Ed Note: Michael Campbell calls Greg Weldon – “The One Analyst other Analysts can’t Wait to Read.”

As long time readers know, I am a big fan of Greg Weldon. This week he has very graciously allowed me to reproduce his client letter from last Thursday on some of the issues of Bernanke and Quantitative Easing 2. It prints a little longer than usual because of his format and all the charts, but this is one letter you should take the time to read.

You can get a free trial (his service is not cheap but if you are a global macro fund or trader, you really should have it!) by going to www.weldononline.com.
John Mauldin

Outside the Box

Time Loves a Hero

I was fortunate to have met the late Lowell George, lead singer of ‘Little Feat’, prior to the band’s performance at Colgate University in 1979. The band was using the men’s basketball locker room as their ‘hospitality suite’, relegating the team to the local high school. As we returned from practice to store our gear, George was in the room, and he asked us if anyone could use the pair of size 21 basketball sneakers that a fan had tossed on stage during the previous night’s gig at Cornell.

We note lyrics from Little Feat within the context of today’s macro-monetary focus on the US …

“Well they say time loves a hero.

But only time will tell.

If he’s real, he’s a legend from heaven.

If he ain’t, he was sent here by hell.”

Markets are praying that time will tell us … that Ben Bernanke was a monetary legend from heaven, and a hero to the masses who are starving for a macro-reflation, specifically as it relates to the housing and labor markets.

But, if the ‘cost’ of creating jobs is a price-inflation spiral … then there could be ‘hell-to-pay’ in the markets, particularly in the fixed-income arena, and Boom-Boom’s legacy could be one of the ‘anti-hero’.

Of course, there is a decent chance that even the most heroic of efforts by the Federal Reserve could FAIL to generate the ‘desired’ outcome, leading to an increasingly ‘devilish’ debt-deflation.

Or, things could just stay … sideways, with both an upward tilt, AND a downward skew.

Thus, the odds of the Fed looking heroic … 2:1 … against … with one scenario considered a draw (status quo), while two of the other three potential ‘scenarios’ (hyper-inflation, or a debt-deflation) leading to some kind of hellacious reaction in stock, bond, and currency markets.

Indeed, we do NOT envy Ben Bernanke, and his ‘job’.

Frankly, few do it better than Boom-Boom, who has managed to create a most unique ‘circumstance’ with his pledge to monetize as much US Treasury debt as necessary, to insure that an overt debt deflation does not become ‘the’ dominant macro-force. Ben has fostered an environment where BOTH bond prices AND inflation expectations, are on the rise.

The Fed has made it crystal clear … they are pursuing higher inflation.

Five years ago, in my book “Gold Trading Boot Camp” we discussed at length the conundrum currently facing the Fed, stating that the Fed would, someday, be forced to acquiesce to higher commodity-price inflation, (particularly Gold) in order to circumvent a deepening macro-deflation.

Bingo, this is EXACTLY what is happening.

This is WHY Gold is screaming to the upside.

This is WHY the TIPS are screaming to the upside.

This, thanks to the fact that the Fed has orchestrated a PLUNGE in US short-term interest rates, US Treasury Note yields, and US Treasury Bond yields …

… in synch with a massive COMPRESSION in the Yield Curve.

We have been discussing the Yield Curve for months since our March-18th Money Monitor entitled “March Madness”, in anticipation of the compression we are now seeing … and we focused on the intensifying flattening taking place in the mid-curve, within the 2-Year, 3-Year, and 5-Year maturities, as recently as our September 24th Monitor, “Dancing with the Devil.”

Yes, the Fed has offered the ‘soul’ of the US currency, in return for a monetization-derived ‘reflation’, in the hope that an asset-price-reflation will, somehow, finally, spillover into the ‘real’ underlying macro-economy.

But only time will tell. If he’s real, he’s a legend from (monetary) heaven.

The problem is, that the Fed may have been ‘too heroic’, by talking-the-talk, without really ‘walking-the-walk’, not yet anyway, not to the degree to which their TALK has sparked a feeding frenzy …

… one that is ‘validated’ by the horrific scene in the macro-economy …

… and yet one that is ‘refuted’ by the price action in Gold, the US Dollar, along with emerging market equity indexes and currencies.

For sure, without much actual debt monetization by the Fed over the last six months, things in the markets are looking increasingly ‘bubblicious’.

The Fed is NOT directly responsible for the ‘froth’.

