RF's Financial News

This Week in Barrons - 1-29-12

2012-01-29T10:05:00.000-08:00

This Week in Barons: 1-29-12:

“Money for Nothing, and the Chicks…” … Dire Straits
Every once in a while we get something right, and knock on wood, since Dec 1, we're on a roll and up over 21% in the New Year! We’ve gotten the January effect as we suggested and this week we received more ‘easing’ from The Ben Bernanke. Remember, Obama's running for office again, and since the true economy is on life support, one thing The Ben Bernanke can do is manipulate the markets in his favor. The Ben Bernanke will be removed from office if ANY Republican candidate is elected. So you have Obama needing a strong market that he can point to, and you have The Ben Bernanke willing to do the work necessary to create an up market because his job is on the line.

Well, this week, the Federal Open Market Committee (FOMC) finished up a two-day meeting where they were discussing what monetary policy to implement to help the economy strengthen. At noon we got the results of that meeting, and there were two interesting observations. One was that the economy is improving – but not at the speed that they would like; therefore, they are going to extend the amount of time that they're keeping interest rates "extraordinarily" low, from mid-2013 to late-2014 – which is incredible to me. The Ben Bernanke already lowered interest rates to the point where overnight lending rates are 0 - 0.25% to the banks. So, since he can't go lower than 0%, all he can do is extend the time line. He did just that, and basically said to the banks: "You guys get ‘Money for Nothing’ for 3 more years" – and banks love free money. Secondly the number of "dissenting" voters fell to 1. In other words, at these meetings, The Ben Bernanke is the chairman and all the invitees from the 12 member banks get to vote on the decisions. In October/Nov the number of dissenting voters was 3, and now it’s down to 1 – and that ‘one’ just didn’t agree with the timeline. So basically ALL the member banks are “ALL IN” for more Quantitative Easing.

But people are becoming wiser, and people know inherently that printing money is "bad" so instead; The Ben Bernanke talks about other elements such as buying up Mortgaged Backed Assets (MBA’s), and other "unconventional" schemes. Guess what? In order to buy back MBA's, it takes money. And the only way The Ben Bernanke can come up with any money is to print it! Call it what ever you want, the solution to The Ben Bernanke forever comes down to printing money out of thin air.

Let us not forget that this is the man that told Congress (in 2005) on the question of a speculative housing bubble resulting from cheap credit said: “These price increases largely reflect strong economic fundamentals." No Ben, these were liars loans, paid off credit ratings agencies, bribed appraisers, and bucket shops churning mortgages for fees – and you didn’t see that, right? This is the man that said: "There is absolutely no danger of a banking emergency" – just months before the Lehman Brothers collapse? What about in 2007, as the market started to turn, Ben told Congress: “We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system." Again we are talking about the man in charge of our entire economic policy. In January of 2008, two months before the nationalization of GSE’s Fannie Mae and Freddie Mac, Ben said: "Fannie and Freddie will make it through the storm." And for the worst Pinocchio moment of his life Ben chose June of 2009 when he said: "The Federal Reserve will not monetize the debt." Now, I’ll stop here because my point is that Ben is NOT a stupid man, just a liar – and there’s a big difference. The real reasons for keeping monetary policy at 0% for the next 3 years have nothing do with the housing industry, unemployment, or manufacturing. Not long ago, The Ben Bernanke announced a trillion dollar "swap" arrangement with the European Central Bank (ECB). Greece, Italy, Spain, Ireland and Portugal are broke, and it’s against the law for the ECB to lend directly to "Sovereign Governments". So, The Ben Bernanke, and Turbo Tax Geithner dreamed up this swap arrangement. The ECB borrows money at virtually nothing from the U.S., and lends it to the European Banks for 1%. The European Banks then lend to sovereign Governments by purchasing high-yielding bonds from the countries for 7%. That keeps Italy from crying default, and puts a nice hefty gain on the bank’s ledger. So The Ben Bernanke doesn’t care about unemployment, housing, savings accounts, and inflation – he really cares about his banking buddies in Europe. By the way, Who’s on the hook for those loans to Greece, Italy, Spain, Ireland and Portugal? Well, the U.S. / we are!

As a market measure for this maneuver you need to look no further than the reaction in Gold. Gold was $1,650 per ounce the day before the announcement, and two days later it is $1,740 per ounce. When fiat currencies fall – gold rises.

Also, there are rumors that India and Iran have completed steps to trade Iranian oil for gold, NOT going thru dollars first. This is a BIG deal, and we’re seeing a lot more ‘deals’ where the U.S. dollar is being circumvented. China and Iran are dealing directly in Yuans, while Russia and Iran deal in Rubles. As the true value of the dollar decreases, people are clamoring to get away from it as the world currency.

We see more sabre rattling concerning Iran. The elites want desperately for Iran to throw the first punch, so we can rush in and bomb them. This is pretty high stakes poker we’re playing here. We’ve put dozens of “sanctions” on Iran, trying to force them into giving up any (and all) nuclear ambitions. Now Iran is threatening to stop selling oil to Europe. If this comes to be, energy prices in Europe will spike, further weakening a very fragile, European economic situation.

The Market:
What happens when you promise "Free Money for 3 Years?" Well, the market loves it, and the banks (financials) get to use all that low cost money and make a fortune; because a part of what they do is to go speculate in the markets. But, I tend to think that there's even more to come. What the media will call QE3, is still in the wings, and it's my guess they will unleash it in March. We’re honestly on a path that’s impossible. All the central banks around the world have expanded their balance sheets to insane sizes, and the only way to keep it together is to continue to print money. In the past, civilizations that have "printed" money have fallen in disgrace, completely bankrupt. This time it's the entire world that's swimming in an excess of printed money. In reality, no one knows exactly how this will all shake out, but look at Gold and Silver. They are rising now that Central banks are buying it instead of selling it, and we’re hearing more and more of Gold being used as a currency. If that is the case, then Gold is destined to go higher. My estimate from 10 years ago was that Gold would ultimately see $2,400 dollars. I still believe that, and I see Silver hitting $70 as well. My point is, as they play more and more games with the fiat money, trying to prop up an entire globe swimming in debt, there's really very few other choices for a stable ‘currency’.

The perpetual manipulation of the precious metals will certainly continue. The JPM’s and other big guys naked short these (especially Silver) at will. In fact, we could see some weakness on Monday, since they generally have a habit of beating on it around options expiration. So, if Monday holds strong and into Tuesday, then something odd is going on and maybe (just maybe) the JPM's of the world are backing away for a while. We'll see.

In stock land, the "good news" from Bernanke didn't last long, and that was to be expected. The market was in a jungle of technical nightmares, from overbought stochastics, to double tops that have held since July. So, while they loved the idea of an extension of free money, they didn't get a true stimulus shock, and they decided to take more profits.

For a couple of reasons, I tend to think we're going to remain soggy for another week or so. First, while extending free money to 3 years instead of 2 is a good thing to bankers, there was no immediate injection of cash. They wanted the instantaneous printing of stimulus money, and they didn't get it; therefore, they may pout a bit and take some profits. Secondly, there is a huge bond auction coming on Feb 9. Recently people have been selling bonds and sticking their toes in the stock market waters. If they have an auction and no one shows – then rates will have to rise and The Ben Bernanke just said that’s a ‘No-No’. So, I could see the bankers taking the market down some in order to purchase more bonds. The big banks would borrow from The Ben Bernanke and then instantly use that cash to buy Government bonds. So, if the big institutions swing from using their "free money" to speculate in stocks, and instead use it to buy up bonds, I can see the market not getting the volumes it needs to swing higher.

Tips:
We had some really spectacular gains lately, as we leaned long at the right times. This week we sold STX for an 11% gain in two weeks, FWLT for a 15% gain in two weeks, CLF $4 dollars per share, TMO for $3.50. So, we really cannot complain at all, and are having a very good start to the year. Now I think it's time to be a bit cautious. I could be wrong and they run this puppy, but...I'm not convinced yet.

So for all the Twitter followers – thanks – and to reinforce what we’re currently holding:
- ADBE at 30 (currently 31.12) – stop at entry,
- KBR at 29.80 (currently 32.34) – stop at 31.50,
- SE at 30.20 (currently 31.63) – stop at 31.10,
- GLD at 159.49, (currently 169.00) - AND
- SLV at 28 (currently 33.04)

As you’ve seen – we continue to exercise a lot of discipline in terms of selling at our stops and just moving on to another stock. We’ll continue that philosophy especially next week.

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 - 1-22-12

2012-01-22T08:38:00.001-08:00

This Week in Barons: 1-22-12:

“Up, Up and Away” … Superman

Here’s a news blurb that I found somewhat startling – “The average time a U.S. stock is held increased last year from 20 seconds to 22 seconds.” According to Michael Hudson, “It's a shorter time frame than even the average foreign currency trade, which is now 30 seconds. It's all about computers (with high-frequency trading) making up 70% of all volume.”

The trading day is 6.5 hours long, or 390 minutes long, or 23,400 seconds long. And if the average hold time is 22 seconds, one stock is changing hands 1,062 times in a day. Now multiply that by all the stocks. Last year $38 Billion was removed from mutual funds and stock funds as people moved to gold, silver, bonds, and spending money. So, if you take out all that money, and then add in the idea that 70% of all volume is high frequency trading lasting about 20 seconds – Is anyone really buying or selling stocks anymore? It sure doesn't seem like it!

Obviously it’s not humans doing these trades, but rather computers. And with this it’s not the ‘attitudes of millions of investors’ that are moving markets, but rather the high frequency computers that are moving markets. For example: didn’t it bother anyone (last week) that Goldman Sachs missed their revenue projections by 30% last quarter but the stock went UP $6. Didn’t it bother anyone that the International Monetary Fund (IMF) is looking to borrow another $1 Trillion (because the first half trillion might not be enough) and our market went UP for the week? Now, I’m not advocating buying and selling 22 seconds later (like Wall Street has morphed into), but ‘active management’ is the only way to play in this market today.

What if you can’t manipulate your funds all that quickly? What if your funds are a part of a 401K or other structure that doesn’t allow for daily or even monthly manipulations? That ‘absolutely’ will require a more ‘macro’ view of the economy. If you have a broad enough ‘fund family’, potentially you can find a gold, silver, precious metals fund – but let’s assume your fund family isn’t that broad. Our ‘down the road’ view is that The Ben Bernanke is going to unleash QE4/3. (I say QE4 because QE3 was the U.S. loaning the European Central Bank (ECB) half a trillion dollars.) The Ben Bernanke will do QE4/3 because Obama is in the fight of his life to remain President. Obama needs an "up" market so he can take credit. The Ben Bernanke would be fired the day a Republican got in office. Therefore, The Ben Bernanke will do what ever Obama wants.

And this week (I digress) Obama wanted to veto the "Keystone Pipeline" bill. It would have been an opportunity to ship good oil and gas from a friendly nation down to our Texas refineries. It would have employed (some estimates show) 20,000 workers. It would put everyone from construction to chemical operators to work. But much worse was a quote Obama used to justify his veto: "However many jobs might be generated by a Keystone pipeline, they're going to be a lot fewer than the jobs that are created by extending the payroll tax cut and extending unemployment insurance." Huh? I know 6th graders that would construct an argument better than that. Somehow giving couch potatoes 150 weeks of unemployment payments creates more jobs than a 2 thousand mile construction job and the entire product that would be delivered, refined, and shipped. If you're a Democrat (and you love this guy), this even has to leave you scratching your head.

In any event (concerning your 401K), I truly believe massive stimulus is on the way. Stocks should go up, and so should gold and silver. Of course the U.S. can't afford the stimulus and of course a day of real reckoning will hit, but that's in the future. I would consider shifting some of that ‘cash’ in your 401K into a more growth oriented fund investment. We continue to lean long into this rally and it's going well so far. Let's keep our fingers crossed for more.

The Market:

Up, up and away… yes it’s a Superman market lately that shrugs off bad news like Superman shrugged off bullets. This week showed that J.Q. Public is putting his toes back in the water for the first time in almost a year. Last year J.Q. Public pulled over $39 Billion out of mutual funds, and this week $11 Billion came roaring back into them. It's not a record by any means, but it's a pretty big chunk of change. So why is everyone so optimistic? Well, there comes a time when people think they've weathered the worst: housing collapse, Lehman’s collapse, bailouts, rounds of stimulus, and horrible unemployment. They witnessed America's credit rating get cut for the first time in history. They remember August, 2011 when the market would drop 500 points on words out of Europe, and then gain 400 back, only to lose 300 the next day. J.Q. Public feels like he’s been through it all – and he’s still standing!

But J.Q. Public’s $11 Billion isn't why the market is moving higher. It's moving higher because there's a growing chorus of people expecting The Ben Bernanke to let loose another round of stimulus. I've been saying for quite some time that the next ‘round’ is on its way. This week, if indeed he does mention that more stimulus is coming, fund managers will plow into the market because they remember the market going up 6,000 points on QE1, and another 2,000 on QE2. So if this stimulus would be $1 Trillion, we could see another 2,000-point gain or more.

Now, if The Ben Bernanke and this week’s FOMC meeting produce nothing, and there's no News Conference – then I suggest this market will go down. So that's the deal, this market is rising in anticipation of more Federal Reserve stimulus. If we get it, we could see a very powerful rally that takes us into the fall. I think we will because The Ben Bernanke needs Obama, and Obama needs a rising market in order to get re-elected. It's pretty much assured that it's coming.

With additional stimulus, along with stocks rising, gold and silver will also increase as they are the anti-fiat money and will guard against the inflation that will eat into your dollars. Materials generally do well in a stimulus inspired market run. Last year some of our biggest swing trades were names like UYM. We bought UYM for around $30 and sold it 8 months later for $52 dollars. CLF and ANR did phenomenally well for us as well. We'll be looking at those and quite a few others that aren't so widely tracked going forward.

A reader had a question concerning how I arrive at my ‘Twitter’ posts each day. Every day I scan for particular set ups. I’m looking for stocks with a "reason" to go up, nearing a resistance level, and we have a flat to rising market. When I find some, I post them on Twitter (handle taylorpamm) with their corresponding ‘buy-in’ prices. I normally post them each morning, and if some get up and over their ‘buy-in’ prices – I take them. And then thru this Sunday letter you’ll see what’s remaining in my active portfolio, and the ‘stops’ that I have set for those ones that I am still holding. Lately – if something dips below the price that I paid for it – I normally sell it. Now, because not every stock gets over my ‘buy-in’ price that day I’m forced to keep a running list of some of the old ones that I’ve recommended as well (dating back a couple weeks). I continue to put up new ones as they develop, yet the old one's are still "relevant". For example: on December 11th, I mentioned that a move on CCJ over $19.65 was buyable. Well, it didn’t get over that mark for several weeks – but it’s now sitting at $23.50. What I do is take these ‘radar ideas’ that I tweet about – and load them into my stock trading ‘alert’ system. I let the ‘trading software’ alert me that one of these is getting close to the buy in area – and then I decide whether to pull the trigger.

Tips:
So for all the Twitter followers – thanks – and to reinforce what we’re holding:
- ADBE at 30 (currently 30.06) – stop at entry,
- LRCX at 40.16 (currently 42.45) – stop at 41.00,
- TMO at 50.01 (currently 51.14) – stop at 50.50,
- KBR at 29.80 (currently 32.01) – stop at 31.20,
- STX at 18.61 (currently 20.00) – stop at 19.20,
- SE at 30.20 (currently 31.44) – stop at 30.90,
- FWLT at 20.00 (currently 23.11) – stop at 21.60,
- GLD at 159.49, (currently 162.00) - AND
- SLV at 28 (currently 31.27)

DS writes in with a tip on BroadVision – BVSN – a stock that he purchased for $8.31 on December 12th, and is now at $27.05 – clearing the latest technical resistance level. It’s clearly on a rocket-ship – nice call DS!

As you’ve seen – we’ve been very true to sticking to our stops and just moving on to another stock. We’ll continue that philosophy especially next week.

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 - 1-15-12

2012-01-15T09:50:00.000-08:00

This Week in Barons: 1-15-12:

Why can’t we just keep printing more, and more money?

What if our debts were so great – that we just printed all the money that everyone wanted and handed it out to everyone? The European Central Bank (ECB), (fresh graduates of the “Best Crooks that ever Wore a Suit School”) have taken their marching orders from Professors Timmy Turbo Tax Geithner, and Ben Helicopter Bernanke. They have point-by-point instruction via Mario Draghi (the X-Goldman associate) on how to print money ‘forever’ and hand it out to the banks. In lockstep, the individual European banks have gone to the ECB for a handout. The ECB is lending its member banks 3-year money at 0.75% (which they actually borrowed from our Federal Reserve). Where'd the Fed get it - thin air – just printed it! The ECB (with help from the International Monetary Fund) doles it out and we all party like it's 1999!

In years gone by, had the Federal Reserve done what they’re doing now – the investing world would have vapor locked, the markets would have crashed, corporate bonds would be paying 30% yields, and economic life (as we know it) would have come to a halt. But that was the ‘old days’, and it’s lucky for us that these new geniuses have it all figured out. According to them, we can print forever, debts don't matter, and there's economic bliss for everyone. The problem however is that this ‘really’ cannot last.

Does The Ben Bernanke and the boys ‘really’ think they're genius for discovering that if you print money out of thin air, you can perpetuate economic growth? Sorry that’s been done a thousand times. The only thing The Ben Bernanke has going for him is that because our money is now digital, he can press 9 buttons and create an instant one trillion dollar loan to the Treasury. But the problem is that this has never worked. Not for the Greeks, Romans, Thessalonians, Hasmoneans, Herodians, Weimar Germans, Zimbabweans and any other "ians" you can name. In each and every incident of money manipulation and abuse of the currency, the end result was first inflation, and then crushing deflation.

But, the time frame is what we need to put into perspective. While a small country like Zimbabwe can experience hyperinflation that will stagger your mind in just a couple years (my son actually has a genuine Ten trillion dollar Zimbabwe bill sitting on his desk), when dealing with larger civilizations, it takes decades for them to completely ruin themselves. The clock has been ticking since 1971 for the U.S. (when we went off the gold standard). We have put 40 years under our belt using a completely fiat currency. Since the US has been the single biggest economy of all time – it takes a long time to completely screw it up. We're going into year 4 since the Lehman blown up – yet where are we? Unemployment is rampant, housing still falling, and now Europe is blowing up. This is a slow motion train wreck, whose life expectancy is extended by The Ben Bernanke bucks. Rest assured, we will not break the most basic of economic rules. There has never been a "fiat" currency that has survived. The only other choice is just to pull the pin, let all the defaults happen, watch everything crash and start from scratch. That route won’t happen for two reasons: (a) it's very painful when it's happening and even the vaunted bankers who are in bed with the Feds and Politicians would have to crash and burn, and (b) there are never any guarantees that the people in power at the start of a wicked crash and burn are still in power on the rebound.

