Initial Report on the Phoenix "Silver Summit" Show
I spoke with many enthusiastic readers who said they were fans of my work, which was very encouraging. Everyone was very respectful, appreciative, friendly and supportive. I'm beginning to gain a bit more confidence now, for several reasons. One is that I hear so many of the same questions again and again, which helps to know what the common concerns and thoughts are of people who are buyers or holders of silver, which helps me help people even better.
I got a chance to sit down with my "posse" consisting of my brother Ted Terbolizard, my mom Joyce of www.momsilvershop.com, my business partner Greg Kyle of www.silveriswealth.com and Peter Spina of www.goldseek.com and www.silverseek.com so we could all talk with Thom Calandra about everything we've been up to, regarding minting silver into rounds to auction off at Peter's site at www.seekbullion.com. Thom Calandra said our story deserves to be told in USA Today, which was very encouraging. Thom was gracious to mention us already, here:
http://www.stockhouse.com/Columnists/2009/February/24/Geo-fiction-or-not,-high-grade-magnates-rule--Thom
Thom's been making what he calls a "comeback" into the precious metals industry, but is being wiser about many things these days.
By the evening dinner on Saturday, there was an excellent panel discussion, where someone asked about the potential gold/silver price ratio in the future.
I answered: "Silver to gold production ratios in the past were 15 to 1, which mirrored the price ratio of 15 to 1 which lasted hundreds of years. But today's ratio of 70 to 80 to 1 does not imply that 80 times more silver is produced than gold. The opposite is true. Since silver is too cheap, too little silver is produced. About 550 million oz. of silver is produced each year, and about 80 million oz. of gold, so it's about a 7:1 ratio in terms of production, which might imply a future 7:1 price ratio.
But historic total production might be a better indicator. There are about 5 billion oz. of gold produced in human history, and about 43 million oz. of silver, but perhaps only about 14-15 billion oz. of silver remain, the rest having been consumed and lost in many industrial applications and ended up in lanfills. So that implies a future 3:1 price ratio.
However, when you realize that if gold and silver ever become money again, and that gold is unsuitable to use as money when an oz. of gold is worth a year's salary, gold is unsuitable for the vast majority of monetary transactions. Therefore, silver has to do all the work. So that might imply an even higher value for silver in the long run, than even the 3:1 ratio."
Another question was asked, "What is the high price for silver that you can see?" I said something like, "Let me, the young man on the panel embarass himself with trying to answer. I've said in the past that silver could hit $10,000/oz., as that is the price suggested by all of the past inflation of money creation that has yet to show up as real inflation. The gold price, based on all of M3 being backed by US gold implies a price of $50,000 to $100,000/oz, which give us a conservative price of $10,000/oz. for silver based on a conservative 10:1 ratio.
But if it takes us 15 years to get there, to change societal attitudes about silver, then the amount that silver has to go up per year, to compound it's way to get there, seems rather tame, as it's only a mere 50% gain each year that would take us there.
But 50% gain each year is about 1 penny per day, starting at today's prices. Thus, since silver has been going up over 10 cents per day, over the last month, that means that silver is now currently rising 10 times faster than my wildest prediction!
The audience went into wild applause, showing they understood the veracity of the argument. I think that was one of my best arguments at the show.
One man asked how difficult would it be to sell silver if silver went to extraordinary high prices, and wondered if crime rates would be very high, and who would be able to buy it, which is a typical question. This is where the panel diverged in opinion. One panelist thought it would be bad, like during the great depression.
I disagree. The great depression is an example of the horror that happens when government abandons the gold standard and many free market principles, like we are doing today. But if very high prices exist for the precious metals, that's a sign they are returning as money, which creates times of freedom, and prosperity.
For example, after gold ran up 24 times from 1970 to 1980, there was business boom times, because a lot of fraud had been eliminated from the system due to the rise in the gold price, taxes were lower, and trade opened up. Society did not turn out like in the movie, "Mad Max, Beyond Thunderdome". I suppose I should elaborate on this more, since it is a common question now, especially because times are hard now.
But times are hard because they are manipulating gold and silver prices too low. See my essay from a few years ago:
Rising Gold Prices Will Help The Economy Dec 2, 2003
In that essay, I did not predict that if prices of gold went up a little, such as from $300 to $1000, things would be better, I'm saying that if gold returns to common use as money, such as from $1000 to $50,000 or "no dollar value", things will be a lot better.
In the evenings, we tried showing off, and even "redeeming" our new "beer rounds".
The first evening of the show, we gave one to our waitress, who took the round for herself, and comped a group of 15 adults a round of about 10 shots or more.
The last evening, the bartender said they have "no cash value", as if too many of them had been presented there already before. (We did sell about 50 of them during the show). How interesting. Yes, what he said sounds about right, cash has no value. Silver has value, silver IS value, silver is wealth!
Funny thing about silver. It has no value to 99.9% of the population now, yet stil has value. You can't spend it everywhere, but sometimes you can, depending on if you get a nice waitress.
The last 100 of our Beer Rounds are up for auction here:
http://www.seekbullion.com/auction_details.php?name=100-ounces--100-x-1-troy-oz-Silver-Rounds-BEER-Last-Hour-Reserve--US-from-Jason-Hommel-1A-of-1A&auction_id=102396
So, do they have value? I suppose it mostly depends on who you ask. Even a bum on the street cannot give you anything substantial for a $100 bill. Does that mean cash is already worthless? Heh!
This brings me to another point made on the panel. One man said to not buy any generic rounds, because dealers might not give you anything for them, or might give you less, or, in other words, they might have a wider spread. That's ok. You can actually buy them from me for about $17 each, and sell them for up to $20 each on ebay, or at a mining show, but what do I know? That's actually a negative spread right now, isn't it? One of our plans is to sell the Beer Rounds in gift shops for up to $25-35 each, but again, what do we know?
Oh, many of my Canadian readers do complain that it is hard to get silver in Canada. Canadians can get silver at Border Gold, run by Michael Levy, one of the panelists at the show. http://www.bordergold.com
His prices are competitive, sometimes slightly less or slightly more than ours at www.seekbullion.com.
Two of my gold and silver mentors were at this show, Ted Butler, and Bill Murphy of GATA. Well, I never received any private tutoring from them, but I continue to read them all the time, and have, for at least 8 years or so.
Ted Butler already put his speech into writing, here:
Silver; Past, Present, Future - Phoenix Silver Summit Speech
http://news.silverseek.com/TedButler/1235407708.php
The thing about giving a speech is that it forces a man to do his best work. That was an excellent presentation by Ted. So if you don't read Ted every week, at least read that one.
I wish I had more time to talk with Ted, but I only had a brief moment after our evening panel. I asked his opinion on the report by Bix Weir about the 400+ million oz. of silver used in the Calutrons used to enrich uranium. It seems that he didn't think it was a valid story. I found his answer disappointing, and last week, I ordered the History Chanel Report mentioned in this report, because I wanted to verify:
The Great Silver Mystery (...and the greatest secret of all time!)
http://www.silverbearcafe.com/private/silvermystery.html
Wikipedia links to two reports that verify that 470 million oz. of silver were used in this way.
http://en.wikipedia.org/wiki/Calutron#cite_note-2
I know a man who is great at research, especially on silver, and he may give us more answers in the future. My apologies to Bix, for not reporting on this issue sooner. Bix broke this story on silver over a year ago, maybe two now.
Bill Murphy reports on gold daily, and I read him almost daily at www.lemetropolecafe.com. He offers a free two weeks subscription, and it's definitely worth it, as Bill is more plugged in than anyone. Bill Murphy asked me to ask my readers to see if anyone can help him get on CNBC. Any of you can make your own appeal directly to CNBC to try to get Bill on TV. Here is Bill's appeal:
Bill Murphy of www.GATA.org writes:
I am on the case again and am asking everyone who is not donating to GATA but still wants to advance the gold cause to contact CNBC.
Nothing would be more helpful to our fund raising than to get our story told. In turn that would help your own precious metals investments.
Few in the mainstream investment world can conceive of a gold price above $3,000. In fact, most in the mainstream investment world think gold is just going through its own bubble phase. The more that investors realize where the gold price is going and why, the more they are going to invest in gold and silver mining shares.
Yesterday I called CNBC and reached its Viewer Services desk. After declaring my intentions, I was told to send my pitch by facsimile machine to this number: 201-735-3200. Here is what I sent:
* * *
"To: the producers of 'Fast Money'
"From: Bill Murphy, chairman, Gold Anti-Trust Action Committee
"Subject: The gold market
"I am a big fan of your show and watch it daily. As a former professional football player with the Boston Patriots, I find it amusing to watch some of the
panelists who have 'been there.'
"Last night there was a great deal of discussion about gold. Most of the comments were clueless.
"I have chaired three international gold conferences over the past decade:
" -- The GATA African Gold Summit in Durban, South Africa, on May 10, 2001.
" -- Gold Rush 21 in Dawson City, Yukon Territory, Canada, on August 8 and 9, 2005. Among the participants was Andrey Bykov, an economics consultant to Russian President Vladimir Putin.
" -- GATA Goes to Washington in Arlington, Virginia, on April 18 and 19, 2008.
"My organization placed a full-page color ad in The Wall Street Journal on January 31, 2008, in which we warned of a coming 'catastrophe' and 'disaster' arising from the long manipulation of the price of gold. That ad may be viewed here:
http://www.gata.org/node/wallstreetjournal
"The press would not give us the time of day. No one asked what we were warning about and why, including CNBC. Ten years ago I was interviewed on CNBC by Ron Insana and have not been allowed back on the network since then, right as I was then. Dylan Ratigan and others are calling for 'transparency.' If transparency is to be achieved, it would be helpful for your viewers to understand what the gold market has been all about and why there is a bigger story here than the Madoff scandal.
"At the Gold Rush 21 conference, when the price of gold was $436) and in our Wall Street Journal ad GATA predicted the price of gold is going to $3,000 to $5,000. It would be helpful for your viewers to understand why. At any rate, we have been correct on the price of gold for nine years.
"Should you wish to check GATA's credentials, please visit www.GoldRush21.com and review our summary video of the conference.
"I look forward to telling the real gold story on your network. I can travel to New York or speak from Dallas, where I live.
"Thank you for your consideration."
* * *
So, friends, most of the work is already done for you. GATA would like you to make your own appeal along the lines of the above and fax it to CNBC in care of one of the following programs:
"Squawk Box"
"Squawk on the Street"
"The Call"
"Power Lunch"
"Street Signs"
"Closing Bell"
"Fast Money"
"Mad Money"
"The Kudlow Report"
If our friends will take just a few minutes to contact CNBC, the network may realize what a big deal this is and how it also can be of value to the network's ratings. If you don't have a fax, please look up the e-mail addresses for these programs and contact them that way.
Our time is here. Let's go for it. Help GATA to help yourself.
Thanks to all of you who are willing to participate in our campaign.
CNBC contact form is here:
https://register.cnbc.com/email/EmailSupport.jsp
==============
If there's one thing I just learned about myself from this show is that I'm a lot nicer in person, and so is everybody else. I'm often too abrasive or too abrupt in email, because I sometimes get too much email, and because sometimes, people are more mean to me in email, too.
I also learned that I would like to speak more, if I get the opportunity, because it's a great learning experience, and it's great to get instant feedback from people in person. However, with a baby at home, I will likely try to stay close to home in my own community, if possible, and maybe speak in local churches, if they will have me.
In Government We Turst?
Can sound money really bring about peace? Actually, it plays a big part in peaceful international relationships. Money based on commodities, rather than paper, is not subject to government manipulation, and is a key component to free and honest trade. History shows that if countries engage in trade with each other, their governments tend to find ways to get along for the same reason you do not kill your customers at your place of business, even if they occasionally annoy you. If someone outright cheats you, however, you may engage in "war" by taking them to court, for example, and the relationship will sour. Governments and central banks with unfettered power to manipulate currency also have the ability to cheat their creditors. One way they do this is to simply create enough currency to pay off debts. This devalues the currency and "cheats" the recipient out of what they are owed. It would not be fair if you watered down your product the way our government waters down its currency, so it is not hard to understand, in these simplified terms, why loose monetary policy contributes so much to ill will and war around the world.
Sound money, on the other hand, simply is what it is. Removing governmental power to manipulate money, removes the temptation for government to spend, print and cheat. Sound money ensures that our government's spending priorities would be brought into sharp focus and reduced to only what we can afford.
Sound money also limits the ability to wage wars of aggression. Imagine how much more careful Washington would have to be about starting a war if they did not have this financial sleight of hand at their disposal! Fiat currency allows government do expensive things they should not be doing while paying the bills with cheap money. The Federal Reserve has lately been auctioning off large amounts of treasury bills as a way to finance the wars in Iraq and Afghanistan, and our crushing entitlement burden. The resulting devaluation of the dollar is quickly eroding our image as a good trading partner in the world. As a consequence, there is therefore more talk of economic isolation and war.
This vicious cycle of spending, fighting and inflating is not what Americans want. It is what the government wants, and it has had to deceive the citizens into allowing and supporting it. Sound money curbs the government's ability to engage in these shenanigans and reduces the wars we fight to only truly defensive ones, for which Americans are more than willing to stand and fight. So in these ways, sound money is very conducive to peace.
Another benefit of sound money is financial security.
Can sound money give you financial security? There is something very comforting in knowing that what you earn today will retain its purchasing power in the years to come. Indeed, the same silver dime that bought a loaf of bread in the 1960's can still buy a loaf of bread with its precious metal content - which is worth about $1.00 today. An ounce of gold has always been about evenly exchangeable for a finely tailored men's suit, which these days is roughly $800. And in these days of fluctuating gas prices, when priced in gold, oil has been stable. Meanwhile, since the creation of the Federal Reserve, the fiat dollar has lost 94 percent of its purchasing power. The erosion of purchasing power rapidly accelerated when it was completely uncoupled from gold in 1971. This sort of fluctuation in the medium of exchange creates a lot of uncertainty in the marketplace and necessitates that you either take extraordinary defensive maneuvers, or face financial ruin. Trusting in government for financial security in retirement is not a safe option. Indeed, a recent study by the Consumer Bankruptcy Project shows that bankruptcies among those 75 and older has more than quadrupled since 1991. This represents wealth and savings that have been eroded by inflation, and trust in entitlement promises that were more fantasy than reality. Even with the pittance that social security pays to seniors, it is bankrupt and bringing the economy to its knees. It is no wonder that many in the younger generations want no part of it, and they should not be forced into a failed system.
