“Over-indulgence and misbehavior by those with too much money and no risk
control creates an atmosphere wherein common sense goes out the window.” -Traderrog

It’s not difficult for us to report upon and discuss a nasty pile of negative events. Seemingly,
our central bankers and politicians are quite adept at creating new and severe problems. We
can engage and be part of their psycho-pathetic schemes; or in the alternative, dig through the
rubble and find some good stuff for ourselves, our families, and our friends. In a historical trading
and investing review of the 1926-1946 era, it’s easy in hindsight to see who had the vision and
intelligence to not only survive, but to also become wealthy and wildly rich.

Most think the 1929 stock market crash in New York was a big surprise. For the greatest trader
of all time, it wasn’t; it was just another day at the office. Jesse Livermore was going short in
those markets as early as 1927 when he ran his usual market tests, taking small bite-sized trades
to watch the tape reactions. Some of his shorts began to make money in late 1928 and of course
with a huge rush in 1929.

With the real estate crash in 1926 in Florida (a really big deal in those days), Livermore knew
where things were headed with the Bubblemania of the roaring 1920s. As a superior trader
he knew that when the markets’ rubber band is stretched too far, the snapback could be an
adventure. That, obviously, was the outcome in 1929.

While the majority of the stock herd went blindly over the cliff in 1929, Livermore was shorting
everything he could find. Even after his shorts were making tons of cash he would increase the
trade, to make market selling go ever faster as he scooped-up his winnings.

At the end of his 1908 shorting, JP Morgan asked him to stop, as it could all portend the end of
stock markets… as in: gone forever. Livermore had already reached that conclusion by himself
and was busy going the other way entering long to shift the tide. After all, he had to get out and
needed the other side of the trade as well. Further, if the markets are your business, your life, and
your very existence, why would you stomp them to death for one monster trade?

Few understand that the 1929 smash was one of only three or four in that era. First the 1926
Florida smash, then came 1929 followed by 1932-33, with a couple more all the way to 1942. The
1937-1938 -45% smash was nearly as ruinous as 1929. Three times investors and traders got
smacked down after thinking the worst was over. However, we all know, it ain’t over until it’s
over. In an earlier 1920-1921 Depression in the USA, government folks did not meddle and it was
all over by itself within just 18 months. This is proof natural market forces work by them selves.

Do you think the Florida real estate smash could be considered similar to the June, 2006 event
in the US? No only do we think so, but the following 2008 Lehman cruncher was just like 1929 or
even replicated the 1908 Panic.

Over-indulgence and misbehavior by those with too much money and no risk control creates an
atmosphere wherein common sense goes out the window. However, this time it truly is different.
Central bankers have encouraged extreme and illegal shenanigans by Big Boy Bankers and hedge
fund operators. Now, there is no going back as the global system moves to its final conclusion.

The party was great fun while it lasted, but now the vultures are circling, as opposite party
politicians are licking their chops in preparation to prepare the voting burial of their enemies.

When the ship of state and the congress-parliaments tip-over, the rats scurry to save themselves
and toss their garbage and toxic criminal actions onto their opponents. It’s kind of like a wild
party to see who can savage each other first.

The American people, the voters, and calmer, cooler heads throughout the world are watching
this, aghast. While those experienced, sharp observers over the past 50 years could not imagine
anything like what we are seeing today, in actuality, there have been periods in the USA when
these things were on the political table.

From our observation, the Sheeple have about had it with crooked politics, central bankers, Big
Boy Bankers and government bureaucrats’ wild antics. While the public cries for “Do something!
Somebody, please!” are prevalent, the truth is you cannot stop it until: (1) some unforeseen
terrible event rudely stops it for us all, or (2) the bond markets collectively fail, taking away the
taxpayer-money-honey-pot-feeding-trough from this pack of criminal fools.

Our bet says the bonds tank and their punch bowl is taken away. In desperation, having so much
to lose, these idiots will do anything whatsoever to keep the game in play. The smart ones, who
know this could be the final hurrah, are scrambling for the last big theft before they run for the
hills with their stolen loot.

Considering This Situation What’s The Best Approach For Little Folks?

We contend that you just ignore as much of the mayhem as you can and take
the high road to pick -over the carcass of these markets in a search of legal profits.

Here are some simple suggestions that we think can work, and have been working for us, and our
readers.

1- Get out of debt and stay out of debt.

2- Find an income that can withstand a prolonged depression. Think: daily needs fulfilled.

3- Stay out of stocks unless you know what you are doing and have an emergency exit
strategy.

4- Do not use a bank safety deposit box. Now there is real oxymoron if we’ve ever heard
one!

5- Hold 3 months cash in small bills in the house (not in the bank) for emergencies.

