saveyourassetsfirst3

---

• The Bear Will Return In 2011
• Gold To Outperform Silver
• Weekender: Stores of Value, Feedback Loops, and Gresham’s Law
• Will Gold fall in a Real Recovery ?
• Is the Gold and Silver Held by ETFs Insured?
• Why I'm Short the Homebuilders in Terms of Gold
• Gold and Precious Metals Update
• Paper, Plastic, or Silver

The Bear Will Return In 2011 Posted: 26 Dec 2010 03:55 AM PST Gold Scents

Gold To Outperform Silver Posted: 26 Dec 2010 03:48 AM PST Perth Mint

Weekender: Stores of Value, Feedback Loops, and Gresham’s Law Posted: 26 Dec 2010 03:15 AM PST In between family, presents, and the eating of Christmas cookies, the holidays gave time to revisit a book or two. One such book was Paper Money by Adam Smith (aka George Goodman). Paper Money is a timely chronicle of 1970s economic conditions  — housing bubble, energy crisis, runaway inflation and so on — published in 1981. In thinking about the conditions that exist today (or could soon exist in future), this passage from Paper Money stood out: The binge of the Second Oil Crisis, you will now see, is very relevant to this discussion of paper money. Remember Sir Thomas Gresham, whose law said bad money drives out good, meaning bad money drives good money out of circulation and into savings. The bad money is spent. In the Second Oil Crisis what was saved was oil, and what was spent was money. The store of value had become oil. The yen, the marks, the dollars, the francs, were spent; the oil was saved. The lesson was not lost. Oil was the good currency, money the bad. When the Iranians restored production, they made more money producing at 3 million barrels a day than they would have made at their former rate of 6 million barrels a day. The Kuwaitis said they might cut back by 500,000 barrels a day, the Nigerians said they would cut back 200,000 barrels a day, the Venezuelans 150,000 barrels a day. Oil does not make very good money. It does not sit neatly in bank vaults. You cannot trade a quart of it for a tuna sandwich, or a barrel for a pair of shoes. On a very large scale you might be able to trade it for a million pairs of shoes, but the trade would be cumbersome. Gold became money because it was so destructible and finite; the destiny of oil is to burn. Ironically, monetizing the oil helped to produce the age of paper money, and the destiny of paper money is also to burn, except that paper money is really a misnomer, because the money is really blips in a computer, and blips do not burn. Not literally. This goes back to an intriguing line of thought: Hard assets as a store of value. Those who belittle gold, for example, fail to understand that gold's value comes from being "the one alternative currency not subject to the whims of a printing press." Gold is like a wallet to put one's wealth in, where the government moths cannot eat it. But gold is a rather small wallet. Other potential "store of value" wallets, like oil and possibly other raw materials, are much bigger. Oil of course gets used up over time. But the demand curve is readily apparent. One can view oil as a reasonably constant store of value as long as buyers are hungry to burn it. In his book (written 30 years ago) Smith talks about why oil does not make a very good currency. But as we talked about in The Trouble With MMT, this digital age of instant transactions makes it very easy for investors to shift their preferences. And that, in turn, makes it easier to view a "store of value" commodity as a form of alternative currency. Especially when the officially sanctioned (government supplied) currency has become a wasting asset. Twenty or thirty years ago, it would have been a challenge to keep your wealth in a mix of, say, fossil fuels, base metals, and timberland. But now the concept is much easier to execute. When it comes time to make a cash transaction — buy the milk or pay the tax bill or what have you — it becomes possible to slice off a little corner of one's "store of value" hoard and turn it into dollars, or euros, or whatever suffices for temporary transaction needs. The Gresham's law idea is also powerful because it addresses abuse of privilege, another topic we discussed at length in the critique of MMT. The more that fiat-issuing governments hamfistedly over-exploit their leverage and spending options, the greater incentive investors have to play a "different game" with the bulk of their investable savings — Gresham's law at work. On top of this, there are many who have a direct vested interest in promoting the hard asset game as a great one to play. In Paper Money, Smith recounts a list of players who happily benefited from the 1970s energy crisis — participants who saw more dollars in their pockets than higher energy costs took out: The Brits and Norwegians — because they owned the North Sea oil fields Non-OPEC oil export