This Week in Barrons - 5-27-2012

This Week in Barrons – 5-27-2012 Happy Memorial Day? Memorial Day is the day we have chosen to remember those who have fallen. It was formerly Decoration Day, as it originated after the American Civil War to commemorate the fallen Union soldiers of the Civil War. By the turn of the century, Memorial Day had been extended to honor all Americans who have died in all wars. I have always had a soft spot for Memorial Day as my father and father-in-law were WWII veterans, who have seen their share of horrors. I guess I could follow the usual plot and talk about patriotism, love it or leave it, and all the normal adages applied to the day, but I'm not going to do that. Today we are engaged in many wars, most of them undeclared. They are not wars between countries or dictators, but rather for your freedoms, your property, and your way of life. All while I was watching the movie “Hunger Games” I was thinking: I wonder how many people know about “Agenda 21?” Agenda 21 is a comprehensive plan of action to be taken globally, nationally and locally by organizations of the United Nations System, Governments, and Major Groups in every area in which humans impact the environment. More than 178 Governments at the United Nations Conference in June of 1992 adopted Agenda 21. Agenda 21 says we should live in cities like compounds, and all rural areas should be returned to nature. Agenda 21 says that you have no rights to personal property because it belongs to everyone. Agenda 21 wants "biospheres" all around the country where you may NOT trespass. Combine that with the fact that the U.S. is currently building the biggest data center the earth has ever seen. The National Security Agency will use it to watch for "terror". The Utah Data Center’s purpose is to intercept, decipher, analyze, and store vast swaths of the world's communications. Flowing through its servers will be all forms of communication, including the complete contents of private emails, cell phone calls, Google searches, as well as personal data trails on parking receipts, travel itineraries, bookstore purchases, and other digital "pocket litter." It is, in some measure, the realization of the "Total Information Awareness" program created during the first term of the Bush administration – an effort that was killed by Congress in 2003 after it caused an outcry over its potential for invading Americans' privacy. On this weekend we are celebrating the fine folks that fought to give us freedoms. Yet I worry that in the past 20 years we have lost many of them. Yes it's Memorial Day and my thoughts will be with those who've served, but a nagging presence in my head tells me that the freedoms they fought for are all turning to smoke and mirrors. The Market... The old adage of "Sell in May and go away" is in full effect, but for a much bigger reason. With Greece about to exit the Euro, With a noticeable slowdown in China, with the UK as broke as the PIIGS nations, and with the US loaded with so much debt it's impossible to ever repay it – sometimes the reality of it all rises to the surface like an oil slick. The reality is – without the ever-increasing printing of fake dollars, the Euro cannot survive, and the US economy can not expand. In June, three upcoming events must be monitored closely: the Greek elections, the next Fed meeting, and a Supreme Court ruling on President Obama’s health care law. Although we can’t predict the outcomes, the decisions could add to or ease anxiety in the financial markets, and the economy. The Greek elections are on June 17th, and ordinarily, what happens in Greece has little impact on the US. The Greek economy accounts for less than 3% of euro-area economies and an even smaller percentage of the US economy. Yet, on June 17, Greece will vote on its future in the euro area and the ramifications could be global. SB points out – that even if Greece elects a government that will keep the country in the euro, the situation won’t be resolved. However, it would provide the new government with the public support to meet its previously agreed to fiscal targets, and the ability to negotiate less stringent terms and some financial support for growth-oriented measures. This would, at least, reduce the downside risk to other economies in Europe and across the globe. Secondly, the Federal Open Market Committee (FOMC) meeting (scheduled for June 19 and 20) is expected to address major monetary policy issues. Policymakers must decide whether to end the Fed’s “Operation Twist” program, which was launched in September 2011 to extend the average maturity of its portfolio securities. The Fed may also consider starting another round of quantitative easing (QE3), via a further expansion of its balance sheet. Finally, by the end of its current session in late June, the Supreme Court is scheduled to rule on the constitutionality of the Patient Protection and Affordable Care Act – which was signed into law by President Obama in 2010. The law requires all people to have minimal healthcare coverage in what is known as the “individual mandate”, and penalizes people who aren’t insured. The law also includes several tax law changes – affecting those earning over $200,000 per year. Honestly, Obama’s healthcare law is widely seen