But their ‘talk’ is, as investors, banks, and global central banks have snapped up Treasury debt as if the Fed did offer a ‘put option’, by which it would be willing to step in as the buyer-of-last resort, in the event that owners of Treasuries stopped buying …

… or … worse yet … gasp … if they started to sell.

The ‘odds’ lengthen, when we contemplate the following thought process:

— IF there is in fact a BUBBLE in the Treasury market, and IF that bubble is ‘pricked’, the FEDERAL RESERVE will be EXPECTED to buy as MANY BONDS AS IT TAKES, to stop the escaping air from deflating the bubble. .

The Fed has put itself in a VERY tough spot, and when (not if) they are finally required to walk-the-monetary-walk, all hell could already be breaking loose.

Indeed, for this reason, we believe that the odds stack up against a Fed strategy that implicitly (as suggested by many, including the St Louis Fed President) seeks to monetize Treasury debt slowly, over a longer-time frame and in ‘smaller’ increments, than was the case in the 2009-10 experience.

To date, the Fed has NOT been leading the charge.

As we detailed in our Dancing with the Devil Monitor of September 24th, US Households, US Commercial Banks, and Foreign Official Accounts (ie: Central Banks) have purchased, in total, MORE than $2.5 trillion in Treasury debt since the beginning of 2008 … whereas the Federal Reserve has purchased only ONE-PERCENT as much (more on this, later). 

Indeed, Treasury Note Yields are plummeting to record lows, and the Fed has only JUST STARTED ‘talking-the-talk’, as evidenced by a plethora of comments on the offer from Fed officials since the middle of last week.

We note the following quotes ..

… starting with the would-be-hero, maybe-headed-for-monetary-hell,  Fed Chairman, Ben Boom-Boom Bernanke himself …

… “I do think that additional purchases, although we do not have precise numbers for how big the effects are, I do think they have the ability to ease financial conditions.”

Next we note commentary that sparked Monday’s extension lower in US Treasury Note yields, from New York Fed President William Dudley …

… “Fed action is likely to be warranted unless the economic outlook evolves in a way that makes me more confident that we will see better outcomes for both employment and inflation before too long.”

Indeed, the Fed will keep pumping, until it sees the proverbial ‘whites-of-their-eyes, as it relates to inflation, and job growth.

……read more and view multiple charts HERE

* Note: Peter Schiff will be speaking at the Money Talks Precious Metals Conference October 23rd!

The Hail Mary

Friday, October 8, 2010

Since the US economy has failed to recover as widely predicted, pressure on the Federal Reserve to conjure a solution has increased. In fact, the Fed now faces the hardest choices in its history. It can either redouble its past efforts to re-inflate America’s bubble economy (risking the destruction of the US dollar) or it can stop pumping and let the economy deflate to a self-sustaining level. Unfortunately, both choices guarantee severe economic pain – but only one offers the possibility of ultimate success.

Today’s news that the economy lost 95,000 jobs in September confirms that record doses of stimulus have failed to create a real recovery. The loss of 159,000 government jobs in the month could have been a positive if those lost positions had been replaced by wealth-generating private sector jobs. But the 65,000 jobs generated by businesses didn’t come close. Worse still, most of these jobs came from the goods-consuming service sector rather than the goods-producing manufacturing sector (which lost another 6,000 jobs). The unemployment rate has now been above 9.5% for 14 consecutive months, the longest such streak since monthly records began in 1948. More importantly, the real unemployment rate, which factors in discouraged and under-employed workers, rose from 16.7% to 17.1%.

Armed with this weak jobs report, the Fed seems poised to make good on its plan for other round of quantitative easing (in English: printing money). Recent statement from top Fed governors have made that sentiment clear. Apparently they feel that they must do something, even though Fed inaction would be far better for the economy. At a time when we should be trusting the markets to grind out three yards in a cloud of dust, we have put our faith in the Fed’s ability to fling a Hail Mary pass, even though all previous attempts have failed.

Most people assume that the “crash” I referred to in my 2007 book “Crash Proof: How to Profit from the Coming Economic Collapse” occurred in 2008. Those who actually read the book know otherwise. The financial crisis that resulted from the bursting of the housing bubble, accurately foretold in my book, was not the crash itself, but merely the overture to a much more tragic economic opera for which the curtain is just now rising.

I argued that the housing bust would threaten the financial system with collapse and that the government would react with stimulus and bailouts – thereby making the situation much worse. That is exactly what happened. I did not believe then, and I don’t believe now, that the process of liquidating bad debt would kill us. But I do believe we will succumb to Washington’s “cure” of endless stimulus.