On the other hand, holding physical gold can defend against aggressive government monetary policies that threaten to inflate away the value of your life savings. During the hyperinflation in post WWI Germany, what used to be a comfortable nest egg was suddenly the value of a postage stamp. If one held just a portion of their savings in precious metals, the crisis was greatly softened. Gold will never be worth nothing, even if the exact price fluctuates. There is a famous photograph, however, of a German woman during this time period burning piles of tightly bound banknotes to keep warm.
Imagine if the money you earned had honest, stable value, or even appreciated like an investment! No such special measures, like converting dollars to gold, would be required to ensure that your savings would sustain you in your golden years. That is the way it could be and is supposed to be. However, the government's thirst for power will not be easily, or cheaply, quenched. Fiat currency is one tool governments have to extract wealth quietly from the working class. It is time for the people to wake up to this ruse and look to the Constitution to restore sound currency.
Sound money keeps government spending in check, keeps trade fair and honest, which reduces the temptations, and many underlying causes, for governments to wage wars. It also gives you the peace of mind of knowing that your savings will be able to sustain you in your retirement.
So if sound money is such a good thing, what is stopping people from simply trading with each other in gold and silver? Why are you still being paid in fiat dollars, and why can't you pay for gas in gold? The answer is that the government has enacted policies that provide considerable stumbling blocks to such transactions.
One of the main stumbling blocks is Federal legal tender laws, which state that government-controlled fiat currency MUST be accepted for many kinds of monetary transactions. In light of this, Gresham's Law takes effect. Gresham's Law states that bad money drives out good money. Meaning, if someone is forced to accept your bad money, it is to your advantage to pass it off, like a hot potato, in exchange for something of value. Any good money you have, you will hoard. Eventually, real money is driven out of circulation and under people's mattresses, so to speak. In the absence of legal tender laws, people are free to accept the medium of exchange of their choice, and are likely to insist on payment in something of real value.
Related to legal tender laws, contracts in gold are not enforced. Meaning if two parties agree to exchange goods or services for gold, and end up in a dispute, the courts will simply settle the dispute in Federal Reserve notes. While gold clauses have been legally enforceable since the late 1970's the fact remains that disputes over gold clauses might well be resolved in court with a dollar figure calculated in terms of Federal Reserve Notes. In the recently decided case of 216 Jamaica Ave v. S&R Playhouse, which reversed a district court decision, the court upheld the enforceability of a gold clause, but sent the case back to the district court to decide what obligations the gold clause imposed on the defendant. It is not inconceivable that this will result in a decision that the value of the "gold coin" referred to could be valued by the court in terms of Federal Reserve Notes, not in terms of ounces of gold. Furthermore, given the federal government's actions against Robert Kahre (the Nevada businessman who paid his employees at the legal tender face value of gold bullion coins) it is obvious that the government is still waging a war on gold. Whether either of these cases establishes a precedent remains to be seen. Additionally, because 31 USC 5103 establishes Federal Reserve Notes as legal tender, it would likely take a court challenge to determine whether a gold clause or legal tender law takes precedence.
Governments should do very little, in my estimation, but it should enforce contracts and property rights through the courts. But in this instance it shirks this basic duty, when it comes to gold, as one way to keep control of our economy and the medium of exchange. One is also expected to pay sales tax on the purchase of gold. This is as ludicrous as if you paid sales tax at the bank when you converted dollars into quarters! The IRS also expects you to pay capital gains tax on gold, which is so backwards, since gains on gold really represent decline in the value of the dollar!
Legal tender laws should be repealed at the Federal level. Congress has the Constitutional duty to protect the integrity of our money. However, since it has passed this duty off, and the Federal Reserve has only debased our currency, Congress should no longer force Americans to do business in dollars if they would prefer to transact in gold, or silver, or cigarettes or seashells, for that matter. Free people should be free to associate and do business in ways that benefit them. Instead they are forced to use the unstable dollar to their own detriment, and the benefit the government.
A Bear Stock Market Rally?
We're going to take our "Crash Alert" flag down for a while. Finally, the Dow shows signs of life. We won't know for a few days...but we'll take a guess: the rally will continue.
Stocks in the United States have lost $11 trillion in value - more than cut in half - without a single major bounce. We expected one after Obama was elected. All we got was a 15% ricochet. Then, after he announced his major stimulus/bailout/boondoggle program...we thought, surely, stocks would rally then. Nope. Instead, globally, stocks are down 20% since Obama office.
But a rally in a bear market is one of the surest phenomena investors can count on. After so many years of rising prices - the bull market began in August 1982 - investors have learned to 'buy the dips.' Now, they're looking at a Grand Canyon of a dip; many can't help themselves. All they need is a little encouragement.
Yesterday, the encouragement came from Citigroup - which said it had made money in the first two months of '09 - and from Ben Bernanke, who said we needed to regulate the financial sector better.
The rest of the news is terrible, awful...revolting.
Unemployment in the United States is up over 8%. A Bloomberg survey says it will go to 9.4% before the end of the year. Our own guess is that it will top 10%. By summer, one out of every ten people in the 'workforce' will be out of a job.
There are always some people living on the margins...hand to mouth...paycheck to paycheck. The trouble is that the margins are getting wider. "24 Million Go from Thriving to Struggling," says a headline at USA Today. Not hard to see why. When you live from paycheck to paycheck, losing a job is a disaster. And in February alone, 651,000 jobs were lost.
Obama says he's going to put millions to work with his spending proposals. He pointed to 60 new jobs in Maryland, on a highway-paving project:
"That's how we're going to get this country back on its feet," he said.
When we lived in Maryland, the only people who worked on paving crews were immigrants from Latin America. No one else wanted the job. But maybe things have changed.
Meanwhile, Congress has gotten into the spirit of the Boondoggle Age. It sent a $410 billion spending bill to Obama for his signature. Included in the bill were 7,991 "earmarks," or pet projects that didn't make it into previous bailout, stimulus and boondoggles programs. Included in the spending bill, for example, is a program to pay for eyeglasses for people who are supposed to be blind...and to increase funding for Amtrak. The passenger train system has been losing money for as long as it has existed. According to classical economics (and plain good sense) Amtrak makes us all poorer. It takes valuable resources - labor, steel, electricity and so forth - and turns it into a service - transportation - which consumers judge to be worth less than the resources that went to provide it. Yet, that is the whole theory of the Obama stimulus program! Spend money on things that are unprofitable. (If they were profitable, they wouldn't need public funding.) Somehow, wasting wealth is supposed to make us all better off.
As we think we reported yesterday, the bill for all these crisis- related boondoggles (including financial guarantees) is headed towards $12 trillion. And Paul Krugman, Nobel Prize-winning economist at the New York Times, believes even that is not enough!
"Many economists, myself included, actually argued that the plan was too small and too cautious. The latest data confirm those worries - and suggest that the Obama administration's economic policies are already falling behind the curve.
"To see how bad the numbers are, consider this: The administration's budget proposals, released less than two weeks ago, assumed an average unemployment rate of 8.1 percent for the whole of this year. In reality, unemployment hit that level in February - and it's rising fast.
"Employment has already fallen more in this recession than in the 1981- 82 slump, considered the worst since the Great Depression. As a result, Mr. Obama's promise that his plan will create or save 3.5 million jobs by the end of 2010 looks underwhelming, to say the least. It's a credible promise - his economists used solidly mainstream estimates of the impacts of tax and spending policies. But 3.5 million jobs almost two years from now isn't enough in the face of an economy that has already lost 4.4 million jobs, and is losing 600,000 more each month."
Yes, dear reader, looked at individually, each spending project may make us poorer - but we'll make it up in volume!
But here at The Daily Reckoning, we always look on the bright side. Yes...you know what we think of bailouts, rescues, and stimulus packages - they're all claptrap, eyewash and bamboozle. And they'll delay the restructuring that the economy desperately needs. But looking at the part of the glass that is half full - at least they make it easy for us to carp and criticize.
*** Poor Bernie Madoff is going "up the river." The expression "up the river" refers to Sing Sing Prison, 30 miles up the Hudson River from New York City.
How much time will Bernie do? "Life," said one report. "For up to 150 years," said another - perhaps over-optimistically.
Bernie has copped a plea. When his attorney is asked the question, he is expected to reply: "Guilty as charged."
Meanwhile, poor Martin Armstrong rots away in a New Prison. We will tell Armstrong's story when we have more time. It has all the ingredients for a great conspiracy story - the CIA...an omniscient computer program...money...power... you name it.
Martin Armstrong was once the highest paid economist in the United States, as head of the Princeton Economics. At least, that's what the papers said. He developed an elaborate cycle theory, which was said to predict major market turns. Now, poor Martin is a convict...serving out a five-year sentence, after having spent eight years in jail for contempt of court, on charges related to an alleged Ponzi scheme. "Alleged" is an important word, because Armstrong was never tried or convicted on the original charges. But we'll leave that for another time....
Even from his jail cell, Armstrong still keeps up with the economy. His 8.7-year cycle theory predicted a downturn would begin in the summer of '07 - which it did. But now...get this...he says the recession will last for 23-26 years! Why so long? Because the feds won't allow the economy to heal itself, he says.
We don't know if he'll be right or wrong. But it is a shame to keep people like Armstrong and Madoff in prison - at taxpayer expense. Both could make valuable contributions to society in order to compensate for their alleged crimes.
We have previous suggested that Madoff be tapped for Secretary of the Treasury. The United States is running the biggest Ponzi scheme of all time, paying off old loans by taking out new ones. Why not let a real pro run the program?
And surely some under-secretary post could be found for Armstrong. In the news over the weekend came word that Geithner was working 'night and day'...and alone. He is supposed to have a full complement of hacks and functionaries to help him; but they haven't been appointed or approved yet. So Geithner sits at his desk and talks to himself. What a pity! Destroying a major economy is not a job for a single man. Even Alan Greenspan had a crew of apparatchiks to help.
Free Madoff! Free Armstrong! Let the pros do the job!
*** And a note from our intrepid correspondent, Byron King, on why all of the cool kids own gold - and you should too:
"I'm recommending gold because it's one way - and an ancient and established way - to preserve your wealth and purchasing power over time, especially during uncertain times.
"Gold has history. Gold is to wealth as Sun Tzu is to the art of war. Gold is real. Gold is solid. Gold is nobody else's liability. Gold is quiet. Gold can be your own little secret. Many people even believe that gold is money! Archaeologists tell us that for about 8,000 years of human history, if you had gold, you could buy stuff. And if I owned a restaurant and you wanted to pay for your hamburger with a $50 U.S. Gold Eagle, I assure you that I'd take the coin and find a way to make change."
Although gold may be in the midst of a correction due to this bear market rally, the long-term outlook for this precious metal is very, very good. Take advantage of this dip in the price and buy some of the yellow metal to pad your portfolio. You'll be happy you did. See here.
*** An account of what we did this weekend...
We are stuck with houses, dear reader. Chained to them...forced to take care of them... we are their prisoner.
So we asked our gardener, Damien, to come on the weekend so we could work together. There were trees to cut...wood to split and stack...trees to trim...debris to burn...and weeds to pull.
Damien is the best worker we've ever seen. He gets up early...he gets onto the job...and he doesn't stop.
At 7:30AM we were still having our coffee and a croissant, but out the window we saw Damien. He'd already gotten out the tractor and was loading up the firewood cut the previous day.
It was a wet day. A drizzle came down...making the logs slippery and hard to handle. We picked up only the light wood...we'd come back later with the log splitter for the heavy pieces. After several trips, we had loaded up all the wood we could pick up. Then, we attached the log splitter.
What a marvelous device! Rural people all over the world must have welcomed the hydraulic log-splitter like a rich uncle. If Abe Lincoln had had such a thing, he probably would have stayed in Kentucky...and spared the nation a disastrous war. It makes splitting wood so much faster and easier than doing it with axes, hammers and wedges. You just set up the logs...and the hydraulic-driven wedge comes down and splits it. The hard work for us was maneuvering the huge logs onto the splitter. Many of them were so heavy, it took both of us to get them in place.
After a few hours, your editor was beginning to get tired. Damien never takes a break. Not even to talk. He just grabs a cigarette and smokes as he works. We stopped for a quick lunch...and then right back on the job.
By the evening, your editor was beginning to move more slowly. He was keeping up...but barely. All that bending and lifting - he wasn't used to it.
We had ricked up a huge pile of branches, about the size of the Great Pyramid of Cheops in the center of the park. Damien had parked the wagon with a can of gasoline and some old newspapers off to the side.
"Aren't you afraid that the wagon is too close to the fire," we asked him.
"No."
He then took the tractor and, using the front forks, raised up a side of the pile as if peeking under a woman's skirt. With the pile lifted up, he put under it a rubber tire, filled it partially with gasoline, and set it aflame. The flames shot up as Damien raced to the tractor to move it out of the way. Within a few minutes, the whole pile was blazing hot.
It was about 8 in the evening. We continued throwing branches onto the fire and enjoying the heat. We hadn't noticed that the sparks were being carried by the wind over to where the wagon sat. One of them must have fallen onto a little gasoline. All of a sudden, we saw the wagon blaze up.
"Don't worry about it...it will go out," said Damien. He was right. The old wooden wagon had been soaked by the slow rain. The gasoline burned off quickly...and the fire went out.
A Broken Down Stock Market
The Dow ended yesterday's trading at 7,114. Before this correction is over, it will trade below 5,000. That has been our prediction for the last 10 years. Maybe we were a little early. But we're sticking with it.
