Information from “The Hill” and more on Markets
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In this show Al discusses:
- Segment 1 – Peter Grandich shares his thoughts on potential events for 2013.
- Segment 2 – Jeff Deist discusses politics from The Hill.
- Segment 3 – Jay Taylor is back with his thoughts regarding investing during 2013.
- Segment 4 – Bill Murphy discusses GATA for new listeners and offers thought on gold price manipulation.
- Segment 5 – David Morgan is back to discuss precious metals and investing.
- Segment 6 – Brent Cook summarizes his portfolio performance during 2012 and what he is looking for in the current year.
- Segment 7 – Dr. Peter Megaw discusses the mining environment in Mexico. Something all investors need to be aware of.
- Segment 8 – Jeff Deist opines some more from The Hill.
Click download link to listen on this device: Download Show
Click download link to listen on this device: Download Show
Click download link to listen on this device: Download Show
Click download link to listen on this device: Download Show
Click download link to listen on this device: Download Show
Click download link to listen on this device: Download Show
Click download link to listen on this device: Download Show
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Peter Grandich said “We have been robbing Peter to pay Paul and Peter is tapped out.”
Someone said (but I forget who) “When you rob Peter to pay Paul you assure yourself Paul’s vote.”
Some say the expression was derived from before the Reformation when church taxes were required to be paid to St. Paul’s church in London and to St. Peter’s church in Rome therefore the theory goes it referred to neglecting the St. Peter’s tax in order to have money to pay the St. Paul’s tax. When you look at the below image of St. Paul’s Cathedral London you cannot help but see a resemblance between the structure and our capital building. The benefactors of much of the “robbed” money over ½ of a millennium are caused by and arrive to the inhabitants of ornate domed edifices.
http://www.google.com/imgres?q=st+paul%27s+cathedral&um=1&hl=en&sa=N&tbo=d&biw=1000&bih=503&tbm=isch&tbnid=WhPqqAKwnLEvuM:&imgrefurl=http://en.wikipedia.org/wiki/St_Paul%27s_Cathedral&docid=h0kJ73xTBxn07M&imgurl=http://upload.wikimedia.org/wikipedia/commons/thumb/6/68/St_Pauls_Cathedral_in_1896.JPG/250px-St_Pauls_Cathedral_in_1896.JPG&w=250&h=190&ei=ODPoUL2qCOqx0QHL4oC4Bg&zoom=1&iact=hc&vpx=632&vpy=2&dur=8050&hovh=152&hovw=200&tx=114.875&ty=90.5&sig=108938575453810407277&page=1&tbnh=131&tbnw=175&start=0&ndsp=13&ved=1t:429,r:4,s:0,i:168
The larger and more ornate a building….the more lavish the adornments of an office…requires more not less questions to be asked and answered.
IGNORANCE……..”facilitates the ability to be robbed”…….Uncle Wally 1949
Uncle Wally is one smart dude, In the Box!
Big Al
I spent the morning in a bank and I wish they would stop robbing me and picking my brains at the same time. Maybe the next time I go their I should leave my purple 1962 Cadillac with the blue sex lights at home. DT
What the banks don’t really know is that instead of me being a World Famous Detective inside I am really Scrooge McDuck, and if I wasn’t they would have me picked clean in 1 hours time. DT
Buying bullion with certified checks can cause interesting bank lobby conversation.
You can say things like “Bank tellers were once required to work behind bars because they had with them on deposit reserves of real intrinsic value. This check is being created to secure some of that value with which this institution no longer transacts and therefore no longer requires a teller cage to protect.”
And yet another good point!
Big Al
DT….if you were SCROOGE MCDUCK….you would not be at the bank, but, in your own gold vault……lol oootb
And, In the Box, I would bet that is where he is.
Big Al
I’ll give a a grand for that 62 Caddy. But then again, you are going to turn me down because you haven’t been picked clean yet, Machine Gun!
Big Al
btw…..DT….YOU SHOULD have kept your PINK 1959 CADDY…., that way if this gold game gets to hard, you can start selling Mary K……lot..ootb
Thanks Mark,
Why is it I love reading that kind of stuff.
