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Russia Derangement Syndrome confounds western thinking

There’s no God higher than truth

Mohandas Gandhi

When Russia invaded Ukraine in February this year, the west enacted a set of extreme sanctions and the ruble began to collapse. Many in the west were delighted to gloat about Putin’s “miscalculation.”

The collapse of Russia’s currency was proof that the west inflicted a crushing blow on Russia. Stability of the currency is central to any economy, especially if it is the only currency in circulation (i.e. there’s no viable alternative). As John Maynard Keynes wrote, “there is no more positive, or subtler, no surer means of overturning the existing basis of society than to debauch the currency… The process engages all of the hidden forces of economic law on the side of destruction and does it in a manner that not one man in a million is able to diagnose.” 

But not only did the ruble fully recover, it turned out to be the world’s best performing currency to date in 2022. Regardless, the western commentariat wasn’t inclined to change its tune. Reuters published an article titled, “Ruble’s strength is a sign of Russia’s weakness.” Its author, Pierre Briancon illuminates us that, “the Russian rouble’s recent sharp rebound reflects economic weakness, not resilience.” His reasoning is utter garbage, reflecting the Russia Derangement Syndrome that’s infected many minds in the west.

The Syndrome has made any positive statement about Russia wholly indigestible to the western intellect. It has become like gluten to the gluten-intolerant. At the same time, any rumor, quip, soundbite or cliche that denigrates Russia readily meets eager minds that will latch onto it and brandish it around as proof positive that Russia bad. 

Thus, Reuters’ Briancon thought it fit to remind us about the Potemkin villages (faking prosperity, for god’s sakes!! Such a Russian thing to do, so totally alien to the unblemished western mind). He goes on talking about Putin “coercing” exporters to convert their accounts to rubles, slapping “punitive” interest rates, etc. You know, the same bag of devious trickery that had made the Argentine peso, Venezuelan bolivar and Zimbabwean dollar such stellar performers in the years past.

Well, whatever. The collapsing ruble was proof of Russia’s weakness. The rising ruble is also proof of Russia’s weakness. In fact, everything is proof of Russia’s weakness.

THE EMPIRE OF LIES

Vladimir Putin called the west an empire of lies and I think we all understand what he’s saying. The Russia Derangement Syndrome did not emerge because our media reported honestly about Russia but only happened to find bad things to say about it. To the contrary, the negative image of Russia has been relentlessly cultivated for many decades to turn it into a core cultural fact in the west. Here are just a handful of concrete examples:

  • During his lecture at Yale University in September 2018, Valdimir Pozner told the audience that he had paid a team of researchers to pull from the archives of the New York Times all stories related to Russia over a three year period (2014, 2015, 2016) to see how many of them cast Russia in a positive light. They found zero positive mentions of Russia.
  • In March 2017, the US National Reconnaissance Office launched a spy satellite aboard an Atlas V rocket powered by the Russian-made RD-180 engine. The 1,500-word official press release did mention the engine three times, but never once disclosed where it was made. Media reports about this event followed suit, scrupulously omitting the Made in Russia part. Clearly, an “Upper Volta with missiles” or a “gas station with an army” shouldn’t be capable of building advanced technological products.
  • In 2015, Forbes contributor Mark Adomanis published an article “10 Charts that Explain Russia.” Adomanis was careful not to add any positive or approving language of his own, but simply presented data that showed positive trends in Russian economy and society. In fact, Adomanis’ language was quite defensive: “Some people find this impossible to accept. They ‘know’ that Putin’s malevolence, corruption, and incompetence have spilled over into every corner of Russian society...” But for the offence of violating the fatwa “thou shalt not speak positively about Russia” Adomanis’ article was promptly flushed down the memory hole. 404-file not found.
  • In what was ostensibly a travel program, BBC’s Simon Reeve managed to paint a comically dark image of Russia. The creepy caricature was appropriately debunked by Graham Phillips, another Brit who actually lives in Russia.

This kind of distortion of our information space has been almost constant over many decades and it has turned irrational Russophobia into a cultural fact in the west. 