Besides, top stocks have been a bad bet for the last 12 years. They're now back to '97 levels...meaning, investors have made nothing for a dozen years. Stocks for the long run? How long do you have to wait?
And now, the stock market is breaking down...again. Dow Theory has given a Bear Market Signal. What that means, exactly, we don't know. Top stocks will go down until they stop going down, we guess.
Citigroup is moving "closer to toast," the New York Times reports. The market cap of Citigroup has fallen by more than 50% since Monday. "I think it is going down," writes old friend Jim Davidson. "My best guess, it will be nationalized...on a 'temporary' basis."
Many are the economists urging the government to nationalize the big banks. People need confidence in the banking system, they say, or we'll all be toast.
Among the big names in favor of nationalization is Nouriel Roubini, one of the few economists who seemed to know what was going on. He saw the crisis coming and said so. Now, he's practically a media star.
Of course, we saw the crisis coming too...here at The Daily Reckoning. We said something too... But we're still waiting for the press to call...just so we can hang up on them. The worst thing that can happen in this trade is success. It makes you think you know what you're talking about. The next thing you know, you're giving advice to central bankers and major corporations. Then, the gods get their backs up. Everyone starts believing what you say...even you.
If we were in charge, we'd get out the toaster. But nobody asks our opinion. And it's probably a good thing. Because when people come to think what you think, what you all think is probably wrong. At least, that's the way it tends to work in the financial markets. As soon as everyone gets on to a trend, it is soon over. Back when the going was good, for example, everyone thought it would be good forever. Naturally, it stopped being so good soon after.
Now, what does everyone think? Hard to say. We read the headlines and try to figure it out.
"In Gold We Trust," says a headline at the Wall Street Journal. Gold fell back below $1,000 yesterday. The yellow metal seems very popular. Maybe too popular. But does everyone think gold is going up? We hope not; if they did, we'd have to sell.
Still, most people still think gold is a little kooky...the kind of stuff that grumpy old men bury in their back yards. And most professionals, too, still think gold is weird - an investment for grandpas. 'Worried about inflation?' they ask. Then, solving their own problem: 'Just buy TIPS. You know, government bonds indexed for inflation. You'll collect some interest...and you'll be protected against inflation. These bonds are indexed to the CPI.'
TIPS are cheap. That is, you don't give up much yield to get the inflation protection. But if investors can get protection from inflation for only, say, 1% of yield...what does that tell us? Well, it tells us that investors think the rate of inflation over the next 10 years - TIPS are equivalent to 10-year notes - will be only about 1% per year.
People don't call an exterminator when they have no pests. Gold is protection against inflation. They don't usually buy gold when they don't fear inflation. The TIPS premium - the extra that investors pay (or the yield that the give up) - is so low, it tells us that investors aren't afraid of inflation.
What are they afraid of then? Why is gold going up? What is it that everyone thinks?
Our guess is that people don't know what to think. Some - and only some - are hedging their bets by buying gold. Something funny is going on, they must think. They don't know exactly what it is, but they're sure it won't end well. They buy gold...just in case.
We continue to hold gold because we know it is the ultimate store of wealth... Think about it this way. No paper currency has ever stood the test of time. They've all eventually become worthless pieces of paper. But gold has not, and will not. This is why it is the ultimate hedge against inflation...against uncertainty in the markets...and is the anti-paper. This is why we hold it...and why you should do the same. Find out how you can get the precious metal for just a penny per ounce. See here.
So, the major trends continue. Top stocks go down. Gold goes up.
*** The S&P 500 took quite a beating last week. After breaking through near-term support at in the 804 area - the bottom of the market's intermediate trading range - stocks market are now poised to test November lows at 741 on the S&P. But Easy Money Options' Wayne Burritt thinks, if history is any guide, that the market may be poised for a bull run.
"The recent technical action is shaping up much like the market's recovery after the dot-com fiasco. Back then, the S&P tested the 769 to 789 level three times in the eight-month period between July 2002 and March 2003. Each time the levels held and after the third was over, the market commenced a spectacular bull run.
"In fact, from its jump-off point of 783 in March 2003, the market didn't stop until it reached 1576 in October 2007. That's a staggering 101% gain in just over four years.
"Today, the markets are wrestling with similar lows in the 741 area. It made its first test in November and succeeded. It's now in the midst of a second test. If my thinking is right, it will test that low, recover and then test it once again. After the third, a new bull run could be in the cards."
Wayne does admit that the fundamental pressures of today are much worse than following the dotcom bust...and that means the market bias going forward is certainly to the downside.
However, Wayne has his sights set on a handful of companies that are prepared to move up - no matter what the broader market does. See here for all the details.
*** Looks like Paul Volcker is channeling Gloria Gaynor...
Volcker, former head of the Fed and hero of the inflation fight of the '80s, says of capitalism: 'I will survive, I will survive.'
We did not read Mr. Volcker's speech. But we can imagine it. Capitalism, in its various forms, has been around for a long, long time. It is unlikely to go away, simply because everything else is a fraud and a scam.
What a delight to see Mr. Volcker rise to defend capitalism. The old creed needs a lift. Every crackpot and malcontent on the planet is gunning for it - including Danny Ortega, here in Nicaragua.
What is capitalism, after all? It is not a system...not a plan...not a program. It was not decreed by any half-wit tyrant...nor written into law by any earnest assembly. It has no constitution...and no boundaries. It is merely a recognition of basic principles. 'Thou shalt not steal,' it says in the Bible. Capitalism recognizes other peoples' property. The baker has a right to his oven. The farmer has a right to his land. The capitalist has a right to his money. What they do with these things is up to them.
Will they make mistakes? Of course they will. Will they do evil and obnoxious things? No doubt about it. Will they occasionally lose their heads and overprice their assets...or run the whole economy into too much debt...or blow themselves up in a bubble? You bet.
As Adam Smith described, they will also bumble along to create the wealth of nations.
But larceny wasn't invented in the 21st century either. Naturally, people want what the capitalists have. Everywhere and always, the thieves will find reasons why they should be able to take it from them. They will respect the environment better, they say. They will invest in 'socially responsible' projects, they claim. They will heal the lame and make the blind see. If only they get their hands on your money!
Here at The Daily Reckoning, we don't particularly like capitalism or capitalists. We just don't like anyone telling us what to do. So, doing unto others as we would have them do unto us, we make no effort to tell others what to do with their money. If they want to give it to Bernie Madoff or to Barack Obama, so be it - just count us out. If they want to invest in CDOs and MBDs...well, good luck to them; but don't look to us to bail them out.
*** "Danny Ortega is not really the person making the decisions down here," explained a Nicaraguan friend. "It's his wife. And she's a witch."
We thought she was expressing an opinion. Instead, she was merely stating a fact.
"No, she's a real witch. She even organized an international witch convention here in Nicaragua. Witches from all over the world came to participate. You should see her. She wears rings on all her fingers. Each one is supposed to be a talisman of some sort. You have to watch out, or she'll put a curse on you.
"Naturally, the whole country is a mess. These people have no idea what they are doing. But they are convinced that capitalism is bad. So they try to stop it. What that means in practice is that they make it very hard to invest in Nicaragua. Just look around. Do you see any new factories? Any new roads? Any new developments of any sort?
"Well, maybe out here at the beach, where rich foreigners are building houses. But the rest of the country has come to a standstill. Of course it has, because who wants to invest in a country run by a witch?"
*** "It's the same down here as everywhere else," explained a developer in Nicaragua. "During the boom, people were creating new developments everywhere. Most of them got to the advanced design stage. Lots were laid out and sold. But the infrastructure was never completed. Now, a lot of those places are just closing down. It's not a good time for us.
"But I just think it is a lull. Over the long haul, Americans will still want a nice place to retire. And Danny Ortega should be gone - I hope - in a few years. There's no prettier or nicer place in the Northern Hemisphere. The coast is beautiful. The beaches are nearly perfect. And the prices are still very low compared to other beach areas. When the economy picks up, this place will come back to life and people will begin building again. It's not like Detroit. That city will probably never come back to life."
Green Energy's Beneficial Impact on Natural Gas
Of course, this may seem like common sense. But it does make a statement about the necessities in life. Most areas these days are heated with natural gas… Meaning, you are mandated to pay for natural gas to live.
Here's a small-cap technique to use this pay-to-play mandate in your favor…
Top Stocks Market Trouble In Tokyo
Tokyo reported terrible GDP numbers a few weeks back. The U.S. dollar was spurred by this report, moving 5 whole cents, from 93 and 1/2 to 98 and 3/4. But believe it or not, the news is still working magic in the market.
In short, it initiated a new change in currency relationships. Up until this point in the last several months, any time the U.S. dollar weakened against the pound or euro, it strengthened against the yen, and vice versa. Now the U.S. dollar is taking on all challengers. All three of the other majors weakened together, while the U.S. dollar went on to make new credit crisis highs. Hot Stocks
However, on Friday of last week, it appeared that the old correlations may have been coming back. The end of the week brought U.S. dollar weakness against the yen, but strength against the euro and pound.
So let's look at the skinny on this dollar/yen relationship a bit more.
It wasn't just last week that brought about a revival in the yen's weakness. Since Jan. 21, the yen has lost 12% against the greenback. That's in only five weeks... a pretty substantial move. On the technical side we saw it put in the infamous double bottom formation. It has moved steadily in favor of the dollar ever since.
The question in my mind is this: While Japan's GDP number was deplorable, it wasn't entirely unexpected, was it? It came at the end of a long line of bad news. Consider that industrial output fell 8.5% in November, 9.8% in December and then 10% in January. Exports dropped a whopping 45% in the last year. Many pundits bemoan the U.S. plight of being a non-manufacturing economy, but Japan's numbers show that manufacturing economies are faring no better than service economies.
But in spite of all this bad news, how has Japan's currency continued its stellar rise, and why now does it appear to be reversing? Have the fundamentals become just too bad to ignore? Or is something else afoot?
Currencies do not rise and fall on the sheer strength or weakness inherent in them or in their economies. They rise and fall because of the factors of supply and demand. The yen was not appreciating because it was the strongest or the surest or the safest. It was driven to these levels simply because the money flows from the long-held carry trade absolutely overwhelmed the market's ability to distribute them quickly enough. Best Stock Investing
In other words, for years, a popular trade was to borrow yen and use them to buy just about any other currency. Since the yen had an official interest rate of zero, traders could borrow them practically for free. Then they'd use the yen to buy a currency producing a higher rate of interest. The profit came from the appreciation of other currencies against the yen, as well as in the form of the interest rate differential. This is what is commonly called the yen carry, or the carry trade.
Its simplicity made it exceptionally valuable. How could you go wrong? If you can get something for free, and then sell it at any price, you will always make a profit.
But when the housing crisis began to unfold, followed by the credit crunch, traders began to worry that their high-paying interest rate differentials might be in serious trouble. What if the high-paying currency they were holding defaulted? What if the banks started cutting interest rates and they could no longer get that primo return? What if pigs started flying? What if? What if? What if?
And so, the panic began. and traders began "unwinding" (getting out of) their carry positions.
What did this do to the yen?
As you know, all currencies are traded in pairs. That is, you sell one currency then buy another. For the years of the successful carry trade, traders sold the yen to buy other money. In doing so, the yen became less and less valuable the more it was sold. Japan, as an exporting manufacturing economy, was perfectly content for it to be so, as it made their goods cheaper for the rest of the world to buy.
But when panic and fear gripped the market, and traders started to get out of their carry positions, it meant that they were selling everything else and buying back the yen. More buyers meant fewer yen. More demand on less yen meant higher prices. So the yen began appreciating like a rocket, especially against the dollar.
Was it fundamentally more sound? Was it an interest rate acceleration that propelled it? Not at all.
Just as there was no real reason for the U.S. dollar to be at 123.50 during the middle of 2007, there was also no economic rationale for the yen to be at 88.00 either.
As the world was flooded with euros, pounds, Aussies and kiwis, the yen was forced higher and higher. The money flows were essentially a one- way street, and the yen could only go in a single direction: up. Top Stocks Market
But now that the vast majority of these trades are unwound, and the money flows are subsiding in this trade, the fundamentals are again reasserting themselves.
Japan's economic condition is considerably weaker than that of the United States, and it appears that there is little the country can do about it. Printing money has not worked in the past, and it is not likely to start working now. Perhaps world demand for their goods will increase. It is doubtful, but even so, there is nothing that they can do to alter that factor either. Finally, in a world where no one is buying, trying to change from a manufacturing/exporting economy to an economy that favors domestic consumption does not happen overnight.
Success in Today's Market Is All About "You"
The days of "well, I have a broker and he's going to take good care of my investments" are over. We see this played out everyday as more brokerage firms struggle to survive and unfortunately, we see folks like Madoff facing serious charges.
Here's how you can take control of your investments:
1. Understand what the market is doing.
That's first and foremost. You can invest in a good stock that's breaking out of a set-up, but if the market direction isn't behind you, it's like riding a bike into a fierce wind. You must understand where the market is and where it's likely to go in the short-term. Then, invest in the best set-ups that will be helped by the market direction. It's much easier to ride a bike with the wind at your back.
2. Trade only the best set-ups.
Let's take a look at NVEC, which triggered a long-side trade last week…
When a stock is moving higher, it doesn't go straight up. Instead it rises, then has mini-downtrends where it consolidates its gains before moving higher. These mini-downtrends are where it pulls back off of its highs in an orderly manner ― often to an area of key support such as its upward trend line and/or 50-day moving average.
We connect the lines of the mini-downtrend. A break above the pink line triggers a trade on the long side. For that reason, NVEC was an ideal long side set-up last week:
On Tuesday morning, NVEC triggered a trade by breaking above the pink line.
By Tuesday's close, we were already enjoying a gain of 5%. And Wednesday morning, we locked in gains of 8.9% ― a nice gain in today's market in just over 24 hours.
This leads to step #3.