Here is an interesting tid bit about one of the many Churches that occupied the current St. Paul’s London site….from wiki
“Crowds were drawn to the northeast corner of the churchyard, St Paul’s Cross, where open-air preaching took place. In 1561 the spire was destroyed by lightning and it was not replaced; this event was taken by both Protestants and Roman Catholics as a sign of God’s displeasure at the other faction’s actions. (things like that will happen when you build a tall spire on the highest spot in London).
“Old St Paul’s” was gutted in the Great Fire of London of 1666.” (What an odd year for a church to burn).
The history of London is to learn about fires.
“The history of London is to learn about fires.”
Learning about the future may also involve learning about fires.
Oh year, Dennis M, someone else has to be the lesser. And that, is part of what is wrong with our world and always has been!
Big Al
Good points, Dennis M!
Big Al
Peter Grandich has is right, and so do you Al.
Yesterday I listened to Thorsten Polleit an Austrian School Banker who explains the outcome of “Collective Corruption”, which describes what Peter, Al and Dan Norcini are saying.
http://www.goldmoney.com/podcast/thorsten-polleit-discusses-collective-corruption.html
The big issue here is, faith and confidence in Fiat Money is the only thing the Fed and Governments have to keep things together, when they loose that all hell breaks out. And the way they are running things, Hell is breaking out now.
Economic psychology goes beyond “faith and confidence in Fiat Money”. The next level is the psychological level caused by the enforcement of the tender laws. When economic reality causes enough to realize an irredeemable paper medium of exchange for what it is….. the next question becomes to what extent will the issuer of the paper fraud go to force the circulation of the tool of fraud. The guillotine was often used to dislodge the head of someone who questioned the value of the assignat. It was an economic crime to even ask the method of payment when price was being negotiated. You can literally say the guillotine was overhead resistance for the fraud that was the assignat. My point Clay is many French had lost faith and confidence in the French paper papal confiscated land backed assignat early on in the debasement of the same. However they continued to conduct business with the assignat simply because they wanted “to keep their heads about them.” Which reminds me of the first stanza of Rudyard Kipling’s 1895 poem titled “IF”. The poem is a good thing to read at the outset of a new year and somehow seems appropriate especially for this forum. (the first stanza is followed by a link to the entire poem):
If you can keep your head when all about you
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too:
If you can wait and not be tired by waiting,
Or, being lied about, don’t deal in lies,
Or being hated don’t give way to hating,
And yet don’t look too good, nor talk too wise;
http://www.poemhunter.com/poem/if/
The second stanza of the poem is a featured fixture center court Wimbledon (for obvious reasons when read).
Many thanks for the reminder of this great verse,Dennis M!
Big Al
Clay,
I enjoyed listening to Thorsten Polleit….. a great interview…. thanks for the link to brain candy Clay. Speaking of which it appears Al brought of the A team this week for the first Weekend Show of 2013.
Yes it is, Clay. And, I have been saying that for the past 5 -10 years. Interestingly enough so far I and the rest of us have been absolutely correct!
Big Al
My sister has been collecting rent from my dad for years and has yet to get caught.In 77 months she had collected $50,400. Never paid ANY tax on the income:-(
That really shouldn’t be an issue. Let dad live free and have him “gift” up to $13,000 annually without triggering mandatory filing of IRS gift tax form 709.
Assuming US residency…sister may be avoiding a 60 month Medicaid look back period.
Hypothetically….
If dad goes to a long term care facility and is not liquid without the rent status the entire amount may be considered a gift and thereby imputed to dad and therefore sis. In this instance sister can say he was paying rent and go back and amend at least some of the years and pay tax. In some instances it makes sense to be exposed to income tax compared to third party alternatives.
DO NOT CONSTRUE THIS AS LEGAL ADICE
If that is what she chooses to do, it seems to be her business.
Big Al
Al, Peter Grandich makes a very important point for your listeners and that’s the significance of $1800.00 gold. I mentioned months ago that the next time we hit $1800.00 gold it will in all probability be the time we finally break that resistance. We will know it then becomes support when we close for 2 weeks above that figure. We may not go directly to the $2000.00 he talks about since we have one last resistance at the previous highs. Jay Taylor is “right on” about his western world deleveraging that will go on for years yet. That’ll tell you about what you can expect going forward with the conventional markets. Also, he’s right about the junior mining sector and the lack of capital and about being very selective. The important point that you and David Morgan makes is that there may be manipulation in the market but in the larger scheme of things it won’t influence the trend.
