RF's Financial News

RF's Financial News

Sunday, July 28, 2013

This Week in Barrons - 7-28-2013

This Week in Barrons – 7-28-2013

“I’m mad as hell, and I’m NOT going to take this any more…” Networkthe Movie’

Sometimes I get the feeling that plain old common sense left the building 100 years ago.  Money is being silently stolen from us everyday – and we go through our lives like nothing ever happened.  When Bernie Madoff was convicted of stealing billions of dollars, most people yawned and said something to the effect: “So what, the rich can afford it".  Over the past few years:
-       We've seen Sentinel steal customer money – and the courts looked the other way.
-       We've seen J.P. Morgan manipulate the price of silver – and the SEC/COMEX looked the other way.
-       We’ve seen John Corzine co-mingle a few billion of his investor’s money (with his own), steal it – and the courts looked the other way. 

But this isn't a new situation.  We (as a people) have been robbed for years on end and just "take it" as if we deserve it.
-       When the Federal Reserve was criminally created and forced upon us – no one fought back.
-       When Roosevelt confiscated everyone's gold in the 30's – no one fought back.  In fact, when the NY Times ran the story it didn’t even make the front page.  The fact that the gold confiscation was timed at the exact moment that beer was legalized (prohibition was abolished) was probably just coincidental.
-       Recently in the late 90’s, our Government stole millions of acres in the Grand Canyons via the Desert Wilderness Protection Act.  The reason they gave was that the beauty of the desert had to be protected.  Probably the fact that the land also housed some of the richest gold veins in North America – estimated to hold between 2B and 25B ounces of gold – was probably just coincidental.
-       Have you noticed how so many of our oil and shale discoveries are on national lands?  This is not a coincidence.  This enables the U.S. to use these holdings as collateral against our fiat currency.
-       In Detroit, many people put in 30 years of government service – expecting to get the retirement that they were promised.  They were surprised that after spending money that they didn’t have, their savings were reduced to potentially just seeing 10 cents on every dollar.  Didn’t anyone ever ask the question: “How are we going to pay for all of these promises?”
-       And right now, 10,000 Baby Boomers a day are hitting retirement age. Most of them used Wall Street’s investment return thesis of 8% return per year.  But The Ben Bernanke had to step in and cut interest rates to 0% - effectively handing the banks all the money they could ever want, and robbing the elderly of their savings income.

We as good Americans went right along with all of these events – just as planned.

The moral to the story is that if you listen to 99% of the talking heads on TV (especially CNBC) they will tell you the economy's rebounding, and the future is bright.  They want you to feel good and go spend money.  But the economy isn't fixed, the global financial structure isn't sound, and things cannot continue the way they're going.  Something must change. 

My bet is still on a ‘global reset.’  Just about every country is tired of the US debasing its currency, and they're willing to move away from having to use it for global commerce.  China is leading the way, making deals with over 27 Countries to deal in their own home currency of the Yuan.  My guess is that when they feel they've amassed enough gold to back the Yuan on a percentage basis, they are going to push to have their currency be the new reserve currency, or at least be a major part of a new Global reserve made up of several currencies.  If I’m right, the reason for the gold price ‘smash’ falls into place.  They had to get more supply, and by beating the price down, all the hot money speculators sold. 

China is buying all the gold it can get.  And when they tell us how much they have, then they will WANT the price to rise.  But China will keep a lid on the gold price until they fill their coffers.  I'm still convinced that gold sees $2,500 dollars an ounce, and people much smarter than me, like Jim Rodgers think $5K is more likely.  Therefore, you can listen to the media, you can rely on dollars that the Fed uses to steal your wealth, or you can continue to buy gold and know you've got something that has NEVER been worth zero.  Don't get robbed, and don't buy the lies.

