RF's Financial News

RF's Financial News

Sunday, February 28, 2010

This week in Barrons - 2-28-10

This Week in Barrons – 2-28-10:

Our Thoughts:
I lost my job. No, I didn't really lose my job. I know where my job is. It's just, when I go there, there's this new guy doing it … Bobcat Goldthwait

Let's Just Suppose...
Indulge me here for a moment. What if: What if the global sovereign debt problems balloon and take down more nations? What if the next "Lehman" hits? Then of course we had that "mistake" by CitiCorp when they released an email to clients telling them that Citi has the right to refuse to give you your money for 7 days. Yes – CitiCorp is denying you access to your money for 7 days if they "warrant" it as necessary. What if this is a foreshadowing of things to come? What the heck do you do about it?

We know Gold has been important for over 6000 years, and silver for longer than gold. Will the ‘market’ always exist – unfortunately it’s man-made. So for today, let's just allow our minds to wander to the dark side for an instant. If we plunge into a depression – there are many elements that will make this one even more severe than the last. Back in the 30’s, our population did not live in cities – but rather in rural areas and loose townships where you could hunt for food and grow (and can) your own. Today's society is wholly and completely at the mercy of the "system". If the local grocery store was bare, what exactly would we eat? And what about power and water? The issue here is that Europe has lived thru this poverty, destruction, death and pain – at least twice in the past 100 years – and they don’t want to see it again. So the idea of sovereign wealth funds going under is real to many Europeans.

Now what if the ‘dollars’ we carry in our pockets became worthless because of devaluation and inflation, you would need ‘real money’ to swap for food and goods. Through out history there have been very few elements that have seamlessly acted as money: diamonds, gold and silver. Gold ‘in the past 10 years’ may have priced itself out of the ‘exchange-money’ arena – for example: if the dollar devalues – the Fed has done all it can – and we’re not in a mess. Gold has gone to $4,000 per ounce. What if you want to purchase milk, bread, and meat. Would you cut an once of gold in tenths – or hundredths – not likely. So you may want to think about silver.

You can still buy "bags" of pre 1964 dimes, quarters and half dollars that are made of silver. You can still buy an ounce of silver for $18. Therefore, if we were in a ‘world of hurt’, I'd sure rather trade someone two one ounce silver rounds for some meat and potatoes, than attempt to cut one-hundredth of an ounce of gold. So for ‘ease of use’ Silver wins over Gold in a catastrophe.

The next reason I like Silver is because Silver is so darned cheap right now. I have every reason to believe that the decades of silver manipulation is slowly coming to an end, and this latest dip in silver might be the ultimate "bottom" we see for many years.

Finally, Silver is compelling because without economic implosions or depressions – Gold will indeed come down. Because other than being used as money and in jewelry, gold doesn’t have a tremendous amount of industrial uses. Silver (however) is used in everything from medical, to 3 D movie screens, to electrical components, to cell phone towers, to – the list is virtually endless. If silver was allowed to trade based on it's true worth/value versus getting stomped on via huge short positions at major institutions, silver would be higher than it is today - anyway.

If the world melts down - Silver will go higher and it will make for wonderful "money". If the world doesn't melt down – Silver will remain relatively stable if not gain in value due to demand. So from where I sit (up here in the cheap seats) Silver is a win/win situation. If you buy silver coin, I tend to think you come out of it smelling like a rose either way.

The Market:
America is one of the finest countries anyone ever stole… Bobcat Goldthwait

Because of absolutely horrid economic reports, the market struggled a lot this week. The initial jobless claims rose to 497K. New home sales hit the lowest number ever registered. Greece and half of the European Continent is awash in debt. Our treasury sales are acting bizarre – for example: on Wednesday, $30+ Billion went into Treasuries that have virtually no return – a return of 0.005%. So, for a month, there are a whole lot of people more interested in just getting their money back, than making anything on it. Isn't that odd?

What happens now? Well next Friday is the all important "jobs" report. The first Friday of the month brings the non-farm payroll report and allows us to find direction in this economy. If that report is poor, the chances of a move higher are slim, but if the the report has been ‘doctored’, we could finally get the last leg of our bounce and possibly threaten the recent highs.

Monday is the first trading day of the new month, and new months usually bring in new money - therefore, you can almost buy into the idea that we'll have an up day on Monday and possibly into Tuesday. Wednesday could bring us some slack as they await Friday's report. I personally will be "leaning long" for the front part of the week, then lightening up for the second part.

If you ever see me getting beaten by the police, put down the video camera and come help me… Bobcat Goldthwait

CLNE - A few weeks back we mentioned CLNE if it got over 18 would be interesting. Then Cramer came on TV and hyped it, sending it over 18.00. I didn't buy since Cramer hype's tend to roll over after the shorts pound his picks. But it's holding up and now I'd probably take it at 18.30

RIMM - has that huge gap to fill if it gets over 72.00. I'd probably take that.

APWR - is trying to build a base under 14.00 and a move over, could let it romp for a few days.

CLF - has been amazingly strong now during this wicked market, and if it takes out 56.00 I'd have to move.

C - CitiBank over 3.50 would be interesting. To quote a trader – “they won't let it go out of business, so what's the downside?" Great point.

Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.

R.F. Culbertson

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