This Week in Barrons - 10-28-12

This Week in Barrons – 10-28-2012

“Courage is being scared to death, but saddling up anyway.” ... John Wayne

This week the US Government posted GDP growth over 2%.  GDP is our Gross National Product (the sum of all the goods and services produced in the U.S.), and this 2% growth EXCEEDED even the brightest of estimates.  With all of the major businesses telling us that they are dramatically slowing – how can GDP go up?

-           Over 18 major companies are telling us that the global economy is dramatically slowing.

-           The stock market darlings are missing their earnings estimates by a mile.

-           CEO's are telling us that things “stink out loud”.

How can GDP go up?  The reason is that the U.S. Government juiced the number itself – by purchasing over (33%) 0.7% of the 2% growth number – ITSELF – with money that it doesn’t have.  So in much the same way as the September jobs report showed a decreased level of unemployment to 7.8% (courtesy of government employee hiring), this same government is now juicing its own numbers to make itself look better on the GDP side of the ledger.

I suggested back in June that the economic numbers were going to come out much better than the economy would suggest.  Just imagine the (wink-wink) ‘courage’ that it took to print that 2% GDP number. 

There is a real financial war going on between mutual fund managers too scared to buy over priced stocks, and banks that are flush with The Ben Bernanke's $80 billion a month burning a hole in their pocket.  Will lousy fundamentals ever give way to a really deep, protracted correction, or will they find the ‘courage’ to give us a year-end rally?  In the past, I’ve voted for the year-end rally.

Unfortunately, the DOW didn't challenge 13,600 because of rising earnings, wonderful fundamentals and a growing economy.  The DOW crawled up from the 6,600 lows in 2009 on nothing but money printing by our Federal Reserve.  Yet climb to 13,600 we certainly did.  So, the market has proven that The Ben Bernanke’s Bucks do indeed move markets.  But now we have a problem.  In order to rise from 6,600 to 13,600 – companies had to lie, lay-off workers, account for all manners of write-offs, and even modify generally accepted accounting principles – in order to beat their publicized earnings “by a penny”.   I think we’ve run out of ‘sharp pencils.’  If this had happened during any other market time in history – where 18 of the biggest, most amazing, terrific companies (like IBM, Google, Federal Express, Intel, Caterpillar, Apple, Microsoft, etc.) all came out and missed earnings and/or warned about lowering earnings guidance, we would have plunged straight down for 2,500 points instead of the 500 point plunge that we’ve seen thus far.   

So the jury is still out.  This collapse could (and should) indeed be the big one.  This market has been primed and pumped like no one has ever seen – with $80 Billion a month flowing straight into the banks.  Banks enjoy spending and taking risks with other people’s money, so what are they going to do with all of this money, it if they don't buy stocks?   We have a very important election in front of us.  We have a rabid Federal Reserve tossing the kitchen sink at things.  We have an over-bloated stock market.  And we have a global recession – all at the same time.  So which group(s) will have the ‘courage’ to do the right thing?

The Market:

This past week wasn't very friendly to stock investors.  After trying for the fourth time to break above a very tough resistance at the 13,600 level, the attempt failed and the market lost 500 DOW points this week.  It should have.  All the monster companies of the US economy missed already lowered earnings, warned about the future, and should have received an old-fashioned butt whoopin’.

 

And Thursday evening things got even sillier.  Apple (the most darling of all companies) missed their earnings estimates by a mile.  And, to add insult to injury, Amazon then came out and confessed that they too were not selling as much as everyone had hoped.  So, come Friday morning, I had to laugh when the ‘magic’ GDP number of over 2% was released, as it’s validity was only rivaled by the 7.8% unemployment number released weeks earlier. 

But I tend to think that there is also something else at work here.  DOW 13,000 isn't horribly important as a technical indicator, but it's quite a valuable psychological level.  If the DOW lost the 13K level, it would paint a very bad picture for the health of both the market and the economy.  I simply didn't think they wanted to lose that level, no matter what.  So we closed out Friday sitting at 13,107.

