&P 500 divided by the $VIX ($SPX:$VIX ratio). Looking at this ratio relative to recent prior peaks in the stock markets yields some good chart porn that I thought I'd share (18 month chart with the $SPX:$VIX ratio as a red area plot and the $SPX plotted as a black line chart on top of the area chart):



I'm declaring July an official bear month a few days in advance...

THIS is when a bio mom is supposed to win

I lament the cases in which legal mothers (biological or adoptive) successfully erase legally unrecognized mothers from their children's lives. The courts that let them get away with this often pretend they are required to do so because the U.S. Constitution protects a parent's right to raise her children.

As my post earlier today indicated, no U.S. Supreme Court tells a state how to define "parent," and California got it exactly right by ruling that a woman who consents to her partner's insemination and then holds the child out as her own is a parent, and should have rights equal to those of the biological mother.

But the arguments about the constitutional rights of parents should not be dismissed, and they are crucially important for lesbian and gay parents. In fact, when I started working on these issues in the mid-1970's, lesbian mothers were at a very real risk of losing custody of their children to their own parents, or to other relatives, who argued that a child should not be raised by a lesbian mother. Perhaps the most highly publicized case of this nature happened in the mid-1990's, when Virginia mom Sharon Bottoms not only lost custody of her son to her mother but was denied any visits with the child in the presence of her partner. (The case was the subject of a made-for-TV movie).

Well a lesbian mother in Indiana won a case this week against her homophobic parents. (Thanks to Art Leonard for his blog post on the case.) The mother's parents objected to the mother's lesbianism and to her new partner's relationship with the child, and eventually the mother denied them all access to the child. This caused them to sue for court-ordered visitation. They were successful at trial, but the appeals court overturned that ruling.

The court found that "confrontations initiated by Grandparents created unnecessary conflict and stress within the family. While they are entitled to their opinions concerning Mother's relationship with [her partner], Grandparents' open hostility toward Mother created an unhealthy environment for [the child]."

And the appeals court ruled that the trial court was legally wrong because it failed to respect...the mother's constitutional right to raise her child!

Over the past 20 years, the biggest challenge in developing the legal basis for continuing the relationship between a child and a legally unrecognized parent has been acknowledging that parents do have constitutional rights and that these rights importantly protect gay, lesbian, bisexual, and transgender parents from the state and from third parties, including grandparents. I do not want those rights diluted. What I want is a definition of parent that accurately reflects the family that two women create when they have a child together...regardless of who gives birth to the child.

When does volume not matter?

In a way, I guess it always matters when analyzing trading opportunities, but there are times when it doesn't fit the pattern. Royal Gold (ticker: RGLD), my favorite Gold stock right now, and one I am invested in heavily (and therefore not unbiased) got jacked on Friday out of the blue on heavy volume. I am not thinking about selling or getting bearish, but one certainly has to consider high volume days, as big money moves markets and we retail traders are simply fleas on the elephants' backs. The trick is to get in before the elephants and then get out before the elephants do.

There were some weird volume patterns on Friday, but I think they relate to the "window dressing" concept, which describes how mutual funds and other institutional investors trick retail investors into thinking they're smart. The quarter ends on Tuesday and the market is up for the quarter, so those fund managers desperate for yield reshuffled portfolios to show everyone reading ads in Fortune magazine that they are with the trend and doing OK.

Here's an example daily chart of the S&P 400 mid-cap index ($MID) over the last 22 months:



Window dressing (and/or the infamous Plunge Protection Team) is the only volume pattern that makes sense for me. Waiting until the last possible day of the quarter carries risks if you're a "window dresser," not that we may not see some wierd stuff on Monday or Tuesday. Come July 1st, we'll have no window dressing and no pending options expiration issues to deal with. Be careful out there if you're not short.

Oil About to Tank

and when it does, it won't be bullish for the economy or the future economic outlook. As if it isn't enough that Goldman Sachs just put a bullish target on oil at $85/barrel recently (this is a warning to sell oil), the divergence between the price of oil and oil stocks is a confirmatory warning not to be ignored. The Goldman indicator is rock solid (do the opposite of what Goldman says about 2-8 weeks after they say it), but to have the oil stocks also confirm means oil's run is very close to being over. We may double top or print a minimally higher high in the oil price, but don't bet on it.

Using commodity stocks to predict turns in the underlying commodity price is an important analytical tool for those seeking to trade this sector. It would have got alert traders out of oil last year before the collapse in the oil bubble and it can help oil bulls avoid another whack right now. I am bearish on oil and commodities because I am in the deflationist camp (for now).

Anyhoo, to the charts. Following is an 18 month daily chart with a plot of the oil price ($WTIC - the area plot) and the Dow Jones U.S. Oil and Gas Index ($DJUSEN - the black line plot):



I think commodity bulls need to be prepared for the possibility that their worst nightmare may come to fruition (11.5 year weekly log scale chart of the $CCI, which is more equally weighted than the oil-heavy $CRB):



For those who think this can't happen, I ask you: did your commodity expert predict the fall crash? Did Goldman Sachs tell you oil was going to $200/barrel right before the plunge?

All the economic pieces are in place for such a bearish commodity scenario. People are again using tankers to store oil based on solely on futures contracts price variances that have already locked in a guaranteed profit for the big boyz while demand is dying on the vine. Commodities, with the exception of certain foods, are sensitive to economic conditions. Who the hell wants copper when building and demand for residential and commercial real estate has ground to a halt? And please don't give me the China bullshit - China is screwed. An export-based economy in the setting of an economic collapse in the U.S., Japan and Europe (the world's biggest three customers by far) is not going to be able (or want) to purchase enough commodities to prop up prices.

Don't get me wrong - I'm fully hedged against a dollar devaluation and I recommend everyone purchase such insurance. But I use Gold because it is not a commodity, it is an international currency that can't be debased by ignorant apparatchiks. Gold requires no economic activity to retain its value. When trust breaks down, people look for something that requires no trust. I don't think food or water are bad investments, but the oil price is about to get whacked, as are the prices of base metals. First deflation, then inflation.

Good news for non-bio moms in California

After my post this week about a dreadful Missouri case, I am especially pleased to report on a terrific case from a California appeals court, although it comes after a biological mom deprived her daughter of her second mom for most of the first five years of her life.