MIND THE WINDS OF CHANGE

But truth is not irrelevant. It is not merely a quaint quality we should perhaps desire and acknowledge in a perfect world, absent the pragmatic exigences of the concrete challenges we face. Truth – investigating it, learning to recognize it, and not only telling it but sharing it far and wide – is an absolute necessity. With regards to my professional occupation, I’ve repeatedly proposed that the first pillar of a sustainable, successful approach to portfolio investing should be truth (followed strategy, discipline, patience) entailing a clear-minded assessment of what transpires in the world.

But the importance of that clear-mindedness transcends the investing considerations. Given today’s geopolitical developments, the clash between the unipolar world order and the emerging multipolarity will have profound implication for history as it unfolds and on the future of humanity. Seeking to see things as they really are, as opposed to the way we might wish them to be, shouldn’t be a controversial proposition. As Stopford Brooke said, “If a thousand old beliefs were ruined in our march to truth, we must still march on.” 

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The above article was first published in this morning’s TrendCompass report (17 May 2022). For investors, traders and hedges you might want to consider subscribing to I-System TrendCompass, possibly the very best trend following newsletter on the market today. One months’ test drive is free of charge. Trends represent far and away the most powerful drivers of investment performance. The most reliable way to capture the windfalls from market trends is through systematic trend following. For more information, please check out I-System Trend Following and our superb turn-key portfolio solutions.

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Is it a buy? Gold and Silver round-out a bullish technical case.

One of the greatest worries for investors and savers – and also everyone living on fixed income – is inflation, which could accelerate to levels not seen since the 1970s. One of the asset classes that ofer effective protection from inflation are precious metals. Over the recent months, as many commodities have rallied strongly (Oats, Coffee, Oil, Natural Gas, Corn, Copper…), Gold and Silver spent nearly a year treading water and going nowhere. But yesterday’s COMEX closing prices rounded out a clearly defined bullish technical picture. On the occasion I decided to publish this morning’s TrendCompass Major Markets report in full.

Silver

In May I wrote that Silver looked poised to stage a bullish breakout from the consolidation pattern it’s held since last August. I also warned that it is never a good idea to trade in anticipation of such events, but instead to wait for either a pull-back which often does happen in such circumstances, or for the bullish break-out itself. Now we’ve had a pullback and with yesterday’s strong close the technical picture looks much more clearly defined:

Continue reading
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Money management: strategy vs. gimmicks and why it matters

Here’s a staggering fact: over the last two decades, literally tens of millions of investors set up individual brokerage accounts to manage their own investment portfolios. But most of them by far lose money. According to an 11-year study published by the UK’s Financial Conduct Authority, as many as 82 percent of all retail investors and traders lose money. This is confirmed by the figures disclosed by retail brokers themselves showing that up to 81% of their clients lose money. And this is in spite of the fact that since 2009 investors enjoyed the longest running bull market ever recorded.

This is in spite of the fact that over the last decade we’ve experienced the greatest bull market in history and every stock investor should have made bundles.

The disconnect and why this matters

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Asset management, Commodity price, Commodity risk, Hedging, Market trends, Oil market, Risk management, Trading, Trend following, Uncategorized

How we navigated the oil price roller coaster

Extreme price events are far and away the greatest source of external risk facing oil and gas producers and other energy-dependent companies. Frequency and severity of such events has been increasing dramatically since about 2005/2006 causing ocasionally severe pain for many industry participants.

Case in point was the 70% oil price collapse through 2014 and 2015, from over $100 to below $30 per barrel. In the aftermath of this decline, U.S. mining industry – which includes oil and gas producers – reported losses of $227 billion, wiping out eight previous years’ worth of profits as the following chart shows: Continue reading

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Is a new U.S. – Russian alliance possible? Let’s hope so.

In the last section of my book “Grand Deception”  (currently banned, but available here in kindle, nook, or pdf formats), titled “Toward the New U.S. – Russian Alliance” I wrote that, “Perhaps more than at any point in history, the future of humanity lies in the hearts and minds of the people of the United States and the people of Russia. Do we dare imagine the world we could all build together if we rejected the needless fear and hostility?” Recently the relations between Russia and the West have deteriorated, triggering a new Cold War that could degenerate into a hot one, whose consequences would be too harrowing to contemplate.