3. Take your profits when you have them.
While on the surface, a 9% gain may not seem like much, I have to tell you that if you just did one trade like that a week, you'd significantly outperform most brokers, money managers and mutual funds. After all, most of these money handlers are nothing but "Managing to a Benchmark" cookie-cutter indexers that know how to sell but not how to manage. Have you seen what the indexes and mutual funds are down year to date? If your traditional account mimics the indexes, you know you're working with one.
Just think about it. Let's say you have a portfolio of $50,000. And you invest in 200 shares of NVEC at 28.22. After selling it at $30.74, you've made a profit of $504. Multiply that by 52 and you have a one-year profit of $26,208 or 52%! And that's just from doing one trade like NVEC a week.
What would a one-year gain of $26,208 do for you? Well, it would easily put you well ahead of what most brokers could do for you.
Stocks may continue to go in the direction we want after we take profits. But for the time being, you are never going to go wrong ringing the register on short-term gains. For example, what if we didn't lock in our NVEC gains at $30.74? Our gains would have been gone as the stock went right back to where it was when it originally triggered.
Now don't get us wrong. We aren't out to get brokers. We know a lot of them and many are very good. But the point we are trying to make is the days of handing your money over and expecting a traditional Wall Streeter to perform are over. To be successful, you have to be in control of your investments. After all, only you have your best interests at heart. As good as your conventional Wall Streeter may be, he's not able to watch your investments as good as you can.
Forget About Stock Market Recovery
At the risk of confirming my critics' dumbest charge ― that I am a "doomer" ― the mandate of clarity requires me to ask: to what state of affairs do we expect to recover? If the answer is a return to an economy based on building ever more suburban sprawl, on credit card over-spending, on routine securitized debt shenanigans in banking, and on consistently lying to ourselves about what reality demands of us, then we are a mortally deluded nation. We're done with that, we're beyond that now, we've crossed the frontier and left that all behind, and we'd better get our heads straight about it.
I maintain that there are countless constructive tasks waiting to occupy us on a long national "to do" list for rebuilding a national economy, but they are way different than the ones currently preoccupying government and the mainstream media. The Obama White House, Congress, and The New York Times are hung up on exercises in futility ― "rescuing" banks and insurance companies that cannot be rescued (because they are hopelessly trapped in "black hole" credit default swaps contracts), and re-starting a "consumer" binge that was completely crazy in the first place, based, as it was, on a something-for-nothing standard-of-living.
Meanwhile, if the buzz on the blogosphere is a measure of anything ― and I think it is ― then a new consensus is forming out there about where to start doing things differently. Unfortunately after less than two months in office, President Obama finds himself awkwardly behind-the-curve on this. It begins with the understanding that a general bank rescue is hopeless and, going a step further, that the people who caused the train wreck of "innovative" securities have to be prosecuted. The public's collective voice on this is muted but growing. It has been muted by the general air of blackmail that the banks have used to enthrall policy and opinion ― the "too big to fail" idea ― in effect holding the nation's future for ransom.
Last week, New York State Attorney General Andrew Cuomo hauled Bank of America chief Ken Lewis into his office to explain who, exactly, received an aggregate several billion dollars in bonuses late in 2008 after the US Treasury forked over billions of dollars in TARP money to his bank. That was a good start. Mr. Lewis, being lawyered-up to the max, had the temerity to reply that answering the question would compromise his ability to keep talented people in his employ. For that impertinence alone, Mr. Lewis ought to be dragged over fifteen miles of broken chardonnay bottles behind a GMC Yukon ― but that is not how we do things in American jurisprudence. To be more realistic, a simple indictment would be in order, and then Mr. Lewis can answer this question, and a few others, in the comfort of an air-conditioned courtroom. Ultimately, that might lead to Mr. Lewis becoming the wife of a bodybuilder in one of New York State's houses of correction ― a just outcom e that would go far in rejiggering the nation's expectations about how people in authority ought to behave. And such an outcome might lead to the conviction of many other brides-to-be from the Wall Street debutante pool.
Now it has come to light, just last week in the wake of AIG's latest bail-out, that previous AIG bail-out money to the tune of $50 billion was distributed to a set of banks including Goldman Sachs (former employer of then Treasury Secretary Hank Paulson and then New York Federal Reserve Governor Tim Geithner), plus Morgan Stanley, Merrill Lynch, Mr. Lewis's Bank of America, and a long list of European banks with operations in the USA. Since the transactions took place in New York State, the investigation of these irregularities alone could solve the unemployment problem here if NY Attorney General Cuomo were given a free hand in hiring staff to depose everyone involved ― including the hiring of caterers to bring in coffee and meals for round-the-clock proceedings.
All of this raises another awkward question: where is United States Attorney General Eric Holder in this situation? Surely the federal statutes offer some grounds for inquiring about the misuse of Treasury funds ― and many other issues arising from Wall Street's stupendous orgy of misbehavior. What I'm hearing out in the blogosphere is a growing clamor to call people to account before we are really able to move on to the massive task-list that awaits us in rebuilding our economy.
The bigger question for now is whether any of these authorities will act effectively before the public simply goes apeshit and starts burning down Greenwich, Connecticut. The dangerous shift in public mood is liable to occur with shocking swiftness, in the manner of "phase change," where one moment you see a bewildered bunch of flabby clown-citizens vacuously enraptured by "American Idol," and the next moment they are transformed into a vicious mob hoisting flaming brands to the window treatments of a hedge funder's McMansion. The moment of opportunity for avoiding that outcome is looking sickeningly slim right now.
Another thing that President Obama can set into motion anytime ― and pull himself back to the head of the curve of leadership ― is to either by executive order or by proposal to congress, shut down the credit default swap system for a period of time while procedures are drawn up to place all these dubious contracts in a "clearing" market, where the holders of them will have to come clean about what they're sitting on. The lack of this procedure is allowing zombie banks to hold the United States hostage for never-ending bailout ransoms. None of these banks are going to survive another six months anyway, so the basic blackmail motif that the whole money system will collapse if ransoms are not paid is a bluff that has to be called sooner or later in any case. So Mr. Obama might as well get on with it.
Once these two matters are dealt with ― an earnest start-up of prosecutions and disabling the credit default swap blackmail racket ― then perhaps a stressed-out and impoverished public might be induced to not go apeshit and instead get on with the mighty task of rebuilding our nation along lines that have a plausible future.
It's awfully quiet out there, Shooters.
In response to Bill Bonner's treatise on Baltimore and Detroit:
"But I guess corporate welfare is OK. Give the banker terrorists all the money they want. After all, they've treated the world to a wonderful crisis. They deserve whatever we can give them. Too bad you were born with the dreaded Conservative gene. But soon modern medicine will be able to block it. Then you may be free to evolve into the full potential that human beings are capable of."
Oh, right, because we've championed corporate welfare repeatedly…wait, no, actually we didn't. In fact, we say that all welfare is bad and we say it several times per week.
I find that people who believe in evolving into full human potential are usually vegan daydreamers…or Canadians…
"I'm a Canadian and reside in the interior of British Columbia (if you even know where that is). The more I read about the beleaguered American state, the more thankful I am to be a Canadian. Study our model, and flirting with socialism isn't the root of all evil as you yanks have been taught to believe. Our greatest fear is the lock step we've embraced with our biggest trading partner to the south, of a fear-based police state coupled with one of the soon to be worthless fiat currencies."
We here at Agora Financial know very well where British Columbia is. We ― and one thousand of our dearest readers ― fly up there every year for the Agora Financial Reserve held in Vancouver. In fact, it's the Symposium's 10th anniversary as well as the 10th anniversary of our flagship e-letter The Daily Reckoning. For details, just call Barb at (800) 926-6575…and tell her the guys at the Whiskey Bar sent you.
We all know the love of money is the root of all evil…and we also know that taking things by force will land you in hell…even if you rationalize your theft…and especially if your intentions are good. Good intentions make for really good asphalt.
The irony of good intentions is that they have the worst results. We refer you to the welfare war zones that used to be our nation's urban powerhouses.
The U.S. is indeed on its way to becoming a full-fledged police state with a worthless fiat currency…and it will be a socialist leader who takes us there. More on this to come (and I expect to hear your opinions on this, Shooters), but in the meantime you may want to take a few precautions by clicking here.
A Shooter chides, "Greg [sic], pretend to be paying attention to the articles and e-mail me once in awhile with a remark that sounds intelligent!!!"
It's…er…"Gary"…but thanks for writing anyway. I look forward to hearing from the rest of you, too.
A 379-Point Rally for the Dow Jones Industrial Average
The day ends with a massive rally as the Dow Jones Industrial Average (DJIA) surges 379 points. The S&P 500 (SPX) jumped 6% while the Nasdaq Composite (COMP) and Russell 2000 (RUT) each advanced 7%.
Continuing the pattern we saw earlier, the sector graph shows most stock-related groups rallied. The only decliners were bonds, oil, gold and the Amex Gold Bugs Index (HUI). Financials led the charge as the Regional Bank HOLDRS (RKH) jumped 16%. The SPDR Homebuilders (XHB) gained over 10%.
Looking at the SPX, this marks the largest single-day advance since November 24. While that sounds impressive, you may want to consider the daily chart below. I have put my cursor on the day of that rally. It is true that we did see a rally off the lows. However, it is equally true that the bounce was relatively short-lived and the market went on to make new lows. In other words, rallies in a bear market may "feel" good but they must be viewed in context. By that, I mean it is important to understand they can be violent but short-lived. Bulls markets trend higher with sudden pullbacks. Bear markets grind lower with sudden rallies.
My intent here isn't to spread gloom. I simply want to remain objective. On the bright side the Dow Jones Industrial Average (DJIA) did break the downtrend shown below. This opens up the possibility of a run to 7500 or even 8000 before heavy resistance is hit. However, if we do rally that much, we will likely be overbought. In other words, when the rally "really" starts to feel good, it will be at its most vulnerable. That will be the point where we will get a true test of how strong the buying demand really is. But I am getting way ahead of where the market is now.
For now, we head into tomorrow with the broad market indices trying to rally off their lows. A short-term downtrend has been broken and we are coming out of an oversold condition with room to run before serious resistance is met. If this can't entice buyers to step in from the sidelines, I am not sure what would. And that is where I will pick up in the morning. Have a nice evening.
U.S. Banks Overrun by Dirty, Rotten Scoundrels
Our theme today comes from a movie, in which Michael Caine teaches Steve Martin how to be a gigolo. The idea is to identify rich, vulnerable women...seduce them...and then take their money.
In today's world, becoming a real gigolo is social climbing. The average man - even one from a good school and a good family - is an oaf. Next to him, the gigolo, with his suave manners and dandyish airs, is like a Venetian palace next to a double wide.
Besides, the gigolo gives value for money. A woman gets little thrill or merit from landing a Wall Street hustler; no matter how rich, he is almost always boorish and preoccupied. But the gigolo brings refinement and taste to a woman; he makes her feel exceptional because he is exceptional. To a woman of a certain age, his attentions are a welcome as bad lighting.
We only bring it up because it is the front-page story at the Financial Times this morning. Whether life imitates art, or the other way around, we don't know; but yesterday a poor gigolo was sentenced to six years in a German hoosegow for taking advantage of Susanne Klatten. The two met at a health spa - where the hunter scouted his prey. Then, after he had made his advances...without too much resistance, it appears... he made up some cock-and-bull story about having an accident in which a child was hurt. According to him, the mafia was after him. And if he didn't come up with $7 million to pay them off, he was going to have his fine bones broken - or worse.
Naturally, his rich mistress produced the money. But then he got greedy and wanted more. He threatened to show some embarrassing photos to her husband. And then she called the cops.
All of this might have gone unnoticed had the woman involved not been the richest woman in Germany, heiress to the BMW fortune.
Ms. Klatten, no doubt, regrets the affair. Her spirit might have been willing to put up a fight, but her flesh was weak...as it with us all. But she is hardly the only woman - or man - to be robbed by dirty, rotten scoundrels.
"Help needed as investing frauds rise," says a piece in the International Herald Tribune. The IHT focuses on another swindler - Arthur Nadel, accused of bilking investors out of as much as $300 million. But the point of the article is that while jobs are scarce - even bank robbers can't find a bank worth robbing - 'receivers,' court appointed liquidators, can name their price: It's a "job that has become increasingly in demand in such huge investment fraud cases as the Bernard Madoff scandal and the one against the Texas tycoon, Allen Stanford."
But first, let's turn to the headlines...then we'll come back to the dirty, rotten scoundrels.
Yesterday, the Dow lost another 80 points. Oil continued its rise - to $47. And gold reversed downward, losing $24. Maybe the correction in gold isn't over...we'll see.
The Wall Street Journal is now wondering out loud if the Dow could fall to 5,000. And so is Barron's. It's a 'bearish possibility,' says the WSJ. But Barron's voices what we think is still the dominant emotion of this market. "Will the Dow fall to 5,000?" it asks. "We don't think so," it replies.
Not only are the papers discussing our Dow target, they're also beginning to catch on to what is really happening.
The economy is in the grip of a "depression dynamic," says Bloomberg. For the first time sine WWII, the global economy is shrinking...it continues...led by the United States of America.
"Job losses hint at vast remaking of U.S. economy," adds the New York Times.
David Rosenberg of Merrill Lynch looks that the numbers: There are now 12.5 million people out of work in the United States - a 25-year high. This is a lot more joblessness than the typical recession produces, he notes. "In just five months we have lost 50% more than we usually do in a classic 10-month recession."
Oh, for an old-fashioned 10-month recession! This is not a recession at all - it's a depression, in which the economy will be restructured, not merely re-inflated.
*** In a speech yesterday, Helicopter Ben stated that a recovery would "remain out of reach" if the major financial institutions were allowed to fail.
If the banking sector is stabilized, said he, a recovery later this year is not out of the question.
Once the banks find their footing, the Fed chairman says, "then I think there is a good chance the recession will end later this year and 2010 will be a period of growth.
At the risk of sounding redundant: this is a depression. Not a recession. But nothing like a nice, healthy dose of deluded optimism from the head of the Federal Reserve to get you through a Tuesday.