as the administration’s biggest domestic legislative achievement over the past four years. A ruling in its favor would augment President Obama’s credibility and could add momentum to the administration’s ability to tackle fiscal issues. On the other hand, if the individual mandate is ruled unconstitutional, the pendulum may swing toward other approaches to healthcare reform and provide momentum to opponents seeking to address future fiscal deficits by scaling back the size of government. In our view, financial markets are often driven more by the direction of change than by actual legislation or resolution of a problem. In this respect, a Greek vote to stay in the euro could be a positive catalyst for the US economy, even though the outlook for Greece and the European economy would not materially change. A “No” vote would deal a huge blow to the European economy and the impact on the US economy and financial markets would be substantial. On the Supreme Court healthcare decision, the markets will be guided by the ruling, as it could set the stage for the framing of future legislation on deficit reduction that will undoubtedly take place after the November elections. I went on record a few weeks back saying that the market was about to do a sideways and down slide. My reason wasn't because it was "May", my reason was simply that “Operation Twist” would expire in June. If they stop that form of QE, then there's a chance rates will increase, and the Fed's beloved member banks cannot afford that – nor can the economy, which can't sell houses at 3.8% let alone 6%. So, I figured the market would sag until they came out and declared some form of new stimulus. So far that hasn't happened. They have hinted that "additional accommodation" may be necessary, but for now they are holding the line on no new QE. I could have this all wrong, and The Fed does nothing. But for The Fed to do nothing would be an almost explicit statement that they "want" the world to crash. Hey, maybe they do? Maybe that's part of the UN’s Agenda 21 as well? In any event, the market is (once again) highly oversold. I haven't seen any horrible news come across the wires from Europe, so if we get past Monday with no significant nightmares, there is a good chance we see the market bounce into month end and into June. But if we do bounce, I suggest it is nothing more than a “dead cat bounce”, and we'll slide sideways and down again. The market needs The Ben Bernanke to print. If and when he comes out with his new plan, then the market will stage a very powerful rally, taking us right back to the old highs. Until then, it's hard to imagine. Tips: We continued picking betting on minors as well as a new recommendation from DS – Synacor (SYNC). Currently I’m holding: - GDXJ at 19.50 (currently 20.03) – stop at entry - GDX at 41.72 (currently 44.96) – stop at entry - EXK at 7.96 (currently 8.95) – stop at entry - SYNC at 10.18 (currently 11.12) – stop at entry - GLD (ETF for Gold) – in at 158.28, (currently 153.18) – no stop, AND - SLV (ETF for Silver) – in at 28.3 (currently 27.69) – no stop. To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm. 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 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 – 5-20-2012 Sell in May and Go Away? This isn't your typical "Sell in May and Go away". This market downturn has very little (if anything) to do with investors starting to book vacations and trading desks getting thin. This downturn has everything to do with Europe, overwhelming debts, no jobs, falling housing, and the biggest reason of all – the effects of the QE's having run their course. But honestly, the entire globe is slowing (especially Europe), and people with very little money don't tend to buy a lot of goods and services. Consider these facts: - “A hurricane is approaching," says a Chinese official, “where 8 of 10 of the country's largest shipbuilders have yet to receive an order this year.” - This week’s upward revision makes the Bureau of Labor and Statistics (BLS) a perfect 20 for 20 this year in needing to revise higher the previous week's jobless claims number. - This week’s Philly Fed Business Activity index came in at -5.8 versus an expected 10.0. New Orders came in at -1.2 versus an expected 2.7. - We learned that Hewlett Packard (HPQ) is planning massive layoffs that, along with an early retirement program and attrition, could reduce its workforce by 10% to 15%. - We also learned that in Chinese real estate: April Housing starts were down 14.4% year over year, Office starts declined 21%, Land sales were down 54.7%, and Foreign funding of property development declined 80.8%! People fear this may push the Chinese economy into a hard landing. The problem with nobody buying anything is the domino effect. When there is no buying, there is no production and therefore fewer jobs. So, like a cancer it spreads. Now, our politicians obviously know that printing money out of the clear blue is bad. But they also know that without freshly printed money to jam into the banks, the economy will grind to a halt. Will they let the economy grind to a halt, and let the too big to fail – FAIL, or will they take the tough road and increase interest rates, put the EPA back into the ground, and really