We all know that the Euro zone is in danger of breaking up. Greece is still destined to fail. They are going to run that digital printing press as fast and hard as it's processor will allow. For those of you who may think that gold and silver have already had their best days, you should reconsider that thinking.

Consider this, when I predicted that we’d invade Iraq – my reason was simple economics. Saddam was tired of the US dollar falling like a rock against the Euro, so he decided to change his central bank holdings from dollars to Euro's. He even said that he'd rather have Euro-states pay for his oil in Euro's. That right there sealed his fate. I stated at the time, that there was NO WAY the US was going to let petrol sell for anything but dollars. The fact is, the dollar is "backed" (if you will) by oil. We made a deal many years back with the Saudi's that we'd keep our oil off the market if they only sold oil in US dollars. It was the grandest "wink - nod" agreement ever. So, when Saddam went rogue his days were numbered.

Well back in December, Iran made a pact with Russia. When the US slapped the embargos on Iran, they said "Okay, we're going to talk to the other big dog on the street" and that was Russia. What they did, was agree to trade Iran Oil for Russian rubles. This is a massive slap in the face to the US, because we can't just go in and blow them up over not wanting to use dollars for oil any more, because they have Russian backing now. If you had any doubts about going to war with Iraq, erase them. We've been provoking them with everything we have, hoping they'll fire the first shot. Instead they did an end around, and buddied up with Russia. So you can bet the rhetoric against Iran will explode, and at some point, we'll be "going in". When it happens, be prepared for the 50+ dollar oil spike and gold will rise a bit on the "tension" side of things.

But how about the lies we were told less than 60 days ago: “Black Friday was the best in 10 years!” And now we find out that the retail numbers stink, company after company is lowering guidance, chipmakers say there's a global slowdown on everything from smart phones to Televisions, Jim Cramer has called a bottom in housing 4 times in 3 years – yet last week we learned applications to buy again fell like a rock. Oh, and one more item – of course QE3 is coming. In many ways it's already come, as there is absolutely no charter that states that our Fed can bail out Europe, but they just did. Likewise, because our numbers here in the states are just manufactured lies, another round of stimulus is coming. Just this past week they let 3 members of the Fed board run around the country suggesting they wouldn't be against more stimulus spending and more purchases of assets. I wouldn't be surprised at all if The Ben Bernanke comes out later in January and announces himself that they are working up the new plan.

The Market:
We are definitely "in January Effect" mode, but it’s going to be herky-jerky and fraught with pull downs as European news crosses the wires. Same shirt, different day. But right now – it is a proverbial day-trader’s market. For example: on Thursday, we had 8 open positions that we had initiated on various days since the start of the year. As they'd rise, we'd sell half positions, and let the other half ride. So, coming into Thursday these 8 were doing really well for us. Then the news hits on Friday am BEFORE THE OPEN of the market that S&P was going to downgrade a slew of European debt. Boom, our stocks fell like rocks – before the open – so there’s literally nothing you can do about it. Now, when the market was falling on that Euro news, was there any proof that it wouldn't be a 300-point down day? So as the market was falling 80 to 120 points, do you hold your short-term stuff, and "hope" this isn't the "big one" and you're going to lose all your profits? Don't let anyone ever tell you that you can look at a chart and know the answer – because you can’t! So you have to use your best judgment and risk management. We sold some half positions on really strong stuff, and held anything that didn't violate our stops – which were all set for “at entry” or higher.

I think that this current rally has more legs, but ONLY for a couple reasons. A lot of fund managers didn't make big numbers last year. In fact, almost 80% didn't do as well as the indexes themselves, so they are desperate for a good quarter, even if it's only one. Secondly, there's no question that with The Ben Bernanke's goons talking about more stimulus, we are probably getting close to QE3 here in the states. (Granted I guess it should be called QE4 because QE3 is the "interest rate twist" game they've put in place to get longer-term rates lower.) Thirdly, if a Republican takes the office, you know that The Ben Bernanke's days are numbered. Thus, he better do what ever it takes to put lipstick on this pig and keep the market up, because without Obama in the Whitehouse, The Ben Bernanke is going back to teaching perverted economic theory.

Depending on the size of QE3, it could propel the market up for a few weeks to several months, but it’s a fake rally. Just like QE1 took us from 6.6K to 12K, and then we faded. So did QE2 took us from 11k to almost 14K, and then we faded. Now that the interest rate twist isn't provoking more home buying, The Ben Bernanke is going to do QE3, and if it's big, we'll see all new market highs this year, before the wheels fall off. If QE3 is not big enough, we'll pop and drop, and likely trade sideways.

Tips:
So for all the Twitter followers – thanks – and to reinforce what we’re holding:
- UA at 75.69 (currently 77.36) – stop at 76.50,
- SPY at 124.08 (currently 129.24) – stop at 128
- STX at 18.61 (currently 19.56) – stop at entry,
- SE at 30.20 (currently 30.89) – stop at entry,
- GDXJ at 25.77 (currently 26.37) - stop at 25.90,
- STLD at 14.68 (currently 14.32) - stop at 14,
- FWLT at 20.00 (currently 20.96) – stop at entry,
- PFE at 21.91 (currently 21.81) - stop at 21.30
- GLD at 159.49, (currently 159.40) - AND
- SLV at 28 (currently 28.95)

This is a full-boat for us – so normally we won’t carry more than 8 stocks (outside of the GLD and SLV ETF’s). We’ll be very quick on the trigger next week in terms of sticking true to our stops.

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 - 1.8.2012

2012-01-08T09:34:00.000-08:00

This Week in Barons: 1-8-12:

I’m still Old enough to Remember, but not (yet) Old enough to Forget:

The market did something very interesting on Friday; it failed to respond to a mindless jobs report by roaring higher. That speaks volumes of what the investing public is doing. In terms of the numbers released this week:
- Friday’s jobs report said that 200,000 jobs were created in December, and I’m sure J. Q. Public said – ‘Wow, maybe my kids (or me) can find a job.’ Not so fast, because short-term delivery drivers and extra help at retailers accounted for 45k of those jobs. And subtracting off other seasonal variations - Trim Tabs reported that the jobs created number was actually 38k and not 200k.
- Thursday’s ADP ‘Unemployment’ report came in as a seasonally adjusted to 376k new unemployment claims files – but also the non-seasonally adjusted number was actually 525k (ugh)!

The interesting part of both of these reports is that Wall Street behaved rationally. That means that we’re going to need ‘spectacular’ news in order to move this market higher – because the real facts are beginning to get in the way of ‘fantasy’ – even on Wall Street. Some real facts from this week:
- American Eagle Outfitters - the teen apparel retailer – cut its Q4 guidance,
- HTC – the mobile phone maker – will cut its Q1 chip orders by 20% blaming slowing global demand for high-end smartphones,
- Nucor - a steel maker - announced that it was closing Nuconsteel due to faltering returns, and
- J.C. Penney and Gap slashed their Q4 outlook.

With real un-employment running around 15%, and under-employment running around 40% - I took a few minutes this morning to look at the job listings in Pittsburgh, PA. The results are potentially not shocking, but they are indeed depressing. I remember my old friends being hired (right out of high-school, no experience, 30 years ago) in my old hometown, for a manufacturing position – for $15 per hour. Within a couple of years they were making $21 per hour. In this morning’s paper there is an “Engineering Assistant” job listing:
- Requirements: Bachelors degree in Engineering
- Duties include: Complete familiarity with implementing process control techniques and procedures into manufacturing environments. Analyzing manufacturing process flows continually for the enhancements of quality, cost reduction, and throughput…
- Salary Range: $28,000 / Year

So 30 years ago a person could start with 0 experience for $29,640 / year, and today with a college degree, and experience that person is starting at $28,000 / year. And 30 years ago a Ford F150 cost $8,383, and today it costs upwards of $22,000. So prices on Ford F150’s have gone up 175% - while wages have gone down.

The bottom line of this particular rant is that in order for the markets to go higher this year (and potentially President Obama to be re-elected), we’re going to need to hear "better" news on all fronts. Therefore, please make your financial decisions by digging below the surface, do your own research, and stay safe.

The Market:
Between insider trading, the plunge patrol team, high frequency trading, dark pools, criminal Federal Reserve heads – I really sympathize with anyone trying to predict this market. Therefore when I saw the jobs numbers on Friday, I really did expect everyone to buy the market. Remember, on Jan 3, we closed the DOW right at 12,400 – the next trading day we closed at 12,418 – and the following day we closed at 12,415. That looks very much like a consolidation, ahead of the important (to be released) jobs number. Yet Friday, instead of using those numbers as a base to press higher, the market sagged and closed at 12,359. I don't think we can explain it away as a European problem, or not wanting to hold over the weekend – I think the market just ran out of gas – a.k.a. the buyers just didn't show up.

So does this mean that the “January Effect” is over? We still see some stocks making good chart patterns and pressing higher, but the fact is if the market (as a whole) rolls over, individual stocks will rarely be able to hold up on their own merits. Just like a rising tide lifts all boats, an ebb tide puts them all in the mud. This week we’ve seen stocks that run higher for a dollar, two, maybe three and then "bang" all the way down to where we bought them. So we are going to change our trading philosophy slightly. What we are doing now is going into a stock ‘fairly heavily’ and then selling ‘half-positions’ as it makes a decent gain – and then we exit the entire purchase where we bought it (if the stock drops to that point). We accomplish all of this electronically – naturally.

Now in the case of Gold and Silver, things are equally as bazaar. 80% more silver was purchased the first week of January 2012 than was purchased in January 2011. Now, how can demand for something rise 80% in a year, and yet the price not move up accordingly? It's easy, just ask J. P. Morgan. On Wednesday, the CFTC is going to hold a meeting to determine and clarify 3 rules in regards to “swap” trading (the type of trading in which J.P. Morgan specializes). But wait, the committee has decided that they first need to determine the meaning of "swap". So, they're going to hold a meeting to clarify such things as "Business conduct standards for swap dealers" this coming week, and then they will define the term "swap" in February.

The Gold pits are equally bazaar. Some central banks are clamoring to buy more, while others have sold some to raise desperately needed cash. In Asia, and in Europe, the amount of people buying gold is making new record highs every quarter. But the price is still depressed – why? By calling up your physical gold dealer you’ll find that they have very limited, shippable quantities on any significant buy order. You’ll find that the ability and price to obtain the physical product is indeed growing – which is good news for investors because at some point, imbalances do come to an end. I don't know when, but I think we're getting close. Currently there is tremendous pressure on the SEC and the CFTC to finally come clean and give us back a market that people can trust. They’re taking a long time so that the criminal banks (JPM) can cover their shorts and get properly in the shadows. But I do believe “swaps” and position limits will be defined, and at that time the silver market (in particular) will rise substantially.

I’m still leaning long but there’s no guarantee, so be careful out there. We are no more stable in January, than we were during the fall, so wicked 300-point days could become the norm again. Hold tight, its all going to be jolly fun!

Tips:
So right now we’re holding:
- UNH at 50 (currently 52.78),
- SPY at 124.08 (currently 127.90),
- EP at 25.72 (currently 26.14),
- SE at 30.20 (currently 30.45),
- GDXJ at 25.77 (currently 25.50) - stop at 25.0
- XOM at 86.00 (currently 85.18) - stop at 84.70
- PFE at 21.91 (currently 21.57) - stop at 21.30
- GLD at 159.49, (currently 156.87) - AND
- SLV at 28 (currently 27.96)

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 - 1-1-2012

2012-01-01T18:39:00.001-08:00

This Week in Barons: 1-1-12:

This Ain’t Your Father’s Market Anymore…

Today’s world is so vastly different from just a couple years ago – “This ain’t your father’s market anymore.” Right now, even the most disinterested of economic followers would tell you that Europe seems to be the big problem. But why is Europe in so much debt? It’s because they implemented socialist programs, that were never financially supported. When I was younger I remember seeing a nice car and saying: “I need to learn what to do, so that I can drive that type of car.” Never did I say: "Boy those people shouldn't have such nice things, they should sell all that and give the money to everyone else". I’m wondering - has the American “dream” become the American “entitlement” state?

Remember those ‘Occupy Wall Street’ (OWS) protestors – and their ‘transformational’ placard: “Everything for Everybody.” Well somewhere along the line some basic concepts were missed – and I’d like to thank one of our readers for reminding me of them:
#1 Life isn't fair. The concept of justice - that everyone should be treated fairly - is a worthy and worthwhile moral imperative, but justice and economic equality are not the same. Or, as Mick Jagger said, "You can't always get what you want." No matter how you try to "level the playing field," some people have better luck, skills, talents or connections that land them in better places. Some also seem to have all the advantages in life but squander them. And others play the modest hand they're dealt and make up the difference in hard work and perseverance. Is it fair – that’s a stupid question?
#2 Nothing is "Free." Protesting with signs that seek "Free" college degrees and "Free" health care make protestors look like idiots, because colleges and hospitals don't operate on rainbows and sunshine. The 53 percent of taxpaying Americans owe you neither a college degree nor an annual physical. There are other things that are not free: overtime for workers, trash hauling, repairs to property, and the food that magically appears on tables. Real people with real jobs earning real dollars are underwriting the OWS temper tantrum.
#3 Your word is your bond. When I see demonstrators advocating eliminating student loans debts, I wonder if they realize that they are advocating precisely the lack of integrity that they decry in others. Loans are made based on solemn promises to repay them. No one forces you to borrow money; you are free to choose educational pursuits that don't require loans, or to seek technical or vocational training that allows you to support yourself and your ongoing educational goals. Also (for the record) being a college student is not a state of victimization. It's a privilege that billions of young people around the globe would die for - literally.
#4 A protest is NOT a party. The issue with OWS protestors is that it’s clear – most are doing it for attention and fun. Serious people in a sober pursuit of social and political change don't dance jigs down streets. Please understand your actions cause your pursuit (as noble as it may be) is being viewed as irrelevant to all that are seeing you.
#5 Finally – there are reasons you haven’t found jobs! The truth? Your tattooed necks, gauged ears, facial piercings and dirty dreadlocks are scary and off-putting. Nonconformity for the sake of nonconformity isn't a virtue. Occupy Reality: Only 4 percent of college graduates are out of work! And if you are among that 4 percent, find a mirror and face the problem. It's not them – It’s YOU!

Now consider what's happening in Europe right now as things have disintegrated to the point of no return. The current push is for all the countries involved - to give up their sovereign rights, and hand them over to a group of technocrats in Brussels. These technocrats will then tell the countries what budgets they can run, and how to form their economic policy. Can that be any clearer? The countries actually will need to give up control of themselves – so that a ‘new world order’ could govern them appropriately – Really?

I remember in 1966 Alan Greenspan writing: “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.”

So, we look back on 2011 and see things never seen in history.
- The Manipulation of Markets. Everyone from Jimmy Rogers to Marc Faber has declared that we do NOT have free markets. As MF Global literally ‘looses’ people’s money – John Corsine (the CEO) serves no jail time.
- We’ve had volatility this year, as never seen before. We had 40 - 90% days this year. That means that there were 40 days when 90% of all the trades and all the volume was to one side, whether up or down. Now from 1996 to 2006, there were only 28 of those sorts of days total - about 3 a year. In 2011 we had 40 such days!

OK in 2012 we know that the world’s economies are on the ropes, and there are only TWO ways out:
- Outright default, where everyone just writes off their debts, the economies implode for a period, and then everyone rebuilds from the ashes. Now once everyone defaults, the first thing to do is to print money in order to rebuild.
- Secondly, the economies can print money as fast as they can in order to paper over the troubles, and put off the pain of default. That always brings the inflation problem.
- The bottom line is that in either situation, whether they print now, or print after default, a "whole lot of money" is going to be created.

2012 is set to go down as one of the most fascinating years in American history. We have an election and our own fiscal nightmare to take care of. Will the billions that our Fed printed and sent to Europe stave off the liquidity problem at the banking level? After all our FED gave 523 banks over half a trillion dollars at basically 1%. These same banks can take that money and buy Italian bonds paying 7%. Italy will then benefit because they won't have to default. The bankers will benefit by getting 6% for "free", and if they leverage that and loan it out, they could light an economic fire. The question is: Will the bankers loan out the money – that is the big question?

The Market
So in 2012 if you can't just park your money in the market, where can it go? Housing? Nope - as much as they've called a bottom in housing about 30 times, housing continues to fall, and foreclosures still mount. In our world, the only thing that still makes sense is short term trading the market, and buying physical gold and silver.

Now I know that many of you are upset over gold’s plunge. At the beginning of 2011 we said that gold would go from $1,200 to $1,600 per ounce – and we got very close at $1,560. But the interesting part of this story is that currently there is a disconnect between the price of the traded element, and the price of the physical element itself. In fact, many places won't honor the spot price of gold, because the physical metal is selling for much more than the paper. Remember, there has never been a time in the world’s existence that the price of gold EVER went to zero – you can’t say that about any other fiat currency!

The stock market itself (as you all know) doesn’t belong at these levels, yet it could go higher with all this funny money. Then again if we cause a war in Iran that pushes oil over $200 per barrel – then we could easily see the DOW at sub 8k levels overnight. But one thing is certain, and that is you can't just "set it and forget it".
- You have to trade this market, or be out of it.
- This year we are going to see more volatility, and more insanity.
- If you can't be nimble, you'd be better off staying away.

In the short term, we are now in January, and "often" we get the January effect. This is when fund managers get their "new year pension money" and plough it into the market. Usually they focus on two places:
- They put a lot in the stocks that worked well in the year before,
- And they put "some" in stocks that have been clobbered to death, looking for a strong rebound.

Will we see a January effect – we should but it’s not written in stone. Even though this year brings major challenges, let me wish you a great new year. Don't forget gold and silver. Yes they're down – they’re supposed to be down, and they'll be back. Keep an eye on your personal safety, and remain aware of your surroundings. Crime is on the rise and will continue in that direction.