*** Depressions seem to bring out the dirty, rotten scoundrels. Richard Fuld - formerly head of Lehman Bros. - was in Paris this week. A friend reports seeing him at a wedding reception held at the exclusive Automobile Club on the Place de la Concorde. We didn't ask questions. But we're happy to see Mr. Fuld still has the joie de vivre to go out...socialize...and have a good time.
Some guys would have been laid low by his experience; they would cower in a bolthole somewhere...unable to show their faces in public...embarrassed and ashamed. After all, Fuld sank one of the world's great financial institutions...and brought billions worth of losses to millions of people. If he were Japanese, for example, he would have at stepped in front of a bullet train or removed his own intestines. But dirty rotten scoundrels just go to fancy weddings.
Of course, we have no particular reason to single out poor Dick Fuld. The scoundrels are so thick on the ground, you can scarcely jump out of a window on Wall Street these days without falling on one of them.
Forbes says the entire U.S. financial industry is "effectively insolvent," thanks to their errors and omissions. But now that everyone is pointing his finger at capitalists...we take their part. We're suckers for lost causes and underdogs. Yes, they are dirty rotten scoundrels...but the people who now pretend to save us from them are even dirtier and rottener.
At least Dick Fuld got rich honestly - by misleading investors. Even Bernie Madoff made his money, too, the old-fashioned way - like a gigolo - by defrauding investors, one at a time.
But now the whole thing has been turned over to the big boys. Now we're getting theft and fraud on a much bigger scale. Trillions of dollars are being given out by politicians and functionaries. AIG, for example, has been described as 'where taxpayers' money goes to die.' But it doesn't die in AIG - it goes to pay off debts to the biggest boys left in the room - Merrill and Goldman Sachs. 'In the room, in the deal,' they say on Wall Street. Goldman was actually in the room with Tim Geithner and the feds - the only investment bank present - when the decision was made to 'rescue' AIG. Goldman may not have mentioned it at the time, but AIG owed Goldman billions of dollars. Now, the taxpayers bailout AIG so that Goldman can get its money.
*** "Our world is broken," writes Gillian Tett in the Financial Times this morning.
The FT is doing a series on the "Future of Capitalism." A lot of ponderous blah blah, as near as we can tell.
Yesterday, Martin Wolf - whom finance ministers and leading economists read in order to find out what to think - had a nice turn of phrase. Derivatives, he said, did not - as advertised - transfer the risk to those people most able to manage it. "They transferred the risk to those least able to understand it."
But when Wall Street's vaults were open, what did they find? They hadn't transferred it at all! So much risk was left in the hands of the people who created it that - when it blew up - it flattened the entire investment banking industry.
The blah blahers misunderstand their subject. Invariably, they see capitalism as a machine-like 'system' that has lost a gear or gotten a flat tire. They spend their ink wondering how to fix it. Invariably, the solutions come at someone else's expense.
Nationalize the banks. Tighten regulation. More bailout money. The usual claptrap.
Why do we say 'claptrap?' Because all these worthy fixes only make the problem worse...while, of course, giving more power and money to the scoundrels.
Already trillions of dollars have been spent supposedly fixing the machine. The latest estimate we saw was $11.7 trillion; we were so flummoxed by the number we forgot to find out where it came from. No matter. The important thing is this: they've spent trillions so far...and the machine is broker than ever. They can spend trillions more, it won't 'fix' the machine. Because it's not a machine...
"It is like saying to someone that the emperor has no clothes on...and then you find he had no underpants either," says Warren Buffet.
Buffett, too, has been surprised by how broke the machine is. He told investors last October that he was buying stocks...and they should too. Since then, the stock market has lost about 25% more of its value. The Sage of the Plains says he doesn't regret his letter from last autumn, he just wishes he had written it a few months later. He also says he sees an "economic Pearl Harbor" coming...
Economic 'Pearl Harbor?' C'mon Warren...that's a negative and silly way to look at it. The Japanese attack on Pearl Harbor was vicious, unprovoked and underhanded. Here in the building in London with the gold balls - no kidding, our office building has gold balls on the roof - we always look on the bright side. But you don't have to crane your neck to see the bright side of the worldwide financial meltdown...and it has nothing in common with Pearl Harbor. What's going on is that capitalism is going through a phase...a very healthy phase of 'positive collapse.'
We know we've given our version of the events leading up to this crisis. We will give it again.
The feds encouraged people to borrow...lend...and spend. People did it. And then they over-did it. And when they finished overdoing it they discovered that they had built way too many houses...and that the houses were priced far beyond what people could afford to pay for them. What followed was a crash in the housing market. It was not too much later that the financial industry realized that its collateral was being undermined. That's when all Hell broke loose. Suddenly, practically every asset in the world was called into question. How much did it owe? To whom? What if it couldn't pay?
The credit crunch was misinterpreted by the authorities. They thought it was a liquidity problem. So, they put out trillions of dollars to 'solve' the problem.
The problem was caused by too much spending...and they still think that if we spend a few trillions more...the problem will disappear.
Of course, it won't happen, because the real problem is debt. And there are only three ways to solve that problem: You can default. You can inflate. Or, you can work your way out (maybe).
The feds favor inflation. But $50 trillion has disappeared from the world's asset markets. So far, the feds haven't been able to keep up.
Give them time.
Buffett has faith. "Five years from now," he says, "I can guarantee you that the machine will be running fine. We have the greatest economic machine that man has ever created."
Buffett is a genius; everybody knows it. But like the FT's capitalism improvers, he misunderstands how capitalism works. Machine? It is nothing of the sort. Capitalism is not a collection of nuts and bolts, gears and switches. Instead, it is a moral 'system.' 'Do unto others as you would have them do unto you,' is all you need to know about it.
And like any moral 'system,' it rarely gives the capitalists what they hope for...or what they want. It gives them what they deserve. And right now, it's giving it to them good and hard.
Laissez-faire! Let the bad times roll!
Incidentally, the Oracle of Omaha made an appearance in our award- winning documentary, I.O.U.S.A., along with former Treasury Secretaries Paul O'Neill and Robert Rubin, former Fed Chairman Paul Volcker and more economic luminaries. If you missed the film the first time around, now is your chance to see what these economic heavy-hitters have to say about the state of the U.S. and global economy - and learn how to save your retirement. It's all in our Emergency 'Personal Bailout' Bundle, which includes the I.O.U.S.A. DVD, companion book and a special report that details how you can bailout your own finances - and accrue enough wealth to retire early.
Get it here: Emergency 'Personal Bailout' Bundle.
*** And this from our old friend John Mauldin:
"Join us in San Diego, April 4th, for the Richard Russell Tribute Dinner.
"We are going to be hosting a special tribute dinner to honor Richard Russell for his outstanding contribution of over 50 years. He is one of my personal heroes as well as a good friend. At 84, his writing today is better than ever, and now he writes every day, not just once a month! Richard is an institution in the investment writing world.
"Richard has some of the most loyal readers anywhere. I have personally talked to readers who have been reading Dow Theory Letters almost since the beginning (1956), and their enthusiasm for all things Richard has not waned.
"The dinner will be Saturday evening, April 4, 2009 in San Diego. You can get tickets here, which are a bargain at $195. Any extra money will be donated to Richard's favorite charity."
by Byron W. King
I've been following the U.S. and world energy predicament for over 35 years. If there's one common thread in the discussion over the course of nearly four decades, it's that someone is sure to say something like, "The U.S. has a lot of coal." Depending on who is doing the talking, maybe the comment will be even more specific, along the lines of "Heck, the U.S. is the Saudi Arabia of coal." Or if the speaker really wants to impress you with precision, it will be, "The U.S. has a 250-year supply of coal."
In other words, relax. It's OK. Don't panic. No matter how bad the energy situation gets out there in the rest of the world, here in the good old U.S. of A., we can always just dig some more coal. That'll let us stay warm, run our industries and keep the lights on. Right? Well, let's take a peek under the rocks and examine the state of U.S. coal reserves. In fact, here's a map from the U.S. Energy Information Agency. And based on the map, it sure looks like there's a lot of coal out there. But is there?
First, I've been hearing that "250-year supply" - thing since about 1973. But the U.S. has been mining, burning and exporting coal in immense quantities for all that time. So don't you think that the reserve estimate might have shrunk down to something like 215 years by now? Nope. That 250-year number seems never to change, kind of like those Saudi oil reserve estimates that stay the same year after year. Despite decades of coal mining, a lot of people still want to believe (and probably want you to believe) that the U.S. has a bottomless pit of coal resources.
Second, the map shows only in a very general way where coal was originally located. The map does not illustrate historical mining trends or demonstrate how people have dug out the coal during the past 150 years of industrial activity in the U.S. Sure, the map shows the coal-rich areas in a broad, arm-waving kind of way. But many of those areas, especially in the eastern and Appalachian region, are mined out near the surface. You need to understand that much of the shallow and easily obtained reserves are gone. The only way to get to the remaining coal is through complex stripping operations or deep and expensive shaft mines.
You also need to understand that a large-scale map does not explain whether or not it is commercially or environmentally possible to dig the coal from the ground. Look at the map of Alaska, for example. Alaska appears to hold large coal resources, and by some estimates, 30% of U.S. coal resources are in Alaska. One characteristic of most U.S. maps is that they typically show Alaska drawn to a different scale than the lower 48 states. In other words, if Alaska were mapped to the same scale as the lower 48 states, Alaska would dwarf every other state. (The main landmass of Alaska is more than twice the size of Texas.)
That's good, right? If the map of Alaska is small in comparison with the lower 48, then the Alaska coal resources must in reality be even larger. (As big as Nebraska, maybe?) Then again, those large Alaska coal resources are almost entirely north of the Arctic Circle, in the exceedingly rugged Brooks Range. The fact is that there is only one coal dragline in all of Alaska (at the Usibelli Mine, south of Fairbanks). There is only one single-track railroad in Alaska that runs from the Pacific Coast to Fairbanks, far from the coal measures in the northwest part of the state and adjacent to the Arctic Ocean. So in northern Alaska, where the large coal resources are located, there are no coal mines. Furthermore, in Alaska's far north, there are no coal miners, no coal mining equipment, no mining support businesses, no coal-transport facilities and no coal-loading piers. There are no power plants even remotely capable of supplying power to an Arctic coal mine. And the environmental challenges of digging and shipping coal from north of the Arctic Circle are simply mind-boggling.
Aside from the modest amounts of coal currently being mined near Fairbanks, it is likely that virtually none of the coal of Alaska will ever see the light of day. Most of the coal resources of Alaska are simply unavailable to the U.S. economy in anything but the most far-out and far-fetched scenarios of long-term planning.
Back in the lower 48, you can see from the map that there are coal resources in many states. The main concentrations of coal resources are in Appalachia, the Illinois Basin area and out west in Wyoming and Montana. But coal mining is a highly concentrated extractive industry. Only 53 large U.S. coal mines account for about 60% of total U.S. coal output.
Three states alone - Pennsylvania, Kentucky and West Virginia - produce 52% of the high-quality thermal and metallurgical coal in the U.S. Coal output in all three of these states has been flat or in decline for many years. This is because the U.S. Northeast was the part of the nation first settled, and was the heart of the nation's industrial expansion in the 19th and 20th centuries. It's no surprise that the coal of this region was exploited first. Now the digging is much more difficult.
Today, Pennsylvania's anthracite coal (high carbon, clean burning) is almost gone. Small mining companies in the "hard coal" country (mom and pop operations, mostly) exploit coal seams as thin as just a few inches. In western Pennsylvania, long-wall mining for bituminous coal has become a controversial practice due to its damage to surface structures and water tables. Further south, in West Virginia (the second largest coal-producing state, after Wyoming), much coal is mined in a ruinous environmental practice called mountaintop removal. (It's exactly what it sounds like.) Even with mountaintop removal - moving 20 tons or more of mountain to obtain 1 ton of coal - West Virginia is nearing its maximum production rate for coal. According to a recent report from the U.S. Geological Survey, production will decline in West Virginia within the next few years.
Despite how it appears on the map, the interior region of the U.S. (Illinois, Arkansas, Indiana, Kansas, western Kentucky, Louisiana, Mississippi, Missouri, Oklahoma and Texas) produces the least amount of coal of all the nation's producing regions. The Illinois Basin boasts large reserves of bituminous coal, but production has dropped there since the mid-1990s. Coal from that region generally has high sulfur content (3-7%), so according to the U.S. Clean Air Act it cannot be burned, absent expensive pretreatment and combustion cleansing.
In Wyoming, the Gillette coal field, in the Powder River Basin, is the most prolific coal field in the U.S. This region has been nicknamed the "Fort Knox of coal." In 2006, output from the Gillette region totaled over 431 million short tons of coal, or over 37% of U.S. total yearly production. Wyoming coal has relatively lower energy content than Eastern coal, but it also has extremely low sulfur content. Thus, many of the 600 coal-fired power plants in the U.S. buy Wyoming coal to blend with other coal with higher sulfur content to meet Clean Air standards.
Previous coal studies of the Powder River Basin indicated that its coal measures would last many decades, if not a century or more. One early estimate of total coal resource in the Gillette field was just over 200 billion short tons. More recently, the development of coalbed methane (CBM) gas exploitation in the Gillette coal measures has added an entirely new set of hard data points to previous estimates. The interpretation of these new data provides a shocking downward revision of the coal resources and reserves in the Gillette coal fields.
According to a recent USGS study (Assessment of Coal Geology, Resources and Reserves in the Gillette Coalfield, Powder River Basin, Wyoming, USGS open-file report 2008-1202), the coal reserve estimate for the Gillette coal field is 10.1 billion short tons, which is a mere 5% of the original 200 billion ton resource total. In other words, the USGS has just revised the Gillette resource base down by 95%.