Many now claim that government deficits and Fed easing prevented a repeat of the Great Depression. From my perspective, calamity was not averted but merely delayed. The price for the reprieve will be a far more severe downturn, which I now think will surpass the Great Depression.

In Crash Proof, I talked about how our economy suffered from the co-morbid diseases of asset bubbles, excessive debt and consumption, and insufficient savings, capital investment, and production. These conditions did not arise as a result of market forces, but from foolish monetary, fiscal, and regulatory policies that distorted market forces. The proper cure would have been to remove the distortions and allow the markets to correct.

Unfortunately, as I forecast, the opposite occurred. Washington lacked the economic understanding and the political will to allow for a painful adjustment to take place. So, instead, they cranked up the printing presses and administered the equivalent of economic heroine. The drugs succeeded in postponing the pain, but at the expense of exacerbating the underlying condition. As the high wears off, a more debilitating hangover will set in.

By electing to bail out the financial sector, prop up housing prices, allow excess spending and borrowing to continue, and maintain superfluous government and service-sector jobs, the government has pushed our economy to the edge of a very dangerous precipice.

The right choice is to admit past mistakes and reverse course. The Fed must raise interest rates aggressively, shrink its bloated balance sheet, and allow the real recession to finally run its course. It will be much more painful now than it would have been in 2008, but at least this time the pain will end and real recovery will take hold. By forcing the federal and state governments to slash spending, sound monetary policy will allow market forces to rebuild a solid foundation upon which future prosperity may be built.

The wrong choice is for the Fed to continue quantitative easing as planned, allowing the government to grow at the expense of the economy. This will widen the economic imbalances that lie at the root of our problems. As a side effect, the US dollar will continue spiraling downward as it becomes clear to foreign creditors that the Fed has no interest in protecting their investments. A weaker dollar will lead to higher inflation and higher interest rates, which will make the Fed’s task that much more difficult. 

In the end, our bubble economy will not just deflate, it will burst. The dollar will collapse, consumer prices will skyrocket, real credit will completely evaporate, millions more will lose their jobs, and our economy will change in ways few of us can imagine. Our standard of living will plummet and legions of middle- and upper-class Americans will be impoverished. It is not a pretty picture, but unfortunately, it’s the one our government is painting. Unfortunately, we are running out of time to change artists.

FX Trading – All together now: GLO-BAL-IS-M

No currency deal on the IMF front this weekend; but really, did we expect anything more than dialogue?

What did seem to be decided upon was the need for more emerging economy representation on the global front … because the developed economies are running this global supertanker aground, of course. The IMF said:

“Stronger and even-handed surveillance to uncover vulnerabilities in large advanced economies is a priority …”

And Thailand’s Finance Minister – yep, Thailand – added this:

“The IMF is no longer the institution designed to look after the developing countries solely …

“Its role needs to be more broad-based, and it needs to realize that mistakes in the larger economies have global impact.”

[Note: it also needs to realize that valuable decisions in larger economies also have global impact. But enough of that thinking …]

Being a little guy, it’s rather empowering to cast blame upon the big guy. The US is the biggest of big guys … and with the limp-wristed way in which US “leaders” have steered America recently – financially and geopolitically – it has become rather popular to bring the country’s economic ills to light.

As this experiment called GLOBALISM is being tested, the US is atop the list of the punishable. 

The rest of the global leadership seems to think better oversight by these globalist institutions  is what’s needed to keep the US and similar developed powers in line. But what they fail to realize: these developed nations are needed to keep this globalism in line; emerging economies are nothing yet without the big guys. Without the US, for instance, such a worldwide effort to produce one giant, perfectly-balanced economic system would fall apart. [Of course, without China getting in the game we can say the same thing.  Thus, the moniker G-2 to describe the relationship that seems to be deteriorating quickly.]  

As it is now, though, US and developed economy leaders seem to agree that maintaining a global order is best done through an IMF … or World Bank … or some combination of organizations that dictate policy. From the IMF this weekend:

“Further action is urgently needed to reinforce the institution’s role and effectiveness as a global body for macro-financial surveillance and policy collaboration …”

We can’t help but think an IMF-like institution restricts countries from acting in their own best interest.  Of course that is true, and why the West is looking to use the IMF as a wedge to change China’s actions which we know are always in China’s best interest. It is a subjective game—best interest—that can never be codified by some institutional body.  No surprise here.  Point being there is no magic bullet. The carrot of persuasion must still be backed by the stick of verification.  For now, trade tariffs seem the only stick available to Western governments to counter China’s “best interests.”  