I don’t think that they want to run the market higher just yet, but they don't want it to cascade downward either.  I’m biding my time until a true trend forms.  Right now, I think sitting on your hands is the right play.

I have received a few emails asking about going short any time soon.  My feeling is if the DOW loses 13K, then it would be time to do a bit of short selling.  BUT – this market reacts to The Ben Bernanke's printing.  If you go short and The Ben Bernanke steps up his bond buying, we will put in another 200+ point gain in a heartbeat.  I'm still in the camp that says at some point they will ‘light-it-up’ and send this market into a year end rally; therefore, I’d rather do nothing than get caught short.

I do believe that a monster correction is coming.  It could be starting now, but I think it will start around May of 2013.  I think that because Wall Street is a very vocal supporter of Mitt Romney, and could very well be using this time to "do some selling”, so that Obama can't point to a rising market and try and take credit for it.

If I’m right, we could see a soggy, droopy sideways market for the next 9 sessions, see a Romney win, and a very powerful sprint higher.  However, if the DOW loses 13K, it's not a good sign.  That's a big mile-marker to lose and could mean that we have more downside ahead.

Tips:

This week I did not purchase anything – nor did I tweet about any stocks to watch.  There’s an old saying: “Don’t fight the tape” – and currently this tape is ugly and it’s fighting to maintain that 13,000 level on the DOW. 

I was stopped out of:  TCK, RIG, CLF, BRCM – all for 50-cent losses. 

I’m still holding silver and gold as a hedge against inflation and our currency. 

As DS wrote us: “With the Fed so committed to quantitative easing, stocks might escape a crash, but not the dollar and Treasuries.  Black Monday is more likely to occur in the currency and/or bond markets, with safe-haven flows moving into gold, not Treasuries.”

My current short-term holds are:

-       SIL – in at 24.51 (currently 24.56) – no stop yet

-       SLW – in at 38.50 (currently 39.34) – no stop yet

-       GLD (ETF for Gold) – in at 158.28, (currently 166.00) – no stop ($1,710.90 per physical ounce), AND

-       SLV (ETF for Silver) – in at 28.3 (currently 31.08) – no stop ($32.01 per physical ounce).

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: <http://rfcfinancialnews.blogspot.com> .

Please write to <rfc@getabby.com> 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: http://www.youtube.com/watch?v=K2Z9I_6ciH0

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: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@getabby.com>

<http://rfcfinancialnews.blogspot.com>

This Week in Barrons - 10-21-12

This Week in Barrons – 10-21-2012

“Many times the Questions are Complicated – the Answers are Simple.” ... Dr. Seuss

On Monday night, there will be the last Presidential debate.  But like all of these debates, the questions will be hand picked soft balls.  Just once I’d like to hear someone in the audience stand up and ask the tough – ‘complicated’ questions:

1.    "Mr. President, with almost 11 million people living in their homes without paying the mortgage and/or taxes – tell me why your administration changed the banking regulations concerning foreclosures and bank accounting, so that people could live in their homes – not paying their mortgage – but rather purchase cars and iPads?”

2.    OR – “Mr. President, previous to your administration – when a mortgage went 3 months late, a bank would start foreclosure proceedings because the bank had to take the entire loan value as a loss.  Banks would then move quickly to get that house back on the market, repackaged and sold – so as to remove the loss from their books.  Why did your administration change the banking rules so that banks now only have to count the missed payments as a loss, and not the entire value?”

3.    OR – “Mr. President, your administration lowered the rules to make it easier for people to be granted permanent disability.  And last month, more people were granted disability than actually got jobs?  Is it true that in order to reduce the unemployment rate, your administration no longer counts the people on disability as unemployed?