This dramatic downward revision is just the beginning of many more disappointing announcements. Other researchers are performing analyses in all U.S. coal mining regions, using more of the updated data that are coming in from the field. This is long overdue. It's one thing to feel good about your own press releases. But for setting energy policy, the U.S. needs to have a detailed, mine-by-mine analysis of resources and reserves based on current data using all of the available geological and mathematical tools for modeling. In the end, we should not be surprised to learn that only a small fraction of previously estimated coal reserves will ever be economically recoverable.
The U.S. almost certainly does not have a 250-year supply of coal. The nation will be fortunate if its coal supplies can stretch for another century. And even if the U.S. continues to use coal at current levels of output - which is unlikely in the face of the looming political controls on carbon - the supply issue will almost surely come to a head in as few as 10-20 years. In the world of long-range energy planning for the U.S. economy, the issue is ripe to address now.
The gold stocks are back!
The gold stocks are back!
After some trying times, the gold stocks are making a major rally… and if you've been considering making a move into these companies, I'd tell you right now: Do it fast.
Because it looks like with 0.25% interest on bank inter-lending - 0% interest on T-bills - people are going to be flocking into real investments like gold en masse...
With gold prices on the rise recently, you might argue that they've already begun their migration.
And while many of our favorite picks � like Kinross Gold and Agnico-Eagle Mines � were down substantially over the last few months, I still consider companies like these the star performers in the mining sector � and exceptional values right now...
...especially at these deep discount prices:
Kinross Gold (KGC) - This company is currently off about $8 from its 12-month high… but it's still is one of the great work horses of the BIG GOLD stocks… that will come through again… Right now - this stalwart stock has already bounced back over 12 dollars from its recent low of $6.85... and is a steal at about $19.00 a share.
AGNICO EAGLE MINES - (AEM) is off almost $30 from its 52-week high… but right now at around $54.00, it's up over 100% from its lows... and is still a screaming bargain at this point in the game.
YAMANA GOLD � (AUY) has almost tripled in value since its November low… but at $9+, it's trading at less than half the price of its 52-week high.
Why gold stocks are rallying � and will continue to for some time.
There are a lot of reasons why I feel gold stocks are coming on strong... and that this rally is the beginning of a major swing back. But here are my top 5 reasons:
The price of gold is strong and has just topped $900 dollars again… consistent with the way gold should be behaving in the midst of all the market mayhem. And it's been out-performing the S&P. Take a look at this chart:
Outrageous government spending is flooding the world with trillions of dollars that didn't exist a year ago. And when the deflation ends, hyper-inflation is going to begin � and come crashing in like an enraged rhinoceros. When that happens, gold will catapult to new heights � and the gold stocks will soon follow.
As gold goes up, the market's been down… and the gold stocks may finally be decoupling from the general market. As this happens, if you're invested in these stocks, you'll enjoy a ride like never before… gold stocks have traditionally out-paced gold by 4-to-1, or more. And we could easily see that happening again.
Demand for gold is at an all-time high around the world � and there's no way to artificially grow the supply of gold. Gold isn't like currency � it can't be created out of thin air. You have to dig it up and refine it. And the large cap mining companies are the best at getting the stuff out of the ground to meet growing global demand.
As gold rallies back, large institutional investors and hedge funds will be looking to re-establish their positions in gold stocks � and they'll be doing it at bargain basement prices. Once this migration back into gold begins, you can expect to see an even bigger run-up in the gold producers.
So let me ask you a question…
When do you want to be buying gold stocks?
Before the large institutional investors move back into the sector and drive the price up again?
Or after the prices are off the charts and through the roof?
Naturally you want to get in before the prices go up.
Unfortunately, many investors will do the opposite. They'll sit it out until the prices are sky-high � and then they'll buy.
Why? Because average investors are herd animals. They want in when everyone else is in, and they want out when everyone else wants out.
This is why average investors lose money time and time again in the market. They follow the herd, and not their heads.
Which kind of investor do you want to be?
If you're looking for reliable, consistent and realistic recommendations for the best plays in the gold market… right now… there has never been a better time to discover BIG GOLD � the newsletter from Casey Research.
We launched BIG GOLD in April of 2007, to give you a place you can turn every month to find the latest trends and the smartest gold picks.
Casey Research has been discovering and recommending the best -performing, fastest-moving, smartest, and shrewdest plays in the natural resources marketplace since 1979.
And in each issue of BIG GOLD, you benefit from the years of experience and insight that comes from one of the premier research companies in natural resources and precious metals.
Discover in every issue:
Concise and fast-reading analysis of the economic forces driving today's accelerating gold prices.
In-depth investigations into the world's leading gold mining companies... proven companies with developed, producing, or near-producing deposits.
PLUS... an insider's perspective on the best ways to assemble a precious metals portfolio and squeeze out risk.
Which stocks you should buy right now
Which stocks to sell ahead of the crowd... and when
Which gold stocks to avoid... and why
And much, much more... the best precious metals funds... the pros and cons of gold ETFs... and all the breaking news that has a direct impact on your precious metals investments.
And it's all yours, every month, in BIG GOLD...
Research you'll never hear on MSNBC or read about in Money magazine... the real, "behind the scenes" information from one of the world's leading teams of resource professionals.
The next year will prove to be one of the most pivotal years ever for gold and gold stocks... and BIG GOLD can be your easy path to big profits.
Become a part of BIG GOLD now at a very special price.
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5 Additional Deadliest Mistakes When Applying For College Funding
In this installment we're going to cover 5 additional deadliest mistakes almost every parent makes when trying to get money for their child's college education.
If you make any one of these mistakes, it could end up costing you thousands or even tens of thousands of dollars in lost funding that you might have been eligible for.
We don't want to see you making these mistakes if you don't have to. That's why we've decided to devote this installment to teaching you how to avoid these common mistakes and make sure you get the maximum amount of money from every school your child applies to.
So, without further ado, let's discuss...
"5 Additional Deadliest Mistakes Most Parents Make
When Applying For College Funding..."
Mistake #1: Not understanding the difference between "included assets" and "unincluded assets" for purposes of filling out financial aid forms
Reality: Certain assets are counted much more heavily in the financial aid formulas than others. For example, savings accounts, CD's, stocks and bonds are all included and asked about on the Federal Financial Aid form. However, it does not ask about the value of annuities or cash-value life insurance anywhere on that same form.
Mistake #2: It doesn't matter where I keep my money; it's all counted in the same way
Reality: Nothing could be further from the truth. Where you keep your money could mean the difference between you getting $10,000 in financial aid or getting nothing! For example, money in the child's name is weighted much more heavily than money in the parent's name. If you don't know how to legally and ethically position your money properly for purposes of financial aid, you could end up losing thousands in financial aid! Even the people reading this who have enough money saved to fully pay for your child to go to college, wouldn't you rather "save" some of the money you've "saved" if the school is willing to pick up part of the tab?!?
Mistake #3: "My CPA or tax preparer is qualified to fill out my financial aid forms - I'll let him/her do it"
Reality: Unfortunately, CPAs and tax preparers are experts at tax planning and preparation - not financial aid planning. For example, a CPA or tax preparer might suggest that you put some or all of your assets in your child's name to save money on taxes. While this advice is well meaning, it will usually kill most if not all of your chances of getting financial aid. Also, CPAs and tax preparers are not trained in filling out financial aid forms. In many cases, they will unknowingly fill out these forms improperly (i.e., using pen instead of pencil, using white-out to cover mistakes, omitting social security numbers, etc.), and these "minor" mistakes will bump your financial aid forms. If this happens, you will have to re-submit these forms all over again, and you will probably end up losing thousands in financial aid since it is awarded on a first come, first served basis.
Mistake #4: Waiting until January or even worse after January of your child's senior year of high school to start working on your college financial aid planning
Reality: Since financial aid is based on your previous year's income and assets, it is imperative to start your planning as soon as possible before January of your child's senior year. If you want to legally set up your income and assets so you can maximize your eligibility for financial aid, you must start working on this, at least, one year in advance - preferably in the beginning of your child's JUNIOR year of high school. The longer you wait and the closer it gets to your child's senior year, the tougher it gets to set up your financial picture without creating a "red flag" for the colleges and universities. It is also important for you to know what your "Expected Family Contribution" is so you can start saving for it. And, you should also know which schools can give you the best packages before you start visiting and applying to them. My advice is if you haven't started planning, DO IT NOW!
Mistake #5: Going Through The Financial Aid Process By Yourself Because It's "Cheaper"
Reality: If this describes you, the colleges and Federal Government are going to love you! This allows them to keep control over the process instead of you, the parent, understanding how the process works and taking back control from them. It always amazes me that people will readily use a doctor when they get sick, a lawyer when they get sued, but suddenly when they are going to send their child to college and spend between $14,000 - $34,000 per year, parents want to save themselves a couple of dollars and do it themselves. Unless you spent the last 5 - 10 years of your life studying and understanding the financial aid process, there is no way you are going to know how to get the maximum amount of money from each school. And, if you do try it yourself, you'll probably spend countless hours trying to figure it out. The moral to this story is "Don't Be Penny Wise And Dollar Foolish!" Use an expert who can help you through this process and make sure you get everything you're entitled to. (If you still insist that it makes sense to handle this yourself, we have a list of 10 books that we recommend you read word for word before even attempting to navigate your way through the financial aid jungle). On top of that, we would recommend reading the HERA (Higher Education Re-authorization Act), which is 400 pages of the smallest legal type you have ever seen and will only take you a couple hundred hours to read!
Be on the lookout in your email next week for the next Online College Funding Course installment where we will be discussing 7 strategies to help you get the maximum amount of money for your child's college education!
Scott Weingold has been ranked one of the top ten college funding advisors in the country, according to The National Association of College Funding Advisors. He has co-authored the book, "The Real Secret To Paying For College. The Insider's Guide To Sending Your Child To College - Without Spendng Your Life's Savings." and has published two student success handbooks: "The College Admission Application Boot Camp Handbook" and "The No Nonsense Insiders Guide To A Successful Freshman Year And Thereafter." Scott also publishes a popular free online newsletter, "College Funding Made Simple" which reveals insider's tips, methods, and strategies for beating the high cost of college. Scott is the co-founder and a principal of Ohio-based College Planning Network, LLC, one of the nation's largest and most reputable college and financial aid servicing centers. CPN is a member of the National Association of College Admission Counseling and the Better Business Bureau.
Scott, along with his college funding advisory team, helps thousands of families throughout the country with their college planning needs and offers a series of free educational teleseminars and workshops on "How To Pay For College Without Going Broke In The Process!"
Geo-fiction or not, high-grade magnates rule: ThomWatch
Mining magnates are shaking the money tree. We cannot guarantee this two-minute Melt-Up is free of some "geo-fiction," but we can assure you the next two minutes of ThomWatch will alter your natural resources:
Sean Boyd, a top executive at Agnico-Eagle (NYSE: AEM) … $100 million in cash and "significant cash flow" … three copper/zinc/gold mines hurtling toward operating status: "I remember these BMO Capital Markets conferences many years ago when they were at Squaw Valley (California), and 10 or 20 people would be there. … Our team is trained geologists. (We) are not an exercise in geo-fiction. There are more and more investors coming to this space … coming to see where they were positioned. … We like to buy (gold properties) early." Sean Boyd was speaking today at the BMO show, a Florida gathering of big fund managers
, i-bankers and sizeable mining companies.
Peter Barnes at Silver Wheaton (NYSE: SLW), also speaking at BMO: "Almost 80% of our revenue comes from four mines. … About half our silver come from gold mines. … Almost three-quarters of our silver comes from Mexico, and Mexico is probably the best country in the world to operate as a miner. … We have the best leverage to the silver price of any company if it goes higher. … We believe silver prices are going to continue to (appreciate). … Over 60% of the silver produced in the world comes from primary metal miners. … I believe silver is going to $30 over the next three to five years, and maybe a lot higher."
Across the country, in another sunny venue, Phoenix, a handful of small miners showed their commitment to telling their story to an audience of about 1,000 garage-loft investors. Joe Martin and Howard Fitch's annual Arizona metals show featured silver companies Endeavour Silver (AMEX: EXK), Mag Silver (AMEX: MVG) and Tumi Resources (TSX: V.TM). Other steady-eddies at the Cambridge House Show included Bravo Venture Group (TSX: V.BVG) and Quaterra Resources (AMEX: QMM).
For our beloved garage-loft investors, silver rounds were everywhere at the show. Silver rounds, as Jason Hummel, Peter Spina, Joyce Espinosa and others who mint and auction one-ounce silver "rounds pointed out, are capturing the attention of Europeans and North Americans. The customized coins sport some gorgeous designs, thanks to Jim Pavlakos at Superior Sources Inc. and other designers. Our kids' favorite one, of course, was the skull and cross bones. Ozzy Osborne eat your Black Sabbath heart out.
Road shows are going into turbo drive. At least 200 small and mid-sized miners, everything from silver and lithium to molybdenum, gold, platinum and geothermal, are on the breakfast and luncheon circuit. They are air-dropping via elevator and motoring via creaky taxis across Toronto, New York, Boston, San Francisco, LA, Philadelphia, Denver, Houston and Chicago. Stay tuned to subscription service www.tickertrax.com for the ones I am attending for the words and the food.
Frank Barbera, a gold stock technician with whom I shared a Phoenix panel this past weekend: "Copper and the base metals still have a ways to go lower this year, so more pain. Gold I see at $5,000 (an ounce) at some point in the future."
My favorite line: Peter Grandich of The Grandich Letter – "Those who live by the crystal ball learn to eat broken glass."
My favorite place in Arizona, where I attended graduate school: Sedona. We stayed for a couple of days at Enchantment Resort, which is lined by red rock canyon walls. Thanks to Mason Romney of www.MasonryDomes.com, a local builder whom we ran into at Euro Deli in town. Mason was using gold coins to pay one Sedona contractor. Nice chap and thanks for the hiking directions.
