This week in Barrons - 5-29-11

This Week in Barons – 5–29-11:

Memorial Day = Celebrate and Remember…
My father, my uncle, my father-in-law and mother-in-law – all either served in WWII directly or as part of the government’s efforts along-side the war. I always use today as day to remember "What those folks did" and what they gave their lives defending. Well – another element occurred this week in California – a Lawyer named Marco Gonzalez, a lawyer for the Environmental Rights Foundation, won his day in Court on Friday. You see – Mr. Gonzalez represented the environment in the case of city fireworks displays needing an environmental impact study prior to display. He claims: "There are a whole host of impacts that we know occur from fireworks shows, from marine mammals, to marine birds, to water quality, to traffic, to noise, and to the air. We want it studied and we want it mitigated." So, the City of Chila Vista has cancelled their July 4th Fireworks show, and LaJolla (where it all started) is going to have to seek some form of injunction, so they don't have to abandon their own show – because there is simply not enough time nor money to create the environmental study. In reading my letters over the years – my stance is that the EPA and NOAA are much more about "control" than about the environment. So much for celebrating patriotism and our history – so celebrate Memorial Day before that’s gone as well!

In terms of the economy, QE2 cost $600 Billion and was supposed to rescue the economy. The Ben Bernanke created (maybe) 700,000 full-time jobs (from 111.8 million to 112.5 million employed). That’s $850,000 PER JOB! (Couldn’t we have just paid that to people instead?) Oh but just wait:
- housing prices are lower than before QE2,
- economic growth is slower than before QE2,
- the dollar is worth less than before QE2,
- inflation is higher than before QE2,
- the number of part time workers has gone down by 600,000 (almost offsetting the 700,000 gain)
- the percentage of the population at work is actually lower today (58.5%) than before QE2,
- AH but the stock market is HIGHER than before QE2!

Maybe Steve Forbes had it right when he wrote:
End of the Financial World by Harold Camping – New Data = October 21st:
Consider the following:
- US Debt Limit = $14,3t
- US Money Supply = $9.079t
- US Debt Held by Foreign Counties = $4.544t
- US Unfunded US Liabilities = $113.96t
- US Tax Revenue = $2.188t
- There is NO WAY to pay this back and NO END in sight…

OK – so what about Greece? Since 2008 their unemployment numbers are up over 100% so that there is a 30.1% unemployment rate Greece. So obviously they think that the ‘end is near’ – they’ve even given up trying!

And the End is Definitely Near in housing – as Richard writes:
- Good News = Freddie Mac announced this week that the 30 year fixed mortgage rate was at 2011 low’s of 4.6% and the 15 year was at an incredible 3.78%!
- Bad News = The banks continue to reign in lending, increase credit qualifying criteria, and constantly change underwriting standards.
- Remember those $1.4t in subprime loans that were originated in the heyday of lending. They came as a result of the 11:1 leverage and securitizations that were allowed. And that created an estimated $140t in exposure – all on the back of a $1.4t in assets.

So add the $140t in exposure to the above US numbers – and potentially Harold Camping has it right – October 21st (financially speaking) may be the Financial End of the World as we know it ☺ So please Celebrate this Memorial Day!

The Market:
On May 2nd the market was up at 12,876 and we said that the market felt “heavy.” From that day, the market fell from 12,800 to 12378. We did not short the market – for fear that they’d pull a fast one on us and goose it higher – but we played a couple bounces on the way down.

So what happens now? Our guess is that we are going to see a move higher from Friday's close. We think that they'll throw the kitchen sink at things trying to offset the worry over the bogus "ending of QE2". But, I do NOT think we'll regain that 12800 level. I think we'll come up short and then fade and fade hard. We're going to lean long, and scoop up what we can before they pull the rug.

Be safe out there folks, have a great weekend and by all means give thought to the fine people that have served this country - no matter what the capacity. To my Dad, uncle, father and mother-in-law – I salute them and will have a drink in remembrance of them.


Tips:
Not much has changed actually:
Our long holds still look like: SLV, NG, AAU, DNN, AVL, SLW, SQM and USSIF.