Some would argue that the reason for the foreign exchange tensions is that the current structure of the IMF et al has hindered smaller economies from acting in their own best interest, or enabling larger economies to act in ways that impede upon the best interest of smaller economies. It’s just that their solution to these tensions seems to be the wrong one.

Rather than further complicate the responsibility of the IMF and formal interconnectedness of national economies, just do away with the whole idea. Let all economies operate with their own interests in mind. And if you think that’s a recipe for chaos, consider this from Ayn Rand:

“When a man trades with others, he is counting — explicitly or implicitly — on their rationality, that is: on their ability to recognize the objective value of his work. (A trade based on any other premise is a con game or a fraud.) Thus, when a rational man pursues a goal in a free society, he does not place himself at the mercy of whims, the favors or the prejudices of others; he depends on nothing but his own effort: directly, by doing objectively valuable work — indirectly, through the objective evaluation of his own work by others.”

If only wishing could make it so!

interests defined by those who don’t have the market’s best interests in mind.  We get It seems this mindset would help to flush away the complexities – restrictions, corruption, waste, risk, etc. – of a tightly-coupled global economic system; but it won’t happen in the real world.  Instead we are stuck with a whole lot of messiness of self-corruption and manipulation of money and credit as the raw material where we operate.  It is a tightly coupled quasi-free market at best; it always has been but the “free” part seems to be receding fast of late and is a handy excuse for inept government policy posed as solution.

The idea of a global monetary system based on a national currency at the center—the US dollar—has always been flawed to a degree.  But it was a system that served the world well despite of those flaws.  Two things have changed to expose how weak the system is now: 1) The US has not been a responsible holder of world reserve currency status.  And over the past 10-years, the manipulation and use of the dollar as pure near- term policy tool in place of real economic reform has been staggeringly stupid, but politically expedient, and 2) The system was based on global economic and political dominance at the center; that is no more thanks to the success of globalization championed by the once totally dominant power—the US.  Thus, the success of the global system, warts and all, under US dollar hegemony, seems to be sowing its destruction.  

Our view before the IMF meeting and after has not changed.  It is this:  If China does not choose to act soon (given that it now shares dominant global system power), there will be a major global conflagration because the West must maintain some credibility and use its stick–a real trade war will flow from the current currency skirmish.  If the IMF can help convince China the ball is squarely in their court, and that playing the game is in their long-term best interests, that at least it has been of some use.  

Jack & JR
Black Swan Capital LLC
www.blackswantrading.com

The Bottom Line
Use weakness into October as an opportunity to acquire attractive equities and ETFs. Preferred selections are economically sensitive sectors such as China, technology, consumer discretionary, industrial, materials and Canadian financial services. A full story on the Canadian financial services sector is offered below. Full story on China is offered in the September 20th edition of Tech Talk(published in the Financial Post on September 18th). Following is a duplicate of that report:

…..read it all HERE including 40 plus charts and analysis.

Michael Campbell:  Peter Grandich (The Grandich letter) have been saying you should be in gold. You said you were looking for $1,3,00 –  $1,350 mark.  Now that its hit your targets, what are you looking for now?

Peter: Since Gold was little bit above $300. eight years ago, it should be called a roaring bull market. Subject to a few calls for corrections, indeed when we were a few hundred below with bears making claims that once again the market was topping I actually bet $100,000  that we would hit 1,300 without going under 1,000. No one took me up but needless to say you’re only as good a your last call in this business and everybody looks forward looking to see what you think. With that in mind, I think we pretty well are deserving of a respite here now. It would not surprise,  me and quite frankly I would welcome it,  although markets a lot of times don’t do what you like them to do. We’re quite overboard on a lot of my technical indicators. In fact Friday on my blog I noted to some people that it’s time to take some profits. Not that we’re at the end of a move, not that we have to sell off a lot of stuff,  but we moved quite a bit. A lot of reasons still suggest that over the longer term we can go higher, but it’s the time or period where this bull market has shown that it takes one step back after taking two steps forward.

Michael: I know it’s a cliché but nobody went broke taking a profit. Are you saying to take of your money off the table when you’ve hit a target like this?

