Stocks & Equities

The Wall Street Whiz Kid on Bull Markets -Dangers & Critical Action to Take

Peter Grandich  said very clearly to Michael Campbell in early December we would see a bull move in the US Stock Market and we did, 11 weeks in a row. He advised his readers to get long because:
 
1. The market had every reason to go down and it didn’t.
 
2. We were entering a seasonally favorable period.
 
3. There was a belief we’d at least get a Santa Claus rally. 
 
Subsequently, once we got past Christmas it looked to him like the market still wanted to go higher, and he even suggested to his readers that in this rally we might even squeak out a marginal new all-time highs in the Dow & S&P. 
 

What Now

To be clear, he didn’t think we’d have a 3-5 years bull market joy. Indeed, on friday March 2nd he put out the “yellow caution flag” to his readers. Peter sees danger in what he sees as an imminent and inevitable conflict with Iran that will hit this elevated stock market that has been getting within shouting distance of Dow and S&P all-time highs. 
 
In short he thinks we will see the end of what he thinks is “a countertrend rally in a secular bear market that actually started in the fall of 2007.”

12-03-02-MWT-01b.ashx
 
Timing and signs that this scenario is in fact playing out. 
 
1. An inevitable  large scale military confrontation in the middle east occurs. Peter feels there is no way that Israel can live with an enemy that has sworn it wants to eliminate all of Israel with nuclear weapons. He thinks that whether or not Israel has to act alone, whether or not their action is successful, its only a question of when and it seems to him that the window for action is getting very small. A matter of weeks to a few months from Israel taking action. “That doesn’t mean the that the day this happens the market will tank and never come back again, but it will be the beginning of a major geopolitical change that will take months if not years to play out and be a net negative simply because of the fragile economies that are in the world today. One fragile economy being the US and another is a good part of Europe.” 
 
2. “The US is past the point of no return. The US doesn’t produce enough cash flow after they pay for their bills to pay off the interest let alone the principle of the debt the US has outstanding. Inevitably one of three things has to happen, part of the debt will be reneged, part of it will be renegotiated, and part of it will be monetized as the Fed is doing now.”  Bottom line, there is not a very bright picture for general equities past the next few weeks or months. “We’ve had a nice rally, if you are still long equities that are not related to metals congratulations, but now is not the time to be getting into them, now is the time to be selling.” 
 
 Bonds 

“Over the next 10 years, the worst investment will be US bonds.” He saw a study this week from a very independent, reliable group that inflation is running in the US between 5 and 7%. Peter believes that study and thinks no-one should believe that inflation is running at 1.6% as the government would have us believe. He doesn’t see how over the next 10 years with bonds yielding 2%, how anybody that buys and holds could end up making money. He would sooner be in general equities, before he would have any ownership of bonds right now. 

“The dramatic lowering of interest rates far below where they should have been literally destroyed or seriously damaged 10’s if not 100’s of millions of Americans and others who would have normally been dependent on fixed income and been able to live out their retirement. The lowering of interest rates resulted in a quest, as Ron Paul said, of destroying the currency and destroying America.
 
This destruction of the Bond Market is the pivotal moment of our time, and we are seeing right now the ramifications of what happens when confidence leaves a bond market in countries like Greece, Portugal, Spanish and Italy. There is an absolute ticking time bomb waiting to explode in the states, and Peter doesn’t see how people can think that it can happen in all of those European countries and not for some reason fail to happen in America too. 
 
One positive, Peter thinks that when bonds start to sell off it will probably initially support the stock market. 
 
The Eye of the Hurricane 
 
“The US is going to have to address the real political time bomb that’s coming, and that is the changing of the US retirement system, changes that will be forced on Social Security and Medicare”. Peter urges us to enjoy what he calls the eye of the hurricane, “we had our first wave in the financial crisis of 2008 and that we are now in this eye of the hurricane where the sun has popped out and things are starting to feel pretty good again. Noting that hope is a great spiritual strategy but also the worst investment strategy, he thinks that in the next several months to perhaps early in the next year “we will be back in the grips of something very serious and that its going to have to get a lot worse before it can begin to get better.” 
 