do what's necessary to fix a failed economy? To me the choice is simple, they're going to print money and announce more QE (more stimulus). The only thing I don't know is when. How far down are they willing to let the market fall before Bernanke comes out with an announcement? The current version of QE (called Operation Twist) is set to expire in June. Thus far, The Ben Bernanke has hinted to us that he has many tools to employ and will jump in if the economy looks like it's weakening. But thus far, despite some pretty horrid economic news, he has kept his powder dry. I have to think that it's going to hit in early June, as they announce the program that will replace the twist. If he rolls out a really big package, then we should see the market run back up and threaten the triple top at 13,000. But what if it's not that big – then that would be ugly. Everyone knows that Greece and Spain are shot, Europe is fading, and China is slowing. Everyone also knows that the U.S. is much weaker than the numbers suggest. Therefore, I think that the next stimulus package will be a monster, but until it hits we are going to fade. We may see a couple hundred point counter bounce, but overall we are sinking. Some folks have asked about Gold and silver – and why they are not moving up? One reason is that because the Euro is so weak, the dollar is relatively strong, and most gold is priced in dollars. So when the dollar is firm, gold slides, but it is deeper than that. JA wrote in showing us a nice article by Greg Canavan hi-liting: - If gold weren’t such a crucial part of global finance, it wouldn't be such a huge market. Gold is crucial regardless of what Warren Buffet or The Ben Bernanke say. Therefore, the day physical gold leaves the banking system is the day when the paper dollar based system dies. - At this point the value of physical gold is many multiples of the current price, and many would not be surprised to see trading halted and gold re-priced much higher over the course of a weekend – as has been done throughout history. - This current pullback in the gold price has not been as severe as past episodes, and the pullback is suggesting that physical gold is increasingly in demand. Many monetary systems are being brought into question – and when this happens (regardless of what the price tells you) – physical gold is the only asset without counterparty risk. - So if you’re thinking of selling your gold – be strong – and think about what you will be swapping it for. You will be going short on 6,000 years of history and long on a 41-year paper and credit based experiment. - A very low gold price is not in a government's interest because physical gold would leave the system and end the paper money game. So governments simply try to control gold's rise, making sure it doesn't throw off too much of a red alert signal. - For the gold price to genuinely fall, we need to see a rise in REAL interest rates. In a world buckling under the weight of debt at all levels, that is just not going to happen. So, I look at this as just more "noise" in the overall picture. I might have gold and silver wrong. I was told I had it wrong at $400, $500, $700, and $1,000. Yet I'm just too dumb to understand why it's wrong, so I continue to buy it. Some have asked: “What if Romney wins?” Do you really think he is going to do the tough things that need to be done? There are only two choices: the tough love, tough medicine we need, or more bogus dollar printing until hyperinflation takes over. I say they pick printing, and history is on my side. The Market What a week. We came into the week with the news that JP Morgan managed to lose $3 Billion. Yes, grand master Jamie Dimon (the guru of finance) didn't know his "whale" trader had placed them with so much risk that $3 Billion could go poof? Give me a break! A “whale” might lose $100 Million and Jamie not know about it – but $3 Billion – not a chance! Of course he immediately had to rush out and tell folks why the banks don't need any more regulations, and it was just a big, bad bet. The market was particularly nasty this week as it didn’t like: Europe, Greece, Spain’s banks on the edge of absolute insolvency, not even the Facebook IPO! You know a market is really nasty, when the single biggest collection of Wall Street wizards couldn't keep it green on the day the biggest IPO in a decade hit the wires. So, are we destined to the dustbin of DOW 7K, or is this just ‘Sell in May, and Go away’? There are areas of the market that got "sold silly". Look at the mining ETF’s like GDX and GDXJ that had been beaten unmercifully. The coal sector represented by KOL has also been getting hammered. Some of these areas are ripe for a nice bounce, but what about the overall market? If you're comfy believing that established technical patterns are really still in place, then it's possible we're looking at a move higher soon. But I'm in a separate camp. I say this market can't do squat in a meaningful way if The Ben Bernanke doesn't come out with some form of replacement for “Operation Twist”. My feeling is that we are indeed overdue for a bounce, maybe even a few hundred points. But after that we will continue lower until we hear from the Feds. My guess is that The Ben Bernanke is going to unleash a