Blood in the Streets by Sean Brodrick
Happy New Year's Eve. What a year, eh? Speculation causes a massive market collapse ... gold prices soar ... leading bankers fail ...
But I'm not talking about today's market woes!
I'm talking about the Panic of 1873.
That was a panic that makes our current market downturn look like a tea party. And there's a good lesson for today's investors to learn from those hard times.
It Was Bad in the U.S., But in Europe ...
The Panic of 1873 makes our market downturn look like a tea party.
Here in the U.S., the Panic of 1873 (which started in 1869) was a combination of railroad speculation, a run on physical gold, and brand-name bank and brokerage houses failing.
Across the pond, in Europe, it was much, much worse. And it gave one of the world's most legendary capitalists the chance to make a fortune for himself and his friends.
I'm talking about Baron Nathan Rothschild. Rothschild was a respected French investor who became the stuff of legend during the financial crisis.
It was a terrible time. A building boom ended with a mortgage bubble bursting. This was followed by a swoon in the prices of many industrial commodities. There was even an energy crisis of sorts — an outbreak of equine influenza (horse flu) saw many forms of transportation temporarily grind to a halt.
Europe fought the Franco-Prussian War, which ended in defeat for France. Emperor Napoleon III was captured, and the French government collapsed. The economic woes combined with military defeat allowed socialists to seize control of the French capital. Paris was turned upside down, and mobs ruled.
And that's when Rothschild told his clients ...
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It Was Time To Buy
The story goes that a panic-stricken investor turned up at Rothschild's office and exclaimed, "You advise me to buy securities now? NOW?! The streets of Paris run with blood."
Rothschild, calm as ever, answered, "My dear friend, if the streets of Paris were not running with blood, do you think you would be able to buy at the present prices?"
There is a second part to Rothschild's quote — one that is perhaps even more impressive: Buy when there's blood in the streets, even if the blood is your own.
Rothschild proved to be quite prescient. French bankers were able to fund a counter-revolution. And the investments that Rothschild and his friends made doubled in value ... and then went higher!
While many U.S. banks failed in the Panic of 1873, we got off lightly compared to Europe. The global depression lasted until 1879. And the end result was the center of gravity for the world's credit shifted from Europe to the U.S.
Fast-Forward To Today
We've seen a building boom end with a mortgage bubble burst. And we've seen the Reuters-Jefferies CRB Index of Raw Industrials, a gauge of the cost of 22 items including scrap copper, cotton and hogs, and a good indicator of economic health, fall off a cliff.
It's down a staggering 39% from its peaks to its lows, as factory production fell 7.3% through November.
Now, though, the CRB Raw Materials Index looks like it's starting to hammer out a bottom. Once a bottom is in place ... the Index could go a LOT higher.
Are Things Bad? Yes!
There are parades of bad news up and down Wall Street and Main Street ...
On Wall Street, the easiest way to get your hands on truckloads of government bailout dollars is to own a bank. Heck, you won't even have to tell the Treasury what you do with the money!
And if you don't own a bank, you could go from being chairman of the Nasdaq to setting up a hedge fund so secretive that your closest friends don't know you're ripping them off for tens of billions of dollars.
On Main Street, manufacturing has slumped to its lowest level in 26 years ... employment has dropped to a six-year low ... retail sales are plummeting. In fact, many experts expect a whopping 25% of U.S. retailers will go bankrupt in 2009.
Problems are rippling around the world, too ...
In Japan, industrial production has taken a header — down 8.1% in November from October.
Even China has caught the recession flu. In Dongguan, where many of Santa's gifts are really made, nearly half of the 3,800 toy factories have closed or plan to shut down. China's steel production has dropped by 12%, and electricity demand is down 9.6%.
Yep ... things are bad. And things in this downturn seem to be going at lightning speed compared to previous economic hard times ...
For example, in the last five months, base metals have fallen in price, on a percentage basis, more than they did during the entirety of the Great Depression!
The question now is: Are we close to blood in the streets ... the time when Rothschild would advise buying?
I'll give you my opinion on that in a bit. First, an important difference between now and the panic of 1873 ...
The Loosest Money Policy Possible.The Long-Term Effects Are Horrific!
In 1873, the U.S. moved to the gold standard, which meant it stopped minting silver dollars altogether. This reduced the domestic money supply, which hurt farmers and anyone else who carried heavy debt loads.
Today, by contrast, we have the loosest money policy possible ...
The U.S. Federal Reserve recently cut its target for overnight interest rates to — zero to 0.25% — its lowest level on record dating to July 1954 — and said it would likely keep it at "exceptionally low levels for some time."
In addition, Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke have been handing out cash by the hundreds of billions to every Tom, Dick and Citibank who drives by with a sob story.
The long-term effects of that free and easy money policy are horrific!
Through December, Washington had already spent or pledged $8.7 TRILLION. As a result of all the bailouts for banks, automakers and other new federal outlays, our nation's budget deficit is expected to reach $1 TRILLION in 2009.