centers, like Mexico, Louisiana, Alaska and Texas, that tangibly benefited from a rocketing oil price The major oil companies who carried and refined OPEC's oil (along with their own non-OPEC stores), and saw gross volumes and profit opportunities go up as the raw material value went up The investment bankers who "sold the bonds for the pipelines" and otherwise conducted lucrative energy-centered deals (M&A, IPOs etc) The broader energy industry on the whole (oil service, exploration, and so on) The "armorers and sutlers to the Middle East" — those who sold hundreds of billions worth of military hardware to OPEC nations The "thirty biggest banks in the world," who by and large handled and invested OPEC's petrodollar deposits (and fractionally lent out the proceeds) Giant construction conglomerates — Bechtel, Fluor and so on — who contracted the massive oil-related infrastructure deals Countless middle men, purchase agents, lawyers, lobbyists and negotiators — the professional problem solvers and wheel greasers who handled disputes, solidified contracts and facilitated deals The research and consulting fields — oil and energy experts commissioned to do vast studies, write thick research reports, investigate alternatives and so on The point of that long list being that, even in a Western energy "crisis," there are many players that benefit, some of them substantially, and those players have an implicit vested interest in seeing a scarce resource get scarcer (or a "store of value" premium get fatter). Another feedback loop? The danger here is another hard asset feedback loop, in which investor behavior becomes self-confirming and self-sustaining based on rising price trends. The loop could work like this: Hard asset values rise on perceived long-term demand trends Western fiat debasement underscores the "store of value" idea As valuations rise, the hard asset bias confirms itself Rising food and energy costs act as a regressive tax Compressed income / high debt levels = persistent stagnation Western governments respond w/ more aggressive debasement A weakening West is contrasted with strong emerging markets Return to step 1, amplify and repeat. The above loop, which clearly has the potential to become self-reinforcing — with many vested interests encouraging it — is an example of what George Soros meant when he said this: "Classical economic theory assumes that market participants act on the basis of perfect knowledge. That assumption is false. The participant's perceptions influence the market in which they participate, but the market action also influences the participant's perceptions. They cannot obtain perfect knowledge of the market because their thinking is always affecting the market and the market is affecting their thinking." The trouble is that, from a social cohesion standpoint, this type of feedback loop is not sustainable. Given that rising raw materials costs are a sort of regressive tax — one that hits the poor and middle income classes hardest — an acceleration of fiat flight and hard asset hoarding divides up "winners" and "losers" in a potentially explosive way. This is especially true against a backdrop of globalized wage pressures and persistent long-term unemployment. In their Christmas issue, The Economist grimly touched on this.) As yours truly explained in reply to a recent comment: Unfortunately the debasement process is more likely to speed up than slow down. The "graying of the west" (retiring baby boomers) is coming at a most inopportune time, with already excessive debt levels set to build further even as the emerging world produces and consumes more aggressively (which in turn compresses wages and increases the cost of food and energy). To a significant degree the upper income classes will be okay with this debasement acceleration, because they have the ability to 1) better exploit the profit-producing aspects of globalization and 2) combat wealth erosion via cost of living increase by participating in paper asset booms. Bottom line: For those on the bottom rung of the income and education ladder in the Western world, life was already hard — and it's only going to get harder…

Will Gold fall in a Real Recovery ? Posted: 26 Dec 2010 02:52 AM PST

Is the Gold and Silver Held by ETFs Insured? Posted: 25 Dec 2010 08:08 PM PST Doug Eberhardt submits: There has been much talk about owning gold and silver with various ETFs as it is a simple way to acquire the metal without paying too much in fees. Kiplinger was promoting gold ETFs recently and had this to say in an article claiming the iShares Comex Gold Trust (IAU) was their favorite: Parking money in gold, whatever happens to its price, is a pain. If you buy coins or bullion, you need insurance and secure storage. That’s why we recommend you own gold through exchange-traded funds. (Emphasis added) Complete Story »