The story of Kristina, the bio mom, and Charisma, the non-bio mom, is pretty typical: joint participation in selecting an anonymous semen donor from a sperm bank; Charisma was there when the child, Amalia, was born, and she cut the umbilical cord; the parents gave the child a last name consisting of their two names hyphenated; Charisma was listed as a parent on a birth announcement, a gift registry, an online message board for women trying to conceive, at a baby shower, and to everyone; the parents took their daughter home and cared for her together for six weeks, after which the Kristina returned to work and Charisma cared for Amalia full-time during the day for seven weeks. (Kristina and Charisma were also registered domestic partners, although that was before that status conferred the parentage presumption in California).

Then Kristina moved out with Amalia and denied Charisma access to the child.

Kristina claimed that Charisma did not care for Amalia long enough to meet the test of receiving the child into her home and holding her out as her own. (This is a statutory test applied to a lesbian co-mom in an earlier case). The court held that there was no duration requirement.

I found this aspect of the case especially important. The Model ABA Act Governing Assisted Reproductive Technology, which I write about often, does say that in the absence of a written consent to a woman's insemination, consent, and therefore parentage, flow from holding the child out as one's own during the first two years of the child's life. The court in this case mentioned this Model Act in a footnote and indicated that Charisma did sign the "patient consent form" at the sperm bank and that she would have signed a written consent pursuant to the Model Act if that Act had been the law in California. I don't like the two year requirement in the Model Act, and the facts of this case are a good example of why.

The case is very important for how it addresses Kristina's claim about her Constitutional rights. The Supreme Court has ruled that parents have a Constitutional right to raise their child. But the case most often cited for that principle, Troxel v. Granville, involved a court that granted visitation rights to grandparents over a mother's objection. It did not tell states how to define "parent." The court's opinion in this case used precisely that reasoning to rule that the case was not between a parent and a non-parent but that, under the fact of the case, Charisma was a parent also. This last point is always obvious in these cases, but many states have interpreted Troxel as though biology was always the line between a parent and a non-parent. Not so. Thankfully, California see that.

A final note. Kristina was represented by the right-wing, anti-gay Liberty Counsel. As heinous as it is for a bio mom to ever attempt to divest her ex-partner of parental status, I find it especially despicable that she would use an organization that opposes all gay rights to argue her case. This is the same group that has thwarted Janet Jenkins's efforts to see her daughter in spite of decisions from the supreme courts of both Virginia and Vermont. Liberty Counsel lost again in court this week. They'll be back in other cases representing bio moms any chance they get.

No Matter Who Is President of the US, They Would Bomb Afghanistan

The libertarian blogger Will Wilkinson's latest post is on Iran, mostly drawing on an article by an Iranian exile, Lila Ghobady. Wilkinson allows that he doesn't know much about Iran, and so defers to Ghobady. That's a good idea, but unfortunately Ghobady doesn't know much about countries outside of Iran. Like these United States.

One commenter beat me to pointing out that Ghobady didn't go far enough when she declared that "Iran has not had a democratic, free election for the past 30 years." The reality is that Iran hasn't had a democratic, free election for the past 55 years, since 1953. The extra quarter century of repression is courtesy of the United States and Britain, which objected to the free, democratic election of Mohammad Mossedegh and sponsored a coup, followed by the accession of the Shah Rezi Pahlevi. The Shah ruled Iran harshly, with murder and torture, until he was finally overthrown in 1979.

Ghobady also wrote, correctly, that

There has been no real election. Candidates are all hand-picked and cleared by a central religious committee. It is a farcical imitation of the free nomination/ election process that we have pictured in the free world. There is no possibility that a secular, pluralistic, freedom-loving democratic person who loves his or her country can become a candidate to run for president (or any other office) in Iran.

True enough. But by these criteria, there hasn't been a free election in the US for a long time either. (Notice that in his day, the Shah's regime was numbered among those of the free world, along with many other brutal but non-Communist dictatorships.) Candidates for the Presidency of the US must pass muster by corporate elites and their allies in the two major parties, and a pro-corporate press genuflecting to a narrow caricature of religion, which effectively rules out the possibility of a secular, pluralistic, freedom-loving democratic person becoming a candidate for president, or any other major office, in the United States. When the Republicans stole the 2000 election, they bused in thugs to intimidate the vote counters in Florida, with no response from the Democrats and no popular response in the streets. But then, mass dissent in the US is reviled, penned in, and subject to state violence no less than in Iran -- I have the right to say such things as an individual, but getting together with others would subject us all to surveillance and eventual repression.

That doesn't mean things aren't worse in Iran, only that the posturing of the US media and some media figures is tiresome in its hypocrisy. The saddest part is that many of the protesters in Iran may have believed that the "free world" was watching their struggle, when our leaders were only interested in what political hay they could make of it.

No Matter Who Is President of the US, They Would Bomb Afghanistan

The libertarian blogger Will Wilkinson's latest post is on Iran, mostly drawing on an article by an Iranian exile, Lila Ghobady. Wilkinson allows that he doesn't know much about Iran, and so defers to Ghobady. That's a good idea, but unfortunately Ghobady doesn't know much about countries outside of Iran. Like these United States.

One commenter beat me to pointing out that Ghobady didn't go far enough when she declared that "Iran has not had a democratic, free election for the past 30 years." The reality is that Iran hasn't had a democratic, free election for the past 55 years, since 1953. The extra quarter century of repression is courtesy of the United States and Britain, which objected to the free, democratic election of Mohammad Mossedegh and sponsored a coup, followed by the accession of the Shah Rezi Pahlevi. The Shah ruled Iran harshly, with murder and torture, until he was finally overthrown in 1979.

Ghobady also wrote, correctly, that

There has been no real election. Candidates are all hand-picked and cleared by a central religious committee. It is a farcical imitation of the free nomination/ election process that we have pictured in the free world. There is no possibility that a secular, pluralistic, freedom-loving democratic person who loves his or her country can become a candidate to run for president (or any other office) in Iran.

True enough. But by these criteria, there hasn't been a free election in the US for a long time either. (Notice that in his day, the Shah's regime was numbered among those of the free world, along with many other brutal but non-Communist dictatorships.) Candidates for the Presidency of the US must pass muster by corporate elites and their allies in the two major parties, and a pro-corporate press genuflecting to a narrow caricature of religion, which effectively rules out the possibility of a secular, pluralistic, freedom-loving democratic person becoming a candidate for president, or any other major office, in the United States. When the Republicans stole the 2000 election, they bused in thugs to intimidate the vote counters in Florida, with no response from the Democrats and no popular response in the streets. But then, mass dissent in the US is reviled, penned in, and subject to state violence no less than in Iran -- I have the right to say such things as an individual, but getting together with others would subject us all to surveillance and eventual repression.