massive program (one that drives the market up to possibly all new highs) right in time for Obama to say: "See I fixed it". So, when the announcement hits we want to be very long in the market. But until it does, be very careful, and take a look at the most beat up of the sectors. Tips: We continued picking up mining shares last week as the sector has been beaten bloody and there's no reason they're so low. We bought more physical gold and silver. DS urged us to acquire more EXK and we did. Currently I’m holding: - GDXJ at 19.50 (currently 18.71) – stop removed temporarily - GDX at 41.72 (currently 41.58) – stop removed temporarily - EXK at 7.96 (currently 7.96) – no stop - GLD (ETF for Gold) – in at 158.28, (currently 154.82) – no stop, AND - SLV (ETF for Silver) – in at 28.3 (currently 28.00) – no stop. To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm. 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 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 – 5-13-2012 What Out for the Banks! First off – Happy Mother’s Day to all – gosh knows they certainly deserve the day. It’s by far the toughest job going out there – congratulations to all the moms! Secondly - take a peek at the following chart (attached):

Last week we heard about the dismal jobs picture, but the concept of ‘participation rate’ is a difficult one to understand. The line on the above graph (produced by the St. Louis Fed) is literally off the charts. Their chart only goes to 88 million, and we now have 88 million 400 thousand people that are NOT in the labor pool. That is why the unemployment rate ticked down. Every time someone leaves the labor pool (gives up looking for work) – they are no longer counted in the unemployment rate! Amazing accounting wouldn’t cha say? I’ve been telling you for years that the banks are insolvent. Not only do they hold toxic "assets" that are not worth the paper they're printed on, but there are so many derivatives cross swapped between the 27 major banks that no one really has a clue what they're all worth. The top bank in the US with exposure to derivatives is JP Morgan Chase (JPM). JPM has over $1.8 Trillion in assets and $70 Trillion dollars exposed in derivative plays! The top 25 banks have $230 Trillion in derivative exposure, but only have $11 Trillion in assets. Now – are these quality assets – of course not. Many of these assets are priced at ‘mark to model’, not mark to market – so who really knows what they’re worth. But it's even worse than that. A lot of these assets are collateral that has been pledged multiple times from smaller dealers to the larger banks. Therefore, no one truly knows exactly who's got what, at what price, or how many times it's been pledged. When you do the math, whether its fractional lending, assets to exposure, or whatever your measurement – the banks are insolvent. Yet The Ben Bernanke cannot let them fail, thus the printing presses continue to run. Remember The Ben Bernanke’s main job is NOT employment, but it IS to save his member banks at ALL COST. Factually we’re seeing: - the worst retail sales since 2009, - factory orders posting their largest decline in 3 years, - housing prices continuing to fall, and - Challenger layoffs increasing 7% in April! Unfortunately, stimulus is like a drug to a junkie – after very short periods of time, you need bigger hits to get the same high. For example: - QE 1 took us from DOW 6600 to DOW 10K. - QE 2 took us from DOW 10K to DOW 12K. - “Operation twist" (basically QE3) took us to DOW 13,300. Notice that each additional stimulus move bought us lower results. That's the way it always works. So we've got an issue, the economy is rolling over again. The effects of QE 1, 2 and 3 are wearing off and all this is taking place smack dab in the middle of what will be a nasty, grueling Presidential race. If the banks roll over again, it’s going to make Obama look really bad because he's been out telling folks he rescued us from collapse – not to mention the stock market will simply implode on itself. Thus, we wonder: "What happens now?" If you listen to CNBC most of them will tell you that any additional stimulus is "off the table". I find this ludicrous, as The Ben Bernanke has NO choice but to open the floodgates, expand the balance sheet, and do more "non-conventional" means of stimulating our economy. Unfortunately it’s mathematically impossible for us to get out of this mess. When you see the Fed’s charts, view the Bank statements, hear the accountants spell it out – then you realize the frustration as CNBC trots out their cheerleaders to tell us that all is fine. Wouldn't it be nice to approach the American people with the real facts, and discuss the disaster we're in the middle of? For all of you asking about gold and silver. The reason that I don't really get too concerned over the daily prices of gold and silver are that they are being manipulated by the likes of our central banks (JPM included). The reason I feel confident is because The Ben Bernanke and the ECB in Europe have absolutely no choice but to print more money and try and reduce their respective debts with devalued dollars. And just like it sounded crazy in 2001 when I said Gold would hit $1,000 in ten years, it sounds equally as crazy when I say that Gold