We continued nibbling with small positions on SLV, SLW, GLD (and some gold miners as well) all of last week – and were rewarded handsomely - and continued to purchase physical silver and gold with the profits on these short-term holds.

Honestly – my purchases are smaller than normal and we’re holding them shorter than normal so tweeting about them almost defeats their purpose – but the show must go on. Please be safe out there!

Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave a little bit ago on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This week in Barrons - 5-22-11

This Week in Barons – 5–22-11:

What Made America the Great?
The other day, I was wondering what my dad would have said (when I was growing up) if I would have told him that in 50 years:
- The U.S. would no longer be the manufacturing arm of the world,
- Our biggest employer would be Walmart (a discount store),
- GM and Chrysler both have gone bankrupt and the Government now owns them,
- Our national debt (then in the Millions $) is now in the Trillions (and impossible to pay back),
- The U.S. dollar is worth (by Uncle Sam’s stds.) 7 cents of buying power,
- 45 Million people are on ‘food stamps’,
- One out of every 6 people in the country are on some form of government assistance,
- We don’t produce oil any more, the Middle East does all that.
- The house he purchased for $11,000, would sell for $485,000 in 2006, and only 3 years later would sell for less than $200,000 again (and going down in value),
- AND now our own government allows banks to run two sets of books – one for ‘real’ and one to ‘show the stock market.’

I’m assuming my dad would have said that this was a ‘joke’, because there’s no way the U.S. would have done all of those things – someone would have had to step in and say STOP. BUT – HERE WE ARE!

In my dad’s time, it wasn't all wine and roses. People worked very hard, doing just about anything they wanted as long as it didn't hurt anyone else. With that freedom they figured out how to create the strongest nation on earth. Can we do that again – I don’t think so. Outside of the military we are not the same country as 50 years ago. Our steel mills are laying-off people here, because it’s cheaper (due to the lack of EPA guidelines) to build and operate steel making facilities in Brazil. Believe me, I'm not against clean air and water – I love it – and live in Pittsburgh, Pa to prove it! But if you’re telling me that ‘JOBS’ are the #1 priority – then the EPA and Congress didn’t get the memo! Just 30 days ago, 1 Million people applied for 50,000 jobs at McDonalds – just for the right to earn $8.50 per hour and say “Would you like fries with that?” Why - because the manufacturing plant where they ‘were’ working was closed in favor of doing production overseas. So I don’t see how we go back?

Think about the world:
- Greece is on it’s death bed.
- Spain, Italy, Portugal, Ireland and probably 4 others are Zombie economies, being propped up by stimulus.
- China, despite being the worlds manufacturer, is facing serious troubles with inflation, and still trying to figure out how to employ the hundreds of millions. (FYI - Estimates are there are 20 ‘multi-billion dollar’ cities in China – complete with houses, shops, streets, and lights – with NO people – all built – just to keep people employed!)

Now, the U.S. – because we’re once again at the debt limit and virtually bankrupt – we are going to use Government employee pension plan money to ‘tide us over.’ The U.S. is at 19% ‘under employment’ and initial jobless claims still hover over 400,000 each week. Gold and Silver are not bubbles – the only real ‘bubble’ we have is that we are printing fiat dollars, and taking on debt we cannot repay. Gold simply shows you the level of the currency bubble, and considering gold is at record highs, you can rest assured that the world has never seen such currency destruction. No, I'm not scared away from gold and silver, in fact I’m continuing to buy more.

The Market:
Heavy, is a word I would use to describe the market for the past 2 weeks. It's been pushed and prodded, forced to yield to higher levels despite "knowing" that the global economies are slowing. This is nothing more than The Ben Bernanke's money getting put to work via the major institutions. Remember the old market adage: “Sell in May and Go Away!” If not for POMO, where the Fed is giving 18 primary dealer banks billions each day in return for Treasuries – we would be thousands of points lower on the DOW and hundreds lower on the S&P. Mutual fund flows for months have been flowing “out" of stocks. The individual investor is using his 401K as a means to support himself. The level of "loans" against 401K's and complete “cash outs” have hit record levels. With all that negativity, and in an “open and free market”, stocks would probably be heading lower. But we have a manipulated market, and that makes this whole thing a lot harder to figure out.