Finally, of note, and back to the BMO show for heavyweights in Florida this week: One of the few presenters and keynoters who requested their words and materials not to be audio-streamed to the general public at this URL, is Robert M. Friedland of the Mongolia miner Ivanhoe Mines and the natural gas/oil producer Ivanhoe Energy. Mr. Friedland told me today (Tuesday morning) that he would prefer keeping his keynote address from Monday and his company presentation today "confidential." Robert's son, Govind Friedland of Beijing, is operating a uranium company with great hopes in Africa and elsewhere and also decided to keep his presentation at the BMO conference "off limits" to Internet stream.
Ticker Trax™
Ticker Trax By Thom Calandra explores planet Earth for a handful of stakes and strategies that offer the prospect of excellent, in some cases cosmic, returns. The new service is for those who can cope with stratospheric levels of risk attached to a handful of planetary prospects. (Please see www.tickertrax.com.)
Bonus: Please nip into our Ticker Trax™ discussion group – only on Stockhouse.
THOM'S STORY: Thom Calandra during 27 years of road work has helped his audience find value in a quagmire of investment choices. Thom co-founded CBS MarketWatch, MarketWatch.com and FT MarketWatch in Europe. As the voice of Thom Calandra's StockWatch and The Calandra Report, Thom fancied $300-ounce gold before that metal became an investment rage. Thom visited bioscience companies, metals mines and energy companies in a search for reliable sources and fine planetary prospects. (He was imperfect in at least one regard, having settled a U.S. Securities & Exchange Commission complaint in 2004.) Thom's novel PABLO BY NUMBERS was completed in 2008.
HOLDINGS: Thom's cosmos of holdings is listed for free Stockhouse members on www.Stockhouse.com under the "portfolio setting" for user TCALANDRA. He and his family own recently minted gold coins. They receive no compensation for these reports. They own shares of Western Uranium. They have no interest in any publicly traded Ivanhoe company. For the free ThomWatch, please click here. For subscription service Ticker Trax, please visit www.TickerTrax.com. Thank you!
Ticker Trax™ is published by Stockgroup Media Inc. Ticker Trax is an information service for subscribers and neither Stockhouse nor Thom Calandra is a broker or an investment advisor. None of the information contained therein constitutes a recommendation by Mr. Calandra or Stockhouse/Stockgroup Media that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Ticker Trax does not purport to tell or suggest the investment securities subscribers or readers should buy or sell for themselves. Subscribers and readers of Ticker Trax should conduct their own research and due diligence and obtain professional advice before making any investment decisions. Ticker Trax will not be liable for any loss or damage caused by a reader's reliance on information obtained in the reports. Subscribers and readers are solely responsible for their own investment decisions. Opinions expressed in Ticker Trax are based on sources believed to be reliable and are written in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. All information contained in Ticker Trax should be independently verified. The editor and publisher are not responsible for errors or omissions or responsible for keeping information up to date or for correcting any past information. Ticker Trax does not receive compensation of any kind from any companies that may be mentioned in the report. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities that are discussed in Ticker Trax.
Enough with Top Stocks Already
Dow got you down? Well it probably has a lot farther to go, even if there are rallies.
It's getting harder and harder to make a buck with "buy and hold"…but who says that buying and holding stocks is the only way to make money or the best?
You could average gains of 104% ― without owning a single stock ― but to find out how, you're going to have to read on…
I'll never forget what my dad told me on that cool autumn walk in 1976.
I was young and hardly knew anything about money... but it didn't matter. The secret was just that simple.
In easy, gentle words, he told me the secret that eventually could have made as much as $1 million in just five years. And nearly $2 million in under 10 years...
You could do that, he told me, without "buy and hold"... without waiting for the stock market to "wake up."
Years later, I saw his private method make vast sums of lasting wealth without buying a single stock.
That's why he called it the "Zero Stock Solution." And he taught it to me, all those years ago, on that brisk afternoon.
I had no idea how earth shattering his "Zero Stock" secret was until many, many years later.
But really, who would believe you could make multiple millions in the market without touching one share of the best stock?
Especially since he told me that you could fully harness the "Zero Stock Solution" to do it in ― get this ― about three minutes a day.
If this was a "job," it'd have hourly wage of about $10,400 an hour!
So you can see why I was skeptical... until I saw it work for myself.
The success I've found from dad's advice has shielded my family from great financial misfortune, and given us a life more comfortable than I'd ever dreamed of.
It can do the same for you, too. And I'll tell you how...
Dad Could Do It, But What About You and Me?
I always knew Dad could conquer the markets for outsized gains.
Ever since I was a kid, I saw him use the Zero Stock Solution to make fortunes for a small circle of private clients.
Take the Zero Stock Solution seminar he gave in the '50's; he charged $25 for three hours of information in a packed and stuffy hotel room.
A total of 22 people showed up.
Just 5 weeks later, some of the ones who followed his advice were as much as $50,000 richer!
That's over $300,000 in today's money. And as much as a 199,900% return on the attendee's $25 seminar fee just five weeks later.
Sure, I'd seen Dad achieve all of that.
But he was a genius. One of a kind.
That's why when Dad passed away ten years ago, some people thought no one could fill his shoes.
BUT... I plugged away at the Zero Stock Solution he entrusted to me. I had worked closely with him since 1995, and when he suddenly passed away, I knew I was prepared to step in and continue his service.
And you know what? The family secret worked, and then some. To the tune of $1,898,052 in just under 10 years.
I'll show you exactly how in a minute...But first let me make this clear:
"I tell you all this because Dad changed my life with the Zero Stock Solution.
He changed an awful lot of people's lives.
And as long as I can keep flesh and bone together, I'll keep that legacy of teaching people how to become millionaires going strong."
So (if you choose) I'm going to show you what's happened since I took over Dad's groundbreaking Zero Stock Solution.
Back on that walk in 1976 I never imagined this could happen.
But fast forward 33 years and here are the Zero Stock Solution gains I've found for readers. Unbelievable success for ordinary people, just like you...
How Dad's Secret Led to Success ― For Me and Hundreds Of Lucky Friends Around the Country
I took over the Zero Stock Solution in late 1999 ― right around the tech crash.
You remember those brutal days in the market ― and even though I'd been managing my own research company for nearly a decade, it was enough to give anyone pause...
But I took Dad's old family secret and plugged away at it.
And look what happened!
If you had put just $5,000 into every one of my Zero Stock picks since I took over from my dad, and rode it to its highest possible point, this is what you'd be sitting on...
In just the last three months of 1999, I recommended my first nine Zero Stock trades. Eight of them shot up. With just $5,000, you'd be up an extra $87,000 just 12 weeks later
In 2000, following my simple Zero Stock picks could have grossed you another $173,215, bringing your cash horde to $260,215
By the end of 2001, you could have nearly doubled your take again, packing on another $216,164 for a total of $476,379
And then for 2002, you could have tossed another $205,101 onto that pile of cash. You'd now be at $681,480
In 2003, you could have socked away another $189,463. That would take your Zero Stock portfolio to $870,943 in cool profits
In 2004, we hit the million-dollar mark. You could have used my picks to add ANOTHER $221,300 to your total, in a single year. You'd have a cool million dollars, plus ― for an added bonus ― $92,243 and change.
Not bad for a few years' haul, with barely three minutes of work each day... $1.09 million.
Yes, $1.09 million in pure cash profits.
Who would've thought I could do that, even with the power of the Zero Stock Solution?
Certainly not me... but I guess the old man thought different.
Yes, there were some huge individual Zero Stock high points that helped us get those big numbers. Like 1,011%... 898%... 1,202%... 472%... 858%... 589%... 838%...
We also had plenty of smaller, faster gains.
And sure, a few losers too.
But overall, even though about 15% of the Zero Stock plays I recommended didn't work out during that period... over 85% of them did, well enough to give us an average high point per play of 104%... well enough to turn your initial investment of $5,000 into as much as $1.09 million.
But it didn't stop there. I didn't think it could get any better, but it did ― in spades. Again, by putting $5,000 into each of my recommendations and riding each one to the highest possible point, here's how you would have fared:
In 2005, you could have followed my recommendations for $217,524... bringing your total to $1,309,767 by year's end
In 2006 there was another $150,375 haul by years' end, taking you all the way to a comfortable $1,460,142
In 2007 you could have reeled in another $202,635 profit from this easy Zero Stock strategy. That brings your portfolio to $1,662,777
And, for just the first four months of 2008, add a $235,276 cherry on top of that stash. That takes us to $1,898,052 total.
Since it would take incredible timing and phenomenal luck to get out at the best exit price every time, you would have realistically logged profits shy of these recorded best gains.
But even if you did only half as well... that's still an amazing $949,026 in the bank!
So, you see, the old man was spot-on with his Zero Stock Solution.
And if I can do it ― anyone can do it.
In fact, "anyone" does do it nearly every week of the year.
Here's how this no-hassle secret works for real people, all over the world...
How These Stellar Zero Stock Solution Returns Change the Lives of Real People
I can barely keep up with the letters I get about my readers who use dad's Zero Stock Solution.
Take this one for example: I used to think letters like this came once in a lifetime...
But now I know better.
Now, I get letters like that all the time ― from ordinary investors from all over the country.
Just look: they're seeing their money multiply two, three, even eight times or more.
If I didn't open the letters myself I'd hardly believe life-changing profits they report...
Hard cash returns for people just like you. Imagine what gains like this would mean for your lifestyle. If you started with a small $5,000 position...
Jim H.'s bold 300% gain means a new deck, a hot tub, a walk-in humidor, or your membership in a luxury golf course
A fat 92% return like Bill P. from California made more than covers your subscription with enough left over for a five-star weekend getaway
Or take Eddie L.'s amazing 750%...that huge cash profit could be your down-payment on a sparkling-new dream home for retirement.
You can buy all that stuff and more.
Or, you can save it for retirement, your kid's education... or use it as a base of wealth that could last for generations.
You could do all that and not even break a sweat. Just three minutes of your time each day.
I think that's why so many readers call this "the best decision they ever made."
And it's not just my readers. Take a look at what Wall Street experts and respected journalists say about that old Zero Stock family secret...
Why This Old Family Secret Has Stumped the Experts
Even before I made this knowledge available to ordinary readers, my time-tested strategy garnered praise from some of the top professionals in the industry.
For years Michael Green of Market Talk talked to all of Wall Street's top analysts and traders.
He was looking for something special. The strategy that really worked. The guru who really had the goods ― the most accurate guy on the Street.
What did he find? The answer might surprise you...
"Over the past few years on 'Market Talk' I've had the opportunity to interview Wall Street's major investment letter writers. Steve Sarnoff has emerged as the most accurate. He has truly made some astounding calls."
And it doesn't stop there... Richard Russell, editor of Dow Theory Letters and an old hand at best stock analysis, praised my technical research as "constitut[ing] an extremely valuable lesson."
It's not just journalists, either. The pros in the trading pits ― guys who could depend on my recommendations to feed their families ― tell us the same thing.
Bernard Savaiko, Senior Futures Analyst at PaineWebber, says I provide "a dispassionate approach to markets, with amazingly accurate results ― a must for traders."
The testimonials from Michael Green, Richard Russell and Bernie Savaiko are all from when I was starting out with my research company (prior to Options Hotline), and the kind words of those professionals helped give me the confidence to succeed.
I wish I could claim all the credit but I can't. I owe most of it to dad. But I'm proud to carry the torch, giving lucky readers the chance to become millionaires by using his Zero Stock Solution...
So just what was that secret he told me in 1976, and how is it that all these ordinary people have turned it into spectacular gains?
Now Here's Where I'm Supposed to Tell You the "Secret" Behind the Zero Stock Solution. . .
But you won't find it here in this letter.
That's not a sales come-on. I won't tell you even if you pay me big money.
You could pay me all the money in the world. You could shock me with an electrified cattle prod.
I'm not telling. Anyone. Ever.
But here's why you can reap all the benefit anyway...
Dad felt strongly ― I feel strongly ― that regular people should have the chance to profit from what we've been blessed with.
So, I use my proprietary "Zero Stock" method (combining the best of Western technical analysis with ancient Japanese charting techniques)... and send out specific plays for you to have a chance to gain your own million.
I hope you find that fair. Because you don't need to know how the Zero Stock Solution works to use it. In fact, using it is so simple it could take you only three minutes a day!
That's why every week I send out one Zero Stock play based on that secret dad told me 33 years ago.
I do all the work; you take all the profits...
Take a look for yourself: Here's my uncut track record since I took over from dad a few years ago...
*Occasionally, a recommendation moves out of range before it is published. In those rare cases, when recommendations are not "triggered," we exclude them from this track record. This service recommends opening positions and gives a general strategy to help readers determine a good closing point. The size of the potential gain is calculated using the highest possible exit point that option reached after the buy recommendation was issued.
**Gains and losses calculated based on a $5,000 initial investment in each play.
You're reading those numbers right: an average of 104% on every play. And that's over a total of 342 plays. For almost a full decade! I doubt you can find another analyst that has such a long term, profitable track record...
Now, how is it we can claim such a stellar achievement?
Simple. It takes just two steps...
1) I recommend that you buy a Zero Stock position
2) I give you a general strategy to help you determine a good closing point to take your Zero Stock profits
You use your own judgment in exiting a position.
That way, you're completely in control of your position and your risk.
You can make the most informed decision on when to take the best profits that personally suit you...
Because of this personalized exit strategy, I calculate my Zero Stock Solution track record based on the highest possible point the play hits after I alert our readers.
If you had the incredible luck and timing it would have taken to sell every one of these picks at that point since 1999, you would have cleared $1 million in only five years, like I showed you above.
Today, you would be up $1.89 million.
That's an average $15,817 in extra income every month.
Or $520 every single day of the year.
Since it's up to you to decide when to sell and you might choose to take a more conservative exit strategy, you'll almost certainly log sell prices shy of the highest possible gain.
But even if you were to do only half as well... $949,026 ― or $7,908 per month, or $260 per day ― still isn't bad. And those stellar numbers become even more shocking when you realize that it takes only three minutes a day to do all this...
There's only one investment that can deliver such enormous gains in so little time, and by now you may have guessed it: options.
That's why I call it the "Zero Stock Solution" - because you never need to buy stock shares to make consistent triple-digits gains!