still has $2,400 written all over it and silver will see $70. But I'm a very patient guy, and The Ben Bernanke isn't. The Market The Market is showing lots of down. Ever since the ugly jobs report, the initial jobless claims, and the Challenger report we’ve been down. Isn’t it funny that just last week we were at "four year highs" and now we're desperate to hang on to the lower range of the channel we've been in for months. We all know that the present "operation twist" is scheduled to end in June; therefore, the 20th of June is the latest The Ben Bernanke could come out with something. Yet that would be a bit rash to just say nothing for two months and then surprise us. I believe that the market will continue to trade sideways and down until the next announcement of stimulus. Sure it won't go down every day. It will bounce and backfill, bounce and sink; however, when The Ben Bernanke does announce something, we'll rally. We might not get the same pop out of it as we have in the past, but we will see them rejoice. Be careful out there folks. it's very hard to find stocks that can go up for more than a day, without sector rotation pulling money away from the very stock you just bought and the next day it's down. Take profits on the lion’s share of the position quickly and try and let the smaller balance ride. If the market goes up again and you're stock does, you're still in the game, but if it rolls on you - you've already made your profit so step out. Tips: We started picking up mining shares last week as the sector has been beaten bloody and there's no reason they're so low. We also picked up some physical silver. When we get something out of The Ben Bernanke, gold and silver should start inching higher. I’m holding: - GDXJ at 20.20 (currently 20.20) – stop at 19.00 - GDX at 42.02 (currently 42.43) – stop at entry - CNX at 34.02 (currently 34.44) – stop at entry - ECA at 21.29 (currently 21.25) – stop at 20.50 - GLD (ETF for Gold) – in at 158.28, (currently 153.38) – no stop, AND - SLV (ETF for Silver) – in at 28.3 (currently 28.10) – no stop. To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm. 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 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 – 5-6-2012 Is This the Big One? Take a peek at the following names (Google them if you wish), some of them guilty of outright crimes, while others just ethical deceit (none with jail time or even outrage): Angelo Mozilla, Aubrey McClendon, John Corzine, Franklin Raines, Hank Paulson, Larry Summers, Timothy Geithner, The Ben Bernanke, Dick Fuld, Ken Lewis and John Thain. The list could go on and on, but my point is that hundreds of slime balls (that have done really bad things), are still out there, thriving very nicely, and simple morality has been sucked down a black hole, never to be seen again. For the past couple years, we've been watching a gradual decline in stock market volumes. Some of the biggest up days we've had are on volumes that we used to see in 1994. Now we see that the trading robots are responsible for about 85% of all the volume. According to an analysis by Morgan Stanley’s Quantitative and Derivative Strategies group, trading by "real" investors is taking up the smallest share of US stock market volumes in over a decade. The proportion of US trading activity represented by buy and sell orders from mutual funds, hedge funds, pensions and brokerages, referred to as "real money" or institutional investors, accounted for just 16% of total market volume in the form of buying, and 13% via selling in the final quarter of last year. I’m old enough to remember the ‘gold rush’ associated with the Internet Boom of 1999 and 2000. I remember when people ignored others who told them to ‘get out of the market’. Why – because the truth was too hard for them to take. They wanted to believe that companies with nothing more than a business plan and no way to take in revenues were worth $200 per share. They wanted to believe the good times could go on forever. Many people got crushed and lost it all. It happened again in 2007 and 2008. Everyone likes the rah-rah news, the hype, but it’s the very twisted good news that ultimately ends up catching everyone off guard. On Friday I heard on my car radio’s local news: "News about the economy got better today as the labor department says the unemployment rate ticked down for yet another month in a row, now at just 8.1% as another 115K people were added to payrolls." I wonder how many millions heard that very same sort of broadcast that was pure horse hockey? Factually: - The "Household Survey" showed a LOSS of 165,000 jobs. The Bureau of Labor and Statistics (in a panic and not wanting to disappoint Obama) ADDED 206K jobs via the birth/death model. These 206K jobs Do Not Exist! The real number was negative not positive! In so far as the unemployment rate dropping, some 342K more people stopped looking for work and dropped out of the labor force. In fact, the labor participation rate has plunged to lows not seen in 30 years! In this twisted statistic, if you simply give up trying to get a job – you are not unemployed. So the unemployment rate fell (wink-wink) while another 342K people gave up trying to find work. - Since no one can find a job and unemployment