RF's Financial News

RF's Financial News

Saturday, April 9, 2011

This Week in Barrons - 4-10-11

This Week in Barons – 4–10-11:

It’s Funny – I wonder what a 3rd World U.S. will look like?

It’s funny – on Friday the big panic was the debate about shutting down the Government for a week as they haggle over numbers and politics that make no difference. When you realize that they're haggling over a few billion in a situation where we're underwater by trillions is kinda funny to me. As much as I do my best to stay out of politics, I have to chuckle when Nancy Pelosi tells everyone that the Republicans want to starve the elderly, while she's a headliner at George Soros's "Take Over the World" conference next week. We (the U.S.) lose over $4 Billion per HOUR into debt – and we’re haggling over $39 Billion in cuts – really? So we lost more money just DEBATING the cuts than what we saved – really?

It’s funny – to think what the U.S. will look like once the US Dollar is removed as the global world currency. You see there are a couple givens here: the dollar will crash, the dollar will be removed from its sole Global reserve status, Greece and Portugal are back begging for bail outs, Ireland has been given the green light to beg next year, and Germany is tired of paying for it all.

It’s funny – we’re talking about cutting defense. We’re presently at war in Afghanistan, Iraq and Libya – does anyone know why? Allow me to defer to the two-time Congressional Medal of Honor Recipient Major General Smedley D. Butler’s book: “War is a Racket!” The answer is simple says General Butler, “Bankers and the military complex create wars, so they can finance them and make billions.”

It’s funny – we’re talking about cutting social programs. Over two-hundred years ago a politician came out with the statement: “Doesn’t anyone realize that when we ALL start voting for the guy who gives us the most – we’re doomed?” Well, with 44 million people on food stamps, and 1 in every 6 Americans getting some form of Uncle Sam hand out – do you really think that the U.S. is ready to vote for really tough measures?

It’s funny – we’re talking about making changes to credit policies. Well – over the past 4 months we’ve seen consumer credit explode. People have been snookered into thinking the worst is behind us and are (once again) taking on more and more debt. Last week personal credit was expected to come in around $2.5 Billion – it came in at $7.2 Billion. I’ve seen this movie before – the ending will just kill ya!

It’s funny – as much as I’ve preached about inflation – and that someday Silver and Gold will rise both as currency hedges but also inflation hedges – this week we really saw them both take off. Beware – nations inflate and crash and the only thing that comes out smelling ‘like a rose’ is gold and silver.

Many are asking if it's "too late" to get in. Well – I continue to buy silver coins – why – (a) because it's going higher, and (b) there's a pretty good chance that JPM and HSBC have lost control and all their naked shorts are going to burn them. Just this week JPM (J.P. Morgan) was granted a vault and weigh station license. What that means is that J.P. Morgan decided that it was time to be a precious metals warehouse. Why become a warehouse now? My guess is that they’re going to take in a bunch of bullion, and then use it to cover all the naked shorts that they're getting killed on. Just like fractional banking – as long as ALL of the metal depositors don't show up all at once to make a withdraw, they can potentially pull it off. But that tells me (however) that they know the metals are going higher. JPM is horribly exposed to the short side and the "squeeze" is on. So in my opinion it's headed much higher, and I’m still buying.

The Market:
The market is in a very interesting area folks. The line in the sand is at S&P 1,333 and the resistance level on the DOW is 12,400. The market has attempted to attack these levels for days now, and each time gets rejected. A while back I had said to you all that we'd need to see a couple market closes above those levels to confirm they're going to push us even higher, and thus far they can't manage it. You could easily see the DOW "rolling over" from here. But of course this isn't your daddy's market, and we have Bernanke handing Wall Street $8 Billion a day via the POMO program, so it's hard to believe that this isn’t getting put to work and driving things higher.

But the one thing you have to understand is that all the gains are coming from overnight gaps. This is important - watch the futures overnight and they're usually red, and then they start their march towards green. By the open we're often big and green and the market "gaps up" and CNBC gets to gush that all is marvelous with the world. All that's happening here is that the Street is walking the futures up, luring in more and more dollars from “John Q Public” and then using their existing inventory of stock to sell right to him at higher prices.

Again – if The Ben Bernanke can push us over 12,400 on the DOW – the next stop is 12,700. However, if they can’t get us over 12,400 we may very well be looking at the start of a hefty pull back. On Monday I’d pop champagne over the "agreement" reached Friday night, but until we get a couple good healthy closes above those numbers we're in very, dangerous territory.

Tips:
Our long holds looking like: SLV, NG, AAU, DNN, AVL, SLW and USSIF. If any of you caught the USSIF 12% gain on Friday good for you. That stock is still 80 cents (yes – 80 cents) so it’s an interesting ‘speculative play’.

In our short-term holds:
- We purchased more SLW this week, along with SVN, and UXG.
- Still have FRG, QSURD, NGD, PAL, EXK, SVM, AGRO, SD, NBR, and SQM.
- Obviously the metals did very well this week – congrats to all of you who had those with me!

I am trying to be more diligent on Twitter at least in the early mornings when I do most of my business.

The oil space continues to scare me - The shale drillers last week - Approach Resources (AREX), GeoResources (GEOI), and Gulfport Energy (GPOR) – have all started to move south and we have not purchased as of yet because our recipe is: rising market, a catalyst, and a technical break-out.

If you’d like to view my actual stock trades – and see more of my thoughts – please feel free to sign up as a twitter follower – “taylorpamm” is my nickname on Twitter – fyi.

If you’d like to see me in action – teaching people about investing – please feel free to view the TED talk that I gave 4 months or so ago now:

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

2 comments:

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