We are still above the 50-day moving averages on the DOW and the S&P. The 50-day on the S&P is 1,325 and we finished the week at 1,333 (only 8 points away from violating a MAJOR technical support level). The DOW 50-day moving average sits at 12,383, and we closed on Friday just 129 points away from it at 12,512.

If either of these break below the 50-day, even with all The Ben Bernanke money, I have to suspect we'll get a flush out that could be pretty severe. But until that happens, all we can do is continue to lean long, but with incredible care. What we’ve been doing is quick and heavy buying and selling. For example (and use your own multiplier) – buy 1,000 shares of SPY @ 10am – noticing at 11:20 we are up 60 cents – so we sell out of half (500 shares) – but not allowing the other ‘half’ to go below our entry point. If the SPY ends the day above our entry level, we'll let it run for as many days as it is up for us.

It's not easy money any more. This week I suspect more battles between real investors wanting out, and Bernanke's banker buddies trying to keep it up. But, I do think we have a date with at least testing those moving averages, so be very careful out there friends!

Tips:
Not much has changed actually:
Our long holds still look like: SLV, NG, AAU, DNN, AVL, SLW, SQM and USSIF.

We continued nibbling with small positions on SLV, SLW, GLD, SPY last week – and continued to purchase physical silver and gold with the profits on the previous short-term holds.

Honestly – my purchases are smaller than normal and we’re holding them shorter than normal so tweeting about them almost defeats their purpose – but the show must go on. Please be safe out there!

Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave a little bit ago on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This week in Barrons - 5-15-11

This Week in Barons – 5–15-11:

Welcome my friends – to the Housing Crash that never Ends!

This weekend is graduation at Carnegie Mellon University – so my hat goes off to all the graduates – CONGRATULATIONS for a job well done!

For several week people have written me asking my opinion on the ‘housing bottom.’ Well, for a couple years, everyone (from Jim Cramer on down) has declared "unequivocally" (at least four times since the big crash) that the “bottom is in.” Well, I’m here to tell you not yet, and with a couple reasons why:
- Too much shadow inventory is waiting to come to market,
- 40%+ of the homes are being purchased by investors for ‘cash’,
- And prices are still too high!

Currently everyone is saying that housing has double dipped, and is in a recession - again. Clearly housing is a train wreck, and is going to get much worse before it gets any better. Why? With an estimated 6 to 8M homes sitting in foreclosure waiting to come to market – there just isn’t the demand to soak up the supply. Also, a lot of housing is still drastically over priced compared to where it "should be". [Go back to 1990 – do a trend line of gaining 2 to 4% per year – and then see where the price of the home should be.] Also, with over 9 million jobs lost in the last several years, and most of the new jobs being low paying service jobs like the recent McDonalds hiring spree – you just can’t afford to purchase a home with: “Do you want fries with that?” Finally, banks are not in any hurry to loan money, fully knowing that prices may still drop, the mortgagee gets upside down, and could simply walk away from the home – leaving the bank in a difficult situation (again).

I think that this next drop in pricing will be as dramatic as the last. Empirically, several mortgage insurers have simply refused to write policies in the "hot" states like Florida and Nevada. And who can blame them – when there’s a pretty good chance that the house is going to be worth ‘less’ a year from now – thereby inviting more ‘strategic defaults’.

A friend wrote me about a house he tried to sell in Florida. He wanted to sell it quickly so he went the ‘auction’ route. Usually an auction will drag out even the coldest of bargain seekers, and he advertised this one heavily. And on auction day – no one showed up! It’s that bad. I have another friend who wanted to purchase a house – and could afford to pay cash for it. But he thought that with a 4% mortgage, the mortgage interest tax deduction, putting over 40% down, assuring that the appraisal came in substantially above the asking price, that there wouldn’t be a problem. On two different properties with two different banks each bank ‘declined’ due to the fear that the house would be worth ‘less’ next year than now – irrespective of the down payment and the appraisal. So as you can see, housing is in a major funk and it will NOT be fixed any time soon.