4.    OR – “Mr. President, you stated in your last campaign that you would  "Fundamentally Change" America.  Did you mean change it from a nation of rugged individuals, competing for the top, and being rewarded for it’s efforts – into a European Union?"

5.    OR – “Mr. President, during your first term you have chosen to concentrate your efforts on Obama-care (giving a majority of the people something that they did not want) – rather than fixing the jobs and economic problems in the middle class.  Aren’t you elected to give the people what THEY want?”

6.    OR – “Mr President, when you took office gasoline was less than half of what it costs now.  Yet while your green companies are going bankrupt and costing us billions, you continue to beat up on our proven methods of energy production such as coal, and oil.  Will you ever change your mind and realize that if we cut the red tape we could again get gasoline down to a buck a gallon, saving billions for the American people?"

In my view, the economy (in the upcoming months) is going to go through a rough patch.  If Obama wins, our economy will crash outright.  If Romney wins, it will contract to very unhealthy levels.  Therefore, I don’t think that there is anything either candidate can truly do about our short-term economic outlook.  But I do believe that capitalism, entrepreneurship and significantly less regulations will get us out of the coming recession/depression faster.  To quote Jack Welch: “If you can’t be right, at least be quick.”

The Market:

Sometimes I make predictions that come true.  One thing I mentioned a while back was: “Companies have cut their staff to they bone, and accounted their books into fantasyland; I’m wondering at what point do lower revenues equate to little or no profits?”  Well – the answer is now.  We’re in the middle of a war between The Ben Bernanke's QE dollars, and horrible earnings.  We have seen some our largest corporations miss earnings:  Microsoft, Google, IBM, McDonalds, GE, Federal Express, UPS, and Intel – to name a few.  The globe is racing toward a depression.  Currently The Ben Bernanke is pushing about $80 billion a month to the banks in “Operation Twist” and "QE3".  I’m wondering when the big buyers of stocks (the BlackRocks, T. Row Prices, mutual funds, etc.) stop buying stocks because they will view them as being over-priced, and having falling profits?  

Right now every single investor is scratching their head (confused) because Wall Street has taught them that the market goes up due to strong fundamentals, increased profits, and growth.  Investors are now seeing companies that have gone higher and higher – tell us that they have no growth, no increased profits and no strong fundamentals.  Does every individual investor sell?  Well, individual investors have removed $470B from mutual funds thus far.  So how is the market within 220 points of a 4-year high – with so much money coming out of the market?  The answer is Benji Bucks.

In the past if IBM and Google would have missed earnings by as much as they did – we would be down a thousand or more DOW points – not the couple hundred we saw on Friday.  Could this snowball – absolutely – but what we’re seeing is that with $80B coming IN from The Ben Bernanke – is enough to temporarily offset the $470B (in total) that is going OUT by investors.

I thought we would see horrible earnings and we are.  I still feel that Benji Bucks will support the market, and (at some point) cause buyers to ignore earnings and warnings and move the market higher.  I also think that at some point next year we are going to enter a monster bear market.  It will be so powerful, that The Ben Bernanke will have to pump close to $200B a month to stave off a depression.  This experiment has never been tried before, so nobody knows how this book will end. 

On Friday we closed the day below the 50-day moving average on the DOW.  That is a problem in the short-term.  I’m honestly surprised that the market didn’t rally and bring us back over that level for Friday’s close.  That is a significant change from the last couple of times we dipped below the DOW 50-day moving average.  But the S&P 50-day moving average is considerably more important, and it has held it’s 1,427 support level, as we closed at 1,433 on Friday.  In a nutshell:

-       I am cautious investor with the DOW under 13,600.

-       If we close a couple days over DOW 13,6000 I would get very bullish.

-       If the S&P drops below the 1,427 level, I would get very bearish. 