“I refuse to leave our children with a debt they cannot repay”Obama 02/29/2009
 
As low as interest rates are, the US is paying 4 billion a week on interest payments alone, and the kicker is that if they keep going on the trend that they are that figure will change to 10 billion a week within 4 years, or 552 billon a year in interest at a minimum (assuming rates do not rise). Given rates have risen tremendously in Greece, Italy, Spain and Portugal, it seem highly unlikely that rates will not rise in the US over the next 4 years and that weekly figure could be very low. 
 
How do Individuals Protect themselves?
 
Seniors in the States have seen all the worst things that can happen. They have seen fairly secure, good reliable interest income disappear, they have seen the value of their  housing go from always rising annually to collapsing to levels where a houses that cost $300,000 in 2007 can be bought for less than half that now. Even nice little 2  Bedroom Bungalows can now be bought for less than $35,000. Now they are being told that their AAA medicare plan is going to change and they are going to have to start paying a lot more for it. 
 
Action Items
 
1. He urges everyone, particularly young people, that debt is now more than ever a 4 letter word and if you do nothing more for the rest of your investment life than pare down your debt and get out of debt completely you will not only have a great financial reward but the mental aspect of being debt free can’t be underestimated. 
 
2. Get out of the US Dollar since as the worlds reserve currency is backed by a country that is in even worse shape than Europe. Peter has recently converted “a bunch of my Capital” into Canadian dollars. 
 
3. The US is no longer the economic engine that pulls the rest of the world around. There are other countries, India, China, Brazil and he recommends that action be taken and investments made in equities that do the majority of their business in these countries. 
 
4. For preservation of Capital he recommends the Gold Market. Its been the best investment for the last 10 years and he thinks it has another 4-5 years to run. As for the Flash Crash, Peter believes it gave investors an opportunity to get involved in Gold at good prices. As an alternative, if you can’t pull the trigger here then buy when Gold breaks the $1,800 level. 
 
5. While Peter thinks that Silver will outperform Gold over the next few months, ultimately he likes and recommends you buy Gold. 

To listen to the entire Peter Grandich interview with Michael Campbell go to this player you will find in the centre of the masthead of any Moneytalks page:

Screen shot 2012-03-08 at 4.20.20 PM
 
 
 
 

 

The 3rd Richest Man in the World: Stock Investor Warren Buffett’s Bursting Bubble

The gold doomsayers have found their champion in the media’s favorite financial advisor and one of the world’s richest men. Warren Buffett, the man dubbed the “Oracle of Omaha,” has repeatedly and publicly denied that gold is an investment, and called gold buyers “speculators” and people “who fear almost all other assets.” In fact, Buffett claims that gold’s rise has the same characteristics as the housing and dot-com bubbles, and it is only a matter of time before it reverses course. He doesn’t mean that the price will decline because of austerity measures and a free-market interest rate, mind you. He just asserts that because he’s deemed it a bubble, it will inevitably burst.

The financial world by-and-large views Buffett as an objective observer, a rare investor who still considers the best interests of common man when he speaks. Each year, there is much hullabaloo over the letter Buffett writes to the shareholders of Berkshire Hathaway. When Buffett makes a claim, the financial world coos and repeats it without question.

I concede that Buffett is a talented investor and a great communicator. He clearly has had great success and has much to offer. But that shouldn’t blind anyone to the fact that Buffett is not a trusted observer. He’s a crony capitalist who bends the truth to serve his long-held ideological commitment to big government.