That doesn't mean things aren't worse in Iran, only that the posturing of the US media and some media figures is tiresome in its hypocrisy. The saddest part is that many of the protesters in Iran may have believed that the "free world" was watching their struggle, when our leaders were only interested in what political hay they could make of it.

Bearish as Ever - More Data

I believe we are smack dab in the middle of the biggest stock bear market any of us will witness in our lifetime. This colors my views on investing tremendously and creates an inherent bias. If you don't subscribe to the same view, my rants probably seem a little over the top. But when the P:E ratio is well over 100 during the worst housing market crash and bank and Wall Street wipeout since the last great generational bear market (i.e. the 1929-1932 bear) occurs, it's time to take notice.

Another great credit contraction is occurring in front of our eyes and such events take more than 1-2 years to sort themselves out. Another 5 banks failed this week, the largest weekly number for the FDIC to sort out since this cyclical bear market began. There will be more - many, many more.

Technical analysis is a tool many use to time investments or speculations and it is easy to get overly wrapped up in the squiggles on a chart and the indicators and what they mean. I love looking at historical chart patterns to get a sense of what's possible and what's reasonable. Since I think this is a "big, bad" cyclical bear market, I am looking for it to last at least 2.5 years (we are 1.7 years into the current bear).

I also am NOT looking for the markets to make a sustained thrust beyond the 200 day moving average, as this hasn't occurred in prior big, bad bear markets. A "peek-a-boo" above the 200 day moving average can occur for a month or so, but that's about it if prior credit crunch/debt deflation bear markets are a guide. So, I am placing my money on the top in the stock market being in already and patiently (or not so patiently perhaps) waiting for another steep drop right here, right now. Not a correction and then new highs, but a full on resumption of the bear market.

How about a few more data points to cement the bear case beyond what I have pointed out in recent posts:

* There was a record issuance of new stock shares in May, 2009 ($64 billion, which blew away the previous all-time high of $38 billion)
* There was heavy insider selling in May and early June, 2009 (sales to purchases ratio approaching 30:1 at times!)

Here's a chart of the 20 day moving average of the New York Stock Exchange's (NYSE or $NYA) volume for advancing shares divided by the volume for declining shares (i.e. roughly, the bullish/buying volume versus the bearish/declining volume with the 20 day moving average used to smooth out the data points) over the past 2.5 years:



And here's a look at Japan's wicked 1990-1993 bear market about a year-and-a-half into it:



Doesn't look all that different from where we are right now, does it (following is a daily 18 month line chart of the New York Stock Exchange/$NYA)?



As someone who's bearish, I am obviously not going to show an historical chart example that resolves to the upside (I told you - I'm biased!), but here's what happened next in Japan's cyclical bear market for the ages (which was precipitated by a real estate crash and stock bubble bursting at the same time):



Stay in the market and/or go long if you want to, but risk is heavily tilted to the downside and a July mini-panic to wipe out the gains since the March low seems pretty damn likely to me. Significant new lows happen this fall, but printing a nominal new low in most of the major stock market averages before a brief late summer rally wouldn't be unusual.

Beyond (Straight and Gay) Marriage: The Five Minute Version...and the kindle

Haven't read Beyond (Straight and Gay) Marriage? Keep meaning to but you can't seem to make the time? Don't have time to watch one of the many full length book talks you can find on the web, like this one on Book TV?

Well, the folks at The Center in New York City (that's the Lesbian, Gay, Bisexual, & Transgender Community Center for long) have put together a five minute clip of my talk there last spring. Enjoy!

And if it's carrying around the book that has been holding you back, I'm pleased to report that it's now available in a kindle edition.

Poetry Friday -- How can I call you beautiful?

How can I call you beautiful? In any
bar you entered you would turn no heads
but mine -- you are no ikon for the many
to carry off and kneel to in their beds.
Nor do I think: "But dress him properly,
find him a better barber -- yes, and please,
shave off that awful mustache!" No. To me
you're fine in tennis shoes and dungarees.
Oh, if I wanted Class (Class only in
the vulgar sense), I know the marketplace
where it's on sale: Take home a mannequin,
a perfect body and an empty face.
Let other people queue up for what sells
most dearly. I want you. And no one else.

April 19, 1978

Poetry Friday -- How can I call you beautiful?

How can I call you beautiful? In any
bar you entered you would turn no heads
but mine -- you are no ikon for the many
to carry off and kneel to in their beds.
Nor do I think: "But dress him properly,
find him a better barber -- yes, and please,
shave off that awful mustache!" No. To me
you're fine in tennis shoes and dungarees.
Oh, if I wanted Class (Class only in
the vulgar sense), I know the marketplace
where it's on sale: Take home a mannequin,
a perfect body and an empty face.
Let other people queue up for what sells
most dearly. I want you. And no one else.

April 19, 1978

A "beyond marriage" perspective on the anniversary of Stonewall

Lisa Duggan, an original drafter of the "beyond marriage" vision statement, has a piece in the Nation and appears on today's Democracy Now. In her Democracy Now interview, she is especially eloquent about who the movement for marriage equality leaves out and how thinking more broadly about family and relationship recognition can benefit more LGBT people and be a basis for building real alliances with straight people who also do not live in marital units. Check it out.

Hard Out Here For a Bear

Being bearish on something requires a different temperament than simply switching one's bullishness to a different asset class. I am uber-bearish on traditional asset classes like stocks, corporate bonds and commodities. Being in cash is no fun and not very helpful when one is trying to grow their wealth through investing and speculation.

Talking to most people about going short or buying puts when the discussion turns to investment causes their eyes to either glaze over or start to roll in irritation. It seems that hope is more important than fact. And to be honest, the ones who are hopeful usually do better than those who try to be skeptical. After all, markets tend to move higher or sideways over longer periods of time, not down.

Bearishness is not popular because it often requires betting against people who are trying to do their best. It conjures up images of gloom and doom. For example, Mr. Nouriel Roubini has been called "Dr. Doom" for accurately predicting some of the things that have come to pass. No one thought to call him "Dr. Got it Right" or "Dr. Smarter than permabull Cramer."