In order for us to avoid making a massive mess of things, U.S. leadership must rise above the relentless hostility towards Russia and to engage instead in friendly and constructive cooperation. Today, President Trump’s administration took another important step in this direction by holding a high-level meeting between the Chairman of its Joint Chief of Staff, General Joseph Dunford and his Russian counterpart, General Valery Gerasimov. Continue reading

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Asset management, Behavioral finance, Commodity risk, Complexity, Hedging, Market psychology, Market research, Market trends, Psychology, Risk management, Something completely different, Trading, Trend following, Uncategorized

Speculation in the natural world

Nature has … some sort of arithmetical-geometrical coordinate system, because nature has all kinds of models. What we experience of nature is in models, and all of nature’s models are so beautiful. – R. Buckminster Fuller

Nature’s survival strategies that bear the most similarities to activities of market speculators are those of predators. To live, predators must hunt and this activity includes elements of speculation. Like trading, predation requires knowledge, skills, judgment and decision-making. It also entails risk and uncertainty. A predator can’t be sure where her next meal is coming from. Each hunt is an investment of resources; it involves the risk of injury and loss of energy expended in failed hunts, which tend to be more frequent than successful ones. To survive and procreate, predators must consistently generate a positive return on this investment. Too much of a losing streak could turn out to be fatal. In his book, “The Serengeti Lion: A Study of Predator-Prey Relations” George B. Schaller painstakingly documented the details of hundreds of hunts by large cats in the Serengeti National Park in Tanzania. We have all seen wildlife television programs showing lions and cheetahs hunting, but Schaller’s work offers a much richer account of the life of predatory cats including their hunting behavior.

The anatomy of a hunt Continue reading

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Central banking, Economics, Inflation, Monetary reform, Social development, Uncategorized

Inflation: lessons from the last empire’s collapse

So far, the dreams of 1,000-year empires and stable world domination have eluded the ruling elites throughout history and across the globe. Empires arise, sustain themselves for a century or two and then rapidly decay and collapse. The collapse may appear relatively fast and obvious in hindsight, but in reality it spans decades, may appear as a series of temporary crises and only become obvious very late into the slow-motion train wreck. Continue reading

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Central banking, Commodity price, Economics, Inflation, Policy, Uncategorized

Greenspan: Fed balance sheet is a tinderbox of explosive inflation looking for a spark!

In June 2011 Carmen Reinhart wrote a paper for the IMF titled “Financial Repression Redux.” She suggested that the current policy of financial repression could ultimately lead to high levels of inflation. Today, five years later it seems like she couldn’t have gotten it more wrong. In spite of the unprecedented monetary expansion, monetization of public debt and swelling central bank balance sheets, deflation seems entrenched. So why worry about inflation at all? In short, because deflation could actually give rise to inflation. Continue reading

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Asset management, Commodity price, Economics, Hedging, Trend following, Uncategorized

“Mastering Uncertainty” receives its first review

I’ve recently published my book, “Mastering Uncertainty in Commodities Trading” which has now obtained its first reader review on Amazon, and it’s a five stars review! For a first-time author, this is Christmas! Heartfelt thanks to Roman for taking time to read the book, “get it,” and post this flattering review. I’m posting the full text, titled “Exceptionally well written book,” below: Continue reading

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Asset management, Central banking, Economics, Market research, Policy, Politics, Stock market, Uncategorized

Investing in the age of unprecedented monetary experiments

Since the 2008 financial crisis, world’s largest central banks have unleashed a program of monetary stimulus that dwarfs anything we’ve experienced in history. With no historical precedents, how should investors navigate the risks and events that will likely exert extreme stress upon political, economic and social fabric of nations across the world. Altana Wealth’s founder Lee Robinon offers some unorthodox insights in a 45 minute interview with Real Vision TV with Grant Williams. You may not hear similar thinking from academics or CNBC-vetted pundits. Lee has the remarkable capacity to keep a mind-bogglingly detailed mental map of what’s going on in the world of business, finance and politics within a clear historical perspective and isn’t shy about laying it out as he sees it. The video is below: Continue reading

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