Are all pension plans safe?

One of the dangerous drawbacks of Western-style ‘democracy’ is that in order to get elected, a political party has to promise more give-aways than the other guys.  The current boost here in the UK to the NHS is a case in point.

Naturally, an increase in spending has to be financed by more borrowing or more taxes or both. When the economy is in the early stages  of its growth cycle, this is readily accomplished as most people agree it is necessary and a ‘good thing’.  Borrowing to invest has become a mantra.

Very few politicians recommend making sensible savings instead of increasing spending.  I guess there are few votes in it.

But near the end of the cycle – as we are now – the populace feels they are taxed to the hilt already and will not tolerate more taxes and as for borrowing, interest rates are already on the rise which adds to the future cost.

This phenomenon also appears within smaller governments – especially in the semi-autonomous  states of the US. The public employee pension fund of the state of Illinois is probably the most extreme example of what can go wrong when too many promises are made by politicians in to get elected

Wow! The lower lines represent the ability to sustain the future promises – and the red line is the total pension benefits promised.  Quite a gap, isn’t it?  And that is something there is no ‘funder of last resort’ for – no central bank will bail it out.  This baby is heading for a gigantic bust.

There must be many pension schemes out there with an impossible load to carry.  In the next downturn, loud popping sounds will be heard.

Climate change alarmists in denial

The world is full of irony.  I see it everywhere especially in public life.  Just as almost everyone is convinced we have a problem with global warming and that CO2 is responsible and is a ‘pollutant’ and must be banished from the earth no matter the cost, the latest data is out – and guess what?  The USA is the only major nation that is reducing its per capita CO2 emmissions

People everywhere except the USA are increasing their CO2 emissions!  How about that?  Even in Europe – the leader in the push for renewables. In fact, the CO2 emmissions per capita in the USA has been in steep decline for 70 years. This is not a chart you will find in the MSM, especially in the uber-alarmist Grauniad.

So who are the deniers now?

In fact, there is a connected irony – the recent shortage of CO2 for producing fizzy drinks has made the headlines – and I failed to find one comment in the MSM pointing out that supreme irony.  I almost offered to hook up the exhaust of my local coal burning power stations’ chimneys to the producer of Irn Bru.

As a contrarian, I have been suspicious for some years of the negative case against CO2. When total amateurs and armchair scientists  pass judgment on the most complicated system on earth – climate – it is the equivalent in the markets of every taxi-driver advising an investment in Bitcoin at the $20k top.

The dollar remains strong

My upside target at 95 was achieved a while ago and since then, it has swung just under that level with fairly wide swings.  With the DSI bullish reading near an all-time high, I had expected a fairly severe pull-back which has not materialised as yet.

and unless the market can challenge the blue trendline soon, it appears the above scenario will likely play out.  And if that occurs, I will likely have a five-wave continuation pattern (see my text pp 38 – 39, 144 – 145) and that spells much higher.  This becomes my best guess

Very high bullish readings do not guarantee an imminent turn down.  Markets can remain advancing in high DSI readings for some time before seeing the light. It is just one indicator of several I use.

If we do see a push above the 95 highs, that is when I shall be looking for a possible reversal.

Is gold making a major low at $1240?

It’s been driving me crazy!  Bullish sentiment is on the floor and has been for some time and yet no low in sight – or is it?  Here is the weely

At the $1240 area, gold has made a Fibonacci 50% retrace of the rally off the purple b wave low of 2017 which meets the major blue uptrend support line.  My best guess is that when the rally starts, it will be a large C wave to move above the old highs at $1360.

But a hard decline and low close under $1245 would be very problematical for my immediately bullish case.  But with silver DSI bulls at a near record 8%, I can say that when the turn arrives, it will be sharp for both metals.  Patience is often a virtue in trading.