This is the nature of things. Even when bears make the right call, they are usually better off keeping their victories to themselves, as their gain may well be an optimistic friend's loss. It seems our financial press would rather cheer lead than investigate, which is what happens when too few mega-corporations control the flow of information and all have the same vested interest in the outcome.

If it weren't for the internet, I am sure I would still be looking to smoke some "green shoots" and simply agonize over which 401(k) bullish mutual fund was best. I think the government needs to shut the internet down or regulate it more - it is too democratic and there are WAY too many people telling the truth in cyberspace. Unfortunately, I have learned a little about this investing and speculating thing and the more I learn, the more I realize bearishness is an asset right now.

But even when bears are right and the markets go down, bear markets are typically more volatile than bull markets. Hard earned and well-researched profits can evaporate quickly without good risk management. The largest and fastest bullish thrusts occur during bear markets, not bull markets. For those who learn the tricks of the trade, bear markets can mean fantastic profits, but they don't come easy.

We have already been through one lost decade of stock investing in the United States and there is no question that we are headed for at least two. Japan is now deep into its 19th year of a secular bear market with no end in sight after having a simultaneous stock market and real estate peak and subsequent bubble collapse back in 1990. After a 19 year bear market, Japan's Nikkei stock market index remains 75% below its early 1990 peak as of the close on June 25th, 2009.

Are we different? Are we better? Are we really not making the same mistakes by keeping bloated, connected large banks alive with taxpayer money and hiding the true losses from full view? Are we really not engaging in the same perpetually failing quantitative easing program Japan did, which created no significant inflation and did nothing to rescue asset prices? Are Ben Bernanke and widdle Timmy Geithner really the economic dream team?

Because, to me, if one is ever going to get bearish on stocks, real estate and commodities, now is the time. The trend is your friend and the rally that began in March is over. There's nothing wrong with being in cash, although previous Kondratieff Winters in history suggest that you may want to hold physical Gold as your cash. Why? Because it can't be debased by desperate banksters and apparatchiks.

Let me re-visit, in painstaking detail, all the reasons this secular bear market is not close to being over:

*The price to earnings ratio for the S&P 500 is now well over 100, at the highest point in the last century.
*Real estate is not yet close to bottoming, which wipes out banks and other mortgage note holders.
*Unemployment is close to 10% and rising.
*California, which has an economy that is the same size as China's, is broke and about to start issuing IOUs because it has run out of money.
*Credit card charge-off rates are now over 10%, the highest ever recorded.
*The entire banking system of the United States, in aggregate, is insolvent. The largest banks, such as Citibank and Bank of America, consider plain old insolvency a goal (they are way worse off than insolvency at this point).
*Nearly half of the venerable Wall Street firms (i.e. Lehman Brothers and Bear Stearns) are already history and the ones remaining are only alive due to fraud/theft and the forced generosity of taxpayers.
*Our auto industry... I'm from Detroit, so I just don't want to finish the sentence.
*Walking away from one's mortgage is more "in" than Paris Hilton.
*Baby boomers are about to start being owed massive entitlements (i.e. Medicare and Social Security) en masse.
*The national deficit has now risen well above 12% of GDP, a level last seen during World War II (how fitting that now our enemies are imaginary, Third World and perpetual - Orwell would be proud).
*Our government is piling public debt on top of a secular private debt bubble collapse, the same scheme that caused and exacerbated our last economic depression in the 1930s and has led to Japan being in a 19 year bear market.
*We remain beholden to a private, non-federal banking corporation known as the federal reserve to "save us" from the mess that they helped cause - this despite the fact that their only solution is always to get anyone with a pulse into more debt (i.e. their rather profitable business plan).
*Our manufacturing base has been dismantled and shipped to other destinations around the globe, so there is little hope of "growing" our way out of the debt morass in the next few years.

Gloom and doom or simply the facts? Yes, I could spin it in a positive light and talk about Goldilocks, green shoots, or some other Wall Street marketing phrase du jour. All I know is that the last secular turn in the debt markets gave us an 89% drop in the Dow Jones over 3 years (i.e. 1929-1932). Markets don't repeat exactly, but they do rhyme.

I believe by the end of this year, people will be hoping and praying to get back to the June, 2009 highs. We will probably just be praying to get back to the March, 2009 lows by that time. With a PE ratio around 120 right now on the S&P 500, let's just say we've got some work to the downside left ahead of us.

So, despite the difficulties, I think I'll keep trying to trade this bear with a portion of my capital. With the rest, I'll just hold physical Gold, my preferred form of cash for a Kondratieff Winter based on history. And once I think this cyclical bear market for the ages is over, I'll put everything I've got into Gold miners, who are sure to thrive in the weak economic environment ahead.

And how will I know this cyclical bear market is over? That's the easy part. I'll just wait for the Dow to Gold ratio to get to 2 (though it could go even lower) and then I'll start looking for opportunities. When I find ones I like at that point, I'll trade in my Gold and invest in something else. For now, the bear market is still in force and risk is extremely high in stocks. Act accordingly.

Chocolate Rations Raised Again!

Okay, let's see, where was I? Oh, yeah: President Obama has severely disappointed many of his gay, lesbian, bisexual, transgendered, and queer supporters by by permitting the Department of Justice to issue a brief defending the Defense of Marriage Act, and then committing damage control with a derisory executive memo offering minimal benefits to same-sex partners of Civil Service Workers. Cue the reaction shot:


Now some of the mainstream GLBT organizations are fighting back, not only by de-friending the President on Facebook but by aiming at any politician's most vulnerable spot, his fundraising: "a steady stream of usually dependable Democratic stalwarts dropped out of a normally prestigious and well-attended LGBT DNC fund-raiser being hosted by Vice President Joe Biden on June 25 -- David Mixner, blogger Andy Towle, the Human Rights Campaign's Marty Rouse, former Clinton adviser Richard Socarides, millionaire Bruce Bastian, Gay and Lesbian Advocates and Defenders attorney Mary Bonauto, and the National Stonewall Democrats, to name a few," Kelly Eleveld reported at the Advocate website. Such a daring move, though some other high-profile homos are going to attend anyway. (P.S. June 26: And it didn't keep the DNC from raising even more money at that dinner than last year.) How long they'll be able to hold out before they rush back under the safety of his wings, I don't know.