is running out on folks, there has been a rush to try and qualify for disability from Social Security. Applications for disability are up 53% with 539K people going on the plan in the last 9 months. People need to live, so they're storming the gates for disability payments. That Social Security system, broke and ambulatory as it is, can't afford to have another million folks on it. - Over in Europe you can buy a Volkswagen Passat Diesel TDI that gets 72 MPG. Yes – 72 miles to the gallon! But you can't buy it here because if VW and Ford (who also makes a mega mileage car) were to flood the US with cars that got 70 MPG, the gasoline taxes that states take in would fall like a brick. We are coming into an election that is the single most significant one in my history. The non-economic reasons include: - Ron Paul still drawing thousands at every event he speaks. - Ruger having to put off accepting more orders for guns, because they can't keep up with the one million orders they already have. - Military folks training in cities with the police departments. - The Head of the EPA’s Oil Division saying that they would CRUCIFY all oil companies. - And our complete inability to open even a lemonade stand without a telephone book worth of permits given out by bureaucrats is beyond me. So, I think that this IS the big one! The Market... Famed investor Jimmy Rogers – this past week – came out and said: “We have inflation in the U.S., and it’s going to get worse. The Fed won’t be able to do anything about it. They’ve printed staggering amounts of money. They’ve taken staggering amounts of debt on their balance sheet. Much of it is garbage. I’m maintaining my commodity positions. Inflation will come whether the economy strengthens or it doesn’t, leading the Fed to ease further. Throughout history, when governments debase their currencies, you protect yourself by owning real assets. I remain bullish on gold and oil. I’m not selling my gold by any stretch. The surprise with oil is going to be how high it goes.” Now although we look perfectly situated for another 4 - 6% pull down, this isn't a ‘crash’ market. There is no way that Obama and Bernanke would let a ‘crash’ happen ahead of his election. The jobs report is being used to twist The Ben Bernanke's arm. "We want more free money" said Wall Street. And if you don't give it to us we will drop the market another 168 points! I expect some more selling to come, and eventually The Ben Bernanke will give in and give us more stimulus. The common thinking on Friday is that The Ben Bernanke will not offer up more QE due to the jobs report. Understand that The Ben Bernanke cannot let interest rates rise. The BANKS (not the people) need to have rates so low. The low rates are NOT so housing can recover. The rates are at 0% so banks can borrow at 0% and lend back at 5%, pocket the difference and lock in guaranteed money. This money is being used to offset the toxic Mortgage Backed Securities and Derivatives they all carry. If rates rise, the banks stop making money. So, in June Operation Twist ends. That means that we’re all ok with crappy employment, and ok with housing falling to all new lows AGAIN, during the most heated-nasty election race ever? "Helicopter Ben" made his whole thesis on the fact that the great depressions can be thwarted by massive injections of money. He's convinced if he prints enough, eventually things will heal. But in the meantime, there's no doubt whatsoever that he's going to unleash massive amounts of stimulus money. And the second it hits, the market will start on a rally that probably takes us to all time historic highs. But it will be the single most fake rally since the NASDAQ bubble, and when it collapses in mid 2013, you'd better be running for the hills. So, in the short term, I expect some more pouting. I think they'll whine and cry loudly. But sometime before June 11, The Ben Bernanke is going to have to tell us what he's going to do about the Twist expiring, and when he does, we will be off to the races. Now, if I'm wrong, and The Ben Bernanke has found religion and does not announce more stimulus to keep this market up for Obama - I suspect you'll find that he inconveniently has a heart attack. If you are not comfortable holding through a decline here, there's no shame in taking your profits and going to cash. Just be sure you're nimble enough to get back in the game when the next QE is announced. In terms of the metals, just recently Russian diplomats have tossed their hat in the "maybe we should have a gold backed global reserve" arena – something we’ve said for 2 years. People are tired of the dollar losing value, being stuck with them, and tired of seeing their currencies get pulled down because of them. It's my guess that sometime in mid 2013, corresponding with a crashing US market; we see some major commotion over the US Dollar. The COMEX had planned on hiking margin rates on Silver and Gold again on Monday, but they got so much heat from small dealers that they've pushed the hike off for 90 days. I imagine they are getting so much heat about the daily manipulation of the metals that another blatant push to keep the stuff down is too obvious right now. The bottom line is (as ugly as it sounds) if you woke up tomorrow and found