Tips:

So right now we’re holding:
- UNH at 50 (currently 50.81),
- SPY at 124.08 (currently 125.43),
- EP at 25.72 (currently 26.85),
- SE at 30.20 (currently 30.75),
- JCP at 34.05 (currently 35.15),
- HEK at 6.51 (currently 6.64),
- GLD at 159.49, now @ 152 - AND
- SLV at 28, now @ 27.07

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 - 12-25-11

2011-12-25T09:19:00.001-08:00

This Week in Barons: 12-25-11:

‘I Heard the Bells (of the Cash Register) on Christmas Day…’

Wall Street loves Santa Claus, but Santa has been very elusive this year. The Ben Bernanke, knowing that he's going to have to juice Europe to keep them from collapse, has been stubborn about giving away free money. So, let's just examine why we gained those 300+ points this past week. Not long ago the ECB (European Central Bank), with help from our Federal Reserve, told the Euro region that they'd lend banks all the money they need, at about 1%, for the next 3 years. Now everyone knew that a lot of European banks needed this kind of infusion, and we thought that about 250 banks would come calling. Well, when the lending window opened and 523 banks lined up to borrow $645 Billion we were all taken by surprise and the markets rejoiced. But why would the markets be so happy to see all those banks needing so much help? Well, what’s really needed is that Spain, Italy and the other PIIGS be able to sell bonds, so they don't go broke. And because of their legal charter, the ECB cannot directly lend to countries. So what better than to have the banks borrow all the money, and then have the BANKS lend to the countries by buying up all the sovereign bonds. That way the banks get income, and the countries get their badly needed liquidity. Now, my guess is that ‘NONE’ of this was a loan but rather it was all ‘free money’. This effort saved the banks, and it might just kick the sovereign debt problem down the road a bit. It might let the banks be a little bit more footloose with lending, since they know that if they lend out the money they got at 1% for say 5%, they'll make a sweet profit, and if no one pays them back – what the heck the FED will give them more.

Anyway – as we stroll around the world – not much has changed – we see:
- The Bank of Japan lowering its outlook for the economy for the second month in a row, saying that the pick-up in activity has paused, and that there are spillover risks from the U.S. and the Eurozone. Data released earlier showed Japan's exports fell 4.5% in November from a year earlier, the second consecutive month of declines.
- Gas costs have risen dramatically for consumers. Although pump prices have been falling, consumers have spent more money than ever on gasoline this year. Based on recent demand trends, consumers will have spent $481B on gas in 2011 vs. $389B last year. Therefore, each U.S. household will have spent an average of $4,155 on gasoline, 8.4% of an average family's annual income.
- The November Existing Home Sales shows contract failures at an alarming rate. 33% of National Association of Realtor members report seeing a cancellation caused by a declined mortgage application contract last month, compared to only 9% a year ago.

The Market:
The market had that huge up day this week. The right people were told that the ECB was going to push half a trillion dollars into the Euro zone. We gapped open in the morning – so that the only people that could take advantage of the entire move were Senators, and naturally Goldman Sachs. The rest of the week was spent verifying that we could stay at these levels for at least the short term. I think they'll add a bit more to the pot early this week, then it might tail off some. We should get a "January effect" heading into the new year, where pension and fund managers dump their new year money into the best performers of the previous year, looking to get a nice fat first quarter gain.

I'm going to wrap this up with a holiday wish – and truly wish you all the very best. Merry Christmas to all – and to ALL a Good Night!

Tips:
2011 was an interesting year indeed. I always like to review and compare our results with others – mostly in order to learn. It appears that we’re going to end up the year up around 24%. The famed John Paulson is off a wicked 30% as we close out the year. The major difference here is that Paulson buys and holds for months at a time, and this year our timeframe was often days. In any event it's not going to get easier in 2012. The over riding debt issues remain. The European crisis is still there, not to mention: North Korea, Iran, and the Presidential race. There will be no shortage of volatility in 2012.

This week we bought the SPY which is the proxy for the S&P 500. We also purchased United Healthcare (UNH), J.C. Penny (JCP) and a handful of others (see below), which are doing well for us considering we bought them this past week. But there's going to be some others to consider as we move into the year-end and January.

So right now we’re holding:
- UNH at 50 (currently 51.35),
- SPY at 124.08 (currently 126.59),
- EP at 25.72 (currently 26.01),
- SE at 30.20 (currently 30.87),
- JCP at 34.05 (currently 35.67),
- HEK at 6.51 (currently 6.95),
- GLD at 159.49, now @ 156.19 - AND
- SLV at 28, now @ 28.30

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 - 12-18-11

2011-12-18T13:47:00.000-08:00

This Week in Barons: 12-18-11:

‘Twas the Week Before Christmas – and We’re Up 23% on the Year…

For the most part Europe is "Closed", and that seems to have left a vacuum of topics to chat about – yes? Hardly. Believe me when I say, things are not rosy here in the U.S. as Morgan Stanley just announced 1,600 job cuts. The leading business school candidates are now seeking employment outside the banking sector. And leading Hedge Funds owned by such notables as Paulson and Tilson are down hard for the year. Part of the reason gold took such a wicked pounding last week, was that Paulson sold millions of shares (rumored 11M) of the GLD to raise cash for all the people that wanted out of his fund. Why, because his fund is down 28% for the year! Whitney Tilson is down 25% for the year, and hundreds of hedge funds are rumored to be in the process of closing. Fortunately, our trading account is still up over 23% for the year, which is not spectacular (by our measure), but certainly not as bad as some of these "Headline Stars". One of the benefits of being a "small player" is that you can be nimble. And with a market that has seen more up and down chop this year than any year in history – the investors that couldn't be 'nimble" got killed.

The ONLY thing I'm willing to be invested in long term is gold, silver and a few related mining stocks. Until this global train wreck is complete, I don't trust anything in the market. For example: look at MF Global. Even if you owned NOTHING, and your money was sitting in CASH in the fund, the crooks stole it – invested it in Europe – and now they can’t find it!

Currently, we own a significant amount of gold, and a decent amount of silver. Some will ask: “When do you stop buying?” My self-imposed "top" for gold is going to be in the $2,000 to $2,200 range. When gold gets to that $2,200 level I will stop purchasing gold and continue to purchase silver. In many respects, silver is a better supply and demand story than gold. I believe that in the years to come, silver will see $80 to $100 dollars an ounce. So at $30 currently – silver has a real chance of rising 200%, vs gold @ $2,000 can’t give me those kinds of returns. The other question is: “When do I sell?” My answer is always the same: “When you need money.” Gold and silver are nothing more than savings accounts, but instead of putting in dollars, you put in metal coins. So when it’s time for college, or a house, or retirement you tap into your savings account. The other "time" we will be selling is when the end game of our US dollar is complete and we have either: crashed, been replaced by something new, OR defaulted. In other words, gold is the insurance policy against all the ills we see. And when the world presses the ‘reset’ button – we will want to be able to buy those new dollars.

People also ask: “What about the mining stocks?” Well, the mining stocks are indeed more risky. The miners dig the precious metals out of the ground. If you have good product coming out, and you can keep your costs of extraction low, then you are making a fortune. A lot of the miners are operating on costs that made them a profit with gold at $700, so imagine how much they're making with gold at $1,600? Yet as stocks go – they’ve truly stunk out loud – why? (1) Unstable foreign governments make mining the precious metals harder each year. (2) Environmental pushbacks against mining get tougher year in and year out. And (3) the over riding reason is that when markets are in a panic, they look at the miners as "stocks" first and a back door to the metal second. So when the market is plunging for 1,000 points nobody sits and says: "I should keep the miners because they have the gold!" No, they dump them and ask questions later. There are 13 "significant mining" stocks that pay dividends. Yet the single highest return is from NEM at about $1.40 annually (which is 2.3%), and then comes FCX at just $1.00 annually, (2.7%). Now, if those miners were paying 5% or 6% - then people would hesitate to dump them, their shares would soar and even a market melt down wouldn't kill them. Therefore, the miners will continue to be volatile and relatively driven by the overall market. I do think that as a whole they've been sold off too much and the GDXJ appears to be a nice buy, but the fact is I still only “trade” the miners and not "invest" in them for the long haul.

Having said that, if you had invested $10,000 in the basket of the 13 big miners that pay dividends in the year 2000 (AEM, AU, ABX, BVN, FCX, GG, GFI, HMY, KGC, NEM and RGLD) – you would now have an investment worth $94,000 – a 22% annualized return. However, you would have had to sit through a period from late 2007 to mid 2008 where their value crashed from $96,000 to just $34,980 along with the rest of the market.

In terms of the U.S. economy: in years gone by you would let an economy go through the death throes, default, and have investors run in and pick up the good stuff, toss out the bad stuff and "start over". But things are different now. The world is intertwined like never before, and we are all witness to a global reset. If it was "just" Europe, or “just” the UK, or “just” the US – that was bankrupt we'd be ok. But it's everyone from Japan, to most of Europe, to the UK including Ireland, and the US that are mired in crushing debt, and slowing economies – all caused by the global housing bubble. And even China is facing something they will not admit – their economy is on the ropes.

It's my opinion that we're in a slow motion train wreck. And between now and the ‘global reset’ we're completely dependent on The Ben Bernanke's printing press. If he prints a few trillion, the markets soar, and countries function. If he doesn't print enough, the markets fall, and America implodes. I believe we're going to see the DOW below 6,600 in our future. I believe the world will mire in a dark depression for a few years. The “when” is a little fuzzy because countries can keep playing "kick the can" by printing more money. But like all games, scams, and schemes, they come to an end when the system can no longer support them. My guess is that point is in late 2012 and into 2013.

So, if/when the Fed does another round of mega stimulus to save Europe and the US, we will get a giant pop out of it – possibly propelling us up and into the DOW 15,000 range. But then it would be lights out, because there could be no more mega stimulus, due to inflation being greater than 15%. If we don’t get the mega stimulus, then things continue to break down – a little here and there – with ultimately the big swoon coming in. In either case having some gold and silver lying around should get you through it all just fine.

The Market:
It's the last call – 9 trading days left until the end of the year. Everyone’s trying to drum up some excitement and get the market higher, but it's a massive struggle. Without The Ben Bernanke’s money, there is more money flowing out of stock funds than into them. On Friday we didn't hold the early gains, but we ended the day statistically flat. I suspect they're going to try and move us up Monday thru Wednesday, and then get flat on Thursday and Friday.

One thing we will have to worry about is the tax selling that's going on behind the scenes. Hedge funds will be dumping things that can create a tax advantage against their winners, and sometimes that gets a bit too "out of hand". Then of course what we often see is the "January Effect". The “January Effect” is when the pension funds come into the New Year with fresh deposits, looking to jump into last year’s winners. That gives the first quarter a good shot at looking decent. Now, factually over 70% of the time the “January Effect” has worked in moving the market higher.

We'll be trying to lean on the long side into the week, but we are definitely going to have to take profits quickly. Although it's possible we could roll over and fall from here, it would be fairly unusual in a historical sense. I tend to think we have one more shot at higher, and then we're going to see some roll over pain. Then with a bit of luck, we'll use the “January Effect” to ride that home.

Tips:
For those of you following me on Twitter – we sold out of the banks last week, MS, BAC and Goldman Sachs (GS) – with a nice profit – and are fairly slim right now.

Currently we have:
- GLD at 159.49 – now at 155.49,
- SLV at 28.00 – now at 28.85, (bought more last week).

A shout out to Jim T for noticing that the Divergence between (lower) Labor Compensation and (higher) Corporate Profits is at its highest point in over 40 years. Think that’s leading to any discontent?

A shout out to John for pointing out the chart breakdown in the Gold sector – and the easiest path going forward for the market could be ‘down’ – especially after the early part of January. Absent printing, the deflationary risk will cause The FED to add liquidity to make up for the contraction in the private sector and that will ignite the next phase in the gold run. This could (however) take a couple of quarters – but could be just in time for the November election.

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 - 12-11-11

2011-12-11T09:41:00.001-08:00

This Week in Barons: 12-11-11:

The Euro – Arranging the Deck Chairs on the Titanic
Many people think that the European Union was some form of agreement to get all the countries able to do commerce more easily, instead of having 17 different types of currency and 17 different interest rates. And at 50,000 feet that sales pitch sounds very much believable. But what if their founding was really all about safety. In the U.S. we’ve never been invaded by Hitler, seen millions die in trenches, and before that had England, Spain and France lobbing musket and cannon balls at each other. After centuries of war Europeans wanted an ever-lasting peace. The difficulty here is taking 17 "cultures", and melding them into one interest rate/one currency/one work ideal. For example: Germany is full of hard working people, enormous exports, tremendous precision and quality. While Greece is socialist to the extent that people vacation more than work, exporting very little, and living off the government. Time has proven that these two cannot function under one economic rule. As one can imagine the German people are none too fond of having to adjust their work lives, and their savings habits to bail out the ‘Club Med’ folks. But, there is indeed a plot to figure out this nightmare, and to do so we need to go back to 2008 in the U.S. to figure it out.

In 2008, the U.S. had a housing "Ponzi scheme" the likes of which the world has never seen: from politicians that had plans to get every person in a house, to greedy bankers that sold fraudulent mortgage backed securities (MBS's) around the world, to a credit explosion that ‘financially’ interconnected everyone.
So, while the politicians played to the masses of people with declining wages, and created the "bubble", you know that behind the scenes The Ben Bernanke, Paulson, Geithner and the rest of the Goldman Sachs alumni said: "Don't worry about it. Make the loans; take in the fees. It won't be evident for several years that it's a massive nightmare. Then package all of it up, and make more fees selling the Mortgage Backed Securities to all the pension funds around the world. You'll take in more billions in fees". And then someone asked: "But what happens when they're all found to be junk?" To which the reply had to be, "That's not a problem – the U.S. Federal Reserve will make sure all the major banking institutions that buy this stuff, will be made whole". Then they asked: “Can we really make Europe whole?” The answer: “Legally no, but in reality – you bet!” The rest is history and for the longest time I was wondering why none of the European Banks were screaming lawsuit? Well recently (via the Freedom of Information act, along with several lawsuits from Bloomberg) we found that the Federal Reserve had lent/given European institutions some $16 TRILLION. And when Congress asked The Ben Bernanke, where's the money? He replied. "I don't know". The same response John Corzine gave last week when asked about the missing $1.2B from MF Global!

Okay, now we fast-forward to Greece going under, and 5 other countries very close indeed to declaring insolvency. Now the ECB of Europe is often thought of as Europe's Central bank and in some function it is. But the ECB is legally not allowed to lend to any Government. And all totaled – countries needed over $6 TRILLION to stop the bleeding. Who has $6 TRILLION – enter Timothy Geithner from the U.S. But one of the caveats of this lender (and one of the articles of the ESM) is that a "Committee" of 8 Government regulators, and 17 "Board Members" be formed. These 25 people will have TOTAL control of all the member countries budgets, austerity rules, margins, rates, ratios - you name it. Now where it gets interesting is that the heads of ALL of these banks, and Governments are Goldman Sachs employees, advisors, or X-Goldman Alumni! Just a coincidence? I think not!

So here is how I think this will all play out. The ECB will stand firm against lending to the individual countries and randomly printing money. The insolvent countries need that money desperately, and will be forced to join the ESM (controlling ‘board’ etc.). When everyone is then "under the umbrella" of central command, the money will flow. But if it’s illegal for the ECB to lend money, where’s the money coming from? The money will come from the U.S. Federal Reserve. They will do what they perfected in the housing bubble years, which is to get money, attach fees to it, and lend, lend, and lend to all the sovereigns. And they’ll funnel it through Goldman to ‘Get Er Done’! So the bankers are in line to make ‘Billions’ providing the money those countries need. And who’s on the hook for it: The U.S. taxpayer!

The Market:
Because of Europe, our market has been an up and down mess. Without the huge "bazooka" of money, the bankers don't get all those great fees, nor do they get to go speculate in the markets and drive prices higher. But the bazooka is coming, they just have to get it all set up. When everyone is "on board", the money will indeed flow. Because the money spigot isn't currently on full blast, the market has had a hard time driving itself higher – for example: up days still come on lower volume than the down days. Too many fund managers, desperate for performance want with all their might to just buy-buy-buy, but they still worry that something in Europe will beat them up again. They've been through it too many times. But I tend to think that they're going to try one more time to push this market over the resistance line of DOW 12,200. If it makes it (and I believe it will) we should have one last hurrah run that takes us close to Christmas and nearly challenging the 12,600 level.

Now (don't get me wrong), we don't deserve a rally. Just this week, Cargill a huge private company with it's roots in lots of businesses, said that sales were slowing quickly. DuPont, Corning and the chip sector all warned that they wouldn’t make their yearly numbers. The true economic news is terrible. This week we heard that initial jobless claims fell to 381K. Well, those are "seasonally adjusted" numbers, and without the adjustment the initial claims soared by 120K to over 500K. But yet again, fundamentals mean nothing, because it’s all about free money. The Fund Managers "need" a decent market for year-end bonuses, and they don't have much time left to make it happen. So, if we get through 12,200 and close above that for 2 sessions, it's my guess we run wild for a while.
Oh, one last note, when the money spigot is opened for Europe, both gold and silver will make their next move higher.

Tips:
For those of you following me on Twitter – you know that I purchased more Gold and Silver last week.

Currently we have:
- GLD at 159.49 – now at 166.55, (bought more last week),
- SLV at 28.00 – now at 31.37, (bought more last week),
- MS (Morgan Stanley) at 15.08 – now at 16.4 – my sell stop is 15.5
- BAC (Bank of America) at 5.31 – now at 5.75 – my sell stop is 5.31
- GS (Goldman Sachs) at 92.1 – now at 101.70 – my sell stop is 96
- MGN (Mines Management) at 2.33 – now at 2.47 – my sell stop is 2.40

With the U.S. backstopping Europe, it means we will be printing more money. That means inflation, and that means Gold will rise both on the idea of an inflation hedge, and as an alternative currency. Silver will rise on the inflation hedge, and the ever-continuing global demand for it both as an investment and for industry. Frankly they're both seriously in play and will be until the Fat lady sings – and she’s not even in the dressing room!

We’re still looking at the junior minors, but the only one we pulled the trigger on as of yet is MGN.

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 - 12-4-11

2011-12-04T03:26:00.001-08:00

This Week in Barons: 12–4-11:

“Deception is indeed nothing else but a lie reduced to practice”… Robert Southey.