Peter: We said in our comment brief on Friday that no one’s ever gone hungry having half a loaf of bread. So this is a good time. This is football season and I’m involved in another away very much in football.  Every team tonight is at its meetings and the coaches have made a plan and will do all they can to stick to it. In investing the problem is that many people don’t have a plan, they go on the day to day emotional swing and a lot of that is affected by what they read in the media which is a lot of times just noise. I just think that with Gold it is a difficult game,  particularly when you get to the junior resource market because there it is just pure gambling. It’s a game of survival and you only have a number of chances to hit a ball out of the park. A lot of people have substantial gains and it always looks like it’s going up and can’t stop. My concern at this point of time is Gold is technically overbought. There’s some fluff in the market. There’s a sense of cockiness almost,  even among some bulls and colleagues of mine. Now you’ve got the Bears on the run it looks like it can only keep going up, up and up. After 25 plus years in this business that suggests to me it’s time to take something off the table. It doesn’t mean we’re looking for a large drop, it doesn’t mean you look to trade this.  If you have some profits book some since they’re not really profits if they’re only on paper.

Michael: What’s your take on the silver market right now?

Peter: Well people when they mention precious metals have to remember there’s actually four precious metals that are considered; that’s gold, silver, platinum, palladium. The later two almost never get mentioned and if they do it’s in a very short breath. Silver is not precious in that there is ample supply of it in terms of the production that comes out. In fact much of the silver that is produced is a byproduct of other key metals. Having said all that there’s also been a great argument and I think a very useful and prudent argument that silver has been greatly manipulated in the paper market. There’s a great belief that there is  a tremendous Silver short position, shorter to the point that perhaps even more than the known physical supplies of silver are short at the Comex. In recent weeks those shorts have started to get hammered because of what took place a few months ago at a commodities hearing. There was ample circumstantial evidence presented, and I think a fear amongst the shorts that the commodity futures commission is going to change the rules and regulations on the Comex. That could really squeeze these people. So with all that in mind silver has been leading Gold. It did indeed break out on the charts but it looks a little bit parabolic of late. In those situations there’s usually a significant pull back and a pause. The further we go up here without a pause the harder that pull back will eventually be. So like Gold,  I think that a sideways move now for a few days to a few weeks would be quite healthy and quite encouraging to bulls. A pullback versus a continued straight up move which could be an exhaustion move and cause us a more serious correction than we really needed.

Michael: Thankyou Peter. You can reach Peter Grandich’s work at www.grandich.com.

Michael: Let’s look at the stock side for a second.

Peter: We just spoke about this in the past week at a Toronto at a conference.  I tried to explain how different and how much harder it is to be particularly successful in the junior resource market than it was ten years ago,  despite the dramatic increase of the metal prices themselves. It certainly shows that the further you go down the food chain the less performance we’ve seen. Major’s, while underperforming the metals,  have actually as a whole done better than the junior market. There’s reasons for that. The game has changed there’s not as many people from the retail brokerage side that used to play these Juniors. The regulatory issues,  particularly in the US,  have prevented a lot of people participating in that market than used to. Quite frankly there’s more people interested in bullion and now money that used to go into mining shares,  because they had no other place to go , now go into the physical bullion ETF’s. That’s helped the metal prices, but it’s also helped the mining shares to under perform.

So as you go down to the more junior resource particularly those are that just pure exploration aren’t even in the development stage of a mine. The less performance we’ve seen overall versus the metal. And quite frankly I don’t see anything on the horizon that can change that simply because I believe the game has changed and the number of players have changed. Doesn’t mean you don’t want to own them. But you’re not going to see what I believe would have been much higher prices if the same thing was happening 10 or 15 years ago.

Michael: It’s usual that the seniors would move first,  then the intermediates and the juniors. Is that what we are seeing unfolding at this point?

Peter: I think the majors will continue to actually outperform the juniors cause there just isn’t enough groundswell of interest among junior player participant’s to get them as trade crazy as we used to see 10 or 15 years ago. That’s somewhat healthier in that we don’t have wild swings. But I don’t think we have the buying momentum in the junior market to actually get them to greatly out perform the metal prices. The junior index markets relative to past performance and adjusted for inflation are still substantially lower than they would have been when gold was just $400. So I don’t see that happening, I would love it to happen because I’m so heavily involved in the business and personally invest in the juniors. But I just don’t see that market flying in the way that it used to fly a decade ago.

Michael: What’s your perspective on the overall stock market itself?