That’s right Doc!
Markets eventually overcome all forces. Its just a matter of time.
Doc: I am sure your work includes some of the following tech work by Steve Roy. Although I am not a chart analyst I can see how the cycles and fib levels would match up with the coming fundamentals with respect to world geo-politics and economics. By the second half of 2013 the world will be in full all out economic crisis caused by currency wars between nations and tax wars within nations. The ability of governments and central banks to control market and currency perspectives will be superseded by the necessities of maintaining civility.
http://www.youtube.com/watch?v=tZsc4N_a60g&list=UUNNxAnYe6Cm443PrVhwsbLQ
Clay, thanks for the info——-interesting segment. I’m surprised they’re calling for $91.00 for silver for 2013. We’ll see—–I am very encouraged that some silver stocks are holding up so well here—–that may be an sign.
SEG.8…….we have only one political party……”THE TWO HEADED SNAKE PARTY”, they are the same..(.see Jackson 1837)
“contact your elected offical”..said…BIG AL.
I think it is to late…..we do not have elected officals, only party elected officals…., all govt big and small is ran by money….and an agenda, and that agenda is not usually the best interest of the public….
AS ROOSEVELT SAID….tell them what they want to hear, and then do what you want.. , and this is exactly what they have done for the last 70 years….and now, we will live with the outcome….
Good point, In the Box.
Yep, tell them what they want to hear! You know, maybe Plato was right!
Big Al
Jerry,
Why did you add “THE SHORT” to your moniker…bored, I guess? 🙂
hello marc……I added the” SHORT”, to give awareness to all , that gold and silver is MANIPULATED by the shorters….(and you know who they are)….., but, we must keep reminding ourselves…just because it is shorted..we must not be shook out of our positions…..and that,,,,gold and silver are going higher,,,,much higher…..
SHORT IS JUST A REMINDER……TO STAY THE COURSE……lol ooooooh how sweet is is..
Then…with that in mind…….I must be Marc THE LONG…VERY LONG….LONNNNNGGGG in gold and silver 🙂
AND THAT IS THE LONG AND THE SHORT OF IT…….lot…
HA, ha, HAAAAAAAAAAAAAAA
marc THE LONG….great name…..great time in history to be longgggggggggggggggg
The $1800 level is looking to be a bit of a neckline. Following reverse head and shoulder theory that the eventual move after resistance is broke is equal to the decline from the neckline that would place AU over solidly over 2000 in the initial move. The chart is looking similar to what was seen in 2008-2009 when the neckline was $1,000. The move in late 09 and the early part of 2010 made the theory look very sound.
Great weekend show as always,and awesome segment with Bill M.
In regards to Bill Murphy’s segment when he speaks to the lack of a free market in money and Clay’s above comment about “faith and confidence in fiat ‘money’.”
The tender laws are prima facie evidence there is no free market in money.
‘We do not have a free market in gold and silver’ because if we did the fraud would be abandoned. If there were no tender laws…if there were no capital gains taxes on precious metals the fraud would quickly end. Beyond ‘faith and confidence’ in the fraudulent mediums of exchange there exists back-ups which require the fraud to be at least 1/2 of almost every transaction. As long as fiat anything is required to pay tax and what one might prefer is burdened with penalty not to mention a LIBOR…MF Global scandal or two you realize you need “to keep you head”.
….you realize you need “to keep your head when all about you
Are losing theirs and blaming it on you.”
No, Dennis M, it is actually “feed your head” as Grace Slick sang!
Big Al
Thanks Ann!
Big Al
Yup, agreed. From a TA perspective, I look at gold’s 1,800 price level just like any other technical chart. Think of it like chopping down a tree…. takes a couple retests to break it on the long term chart. My guess is that there will still be some “noise” from those trying to defend 1,800.
AL…we do not need” higher taxes”…., the usa is already in the “toilet”…..
btw….great show….ootb
Thanks for the kind words, Out of the Box!