Although Greed has been with us since the beginning of time, never in history has it been able to flourish as well as in the digital age. When greed pushes the envelope and becomes fraud, manipulation, and outright theft – that’s when we’ve crossed the line. This week we learned that Former Goldman head, former MF Global head, and former Treasury Secretary - Henry Paulson told certain hedge fund managers of the situations that would come about for Fannie and Freddie – giving them an obvious competitive and ‘insider’ advantage. Then of course we have John Corzine, who took over MF Global and somehow ended up stealing about $1.5 billion dollars from investors without so much as an SEC eyebrow being raised, or even an investigation. When you're that connected at the top, you live by different rules. So let’s examine a list of recent Goldman Alumni:
- Henry Paulson
- Tim Geithner
- Neil Kashkari
- Robert Rubin
- Joshua B. Bolten, a former Goldman executive, was President Bush's chief of staff
- Stephen Friedman, a former chairman of Goldman, was chairman of the New York Fed.
- Edward M. Liddy, a Goldman director, in charge of A.I.G
- Dan Jester, a former strategic officer for Goldman who has been involved in most of Treasury's recent initiatives, especially the government takeover of the mortgage giants Fannie Mae and Freddie Mac
- Steve Shafran, friend of Mr. Paulson in the 1990’s while working in Goldman's private equity business in Asia. Initially focused on student loan problems, Mr. Shafran quickly became involved in Treasury's initiative to guarantee money market funds, among other things
- Mario Monte, a Goldman Senior Advisor – now the Italian Prime Minister
- Peter Sutherland, Director of Goldman International – now the former Ireland Attorney General
- Mario Draghi, Senior Director of Goldman International – now the new head of the European Central Bank
- Lucas Papadamos, X-Goldman Advisor – now Greece’s Prime Minister
- Otmar Isseng, Goldman Advisor – now Board member of the ECB and Bundesbanc

I don’t think I need to go on. So which government around the globe does Goldman Sachs not influence? So this week (out of the clear blue) our Federal Reserve announced that it was going to join up with a handful of Central Banks and supply the European bankers with all the money they need to continue to function. The excuse is always the same, “If they allow the banks to fail the whole system would fall.” In reality they could systematically take over the worst banks, default the bond owners, sell off the good assets to stronger banks, and move on to the next one. One by one they could clean up the system that way. But the point here is that the “Bankster” Brotherhood is stronger than the Mafia. They protect each other, and the unwritten rule is that no major bank suffers! This latest Fed Announcement will NOT solve the European issue, just as much as printing more money will NOT get us all out of debt. But, by giving the backstop to the European banks, it let's hedge funds, mutual fund managers and everyone else toss money at the market, because there's no longer any fear of waking up tomorrow to find out that another "Lehman" had occurred. And that is why we had the 500-point up day. Unfortunately, this does nothing for the taxpayer; it does nothing to resolve the debt issues; it does nothing to strengthen the economy; and it causes inflation.

Greed has reached astronomical levels. Here in the "digital" age, news moves in micro-seconds - adapt to it or give your investments to a Goldman trader!

If you’re in the market for a laugh – here’s this submitted by JT: http://www.youtube.com/watch?v=bdob6QRLRJU&feature=player_embedded

The Market:
We had a hunch that there would be some form of plan in place before Dec 7th, when most of Europe will start to shut down for the holidays. So we purchased those 1 week Call Options on the S&P last week – and when the news hit that the Fed was going to backstop the world – we were nicely rewarded.

Our first inclination was to try and grab some banks. We took Goldman Sachs (GS) at 92, it ran to 102 in two days. We grabbed some of that insolvent Banc of America, and it ran up as well. Also, knowing that the Feds announcement really meant "let’s start up the printing presses", we thought that the materials would run so we took ANR (Alpha Natural Resources) at 21, and it’s now around 25.

So the real question is: Will this last? My thinking is that YES it will. It won't be a straight line and there will be news blurbs that smack us around a bit, but overall I think the market ends the year higher than it is now – strictly because of GREED.

The average fund manager is nursing over 100 stocks in his portfolio, but the whole darned thing is down 1% on the year. You have everyone screaming for “Alpha” – meaning positive returns! You have people calling and asking why you are DOWN for the year? Now it's December, and you have a month to try and make some money or miss a bonus, and possibly get fired. So you’ll look at the Fed Announcement and figure that the "really bad risk" is gone, and I think that you’re going to go “All In".

A lot of fund managers are now looking to "chase performance", and their greed and their desire to have a job come January might push them to take all the risk they can. Naturally the Fed wants the market up, because everyone including Ron Paul is talking about how the Fed is an illegal band of ‘Bankster’ Brothers and should be disbanded. So the market being up may get the critics off their backs temporarily. Then we have the whole Obama thing. This is the last Christmas before he either gets re-elected or booted out of office. Don't you think people would feel better about the man if the stock market rallied into the Holidays?

So, we have:
- December being a historically strong period for the market,
- The fear of European bank default being removed,
- Fund Managers desperate for performance,
- A Fed that would enjoy a rising market, and
- A White House trying to preach how great they've been - that could also use a higher market.

That's a lot of firepower that "suggests" that yes this should keep going. Honestly, if everything was going to align for a year end run – this is about the best alignment we're going to get. We're leaning long, and heartened by the fact that after the 500-point up day we didn't give half of it back – and we didn't rally again. We just "hovered" and digested that gain. That's a pretty good sign that they're willing to hold us up. So, we've made some great money already, and we think there's more to come.

Tips:
Remember – we did gamble on the December SPY Calls early last week and were rewarded handsomely! For those of you following me on Twitter – you know that we have somewhat of a full basket right now:

We have:
- GLD at 157.49 – now at 169.85, (I’ll be buying even more this week),
- SLV at 28.00 – now at 31.73, (still buying),
- MS (Morgan Stanley) at 15.08 – now at 15.52
- X (U.S. Steel) at 27.87 - flat
- RVBD (Riverbed Tech) at 26 - flat
- BAC (Bank of America) at 5.31 – now at 5.64
- GS (Goldman Sachs) at 92.1 – now at 97.20
- ANR (Alpha Natural Resources) at 21.25 – now at 24.05

What about Silver and Gold? If there is one thing the Fed announcement makes clear is that they're going to print dollars. That means inflation, and that means Gold will rise both on the idea of an inflation hedge, and as an alternative currency. Silver will rise on the inflation hedge, and the ever-continuing global demand for it both as an investment and for industry. Frankly they're both seriously in play and will be until the Fat lady sings – and she’s not even in the dressing room!

With that in mind, we're beginning to look at the mining stocks again. A few months back we made some awfully nice returns in them, and it's looking like several are setting up to do it again. One in particular that is interesting that DS brought up is: MGN – at its current price of $2.33 – be careful – but it’s definitely in the hunt.

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 - 11-27-11

2011-11-27T05:51:00.001-08:00

This Week in Barons: 11–27-11:

What Happens in Europe – Doesn’t Stay in Europe!

Europe isn’t Vegas – Europe is Toast! You might not know it yet, but you will want to care about what's happening in Europe. Why - because what happens in Europe – is NOT going to stay in Europe. It is going to come here, and YOU are going to get hit with it. Most analysts are going to tell you that Europe will have a plan, but they won’t. Not in any normal sense anyway. There are 6 desperately broken countries that need from $8 to $30 trillion to be made solvent again. No one has that kind of money, and frankly Germany (who has worked hard, saved, not run up debts) is being asked to shoulder the load and a) they can't, and b) they shouldn't. All the machinations we are seeing, all the plans to make plans, all the EFSF's and ECB's are just smokescreens to buy time. The only answer that seems to make sense is that the ‘broken countries’ will leave the EU, go back to their own currencies, default, get their act completely together and then attempt to rejoin the Euro. Will this actually happen - probably not. Instead, we'll probably see a push to continue bailouts with money no one has, until it all collapses.

In any event, the issue here is this that we ARE exposed to Europe. Not only will the top 4 economies of the world be forced into serious slowdowns by European austerity and lower GDP levels, but every nation from the U.S. to China, to Russia, to Brazil has a monetary stake in the banking system there. In our case, the estimates are that U.S. banks have at least $650 Billion in credit default exposure. Do any of our banks have $650 Billion to spare – nope! Some have pushed off parts of their exposure to other insurance companies, and those companies are in no better shape to withstand demand for payment than the banks are.

So, while people rush the stores in their desire to shop till they drop, few are aware of the fact that we face a situation that is virtually 4 times worse than the Lehman Brothers debacle, and the economic contraction we had in 2008. There is no magic bullet to fix this mess. We are in a slow motion train wreck. Let's (for a minute) take the alternate look. Let's just suppose that incredible austerity, along with timed bailouts from the IMF (International Monetary Fund) all work. Well along with austerity come less credit and less spending, and when one of the largest economies of the world (Europe) has to cut back on "buying stuff", it leads other countries (China, the U.S., and the BRICS) to cut back as well. Thus we have a global synchronized recession or depression on our hands. So if the Euro zone comes apart (probable) there will be huge fall out, and we will feel it here for certain. If the Euro zone holds together but has to cut back economic activity, we are going to feel it via recession or depression.

What do we do about it? Save money, stay out of debt, and own physical gold and silver. There’s a reason why gold has appreciated over 20% this year! In the past few weeks gold and silver have sold off. Some of that is because big time funds that were getting redemption calls had to raise cash. If all your equities are underwater, but you're up $500 an ounce on your gold and you have 10,000 ounces - you sell some gold to stave off the redemption calls. Well, this has some people worried. Gold has fallen from $1,850 to $1,650 recently and that has the usual bevy of anti-gold folks laughing and calling for ‘bubbles.’ What they forget is that for the past 10 years gold has been the best performing asset. And at a price of $1,850 it’s up 27% year to date, and at $1,650 it’s still up 20%!

Silver is just $30 an ounce. You can buy 10 ounces of it for what a family spends going to a football game. As fiat currencies continue to melt down, as the Euro zone dissolves, as we are forced to endure another round of QE (Quantitative Easing), and probably bail outs – no other investment makes sense?

This Christmas, do something that 90% of your neighbors won't. Give your children and your friends some silver dollars as gifts. In a few years when other gifts are out of date, those silver dollars will be worth twice what you paid.

The Market:
The market just went through its worst Thanksgiving Week since 1973, and the worst in percentage terms since 1932. This was all out selling. Some of it was panic over Europe, some of it was panic over MF Global, some of it was because of the Credit downgrades of Portugal, Hungary and Spain, and some of it was "raising cash" to fend off the redemption and margin calls. But it was ugly!
It was especially ugly because 70% of the time the market goes up during Thanksgiving week. The market usually starts heading higher in October, giving us the year-end rally – but so far, not this year. Now, I’m the guy calling for the breakdown of the Euro. I'm the guy who thinks we’re "doomed" economically. Yet I’m also NOT wholesale short this past week. Why, because I also know that we're just one announcement away from QE3.

In 2009, The Ben Bernanke unleashed QE1 (Quantitative Easing 1). We went from DOW 6,600 to over 12,000. So if you shorted at that point, you were crushed. When the market softened up again, The Ben Bernanke came out with QE2, and we put in highs of almost 13,000. Again, if you were short ahead of it, you were hurt very badly. Now with the economy slack, employment soggy, and the market in turmoil – we’re awfully close to hearing of QE3. And that’s what keeps a lot of short sellers out of the market.

QE3 will NOT solve anything, and (like Europe) it kicks the can down the road, but it will create a market run that pushes the market to all time new highs – all on printed money. Heading into December, there must be a last ditch effort to put on a good show, or a lot of fund managers are NOT going to get the holiday bonuses they want. And if they don't muster up some form of rally soon, you can consider that proof positive of just how ugly things really are out there. I'm looking toward leaning long into any late rally if it comes. But if we do get a ‘Santa Claus’ rally, and once it has some distance on it, we're going to start looking at long term put options for the inevitable market fall.

On Friday the market did it’s best to put on a brave show ahead of a weekend, and yes we ended the day red – but only by a few points. In many ways that could have signaled that the selling is over for a while. Nothing goes straight down, and we've been going down a lot of that lately. So, a bounce is in the cards, and if nothing really stupid comes out of Europe this weekend, we might see some green next week.

2012 is going to be quite a remarkable year. You might witness the breakup of Europe, and another 2008-style meltdown here. We're going to see if someone defeats Obama for President. And we're probably going to see an even more volatile market than what we’ve had this year.

Tips:
Remember - Gold is up over 20% from a year ago – and over 27% from it’s lows during the year - $1,270+ to $1,650+ on the close on Friday. Have your other equity decisions performed that well? Please consider buying more physical Gold and Silver before it’s too late.

We’re out of virtually everything except:
- GLD at 157.49 – now at 163.50, (I’ll be buying more this week),
- SLV at 28.00 – now at 30.22, (I’ll be buying more this week),
- And HDGE at 25.30 - now at 27.23. (If we get a bounce – I’ll be selling this and buying in later.)

When the bounce comes (and it will), we will use it to start to scale into some long term puts. We are now close enough to 2012 and 2013 that we can buy long dated puts that I completely believe will be rewarding. I still believe that the DOW will visit the 4,500 level in approximately mid-2013, but we’ll start loading puts when the market turns back up.

Speaking of options, I think that it's also time to buy some inexpensive call options on the DOW and S&P. Why? Well along with people liquidating a lot of positions, one of the other issues is that we're coming through a 4-day weekend where no one wanted to be too long. Therefore, if nothing stupid happens, Monday could be a decent day. I'm thinking of the Dec 11th (weekly) S&P 119 calls are only $1.49 now. Could the SPY’s make 119 by December 11th, absolutely – and taking 10 contracts could be rewarding.

Other than that, remember to celebrate the weekend – it’s my favorite holiday (for many reasons).

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 - 11-20-11

2011-11-20T00:10:00.000-08:00

This Week in Barons: 11–20-11:

They are Dropping Like Flies…
Ann Barnhardt of BCM Capital closed her brokerage business this week because of the MF Global scam. Taking excerpts from her post: “November 17, 2011 10:27 AM MST. It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. I could no longer tell my clients that their monies and positions were safe in the futures and options markets - because they are not. And this goes not just for my clients, but also for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. MF Global, a firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let's not sugarcoat this - Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian roulette. I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg, and as the failures begin to cascade there simply isn't that much money in the entire system. I will not consider reforming and reopening Barnhardt Capital Management until Barack Obama has been removed from office AND the government of the United States has been sufficiently reformed and repopulated so as to engender my total and complete confidence in the government.”

As you can see, Miss Barnhardt has no problem expressing her opinion. But, is she right or wrong? I think that she is right, and we are witnessing 40 years of fiat currency craziness all coming to a head. Can we clean it all up? I do not believe we can, because the problems are too deep, too widespread, and too interconnected. Sit back and ponder what we’ve seen during the past 4 years – Lehman Bros, Bear Sterns and MF Global are gone, while Greece, Italy, Slovenia, Belgium, Portugal, Spain, Ireland are all technically insolvent. U.S. housing is still falling, the poor are increasing, food stamps are at record usage, and joblessness is raging. And all of this is happening despite 2 rounds of Quantitative Easing, Operation Twist, Cash for Clunkers, cash for Window Replacement, Government owned General Motors, and our FED lending out $16 trillion to European banks that when asked ‘Who got it?’ - The Ben Bernanke responded: “I don’t know!” And currently The Jefferies Group is about to go belly up – due to their exposure to MF Global.

I think the most telling part of all this is that no one seems to notice. John Corzine was about the most connected person you could name, and was probably going to be the next Treasury Secretary – he’s done! David Tepper (we learned this week) has taken all his funds out of equities. Here are some facts about the poor that certainly shook me:
- Last year, 2.6 million more Americans descended into poverty. The largest increase since the US government began keeping statistics.
- In 2000, 11.3% of all Americans were living in poverty – today it’s 15.1%.
- 22% of the children in the United States are living in poverty.
- Over 20 million U.S. children rely on school meal programs to keep from going hungry.
- One out of every six elderly Americans now lives below the poverty line.
- 45 million Americans (15% of all Americans – one out of every 4 children) are on food stamps – increasing 74% since 2007.
- Today – 18% of Americans are on Medicaid – in 1965 only 2% were.
- Today – over ½ a million children are homeless!

So where can we invest our money safely? Understand, on any given day the $600 Trillion in outstanding derivatives could take down all the trading houses and all of the exchanges – which is why investing in physical Gold and Silver make sense to me. For your information, we’re beginning to hear of non-delivery of gold and silver after payment. And warnings are beginning to circulate telling everyone to cash out of all gold ETFs because the backing is questionable. I'm just hopeful that the right people get in power so that when the default hits, the reset is done correctly and our kids have a shot at a brighter future.

The Market:
Our market is broken. When 200 to 300 point swings are the ‘new normal’, you can bet all semblance of ‘real normal’ is gone. We have a $600 trillion derivative bomb lying in wait, ready to go off at any moment. We have Europe melting, and brokerages imploding. Without more stimuli – QE3 – the economy will continue to crumble. Last week the Fed heads were out in force talking about how Europe could force us to be more accommodative, which is a fancy word for "print more money". So it’s coming, and when it’s announced the market will put on a furious rush higher. However, until it’s announced, we're going to be in a ‘rinse and repeat’ moment. So we’re in a time where the market depends upon free money from The Ben Bernanke, otherwise we will ‘slosh and fall’.

So one tactic is to just buy silver and gold, take possession, and forget the stock market. The only other tactic I can recommend is for you to understand how to trade. Trading means – actively buying something today, and maybe selling half by the close and the other half a day or two or a week later.

Currently the market is set for more down side. However, something happened this week that suggests to me that without something "real" like the FED coming out with QE3, or something really solid out of Europe – we are indeed heading lower. That ‘something’ was that the market rewarded the PUT buyers. You see people buy call options and put options to hedge their positions and to try and make money. Well, most of the time, the Market will generally move in the direction that will punish the most people, most of the time. It's called the "max pain" theory. Coming into this past week, to "punish" the most people the market would have had to trade sideways and slightly higher, but it didn't. This past week the market fell like the proverbial rock. It rewarded the bulk of the options holders who were destined to make the most money. So something went terribly awry, and could signal the shape of things to come.

I’m betting that (minus some rumor or news of a bail out) the market's going to go down and test the 50-day moving averages. On the S&P it has only 8 points to go, but on the DOW it’s got a couple hundred. So, we should be looking at a lower market this week. Normally Thanksgiving is a time for the markets to be fairly strong, so maybe they’ll all pitch in and try and save us, but it sure looks shaky.

Be careful out there, because we’re just one headline away from an all out crash, or a wild run higher.

Tips:
We’re out of virtually everything except:
- GLD at 157.49 – now at 167.90, and
- SLV at 28.00 – now at 31.55,
- And HDGE at 25.30 - now at 26.01.

As the miners continue to ‘relatively’ strengthen – thanks to Dave S for recommending Mines Management, MGN.
Now if things continue to roll over, I continue playing the short side using HDGE.

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 - 11-13-11

2011-11-13T07:29:00.001-08:00

This Week in Barons: 11–13-11:

These are the Worst of Times…

I prefer the company of peasants because they have not been educated sufficiently to reason incorrectly. ~Michel de Montaigne

Are we there yet? Are we at the bottom? Can we trust people again? Well, according to Jack Abramoff (past DC Lobbyist): “As many as a dozen members of Congress and their aides took part in insider trading based on foreknowledge of market moving information, sometimes gaining several hundred thousand dollars. But it's basically legal, because the SEC has largely determined that trading stocks based on advance knowledge of action in Congress is not insider trading.” What? If you or I get a phone call from someone in a high level position at a public company, and we go and act on that news – you, the informant and I can all be imprisoned. But if you're a US Congressman and you get that same phone call; then, you can go act on the information, and it's deemed as "fine" by the SEC. How does such a double standard exist?