the dollar had crashed, banks were closed, and your dollars wouldn't buy you a stick of gum – you may need a nice shiny one-ounce silver coin that would buy you dinner, or a gold coin that would feed your family for 3 months. One day the dollar will be replaced, and in the meantime, Gold and Silver feel like a tremendous insurance policy as well as an investment. Tips: A big shout out to BL for shorting names like: AH, DECK, CTCT last week. We have a very thin tape – and the losers are already showing signs of starting a bear market. This sounds like a broken record – but I’m really sitting in very little other than my old stand-buys of Gold and Silver: - TJX at 42.01 (currently = 41.74) stop at 41.40 - AXP at 59.09 (currently = 60.10) stop at entry - HD in at 50 (currently = 51.96) – stop at 51 - GLD (ETF for Gold) – in at 158.28, (currently 159.60) – no stop, AND - SLV (ETF for Silver) – in at 28.3 (currently 29.48) – no stop. To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm. 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 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 - 5-6-2012

This Week in Barrons – 5-6-2012 Is This the Big One? Take a peek at the following names (Google them if you wish), some of them guilty of outright crimes, while others just ethical deceit (none with jail time or even outrage): Angelo Mozilla, Aubrey McClendon, John Corzine, Franklin Raines, Hank Paulson, Larry Summers, Timothy Geithner, The Ben Bernanke, Dick Fuld, Ken Lewis and John Thain. The list could go on and on, but my point is that hundreds of slime balls (that have done really bad things), are still out there, thriving very nicely, and simple morality has been sucked down a black hole, never to be seen again. For the past couple years, we've been watching a gradual decline in stock market volumes. Some of the biggest up days we've had are on volumes that we used to see in 1994. Now we see that the trading robots are responsible for about 85% of all the volume. According to an analysis by Morgan Stanley’s Quantitative and Derivative Strategies group, trading by "real" investors is taking up the smallest share of US stock market volumes in over a decade. The proportion of US trading activity represented by buy and sell orders from mutual funds, hedge funds, pensions and brokerages, referred to as "real money" or institutional investors, accounted for just 16% of total market volume in the form of buying, and 13% via selling in the final quarter of last year. I’m old enough to remember the ‘gold rush’ associated with the Internet Boom of 1999 and 2000. I remember when people ignored others who told them to ‘get out of the market’. Why – because the truth was too hard for them to take. They wanted to believe that companies with nothing more than a business plan and no way to take in revenues were worth $200 per share. They wanted to believe the good times could go on forever. Many people got crushed and lost it all. It happened again in 2007 and 2008. Everyone likes the rah-rah news, the hype, but it’s the very twisted good news that ultimately ends up catching everyone off guard. On Friday I heard on my car radio’s local news: "News about the economy got better today as the labor department says the unemployment rate ticked down for yet another month in a row, now at just 8.1% as another 115K people were added to payrolls." I wonder how many millions heard that very same sort of broadcast that was pure horse hockey? Factually: - The "Household Survey" showed a LOSS of 165,000 jobs. The Bureau of Labor and Statistics (in a panic and not wanting to disappoint Obama) ADDED 206K jobs via the birth/death model. These 206K jobs Do Not Exist! The real number was negative not positive! In so far as the unemployment rate dropping, some 342K more people stopped looking for work and dropped out of the labor force. In fact, the labor participation rate has plunged to lows not seen in 30 years! In this twisted statistic, if you simply give up trying to get a job – you are not unemployed. So the unemployment rate fell (wink-wink) while another 342K people gave up trying to find work. - Since no one can find a job and unemployment is running out on folks, there has been a rush to try and qualify for disability from Social Security. Applications for disability are up 53% with 539K people going on the plan in the last 9 months. People need to live, so they're storming the gates for disability payments. That Social Security system, broke and ambulatory as it is, can't afford to have another million folks on it. - Over in Europe you can buy a Volkswagen Passat Diesel TDI that gets 72 MPG. Yes – 72 miles to the gallon! But you can't buy it here because if VW and Ford (who also makes a mega mileage car) were to flood the US with cars that got 70 MPG, the gasoline taxes that states take in would fall like a brick. We are coming into an election that is the single most significant one in my history. The non-economic reasons include: - Ron Paul still drawing thousands at every event he speaks. - Ruger having to put off accepting more orders for guns, because they can't keep up with the one million orders they already have. - Military folks training in cities with the police departments. - The Head of the EPA’s Oil Division