A Little Too Close for Comfort

Fox has fired Judge Napolitano after this rant. His intimations were a little too close to the truth.  No, the main-stream media, controlled by the established powers, cannot have a loose cannon like this, can they?

But in a beautifully articulated monologue in his final episode, Napolitano sums up America’s root problems and encourages the people to fight for their freedoms against the tyranny of government!

Government Economic Statistics Are Misleading

Dr. Paul Craig RobertsDr. Paul Craig Roberts served as the Assistant Secretary of the Treasury under President Ronald Reagan.  He should know a thing or two about U.S. economic policy.  In this brief and simple article, he explains how government statistics on inflation, housing, employment and GDP have consistently under-reported actual data.

“In place of recovery, we have hype from politicians, Wall Street, and the presstitute media.”

5 US Banks Control 97% of CDS Contracts

In this interview with Jim Sinclair, the Credit Default Swap (CDS) market is thoroughly discussed.  There are 5 major banks that control almost all of the CDS contracts issued. These 5 banks also heavily influence the International Swaps and Derivatives Association (ISDA), which will decide whether defaults actually occur when the sovereign nations of Europe don’t pay their creditors.  For example, when Greece was allowed to free themselves of 50% of their debt recently, the ISDA decided that was NOT a default, hence the CDS contracts the 5 major banks issued were not triggered.  Those that bought the CDS contracts were screwed.  And now the ISDA is deciding whether or not the current 70% haircut being imposed on Greek bond holders is a default.  Obviously, the ‘self-governing’ CDS market is not going to shoot themselves, so the CDS purchasers are going to be screwed again!

Sinclair points out that this credit event is signaling global quantitative easing because if Greece and the other sovereign nations can keep selling bonds without the obligation to pay back creditors, bond buyers will get wise to the scheme and not purchase. QE will therefore be necessary – money will be created out of thin air to buy the bonds no one wants to buy.  This will support much higher prices for precious metals and general equities.

March 2, 2012 update: Sure enough, the ISDA has just declared that no Greek ‘credit event’ occurred.  So, why the hell would any institution invest in CDS insurance anyway?  That’s a good question that many are now asking.

March 9, 2012 update: In a surprising twist of events, the ISDA is now claiming that a credit event has occured and will result in a CDS payout of about $3.5 billion. Although Jim Sinclair suggests that the payout amount is actually going to involve much more than that, given the outstanding number of Greece-based CDS contracts.

The Triumph of Crony Capitalism

David Stockman was the budget director under President Ronald Reagan. The Triumph of Crony Capitalism is the working title of Stockman’s new book due to be published soon.

Here’s Bill Moyer’s interview with Stockman where they discuss the corrupted relationship between investment bankers and those who hold public office. “We have neither Capitalism nor Democracy…. Instead we have Crony Capitalism.”

David Stockman on Crony Capitalism from BillMoyers.com on Vimeo.


Ron Paul – Fighting to Keep the Constitution Alive!

Most Americans are unaware that the National Defense Authorization Act (NDAA) was signed by President Obama on New Year’s Eve.  This measure comes up every year and usually defines the US defense budget.  But this year, politicians added yet another little item that threatens the constitutional rights of every American.

According to this new legislation, Americans can be detained indefinitely, without trial, and without legal representation simply on the grounds of being suspected of terrorist activities.  In the US Constitution, Article 1, Section 9 limits the powers of Congress. In regard to Habeas Corpus – the right a court hearing showing proof the detention is warranted – Section 9 declares ‘The privilege of the Writ of Habeas Corpus shall not be suspended, unless when in Cases of Rebellion or Invasion the public Safety may require it.’  Furthermore, the 6th Amendment guarantees a right to a speedy trial and confrontation of witnesses.

Ron Paul is among the few congressmen who actually understand the constitutional rights guaranteed to every American.  Furthermore, he’s fighting for the America most Americans seem to have forgotten.

Read Ron Paul’s Revolution, which outlines his basic platform – based on the US Constitution, which every American should know and understand!  (Do you?)

Manipulation of Public Sentiment

Here’s a video outlining how the media is able to manipulate us and has been doing so for quite some time. The media tells us what to think, not how to to think.