Big Al
SEG.4….GOLD IS MANAGED….THEREFORE., IT WILL GO UP….. ,this is a no brainer…..
Managed a return of 16% a year…. GATA HAVE IT…..
oh gawd…
hi JWR…..gawd? did you get sunburned at the beach today….
It’s actually been pretty rainy and overcast. Like GATA too.
Al a few weeks back you stated that Yale told you he was the big buyer of XRC…well the insider reports have come out and he purchased 13,600 shares or $15,000 of stock. I think it is very disingenuous to claim he’s a big buyer when the truth is $15…. So which one of you lacks ethics and exaggerated?
Very poor standards.
I have reported your and Yales comments to the BCSC and OSC as misleading statements.
Jason,
At least you are not marked for life.
Try and read the below story without laughing out loud….it may make you feel better, to wit:
Jason. I dont remember the segment.Canadian Insider shows a purchase of 13000 shares at a buck and change.
Has anyone viewed this 8 part series by Ann Barnhardt?
“The Economy Is Going To Implode”.
I’ve watched 2 parts so far, and I like this lady!
This is part one:
http://www.youtube.com/watch?v=7dFVFJ0iRRA
Irwin,
That is the lady who shut down her commodity firm after MF Global.
She had he best line about the monetary mayhem fiat fiasco to date.
She was typed about on this forum back in August when this was typed:
“I loved then her line “when the feces hit the rapidly rotating metal blades.” I respect her opinion. The kind of girl that would pay for dinner!= 8/19/12 Weekend Show
Thanks Irwin without even sampling I think I will watch all of her offerings.
Thanks Again Irwin!
Dennis;
Yes, I recall when she closed the doors of the firm; I think she was interviewed by Jim Puplava at that time (or maybe it was on the unmentionable network).
Anyway, I watched all 8 parts … mostly dry numbers and far above my comprehension, but the last few minutes of Part 8 made it all worth while … a very powerful ending.
I have just finished watching part 4 sitting by the fire.
I am more than slightly turned off by her outright condemnation of John Corzine.
Regardless of the merits of his case for which she is almost certainly correct in her assessment….
I find it a bit presumptuous to so callously call for execution. It reminds me of the French Revolution discussed earlier today. Our founding fathers realized the danger of trading one tyranny for another form of tyranny. My experience with government convinces me that due process is an opportunity not a result and because of that I cannot justify the death penalty for anyone.
She is a smart girl but I will no longer allow her to buy me dinner.
Re: the video presentation by my dearest Ann B.
What she said right at the beginning of part one caught my attention, and is something I’ve been thinking about since the flash crash of May 2010 – “How much of your wealth is allocated as zeros and ones on computer servers”? Heck, most of the time I don’t even bother to print a copy of my bank and brokerage accounts. It wouldn’t even take a devious act by some nefarious villain to wipe me out; something like a well aimed solar flare could take down the computers and everything would be gone.
The gold & silver in the secure vaults of Central Fund of Canada (CEF) would still be there but I would have no way of laying claim to it. So what to do?
I’m not about to become a “midnight gardener” burying coins under the propane tank; perhaps a reputable coin/bullion dealer would provide safe storage. Of course there are other options such as artwork, bins of grain, cattle, huge tanks full of fuel, land, arms & ammo …. they all have their quite considerable disadvantages – gold is the easiest.
Ann B. is obviously quite intelligent, so I was surprised that she hadn’t closed her bank accounts before declaring a “federal tax strike”. Most people know that if they embark on such a course they can kiss their accounts good-bye; that goes for CRA* as well. Then, after listening to part eight it dawned on me that perhaps a fight with the IRS is exactly what she wants; she certainly has an agenda, I’m just not sure what it is.
All in all, a very good series of videos that I wish more than 100,000 people would watch; and if I’m not mistaken, she did the whole two and a half hours without so much as taking a sip of water!
*CRA – Canada Revenue Agency
Irwin…..I have typed the below in this forum before:
“I wish upon no one tomorrow’s equivalent of yesterday’s lions.”
Ann makes a lot of great points which demonstrate we are beyond the point of wishing dire straits away. She dramatically demonstrates the figurative lions are on the horizon. I guess that leaves me continuing to “wish upon no one tomorrow’s equivalent of yesterday’s lions” while at the same time expecting the lions to return.