And that's just the tip of the iceberg ...
The Grandfather Economic Report series calculates that America now owes a total debt (including government, household, business, financial sector, etc.) of $53 trillion. That's $175,154 for every man, woman and child in the country, an increase of $33,781 per family of four over last year.
However, that's longer-term. In the short-term, that easy-money policy could be just what the doctor ordered for an ailing economy.
Sure, it looks like consumers, who power 70% of America's economy, are in a power dive. But we've also been lucky that oil prices have been falling like Wile E. Coyote, and gasoline prices are tumbling, too. That puts more money in consumers' pockets.
While the Grinch may have stolen Christmas, on an inflation-adjusted basis, consumers spent 0.6% more in November than they did the month before. Disposable income also rose on an inflation-adjusted basis, by 1%, compared with an increase of 0.7 percent in October.
Plus homeowners have rushed to refinance their loans to cut costs or switch from adjustable-rate mortgages to fixed-rate loans. Recently, mortgage applications jumped to the highest level in five years.
My point is that things may not be as bad as they seem. Maybe we have much worse to come. Or maybe we are near the point where Baron Rothschild would tell his clients to buy.
So when that time comes, what should you buy?
Here Are Three Ideas ...
1) Gold Miners. Gold, with its historic outperformance during times of trouble, is looking better and better. Sure, I've been pounding the table about gold for some time now. And it's been zig-zagging higher. And "buy" signals on select gold stocks are flashing on my board like holiday lights.
2) Oil Companies. Say what? Why buy oil when many analysts are predicting $25 oil in 2009? My reason is simple: Enjoy the cheap oil, because it won't last. We've seen oil prices plunge about 73% in six months. That has never happened in history before — ever.
The current price of crude signals that something is very out of whack in the oil markets. And I can tell you what the effect is: Projects that cost more than the current price of oil are being taken offline — slowly at first. But the process could quickly start to cascade.
That should quickly bring supply and demand in balance. And if prices go higher, we can always bring more production online, right? Maybe.
But the kind of black swan event we've seen in oil markets leaves long and deep scars in the conservative psyches of oilmen. That's why I think it's going to be a while before anyone goes after new deepwater wells that cost $80 a barrel.
So who will profit from this? Major oil companies with lots of cash.
That brings me to my third recommendation ...
3) Big Companies With Lots Of Cash. For smaller industrial firms that relied on seasonal demand and outside capital, the Panic Years of the 1870s put them in one heck of a bind.
As capital reserves dried up, so did their industries. Who thrived? The large companies with guaranteed contracts and the ability to force deals on their suppliers and vendors.
Baron Rothschild would tell you to make the most of troubled times.
Andrew Carnegie and John D. Rockefeller had enough capital reserves to finance their own continuing growth. Both bought out their competitors at fire-sale prices.
And today, large, well-capitalized companies could be the way to go.
Indeed, these are tumultuous times. Yet I'm sure that Baron Rothschild would tell you to make the most of them.
I wish you all the best for 2009.
Yours for trading profits,
Sean
About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Michelle Johncke, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
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Showing posts with label Gold. Show all posts
Showing posts with label Gold. Show all posts
Wednesday, December 31, 2008
Friday, October 17, 2008
Another Reason to Like Gold
Another Reason to Like Gold by Larry Edelson
The credit collapse is not entirely over. Nor is its impact on Main Street.
And as we saw yesterday, there will be more sell-offs, sharp ones that scare the dickens out of nearly everyone.
That's why I suggest sticking mainly with natural resource-based companies that operate businesses which deal in assets that have intrinsic value — and that will be the main recipients of the next wave of what I call the "Great Re-inflation."
At the top of that list is my all-time favorite: Gold.
You know I'm a gold bug. And given everything that's happening in the world today, I'm more of a gold bug than ever before.
How can you NOT be in gold?
There are dozens of reasons I believe everyone must own some gold. But lately, there's another one that's rising to the surface ...
China Is Soon Going to Make Some Big Buys In the Gold Market
Just yesterday, China's central bank announced that its foreign-exchange reserves rose to a record $1.905 trillion.
If China were to lay this nearly $2 trillion in surplus reserves end-to-end using dollar bills, the trail would stretch for 193,813,130 miles. That's enough to wrap around the widest part of the earth 7,752 times!
Clearly, Beijing's piggy bank is overflowing with money. In fact, at nearly $2 trillion, China has the largest foreign reserves of any country in the history of the planet.
Compare it to Washington, which now has nearly $11.4 trillion in debts, not counting the contingent liabilities of the real estate crisis, Social Security or Medicare.
Whose paper currency do you think should have more purchasing power? Naturally, the yuan. Yet that's not the case — the dollar remains stronger.
But not for long.
I warned of this a couple of years ago, but now the signs are even clearer: Over the next few years China is essentially going to corner the world's gold market.
It's one of the chief reasons I am now even more bullish on gold, expecting the price of the precious yellow metal to eventually exceed $2,000 an ounce.