In the early stages of the financial crisis, when I was writing and promoting my first book Crash Proof to warn private investors about trouble ahead, Buffett was accumulating shares in companies such as Goldman Sachs, Wells Fargo, Bank of America, and General Electric. I knew these companies were insolvent, so I wouldn’t touch them with gardening gloves on. When the credit markets seized up, Buffett worked behind the scenes and in public to make sure each of his pet companies were bailed out. This was not by coincidence. Buffett actually stated in September 2008 that he would not have invested in Goldman Sachs if not for the implicit guarantee of federal assistance. As a result, he profited at the expense of taxpayers at the very time when they were losing their savings in the markets. Meanwhile, many “in the know” politicians bought Berkshire stock during the height of the crisis, making a profit from their votes, and giving them incentive to revere Buffett all the more. Buffett once said that if the government didn’t bailout failed companies, he would be “having my Thanksgiving dinner at McDonald’s instead of having a big dinner at my daughter’s.” Seems like there were two bloated turkeys at that meal.

If Buffett were a true capitalist, he would be in favor of gold. He has noted that the value of the dollar has fallen 86% since he took over Berkshire Hathaway in 1965 and even said in his latest shareholder letter that investors are “right to be fearful of paper money.” But he continues to harp on gold. It seems the only unit of account Mr. Buffett approves are shares of his own company!

The adoption of an independent measure of value like gold presents two problems to Buffett. First, it would reduce the nominal returns of his dollar-based investing strategy. Second, it would restrict Washington’s ability to goose the financial system in his favor.

In the 19th century, when gold and silver were legal tender, the outsized returns to which Buffett has become accustomed were much harder to earn. Most people kept their money in physical bullion or bank deposits – and earned a real rate of return. Now, under the fiat system, working folks are forced into the more complicated world of equity investing. This, too, can generate real returns, but it’s a tougher playing field for the inexperienced.

Also, the fiat system artificially balloons the financial services portion of the economy. In the 19th century, fortunes were made more often by business owners than simple equity investors. People were more likely to be rewarded for providing a productive service than having direct access to the Fed’s discount window.

A quick look at Berkshire’s performance verses gold since the Credit Crunch goes a long way to explaining Buffett’s antipathy toward the yellow metal:

1

But Mr. Buffett’s lack of credibility goes deeper than a differing monetary philosophy. He has been in the press since last August claiming that he pays less taxes than his secretary – and urging Congress to pass a “Buffett Rule” mandating a 30% minimum tax on millionaires. The natural reaction is to say, “If you want to pay more, go ahead.” But Buffett has gone on record saying that it’s not enough for him to lead by example, and demanding that all of America’s well-off bear the burden of Washington’s reckless spending binge.

The problem is that Buffett’s entire argument is constructed on deception. Buffett is rated as the third richest man in the world for managing the nearly $393 billion in assets, and he highlights that he only pays 17.4% of his income in taxes. But this is because he earns less than 1% of his annual wealth from his salary, while over 99% is earned as the largest shareholder of Berkshire Hathaway. Buffett claims that he discounts his Berkshire holdings because he plans to give it all to charity when he dies. So, it’s not that the tax rates are so low, it’s that Buffett plans to give away 99% of his wealth.

But even accounting for this clever accounting trick, Buffett is still grossly understating his personal tax burden. He owns roughly 1/3 of Berkshire’s outstanding shares, the profits from which are subject to a 29% corporate tax rate. Last year, Berkshire paid $5.6 billion in taxes – and the IRS says they owe $1 billion more! In addition to corporate taxes, Buffett is also subject to an additional 15% capital gains tax on his stock when he cashes out, not to mention any future estate tax, leaving many to conclude that his share of taxes is certainly higher than his secretary’s.

You might wonder what Buffett would hope to gain by understating his own tax rate. To answer that, you have to understand Buffett’s ideological background. His father, Howard Buffett, was a US Congressman known for his staunch libertarianism. As has been recounted by biographers, Buffett resented being uprooted from his Omaha, NE home to move to Washington, DC and felt estranged from his stoic father. That is to say, Buffett’s commitment to the nanny state runs very deep.

But also, as mentioned earlier, Buffett personally benefits from the current corrupt state of affairs. He gets prestige from nominal gains in his stock price. He gets bailout money to guarantee the insolvent companies in which he invests. Even that estate tax that will hit him when he passes currently allows him to buy out other businesses at a steep discount.

It also shouldn’t be a surprise that humble Howard was a staunch advocate of gold and silver as money – nor that wealthy Warren rejects precious metals as having “no utility.”