Is it safe? Have we solved the currency issues?
“According to China's National Foreign Exchanges Administration, China's gold reserves have recently increased. Recently China has been opening their own mines and buying mines around the world, thus accumulating both spot buying in the market, and their own production capacity.” For many years, U.S. Central Banks sold their gold holdings. They stopped selling in 2009, and became buyers of the metal again. Most nations want more exposure to gold; however, gold supply is limited and if everyone wants it at the same time, it pushes the price up. No one wants to buy anything that's been driven higher, so they have done everything they can to accumulate it, while at the same time, not disrupt the price.

Or are we simply re-arranging the deck chairs on the Titanic:
“Standard and Poor’s reported this week that ALL BANK earnings in Q3 were from Credit/Debit Valuation Adjustments (CVA/DVA). This is where the lenders booked profits as their credit-worthiness declined.” Yes – that is the same as a Bank making money – betting against itself.

And just when you thought it was safe to purchase GM stock again:
“The United Auto Workers retirement trust fund, which provides health benefits to over 820,000 people, has underfunded by almost $20B, due to rising medical costs and poor investment performance.” This week when the CEO of GM was asked about their underfunded pension, he flat out said: "I'm not going to talk about that".

And last but not least – those pesky European Banks:
“European banks are sitting on heaps of exotic mortgage products and other risky assets that predate the financial crisis, in addition to all that Eurozone sovereign debt. Royal Bank of Scotland (RBS) is exposed to nearly €80B worth of risky mortgage assets, eight times more than its sovereign debt burden. Also: HSBC Holdings = €54B; Deutsche Bank = €51B; and ING = €36B.” The issue here is not only the amount, but also how far and wide the insurance on those amounts lead – U.S. fair warning!

So – can we still win the war or are we fighting a meaningless battle? Each day I get closer to moving in with the camp that says it's over. The Eurozone has had ample time to ‘fix things’ (over 18 months starting with Greece) – and they still haven’t – because they can’t.

You see, between 1944 and 1971 the world experienced incredible global stability and growth because the major economies of the world kept their currencies in balance with a basic gold standard. Debt loads remained manageable, because they could only create currency as long as it was pegged to a loose value of gold. Markets were free to set interest rates, and savers were rewarded with stable and realistic returns. As more people saved their money, pools of currency were created which banks could then lend to productive companies and create more jobs. But when the Bretton Wood accord was demolished in 1971, and President Nixon closed the "gold window", by 1974 we were thrown into one of the most horrid recessions of our modern history. Likewise, our current system of money supply creation, and constant borrowing is destined to fail, no matter how hard everyone "agrees" to keep things stable.

So what do we know? While the US dollar is still loosely recognized as the "reserve currency", everyone now understands that it's a fantasy. It's not stable, it's not pegged to anything, and a group of 12 people at the Federal Reserve can print as much money as they think they want or need at the drop of a hat. But behind the scenes there are choices. It seems to me, that the first big push is going to be for SDR's (Special Drawing Rights) to act as the new reserve currency. The only difference between SDR’s and the paper dollars we have now is that the International Monetary Fund and/or the World Bank would be the only issuers. And yes there are groups working on the concept of a Gold and Silver standard again. However, right now, to have gold be used as a reserve, the price would have to be somewhere around $7,000 per ounce, to "cover" the dollars in circulation, and to encompass all the world’s currencies the price of gold may have to reach $40,000 / ounce.

We predicted in 2001 that gold would be the single best investment idea, because we connected the ‘debt dots’ and those ‘dots’ added up to a picture that was unsustainable. We hit the wall in 2008, and now the entire world is suffering the consequences of printing too much currency, promising too many things, and not being able to shoulder the load. Hopefully when we emerge on the other side, we'll have the intelligence to realize that often simpler is better.

The Market:

Wild ride this week – ya think? Everyone knows that Greece is impossible to save, with Italy running a close second. Most believe that the PIIGS (Portugal, Ireland, Italy, Greece and Spain) are ready for slaughter, and as they fall away, it’s going to spread to the U.S. Now, I remember the days where you would ‘go long’ for 4 months, and you made your money as the market made long grinding runs. You didn't go short for a day, but rather you would go short for 2 months. But when today’s volatility causes a market to fall 400 points in a day, and then recover again in two days - trading houses make a years worth of profits in two days. In fact, during the month of October – if we totaled all of the daily swings – they totaled over 10,000 points! If you're addicted to charts, the pattern on the S&P is a bit scary right now. Unless we get some more points, and soon, we'll have developed a pattern of "lower highs". We desperately need a close over 1,275 on the S&P to give the bulls a glimmer of hope that this bullish run is going to last. If we put in another close or two below that, we could be in for more downside, before our next bounce. Unfortunately with this chop, I think you only have a few choices. You can just buy gold and silver and wait. Or, you can learn how to be more nimble by using the tools that modern investing platforms give us.

Just because you have a job, doesn't mean you can't put in conditional orders. By following me on Twitter, I might say that I like a particular stock over $30.00. Well, with today's advanced platforms you can put in a conditional buy order – to buy a number of shares that particular stock if it gets to $30.05. If it does and your order gets filled – you can then put in a conditional ‘stop/sell’ order at $29.70. In some ways I find that it works better than sitting in front of a screen all day. It takes the emotion out of the decision. You don't double guess yourself out of a trade. You have a defined entry, and a defined stop. We let the market take care of the rest.

Tips:

We have some profits in our long positions, but I'm guarding them closely. I'm not yet convinced they're going to get this market up yet, so we might have to cash out and wait on a better market "mood". If we don’t get more bad news out of Europe on Sunday, we might be able to add to Friday's gains. Our current short-term holdings include:
- GLD at 157.49 – now at 174.05, and
- SLV at 28.00 – now at 33.7,
- DIA at 121.24 – now at 121.55,
- MRVL at 14.66 – now at 14.92,
- NBR at 20.00 – now at 20.53.

If things roll over consider playing the short side using HDGE.

And to all the Vets out there, I salute you for your service.

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 - 11-6-11

2011-11-06T07:30:00.001-08:00

This Week in Barons: 11–6-11:

Misery Loves Company:

This week was a little bit of a travel week for me – and as I settled back into my room on Friday night – I noticed that Suze Orman was on. For those who don't know who she is, USA Today called her a ‘one-woman financial advice powerhouse’. She is undeniably America's most recognized expert on personal finance. Combine her with Jim Cramer – and I’ve spent a fair amount of time (over the years) denouncing their collective wisdom as an absolute train wreck. Suze Orman shocked me on her show when she said: "Up until 2007, I thought I had it all figured out. But then it all went horribly wrong. What I didn't take into consideration was that - I trusted the people at the top to be giving us the truth. But we found out that the truth wasn't there, and we were in a time of lies and corruption". So here is America’s most recognized expert on personal finance telling everyone that what she and the rest of us have been getting fed is a pack of financial lies. For the next hour she told people: (a) get back to the basics, (b) get out of debt, (c) train your kids to get out of the "buy me this" syndrome, (d) don't buy stuff you can't afford, and (e) save your money because there are very bad times ahead. This was such a turn around from the last time I heard her speak that I said: “Misery Loves Company!” Don’t get me wrong – Suze Orman knows more about the taxes on 401K's and Roth IRA’s than my accountant. Suze knows more about FICO scores than I'll ever know in my lifetime. My point to all of the above is that it’s one thing for someone to make a mistake, but it's very different when you openly mislead people. Suze Orman is now saying what we’ve been saying for years - 90% of the financial information that you are seeing and hearing is misleading information. If this economic crisis has taught us anything, it is that you have to listen and decide for yourself the financial elements that make sense for you. Sometimes it's not easy going against the grain. Welcome Ms. Orman – welcome back to the land of the living! In early 2001, we decided Gold was to be the ultimate investment, and we bought as much as we could afford. Then in 2007, we decided that Silver was the next best investment, and again we bought as much as we could afford.

To the fundamentals:
- The percentage of the population working full time now stands at 47.2%. We need to go all the way back to 1975 to find a ratio that low in October. So The Ben Bernanke, with the working population and wages being stagnant or down - Where’s the Growth?
- Of the 280 most profitable companies in the U.S., 78 paid no federal income tax in at least one year over the last three, and 30 reported a cumulative negative income tax over the period. The country is in debt to it's eyeballs, and one of it's biggest companies GE pays NO taxes, yet it's CEO trots around with Obama and preaches jobs creation, while shipping his own jobs over to China.
- U.S. investors have pulled $80B out of equity funds this year, but this has been more than offset by $200B in corporate stock buybacks. With the cost of debt being very low, and the cost of equity very high, many find it logical to float debt to repurchase stock. Did you know that while boosting their share prices by buying so much of their own stock, we’ve also created the largest corporate debt load in US history? Companies have borrowed heavily on the heels of Bernanke's 0% interest, but (like Greece) one day it's going to have to be repaid.

And then there’s Goldman Sachs with over 30 alumni stationed in power positions all around the globe, we’re seeing:
- MF Global, run by John Corzine (a Goldman alum – who helped bankrupt New Jersey) is now in the hole for $1.6 Billion, and we all know he won't go to jail.
- Gary Gensler (also from Goldman), the chairman of the U.S. Commodity Futures Trading Commission under President Barack Obama – overseeing over $5 Trillion in commodities trading each day. Mr. Gensler worked with Sen. Phil Gramm and Alan Greenspan to exempt credit default swaps from regulation, which led to the collapse of AIG and has resulted in the largest taxpayer bailout in US history. Gensler also worked on the deregulation of electronic energy trading, which led to the downfall of Enron, and supported the Gramm-Leach-Bliley Act, which allowed American banks to become "too big to fail"

Do you think it's possible that what these people do as far as global economic policy might all be in favor of shielding, abetting and strengthening Goldman?

The Market:
Greece is toast. The EU is disintegrating. Each hour of every day brings a new scheme, a new plan, or a new idea. Nothing they are doing is going to get the debts repaid, thus at some point default and defection become the fact.

Right now there are several forces tugging at us, and that makes it a bit harder to figure out the short-term direction.
- U.S. investors have pulled $80B out of equity funds this year, but this has been more than offset by $200B in buybacks. It’s obvious that John Q. Public is scared over global events. However, insiders are simply using the cheapest credit rates in history to juice their stock. If you're a CEO and you have 10 million shares of company stock, why not go borrow a billion dollars, and buy company stock? The stock rises making you richer, and if something happens the Company takes the hit.
- Each hour, some form of news comes out of Europe concerning Greece and also a bankrupt Italy - making for a huge market chop.
- It’s the Holiday season, where November and December have historically been the two best months for the fund managers to make their giant year of end bonuses. So fund managers want the market up, and the under performing ones will go for broke putting the last of their money to work.
- Quantitative Easing 3 (QE3) is on the way. There's no question Bernanke will unleash more stimulus, starting with buying more mortgage backed securities (MBAs), and from there, who knows how much he'll print and spend.
- Finally, each time the world is in an economic funk, we create a war. Tensions over Israel and Iran are now white hot – so watch for missiles flying sometime soon?

Right now it looks like we might be in for some short term selling, but they'll offset that with random, well timed rumors that will reverse any selling for a short-time – so please be cautious. If we can get the DOW and S&P to hold over their 200-day moving averages, we could see more upside. But if these averages hold as upper resistances, then we should be moving lower. Right now - my guess is that we end the week lower than we start it.

Tips:
We trade stocks. We try to trade based upon fundamentals, but there are none. We try to trade on based upon the technicals, but because we're in a world of rumors, designed to move things "their way" – we can’t do that either. We’re stuck trading on the insanity of the moment, and unfortunately it’s working! The moment we see the dollar dropping we buy materials and commodity companies like ANR, CLF,etc. If the dollar drops, U.S. stocks move up, and materials and commodities move the most. Like I said last week - desperate funds are going to seek high “alpha” stocks like: Apple (AAPL), Amazon (AMZN), Caterpillar (CAT), and Deckers (DECK). Funds that need dramatic returns won’t take chances with regular companies – so also look at Priceline (PCLN). And consider the technology ETF the XLK. Although it's not a rocket, the Holiday season is a big tech time and if Apple or Priceline are too expensive, the XLK may fit in nicely.

We stopped out of many of our short-term holdings (with gains) last week, and we’re left holding:
- GLD at 157.49 – now at 170.75, and
- SLV at 28.00 – now at 33.25.

If things roll over consider playing the short side using HDGE.

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 - 10-30-11

2011-10-30T07:05:00.000-07:00

This Week in Barons: 10–30-11:

Making Giant Dollars on Fraud

This past week we bought and sold NTES for a $6 per share gain, sold the SPY’s for a $20 gain, Silver (SLV) is sitting on a $6 gain, Gold (GLD) is sitting on a $12 gain, and we purchased Amazon (AMZN) for $208.50 on Friday and it ended the day at $217. I am not saying this to pound my chest or to gain more twitter followers – but rather to tell you that the market is NOT running up on fundamentals. The market is running up on the "new paradigm" which is all FRAUD all the time. You really can’t believe that Merkel and Sarkozy just solved all of Europe’s problems. Nothing is solved; it's simply pushed off a few months. Soon we'll hear about Ireland wanting to discharge 50% of its debt, and then we'll hear more horror stories out of Italy. And then the German people (who have created the biggest economy in Europe) are going to revolt against the Merkel régime.

According to a recent survey, about one-third of small business owners polled by Gallup say they are concerned about going “Out Of Business.” And approximately one-third said that they might need to lay off workers. The biggest small business problem is complying with government regulations, followed closely by falling consumer confidence in the economy, and lack of consumer demand.

The market is running up on many "things" but none of them have anything to do with sound fundamentals. Unemployment continues higher – as on Friday Whirlpool announced that they are seeing "recession-like demand" and are closing a plant in Michigan, laying-off 5,000 people. Housing is a massive disaster, and Uncle Sam is working on literally "nationalizing" the whole lot of foreclosed houses. Healthcare has risen by another 8% this year, and projected to rise by at least 6% again next year.

The Market:
So if nothing has fundamentally changed – then why is the market moving up?
- The European summit absorbed the risk of a Greek default by punting the ball 6 months into the future – which relieved us of the burden of waking to a Greek disaster.
- The fall months of October, November and December are historically the best months of the year for the stock market.
- Almost 40% of all the hedge funds are "behind" the market, and to stave off redemptions, they will have to "get in the game" quickly (by making big bets) or risk losing investors.
- But if a fund loses an investor, the investor usually goes to another fund that has been doing well (normally a fund that has been buying heavily.) As "heavily buying” funds get more and more money, they will continue to buy heavily, and this becomes a viscous circle.
- Then we have the Federal Reserve and the "Plunge Protection Team" – officially known as the "Presidents Working Group on Capital Markets". Their job is to keep the market from plunging – because it instills consumer confidence when markets rise. This "wealth effect" is very real. When the stock market is rising, people feel better and spend more money. One firm recently compiled the data going back 30 years, and found that a rising market (especially around an important holiday) boosts spending by 16% over the same holiday in a sagging or flat market.

So, in total you have:
- 1 - A "Deal" in Europe that solves nothing, but does give them more time to make more plans.
- 2 - Almost half of Wall Street desperate to make some money, so they can get their bonuses.
- 3 - A Government, and a Federal Reserve that desperately want the market higher so that consumers (who should be saving) spend that additional 16%.
- 4 - Beaten down hedge funds, getting redemption calls daily - that "need" to “risk it all” and go for broke.
- 5 - And the very real possibility of another huge stimulus project out of our Fed.

All that has caused a market to run from 10,400 to 12,200 in 3 weeks. The run was not caused by fundamentals or improving economies, but simply by “animal spirits.” Now – does it continue? I think it does.

There is no resistance until 12,400 and then again at 12,724. We've gotten over the 200-day moving average. So, although we won't get there in a straight line (and currently we're tremendously "overbought") all the obstacles have been removed for a gallop higher. What makes sense to me right here is some back-filling. As people pile in because they're afraid that they have now missed the boat, Wall Street will oblige them by taking their money. But after a brief downtrend, I'd imagine the market would turn around and drive us higher again. Because we're carrying 6 long positions in our short-term account, and 5 of them are insanely profitable, I won't be shy about cashing out on a pull back and then re-entering on the way back up.

Tips:
These desperate funds are going to seek all the “alpha” they can get in a short period of time. That means they'll pile into the LEADERS that should be safe for them and give them a return. Think leaders like: Apple (AAPL), Amazon (AMZN), Caterpillar (CAT), and Deckers (DECK). Currently the market is extended, and is overdue for a pause. But when it perks up again, the leadership stocks will continue to lead. The funds that need the dramatic returns won’t take chances with regular companies – so look at Priceline (PCLN). Also consider the technology ETF the XLK. Although it's not a rocket, the Holiday season is a big tech time and if Apple or Priceline are too expensive, then take a peek at the XLK.

In the short-term holdings account I’m carrying:
- SPY at 108.54 – now at 128.23,
- AMZN at 208.50 – now at 217.20,
- GLD at 157.49 – now at 169.25,
- SLV at 28.00 – now at 34.37,
- CLF at 66.55 – now at 72.83, and
- CMI at 100.06 – now at 102.61.

I did take a lot of profits last week – but there’s still some more there to be taken. I’ll hold them for a bit longer just to see. If things roll over (as I think we’re over-bought right now) I'll cash out and play some short side using HDGE.

Please be safe out there!

To follow me on twitter and get my daily thoughts – my handle is: “taylorpamm”.

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 - 10-23-11

2011-10-23T10:49:00.001-07:00

This Week in Barons: 10–23-11:

Your Single Best Investment

People forever ask – What’s your single Best Investment? Was it in stocks, bonds, gold, silver, or real estate? My answer has been the same for over 20 years – None of the above! It’s been in Education! The single best investment you can make is in educating yourself and/or the people around you. You are witnessing a global economic implosion that will eclipse the 2008 debacle, and things are just beginning to fray at the seams. People are becoming outspoken. Consider the “Occupy Wall Street” crowd. Right now they are a fairly peaceful group, but just this weekend 139 of them were arrested in Chicago. Consider what’s going on in Greece. On Friday we watched fires being set, petro bombs being tossed, and cars being overturned. Things are becoming desperate, and there's still no real way out. Heck, crime in certain areas of New York City is up 250%. Therefore, instead of arguing whether things are going to disintegrate into some re-enactment of “Mad Max”, let's think about what I consider to be the most important thing you can be doing right this minute. Educate yourself on your ‘options’, because that is going to be a very valuable skill as this economic train wreck continues. Most importantly – Don’t be an ‘easy mark.’