Mind you, Beijing won't intentionally set out to corner the gold market. But, in effect, that will be the end result.
Take it from me. I've met with central bankers, regulators, and gold traders in China and Asia. I know Beijing's views on the yuan and gold.
You see, Beijing knows that the dollar's status as a reserve currency is soon going to be history. Just like the pound sterling lost its status as the world's reserve currency in the early 20th century.
And authorities in Beijing also believe that as China rapidly progresses toward superpower economic status, the yuan should be a world-class, stable medium of exchange.
They envision the yuan as a major international currency some day, with as much (or more) status than the U.S. dollar. That's why they're going to back the yuan with gold ... loads of it.
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Plus, there's another reason for Beijing to buy more gold as part of China's piggy bank. China has an estimated $1.3 trillion invested in dollar-denominated investments. They can't get out of the dollar quickly. It would destroy the U.S. economy which would have a direct negative impact on China.
So the smart thing to do: Hedge and diversify existing dollar holdings with gold.
Consider this: Right now, China has a mere 0.9% of its reserves in gold (600 tons). That's the lowest of any industrialized economy! To put it into perspective ...
The U.S. has 77.3% of its foreign reserves in gold.
The European Union has 23% of its reserves in gold.
Lithuania, Mozambique, and even tiny Nepal all have more of their reserves in gold than China.
Just to up its reserves to 5% in gold, Beijing would have to purchase $93 billion worth of bullion. That could easily send the yellow metal skyrocketing to more than $2,000 an ounce.
And if China were to match roughly half of the gold reserves held by the United States, it would have to buy another $636 billion worth. That kind of buying would send gold to well more than $2,000 an ounce. Probably to $3,000, or even higher.
My view: China has already started purchasing small amounts of gold. It's one of the reasons gold is now holding support at its 1980 high in the mid-$800 level, well above important support levels on the charts from $600 up to $735 an ounce.
This is yet another reason I recommended you substantially increase your gold holdings back in mid-September.
I believe gold is still one of the best bets out there, loaded with huge profit opportunities. No matter what aspect of the market I examine, I see much, much higher prices to come for the precious yellow metal.
Best,
Larry
P.S. Make sure you're on board with all my gold recommendations, which can be found in my Real Wealth Report. The October issue is going to press tomorrow. You can get that issue, and become a Real Wealth Report member for a mere $99.
About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
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The credit collapse is not entirely over. Nor is its impact on Main Street.
And as we saw yesterday, there will be more sell-offs, sharp ones that scare the dickens out of nearly everyone.
That's why I suggest sticking mainly with natural resource-based companies that operate businesses which deal in assets that have intrinsic value — and that will be the main recipients of the next wave of what I call the "Great Re-inflation."
At the top of that list is my all-time favorite: Gold.
You know I'm a gold bug. And given everything that's happening in the world today, I'm more of a gold bug than ever before.
How can you NOT be in gold?
There are dozens of reasons I believe everyone must own some gold. But lately, there's another one that's rising to the surface ...
China Is Soon Going to Make Some Big Buys In the Gold Market
Just yesterday, China's central bank announced that its foreign-exchange reserves rose to a record $1.905 trillion.
If China were to lay this nearly $2 trillion in surplus reserves end-to-end using dollar bills, the trail would stretch for 193,813,130 miles. That's enough to wrap around the widest part of the earth 7,752 times!
Clearly, Beijing's piggy bank is overflowing with money. In fact, at nearly $2 trillion, China has the largest foreign reserves of any country in the history of the planet.
Compare it to Washington, which now has nearly $11.4 trillion in debts, not counting the contingent liabilities of the real estate crisis, Social Security or Medicare.
Whose paper currency do you think should have more purchasing power? Naturally, the yuan. Yet that's not the case — the dollar remains stronger.
But not for long.
I warned of this a couple of years ago, but now the signs are even clearer: Over the next few years China is essentially going to corner the world's gold market.
It's one of the chief reasons I am now even more bullish on gold, expecting the price of the precious yellow metal to eventually exceed $2,000 an ounce.
Mind you, Beijing won't intentionally set out to corner the gold market. But, in effect, that will be the end result.
Take it from me. I've met with central bankers, regulators, and gold traders in China and Asia. I know Beijing's views on the yuan and gold.
You see, Beijing knows that the dollar's status as a reserve currency is soon going to be history. Just like the pound sterling lost its status as the world's reserve currency in the early 20th century.
And authorities in Beijing also believe that as China rapidly progresses toward superpower economic status, the yuan should be a world-class, stable medium of exchange.
They envision the yuan as a major international currency some day, with as much (or more) status than the U.S. dollar. That's why they're going to back the yuan with gold ... loads of it.
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Plus, there's another reason for Beijing to buy more gold as part of China's piggy bank. China has an estimated $1.3 trillion invested in dollar-denominated investments. They can't get out of the dollar quickly. It would destroy the U.S. economy which would have a direct negative impact on China.