The media has built Warren up to be a demigod, a straight-talking Nebraska boy that can hold his own against the vipers of Wall Street. But he is just a man with a talent for making money, and his motives should not be beyond reproach. Is he advocating the use of taxpayers’ money to bailout his business interests so he can profit? Is he being honest about what money is? Does he even understand the business cycle?

Gold prices will only go down when governments change course and make significant cuts. Until then, gold is not in a bubble. It’s the only way to protect your wealth; and in the current economic condition, it’s poised to go much higher. I think it’s high time Buffett takes to heart his father’s wise words: “For if human liberty is to survive in America, we must win the battle to restore honest money.”

Peter Schiff
C.E.O. of Euro Pacific Precious Metals
email: info@europacmetals.com
website: www.europacmetals.com

Peter Schiff is CEO of Euro Pacific Precious Metals, a gold and silver dealer selling reputable, well-known bullion coins and bars at competitive prices. To learn more, please visit www.europacmetals.com or call (888) GOLD-160.

For the latest gold market news and analysis, sign up for Peter Schiff’s Gold Report, a monthly newsletter featuring original contributions from Peter Schiff, Casey Research, and other leading experts in the gold market. Click here to learn more.

Your Opportunity to Acquire Roman Coins Documenting the Monetary Crisis of the 3rd Century

Martin Armstrong is offering you an opportunity to buy ancient Roman Coins:

 

Screen shot 2012-03-08 at 12.47.44 PMScreen shot 2012-03-08 at 12.50.05 PM

The response to the offering of Roman Coins was simply overwhelming. So many people have written asking how they can buy Roman Coins and others realizing these are from the 3rd Century have asked are there examples available documenting the collapse of the monetary system? I have contacted some old friends with respect to making available a selection of Roman coins of this 3rd Century period for those interested in owning a piece of real live history and/or demonstrating the Monetary Crisis that led to the fall of Rome from a hoard of Roman coins.

Screen shot 2012-03-08 at 12.58.37 PM

Because of the turmoil of the 3rd Century and precisely the dangers we face today as government goes after citizens hunting down their wealth to confiscate to sustain their existence, what happens is they cause capital to hoard reducing the VELOCITY of money. Hoards of Roman coins of earlier chaotic periods exist, although much fewer in number. Consequently, the earlier coins tend to be much rarer. As shown above, here are two gold coins from the Post-Caesarian Civil War period (44-42BC) that followed the assassination of Julius Caesar. In the case of Brutus, a non-portrait silver denarius would bring generally $2,000-$5,000 where a silver EID MAR (bragging he killed Caesar) would be $25,000-$100,000. There are only two gold EID MAR (Ides of March) coins and these today would bring more than $1 million. The gold Ahenobarbus (supporter of Brutus) would bring well over $50,000 today.

Hoards of the 3rd Century are far more common. Pots with up to 50,000 coins have been discovered, but of course the condition is often well corroded making such coins worth perhaps $10 simply because they are a relic of the past and a piece of history. Silver and gold coins endure through the ages much better than bronze. Thus, condition of coins during the 3rd century does help to reduce the supply of decent well preserved coins in proportion to the bulk that are found over time.

Consequently, those asking the question: Is it possible to obtain coins showing the drastic collapse in silver content of the 3rd Century? This collapse took place during the reign following Valerian I (253- 260AD) who was captured by the Parthians (Persians) and stuffed as a wild animal trophy upon his death. His son, Gallienus (253-268AD) made no effort to rescue his father and the economic collapse thereafter is easily seen in the coinage. So the answer is yes! I have made arrangements for those seeking such an example of the Monetary Crisis of the 3rd Century.

This is an accommodation – not a business

Screen shot 2012-03-08 at 1.00.49 PM

 

Screen shot 2012-03-08 at 1.01.48 PM

The quality of these coins is virtually Extremely Fine without corrosion. All names are legible. These are the selected quality from the hoard and and are not the typical low grade junk often sold. This provides a good sampling of this period (minus the extreme rarities) that have survived thanks to the tremendous economic upheavals of the times that led people to burry their wealth.