Why I'm Short the Homebuilders in Terms of Gold Posted: 25 Dec 2010 07:40 PM PST Preet Chawla submits: The homebuilders have had a wonderful run in the last few months with the ITB ETF up 25% from its bottom in August. It has gained the same amount as the S&P over the past year despite housing fundamentals that are in far worse shape than a year ago. This is why I present this short case against the homebuilders. While it’s been a popular trade, I think that housing is going to be weak for at least another three years no matter what the government does. This is irrespective of where mortgage rates are. Of course, if rates shoot up, it will make the problem worse but even if rates stay where they are or head south, home starts will not show any improvement. Click to enlarge: Complete Story »

Gold and Precious Metals Update Posted: 25 Dec 2010 10:21 AM PST Gold and Precious Metals US Dollar Chart US Dollar Analysis: The Dollar rally has been plagued by distribution volume, and now looks like it will rally only slightly higher before declining again! Study the volume on my chart.  The power volume of this move is happening on dollar selling!  Big Volume equals Big Money Flows. The Federal Reserve's action is deluding the Dollar's fans. The Fed Balance Sheet, if it was ever really audited, would probably give Ron Paul a real heart attack.  It is unacceptable that Ben Bernanke would not even admit QE is money printing. That tells me a lot about how far down this road we are now, to US dollar perdition. The Fed protects the banks, and inflation helps the banks. Inflation could spiral out of control.  Click this link now to view my Socialism's Crown Jewel audio update. Crude Oil refuses to pull back in price, along with pretty much all commodities.  The street called for $55 oil, even $45.  It's $90!  This is not the stuff of major dollar rallies.  It is the stuff of a coming dollar collapse. Gold Bullion.  6 Month Price Chart. Gold Bullion 6 month Chart Analysis: Gold's sideways correction continues. Very Bullish. My worst case low for the correction is 1260, followed by a blast to 1500.  Remember that I buy every 2% down, regardless of my 1260 maximum downside target.  From $1430, that is about every $30 down I am buying, because I see Gold going dramatically higher over the next several years.  $4000 is the number you need to focus on, not 1260. Gold Bullion.  14 Month Price Chart. Gold Bullion 14 month Chart Analysis: The long term picture is bullish. MACD working off the overbought condition.  I don't think many of my competitors understand MACD.  Part of that comes from a lack of understanding volume. Volume rules MACD, not the other way round.  Volume is about the flow of capital. MACD is about price averages.  You are a business owner.  So am I.  Do my technical analysis competitors own any manufacturing companies that have been in business for decades?  No.  I do.  I understand capital flows and respect them above price average movements.  Think about that at year-end subscription check-writing time.  Still, MACD is a powerful indicator and it has been coming down while price consolidates. MACD is essentially confirming volume.  Bullish! Down price volume on the 14 month Gold Chart continues to drift lower as price declines.  Just the opposite of US dollar volume patterns.  Gold's charts are bullish.  The US Dollar chart is bearish. Investors who don't have a 30% risk capital allocation to the metals markets should use all weakness to get involved. If you have no metal, put 20% of your risk capital into it right now.  Do it today.  I think you all will be amazed at how high Gold will be, in the not too distant future! Gold Juniors – GDXJ Chart Gold Juniors Analysis: I issued a Sell on Friday, Dec 3rd to you for GDXJ. I want your full attention: You could be within a day of getting a new Super Force Gold Juniors buy signal.  One day!   Merry Christmas to you from GDXJ!  Take a good look at these ratios below to understand how much stronger gold stocks are going to be than gold bullion in the next up leg of the bull market. SuperForce Gold Stock Ratios: Example: Gold, from 1387, moves up 10%.  