So the smart thing to do: Hedge and diversify existing dollar holdings with gold.
Consider this: Right now, China has a mere 0.9% of its reserves in gold (600 tons). That's the lowest of any industrialized economy! To put it into perspective ...
The U.S. has 77.3% of its foreign reserves in gold.
The European Union has 23% of its reserves in gold.
Lithuania, Mozambique, and even tiny Nepal all have more of their reserves in gold than China.
Just to up its reserves to 5% in gold, Beijing would have to purchase $93 billion worth of bullion. That could easily send the yellow metal skyrocketing to more than $2,000 an ounce.
And if China were to match roughly half of the gold reserves held by the United States, it would have to buy another $636 billion worth. That kind of buying would send gold to well more than $2,000 an ounce. Probably to $3,000, or even higher.
My view: China has already started purchasing small amounts of gold. It's one of the reasons gold is now holding support at its 1980 high in the mid-$800 level, well above important support levels on the charts from $600 up to $735 an ounce.
This is yet another reason I recommended you substantially increase your gold holdings back in mid-September.
I believe gold is still one of the best bets out there, loaded with huge profit opportunities. No matter what aspect of the market I examine, I see much, much higher prices to come for the precious yellow metal.
Best,
Larry
P.S. Make sure you're on board with all my gold recommendations, which can be found in my Real Wealth Report. The October issue is going to press tomorrow. You can get that issue, and become a Real Wealth Report member for a mere $99.
About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
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Sunday, September 21, 2008
Warning: Nasty Surprises Coming Next Week
Warning: Nasty Surprises Coming Next Week by Martin D. Weiss, Ph.D.
America's $47-trillion bubble of debt has burst.
America's $180-trillion balloon of derivatives has popped.
And all the president's men cannot put them back together again.
Last year, they tried three different mortgage work-out plans. This year, they tried a massive economic stimulus package. They resorted to a myriad of unprecedented lending facilities. They even bailed out Bear Stearns, Fannie Mae, Freddie Mac and AIG. Each attempt was more radical than the previous. And each attempt failed miserably.
Now, appearing before the American people at the White House Rose Garden, they've declared that they're going to try again, this time with an even bigger, more ambitious plan: A structure to buy up the bad debts of sinking banks ... a guarantee for money market funds ... a prohibition on certain short selling activities.
And with all this, they say, they're finally going to "restore confidence" and "end the debt crisis."
But there are a few, not-so-small dangers they're not talking about plus a few nasty surprises, shocks and wake-up calls coming as early as next week:
The fear factor: Their actions are so much more extreme than anyone expected ... they're inadvertently sending the message to smart investors and speculators around the world that the crisis must also be far more extreme than anyone expected. Rather than reducing uncertainty, the president's men are creating more fear.
The selling stampede: These investors are more anxious than ever to sell and get the heck away from risk. They're waiting for the knee-jerk market rally to end. And they're getting ready to sell with both hands.
Leading lenders to water: Millions of Americans continue to default on their mortgages. Hundreds of millions of homes continue to fall in value. So the risk of lending today to consumers is astronomical.
With this backdrop, Mr. Bernanke and Mr. Paulson can pump all the money they want into sick and dying lending institutions, but there's nothing they can do to get the lenders to drink — to lend that money to high-risk borrowers.
No free lunch: Where do the Treasury, the Fed and Congress get the money? Contrary to popular myth, they cannot just "print" it out of thin air. They have to either borrow the funds from investors or raise it from taxpayers.
$1-trillion tab: Just for the rescues and bailouts announced to date, the most conservative estimate of the bill is $1 trillion. The federal budget deficit is already projected to be well over $400 billion. These new measures could easily double and triple that deficit.
What's Next?
On Friday, in a special edition of Money and Markets, I answered your urgent questions on Washington's latest moves. Now, let me ask you a couple of questions:
Q: What happens when the government tries to borrow a massive sum like $1 trillion? You know the answer: They automatically drive up interest rates ... crowd out other borrowers like corporations, consumers or local governments ... and make the entire debt crisis far worse.
Q: What happens when the government tries to raise the money with higher taxes? You know that answer too: Tax hikes can only crush the already-mangled consumer ... and make the recession far worse.
And This Is Supposed to Be Their Master Plan to Save America from More Misery?
Not only won't it work ... but to the degree that it does have some impact, that impact can only backfire.
Already, on Friday, the interest rate that the U.S. Treasury must pay to borrow 10-year money surged by 33.2 basis points — one of the greatest single-day rises in history and an early omen of far sharper rate rises in the future.
Also on Friday, gold resumed its surge — a warning to all governments that seek to defy the power of free markets.
These dramatic moves in interest rates and gold are telling you that if there ever was a time to position yourself for protection and profit from the next phase of the debt crisis, this is it.
Our recommendation is unchanged: As we've told you from the outset, every time the government attempts to fight this debt crisis spurs a temporary rally, you have a golden opportunity to sell any vulnerable stocks you may still have.