Factually:
- U.S. Underemployment has reached 17+ percent = 26 Million people
- Misery Index (inflation + underemployment) = 5+ and 17+ = OVER 22%
- Bank of America Corp. was hit by a credit downgrade and is moving all of its derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, so that if those derivatives fail (which they will) – the FDIC and we (the U.S. people) will be responsible for keeping them solvent!
- Pete M reminded us of a line from the Carter – Reagan debate: “We have inflation because the American people are living too well," says Jimmy Carter. “We have high inflation and high unemployment because the government is living too well," responded Ronald Reagan.

Wealth creation is a long and arduous process. Understand that it’s a discipline as much as it is a vision. In many cases it’s like ‘watching paint dry’ – but if you understand and listen to what is going on around you – you can then avoid the areas that are the most volatile. The world is upside down, and the economic unrest is making things worse.

The Market:
I said last Sunday that this past week would be one of the most important weeks of the entire year, and thus far that's proven to be true. The market was battling within a trading range of between 1125 and 1225 on the S&P. As we would approach the highs of the range, we would regularly bounce off of them and plunged down to the 1125 support level. For 3 days in a row, the market attacked that 1225 high and got repelled. Then on Friday it pushed up and broke over and out of that range, closing at 1238. There was much joy on the set of CNBC, and everyone was giddy with excitement. Is the market now set to run to the next S&P level of resistance at 1260? Is it finally time to pile in and ride the big wave?

I'd love to tell you YES, but I can’t. Why - because you need to consider the reason the market moved up in the first place. The market isn't moving on earnings or fundamentals. The market is moving on the hope that Europe has a plan to ‘carpet bomb’ it's members with Trillions of Euro's in order to bail out the banks and sovereign funds that are bankrupt. Unfortunately there us no such plan. We are going to hear about that plan on Wednesday of this coming week. Now, do I think that upcoming plan will encompasses several Trillion dollars, and solve all the immediate problems? Sorry, I don’t believe that we will. They've been “kicking the can” down the road now for months – making plans to make plans; therefore I am just not convinced that they are going to pull this off.

Do you know why Timothy Geithner has been travelling around Europe, begging and pleading for them to "get er done?" Because Timothy knows that some "very bad" things have been happening. In the past couple of months, U.S. money market funds have pulled approximately $400 Billion out of Europe. And with that much money leaving the European Banks and Investment Houses, it creates more debt problems for the Euro Zone. But because JPM, Citibank, Goldman Sachs, and many others have CDS’s (credit default swaps) written against these banks and sovereigns; when they go – we go because our financial houses do not have that kind of guaranteed money either! Timothy also knows that he can not get more bail out money out of Congress; therefore he’s seeing his friendly banks going ‘kaput’ – and hence his heavy travel schedule!

Will the International Monetary Fund (the IMF) come to Europe’s rescue? Will the German people allow their economy to be wrecked, so they can bail out the Greeks that still want to retire at age 50 with 100% pay? Is France strong enough to truly prop-up Spain? Are there really enough printing presses in the world to paper over the nightmare that Europe has become?

We rallied up and over a very important breakout level, and momentum could push this higher Monday and Tuesday. But will Wednesday’s Plan truly be enough? Currently I have my doubts.

We are "leaning long" into this rally, but I'm not ashamed to say that it's got me a bit scared. There is absolutely NO volume on these up days. On Friday when the S&P market got "up and over" that 1230 level we only traded 3 Billion, 765 Million shares. When the market was crashing on October 3rd – we traded over 5 Billion shares. When it was crashing back on August 8th – we traded 7 Billion, 491 million shares. I’m not inspired when there is huge volume on the big ‘roll-over’ days – and mediocre volume when we push over resistance level that was attacked 4 times.

I don't think we get a grand plan out of Europe, and I don't think they can pull it off if we get it. But, how our market deals with that has yet to be seen. With the lack of break out volume, I won't even be surprised if we sink back on Monday. However, pure momentum should keep us up, but I also tend to think that ammunition is running scarce about now. Mutual Funds are still losing money via redemptions. The bottom line is that if Europe doesn't come up with something substantial, I can easily make the case that we're going to plunge and plunge hard by the end of the week. It's something we have to all be aware of and be prepared for.

Tips:
In the short-term holdings account I’m carrying:
- SPY at 108.54 – now at 124.20,
- NTES at 42.43 – now at 45.60,
- GLD at 157.49 – now at 159.90,
- SLV at 28.00 – now at 30.46.

I did take some profits last week – but there’s still some more there to be taken. I’ll hold them for a bit longer just to see. If on the other hand things roll over, I'll cash out and play some short side using HDGE.

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 - 10-15-11

2011-10-16T06:49:00.001-07:00

This Week in Barons: 10–15-11:

This Seat is ‘OCCUPY-d’

Remember the 70’s – when "Enough was Enough!" I’m sensing the same energy in the Occupy Wall Street movement. What's it about? Is it really a Socialist movement inspired by the Unions? Is it some radical movement started by an underground network of revolutionists? Or is it as Jim Rickards suggests: “In America, we generally go about our private business and rely on elected officials and appointed bureaucrats to take care of the government. When protest arises, it's a sign that government is not doing its job, or not doing it in a way that serves the people. Elections are fine for gradual change, but sometimes immediate change is called for when government fails the people utterly and repeatedly in important ways. Such is the case with the Occupy Wall Street movement and its "Occupy" variations in cities around the world. Governments have failed to stop the concentration of wealth, the concentration of financial power, the proliferation of derivatives and the metastasizing of systemic risk facilitated by unethical, self-absorbed and shortsighted bankers. So the people respond.”

Now you can laugh at or disparage the demonstrators all you want. You can single out the fringe and think it's un-representative of the whole. But that won't change the fact that this demonstration has touched a nerve. A rag-tag group is standing up where the government, regulators, media and business elites have rolled-over and played dead. Thus far, this has been a peaceful uprising. But history shows us that there is a very good chance of escalation. Armed clashes are NOT out of the realm of possibility. Martial law in various cities is NOT out of the question. But perception is tricky stuff. No one knows where this all goes. My hope is that some of the younger freshmen politicians listen to the gripes, and start to make the changes that we know need to be made. Most “Occupy” protestors would be happy to go home if they could see some true government leadership. We are witness to an uprising that's not bound by territory or border. We're seeing a global spread of voices that are tired of being the ox that shoulders the burden for the elite.

The Market:
In terms of the market, we are at the biggest moment of the year. From the lows just 9 trading days ago, we've run from 10,404 on Oct 4 to 11,644 on Friday's close. Couple that ‘inflection point’ with Bill Pimco’s apology this week: “The simple fact is that our portfolio at midyear was positioned for what we call a “New Normal” developed world economy – 2% real growth and 2% inflation. We have now revised our internal growth forecast for developed economies to be 0% over the coming several quarters and our new portfolio more accurately reflects this posture.” WOW – 0% growth ahead! A recession is two quarters of negative growth – and negative growth is just one click away from zero – yes?

Followed by Pimco’s CEO Mohamed El-Erian – when ask about the global economy responded: “I’m between concerned and scared. We are watching three distinct, yet inter-related forces: poor economic growth, excessive contractual liabilities, and disappointing policy responses. The result is that western economies are getting trapped by the lethal combination of an unemployment crisis, a debt crisis, and mounting fragilities in the banking sector. The longer this persists, the greater the risk that even the healthiest parts of the global economy will get dragged into a prolonged period of economic and financial stagnation.”

I said last week that we would probably move up to challenge the resistances on the S&P at between 1220 - 1230. Well, Friday we ended the day at 1224. The question is: Do we blast through it, or does the air come out? On October 4 people were in a panic. We had every chance at really witnessing a crash that took us down to DOW 9K. I think that The Ben Bernanke called his Euro buddies and got the rumor started that changed the whole scene. The rumor of course was that the European Leaders had a plan to make a plan. The market reversed course in the last trading hour of that day, going from being down over 100 to being up over 200. From that day onward it simply marched straight up. However, the volume has consistently fallen each day as we've gone up. Mutual funds continue to show Billion dollar outflows – again! The economic news has been mediocre at best. So, I can indeed say that on one hand this has been a manufactured head fake rally, with the goal being to create "headroom" – just in case we received declining earnings and/or got more nasty European news.

And on the other hand, J. Q. Public is still scared. He's been pulling money out of his 401K to survive. The market’s ‘Talking Heads’ have repeatedly told everyone that we're range-bound and that when we get to the top of the range (where we are) you should sell out, as we'll sink back down. So, what happens if we push up and over 1230? Pushing over 1230 will ignite a frenzy of algorithms that will fire off a lot of orders, and will have J. Q. Public screaming to their fund managers to "buy-buy-buy!" So, we could see an enormous move higher that compounds on itself, and runs us up to the 1275 level in no time.

But don’t forget that this is all ‘supposedly’ because Sarkozy and Merkle have devised a plan to make a plan. The Plan is supposed to be released on or before Nov 4th. What if the plan is not good enough? What if it's not big enough? What if they find $4 Trillion? My point is, you can make the case that we roll over, you can make the case that manipulation wins out and we push over and soar for another two weeks. But no matter what happens, we have another big situation coming when they announce the "Plan".

Currently I’m thinking that no one expects the market to make it past this resistance, so it probably will, and we will spurt higher for a bit. If we get past 1230, all the shorts are going to cover in a panic, and we would see a fast pop to the upside. It could then build on itself and continue to roar as more and more figure the train is leaving the station. But be careful because it could be the last "hurrah", and it could roll over violently just after achieving new recent highs, crushing those that covered their shorts.

Tips:
I’m currently carrying a lot of short term long positions:
- SPY at 108.54 – now at 122.57,
- NTES at 42.43 – now at 45.46,
- RVBD at 22.17 – now 23.41,
- RHT at 46.03 – now at 47.44,
- RMBS at 16.04 – now at 16.61,
- GDXJ at 29.01 – now at 31.04,
- GLD at 157.49 – now at 163.40,
- SLV at 28.00 – now at 31.34.

There's a lot of profit sitting there for the taking, but we could see the market head fake everyone and push even higher, so I'll hold them for a bit longer just to see. If on the other hand things roll over, I'll cash out and play some short side using HDGE.

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 - 10-9-11

2011-10-09T07:44:00.001-07:00

This Week in Barons: 10–9-11:

“As for Steve Jobs in Heaven – the ‘Pearly Gates’ are probably more of a ‘Brushed Aluminum’ and let’s NOT call them ‘Gates’”! … Paula Poundstone

Steve Jobs passed this week and I read a marvelous piece by Firas Raouf of Openview Partners on his passing and I’d like to quote one line: “Thank you for making it possible for my 80-year-old mom to start interacting with the world online. Until we bought her an iPad last year, my mom had never used a computer, had never texted, emailed or IM’ed. Had never read anything online, and only had the phone as her way of interacting with her children and globally dispersed friends and family. Because of your vision of building tech products with intuitive and delightful user experiences, my mom was able to make the leap online with pretty much no training or pain. Thank you!” I certainly share Firas’ thoughts, and my wishes and prayers go out to Mrs. Jobs and family. He certainly made a difference, and will be missed!

Shifting gears – BET founder Robert Johnson on the "FOX News Sunday" program said: "I didn't go into business to create a public policy success for either party, Republican or Democrat. I went in business to create jobs, to create opportunity, and to create value for myself and my investors. And that's what the President should be praising, not demagoguing us simply because Warren Buffet says he pays taxes more than his secretary. Mr. Buffet should pay his secretary more and then she will pay more."

I was always taught, if you're playing poker and you haven't figured out by the third hand who the ‘stooge’ is – it’s YOU! That's sort of how I feel about how we’re being played about now. We all see "Occupy Wall St" folks protesting, and many of them don't have a clue what or why they're protesting. As a society we were ‘sold’ on an idea that:
- We could be a consumption society;
- We could consume ourselves to wealth;
- We could be a "service" society instead of a manufacturing society;
- Debts don't matter;
- We don't need a currency pegged to gold;
- Letting ‘banksters’ run free was a good idea;
- Giving houses to people with no way to pay for them was a good thing;
- The rich were evil;
- And competition might hurt ‘Little Johnny's’ self esteem!

The other day President Obama was interviewed and he said: "No! People are not better off than they were 3 years ago"! That's probably the only honest thing I've heard come out of his mouth in 3 years.

Factually:
- The Bank of Italy Deputy Governor sees a genuine risk of global recession, and calls for global monetary standards to safeguard savings.
- The U.S. Bank exposure to the Euro crisis may total = $640B!
- Wells Fargo may face a $8.79B cost for soured 2nd liens.
- Spain's credit rating was cut 2 levels on the spread of debt crisis.
- The housing bust is the worst since the great depression!
- Italy's credit rating was cut to A+ and Spain's to AA-, describing the outlook for both as negative.
- U.S. needs to generate 261,200 jobs per month to return to pre-depression employment by end of Obama’s second term.
- Consumer credit has contracted the most since May 1998.
- Portugal's credit ratings may soon be cut to junk!

My fear is that the U.S. cannot return to the glory it once had, when the things that made us great are now against the law.

The Market...

So, just how bad was the 3rd quarter? It was ugly! Hedge funds (in equities) lost on average 9.5%. Mutual funds saw massive outflows again. People are scared and rightfully so. For many years it was very fashionable to be a "contrarian" investor. You know the old adage: “Buy when there's blood in the streets. Sell when everyone else is clamoring to get in.” Thus you can make the point that this should be the greatest time to buy stocks we've seen in 80 years. People are scared, pulling out, the VIX (volatility index) is high, the economy's a mess, and the politicians are at each other’s throats. Could it get any better for the contrarian?
- Since the April highs we’ve seen the DOW fall from 12,800 to 10,400.
- We've seen unprecedented volatility.
- We've seen Europe continue to erode, now to the point where we're about to see our first outright defaults.

The problem with "Buying when there's blood in the street" is that they never tell you how deep the ‘blood’ is supposed to be before you buy. Is it deep enough when Greece defaults? How about when Spain rolls over? What about when the U.S. banks (that may have $640 Billion worth of exposure to Europe) take hits? It’s been several years since:
- TARP,
- The roll-outs of the stimulus plans,
- "Cash for Clunkers" and the 1st Time Housing Program,
- The reworked re-financing program,
- QE1, and then QE2,
- 9.1% unemployment (which is actually 16.4%),
- Falling housing, Higher national debts, No savings, and More senseless regulations!

Although the market is NOT the economy, and often goes in the opposite direction for prolonged periods, it usually does square up at some point. Supposedly the world is so smart that the market will start to rise 9 months ahead of an economic pickup. Then as the market runs and runs, the economy usually starts moving higher and higher, and then slowly the market will roll over and drop (while the economy still seems strong) and then finally the economy follows the market lower again. Over and over this has been the cycle.

So, for the market to start moving significantly higher from here, the worldly wizards would have to be thinking that 9 months out there's going to be a nice pick up in activity. If so – just where is the economy going to get the "oomph" from to fix itself in 9 months? It's been my premise that until The Ben Bernanke comes out with a true monetary stimulus plan, the market will be soft. And to that end, since June 1st the DOW has continuously made lower highs! That is not a pattern of strength. This week kicks off earnings season and CNBC is going to be foaming at the mouth as company after company announces they beat estimates by a penny. Yet how are they going to do it – layoffs! Layoffs have risen 117% percent this summer. So companies are making earnings (yet again) by cutting jobs, accounting tricks, and currency swaps.

Technically speaking – if the DOW can't get up and over 11,239 (which is the 50 day moving average) and put in a few solid closes, we have to imagine that we’re moving lower! I still think we go nowhere but sideways and down until The Ben Bernanke caves in and puts a $ Trillion more in the bankers hands. If the DOW were to hold up over the 50-day average, they could use the "great earnings" to try and power us up to the 11,600 level, where the next real fight will take place.

The economy has no reason to improve in 6 to 9 months; thus except for wide range ‘mood’ swings the equity market has no reason to improve and start a bull run. The risk is defined to the downside for now. But if The Ben Bernanke releases a huge stimulus, then we will indeed roar higher, kicking the can further down the road – but until then we're in danger, and short-term trades are the only game in town.

For Monday the action will be dictated by which rumor comes out of Europe over the weekend. Then (on Tuesday) earnings start with Alcoa. From there on out, sectors will be cheered or jeered depending on what the companies say, which will cause our insane market fluctuations to continue. Some have written in asking if my prediction of DOW 6,000 is still inline. Absolutely. I can't say when, but we could be on our way there right now. However, we do know The Ben Bernanke will come up with a spare $ Trillion to try and abort that. And we also know that the stimulus will wear off and we'll sink again, and the cycle will continue. This could go on until 2013 – but at some point we will sink back to those 2008 lows.

Am I still in love with gold and silver? Yes on both counts. I don't care how either of them behaves in the short term. I'm looking at them for the 2013 time slot. As Europe defaults, as currencies get kicked around, as economies slow – I don’t think people are going to be fast to "rush back" to fiat currencies. Some will want the metals and I’m in that camp.

Tips:
This week I sold my DIA put options for over $6, and since we purchased them for $2.80 we are very happy about that!

In my short-term holds I have DOG, and SH (that are inverse ETF’s focused on the market going lower). I also have GLD and SLV. As I looked out across earnings season - this week I purchased some miners: FCX at 34.53 and some GDXJ at 29.01.

As this market continues it’s sideways and down movement – look at HDGE – a very nice ETF you can use to play the downside. It has moved from $20 in May to being closer to $30 right now!

This market is NOT for the weak of heart.

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 - 10-2-11

2011-10-02T07:05:00.001-07:00

This Week in Barons: 10–2-11:

Laughing at our mistakes can lengthen our own life; however, laughing at someone else’s can shorten it! … Cullen Hightower

In a grim final speech as Kansas City Fed President, Thomas Hoenig said that he expects U.S. economic growth to lag behind historical norms for generations, and that Fed policy has done more harm than good: "When you encourage consumption by inhibiting your interest rates from rising to their equilibrium level, you will in fact buy problems, and we have in fact bought problems."

Wow, now there's something you will rarely hear – a Fed head telling us that we're going to be slugging it out for years on end and that their path was a mistake. But of course - he's retiring and no longer a part of the decision process at the Fed, and therefore no more backlash from The Ben Bernanke. Thomas Hoenig realizes that this recession, this debt load, this nightmare cannot be fixed using monetary policy. But meanwhile, the US economy has been slowly and deliberately eroded by inflation, falling wages, lower paying jobs, and more ridiculous regulations. Can we fix the economy – of course – but it would mean short term pain for some, because it would mean disbanding hundreds of government programs that hinder real growth, and then we’d have to take control of our money back from the Banksters. Remember when we had the single greatest economy on earth. If a child was failing in school, he was held back and made to study. Today the reading scores for high school seniors have hit the lowest level ever recorded. If we compare various elements over the past 20 years or so:

Ex #1: Johnny and Mark get into a fistfight after school.
20 Yrs Ago: A crowd gathers. Mark wins. Johnny and Mark shake hands and end up buddies.
Now: Police called. Johnny and Mark are charged with assault, and both are expelled even though Johnny started it.