If housing isn't going to appreciate and add to your net worth, the only benefit to owning versus renting is the stability of ownership, the mortgage deduction, and the ability to do what you want with it. But as far as simple "shelter" goes, the typical home isn't such a great deal. And when you add in maintenance, repairs, insurances, local taxes, etc. – owning isn’t such a great idea at all! As the economy continues to be kept on life support with Fed money, and the foreclosures still continue to roll in, more and more people are going to decide that there is too much risk, too much at stake to own a house. Housing prices will find a level where they don't fall any further, but there will be NO big fast explosion in higher prices to follow. Very simply – the price of a home needs to return to trend line – and then it well sell (be granted a mortgage), and then resume it’s 2 to 4% per annum increase. Bottom line – the gurus were wrong, Jim Cramer was wrong, the National Association of Realtors (NAR) were wrong – until all the excess is out of a bubble the sector will truly not expand. How long – I’m betting that a better market doesn’t appear for another six to ten years.

The Market:
Each and every day there's a power struggle that normally goes on between sellers and buyers, but today is a different world with the Central Bank handing Wall Street Billions of dollars each day, and some portion of that is getting plowed back into stocks.

Nine trading sessions ago, we hit a brick wall at 12,800 after a spectacular rise from 12,200 in mid April. Since then we’ve had 3 closes under the 18-day and the 10-day moving averages. In a technical sense, this isn't good for the bulls. But that’s in a normally functioning market, which we haven't had in years. Over the next several days POMO is scheduled to pour between $21B and $25B into the market place for the purchase of treasuries. Just to refresh, POMO is the name of the operation whereby the Federal Reserve is buying Treasuries from the 18 primary dealers on Wall Street. This is part of: “Quantitative Easing.” What I don’t know and am unable to find out – is when the primary dealers sell treasuries to the Feds – What is the Mark-Up? Are they making 10% or 50% on the sale? Now – we can factually – look back thru the charts and on days where there are large POMO buys (especially an outright treasury coupon purchase) – the market magically goes higher. So although we don't know how much of those Billions Wall Street gets to play with, my guess is that it's quite a bit.

So that is the problem with determining market direction. The simple (and frankly correct) thing to do up until now has simply been to buy every dip. For someone like myself, who has a track record of predicting market direction, this drives me insane. In normal times we would have seen increases in buying pressures, and increases in upside volume to halt any slide and reverse it to the upside. Today, due to dark pools and other programs, the reversals, saves and pushes higher are often on volume that cannot possibly be enough for the gains we get. If I were to look at the DOW chart right now – I would think that more downside is to come. But we’ve seen this movie before – and in the end The Ben Bernanke rides in and saves the day. I'm thinking like this: if we put in a close under 12,580 – that would be the lowest closing price in 12 sessions, and could finally lead to a hefty drop off. If on the other hand, we put in a close over 12,720, that would exceed the last couple highs, and probably would signal a move back up. So we’ll lean long – since that's been the trend, and we'll lean heavier on a move over 12,720. But if we hover under 12,580 and we close down there – it will be interesting to see the POMO money rescue us from that fall.

Be careful out there folks. We know The Ben Bernanke is trying to keep the market up so everyone feels great. But its failure will be ferocious when it hits. We’re using smaller positions and taking profits early. It's much more work than we like, but in this atmosphere, it's all we can do.

Tips:
It’s for weeks like this past one where setting stops really comes in handy. Nobody can ever get mad at you for taking a profit!

Our long holds still look like: SLV, NG, AAU, DNN, AVL, SLW, SQM and USSIF.

We continued nibbling with small positions on SLV, SLW and GLD last week – and continued to purchase physical silver and gold with the profits on the previous short-term holds.

Honestly – my purchases are smaller than normal and we’re holding them shorter than normal so tweeting about them almost defeats their purpose – but the show must go on. Please be safe out there!

Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave a little bit ago on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This week in Barrons - 5-8-2011

This Week in Barons – 5–8-11:

Do you make money – if you Buy a Depreciating Asset – with a Depreciating Currency?

One thing that I know that is ‘REAL’ is that today is Mother’s Day – so Happy Mother’s Day!