Plus, it's also the very best possible opportunity to position yourself for huge profits as the crisis continues to spread.
Your next urgent step: View our 1-hour video "Plague to Pandemic" before we take it offline early next week.
It shows you what you must do to protect your wealth and multiply your money ... as America's debt pyramid continues to collapse ... and as Washington continues to stumble in its efforts to put it back together.
Indeed, Washington's latest effort to goose up stock prices gives you a unique window of opportunity to find true safety and position yourself for profits before the next big decline.
But never forget: As soon as investors around the world start selling en masse, that window is going to snap shut. So turn up your computer speakers and click this link for the video before it's too late.
Good luck and God bless!
Martin
About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Christina Kern, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
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America's $47-trillion bubble of debt has burst.
America's $180-trillion balloon of derivatives has popped.
And all the president's men cannot put them back together again.
Last year, they tried three different mortgage work-out plans. This year, they tried a massive economic stimulus package. They resorted to a myriad of unprecedented lending facilities. They even bailed out Bear Stearns, Fannie Mae, Freddie Mac and AIG. Each attempt was more radical than the previous. And each attempt failed miserably.
Now, appearing before the American people at the White House Rose Garden, they've declared that they're going to try again, this time with an even bigger, more ambitious plan: A structure to buy up the bad debts of sinking banks ... a guarantee for money market funds ... a prohibition on certain short selling activities.
And with all this, they say, they're finally going to "restore confidence" and "end the debt crisis."
But there are a few, not-so-small dangers they're not talking about plus a few nasty surprises, shocks and wake-up calls coming as early as next week:
The fear factor: Their actions are so much more extreme than anyone expected ... they're inadvertently sending the message to smart investors and speculators around the world that the crisis must also be far more extreme than anyone expected. Rather than reducing uncertainty, the president's men are creating more fear.
The selling stampede: These investors are more anxious than ever to sell and get the heck away from risk. They're waiting for the knee-jerk market rally to end. And they're getting ready to sell with both hands.
Leading lenders to water: Millions of Americans continue to default on their mortgages. Hundreds of millions of homes continue to fall in value. So the risk of lending today to consumers is astronomical.
With this backdrop, Mr. Bernanke and Mr. Paulson can pump all the money they want into sick and dying lending institutions, but there's nothing they can do to get the lenders to drink — to lend that money to high-risk borrowers.
No free lunch: Where do the Treasury, the Fed and Congress get the money? Contrary to popular myth, they cannot just "print" it out of thin air. They have to either borrow the funds from investors or raise it from taxpayers.
$1-trillion tab: Just for the rescues and bailouts announced to date, the most conservative estimate of the bill is $1 trillion. The federal budget deficit is already projected to be well over $400 billion. These new measures could easily double and triple that deficit.
What's Next?
On Friday, in a special edition of Money and Markets, I answered your urgent questions on Washington's latest moves. Now, let me ask you a couple of questions:
Q: What happens when the government tries to borrow a massive sum like $1 trillion? You know the answer: They automatically drive up interest rates ... crowd out other borrowers like corporations, consumers or local governments ... and make the entire debt crisis far worse.
Q: What happens when the government tries to raise the money with higher taxes? You know that answer too: Tax hikes can only crush the already-mangled consumer ... and make the recession far worse.
And This Is Supposed to Be Their Master Plan to Save America from More Misery?
Not only won't it work ... but to the degree that it does have some impact, that impact can only backfire.
Already, on Friday, the interest rate that the U.S. Treasury must pay to borrow 10-year money surged by 33.2 basis points — one of the greatest single-day rises in history and an early omen of far sharper rate rises in the future.
Also on Friday, gold resumed its surge — a warning to all governments that seek to defy the power of free markets.
These dramatic moves in interest rates and gold are telling you that if there ever was a time to position yourself for protection and profit from the next phase of the debt crisis, this is it.
Our recommendation is unchanged: As we've told you from the outset, every time the government attempts to fight this debt crisis spurs a temporary rally, you have a golden opportunity to sell any vulnerable stocks you may still have.
Plus, it's also the very best possible opportunity to position yourself for huge profits as the crisis continues to spread.
Your next urgent step: View our 1-hour video "Plague to Pandemic" before we take it offline early next week.
It shows you what you must do to protect your wealth and multiply your money ... as America's debt pyramid continues to collapse ... and as Washington continues to stumble in its efforts to put it back together.
Indeed, Washington's latest effort to goose up stock prices gives you a unique window of opportunity to find true safety and position yourself for profits before the next big decline.
But never forget: As soon as investors around the world start selling en masse, that window is going to snap shut. So turn up your computer speakers and click this link for the video before it's too late.
Good luck and God bless!
Martin
About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Christina Kern, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
Rob Schmidt Recommends Commission Blueprint for Your Success
Click here for Income From Photography. Let this guide motivate you to unlock the money making power of your mind and your camera... http://make200aday.biz
Create your own water hybrid for under $150!