In addition, here’s a well-supported article explaining how public support for most of the major wars had been achieved using propaganda campaigns:

  • The Mexican-American War of 1846
  • The Spanish-American Ware of 1898
  • American involvement in World War I – 1915
  • American involvement in World War II – 1941
  • The Korean War in 1950
  • The Vietnam War in 1964
  • The invasion of Grenada in 1983
  • The invasion of Panama in 1989

Swiss America Gold Ads Censored by Main-Stream Networks

Television ads promoting precious metals as safe havens against profligate government spending have been denied by main-stream networks.  Swiss America created two such commercials to be aired on TV only to be denied by NBC, MSNBC, CNBC, ABC, CBS, CNN/HLN and the Discovery Channel.  The networks claim the commercials violate certain standards they try to uphold.

Google TV, however, will be airing the ads.  Score another win for the Internet!!!!  See the full story as well as the other ad at Swiss America.

Update: Fox apparently has reversed its decision and will air at least one of the commercials.


The Golden Game

Those serious precious metals investors will know that this isn’t a game – at least not in the long term.  As long as politicians and central banks keep printing money in their attempts to “solve” their economic problems, fiat currencies will continue to lose value and force prices for precious metals and other commodities upward.

However, the recent turn of events in Europe shows that the short term, erratic price movements can turn the most fearless investors into trembling game players, trading their long-term winners for short-term losers.  It’s worth a deeper look into this phenomenon, because the psychology in play here is one that will be predominant when the final crash eventually brings everything down.

If the crash comes via the sudden political transformation that abruptly halts the printing presses, thus forcing austerity by lack of currency supply, then everything, including precious metals, will crash (at least temporarily). In this case, cash will be temporarily enthroned – it will be hard to come by.  Prices will come down on everything and those that have cash will be able to sweep up some sweet deals.

This is what most investors were afraid of during the European crisis of September and October, 2011.  They were “keeping their powder dry” in case this scenario played out.

But eventually, the economy would need a strong, dependable currency again in order to sustain any growth. If the government simply started printing again, they’d only get more of the same problems. There would therefore need to be some kind of guarantee that would prevent the money supply from inflating at will – perhaps by backing the currency with precious metals.  In either case, holding precious metals for the long term is the best strategy.

Investment AllocationsBut how much should an investor allocate his/her investment portfolio to precious metals? The chart to the right suggests that a 33% allocation each, in cash, stocks and physical metal, will best serve to enable good deals to be snatched up when the market drops and still rake in gains during the the long-term bull market.  Keep in mind that owning a precious metals ETF is not the same as owning physical metal – an ETF would be part of the stocks allocation.

Using this type of approach, the investor must continually adjust the allocations as needed when the market fluctuates. Note that this allocation chart is for investable funds only and should not include cash that is needed for living expenses or any non-discretionary items.

Precious Metals Crash

The precious metals investor has to ask, “Why?” All the fundamentals that made gold and silver rise to the highs they saw in August are still in place. How can it all be erased in 3 days?

First of all, looking at a multi-year chart of gold performance, one can immediately see that the price rise was ascending at a much accelerated pace since July. Here’s the GLD chart which exemplifies this pattern.

Two year GLD chartThere were good reasons for gold to take off like it did – as political and economic problems persisted in Europe, the middle east and the U.S., things were looking bad. And nothing’s changed. In fact, much has gotten worse! For example, the Swiss have effectively pegged their currency to the Euro, which means there isn’t any true safe haven currency to flee to anymore. In the face of all that, why the sudden plunge in precious metals?

The “leap” in the slope shown in the graph above is more speculation of future prices, rather than an indication of current prices. And the markets love to take advantage of speculators on both the long and short sides when they can make money from it. And that’s exactly what’s happened here.

There isn’t a bubble in precious metals. Gold and Silver will continue to rise until the governments of the world stop their incessant spending programs and central banks stop accommodating them by printing paper money at will.

There are two levels of investing going on here:

  1. Speculators on the long term trend of gold and silver due to the fundamentals;
  2. Traders taking advantage of short-term, irregular trends in the market.

Keep your cool & stay the course. Watch the trends for good times to buy back into the market (like RIGHT NOW!!!!)