So what else is REAL:
- $4 gasoline = REAL
- Housing is in a proven double dip (which never really recovered despite tens of billions in loan modifications) = REAL
- Unemployment is at 9% officially, 17% unofficially = REAL
- Teen workers are in the worst shape of all time, because adults are taking their jobs = REAL
- The amount of people working part time because they can't find full time work is increasing = REAL
- The "household survey" polling hundreds of thousands of households showed a DROP of 190K jobs last month = REAL
- This week’s consumer credit showed a gain of $6 Billion dollars instead of the estimated $4.8B = REAL
- Housing foreclosure sales continue to be 40%+ of all sales = REAL
- The Government Jobs Report showing a gain of 244K jobs = LIE. 175k of the 244k jobs gain was as a result of the ‘birth –death’ model (fiction). If you're not familiar with the birth-death model – this website should help: http://www.bls.gov/web/empsit/cesbd.htm. In loose terms this means that for every “X” amount of people that get laid off, some percentage of those will go out and open a business and hire people. This number is just a ‘guess’ and is simply used to ‘goose’ the report higher when necessary.

What is REAL is that on April 19th McDonalds held a gigantic jobs push, and hired 62,000 people – with over ONE MILLION people standing in lines to get jobs. The employees got $8 an hour and virtually no benefits. Most of those hires were adults with nowhere else to go. So 244k jobs – minus the 175k jobs (birth-death model) – minus the 62k from McDonalds leaves you 7k jobs. So of all the people that read the 244k number and think good thoughts, remember the market has always had a knack for pulling in people at the wrong time and dashing them against the rocks of despair, and this time it's even worse.

You all know we're into gold and silver here as well as short term trading stocks, and we’ve done exceptionally well in those two areas. Now allow me to ask another question: Since gold isn’t used commercially for anything more than jewelry, why then has it risen from $270 in year 2000 to $1,500 today? Two reasons: the depreciating dollar and people losing faith in our economy.

This week, the dollar was perched on a very precarious ledge, and another nudge would have caused a considerable crash. You see - the U.S. Dollar index recently touched its lowest level against the Euro since December 2009, and was recently off 7.5% just in 2011. Since most commodities (including silver and gold) are priced in dollars, they generally move opposite to the greenback. On Thursday (surprisingly) Mexico took delivery of 100 TONS of pure GOLD. That would have been the nudge that pushed the dollar off the cliff; however, the Central Bankers decided that they ‘had no choice’ but to intervene and rescue the dollar causing oil to fall $10, gold to fall $50, silver to fall an additional $3 – but we saved the dollar from the crash (temporarily). But I ask you: If gold and silver are rising because gold is the only real money, followed by silver – and they’ve gone up because of the debasement of our own dollar, inflation fears, economy, etc. - Did we somehow fix that and I missed it?

So as much as I love to take Wall Street money via trading stocks, I still take my winnings and buy gold and silver. And ask yourself – if you’re not in the best performing asset class of the decade – why not? Lately, people have asked me if I would do a fund with them, and I’m seriously considering it. If you have the time – drop me a line on that thought.

The Market:
You cannot put trillions of dollars into an economy and not get some activity. Therefore, there are times and sectors when true economic activity is indeed growing. The issue of course is that without the enormous volumes of this liquidity (money printing) where would the markets be? One issue is that Wall Street itself gets instant money from the Federal Reserve virtually every day as the Fed buys Treasuries from the 18 "Primary Dealers" – which account for between $1 and $8B dollars each day. And the second issue is the good earnings reports from companies that are riding the wave of the stimulus money. But what happens if/when the easy money, Fed printing, quantitative easing programs are stopped?