Free Registry Cleaner and Spyware Remover Scan
Google is Paying Out Big Money
Discover a More Effective Training Method for Fat Loss and Heart Health!
What is the Best Ab Workout for Belly Fat Loss?
Save the Romance
pinup tattoos, wings tattoos, angel tattoos, girl tattoos, sexy tattoos, cloud tattoos, sun tattoos
Boston Terrier Secrets. Breakthrough New Book Reveals How To Have The Happiest, Healthiest And Most Well Behaved Boston Terrier
You make some bucks on the world wide web? Common thats pathetic.. I make thousands.. See how i do it. Forex-Killer.com
Your Best Man Speech
SEX, LOVE and RELATIONSHIP
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Health Internet Business
WOW! You had best get on this QUICK Shhhh! … Click Here to Add Just 1-Line of Code that Forces Any Site to Magically Make Money!
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Thursday, September 18, 2008
Increase Your Gold Holdings Immediately!
Increase Your Gold Holdings Immediately! by Larry Edelson
Quite frankly — anyone who doesn't own gold in this environment has lost their marbles.
Consider the following ...
— The U.S. economy is experiencing its worst financial crisis since the Great Depression.
Fannie Mae and Freddie Mac have failed — the largest financial failures ever seen in this country. And the U.S. Treasury has guaranteed their $5.2 trillion of debt. Lehman Brothers has failed. Merrill Lynch has had to be sold off to help stop its bleeding.
The airline industry is broke. The big three auto manufacturers are all but officially bankrupt. And more woes are certainly coming.
Lehman Brothers goes belly up!
— The U.S. dollar has lost 33% of its value in the last few years, AND IT IS probably GOING TO LOSE A LOT MORE.
How can it not decline in value? The Federal Reserve is now accepting as collateral everything from investment-grade bonds ... to mortgages ... and even common stock from failing institutions in exchange for lending (printing) up money and loaning it out.
That means the Federal Reserve's once pristine balance sheet — the assets behind the dollar — is now being massively diluted.
Just a little over a year ago nearly 100% of the Fed's balance sheet was invested in U.S. Treasury securities. Today, more than 40% of the Fed's balance sheet is invested in assets and securities that would otherwise be labeled junk in the private sector.
And keep in mind the dollar's 33% loss in purchasing power occurred BEFORE the recent dilution of the Fed's balance sheet.
But it's not just the Federal Reserve whose balance sheet is deteriorating. So is the U.S. Treasury's.
Internal Sponsorship
URGENT NEWS BRIEF!Dow plunging DESPITE Fed Bailout of AIG! Credit Pandemic Spreading!Watch Out Below!
Our Crisis Briefing — Plague to Pandemic — is now online.
It shows you how to help protect yourself and profit.But events are unfolding so fast, we MUST take it offline soon.
Click here for more information ...
Our national Treasury is now on the hook for $5.2 trillion in Fannie and Freddie mortgage bonds. Not to mention the existing $9.6 trillion in national debt.
If just 10% of those mortgages go bad, the Treasury will take a $500 billion loss. If 20% go bad (not an unreasonable scenario), it will take a ONE TRILLION DOLLAR LOSS.
And since the Treasury is guaranteeing those mortgage bonds, and therefore must fund any losses on them — it will have to issue U.S. treasury bonds back to the Fed so the Fed can print the money to pay the Treasury's creditors. This includes hundreds of billions of dollars owed to foreign investors.
Oh, and let's not forget, the Federal Reserve will charge the Treasury interest on the money it prints.
So I ask you now: How can the dollar not go down? Other than an occasional short-term bounce, the value of the buck is destined to decline much further.
More ...
— Real interest rates remain negative, below the rate of inflation, and they will remain negative for some time.
In other words, it's cheaper to borrow dollars and speculate with them than it is with just about any other currency in the world.
In other words, negative real interest rates are bearish for the dollar. And when you hold dollars, you're losing out to inflation.
Period.
I haven't even begun to tell you the real nightmares for the U.S. dollar. I haven't even touched upon the $50 trillion in contingent liabilities in Social Security, Medicare, government pensions, money the FDIC will need, and more.
And there is no way, no how that any of these debts, liabilities, potential losses will ever be covered without a massive, ongoing devaluation of the U.S. dollar.
So why would you NOT want to own gold in this environment?
Gold is the only true form of money.
Gold is the only true form of money there is. It is no one else's liability. It has no board of directors manipulating its value. It has preserved its purchasing power for over 5,000 years of civilization. It has outperformed every paper currency on the planet.
Given all of the above, and more, I am now officially putting out an emergency buy signal in gold.
— If you don't own any gold, I urge you to buy some now.
— If you do own gold, I suggest you buy more, immediately!
The precious yellow metal — your vehicle to survive financially in the years ahead — recently fell back to major support at the $735 level.
It has since rallied back to $785. I believe the pullback I've been warning you about is now over.