Tips:

Thanks to DS for this:  The biggest upside catalyst for gold is a massive re-evaluation by the Basel Committee of Bank Supervision (BCBS).  The BCBS sets the international rules for banks.  Currently gold is rated as a Tier 3 asset.  This means banks can only carry 50% of its market value as capital.  This could change in a few short months as it is rumored that the Basel Committee is planning on turning gold into a Tier 1 asset so that it can be carried at 100% of its value. The more Tier 1 assets that a bank has, the more money it can lend.  What nations would this impact, well let’s see who’s carrying the most in gold reserves:

-       USA = Gold reserves: 8,133.5 tons

-       Germany = Gold reserves: 3,395.5 tons

-       Italy = Gold reserves: 2,451.8 tons

-       France = Gold reserves: 2,435.4 tons

-       China = Gold reserves: 1,054.1 tons

-       Switzerland = Gold reserves: 1,040.1 tons

-       Russia = Gold reserves: 936.7 tons

-       Japan = Gold reserves: 765.2 tons

-       Netherlands = Gold reserves: 612.5 tons

-       India = Gold reserves: 557.7 tons

Hmmmm – imagine that!

This week I purchased some: TCK, RIG, CLF, WYNN, and DE.  I stopped out of:  FDX for a $2 gain, DE for a $2 gain, and WYNN for a $4 gain.  I am still holding the Silver stocks – breaking my discipline – as a hedge against inflation and our currency.  I temporarily removed my stops on TCK, CLF and BRCM because the last 90 minutes of trading on Friday were horrific!

My current short-term holds are:

-       TCK at 32.22 (currently 31.63) – no stop just yet

-       RIG at 48.00 (currently 48.52) – stop at entry

-       CLF at 44.66 (currently 44.10) – no stop just yet

-       BRCM at 33.52 (currently 33.34) – no stop just yet

-       SIL – in at 24.51 (currently 24.47) – no stop just yet

-       SLW – in at 38.50 (currently 39.02) – no stop just yet

-       GLD (ETF for Gold) – in at 158.28, (currently 166.67) – no stop ($1,722.80 per physical ounce), AND

-       SLV (ETF for Silver) – in at 28.3 (currently 31.00) – no stop ($32.07 per physical ounce).

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: <http://rfcfinancialnews.blogspot.com> .

Please write to <rfc@getabby.com> 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: http://www.youtube.com/watch?v=K2Z9I_6ciH0

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: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@getabby.com>

<http://rfcfinancialnews.blogspot.com>

This Week in Barrons - 10-14-2012

This Week in Barrons – 10-14-2012

QE3: “to Infinity and Beyond…”... Buzz Lightyear – Toy Story (the movie)

I my view we should have gotten a 5% market ‘pull-back’ when The Ben Bernanke announced QE3; therefore, the current pullback isn't surprising.  But it is still surprising to me to have us trade virtually sideways and down for over 20 sessions.  I still believe that there's a year-end romp waiting in the wings.  I’m not sure of the catalyst for it just yet, but at some point we're going to see them put The Ben Bernanke's money to work and drive this market higher.  It could happen on a Romney win, since Wall Street is backing his campaign.  All in all, I think there's one last run higher left in this market, and then sometime in 2013, we're going to see the market roll over and it will fall a lot further than most people can imagine.

I tend to think that when we go short next year, we're going to have another record return year.  Currently you can’t short this market because at any time we could touch the 50-day moving averages on the S&P and DOW and instantly bounce for 400 points.  You need to wait on the big picture trend change.

Factually:

-       Consumer credit outstanding is at an all-time high of $2.73 trillion – as the Federal government has dished out billions in student loans.

-      Total credit market debt ($55 Trillion) now exceeds 350% of GDP.

-       The National Debt of $16.2 trillion will exceed $20 trillion in 2015 no matter who wins the Presidency in November.

-       40% of our citizens are obese, and diseases like diabetes are growing exponentially.

-       This week 4 major companies sent out letters to their employees that if Obama-care were implemented, they would have to do everything from laying people off, to changing their entire work force to part-time status.