The more discussion I've seen on this dust-up, the less I'm inclined to support same-sex marriage. I don't support mixed-sex marriage either, after all. Far from being a matter of equality, as the advocates of same-sex marriage keep saying, marriage is a matter of inequality: inequality between the spouses, and inequality between married couples and other family arrangements -- or between married couples and single persons. One commenter at Alison Bechdel's blog, for example, complained that she and her English partner cannot be together because of the Defense of Marriage Act, which prevents them from being "married in the eyes of the federal government and therefore she has no immigration rights." As the writer said, this is "heartbreaking," but why should someone have to get married to get "immigration rights"? (She didn't explain why she doesn't move to England, where she could marry her partner.) In his book The sexuality of migration: border crossings and Mexican immigrant men (NYU Press, 2009), the scholar Lionel Cantú, Jr. quoted a representative of a gay organization working on immigration issues that changed its focus from "just talking about immigration categories being too restricted because they didn’t recognize different kinds of families." When marriage became a hot issue, he said, "what we were trying to push for was opening it up" (66). By stressing just one kind of family, albeit the most prestigious kind, I'd say they were pushing to close it down. Besides, marriage doesn't automatically, naturally, magically solve the problem of immigration. In the early years of the 20th century, American women could lose their American citizenship if they married a foreign (especially non-white) man. Not until 1936 was this changed.

Why should someone have to get married to get a pension, or health insurance? Why should someone have to get married to visit a sick person in the hospital? On the subject of children, Nancy Polikoff has written in Beyond (Straight and Gay) Marriage (Beacon, 2008),

It’s especially troubling when marriage-equality advocates make similar assertions [to those of the religious marriage movement]. The constitutional mandate and law reform of efforts of the late 1960s and 1970s reflected the understanding that children are not supposed to suffer harm as a result of having unmarried parents. The lifelong disabilities of “illegitimacy” have been erased. If a law discriminates between a child born to married parents and a child born to unmarried parents, it is subject to heightened scrutiny under the equal protection clause of the U.S. Constitution.

… Some who urge marriage as the solution to children’s needs fail to distinguish between consequences of marriage and consequences of parenthood. For example, a National Gay and Lesbian Task Force publication refers to the lack of educational assistance for the children of deceased public safety officers “who lack legal recognition of the parent-child relationship due to the lack of marriage rights of their parents.” But a child does not need his parents to be married to get these rights; the child needs his parent to be legally recognized as his parent. The same is true for children of heterosexual parents.... [100-101]

Marriage-equality supporters also invoke the specter of illegitimacy and quote marriage-movement rhetoric about child well-being. The American Psychological Association, in its briefs in same-sex marriage cases, has argued that children of gay and lesbian couples will benefit from their parents’ marriage because nonmarital birth is widely viewed as undesirable. Referring to the historical stigma of “illegitimacy” and “bastardy”, it argues that “this stigma … will not be visited upon the children of same-sex couples when those couples can legally marry.”

… Herdt and Kertzner assert that “marriage denial has had particular effects on the well-being of children reared by lesbians and gay men by undermining family stability and perpetuating false claims about parental fitness.” But the research on children of gay parents uniformly finds no damage to them. The claims for marriage equality made for the sake of the children unfortunately echo claims the marriage movement makes when it blames poor child outcomes on parents’ failure to marry.

Evan Wolfson, of Freedom to Marry, wrote that “all children deserve to know that their family is worthy of respect in the eyes of the law. … That respect come[s] with the freedom to marry.” I agree with Wolfson’s premise but not his conclusion; the respect comes from the law equally valuing all family forms ... [102-103].

Some might argue that once same-sex marriage gets legal recognition, these little problems can be dealt with, and all other family forms will also be valued. I doubt it. Even granting the best intentions to the advocates of marriage, I would expect them to want a rest, in terms of time and energy as well as money, from such political activism. And I'm not inclined to take their goodwill for granted. As Polikoff shows, they are too willing to buy into the marriage-supremacist rhetoric of the religious Right where the well-being of children is concerned. Suppose that same-sex marriage were legalized in every state and at the federal level. What would happen to a couple from different countries who want to be together, but don't want to marry? From what I've seen, I don't believe they'd get much sympathy from the gay marriage movement. Why wouldn't they want to marry? Why are they so selfish and immature and ungrateful? Why not exercise the rights they've been granted, thanks to the hard work of dedicated activists over many years?

I believe the appeal of marriage as a solution to so many problems is due to inequality -- the prestige of marriage over other kinds of family bonds. That's not something I am inclined to support or encourage. While Obama's waffling doesn't make him look any better to me, he couldn't fix that by reversing course and putting a full effort into advancing the recognition of same-sex marriage in the US. There's too much else wrong with him.

Chocolate Rations Raised Again!

Okay, let's see, where was I? Oh, yeah: President Obama has severely disappointed many of his gay, lesbian, bisexual, transgendered, and queer supporters by by permitting the Department of Justice to issue a brief defending the Defense of Marriage Act, and then committing damage control with a derisory executive memo offering minimal benefits to same-sex partners of Civil Service Workers. Cue the reaction shot:


Now some of the mainstream GLBT organizations are fighting back, not only by de-friending the President on Facebook but by aiming at any politician's most vulnerable spot, his fundraising: "a steady stream of usually dependable Democratic stalwarts dropped out of a normally prestigious and well-attended LGBT DNC fund-raiser being hosted by Vice President Joe Biden on June 25 -- David Mixner, blogger Andy Towle, the Human Rights Campaign's Marty Rouse, former Clinton adviser Richard Socarides, millionaire Bruce Bastian, Gay and Lesbian Advocates and Defenders attorney Mary Bonauto, and the National Stonewall Democrats, to name a few," Kelly Eleveld reported at the Advocate website. Such a daring move, though some other high-profile homos are going to attend anyway. (P.S. June 26: And it didn't keep the DNC from raising even more money at that dinner than last year.) How long they'll be able to hold out before they rush back under the safety of his wings, I don't know.