But even if I'm wrong, and by some crazy fluke, the price of gold falls back to major long-term support at the $600 level, it would not be that big a deal.
Because I know that paper dollars are NOT where I want my money.
Internal Sponsorship
WANTED:Editor for Money and Markets Special Edition
Money and Markets is looking for a story from you. Our special contest for Money and Markets subscribers to tell their tale is ending soon. You have until Friday, September 19 to submit your entry.
The winning entry will be published in a Special Edition of Money and Markets, and the author will receive a prize of $1,000.
Click here for more information ...
And because I have absolutely no doubt whatsoever that gold will ultimately reach at least $2,270 an ounce, and perhaps even higher.
I now suggest you seriously consider holding as much as 25% of your net worth in gold.
Here are the four best ways, and my suggested allocation would be one-fourth of your total liquid funds for gold going into each ...
1. Gold Bullion: I prefer the one- and five-ounce gold ingots available at most reputable gold dealers. Store in your bank's safety deposit box, or at home in a safe that's securely bolted to the floor.
2. The SPDR Gold Trust (GLD). This fund allows you to invest in an ETF that owns the physical gold for you, but without the storage hassles. Each share of the GLD equals 1/10 of an ounce of gold.
3. Gold stock mutual funds: Consider spreading this fourth of your gold funds as evenly as possible amongst three of my favorite funds: Tocqueville Gold Fund (TGLDX) ... U.S. Global Investors World Precious Minerals Fund (UNWPX) ... and the U.S. Global Investors Gold and Precious Metals Shares (USERX).
4. Top-notch gold mining shares. This fourth is best suited for more accurate timing. See my Real Wealth Report for specific buy and sell recommendations.
Again, I suggest you allocate 25% of your net worth to gold holdings immediately. Do not wait.
Best wishes,
Larry
P.S. To get all of my specific gold recommendations, subscribe to my Real Wealth Report for just $99 a year. I'll let you know when and what to buy the moment I pull the trigger!
About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Christina Kern, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
Rob Schmidt Recommends Commission Blueprint for Your Success
Click here for Income From Photography. Let this guide motivate you to unlock the money making power of your mind and your camera... http://make200aday.biz
Create your own water hybrid for under $150!
Free Registry Cleaner and Spyware Remover Scan
Google is Paying Out Big Money
Discover a More Effective Training Method for Fat Loss and Heart Health!
What is the Best Ab Workout for Belly Fat Loss?
Save the Romance
pinup tattoos, wings tattoos, angel tattoos, girl tattoos, sexy tattoos, cloud tattoos, sun tattoos
Boston Terrier Secrets. Breakthrough New Book Reveals How To Have The Happiest, Healthiest And Most Well Behaved Boston Terrier
You make some bucks on the world wide web? Common thats pathetic.. I make thousands.. See how i do it. Forex-Killer.com
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SEX, LOVE and RELATIONSHIP
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Health Internet Business
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Click here for Income From Photography
Quite frankly — anyone who doesn't own gold in this environment has lost their marbles.
Consider the following ...
— The U.S. economy is experiencing its worst financial crisis since the Great Depression.
Fannie Mae and Freddie Mac have failed — the largest financial failures ever seen in this country. And the U.S. Treasury has guaranteed their $5.2 trillion of debt. Lehman Brothers has failed. Merrill Lynch has had to be sold off to help stop its bleeding.
The airline industry is broke. The big three auto manufacturers are all but officially bankrupt. And more woes are certainly coming.
Lehman Brothers goes belly up!
— The U.S. dollar has lost 33% of its value in the last few years, AND IT IS probably GOING TO LOSE A LOT MORE.
How can it not decline in value? The Federal Reserve is now accepting as collateral everything from investment-grade bonds ... to mortgages ... and even common stock from failing institutions in exchange for lending (printing) up money and loaning it out.
That means the Federal Reserve's once pristine balance sheet — the assets behind the dollar — is now being massively diluted.
Just a little over a year ago nearly 100% of the Fed's balance sheet was invested in U.S. Treasury securities. Today, more than 40% of the Fed's balance sheet is invested in assets and securities that would otherwise be labeled junk in the private sector.
And keep in mind the dollar's 33% loss in purchasing power occurred BEFORE the recent dilution of the Fed's balance sheet.
But it's not just the Federal Reserve whose balance sheet is deteriorating. So is the U.S. Treasury's.
Internal Sponsorship
URGENT NEWS BRIEF!Dow plunging DESPITE Fed Bailout of AIG! Credit Pandemic Spreading!Watch Out Below!
Our Crisis Briefing — Plague to Pandemic — is now online.
It shows you how to help protect yourself and profit.But events are unfolding so fast, we MUST take it offline soon.
Click here for more information ...
Our national Treasury is now on the hook for $5.2 trillion in Fannie and Freddie mortgage bonds. Not to mention the existing $9.6 trillion in national debt.