-       CNBC reported that 4% of all trading in the U.S. stock market last week was executed by one algorithm that placed an order once every 25 milliseconds and then canceled that same order.  It was a specific firm’s way of baiting buyers interested in purchasing a specific stock (showing them extremely high volume), and thereby forcing purchasers or sellers to reveal their positions prior to executing a trade.

-       In one Texas school district, children wear RFID devices so the school can track their every move.

-       The UN is pushing for the implementation of the first "global tax".

I received many questions this week from readers – and here are three:

“Is now a good time to buy a house?”  Housing is a key economic issue as it has lagged the recovery badly until this year.  What I see is that most of the pickup in demand is not coming from real home buyers, but speculators, hedge funds and Freddie Mac / Fannie Mae getting into the rental business or buying the speculation.  Hence I don’t see a sustainable housing recovery – and see foreclosures picking up in Q2 thru Q4 of 2013 along with an already massive backlog of foreclosures.

“Will there be a Santa Claus Rally?”  Stock trends around the world all point toward a major stock bubble bursting just ahead.  There is very strong upper resistance on our S&P at 1,580 to 1,600 and on the other world markets as well.  That means that even our best estimates give an 8% gain remaining for stocks until the end of the year.  I think stocks will peak over the next 6 weeks and (like 2008) leave Gold and Silver to diverge and continue their own rally into 2013.

“Can we fix the U.S.?”         Yes we can – but it’s not going to happen.  The single most important reason that we were able to become the most powerful middle class on earth – leading to our expansion and manufacturing was CHEAP ENERGY.  Cheap energy allowed people to purchase their dream homes 40 to 50 miles from where they worked.  They could afford the 35-cent a gallon gasoline that allowed them to work in the city, but live in the country.  Housing was the ticket to a strong middle class.  The fact is that when a developer puts up 1,000 houses, tens of thousands of craftsman have a job.   Demand for goods rises.  Factories expand to meet the demand.  But, without cheap energy, it all stops.  So why don’t we have an energy policy out of Washington?  For 40 years I've been promised (by every single Presidential candidate) that we'd have a safe and secure energy policy that kept our energy cheap and our nation safe.  In the past ten years, via the improvements in fracking, oil discoveries off Alaska, and deposits in Canada, the amount of energy the US can produce is staggering.  Yet it's opposed every day by our own government.

-       Obama pledged billions to drill offshore – where – Brazil.

-       Remember when Obama looked at the camera and said point blank: “Oh you can open a coal company, but you're going to go broke." 

-       Obama turned down the pipeline project.

-       Obama’s tried his best to halt offshore exploration and drilling.  He comes on TV and says: "Exploration and drilling have expanded on my watch."  But what he doesn't tell you that it’s all on PRIVATE lands.  On the U.S. owned lands, exploration and drilling are all but nonexistent. 

Thus, we have no choice but to prepare for a pretty tough stretch of road ahead.  We need to understand that this path is unsustainable, and will end badly.  But hey, maybe that's the very medicine we need.  Once we all see the big depression hit, maybe then, we can finally do the things we need to rebuild correctly.  But between now and then, I’ll continue to hunker down.

The Market:

When Bernanke announced QE to infinity, my reaction was that the market should have "sold the news" and done a 5 to 8% pull back – back to around 13,000 on the DOW.  But instead it didn't, and slopped and chopped sideways for 20+ trading sessions – between 13,300 and 13,600.  Inside that range, everyone has played the sector rotation game, bidding up materials one day, tech the next, pharma the next – but basically running in place.  This all could be described as ‘base building’, but I was disturbed that we didn't have that initial correction.

After trying to break the DOW above 13,600 and failing the previous week, we are now experiencing full tilt selling.  We are just about 10 points above the 50-day moving average on the DOW.  On the S&P the scenario is worse, we're a couple points below the 50-day moving average.  If we put in a close or two under that 50-day moving average, we could be looking at 13,000 in a very short period of time.  There's not a lot of support at 13,300 and under that things get ugly.