6- Buy gold and silver US or Canadian coins held/hidden at home for capital preservation.

7- Keep medical and dental needs up to date for self and family.

8- If you have life-saving prescriptions needs, get the doctor and druggist to provide at least
a 90-day supply or longer.

9- In your home, store 3-6 months of food and water for family and pets. Rotate for
freshness.

10- Have a generator for emergency use in a power failure.

11- Keep gas tanks full for your vehicles. Some are opting to have bikes and motorcycles
handy as alternatives.

12- Tighten security around your travels, vehicles and home. No showing-off fancy stuff to
incite criminals.

13- In general, stay under the radar and try to be as inconspicuous as possible in outward
appearances.

14- We think small towns but not very remote homes and farms are better than big cities. The
ability to walk to everything in a small town has merit. Make new friends there.

For Investors And Traders

Get out of and stay out of all bonds of any kind.

While some funds are fine, we prefer hard assets and a trading account. Find out who is running
your accounts and where the money is. Be very careful here as more financial companies will bite
the dust. We are seeing new fear of currency funds as they have investments in Europe, too.

We strongly dislike emerging nations’ investments, and most anything in Asia or Europe.

Own a business providing products/services consumers MUST HAVE EACH AND EVERY DAY.

One of our readers bought a small town hardware store (not for sales or to make money, but to
own the inventory for trading). Also, his hidey-hole is an upstairs apartment.

Investors and traders are going to have to move toward faster investing and trading. Enter ideas
with a firm exit strategy. If you can use stops for automatic exits (either long or short), that’s a
good idea. One of our top contacts in Florida trades large and told us she has to trade more often
and take smaller bites of the apple. She is a top S&P trader with daily open positions of $500,000+
using futures. Her research, which is run by three smart, top-dog women assistants, is legendary.

Stay with a smaller number of trades and markets. Buffet says: more diversification equals more
ways to lose money. Make a small basket and watch the basket like a hawk.

Owning positions in Canada is a good thing as Canadian banks are in better shape. The Canadian
dollar should hold up better than the US dollar, over time. Oil shares and oil trading will be an
adventure. Those that are quick can make money. Most in this sector can get hurt with skimpy
knowledge. Be careful.

If you have larger accounts it might be wise to pay cash for someplace you can live. For a long
time, we liked renting but with so many markets that have seemingly hit bottom and stopped
selling, how low is low? A smaller owned property-home (not leased), can have merit as you are
owning a hard asset that cannot dissipate over time. Do not expect to make money using a home
as a piggy bank and do not borrow against it when it’s paid off. As much as possible, keep real
estate taxes paid in advance and insurance up to date. I think $250,000 in a good paid-for house
is now better than $250,000 in a mutual fund.

If you own precious metals shares be sure the company has 2-3 year’s cash and a senior
pperating miner next door to take them out when they prove-up good reserves. Leased farm land
is good to own for income for several more years in the right locations.

In summary, the 3rd quarter of 2012 will be a set-up quarter for those traders and investors moving
toward positions that can profit from all this forthcoming excitement arriving in the 4 th quarter.

We strongly suggest that if you are not experienced in managing big, faster moving messes, it
might be easier to go and buy physical gold and silver and take possession. This way you can
eliminate any counter party risk and if you need some cash later on, the metal brokers are more
then happy to buy it back and very quickly, too. This trade is safer and liquid.

Most of our readers of these essays and in our Trader Tracks Newsletter are primarily stock
traders and investors. At this juncture they are wondering and worrying as to when markets will
return to new rallies, pulling-up their beaten down stock positions.

The precious metals stocks (the best of the best) will begin to react almost immediately when gold
and silver begin new rallies. However, most of them usually take 2-4 weeks longer in a precious
metals reaction before any substantial shares movement.

Follow monthly charts first and discover the best time of year for your favorite markets. Then,
work backwards using weekly charts followed by dailies. For the most part, we have learned that
swing trading (a few days to a few weeks) is easier to manage for us.

However, some traders enjoy the scalping game doing 150 trades each day finishing the session
and then going flat overnight. Find what suits you best and above all control risk first. The
balance of your earnings will often take care of them selves. –Traderrog

Roger Wiegand is the writer and editor of Trader Tracks Newsletter for gold, silver and energy traders. Roger provides recommendations for short and longer term traditional stock shares, futures and commodities trading with specifics for individual trades. Listen to Traderrog reports and editorials on the Daily Market Close on the Korelin Economics Report website www.kereport.com. Visit Kitco.com for essays and audio.

Stay tuned for more of Traderrog’s insights and predictions via his exciting new daily audio subscription. Coming soon! Details at www.wavelengthpublishing.com