If just 10% of those mortgages go bad, the Treasury will take a $500 billion loss. If 20% go bad (not an unreasonable scenario), it will take a ONE TRILLION DOLLAR LOSS.
And since the Treasury is guaranteeing those mortgage bonds, and therefore must fund any losses on them — it will have to issue U.S. treasury bonds back to the Fed so the Fed can print the money to pay the Treasury's creditors. This includes hundreds of billions of dollars owed to foreign investors.
Oh, and let's not forget, the Federal Reserve will charge the Treasury interest on the money it prints.
So I ask you now: How can the dollar not go down? Other than an occasional short-term bounce, the value of the buck is destined to decline much further.
More ...
— Real interest rates remain negative, below the rate of inflation, and they will remain negative for some time.
In other words, it's cheaper to borrow dollars and speculate with them than it is with just about any other currency in the world.
In other words, negative real interest rates are bearish for the dollar. And when you hold dollars, you're losing out to inflation.
Period.
I haven't even begun to tell you the real nightmares for the U.S. dollar. I haven't even touched upon the $50 trillion in contingent liabilities in Social Security, Medicare, government pensions, money the FDIC will need, and more.
And there is no way, no how that any of these debts, liabilities, potential losses will ever be covered without a massive, ongoing devaluation of the U.S. dollar.
So why would you NOT want to own gold in this environment?
Gold is the only true form of money.
Gold is the only true form of money there is. It is no one else's liability. It has no board of directors manipulating its value. It has preserved its purchasing power for over 5,000 years of civilization. It has outperformed every paper currency on the planet.
Given all of the above, and more, I am now officially putting out an emergency buy signal in gold.
— If you don't own any gold, I urge you to buy some now.
— If you do own gold, I suggest you buy more, immediately!
The precious yellow metal — your vehicle to survive financially in the years ahead — recently fell back to major support at the $735 level.
It has since rallied back to $785. I believe the pullback I've been warning you about is now over.
But even if I'm wrong, and by some crazy fluke, the price of gold falls back to major long-term support at the $600 level, it would not be that big a deal.
Because I know that paper dollars are NOT where I want my money.
Internal Sponsorship
WANTED:Editor for Money and Markets Special Edition
Money and Markets is looking for a story from you. Our special contest for Money and Markets subscribers to tell their tale is ending soon. You have until Friday, September 19 to submit your entry.
The winning entry will be published in a Special Edition of Money and Markets, and the author will receive a prize of $1,000.
Click here for more information ...
And because I have absolutely no doubt whatsoever that gold will ultimately reach at least $2,270 an ounce, and perhaps even higher.
I now suggest you seriously consider holding as much as 25% of your net worth in gold.
Here are the four best ways, and my suggested allocation would be one-fourth of your total liquid funds for gold going into each ...
1. Gold Bullion: I prefer the one- and five-ounce gold ingots available at most reputable gold dealers. Store in your bank's safety deposit box, or at home in a safe that's securely bolted to the floor.
2. The SPDR Gold Trust (GLD). This fund allows you to invest in an ETF that owns the physical gold for you, but without the storage hassles. Each share of the GLD equals 1/10 of an ounce of gold.
3. Gold stock mutual funds: Consider spreading this fourth of your gold funds as evenly as possible amongst three of my favorite funds: Tocqueville Gold Fund (TGLDX) ... U.S. Global Investors World Precious Minerals Fund (UNWPX) ... and the U.S. Global Investors Gold and Precious Metals Shares (USERX).
4. Top-notch gold mining shares. This fourth is best suited for more accurate timing. See my Real Wealth Report for specific buy and sell recommendations.
Again, I suggest you allocate 25% of your net worth to gold holdings immediately. Do not wait.
Best wishes,
Larry
P.S. To get all of my specific gold recommendations, subscribe to my Real Wealth Report for just $99 a year. I'll let you know when and what to buy the moment I pull the trigger!
About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Christina Kern, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
Rob Schmidt Recommends Commission Blueprint for Your Success
Click here for Income From Photography. Let this guide motivate you to unlock the money making power of your mind and your camera... http://make200aday.biz
Create your own water hybrid for under $150!
Free Registry Cleaner and Spyware Remover Scan
Google is Paying Out Big Money
Discover a More Effective Training Method for Fat Loss and Heart Health!
What is the Best Ab Workout for Belly Fat Loss?
Save the Romance
pinup tattoos, wings tattoos, angel tattoos, girl tattoos, sexy tattoos, cloud tattoos, sun tattoos
Boston Terrier Secrets. Breakthrough New Book Reveals How To Have The Happiest, Healthiest And Most Well Behaved Boston Terrier
You make some bucks on the world wide web? Common thats pathetic.. I make thousands.. See how i do it. Forex-Killer.com
Your Best Man Speech
SEX, LOVE and RELATIONSHIP
automatic cash making website
Health Internet Business
WOW! You had best get on this QUICK Shhhh! … Click Here to Add Just 1-Line of Code that Forces Any Site to Magically Make Money!
Click here for Income From Photography
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