Peter: Well Mike my feeling has been that we’ve entered a Japanese style market like what we saw Japan do from 1989 to present. After a rally that took place into the summer my expectation is we are going to go into a long term trading range, and over a several years period of time we’ll work our way lower in that trading range. And in some time we’ll test those March 2009 lows. A couple of weeks ago I noted on our blog that despite very poor fundamental outlook for the market, the market had shown a technical position that was suggesting the market can move back to it’s recent highs a little bit over 11,000 on the Dow. And that’s happening, it’s frustrating a lot of people got shot in this move a lot of, what I would call somewhat inexperienced traders got shot because it looked in their mind that we were slam dunking a fall off the cliff again. And my argument is that the market and the economy is going to go nowhere as fast as the US. So I’m neither long or short I’d lean to the bear side because over time I think the US stock market will greatly under perform other markets including Canada. But more importantly other countries in Asia some in Latin America even a few in Europe. And the US stock market and the economy is no longer the engine that pulls the world around. So you’ll have to get used to the fact that the US market may not be going up. But that doesn’t mean you don’t look elsewhere around the world.

Michael: You know it’s one of my themes has been making this distinction between economics and finance. For example the meltdown was a financial problem that had reverberations in the economy. And I still think that’s a central dynamic whether we are talking the currency moves. You know it might be that the US dollar now becomes the big carry trade where people can borrow or massive organizations can borrow at very low rates in the states and then move that money elsewhere that will catch up too. So I see a financial thing, but one of the simple dynamics I see is that that’s kept the market up Peter and I just want your reflection on it, is that there’s not really a lot of other alternatives. If you are a pension fund looking to make your 7 8% which is probably in the projections of most of them at this point and have been very disappointed. You know you obviously can’t do it in the government bond market as an example. So I think that’s also helped to some degree in keeping the stock market up.

Peter: I think that’s true, I think one of the areas that has; you know people talk about gold in a bubble. I mean the bubble’s the bond market. But in particular the junk bond market it is so much money because people are chasing [you]. Has poured into some very low credit rating type of bonds here particularly corporate US paper that I think is very dangerous down the roads. It’s going to be very difficult for some of those to even pay it off. But nevertheless as you said there is people just chasing cause they have no other alternatives. But that doesn’t mean you have to join them simply because they’re making a bet that they are just making for the sake of a bet. I think the, if people would just look at the US economy and try to understand it from a business stand point they would conclude that we are not going to be able to service our debt. We are not going to be able to pay it off over time. We just don’t kick off enough [discussionary] income to pay it down. So eventually US debt, and that debt also includes on the state and local level which a lot of people don’t realize is maybe even worse percentage wise than the US national debt. Is going to have to be renegotiated forgiven or monetized and I think it’s going to be a combination of all those three. And that’s one of the reasons why we’ve seen the deterioration in the US dollar because people overseas already have recognized that and they are moving away from the US dollar.

Michael: And let me just before you go Peter touch on one quick thing and obviously we won’t be able to cover it in full at all. But I think the other point you’re making is very important for people to hear that when we talk the markets I think we automatically hear the US markets or the Canadian stock market. But of course the opportunities have been elsewhere for much of the last three or four years and we could argue how long that’s been. But I just think people are going to have to broaden their horizons if they want to get better returns. They are not going to be stuck just thinking US you know the Dow the S&P or even in the Canadian terms

Peter: Canadians and Americans still are just so over weighted in just North America. They have very limited exposure out elsewhere yet most of the growth that’s happening in the world is elsewhere. So you just have to do it. You have to get accustomed to it whether you like it or not that you have to have your money particularly outside the United States. You know areas Mike like Shanghai and all of China and India and Brazil and you know even a couple of the European countries that got [whacked]. They are not buyers yet but Ireland is at least doing what is necessary to put itself on good footing again. And eventually that even that market will come attractive where the US just continues to add to the pile of debt and really the terminally ill situation that it sees it’s currency in.

Michael: Well it’s going to be a fascinating time and I really look forward Peter to having you com out October 23rd you’re going to be out in Vancouver. We’ll be talking precious metals that entire day and from literally what the big picture is to write down what are some of the juniors that you should keep an eye on to the mid tier you name it. We are talking all about precious metals October 23rd tickets at 1-877-926-6849 or www.moneytalks.net for your tickets. Peter great chat with you I really look forward to seeing you when you come out here and you better reserve some space for some fine food with me

Peter: Alright Mike it’s always a pleasure and I hope to see many of your listeners and my readers at the show.

Michael: It’ll be terrific Peter Grandich my guest www.grandich.com. I’ll take a break Ozzy Jurock on deck also I’ve got Victor Adair and goofy awards.