That's a move to $1525. GDX Current 65% Momentum Ratio to Gold: If Gold moves up 10%, GDX moves up 16.5%. GDXJ 239% Momentum Ratio to Gold: If Gold moves up 10% GDXJ moves up 33.9%! Gold Stock Ratio Prices:  If Gold goes from $1387 to $1525, GDX from $60 to $70, and GDXJ from $41 to $56! As the ratios demonstrate, the juniors are leading the Gold Market. The GDXJ is out-performing Gold by 239%! losses.  How has your financial advisor done for you in that time? GDX 9 Month Chart Compare the GDX Chart to the SGOL Chart.  GDX is yet to decisively cross the center channel line. GDX will catch up and blow past SGOL very soon. Senior Gold Stocks are second only to Gold in my SuperForce portfolio holdings in position size. GDX 3 Year Chart I have a major fresh buy signal on GDX. Super Force Arb System I developed a brand new trading program targeted at business owners.  It greatly enhances your ability to win in any market.  Here are the facts: I've got documented numbers showing 100% annual gains via arbitraging the worst structured ETFs.  You've heard the talk about many of these ETFs.  I view these very real problems as inefficiencies and arbitrage opportunities of unprecedented possible reward, unprecedented in the history of markets!  The door is open to previously unheard of profits and I'm here to make you a pile of money from these inefficiencies exactly as I'm doing now myself. Straddle Trades on these inefficiencies are the prime focus of my own personal trading going forwards.  All I recommend for you, is all I am doing in my personal trading accounts. Jim Sinclair has called the gold market potentially untradeable now for short term traders, so you need to look outside the box for trading profits, while holding your key gold and gold stock core positions as they grow. I use arbitrage ratio calculations, and they vary depending on the leverage used by the underlying ETFs, and the volatility at any given time. The current average annual arb gain with the liquid ETFs is about 30%, and some much higher, in the hundreds of percent annually. My exclusive arb trading service has a planned launch date for the Gold Community of January 14, 2011 and will include screen shots of a model trading account. An ARB ratio gain of over 3% monthly is pretty normal.  Imagine that compounding effect in your account.  Goldman Sachs and the insiders are making a mountain of money peddling these ETFs to unsuspecting investors.  I can put you in the exact same position as the bank insiders.  Stay tuned for full detailed information on Jan 14! Have a fantastic Christmas.  Thanks to the Gold Community for your business this year and I look forward to meeting the challenges of 2011 for you with the very best financial positioning.   Unique Introduction for Wed Readers: If you send me an email I'll send you 3 of my Super Force Surge Signals, as I send them to paid subscribers, to you for free!  Serious investors of size are taking notice of Super Force Signals, with good reason.  Note my track record as it relates to my www.superforce60.com trading service.  I only trade in items you and I  both have great confidence in.  Since mid October I have booked you an unblemished record of: 57 wins and zero losses.    Send me your email address to: alerts@superforcesignals.com and I'll be sure you are on my free signals hotlist! The SuperForce Proprietary SURGE index SIGNALS: 25 Surge Index Buy or 25 Surge Index Sell: Solid Power. 50 Surge Index Buy or 50 Surge Index Sell: Stronger Power. 75 Surge Index Buy or 75 Surge Index Sell: Maximum Power. 100 Surge Index Buy or 100 Surge Index Sell: "Over The Top" Power. Stay alert for our surge signals, sent by email to subscribers, for both the daily charts on Super Force Signals at www.superforcesignals.com and for the 60 minute charts at www.superforce60.com About Super Force Signals: Our Surge Index Signals are created thru our proprietary blend of the highest quality technical analysis and many years of successful business building.  We are two business owners with excellent synergy.  We understand risk and reward.   Our subscribers are generally successful business owners, people like yourself with speculative funds, looking for serious management of your risk and reward in the market.   Frank Johnson: Executive Editor, Macro Risk Manager. Morris Hubbartt: Chief Market Analyst, Trading Risk Specialist. Email:  trading@superforcesignals.com trading@superforce60.com