Ex #2: Jeffrey ‘fidgets’ in class, and disrupts other students.
20 Yrs Ago: Jeffrey sent to the Principal, given a paddling, returns to class, stays still and doesn’t disrupt class again.
Now: Jeffrey given drugs, and the school gets extra money because Jeffrey has a disability.

Ex #3: Billy breaks his neighbor’s car window – Dad paddles Billy.
20 Yrs Ago: Billy is more careful next time, grows up normally, goes to college, and becomes a successful businessman.
Now: Billy's dad is arrested for child abuse. Billy is remanded to foster care and joins a gang.

Ex #4: Mark gets a headache and takes some aspirin at school.
20 Yrs Ago: Mark offers an aspirin to someone who also has a headache at school.
Now: Police called, and Mark is expelled from school for drug violations.

Ex #5: Pedro fails high school English.
20 Yrs Ago: Pedro goes to summer school, passes English, and goes to college.
Now: ACLU files class action lawsuit against the school system and the English teacher. English is banned from the core curriculum. Pedro ends up unemployed because he cannot speak English.

Ex #6: Johnny takes leftover firecrackers and blows up a red ant bed.
20 Yrs Ago: Ants die.
Now: Johnny charged with domestic terrorism. Johnny's Dad goes on a terror watch list and is never allowed to fly again.

Ex #7: Johnny falls while running during recess and scrapes his knee. He is found crying by his teacher, who hugs and comforts him.
20 Yrs Ago: In a short time, Johnny feels better and goes on playing.
Now: Mary is accused of being a sexual predator and loses her job.

Many of the companies that you buy stock in were first created in someone's kitchen, basement or garage. Because they were so good they grew, necessitating a move into a true factory, employing thousands. Now, you’d be arrested because that ‘garage’ would have to acquire "commercial" business permits that do little more than dissuade innovation. But no politician is going to stand up and tell the American public that to be great again, we need to go back and disband the EPA! Since the EPA showed up – we have lost over 50 Million high-paying jobs. Honestly, if TARP didn’t create jobs, and if QE1 and QE2 didn’t create jobs – why do we really think that pushing trillions more stimulus into the economy will have any effect?

The Market:
It’s been another roller coaster week. We saw the market gain 300 points on Tuesday, only to lose more than half. We saw the market up 117 Wednesday, only to end the day down by 179 points. We saw Thursday gain us 255 points by mid day, and tumble all the way down to DOW -41 by 3PM, and then rally all the way back to + 143 points end of day. Welcome to the world of high frequency trading.

So will the market roar higher or roll over? I can honestly make both cases, but here's something to consider. As you can figure out, all the schemes they're cooking up in Europe are 1 - not working, and 2 - probably not able to be implemented. So, we could be facing a Greek default any day. And if that were to happen, I suspect the immediate reaction would not be a good one.

I'm hearing that Germany has already begun printing Deutsche Marks. I can't confirm that, but there are more rumors swirling around Germany announcing that they want out of this ‘Euro’ thing. What happens if that announcement is made? A cascade of crazy things (and none of them are good) will happen – at least in the short term. But on the other hand, we could very likely see The Ben Bernanke come out of left field with a whole new round of stimulus on any particular day. So, with all those plates spinning in the air, to make any real predictions right now is silly. I feel the market wants to fade off and fade off hard, but if a few trillion in stimulus were announced they'd start to ignore all bad news and push us higher, because they can.

I've been carrying some short positions all week, and although there were times when they were not profitable, we ended the week in positive territory. I tend to think that we'll see more downside until The Ben Bernanke comes out with some form of stimulus pump. The issue of course is that it will happen after hours, and we'll gap up 300 points that day.

The bottom line is that we're mired in a horrible situation that really cannot be resolved without pain of some form. Therefore, you need to remain pretty cautious. One thing I feel strongly about is that whatever the course of action that they try, it's going to involve printing money, money that the world doesn't need to have pushed onto it. Gold and silver will naturally react to the upside. The recent bear raids on Gold and silver frightened a lot of folks, but for me, it was simply a buying opportunity at discount prices. ‘The Talking Heads’ say that the gold run is finished, but they said the same thing with gold at $500, $750 and $1,000. While funds have lost investors 28% this year - Gold is up on the year!

Tips:
This week I purchased more DOG, SH, GLD, SLV, and purchased more physical gold and silver as well.

I have DOG, SH, GLD, SLV in my short term holds, along with some Oct DIA 110 put options at 2.80 per share.

I am not going to put a stop on these, and still looking to add to physical metals on their down days. This trade isn't for the weak of heart.

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 - 9-25-11

2011-09-25T08:20:00.001-07:00

This Week in Barons: 9–25-11:

Face: “Murdoch, what’s going to happen?”
Murdoch: “Looks like we’re going to crash!”
Face: “Murdoch, what’s really going to happen?”
Murdoch: “Looks like we’re going to crash and die!”
… A-Team

This week everyone looked on anxiously as The Ben Bernanke pushed his one-day FOMC meeting into a two-day affair. The market was hoping for some real stimulus, but unfortunately all The Ben Bernanke gave us was the interest rate ‘twist’. And following that, we crashed for 600+ points in two sessions!

I have to admit, I thought (due to The Ben Bernanke’s thinking that the Great Depression could have been cut short if the government had just printed and shoveled more money into the system) that The Ben Bernanke would indeed let loose a ton of true monetary stimulus. I truly felt that he would cut the interest rate that the Fed pays to banks for their excess reserves, basically forcing them to push the money into the markets and into loans. And then there was Vice President Biden publicly saying: “What we need is more stimulus". Well, ‘Surprise’ - he didn't do any real stimulus, he simply gave us the interest rate ‘twist’, where he starts buying up longer term paper to lower the 10-year interest rates. Well, if you aren’t buying a home at 4%, it’s doubtful that 3.8% is going to even raise an eyebrow. The part that I got right was that if we didn't get some true stimulus, (if all he did was the ‘twist’) we were going to ‘roll over and plunge, and plunge hard.’ On Wednesday afternoon (after the decision), the DOW fell 280 points and Thursday (at one point) was off 530 and ended being off 395 points. So there was a point where the market was off well over 700 points in 1.25 days.

Now, as we told you Tuesday on Twitter, we sold out of all of our trading positions. However, knowing that if The Ben Bernanke cut loose with a ton of true stimulus the market was going to roar higher - you'd naturally wish to buy a CALL option (because calls pay you when the stock goes up). But we also knew that if The Ben Bernanke didn’t do anything, the market would fall, and therefore you should own a PUT option. We bought the October call options for about 2.60, and the October Put options for about 2.85. When the announcement came, we knew that it stunk and promptly sold the call options. When the market lost 240 points Wednesday, we ended the day profitable on the Puts. And when it fell another 500 points on Thursday, those puts had gone from our purchase price of $2.85, to over $6.00 – a 100% gain. The point being – we laid out all the reasons why The Ben Bernanke should reduce the reserve requirements – but he didn’t – and as part of ‘The Backup Plan’ – the strategy was to take advantage of the volatility that we knew would come.

OK - onto the Precious Metals. Everyone wants to know why gold and silver got so horribly whacked. The main reason was the coordinated central bank attack on the metals. JPM (in specific) has a dozen lawsuits pending where global traders have proven outright manipulation of the price, and yet there are no rulings. Then there were margin calls. Some of the real gold/silver selling was in anticipation of the waves of margin calls that would be flooding the market so market makers were raising cash. But then on Friday they added ‘insult’ to ‘injury’ by raising the margin requirements on Gold, Silver and Copper. So at the same time regular traders were doing "some" selling to raise money, the exchange comes out and hikes margin requirements on gold by 21%, on Silver by 16%, and on Copper by 18%. Do you think the big boys at JPM knew of this? With that knowledge in hand, the high frequency trading platforms then worked their magic to exacerbate that move – and suddenly we’re down a bunch. Remember – back in 1900 when J.P. Morgan himself uttered the words: “Gold is money, everything else is credit". I continue to always ask myself: What’s changed? Since Wednesday has Europe really been solved or just delayed? Has housing magically run higher? Has unemployment mystically healed itself? Isn’t the Government facing another shutdown next week? And as John A. writes: “With silver below the 200 EMA and gold down another $80, gold could be headed to its 200 EMA of $1,558.” I personally told you that I had stopped buying gold when it got over $1,650 (with my end of year prediction being $2,000 / ounce). On the other hand I have been buying silver as it hovered in the $35 to $40 area. And I don't think its day is done (at all) so I will buy more with it down here at $30. Could Silver drop to $20 – as those that didn’t sell, panic and sell at the lows – but come Monday I’ll be a buyer of silver and scale back into gold.

The Market:
What about stocks? We lost 600 points in two days, and ended the worst week since ‘09. Then on Friday we went "flat" – so is the selling over? It could be. They held the bottom at the same levels that held during the end of August’s 2,000-point plunge. But we have to consider the Thursday/Monday connection. In the past, there's been a correlation between gigantic sell offs on a Thursday, and a pretty horrible Monday, because of margin calls. When you get a plunge like we did, so many positions become upside-down, and the margin clerks have to start rounding up the folks that need to put in more money or sell out. But when you get a little bounce on Friday, they have to ‘rejigger’ the books as some fall off the margin call radar. Then come Monday, the true list is published - the phone calls go out, and the selling begins. Now, this doesn’t happen every time, but it's happened enough to where it's something to consider for early this week. If Monday does become a slaughter, then what usually happens is that it carries into Tuesday and then late in the session Tuesday the market recovers and "soars" higher.

What about the bigger picture? Well, without the extra stimulus I think that the market will continue lower. This week FedEx said that they see lower shipments, and fewer electronics coming over from Asia. They said their "peak" season is not going break any records this year, because Americans just aren't buying. I don’t think that will change. So, that despite some certain 'up days'" that look wonderful (don't forget, markets only stage insane 300 point up days while in bear markets) the overall trend I believe is going to be downward. If they use the recent low as some form of bottom to work up off of, I could see the market making it to the 11,300 - 400 area, before again running out of steam and rolling back down, and breaking below the 10,719 August close. If that happens, then my next level would be around 9,700 as the next true workable bottom.

As you can see, we're fraught with all manner of uncertainty. Each day seems to bring us more and more insane situations. From political infighting, to European madness, to evidence of societal breakdown, things are NOT going well. If we had gotten the trillion in stimulus, even though it would be kicking the can down the road, we'd be in a position to move cash into some funds and take the ride upward. Without the stimulus, I feel the market risk is to the downside.

Tips:
By the way, additional stimulus will be announced one day. As elements continue to deteriorate, additional monetary stimulus will occur. I have scaled into very small positions in the short arena. There’s nothing more dangerous than buying something short when the market is down 600 points in 2 days.

I have:
- DOG at 45.38
- SH at 46.42
- Oct DIA 110 put options at 2.80 per share

I am not going to put a stop on these, but rather I am going to buy more of them on UP days. This trade isn't for the weak of heart.

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 - 9-18-11

2011-09-18T06:25:00.001-07:00

This Week in Barons: 9–18-11:

It’s All Greek to me – anyway you cut it – Default by Christmas!

The European Community, Timmy Geithner, and the Greek authorities have laid the groundwork to provide the liquidity needed to supply banks with cash, when a national default is announced. The good news is, when a national default occurs people immediately rush to get their money. We know that the average Greek citizen has approximately $20k in the bank, but less than $200 in his pocket. Therefore, when all the citizens rush to get their money at the same time, under normal conditions banks would be forced to shut down after the first 2 hours of a day – then armed guards would show up – people would riot – and lives would be lost. The Central Bank Dollar liquidity that was announced Thursday is a way to stave off the "bad" parts of a National default. If you can capitalize the banks to a point that when the bank run hits, you have the assets to give the people the bulk of their holdings, you can then have an orderly default – which (in my opinion) will occur between now and December. The bigger question is this: If they capitalize the banks to take care of the citizens, are they also going to cover the derivatives that are held against these banks? And the answer is: Absolutely! You see The Federal Reserve is comprised of shareholders – like J.P. Morgan (JPM). Now JPM has significant exposure to Greece, and do you think the Federal Reserve is going to let JLM get burned for hundreds of billions of dollars? Heck no – so the capitalization will include the derivative holders such as JPM and others as well. And what about sovereign debt vs private debt? When a nation defaults, we must assume that the country has not taken in enough revenue to offset it's spending and has run up extreme levels of debt. So, who gets paid first, second, and on down the line is a good question? Now, there will be many "businesses" and services that are owed money, and will receive nothing. But the contagion of sovereign investments from other countries getting crushed, that is what they're trying to defuse, and further rationale behind over-capitalization. However, the much bigger issue is the fact that Greece is tiny, so what about Spain? The Spanish housing market was much or more of a bubble than ours, and is currently bottomless. The Spanish "green jobs" initiative was a dismal failure. Spain is in ‘worse shape’ and larger than Greece, and will probably be next to fall. Then, what about the tag team of Portugal and Italy? Diffusing Greece is the #1 job (and it will cost billions), and trying to keep it contained to just Greece is job #2.

In the U.S. this week:
- The Empire State manufacturing report fell to -8.
- The Philly Fed report fell to - 17.
- The "Inflation Gauge" (which is rigged to start with) reported + 0.4% (very hot).
- The initial jobless claims spiked by 11K to over 428K.
- And the market this week had the S&P gaining 4.5%.

Now that the Central Banks are willingly open to supporting the market, this is a whole new world of investing. Think of it – we had a 20% crash in the summer – and now we’re working our way back to normal after all the Central Banks colluded to toss billions at the European Banks to keep them alive. Technically we’ve retraced 50% of the fall in the NASDAQ since that crash – and if the DOW can maintain levels above 11,488, and The Ben Bernanke is accommodative this week – we could be up for a run higher. Honestly, Central Banks aren’t supposed to band together and keep dead banks alive. Dead banks are supposed to die. The weak die, and the strong pick up the pieces. But today it’s all about: “Too big to fail".

Everyone is looking to the Federal Reserve meeting next week. Everyone desperately wants QE3 / free money. I think we're going to get something, and despite the fact that the market is telling me it's tired and wants to roll over (due to the desire for more stimulus) we very well might continue up. Not only that, if The Ben Bernanke coughs up some form of huge stimulus, we could just roar higher thru the end of the year.

This week was ‘options expiration’ week – and there is a ‘max pain’ principle. That is to say – around 70% of market movements are in the direction that will cause the ‘most pain to the largest number of people.’ Given options expiration week, we found that a lot more people had taken downward bets on the market vs upward bets. So – what did the market do – it moved ‘up’ in order to inflict the most (options) pain on the largest number of people.

This week is a Federal Open Market Committee (FOMC) meeting, and the entire world is looking for them to release some new form of stimulus. Two weeks ago even the Vice President said that what this market needs is "more stimulus". We then saw the FOMC change this meeting from a one-day event, to a two-day event. All of this is telling me that ‘something’ is coming. I think the immediate direction of the market is going to be in direct proportion to what comes out of that Fed meeting. If they don't do enough, the street is going to whine and fall. But if Obama has pushed his Chicago Style politics into the Fed's head, and he lets loose some wild amount of real stimulus, we very well could fly higher.

The Market:
We just came through a nice positive week. We had a hunch we would, although Friday did have the ability to be a bit scary - especially when in the Friday morning session we went from +100, to plunging all the way down to red, and then finishing green. In some ways, that's a real sign that the market is itching to go higher.

Remember, the market is yearning for something huge out of The Ben Bernanke's FOMC meeting. They’re not looking for some simple “twist” where they buy long dated paper to lower long-term rates. The Street wants cash, and what’s different about now vs then, is that NOW we have a Fed that loves the idea that their policies could move markets higher, creating a "wealth effect", which will drive people to spend more. So what’s the Fed going to do? I have a hunch that The Ben Bernanke is going to tell the member banks that their reserves are now adequate for the risk profile, and that they can release some of their reserves into the system. If he does that, $1 Trillion will come forth and it's going to be a party. The banks will use "X" amount of it to play cowboy in the stock market, and they'll use "Y" amount to start lending again. My hunch comes from a statement The Ben Bernanke made last week about considering cutting the interest rates that the Fed pays to banks for keeping their reserves there. Now, if he tells the public "Hey we're going to cut the interest rate we're paying the banks", it sounds good to the average listener, but what that really means is "Hey, banks instead of parking money with us (The FED) and getting a free 4%” – and therefore not lending to John Q. Public – we’re going to lower the rate we give you, and reduce your reserve requirements, so that NOW you’re free to use those excess reserves to make loans and invest!”

If Bernanke really cuts loose and frees up a $1 Trillion in stimulus, we’re going to rally, possibly right up into year-end. If he disappoints, takes a hard stance, and doesn't give up much more than the interest rate "twist", we're going to roll over and plunge, and plunge hard. Be very cautious.

Tips:
Our bets (this past week) have been in the "swing" trade. What we like to do is pick entries that let us hold something for 3, 5, or 10 days. This is fairly easy when the market romps for 5 up days! For instance we picked up WPRT early this week at 28, and sold half of it at 32.35 – netting 15% in a week. We also bought SNDK at 40.22, NVLS at 28.8, KLAC at 38.02, HES at 60, ORCL at 28, and some SPY at 118.53. We sold the SPY at 121.54 taking in $3 per share. We stopped out of WPRT at 30.98, taking almost $3 per share. We sold HES at 61.90, taking in almost $2 per share. And we sold ORCL at 29.19 taking in a little over $1 per share.

That leaves us some:
SNDK bought at 40.22, with a stop at 42.20,
NVLS bought at 28.80, with a stop at 29.80, and
KLAC bought at 38.02, with a stop at 38.60.

I think we see the market "hover" on Monday into Tuesday, and then we'll know by Wednesday what The Ben Bernanke is going to do. This should prove to be interesting, so hold onto your hat!!

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 9-11-11

2011-09-11T07:52:00.001-07:00

This Week in Barons –9–11-11:

"What is the point of being able to forgive, when deep down, you both have to admit you'll never forget?" … Jodi Picoult

This is the 10th anniversary of that dreadful day that forever changed most of our lives. I was on my way to teach a class at Carnegie Mellon University when monitors started showing ‘The Event’ in real time. The emotions cannot be described. ‘The Event’ touched virtually everyone that I came in contact with. My thoughts and prayers go out to everyone involved in that incredible day.