A lot has been written about silver this week. It’s true that the CME (Chicago Mercantile Exchange) raised the margin requirements on silver futures four times in two weeks. Yes silver was due for a correction due to its recent parabolic path; however, this also shows (a) manipulation, (b) fear on the part of the 5 Big Banks that are openly short silver, and (c) some profit taking on the part of the big funds (George Soros – etc.) But ask yourself what has changed, as industrial demand for silver is still enormous. Nearly 75% of the world’s silver supply is used to make everything from chemical reagents to jewelry to solar panels to plasma TVs, and with the global economy expected to grow by 4.5% this year, the industrial demand for silver is only going to increase. Couple that with the mine supply of silver being tight. Silver fabrication demand grew by 12.8% last year, but silver mine production rose by only 2.5%, and mine supply accounts for 70% of all silver supply, according to GFMS. It’s hard for miners to crank up silver production because two-thirds of silver produced by mines is used as a by product to other metals. Mine supply is expected to rise this year, but it will be hard-pressed to keep up with the expected rise in demand. The fundamental fact is that, despite the recent correction, both gold and silver are in big bull markets. Until that changes, pullbacks and corrections are buying opportunities.

Also China (like many countries) used to be a major seller of silver supply, and now it’s an importer. So yes, we are seeing some air come out of the silver bubble - but I don’t think we’ve seen the real mania in silver yet. Can silver go down due to the Dollar rally or a global recession – of course! However, if you want to short silver in the face of strong demand – good luck to you because I think you’ll need it.

The market feels ‘heavy’ to me – and as much as we will continue to lean long, we're going to have our finger very close to the sell button. When the top arrives there will be no signpost. We're still making money in this manic market, but it’s harder as they fight off the market's urge to slide lower. Be careful out there folks, we are indeed in "uncharted" waters.


Tips:
It’s for weeks like this past one where setting stops really comes in handy. Nobody can ever get mad at you for taking a profit!

Our long holds still look like: SLV, NG, AAU, DNN, AVL, SLW and USSIF.

Most of our stop losses were triggered in our short term hold positions – and therefore we sold out of: FRG, QSURD, NGD, PAL, EXK, SVM, SD, NBR, all at profits – but we are still in: SQM

We started nibbling with small positions on SLV, SLW and GLD on Friday. And on Thursday and Friday I continued to purchase physical silver and gold with the profits on the previous short-term holds.

I’m watching SLW and some other miners this week - as we should begin to recover from the ‘dip’ that they just experienced. It’s the stock price that will determine when we dive back in or let it rest, and we’ll keep you posted via Twitter on anything there.


Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave a little bit ago on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 5-1-11

This Week in Barons – 5–1-11:

To Quote Donald Trump (oops):
I always question quoting someone as controversial as “The Donald” however in this case: “We are one of the richest energy nations on the planet. There are ships fully loaded with oil - outside our ports – waiting to deliver us oil, and we can’t find a way to let them in. Now why is there $4 gasoline?” The Ben Bernanke – during his press conference was asked directly about rising gas prices, he said that it was due to emerging economy demand. Really Ben, it has nothing to do with your money printing - really? So it’s pure coincidence that gasoline started rising just as the first of the Ben Bernanke’s Quantitative Easing’s began, and has accelerated ever since?

Honestly, as much as Wall Street says people are okay with $4 gas, do those same people really understand the 45 million people on food stamps, or the one out of every six people that are on some form of Government assistance?
Is it ONLY Donald Trump that is asking: “How did we get to this situation? How is it that the single biggest economy, with the single biggest military, has NO energy policy? How is it that Apple can track your every move through your cell phone, satellites can read license plates from space, yet when it comes to something as important to the nation as abundant inexpensive energy, we have NO policy?” To quote ‘The Donald’: “Do you really think that's just an oversight?”
The United States has enough natural gas to supply our energy needs for 150 years, but it's not utilized? How can the Government take over GM (selling cars that need GASOLINE) yet there hasn't been a refinery built in 40 years? How is it that our coasts and sovereign territories are flush with oil, yet we don't touch it, but rather send BILLIONS to Brazil to help them develop their fields so we can buy oil from them?