saying that they would CRUCIFY all oil companies. - And our complete inability to open even a lemonade stand without a telephone book worth of permits given out by bureaucrats is beyond me. So, I think that this IS the big one! The Market... Famed investor Jimmy Rogers – this past week – came out and said: “We have inflation in the U.S., and it’s going to get worse. The Fed won’t be able to do anything about it. They’ve printed staggering amounts of money. They’ve taken staggering amounts of debt on their balance sheet. Much of it is garbage. I’m maintaining my commodity positions. Inflation will come whether the economy strengthens or it doesn’t, leading the Fed to ease further. Throughout history, when governments debase their currencies, you protect yourself by owning real assets. I remain bullish on gold and oil. I’m not selling my gold by any stretch. The surprise with oil is going to be how high it goes.” Now although we look perfectly situated for another 4 - 6% pull down, this isn't a ‘crash’ market. There is no way that Obama and Bernanke would let a ‘crash’ happen ahead of his election. The jobs report is being used to twist The Ben Bernanke's arm. "We want more free money" said Wall Street. And if you don't give it to us we will drop the market another 168 points! I expect some more selling to come, and eventually The Ben Bernanke will give in and give us more stimulus. The common thinking on Friday is that The Ben Bernanke will not offer up more QE due to the jobs report. Understand that The Ben Bernanke cannot let interest rates rise. The BANKS (not the people) need to have rates so low. The low rates are NOT so housing can recover. The rates are at 0% so banks can borrow at 0% and lend back at 5%, pocket the difference and lock in guaranteed money. This money is being used to offset the toxic Mortgage Backed Securities and Derivatives they all carry. If rates rise, the banks stop making money. So, in June Operation Twist ends. That means that we’re all ok with crappy employment, and ok with housing falling to all new lows AGAIN, during the most heated-nasty election race ever? "Helicopter Ben" made his whole thesis on the fact that the great depressions can be thwarted by massive injections of money. He's convinced if he prints enough, eventually things will heal. But in the meantime, there's no doubt whatsoever that he's going to unleash massive amounts of stimulus money. And the second it hits, the market will start on a rally that probably takes us to all time historic highs. But it will be the single most fake rally since the NASDAQ bubble, and when it collapses in mid 2013, you'd better be running for the hills. So, in the short term, I expect some more pouting. I think they'll whine and cry loudly. But sometime before June 11, The Ben Bernanke is going to have to tell us what he's going to do about the Twist expiring, and when he does, we will be off to the races. Now, if I'm wrong, and The Ben Bernanke has found religion and does not announce more stimulus to keep this market up for Obama - I suspect you'll find that he inconveniently has a heart attack. If you are not comfortable holding through a decline here, there's no shame in taking your profits and going to cash. Just be sure you're nimble enough to get back in the game when the next QE is announced. In terms of the metals, just recently Russian diplomats have tossed their hat in the "maybe we should have a gold backed global reserve" arena – something we’ve said for 2 years. People are tired of the dollar losing value, being stuck with them, and tired of seeing their currencies get pulled down because of them. It's my guess that sometime in mid 2013, corresponding with a crashing US market; we see some major commotion over the US Dollar. The COMEX had planned on hiking margin rates on Silver and Gold again on Monday, but they got so much heat from small dealers that they've pushed the hike off for 90 days. I imagine they are getting so much heat about the daily manipulation of the metals that another blatant push to keep the stuff down is too obvious right now. The bottom line is (as ugly as it sounds) if you woke up tomorrow and found the dollar had crashed, banks were closed, and your dollars wouldn't buy you a stick of gum – you may need a nice shiny one-ounce silver coin that would buy you dinner, or a gold coin that would feed your family for 3 months. One day the dollar will be replaced, and in the meantime, Gold and Silver feel like a tremendous insurance policy as well as an investment. Tips: A big shout out to BL for shorting names like: AH, DECK, CTCT last week. We have a very thin tape – and the losers are already showing signs of starting a bear market. This sounds like a broken record – but I’m really sitting in very little other than my old stand-buys of Gold and Silver: - TJX at 42.01 (currently = 41.74) stop at 41.40 - AXP at 59.09 (currently = 60.10) stop at entry - HD in at 50 (currently = 51.96) – stop at 51 - GLD (ETF for Gold) – in at 158.28, (currently 159.60) – no stop, AND - SLV (ETF for Silver) – in at 28.3 (currently 29.48) – no stop. To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm. 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 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