The more discussion I've seen on this dust-up, the less I'm inclined to support same-sex marriage. I don't support mixed-sex marriage either, after all. Far from being a matter of equality, as the advocates of same-sex marriage keep saying, marriage is a matter of inequality: inequality between the spouses, and inequality between married couples and other family arrangements -- or between married couples and single persons. One commenter at Alison Bechdel's blog, for example, complained that she and her English partner cannot be together because of the Defense of Marriage Act, which prevents them from being "married in the eyes of the federal government and therefore she has no immigration rights." As the writer said, this is "heartbreaking," but why should someone have to get married to get "immigration rights"? (She didn't explain why she doesn't move to England, where she could marry her partner.) In his book The sexuality of migration: border crossings and Mexican immigrant men (NYU Press, 2009), the scholar Lionel Cantú, Jr. quoted a representative of a gay organization working on immigration issues that changed its focus from "just talking about immigration categories being too restricted because they didn’t recognize different kinds of families." When marriage became a hot issue, he said, "what we were trying to push for was opening it up" (66). By stressing just one kind of family, albeit the most prestigious kind, I'd say they were pushing to close it down. Besides, marriage doesn't automatically, naturally, magically solve the problem of immigration. In the early years of the 20th century, American women could lose their American citizenship if they married a foreign (especially non-white) man. Not until 1936 was this changed.

Why should someone have to get married to get a pension, or health insurance? Why should someone have to get married to visit a sick person in the hospital? On the subject of children, Nancy Polikoff has written in Beyond (Straight and Gay) Marriage (Beacon, 2008),

It’s especially troubling when marriage-equality advocates make similar assertions [to those of the religious marriage movement]. The constitutional mandate and law reform of efforts of the late 1960s and 1970s reflected the understanding that children are not supposed to suffer harm as a result of having unmarried parents. The lifelong disabilities of “illegitimacy” have been erased. If a law discriminates between a child born to married parents and a child born to unmarried parents, it is subject to heightened scrutiny under the equal protection clause of the U.S. Constitution.

… Some who urge marriage as the solution to children’s needs fail to distinguish between consequences of marriage and consequences of parenthood. For example, a National Gay and Lesbian Task Force publication refers to the lack of educational assistance for the children of deceased public safety officers “who lack legal recognition of the parent-child relationship due to the lack of marriage rights of their parents.” But a child does not need his parents to be married to get these rights; the child needs his parent to be legally recognized as his parent. The same is true for children of heterosexual parents.... [100-101]

Marriage-equality supporters also invoke the specter of illegitimacy and quote marriage-movement rhetoric about child well-being. The American Psychological Association, in its briefs in same-sex marriage cases, has argued that children of gay and lesbian couples will benefit from their parents’ marriage because nonmarital birth is widely viewed as undesirable. Referring to the historical stigma of “illegitimacy” and “bastardy”, it argues that “this stigma … will not be visited upon the children of same-sex couples when those couples can legally marry.”

… Herdt and Kertzner assert that “marriage denial has had particular effects on the well-being of children reared by lesbians and gay men by undermining family stability and perpetuating false claims about parental fitness.” But the research on children of gay parents uniformly finds no damage to them. The claims for marriage equality made for the sake of the children unfortunately echo claims the marriage movement makes when it blames poor child outcomes on parents’ failure to marry.

Evan Wolfson, of Freedom to Marry, wrote that “all children deserve to know that their family is worthy of respect in the eyes of the law. … That respect come[s] with the freedom to marry.” I agree with Wolfson’s premise but not his conclusion; the respect comes from the law equally valuing all family forms ... [102-103].

Some might argue that once same-sex marriage gets legal recognition, these little problems can be dealt with, and all other family forms will also be valued. I doubt it. Even granting the best intentions to the advocates of marriage, I would expect them to want a rest, in terms of time and energy as well as money, from such political activism. And I'm not inclined to take their goodwill for granted. As Polikoff shows, they are too willing to buy into the marriage-supremacist rhetoric of the religious Right where the well-being of children is concerned. Suppose that same-sex marriage were legalized in every state and at the federal level. What would happen to a couple from different countries who want to be together, but don't want to marry? From what I've seen, I don't believe they'd get much sympathy from the gay marriage movement. Why wouldn't they want to marry? Why are they so selfish and immature and ungrateful? Why not exercise the rights they've been granted, thanks to the hard work of dedicated activists over many years?

I believe the appeal of marriage as a solution to so many problems is due to inequality -- the prestige of marriage over other kinds of family bonds. That's not something I am inclined to support or encourage. While Obama's waffling doesn't make him look any better to me, he couldn't fix that by reversing course and putting a full effort into advancing the recognition of same-sex marriage in the US. There's too much else wrong with him.

California is Bankrupt

California, the 10th (or up to 7th, depending on who you trust) largest economy in the world with a state domestic product roughly equal to the national GDP of China (or Italy or Spain), is bankrupt. According to this article on California's fiscal situation:

"Next Wednesday we start a fiscal year with a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression," Controller John Chiang said in a statement announcing that he would be forced to use IOUs to pay the state's bills beginning on July 2.

Now, those who still believe in decoupling and the China miracle should be wondering whether or not they think California can drag the global economy into a depression if China can supposedly drag the world out of it. Can't have one without the other. If the so-called miracle Chinese growth story was going to help the globe, the California basket case economy must be enough to negate it. And I doubt that anyone is counting on the equal-sized economies of Spain or Italy to help global growth get back on track.

The references to the "Great Depression" keep popping up and the statistics seem to indicate that the current period is either similar to or worse than our last deflationary economic depression. The arguments against this scenario usually resort to vapid, ignorant comments discussing an unemployment rate of 25% and the lack of soup lines. The unemployment rate in 1930-1931 was 8-9% (sound familiar?). Soup lines are packed but the media doesn't have time to cover them: American Idol and good sex or murder scandals draw more viewers and keep the corporate masters happier.

Iceland's economy collapsed, Eastern Europe is on the brink, California is flat out broke and about to issue IOUs, some of the largest financial institutions in the United States have failed and/or become nationalized (and others needed government hand outs to survive), the worst housing collapse in the USA since the last economic depression is well underway with no end in sight (no, we're not close to the bottom in real estate yet), bank failures are set to accelerate, GM and Chrysler are toast, the PE ratio for the S&P 500 is now well over 100 and sentiment figures indicate either complacency or outright bullishness.

Now I understand that when things seem darkest that it is time to be contrarian and buy anyway. I get it. I really, really do (and apparently the majority of market participants are way ahead of me in getting bullish near the top of this rally if the put to call ratios are a clue). But after a 35-40% rally within a bear market that isn't over by a long shot, why would anyone be something besides bearish unless day trading? I personally think we're on the brink of another quick move down in general stocks that should start before the week is over (possibly tomorrow).