Could this be the pullback we expected on the The Ben Bernanke announcement that's finally come home to roost?  It very well could be folks, but allow me to apply a slightly different spin to this.  Back in 2008, Wall Street was all about Obama.  The Wall Street campaign donations were enormously skewed to the Obama coffers, and Obama won.  This time, Wall Street's hundreds of millions is going to the Romney camp.  In fact the ratio is higher than 10 to 1 for Romney.

Is it possible they kept us up all those days just chopping around so they could then let a correction hit – just so that Obama can't point to the market, and tell the lie that his policies have pushed the market to new highs validating that he's on the right track?  With algorithmic trading robots, high frequency trading, etc. there’s virtually nothing that bankers can't pull off when it comes to the market.  In fact a Swiss entity just put out a study that found a mere 147 corporations have control of 40% of the world's wealth; which is the real economy.  Of those 147 corporations, the big hitters are the banks, and they cite: Goldman, JPM, UBS, etc.  If you are that powerful globally, it wouldn’t take all that much to pull off a little market sell off which would benefit Romney.

I know that might sound silly, but the market is doing what it always does – dissuading the most amount of people it can – before it "takes off".  Don't forget that many fund managers (and individual investors) thought that when QE3 was announced we'd soar to new highs.  Well, the market is rarely that accommodating.  The market senses if too many are long, it goes down, and when too many are out (or short the market) it goes up.  That's its job, to separate as many from their money as it can.  So, as more and more folks get depressed that QE 3 hasn't worked and are pulling out or going short, the market will punish them with a long side run.  But it will do it when it wants, not when I want.

In terms of gold and silver, the numbers tell the story: Silver is up over 18% in 2012 and up at least 27.5% since mid-June, only four short months ago.  Silver Wheaton’s (SLW) CEO Randy Smallwood (and other experts) believe silver will soar to $40 an ounce within six months, and end 2013 with 47% gains, putting silver at $50.  There is a definite ‘silver lining’ in the Fed’s "QE to Infinity" remark.  And if some analysts' predictions come true (that we do experience QE4 next year), silver could go even higher.  It really all comes down to how many U.S. dollars are being printed to carry, restart, or build on the economy here in the United States.  We may not be able to stop the Fed from aligning with the government to support a wasteful bureaucracy at the expense of taxpayers like you and me, but we can make money on it via Gold and Silver.

Tips:

Consider this, with Romney doing so well in the polls and telling voters in West Virginia that if he's elected he's going to help the Coal industry – the coal stocks are moving upward.  I like BTU over $26.25 per share. 

Also consider HPQ.  Hewlett Packard / Compaq is NOT a trade.  I’m thinking about holding this for a few months.  HPQ is still a major player, and their 3D printing could be the fundamental catalyst that allows them to exit the tunnel that they’re currently in.  I may be willing to hold it for a while and see if the value guys start to sniff around.

This week (on twitter and for real) I purchased some: SLV, SIL and SLW.  I also stopped out of:  JNJ – $0, MMM – $0, FCX – $0.25 cent gain, GDX for a $10 gain, and IBM for $10 gain.  It was a good week!

My Current Holds are:

-       FDX – in at 86.03 (currently 90.38) – stop at 88.15

-       SIL – in at 24.51 (currently 24.37) – no stop just yet

-       SLW – in at 38.50 (currently 39.10) – no stop just yet

-       GLD (ETF for Gold) – in at 158.28, (currently 169.91) – no stop ($1,768.80 per physical ounce), AND

-       SLV (ETF for Silver) – in at 28.3 (currently 32.37) – no stop ($34.05 per physical ounce).

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: <http://rfcfinancialnews.blogspot.com> .

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Until next week – be safe.

R.F. Culbertson

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