Irwin,
In regards to the zeros and ones.
With the exception of my clients who are farmers and engaged actively in the agricultural commodities the vast majority of my clients present their wealth to me on pieces of paper that would fit comfortably in a manila envelope. My modest clients and more establish clients alike usually presents 10 to 15 pages from a custodian of their wealth to explain their estate. On average personal tangible property including but not limited to jewelry and collectible represent insignificant portions of the overall estate.
Even the excepted group farmers tend to trade out of their exposure to the commodities as quickly as they can in favor of digital supposed wealth. I have learned a great deal from a few of my clients who make use of their silos as more than feed storage. Irwin I have often wondered why qualified account statements proudly display figures that include so much unpaid tax that the account owner will never realize. And after you watch Ann Barnhardt’s presentation you wonder just how many account holders will realize any of their zeros and ones. I agree with your assessment that she was thought provoking.
I cannot agree with much of what she said. I would like to consult her on the effective use of and the limitations of a power point presentation. She engaged a lot of editorial she need not have to make her major points. She is certainly brave.
Sorry
A majority of Americans are immoral, lack ethics, are becoming sinners????? …….seriously …..really. I wonder what a majority of Americans would have to say about that.
With the greatest respect please spare us the religious overtones thinking that somehow that the only righteous path is the religious one. Those who caused this financial crisis, the banksters, are likely to tell you that their God is a fair compassionate God except when it comes to telling you the truth about what they are doing with your money.
You keep blaming Obama for what is going on without talking about the set up by Bush and the Republicans. Please be a bit more fair and objective with the reporting as it is starting to sound a little one sided biased and hardly arms length.
The current brand of US capitalism is starting to look a lot more like socialism. For all the talk the US have continuously moved the goal posts and have not embrace their own capital rhetoric ie failures should fail. Now we see the lords and masters of the banking industry (and others) survive while the plebs are having to bow a scrape to make a living and somehow this is being characterised as a diminishing of the moral standing of the US citizen.
Unbelievable!
It is also quite obvious that there needs to be a major overhaul of the tax code. Until then the rich will continue to get richer and more powerful and the rest of the people will become increasingly disparaged. Sounds like socialism to me. Where is the rule of law when you need it. This is key to the overall solution to what ills the US.
I do not mean to be disrespectful but am critical of some of the commentary and the direction it’s taking. I also know there are some generalisations in this post but just don’t have the time to expand on it.
Cheers
TonyW
PS BTW on the criticism of KWN – as mention on today’s show John Embry and Eric Sprott feature regularly on KWN so not sure why the criticism at least Jay Taylor likes them.
The people always get the government they deserve. Yes, the majority are immoral. Most Democrats AND Republicans have been completely fine with the welfare/warfare state and the fiat money it rode in on. Few protest anything based on justice. I, for one, do not wonder what a majority of Americans would have to say about that.
At least you recognize that the U.S. is more a socialist nation than a capitalist one.
“Government is the great fiction through which everybody endeavors to live at the expense of everybody else.” — Frederic Bastiat
Hi Matthew
That maybe true taking a snap shot but where’s all the cause and effect arguments here.
The people didn’t just wake up one morning and decide to not go to work and earn a living, that’s right earn a living not ask for a living. Now you have professional having to beg for food just to make do.
Profits before people seems to be the mantra. What has Apple done for your country; the steel industry; manufacturing etc etc ad nauseam.
It seems it is big industries raison d’etre to build themselves up then disrespect the people who help and cut them off at the knees.
What happens when you default against big business. They will take you screaming through the courts until your nose bleeds and you are left with nothing. What happens in the reverse they will take you through the courts until your nose almost bleeds then smack you in the face for good measure. Even if you win you feel like a loser.
Again where is the rule of law in all this. Where’s the justice.
Cheers
TonyW
The government is responsible for the rule of law and justice. The people are responsible for their government. The power rests with the government, not big business. Politicians took an oath to uphold the constitution, CEOs did not. The privilege that big business enjoys is made possible by corrupt politicians. Corrupt politicians remain in office due to a corrupt citizenry.