Remember that the banks, financial firms and real estate firms are the weakest sectors and have led and will continue to lead this bear market down. These sectors for the most part peaked over a month ago and are heading down already. Here's a look at the homebuilders ($DJUSHB) using a 4 month candlestick 60 minute intraday chart:



Green shoots, meet my big brown bear boots.

Missouri court deprives one child of a second mom and the other of child support

The number of states that disregard a child's second mother grows. I don't know whether to scream or cry. I do know that if judges cannot see the family in front of their eyes then the answer lies in changing state statutes to recognize two parents of a child born through donor insemination.

Here is the latest disaster, which adds Missouri to the hall of shame. Leslea and Michelle White (Michelle changed her surname to Leslea's...a heterosexual custom I wish same-sex couples would discard...but I digress) had been together for about 4 years when Michelle gave birth to one child, C.E.W. Two and a half years later, using the same anonymous semen donor, Leslea gave birth to their second child, Z.A.W. When that child was about a year and a half the couple separated and the children went back and forth between the two moms. Some months later, Michelle refused to allow Leslea any contact with C.E.W.

Leslea filed for shared custody or visitation rights with C.E.W. and for child support for Z.A.W. The trial judge dismissed her case, and yesterday the Missouri Court of Appeals affirmed that dismissal.

The court held that Leslea lacked standing to file an action, so there was no consideration at all of the relationship between Leslea and C.E.W. for the first four years of C.E.W.'s life, let alone C.E.W.'s best interests. In the most offensive line in the opinion, the court rejected Leslea's theories by saying that "neither our statutes nor our case law remotely suggest that any third party that comes along has standing to bring an action seeking custody of children." (emphasis added). But of course Leslea is not "any third party." To C.E.W., she is a mother. To the state of Missouri, she is a stranger.

The court also dismissed Leslea's claim for child support from Michelle for Z.A.W. despite Leslea's allegations that the couple explicitly agreed to raise the children of their relationship together and shared the costs of the pregnancy and the childrearing. One judge, of the three on the panel, dissented from this part of the ruling (only!) and would have allowed Leslea the opportunity to prove that she relied on Michelle's agreement to co-parent in deciding to have a child and that therefore Michelle should bear some financial responsibility for the child.

Missouri, like many states, has a statute that says that a husband who consents to his wife's insemination with donor semen is the father of the child she conceives. It's a statute based on the original Uniform Parentage Act written in 1973. As I have written about in several other posts, the latest version of the UPA extends that status to a "man" who consents to a woman's insemination with the intent to parent, and the American Bar Association Model Act Governing Assisted Reproductive Technology extends parentage to an "individual" who consents to a woman's insemination with the intent to parent. That would cover Michelle and Leslea, and the ABA intended exactly that with its model law.

Earlier this week I posted that the Uniform Probate Code definition of a parent-child relationship for purposes of inheritance now includes an "individual" who consents to a biological mother's insemination with the intent to parent.

I continue to believe that our communities need to apply pressure to biological mothers to honor the families they have created. Friends of Michelle...where were you?

GUESS WHAT.

We're way busy packing for our first ever Glastonbury, but before we jet off for the weekend we had to hook you up with the amazing new video that's just come through for Marina & The Diamonds' "I Am Not A Robot". Directed by Dazed & Confused founder and famed London photographer Rankin, it's hands down one of the best videos we've seen in ages and one of the more special things we've ever been involved with. We were on set for a portion of the grueling 16 hour shoot (which involved three full body paint jobs) and it was obvious this was going to be pure magic, but the video turned out even more beautifully than we could have ever imagined. Truly a work of art.

Out on Neon Gold this past Monday, "Robot" is the lead single from The Crown Jewels EP, which is still available for purchase from the Neon Gold Shop and Puregroove as well as on iTunes UK. As per usual it comes backed by a delicately assembled remix package, one of the highlights of which is the incredible mix from The Aspirins For My Children. NME's named the remix their #1 Must Hear track in this week's issue and they're pretty much spot on there: this shit has massive trance stabs, high drama strings, actual robots and just about anything else you could possibly ask for. Between this and his immense destruction of "Obsessions", we're starting to feel like a full-fledged Aspirins/Marina EP is something that needs to happen... we're not making any promises though.

MP3: "I Am Not A Robot" (Aspirins For My Children Remix) - Marina & The Diamonds

That's all for now, off to Glastonbury tomorrow. We'll be back in action next week (with a new single announcement, no less) provided we survive the next four days. Holler at us if you're headed down and if you're not be sure to keep it locked on our twitter for drunken updates on how much fucking fun we're having. We'll be spending most of our time kicking it the Chess Club-curated stage at the Departure Lounge, where Neon Gold favorites and Chess Club all-stars Ex-Lovers, Mumford & Sons, Kurran & The Wolfnotes and many more will be awing the masses all weekend. Check out the full line up our Chess Club dudes have put together HERE. Can't wait, y'all.

// Rankin & Chris //

I Think Gold has Bottomed

I think the bottom for Gold is already in at around $913-$914/ounce in overnight trading yesterday (6/23). I think it's time to go back to $1000/ounce and shoot for new nominal highs in the Gold price. The plunge in the stock markets that is about to occur should help fuel the rise in the Gold price as people flee for safety.

A new phase in the credit contraction cycle has begun and Gold likes credit contractions. So does Gold royalty company Royal Gold (ticker: RGLD). An economic depression has already begun, but such events are processes, not "wake up one day and everyone's in a soup line" concerts. Government insistence on piling public debt on top of bad private debt makes sure that we are headed for a replay of the Japanese lost two decades experience (one decade down, one to go...).

In such an environment there will be trading opportunities, but buy and hold for stocks is dead for another decade (at least!). The only buy and hold sector is Gold (or fiat cash if you insist on hoping for the best) and the Gold mining sector. Do not put new money into senior Gold stocks yet, as lower prices will occur later this summer.

We will certainly have a cyclical bull market (or two) during the remainder of this secular bear market, but the current cyclical bear market ain't even close to being done in time or price. We are at a P:E ratio of greater than 100 right now when you strip away all the modern "tweaks" introduced by Wall Street shills during a 20 year stock market bubble that has finally popped for good as a generational, not cyclical, event. Let me repeat that: we are now at the highest PE ratio for stocks seen in any of our lifetimes at a time when the economy has entered a full blown economic depression. Tell CNBC and Cramer to put that in their green shoots pipes and smoke it!