Set of 15 one average coin of the above non-corroded, Very Fine condition all readable $595 (suitable for non-collectors)

Set of 16 above with (2) Gallienus (Silver/Bronze) Extremely Fine Top Grade all readable $2450.00 (with silvering largely intact where noted)

Prices include shipping. Payment is acceptable at: ArmstrongEconomics@HotMail.COM” data-mce-href=”mailto:ArmstrongEconomics@HotMail.COM“>ArmstrongEconomics@HotMail.COM

Or checks may be send to:
Armstrong Economics
Two Penn Center – 1500 JFK Blvd, Suite 200 – Philadelphia, Pa 19102

The Smartest Economist Michael Campbell Knows of Casts Light on “The Commodity Empire”

Screen shot 2012-03-08 at 12.35.39 PM

Photo of Goldman Sachs’ Detroit Commodity Warehouse:

Most people do not realize but there is a Commodity Empire that is run by New York’s biggest
banks/Investment Banks that are in a continued struggle with the Federal Reserve over the right to
 retain the power of their commodity trading empires. They control the storage warehouses, storage
tanks, and silos constituting hard assets worth multi-billions of dollars. But it also gives them inside
information regarding inventories and the ability to manipulate the prices by moving inventory back and
forth to unreported warehouses or to London.

At the center of this power struggle has been the issue of their proprietary trading under the new
derivatives regulations. Ever since the 2008 financial crisis, the fight by Goldman Sachs, JPMorgan Chase,
and Morgan Stanley to retain or expand their valued physical commodity operations has been roaring
silently behind the headlines of mainstream media.

This is coming to a head and the Fed will most likely yield allowing banks more freedom to invest in the
physical commodity world even far more than they did prior to 2008. True, the Fed could order them to
sell off the assets that they use to boost their inside trading ability. However, it is unlikely that the Fed
will really enforce the ban on such trading. Goldman has been arguing that they have a right to remain
in that business for it is what you call being ‘grandfathered’ in prior to 2008 and are thus part of their
“merchant banking” investments, promising to keep them segregated from the trading desks – fat
chance!

The whole problem with the New York Banks is that they are greedy. They are just not satisfied being
banks. They began merging with commodity firms in the 1980s. They began speculating and then to
reduce risk, they formed the “club” and began infiltrating government to change the direction of
regulation. When they lose, they are always bailed out and when they win, they keep the profits.
Regulators and lawmakers have allowed them to do as they like. As long as the government needs to
borrow money every year, they are scared to death to really regulate the banks at all beyond pomp and
show. In theory, the banks are under pressure to reduce risk on their balance sheet and that would
seem to suggest that they should get out of the commodity business. Morgan Stanley is the only one of
the three that has any foundation to be in the business. They are an Investment Bank with real live
brokerage operations. Goldman does brokerage for institutional clients, but that is primarily so they
have also access to inside information. They are not a national retain firm and in the crisis, they applied
to become a bank to be able to borrow from the Fed.

While the Fed’s does not want to appear to be accommodating, most politicians will not say anything
until the shit-hits-the-fan again. Hell, most are hoping Goldman will hire them. The notion that the
sentiment in Washington is somehow about reducing risk, let’s face the truth, most on Capitol Hill are
clueless about what is risk. So while the drama circulates around pretending the banks may lose their
commodity power, it is unlikely to ever happen. It is just more pomp and circumstance without substance.

Martin Armstrong is offering you an opportunity to buy ancient Roman Coins:

 

Screen shot 2012-03-08 at 12.47.44 PMScreen shot 2012-03-08 at 12.50.05 PM

The response to the offering of Roman Coins was simply overwhelming. So many people have written asking how they can buy Roman Coins and others realizing these are from the 3rd Century have asked are there examples available documenting the collapse of the monetary system? I have contacted some old friends with respect to making available a selection of Roman coins of this 3rd Century period for those interested in owning a piece of real live history and/or demonstrating the Monetary Crisis that led to the fall of Rome from a hoard of Roman coins.