The sheeple don’t care about justice until the shit hits the fan. They don’t understand that fiat money is most responsible for most of society’s worst problems. They also don’t understand that the current economic situation is not the problem but only a consequence of the problem.
As long as the majority believe in massive government and wealth redistribution, they better get used to being unhappy with the results of such a belief.
“Democracy is a pathetic belief in the collective wisdom of individual ignorance.”
— H. L. Mencken
Tocqueville thought the future of democracy in the United States included the danger of degeneration into a soft despotism and/or a tyranny of the majority.
The question was…… how quick would Puritan civic virtue be abandoned?
There is a far reaching consequence for not having a Nativity display on the Court House lawn. Perhaps the proponents of removing religion from public life knew just how far reaching and debilitating the prohibition was and is.
http://www.kentucky.com/2011/08/24/1855157/under-threat-of-lawsuit-bell-county.html
Good Day Tony W,
I think perhaps you are too inclusive in the criticisms that were directed towards KWN. You seem to be implying that we are criticizing EVERY guest and interview from there. Most certainly not!
I have no problems with many guests from KWN, in fact I believe that Ann mentioned some of the greats in her response to my negative criticism from yesterday. You are right in comparing this site to KWN – in regards to promoting precious metals.
My argument is when Mr. King practically puts words in some of his guests mouth and pushes them into saying things they don’t wish to say, or had no intention of saying. I can’t say I have heard Big Al do that, but then again, I don’t drop by very often, as I too don’t want to hear about “buy gold buy silver…ad nauseam”.
The numerous projections of where gold WILL BE at a CERTAIN DATE IN TIME gets old real fast. Those are the criticisms I am referring to as well as every dreamed up reason for a “gold smack down” possible.
I did enjoy it when Art Cashin, James Turk, or Sprott, or Norcini, or the gentlemen from CMI were interviewed, as those guys ARE WORLD CLASS and deserve my full attention. But then he would bring out the Secret London Trader, who almost always came out with a story of how “MASSIVE SHORTAGES IN GOLD AND SILVER” were to be seen eveywhere, just days BEFORE gold tanked hard. Not once, not twice, but several times. He was about as contrarian as Dennis Gartman.
No my criticism isn’t with KWN’s guests themselves – MOST (not all) are top notch and have great wisdom, whom I still follow and read their articles today. But it is actually with the host and SOME of his guests who always seem to think that tomorrow will be “the day” in which gold goes to the moon. The cheer-leading gets old after awhile. Yes, there are reasons to like and not like something. I guess that is how the world will always be. Sorry
The last segment summed up our problems very well. Bravo, Al, you have a great program. I do not understand why the media is blind to these issues.
Thx Irwin for the link, I thought it was very good.
Interesting she agrees with Bill Still about gold. She also agrees with Max Keiser that Corzine and ilk should be executed, that I think is due to them realising the severity of what they do, rapeing children tortureing the elderly and enslaving pretty much everyone, I agree, the death penelty is required.
I thought it unfortunate that she used religion, it wasnt needed, liberty covers everything she is talking about,and I have to disagree that Ron Paul is anti semite,
prejudice is against liberty wich is what RP is for, but liberty takes a little study to understand I believe.
I think she was right to get out of the markets some time ago, she could be right now,
“get out before you cant.”
I dont think its the end of the world, China,Russia and others will survive, its the west that is going to crumble, we can watch as our cities slowly erode to ruble.
I thought she pointed out Romny Ryan well, same as Obama, maybe a few more people will see they are the same and she could very well be right about the next presedent being the one to fear. Goldman Sachs and Obama have set up whoever it is perfectly. imo. I liked her telling the christians what she thought of them, while retaining her own beliefs. I aplaud her courage to oppose the “dark side”, she is scared to death because she sees and understands whats happening, unfortunatly, the average guy is “smart as a brick” and he is more intellegent than 50% of the people, and they will continue to vote for Romny/Obama, not call for Corzines head and not see whats coming until its happened. I think she makes a good point that those that do have the intelligence to understand, have the moral obligation to defend those that dont, she is a moral person, has the understanding, intelligence, youth and energy required to do something, I wish her luck, she will need it.