If you don't like going short, there is nothing wrong with a cash position - a 0% return on your money is good compared to a loss. The US Dollar is not about to collapse in the next month, but a few banks will. Deflation first, then inflation.

Hordak Masters of the Universe Classics Toy Review

Hordak Masters of the Universe Classics Toy Review

More chart fun with Mr. VIX

The resumption of this cyclical bear market in stocks is on like Donkey Kong. I have been following the chart pattern of the Volatility Index ($VIX) like a hawk, as its turn is overdue. Today, a "Golden cross" of the 50 moving average above the 200 moving average occurred on a 60 minute intra-day chart (plot made invisible to highlight the moving average crossing):



Why does something like this have me so excited? It is important to not overanalyze markets (i.e. paralysis by analysis) and a Golden cross is old school, basic technical analysis 101. Rising Mr. VIX means falling Mr. Stock Market almost always. Here, in chart form, is why this cross cemented the resumption of the bear market in my mind after roughly 8 months of a declining $VIX (2 year chart of the 50 and 200 moving averages on a 60 minute intra-day chart with the underlying plot made invisible to focus on the moving averages):



Another nail in the bullish coffin. Gravity is a bitch and the stock market is about to find this out.

Regional Banks - a lock for the bears

Think of charts as the symmetry and art of human folly and there's no question that one sector is going right to its March '09 lows and that will simply be a pause on the way to further lows. This is a 60 minute intraday chart of the past 4 months of action in the KBW Philadelphia Regional Banking Index ($KRX), which I have covered before:



It stinks not to get TARP money and not to be able to suckle at the government teat. Regional banks are leading the way deeper into this deflationary economic depression with its attendant stock market bear for the ages. Get short or get out of the way. This is not a drill.

Gold Miner Fundamentals About to Improve

The cost of mining real money (i.e. Gold) out of the ground is about to decrease relative to the cost of Gold (again). Fundamentals DO NOT immediately translate into stock price changes, but they lay the groundwork for stock prices to change at some point in the future. I am intermediate-term bearish on senior Gold mining stocks, but will be looking to buy more once I think the current correction is over. The fundamentals are about to become even more supportive than they are already.

To review, I am bullish on Gold miners because I believe we are in deflation, not inflation. Most people interested in Gold miners believe inflation and/or hyperinflation lurks, but Gold miners do better during deflation than inflation. Why is this true? Simple. Gold is money and cash holds up well during a deflation - this is why Gold is near its all-time highs. Commodities such as energy decline during deflation and this is why they are way down from their all times highs and about to drop further, while Gold is about to rise and re-challenge its all time highs. Commodities, along with labor and capital equipment, reflect the main variable costs for Gold mining firms.

When the price of Gold increases relative to the costs of mining Gold, Gold mining companies increase their profits. This is true whether the price of Gold is increasing, flat or even decreasing! Remember Wal-Mart if you don't understand how a firm can cut the cost of the good(s) it sells and still make higher profits (it can if it cuts costs faster than it decreases the price(s) of the good(s) it sells).

On the other hand, if the oil price (as an example) is increasing faster than the Gold price while both are going higher, Gold mining firms have a hard time making more money/increasing profits (e.g., spring and summer 2008). Certainly there are times in an inflationary environment that the price of Gold rises more rapidly than the price of other commodities, but rarely is this as predictable as during a deflationary environment.

For Gold miners, the easiest way to assess profitability is to divide the price of Gold by the costs of mining. When this ratio is increasing, Gold miner profitability for producing mines is increasing. A crude estimation of Gold miner profitability can be obtained by dividing the price of Gold by the price of a basket of commodities. Though many commodities are not needed to mine Gold, others are essential (e.g., energy).

I use the Gold price divided by the Continuous Commodity Index ($CCI) to follow this ratio. Now, keep in mind that a change in fundamentals will eventually be followed by a change in the stock price, but the lag time can sometimes be significant. However, eventually increased profits for Gold miners should be reflected in their stock price, all other things being equal.

Here is a current chart of the $Gold:$CCI ratio on a daily candlestick chart as of today's close (6/23/09):



Now keep in mind that this ratio chart is bullish for Gold miner profitability and should ultimately improve the Gold mining sector stock prices after a lag, but this ratio chart is not indicative of inflation. During a deflationary depression, which I believe has already begun (i.e. Kondratieff Winter), the Gold price will probably hang around near its all time highs and even make new nominal highs while other commodities tank. Commodities do poorly during deflation, but Gold is a currency and is cash/money, not a commodity.

Firms that dig money out of the ground during a deflation (when everyone needs money) are rewarded handsomely for their efforts. It is cheaper to dig Gold out of the ground when costs such as energy and labor are falling relative to the market price of Gold, thus profit margins increase for Gold miners during deflationary periods. So, this chart is bullish for Gold miners but does not mean that those who hold Gold will get rich other than in a relative sense.

In other words, those who stay invested in real estate, general stocks, and commodities like oil will lose most of what they've invested but those who hold cash (i.e. Gold) will maintain what they've got and increase their wealth relative to their neighbors. I think Gold at $2000/ounce is a reasonable peak during a deflationary depression. The potential dynamics of a currency crisis, should a geopolitical event occur that dethrones the U.S. Dollar as the reserve currency of the world, make the built in insurance policy Gold offers against a rapid currency devaluation important in the economic crisis in which we find ourselves.

However, if the last deflationary depression is a guide, the real money to be made is in Gold stocks, not the Gold price. Once an investor anchors his or her portfolio with physical Gold, he or she should look to Gold mining companies for speculative profits. Now is not the time to invest new money in the senior Gold mining sector in my opinion. This is because the worst cyclical bear market in general stocks most of us will see in our lifetimes has begun a new leg down to re-test the spring '09 and fall '08 lows, which may or may not hold.

Such wicked bear legs down in general stock market indices spare few stocks and risk is too high right now to be investing new money in any stocks, including the Gold miners. Having said this, I believe the lows for the price of Gold will be in this week and then Gold will move to re-test its all-time highs over $1000/ounce. Now is a great time to secure some physical Gold coins or bars if one has not already established an anchor for their investment portfolio. And please do not mistake the fraudulent GLD ETF for an equivalent to physical Gold held outside the financial system - insurance cannot be trusted to those who have already shown a penchant for committing fraud (i.e. Goldman Sachs and JP Morgan are two of the custodians for the GLD ETF).