Paper, Plastic, or Silver Posted: 25 Dec 2010 08:02 AM PST Paper, Plastic, or Silver By: Michael "Woody" O'Brien ChFC My lovely wife enjoys shopping, but not as much when I'm shopping with her. In the past her angst was limited to me prodding her NOT to buy made in China, but to instead make every purchase a hard-target search to buy American - especially online. (see: http://www.americansworking.com/index.html). Then her eyes rolled when I refused to have anything I purchased put into a plastic shopping bag. I've told 1000 retail clerks, "plastic comes from oil, that causes wars, that kill innocent people, and I won't be a part of that global crime spree." However, now my wife must endure my new retail teachable moment. I now ask businesses at which we shop if they want to be paid in worthless paper dollars or real silver money, while holding up a new, 1 troy ounce silver round. The reaction of most people who have never eyeballed (or even held) a pure ounce of precious metals in their hand is enlightening. People's eyes light up like a Christmas tree when offered payment in silver. Many small, owner-run local, small businesses are THRILLED to be asked to take silver as payment for services. I have had my Hummer serviced, bought hunting equipment, food direct from an organic farmer, and even a solar power generator paid with precious metals. Just as important, I am conditioning these same merchants to look at me as a preferred, hard-money customer – especially when the dollar falls. "Where did you get that silver, and how can I get some?" is also a very common question. Apmex.com and eBay is my standard reply. Why is offering people you do business with the option to pay in silver so important? It's actually quite simple. If you are in a movie theater, and 3 people walk out, you will barely notice it. But if 10 people dash out, the rest of the crowd will start to think they know something and head for the exits. People who own silver know the reasons why it keeps going up, but they are not usually very chatty about telling others. For the bull market in precious metals to power forward to the next level, it's in the enlightened self interest of every bullion investor to start offering to pay others in metals. One man named John Chapman, aka: Johnny Appleseed, made eating apples mainstream in America in under 20 years. Imagine what 1 million silver bullion owners can do in 12 months trying to mainstream silver as payment for goods and services. Try tipping a waiter with a ½ ounce silver round or silver war nickels and explain why. Give silver bullion Christmas, birthday, graduation and thank you gifts. My clients LOVE getting silver rounds as my thank you for their referral of new gold stock mutual fund clients. The allure of precious metals is thousands of years old; it's nearly in our DNA. If you have never seen the way people's eyes light up when holding a real silver round, try it. You will be shocked by what you witness. With the vast majority of Americans having never held a 1 ounce, of any precious matal in their hand, there is much work to do. There are hundreds of millions of teachable opportunities in the lives of bullion owners that NEED to be seized. Consider this your marching orders from Silver General Woody O'Brien: get off your silver ASSets and stop JUST accumulating silver, and start giving and spending it as money. Start letting others feel silver as indestructible tender in their hands. Become a silver enabler. Help people reconnect with that precious metals DNA in all of us that craves real money in the palm of our hand. Max Keiser's prediction of $500 silver can come to pass, and crush bankster criminals like JP Morgan like a bug on a windshield, if just one thing happens: Current owners of bullion treat silver as the proverbial candle of Matthew in verse 5:15: "Neither do men light a candle and put it under a bushel, but upon a candlestick, that it may shine to all that are in the house". At this moment in history, Silver can do more than just save your wealth and others you teach about it. Silver (and gold) can save the world from more decades of bankster war and debt slavery. The protesters in Europe and Alex Jones are on point: the world faces a choice between the banksters or us. Choose! I vote we keep the guillotines in storage and bankrupt the banksters with silver rounds before jailing them (the real terrorists) at Gitmo! Michael "Woody" O'Brien ChFC

You are subscribed to email updates from Gold World News Flash 2 To stop receiving these emails, you may unsubscribe now.	Email delivery powered by Google
Google Inc., 20 West Kinzie, Chicago IL USA 60610