You’re welcome benb;
She certainly said a lot of things to make a person think … and that’s always good.
I also listen to Michael Savage occasionally (Savage Nation).
Those two together on the same podium would be an event to behold.
and now a word from Dr Paul (the ob doc not the optho doc)…..
oops…that’s ophtho…..
Jan.3rd update from expected returns:
When you talk to different people, you figure out what the prevailing thinking is. That being said, my sense is that people really do not understand what’s going on in the global economy, and this is due to a lack of what’s called divergent thinking. Basically divergent thinking is a creative skill that allows you to see multiple scenarios and then come up with a solution to a problem. It’s the type of thinking that is seriously lacking in our leaders, and quite frankly, in the majority of the population. In order to prepare for a crisis, you must first be able to see it unfold.
Things are getting crazy everywhere. The Japanese Prime Minister recently said that Japan needs to weaken the Yen because of an ongoing currency war led by the U.S. Many leaders around the world have voiced the same opinion, and it’s true. Heck even Switzerland has been devaluing its currency because the appreciating Swiss Franc was causing economic problems. We are simply in an environment where a bad problem becomes worse because of short-sighted actions by global leaders.
The U.S. is leading the charge in stupidity by raising taxes in a depressed economic environment, thereby imposing deflation. This is clearly the route our leaders have decided to take, so you can forget about an economic recovery now. Businesses were sitting on their hands waiting for signs of intelligent life in Washington, but now that it has been confirmed it doesn’t exist, they will start hunkering down again. Economic growth will slow in real terms and jobs will be scarce. This means the ticking time bomb of student debt is set to explode in the near future. Pensions that are loaded with government bonds are also set to implode, thereby guaranteeing that no demographic of the U.S. population is coming out of this unscathed.
We will now see a massive flight to quality, which in this particular situation means liquid assets not associated with the government. Stocks are still rising, which demonstrates the prevailing secular trend is intact. The metals are lagging behind, but there is no reason for concern- market participants are still trying to figure out the situation. Also remember that any market can be manipulated in the short-term, and if there is any market that the “powers that be” don’t want to see go nuts, it’s gold. I absolutely would not be surprised by a panic sell-off that shakes people out of their positions before an epic rally. It’s a golden rule of trading that a bull market always shakes off as many participants as possible before making its largest moves.
I really get the sense that I will need to calm a lot of nerves in 2013. The endgame is not in doubt at this point- the only question is how we will get there. Will we see munis default first? Will a collapse in Europe or Japan derail our economy? There is no way to know exactly what will be the catalyst, but the key point is that all debt is connected. All currencies are connected. So when a country like Spain implodes, it reverberates throughout the global economy.
Without a doubt it is time to hunker down and get as much money out of banks as possible without setting off alarms. I believe real estate at this point should only be purchased with a mortgage. In other words, you are leveraging the cheap money moreso than the actual asset underlying it. Real estate has been garnering the headlines while gold is the forgotten asset. To me this is telling. I personally will be leaning more towards gold purchases as this correction/consolidation persists. This is all about staying nimble mentally.
Disclaimer: 1. This newsletter is for informational purposes only. I am not a registered investment advisor and I am not responsible for any actions taken by subscribers.
Great letter Paul!
Donald says: The last segment summed up our problems very well. Bravo, Al, you have a great program. I do not understand why the media is blind to these issues.
I agree for the most part with Donald’s assessments of Segment 8 except one critique(intended only as corrective criticism):
Al and Jeff tend to phrase the blame on the last 10 years. The last decade is often phrased into the blame time frame. It is as if the illusion that Clinton ran a surplus was real.
2/3 s of our debt consist of Social Security and Medicare. The former was created to fail in the 30’s…Medicare and Medicaid (technically amendments to the Social Security act) piled on in 1965. When talking about the last ten years I understand the Bush wars and Prescription drugs add-ons..but the majority of our budgetary fiscal problem started back with FDR and LBJ’s socializing America.
In addition we are now in the 100th year of debt based money. A thoughtful analysis can conclude that the whole reason for FDR, LBJ, Bush and Obama so deliberately running up the debt is that The Federal Reserve Act delivered to them a monetary dilemma. A monetary dilemma they all dealt with politically rather than uprightly.
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