Well some facts:
- In 1944 the Bretton Woods Agreement pegged the U.S. dollar to gold – at the rate of $35 per ounce – and other currencies were pegged to the dollar. However, in order for the agreement to work – you either needed $35 per ounce gold forever, or you’d have to change the exchange rate as the price of gold changed. In any case – these two elements would absolutely need to move in ‘lock-step’ – and they didn’t.
- What started to happen was that nations would accumulate U.S. Dollars – cash them in for gold at $35 an ounce – and then sell the gold at a higher price on the open market for a profit!
- Fast-forward to 1971, due to the Vietnam War producing large account deficits – President Richard Nixon suddenly “closed the gold window” – stopping the dollar to gold conversion – except on the open market.
- So why would anyone want to use U.S. Dollars – you ask? Well – one reason is the military security that we offer. Secondly the real key to the world has always been energy. So, the U.S. (which had already developed the Middle East oil areas) got the Saudi's to agree to only sell oil based on US dollars in return for security. But what’s to keep the Saudi’s from developing their own fields and purchasing security on an ‘as needed’ basis - nothing is the answer!
- Well what is often overlooked in 1971 is along with ‘closing the gold window’ was President Nixon’s unilateral creation of the EPA. The EPA (along with maintaining many clean air and water standards) – indirectly (or directly) ensures that the Saudi’s would remain the global oil producers going forward and the ‘U.S. dollar’ would remain the global reserve currency by severely limiting any oil exploration or refining that can be accomplished inside the U.S.
- Fast-forward to 2011 – and no one wants the U.S. Dollar anymore. This makes the ‘old deal’ virtually worthless. The good news is once we are removed as the world’s reserve currency we will see a renewed interest in securing and using the oil and natural gas we have on our own shores – which will dramatically reduce the price of energy.

So ‘The Donald’ – in order to reduce the price of gasoline – look no further than your own EPA. And to quote Paul Harvey: “And now you know the rest of the story".

The Market:
Remember the program Fantasy Island – with Tatoo saying: “Boss – de plane, de plane!” A place where people would go to make all their dreams come true! Just this week our own Treasury Secretary told us that everything we’re doing is about a STRONG dollar. Meanwhile – gold is gaining $30 per day – and Silver is touching $50 an ounce. Now the world knows that this ‘strong dollar’ policy is a scam and is ‘honestly’ just playing along until the music stops! This week we saw some of the most interesting attacks on silver that the big cartel could make. With so many of the big banks on the wrong side of the silver trade, they've pulled out the stops – starting with raising the margin requirements TWICE in two days – next June’s expirations will be exciting and we are set up for some wicked movement in the silver pits over the next 3 weeks.

Now as Steve Forbes writes us: What could possibly be the upside to this market now that: (a) we’re within 1,000 points of the 2008 high, (b) the Ben Bernanke is openly concerned with inflation, and (c) the funds into QE3 will either be significantly less, just disguised as less than QE2. Often the method for controlling inflation is raising interest rates – but that’s in an economy that was fueled by jobs and by housing growth. This is a jobless recovery – with underemployment numbers hovering around 17% - and a housing recovery that is non-existent due to the shadow inventory of foreclosures sitting in the 4 to 7 million homes neighborhood. So if the Ben Bernanke keeps interest rates low (in order to satisfy investors and residential home buyers) – he simply fuels inflation. If he raises rates to contain inflation – obviously this further deepens the housing trough and further restricts demand – and subsequent employment. Sadly (and I agree with Steve here) – we could see a ‘finessing’ of the numbers over the next couple of months – i.e. changing the way we report elements such as inflation, CPI and PPI to name a few.

The market is dangerous folks, don't overexpose because when this music stops, the rush for the doors will be incredible. Take care!

Tips:
Our long holds looking like: SLV, NG, AAU, DNN, AVL, SLW and USSIF.

In our short-term holds:
- FRG, QSURD, NGD, PAL, EXK, SVM, SD, NBR, and SQM.
- We’re still talking about how to contract and distribute the iPhone APP – so any thoughts – advice – you may have is more than welcome at this stage.

Watch SLW in the coming weeks as it continues to recover from ‘dip’ that it just experienced. I am keeping an eye on this – and it’s the stock price that will determine if we stay in SLW or go.

On a tip by Dave S. – we’re watching GXG – a basket of Colombian stocks. Colombia is the third-largest oil producer in South America, and now ranks 10th among the exporters of oil to the United States – a breakout above the 23 to 24 range would be appropriate.

Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform us of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of his thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is his moniker.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave 4 months or so ago now:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog:
Until next week – be safe.

R.F. Culbertson