Screen shot 2012-03-08 at 12.58.37 PM

Because of the turmoil of the 3rd Century and precisely the dangers we face today as government goes after citizens hunting down their wealth to confiscate to sustain their existence, what happens is they cause capital to hoard reducing the VELOCITY of money. Hoards of Roman coins of earlier chaotic periods exist, although much fewer in number. Consequently, the earlier coins tend to be much rarer. As shown above, here are two gold coins from the Post-Caesarian Civil War period (44-42BC) that followed the assassination of Julius Caesar. In the case of Brutus, a non-portrait silver denarius would bring generally $2,000-$5,000 where a silver EID MAR (bragging he killed Caesar) would be $25,000-$100,000. There are only two gold EID MAR (Ides of March) coins and these today would bring more than $1 million. The gold Ahenobarbus (supporter of Brutus) would bring well over $50,000 today.

Hoards of the 3rd Century are far more common. Pots with up to 50,000 coins have been discovered, but of course the condition is often well corroded making such coins worth perhaps $10 simply because they are a relic of the past and a piece of history. Silver and gold coins endure through the ages much better than bronze. Thus, condition of coins during the 3rd century does help to reduce the supply of decent well preserved coins in proportion to the bulk that are found over time.

Consequently, those asking the question: Is it possible to obtain coins showing the drastic collapse in silver content of the 3rd Century? This collapse took place during the reign following Valerian I (253- 260AD) who was captured by the Parthians (Persians) and stuffed as a wild animal trophy upon his death. His son, Gallienus (253-268AD) made no effort to rescue his father and the economic collapse thereafter is easily seen in the coinage. So the answer is yes! I have made arrangements for those seeking such an example of the Monetary Crisis of the 3rd Century.

This is an accommodation – not a business

Screen shot 2012-03-08 at 1.00.49 PM

 

Screen shot 2012-03-08 at 1.01.48 PM

The quality of these coins is virtually Extremely Fine without corrosion. All names are legible. These are the selected quality from the hoard and and are not the typical low grade junk often sold. This provides a good sampling of this period (minus the extreme rarities) that have survived thanks to the tremendous economic upheavals of the times that led people to burry their wealth.

Set of 15 one average coin of the above non-corroded, Very Fine condition all readable $595 (suitable for non-collectors)

Set of 16 above with (2) Gallienus (Silver/Bronze) Extremely Fine Top Grade all readable $2450.00 (with silvering largely intact where noted)

Prices include shipping. Payment is acceptable at: ArmstrongEconomics@HotMail.COM

Or checks may be send to:
Armstrong Economics
Two Penn Center – 1500 JFK Blvd, Suite 200 – Philadelphia, Pa 19102

Precious Metals Monitor: Major Reversals In Gold & Silver Reset Technical Expectations

It’s been a dismal week for precious metals, as gold, silver, platinum and palladium all dropped precipitously. The correction began on Wednesday of last week after Ben Bernanke’s testimony to Congress. But it wasn’t what the Fed Chairman said that spooked precious metals traders, but rather, what he didn’t say.

“When Bernanke didn’t mention the possibility of another round of [quantitative easing], that was enough to take the fizz out of everything,” said Dennis Gartman. “Before [the testimony], gold was looking quite strong, but [afterward] it just gave up the ghost.”

The implication is of course, that gold had been pricing in more stimulus — such as a third round of quantitative easing (QE3) from the U.S. central bank. Yet that may not have been the case.

“Negative real interest rates and accommodative monetary policy were and remain the key drivers of investment demand,” said Morgan Stanley. “Bernanke’s testimony [last week] did nothing to remove this benefit.”

“Under these circumstances, QE3 would have been icing on the cake for the monetary easing trade, but not the fundamental driver of bullish investor positioning,” the bank concluded.

Indeed, as of the close of Monday, exchange-traded fund holdings of gold totaled a record 77.4 million troy ounces, indicating that at least one segment of investor demand for the yellow metal remains strong.

goldetfholdings20120306

…..read more and view 24 charts HERE