Now, you've probably heard that options carry risks. And it's true ― any investment does. But options also let you do something most investments don't:
Here's exactly what that means: if the underlying stock moves 5% or 10%, the related options contract could easily shoot up 200%, 300%, even 500% or 600%.
If the best stock fails to move the right way, you merely write off the small amount you paid for each option (often pennies on the dollar) and that's it.
Your upside is many times your original investment. Your downside is never a surprise.
That's why it's quite possibly the best way to build lasting wealth with limited risk.
It's why it was so important for my dad to pass it on to me.
Now let's dig around in some actual trades to see how it's done in practice. I'll show you four specific Zero Stock plays I've sent to my readers at Options Hotline, the research advisory service my dad started and I've continued.
Here's a great example of the "Zero Stock Solution" at work: a pick that soared while the rest of the market was getting hammered...
"Zero Stock Wealth Strategy" #1: "Recommend Plays That Go Up Even When the Market Goes Down"
One great advantage of my system is it can make huge Zero Stock gains whether the market goes up or down.
When I predict a best stock will tank, I recommend you buy a put option on it.
The put option goes up in value as the stock's price goes down, so you win while the other guys lose ― all without the risk and hassle of selling short.
A few months ago, my proprietary forecasting method told me UPS was about to go down the drain.
That UPS option could have pulled in 1,011% for readers who followed my buy recommendation and got out at the best possible time.
Can you imagine making more than 10 times your money on a single play?
$5,000 would turn into $50,550!
And best of all, winning big Zero Stock gains when a company goes down is just as easy as when it goes up: the same three minutes of work each day. It's that simple.
Here are some more examples of maximum potential gains from an individual stock's falling price:
1,202% on GM puts
257% on Newmont Mining puts
210% on FedEx puts
168% on Caterpillar puts
87.5% on eBay puts
55% on Ingersoll-Rand puts
52% on Texas Instruments puts
And here are some puts on entire stock indexes that profit when the general market goes down:
189%, 45% on S&P index puts
253%, 25%, 135% on Dow Jones index puts
335%, 258%, 54%, 50% on long-term bond index puts
27% on Nasdaq index puts
This way, you can take advantage of every move ― up or down.
And you could still take outsized triple-digit profits in a market downturn.
In fact, here's how we did in two of the most challenging years in recent memory...
While the Dow, Nasdaq and S&P 500 All Lost Money in 2002. . . Our Biggest Winners Gained 170%. . . 186%. . . 212%. . . 292%. . . 360%. . . 858%. . . and 898%. . .
Remember America and the markets in 2002?
I sure do.
Enron was on trial. Global Crossing, ImClone and Adelphia were all under investigation.
Argentina's banks had just collapsed. A bomb had just gone off in Bali...and this whole mess in Iraq had just then started looming darkly on the horizon.
Not exactly the most stimulating times for stock investors.
But as tough as it might have looked for everyone else, you could have done extremely well that year... just following the options strategy I'm laying out for you today.
How well?
In fact, out of our 40 plays that year, 31 were winners... with an average highest possible gain of 103%.
By investing $5,000 in each of these plays and riding each one to the highest possible point, you could have ended the year ― one of the toughest in recent memory for regular investors ― UP by as much as $205,101!
In 2001, 37 out of 46 Winning Plays. . . And an Extra $216,164 for Your Portfolio
Even back in 2001, the same year as one heck of a lot of gut-wrenching news in the world... plus some very rattled stock markets... you could have turned an initial $5,000 investment into as much as $216,164... in a single year of trading. We made 46 plays total that year, 37 of them came up roses.
With an average maximum possible gain, on each and every play (with the few losers included in the calculation), of 94%.
Can you imagine if you averaged 94% gains on every play you made?
Thirty-five of those plays were double-digit winners... more than half of those plays returned better-than-50% gains... 16 of those plays were money-doublers or better... and at least five of those plays all returned better than 200%.
Just $5,000 invested in the General Motors put options play alone, the day after I recommended it to my Options Hotline readers, could have given you as much as a $60,100 windfall.
And quickly, too.
Now that the markets are tanking again, I expect you could have a field day with put options. And those would protect your downside.
Here's why: During the record-setting year of 2007, my average best possible gain was 113%. That's good. But in 2008 that record was 130%.
In other words, I did 17 points better in the biggest crash since '29 than I did when the Dow was at 14,000.
In both cases, my readers saw the opportunity for gains of better than double their money.
Up markets. Down markets. It doesn't matter: Because I'm not recommending a single share of top stocks.
Now, even with the incredible Zero Stock knowledge my dad passed on to me, once in a while a play doesn't pan out as expected. That's why the second thing my Dad told me is so important...
"Zero Stock Strategy" #2:"Your Gains Overpower Your Losses"
The second secret is the most important one.
And it's simple: Your gains overpower your losses.
You aim for a 60%-40% win-loss ratio.
You aim for bigger gains than losses.
Told you it was simple...but it's VERY important.
So let's drill down to some recent specifics...
Like I said, it's up to you to decide when to exit your play, and those numbers just represent the highest possible exit point. I send you the picks and give you general guidelines for making successful trades.
And with a record like that, you can win 60% of the time, lose 40% of the time, and still come out way ahead.
But if you do far, far better than that, like I have been giving my readers the opportunity to do for years with this time tested family profit key...well, that's just icing on the cake!
88%. . . 92%. . . and Now 100% Win Record
A few months ago, I got a shocking call from my publishers.
They'd just checked their records, and found my picks had averaged 104% maximum gains since I took over from my dad in 1999.
Even more shockingly, my win record suddenly climbed from an already stupefying 92% in 2006 ― to a stunning 100% perfect record since the start of 2007. They were stunned.
But we checked the records and not a single pick had failed to gain value, or at least break even, at some point after I recommended them and before they expired...
I bet you won't find a record like that in the entire world of financial publishing.
Because of that I've been driven to get results like these:
92% wins against 8% losses, like I did in 2006...
78% wins against 12% losses, like I did in my least accurate year, 2001...
Or even an incredible 100% win record and no losses whatsoever, like I did in 2005, 2007, and in 2008...
That's why I say your potential gains could overpower your losses ― it's the secret behind the Zero Stock Solution.
And it's a secret that could be yours for no money whatsoever if I don't pass some pretty demanding thresholds. I'll explain that in a moment...
But that's not all ― not by a long shot. Here's another piece of father-son wisdom I need to tell you about.
"Zero Stock Strategy" #3:"Recommend Only Plays That Have a Good Chance of Doubling"
I will only send you options plays that I feel have a chance to double ― or more.
If I dig up something that promises to go up only 15% or 25%, I trash that play and look for something else.
Now, a gain is a gain. And I see nothing wrong with double-digit gainers.
It's just that I feel the risk in playing options is justified only if your potential gain is in the triple digits or higher.
The upside must clearly crush the downside.
How does it work in practice? Let's take a quick, specific look at one recent play...
In November 2006, I sent out this clear recommendation to my readers: "Buy the Bristol-Myers Squibb March 2007 $25 call for $115 or less."
As you probably know, a call option goes up in price if the best stock it's based on goes up. It's really that simple.
But the great thing about options is that the option shoots up far, far higher than the best stock does. That simple fact hugely increases your profit potential.
"Just how much profit potential?" you may ask...
Take a look. Here's what happened with Bristol-Myers Squibb after my specific recommendation:
The stock market went up a bit. But the call option exploded. That's the sheer power of the Zero Stock Solution.
It hit a high of 300% in just two months. That's enough to turn $5,000 into $20,000 ― with $15,000 pure profits in practically no time at all. Now you see how I give members the opportunity to make a great deal of money very quickly...
In fact, since 1999, I've pumped out 112 plays that topped out at a maximum of 100% or more.
So you've seen the power of options trading and how I used it to produce an average maximum gain of 104% over nine years.
Can you imagine the wealth you could make if every play you made more than doubled in value?
Well, now you can join a research service that has done just that for almost a decade!
That long-term consistency is why I'm so comfortable guaranteeing your money back if I don't surpass the very high bar I've set for myself. (Yes, I'll get to that very soon!)
And finally, let's go over the very last "Sarnoff Wealth Strategy":
"Zero Stock Strategy" #4:
"Be Consistent: Recommend Only One Play per Week"
This one's pretty simple ― but it's also important.
I constantly scan each one of the nearly 15,000 hot stocks on the U.S. markets all week long.
I crank away, batting around the numbers and boiling down the massive list of top stocks and indexes to a short list of the ones that seem poised to make a strong move up or down.
Then, I take this short list and apply my analysis to each possibility... cutting the list down until we have one single opportunity that I think will double or better.
So from the entire universe of stocks and indexes ― and options you can play on them ― I drill down to just one pick per week. I then send you an e-mail on Sunday night telling you exactly what the play is. That way, you have the time to look it over and place the order before the market opens on Monday morning.
And all that could be yours entirely risk-free.
That's how little you have to risk, and how much you have to gain.
Don't you think it's time to get in on the action?
Start Making Your Own Million-Dollar Plays Right Now: Consistent, Hefty Gains Over the Long Term: Options Hotline's Performance Laid out Year by Year
Before we finish up, let's see just how the Zero Stock Solution my dad taught me has performed over my entire nine-year tenure with Options Hotline...
*Occasionally, a recommendation moves out of range before it is published. In those rare cases, when recommendations are not "triggered," we exclude them from this track record. This service recommends opening positions and gives a general strategy to help readers determine a good closing point. The size of the potential gain is calculated using the highest possible exit point that option reached after the buy recommendation was issued.
**Gains and losses calculated based on a $5,000 initial investment in each play.
Wouldn't you like to grab some of those gains for yourself?
You can! And it's easy.
One recommendation per week, one call to your broker on Monday morning, and then just three minutes per day tracking your positions.
Let's get down to the details of what you'll receive with your membership to Options Hotline:
Options Hotline Delivered Sunday Night via E-Mail
This is the very heart of the service, when I send you my specific play for the week.
Your one-page Options Hotline Alert is delivered Sunday evening in plenty of time for you to read it, digest the information and phone your broker first thing Monday morning if you want to get in on the action.
You'll find my recommendation of the week, written out exactly in words you could say to your broker, to ensure accuracy.
Midweek Updates on Open Positions
Since options can move fast, I also send out midweek update alerts every Wednesday so you can review again where you are on all of your open positions.
I'll talk about the direction of the option price, the underlying stock price, resistance and support levels (concepts thoroughly explained in your THREE FREE BONUS REPORTS), and where I see it all trending.
Important Bonus! Exclusive Free 24/7 Access to the Subscribers-Only Web Site
You get unlimited access to the Options Hotline Web site 24 hours a day, seven days a week. This password-protected members-only access is FREE with your subscription.
Here you can download the latest recommendations, midweek updates, and frequent alerts.
It's a valuable offer that can put you on the road to the next million dollars in options profit.
Look what Options Hotline has done for Randy Norton: "My first trade made me $6,540 in profits. You are the first newsletter I have tried out of hundreds that actually delivers what it promises." But wait ― there's more:
Subscribe now and I'll also give you...
3 BONUS GIFTS That Are Your Crash Course on Options!
In addition to the comprehensive source of information you will find on our subscribers-only Web site, I'm offering you three FREE handbooks that will help you use the Options Hotline research service to its fullest.
Start your options education today with these easy-to-read guidebooks, both written in everyday English, so you're up to speed on options in no time:
1. The Options Buyer's Handbook
Click the subscribe button below to join and download this FREE handbook immediately. Inside its pages, you'll discover just what you need to know about buying options.
Learn the basics of options, how they work, when to buy and sell, and what it all means in this informative handbook... FREE and instantly available with your subscription.
2. Secrets of a Master Trader: Tips and Strategies for Making a Fortune in Options
The secret to winning at options is to keep playing. Options are not like the lottery or the luck of the draw (especially since I'm recommending what to buy each week).
To really succeed, you need a plan of action. And Secrets of a Master Trader is your playbook. It contains the secrets of two of the best options analysts the business has ever known...my dad, options genius Paul Sarnoff, and me, Steve Sarnoff.
3. The Options Hall of Fame
Of course, there's no better way to learn something than by doing it yourself. Second only to that is seeing what others have done in the past. And this is exactly what you'll find in this third FREE gift report.
I'll walk you through some of the biggest and best options plays ever made. Together, we'll take them apart, down to the nuts and bolts. Then I'll show you how they work by putting everything back together, step by step. You'll see unmistakable patterns of profit.
You can't get secrets like this at any bookstore or Web site or "learn to trade options" weekend seminar. They're reserved only for subscribers to Options Hotline. You'll receive these exclusive Secrets via e-mail the moment I hear from you.
Please don't pass up this chance to profit on the unlimited potential (but limited risk) of options trading with your subscription to Options Hotline.
Put briefly, here are the key benefits Options Hotline can offer you:
A chance to grow your money into as much as $1.71 million in
less than 9 years
More-than-double-your-money average maximum gain on
every single play
A chance for as much as 6 figures in pure profits every year.
How could you pass that up?
Especially when you can get your membership 100% RISK-FREE, my compliments...
Now, how can I offer this valuable information RISK-FREE?
Easy: If I don't give you at least one "doubler" every single month, you pay nothing.
Just check my recommended portfolio. After the first six months of your membership, if at least one of my recommendations per month hasn't shot up 100% at some point after I recommended it and before it expired, I'll refund every penny of your subscription.
I take on all the risk ― and I feel comfortable doing that as I look at our incredible long-term track record.
So how much is this unique offer worth?
You'd expect to pay $5,500... $7,500... even $10,500 a year to get options plays with million dollar profit potential like I just showed you. But you won't pay anywhere near that. Simply click the "Order NOW" button below to see your insanely low price for a guaranteed doubler every month ― starting right now.
So if you want a chance to hit the next million-dollar milestone... if you want to join the "Zero Stock" research service that averages maximum gains of over 100% per play... if you want the opportunity to see as much as six figures in profits per year... now's your time.
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