It’s going to take all of us ‘getting mad’ in order to right many of these wrongs.  You remember the movie “Network”: “I want you to get mad.  You’ve got to get mad.  You’ve got to say: I’m a human being – god-damn-it.  My life has value.  I want you to get up right now, go to the window, open it, and stick your head out and yell: I’m as mad as hell, and I’m not going to take this anymore!”

The Market...

It is hard to find the words to describe what has been happening in the markets lately.  Each day the market has been pushed to all time highs, despite ever worsening economic numbers.  In the last few days we've seen MOST of the major companies miss on the revenue line.  We've seen mortgage applications fall for 10 weeks out of 11.  We've seen China admit that growth is slowing.  We've seen multinationals like Caterpillar miss earnings and warn that the entire globe is slowing.  Yet the market just keeps getting pushed higher.

Currently, over a quarter of the homeowners in the government program are in default – AGAIN.  Over 306,000 of the 1.2M delinquent homeowners who have received loan modifications under the Home Affordable Modification Program (HAMP) since it was introduced in 2009 – have Re-Defaulted!  The cost to the taxpayer is $815M.

Last month – the average new home sale price had the largest 2-month drop since the Lehman collapse.
While the average investor is desperately trying to get into the market at these lofty levels, institutional investors have sold more stock in the last 4 weeks than EVER.  The "smart money" is selling the stocks that they've already profited from.  We know how this is going to end – the average investor is going to get fleeced. 

This week, Face Book beat earnings, blew away the numbers and jumped 20% to beat it’s IPO price for the first time – since it’s IPO.  One thing to keep in mind is that the S&P index has slammed into the 1,700 level before and couldn’t take it out.  If we try again and it still holds firm, I suspect we'll see a pull back.  So watch the 1,700 level on the S&P.

Also – did you see the ‘stick save’ on Friday?  It was like watching a hockey game and Masterpiece Theatre combined.  After Japan had an almost 500 point drop, our market was acting weak at best.  At one point the S&P even lost the 1680 level, an important "support" area.  It looked for all intents that we were going to end the day seriously red – down almost 150 DOW points.  But then, in the last hour of trading, the market started to rise – and from being DOWN over 140 points – we ended the day UP 4 points.  That simply goes to show you the level of manipulation we are dealing with.

This week, The Ben Bernanke will be having a two-day FOMC meeting to discuss monetary policy.  Considering that this market is completely dependent on the Fed’s printing of money, I think that there will be no serious mention of ‘taper’ in his meeting announcement later this week.  He's will say that one might be necessary, but ONLY if the data dictates it.  He will also leave the door open for "endless QE" if the data deteriorates.  If we get past this two-day meeting, and there is no clear worry of taper coming, I think that this market runs right back up and through the S&P 1,700 level.

So as usual, we can't make our investing decisions based on earnings, or book to sales, or margins, or any other normal metric of investing.  We have to base our buying and selling on whether or not the Federal Reserve is willing to debase our currency some more.  I won’t be doing a whole lot in front of the Fed’s decisions this week.  But please be careful out there.   


This week we purchased some miners, some materials, and some metal(s) – mostly bottom feeders.  We were stopped out flat on: SRPT, NXPI, ED, & AMAT.  But we’re up nicely on some of these others:

My current short-term holds are:
-       FB – in at 25.61 (currently 34.00) – stop at 33.00,
-       JNJ – in at 89.00 (currently 92.74)  - stop at 91.50
-       BTU – in at 16.27 (currently 16.80) – stop at entry
-       ACI – in at 3.95 (currently 4.21) – stop at entry
-       SLW – in at 21.64 (currently 23.03) – stop at entry
-       FCX – in at 28.47 (currently 28.91) – stop at entry
-       SIL – in at 24.51 (currently 13.55) – no stop
-       GLD (ETF for Gold) – in at 158.28, (currently 128.75) – no stop ($1,321.70 per physical ounce), AND
-       SLV (ETF for Silver) – in at 28.3 (currently 19.33) – no stop ($19.76 per physical ounce).

To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there! a

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