Switching gears – I don't understand The Ben Bernanke. Although he's certainly a very smart man, he has no problem lying and he does that often. Just the other day he said that he was perplexed as to why consumers aren't consuming more. Please – spare me the drama. I listened to Obama very intently thinking – this man is incredibly dangerous because of one thing – his ability to speak the written word. He is a tremendous, very dangerous speaker. He gets people very excited about Government (for once) doing the right thing, and then stabs everyone in the back for not doing EXACTLY what he says. He is a very good salesman. Both he and The Ben Bernanke are selling hopes and dreams – just not reality. In the past three weeks I've heard the world "entitlements" so many times my head is going to explode. The words normally refer to “Social Security”- referring to it as some form of ‘social program’ rather than a legal contract that you have paid into and the government has the obligation to pay back to you! For years Social Security had its own separate fund. Then Lyndon Johnson (looking to find money for his pet projects) found the Social Security account – and merged it with the General Account – and in an incredibly short period of time all the money was gone. I'm not saying that Social Security would be in great shape if they didn't raid the fund. I'm simply saying that Social Security would still be “Manageable.”

Continuing along the lines of politics – last week Dominion Resources applied for permission to turn part of its Cove Point, Md., terminal into an export facility. The Cove Point facility was built to "import" natural gas in liquefied state, but because we've found so much natural gas in the U.S. over the past ten years, Dominion is now looking to export it! We could easily increase production by 25% a year, creating thousands and thousands of jobs and not even put a dent in the supply we've found in the ‘Shale Deposits’ from NY to North Dakota. In fact, the biggest danger is that there is too much natural gas, and the price will fall! So where's the giant push from our politicians to get us off foreign oil and onto natural gas? I’m watching with anticipation the Dominion Resources request.

Globally, Europe's hanging on by a thread, and ‘frankly’ the PIIGS can't be saved. Greek default is just a matter of time. In Austria, they've made regulations that the general public can only buy approximately $20,000 worth of gold at any time. With Europe in such turmoil, people are doing anything they can to get rid of the Euro, and buy gold. You can bet similar actions will come to the UK and to the US as things continue to deteriorate. If you don't own gold and silver right now, I think you'd best "get on it" because I could see them trying that here.

The Market:
On Friday the DOW lost 300 points – most of it on developments from Europe. Just before the open we learned that a board member of the European Central bank decided to resign, which is usually a harbinger of bad news coming. So now it's all in Bernanke's hands, and he’s been playing tough, not mentioning more stimulus. There are several ideas floating around regarding the next Fed move, most of them revolving around the "Twist". This is simply a change in the way the Fed manipulates interest rates. By buying up short-term Treasuries, they have been able to keep short-term rates low. Now they might focus on longer dated paper, trying to drive those rates lower – thinking that corporations are not expanding because of excess long-term interest rates. (Honestly, corporations are not expanding because there's no demand. And (fyi) our country’s production output is running well below capacity.) On top of that, some think that a ‘Twist’ will spur housing. In my view, housing is in a death spiral, and no one wants to catch that falling knife. If 4.5% mortgages won't spur buying, it’s doubtful that 4.25% will either. So the ‘Twist’ isn't going to do much. And (of course) the Fed will continue buying treasuries with the billions that mature in the portfolio they have amassed, so in essence QE3 is in effect right now.

So, what else does The Ben Bernanke have up his sleeve? A couple months ago I suggested: "One day the banks are going to unleash all that excess reserve they've been hoarding and push it into the economy. It will be highly inflationary, but it will spur activity". I tend to think that one of the items that will be mentioned is that the Fed is going to back away from making the banks pull in more reserves. In fact, I think The Ben Bernanke might suggest that banks are overfunded compared to the risk and encourage them to reduce their reserves. This would be fancy talk for "Go forth and Lend", and that could inject between $1.5 - $2 Trillion into the system. Now that could be quite an interesting policy.

Obama is in trouble. The polls are showing that 87% of Afro-Americans think Obama's doing well, 48% of Hispanics and 33% of whites. Obama’s jobs speech was a complete flop on Thursday – nothing but another "Give a union man a job today, and we'll pay for it in the future" scam. So it’s left to The Ben Bernanke to potentially tell the banks to release $1.5 Trillion in reserves. He could easily tell banks to relax lending standards in order to buy more homes, cars, virtually anything! And if The Ben Bernanke comes out and let's his banks go nuts – we’re going to have the ‘mother’ of all stock market runs, with the ONLY fly in the ointment being Europe. Although a Greek default is immanent, it will be looked upon as a massive problem that could spread.

In the meantime, there have been various gold raids over the past week. The raids are coming closer together now, but it's evident they’re not working all that well. For example - on Friday – gold was beat down by $50 as 4,000 contracts were dumped in under 28 minutes. This is virtually impossible – and the only way that can happen is if the major bankers ‘literally’ call each other up, and determine a price they want for gold. On Friday they set their boxes to trade paper back and forth, each time a bit lower – it’s happens quickly and quite dramatic. However, over the course of the day gold was bid back up and cannot be stopped now. As I mentioned before, it’s just a matter of time until they put ‘buying restrictions’ in place.

We have some tough times ahead as unemployment will get worse, and businesses refuse to hire. Housing isn't going to recover for years, even if the Government "takes over" the foreclosed houses and rents them out as some have suggested. Be prepared, and raise some cash. If you're in “Long Only” mutual funds, be very, very careful. It’s my guess that a massive release of stimulus will propel the market higher, but it’s a head fake. In many ways you’re living thru historic times. Economically, the world has never seen what we're going through because until now the world was not a completely "fiat" basket of currencies. We're going to see some very disturbing things coming out of the EU, and contagion is not just possible, it's probable.

Tips:
We had purchased GDX (which is an ETF basket of gold "miners") at the 61 level and we sold out of it at 67 on Friday. Although we think gold goes to 2400, miners are sometimes looked at as a way to get gold cheap, and other times as a "stock" that should be sold. Although I think the GDX has more upside to it, possibly much more, I'd like to see it bust up and over 67 dollars before getting involved again.

Gold is still around $1,850 per ounce, with silver being close to $42.

The theme continues to be simple – take profits and buy more currency – where currency means more: gold, silver and energy.

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 9-4-11

2011-09-04T05:58:00.001-07:00

This Week in Barons –9–4-11:

“All the Gold which is under or upon the earth is not enough to give in exchange for virtue!” … Plato

Dangerous Times Ahead:
- This will be somewhat of an abbreviated letter – due to (a) the holiday weekend, and (b) the fact that I’m at the Telluride Film Festival (TFF) – with my older son – enjoying the venue and ‘some’ of the film offerings. A few thoughts about TFF from a pure outsider:
1. Standing in line for 90+ min. to get into a movie – only to have the movie ‘not’ start on time – is soooo ‘yesterdays weather!’
2. The experience gets worse when you stand in line for 90+ min. and NOT get into the movie!
3. Then getting chastised by the venue chair-person BECAUSE of standing in line 90 min. for the movie and THEM not being prepared for 90 min. wait times.
4. Then someone asking the question: “Well how would you do it differently?”
5. That’s easy: Apply the APPLE model to it – from handling lines / to ‘genius’ bar / to subscription models / to downloads / to payments / to even VIEWING the movie.
6. But it’s clear that I don’t know or understand film – so we’ll leave it at that!
- This weekend I also noticed that drivers were hitting things and just continuing on – basically a hit-something-n-run. I did a little digging and noticed that hit-n-run incidents are on the increase. Lawmakers think that with the economy in the toilet, drivers are being forced to make a decision - pay the rent, or pay car insurance. Many drivers are giving up the insurance, and therefore are forced to make a choice when they hit something. They either will ‘run like heck’ and hope they get away with it, or do the right thing and pay the consequences for causing the hit. But pay up with what? They have no money, no job, and their home is worth less every day. Moreover, the incidence of robbery, snatch-n-grabs, along with home invasions are escalating by leaps and bounds. When people have ‘nothing to lose’ they are often more willing to ‘lose it!’
- Jobs – Jobs – Jobs. Well, on Friday morning the Non-Farm Payroll report told us that we had ‘0’ job growth in the month of August. They also went back and revised the last two months of data lower by 58,000 jobs. The ‘0’ growth figure included 87,000 birth/death model jobs – so in reality we lost jobs. The unemployment rate remained the same – which simply tells us that more and more people are giving-up looking for work. The U6 / underemployment rate remained over 16%. As we speak – I'm waiting for the government to revise it’s previous GDP numbers showing up that this has been a 3-year recession (the single longest recession in US history). Sure they juiced the numbers so Obama could make it look like we improved, but inject $13 Trillion into any economy and you should see some growth. But you see that it’s not sustainable, simply a desperate measure that continues to kick the can down the road.
- More Stimulus – but we have no money! Once an economy is addicted to stimulus, it cannot stop or the economy crashes. And now we’re stuck in a loop where we need ever-bigger jolts of stimulus to give ever-lesser economic response. We are the classic junkie – who needs bigger doses of junk to get less and less results. And the problem is compounded by the fact that we have no money. This week the Chicago Fed Governor came out in favor of "more accommodation". There's going to be more stimulus coming, and it's going to boost the stock market when it hits.

The Market:
Well, the market puked on Friday over the jobs report. But it's not just the jobs report. Include what’s happening in Europe – because that is tantamount to the end of a massive global experiment. The Euro is on borrowed time, the PIIGS (Portugal, Italy, Ireland, Greece, and Spain) are broken, and Germany is tired of shouldering the load. Over the next two weeks, Germany is going to have their Constitutional vote concerning giving the ECB the right to lay off those bonds, and this is going to be very interesting. The German people are tired and angry, and really don’t want this whole Euro thing any longer. Greece and Italy are on life support, and need to be allowed to fail. But when they do (despite the ECB actions) it's going to hit a lot more people around the world than most expect. Because of derivatives, our banks have more than $160 Billion worth of exposure to the area, and therefore that ripple effect comes home to roost fairly quickly.

So this month is going to be very special to watch. Between the Obama jobs speech on Thursday, the German Constitutional vote, and the two-day FOMC meeting – just about anything could happen. There could easily be 400 points swings in the market. For instance, on Thursday when Obama makes his presentation, the very next day is the German vote. If things don't go the way the bankers want, I could envision us being clobbered for 400 points.

It's certainly not a time to get brave. I think we get a huge gob of new stimulus announced at the Sept 20th FOMC meeting, and that should ignite a rally of some form. Until then, we need to be cautious. With the shortened week, and the upcoming speech and vote – I think that it's going to get "lumpy" here.

If everyone didn’t get ‘shaken out’ of gold – and in fact piled into gold when we suggested (around $1,751 per ounce) – you should sitting pretty right now, with gold just slightly shy of another all time high. With most Europeans afraid of the banks going under, the buying of gold and silver has been relentless, and there's no reason for that to end.

For the coming week, it's all about what comes out of Europe Sunday and Monday. If nothing blows up, we should get a small bounce higher. But if something ugly does hit, we will be visiting the lows again soon.

Tips:
As far as stocks go, we had a tremendous week. Looking for a good swing trade, we bought 8 positions early in the week and watched them soar. We then sold out of half positions on Thursday, locking in those gains, and taking the rest off the table early Friday. We got $3/share on RIMM, $13/share on CLF, $6/share on DECK, etc. We did however lose 25 cents per share on CSC, as it gapped down on us Friday.

We’re still holding our GDX (basket of miners) along with individual miners – and we’re being rewarded as the market finally realizes that with gold at virtually all-time highs – the miners are going to show some huge profits during the next earnings season.

Gold is now closing in on $1,900 per ounce, silver is close to $42, and the miners are waking up – we like where we are.

The theme continues to be simple – take profits and buy more currency – where currency means more: gold, silver and energy.

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 8-28-11

2011-08-28T06:53:00.001-07:00

This Week in Barons –8–28-11:

More gold has been mined from the thoughts of men than has been taken from the earth” … Napoleon Hill

Factually:
- Steve Jobs resigned this week as the CEO of Apple Computer. He is staying on the board, but my hopes and prayers for his good health continue.
- Gold ‘margin’ rates were hiked this week – which sent a lot of gold traders packing. I personally had stopped buying at 1600, because it was being stretched too thin.
- The August Richmond Fed Manufacturing Survey fell to a -10 index, from a -1 in July (anything above 0 = growth). Shipments are now -17, and new orders are -11, so basically we’re falling much quicker than expected.
- The August Philadelphia Fed Manufacturing Survey fell to a -30 index, from a +1 index in July (again, anything above 0 = growth).
- New home sales fell to their lowest levels in 15 years!
- 49% of all babies born in the U.S. are now born to families receiving food supplements from government programs.
- The SEC destroyed thousands of investigation documents – that would have helped to put Wall Street executives in jail!

Wait – let’s stop here for a minute. It never ceases to amaze me how the SEC will do virtually anything to shield their Big Banker Buddies from being put in jail for selling toxic crap as AAA investments. Most recently the SEC destroyed documents relating to at least 9,000 preliminary investigations into banks and hedge funds, erasing valuable information that would have assisted other inquiries. Despite the SEC saying the destruction of documents relating to thousands of preliminary investigations was “Not Illegal”, the National Archives & Records Administration said yesterday that the agency "did not have authority to dispose of the records.”

Remember Paulson (the supposed "genius' that made billions shorting the housing debacle) – that we later found out was instrumental in hand picking the toxic crap – so he basically made billions SHORTING the same crap he created. Well – how’s his hedge fund doing without that insider knowledge – it’s DOWN 34% this year already!

This week we also learned of low inflation rates. Unfortunately I get the fact that our inflation indices are heavily weighted toward housing, and as long as housing continues to tumble our inflation indices will continue to decrease – but can someone other than The Ben Bernanke explain the following to me regarding ‘real’ inflation? “The big back-to-school fashion is higher prices, and retailers are trying hard to keep customers from noticing by using less fabric and adding cheap stitching – calling it a redesign. Stores are raising prices an average of 10% across the board to offset rising costs for materials and labor, which are expected to jump as much as 20% in the second half of the year. More than half of retailers and restaurants with annual sales of $10M-$500M have raised prices during the past year, and 61% say they plan more price increases during the next 12 months.”

Okay, so we have inflation, more failing banks, fund managers down 35 % on the year, the SEC hiding and shredding evidence – surely this means that the economy is doing better – yes? Well, The Ben Bernanke has kept interest rates at basically 0, and just recently announced they'll keep them there until mid 2013. So, banks borrow for 0, and then lend right back to the Fed, taking in the interest rate spread. But the issue now is that our tax base is so small, Uncle Sam can't continue to operate without printing money. So, print they will. But they also hate the idea that there's trillions sitting in retirement funds and also dislike paying Social Security. So, they've created their 12-member panel to by-pass Congress. My short advice – please be very cautious of where you put your retirement funds!

On Friday, The Ben Bernanke (in his speech from Jackson Hole, Wyoming) refused to acknowledge more stimulus. He mentioned that he has unconventional tools in his arsenal, and could deploy them if necessary, but he sat on the idea that the economy is slowly mending. He then said that the next FOMC meeting would be 2-day affair – rather than the traditional 1-day event! Well, enter President Obama - who desperately wants to remain President and throw in a ‘dash’ of Joe Biden on Friday who released the following statement: “The U.S. economy is in need of more stimulus to get it moving, and we will be unveiling our new proposals to boost job growth shortly.” Obama has said he's going to unveil some form of economic stimulus and jobs plan after Labor Day. Considering that Obama can't do anything without money, and the money has to come from the Fed, do you think it's coincidence that the next Federal Open Market Committee meeting has been changed from a one-a-day, to a two-a-day?

So, it's my guess that the reason Bernanke stood firm on not mentioning additional stimulus is that Obama wants to save it for himself. Being that he's getting killed in the polls, and even his long time supporters are fleeing him, Obama would rather ‘rescue the country’ than let The Ben Bernanke do it. So, The Ben Bernanke was told to sit tight, and Obama will announce his grand plan and try and look like a hero.

The Market:
The market ended the day Friday with a decent sized gain. When The Ben Bernanke’s original statement was read, Wall Street dropped 212 points. But then it inched its way back to green, and then went up strongly later in the session.

Consider this, with Joe Biden coming out saying "we need more stimulus", is it possible that Wall Street knows more free money is coming in September, and the market is going to move up ahead of it? I think Obama is going to announce some form of monetary stimulus program and then in classic “Pass The Buck Fashion” say: "I've instructed the Federal Reserve to come up with a comprehensive plan that puts more money in the system and gets our people to work". That's why the FOMC meeting is two days instead of one.

Now with this development on the plate, how do you play this? The original plan was that if Bernanke didn't hint strongly of more stimulus the market would fall. It did, but came back up, bolstered by the Vice President’s call for "more stimulus". That was NOT an accident. He was told to start laying the foundation, softening up the people, so that when it comes, it's not a shock.

I can make a case that the market moves higher into this Obama plan and the FOMC meeting on the 20th. But one question still remains: Where does the stimulus money come from? Did you see gold's response? After all the geniuses sold it, it rallied $60. Certainly gold didn't like what happened Friday. If they do more stimulus, it's more debt, which means more dollar devaluation, which means gold goes higher!

I know most people want to know what stocks to buy, hold and sell. My single best idea is to continue to buy gold and silver, because in the next 2 years, they'll continue to be the best deal. But, what about working the market in the near term? I'm thinking sideways chop. Wall Street wants the stimulus and will feel good about that, but doesn't have the details of it, and therefore won't go "all in". I think we are going to bounce in a range between 1125 and 1200 on the S&P, until they get the news. Then it will all be about the size, the shape and the deployment of Obama's new stimulus game. For the person wanting to place long term money, I'm not sure I'd do it until the S&P is clearly over 1210 and it stays there for a while. But until we hear from Obama, and the FOMC, I'm thinking: “buy the dips” that take us to 1125, and “sell the rips” when we near 1200.

For all of you on the East Coast, my thoughts are with you. Irene is not as ugly as she was, but she's still a monster. Good luck folks.

Tips:
First a bit of housekeeping, we bought some GDX ahead of the close a couple days ago. We saw gold beginning to bottom, and the bigger miners were finally showing technical signs of moving higher. When gold pulled back almost $200 per ounce) we then doubled-up on the GDX on Friday and were nicely rewarded. So we’re currently holding a small basket of both gold and silver mining stocks – along with the GDX.

With Gold being around $1,800 an ounce, Silver around $41 per ounce, and the miners awakening and participating in the small rally on Friday – life is good! We did (as we told you) buy the dip in Gold and Silver. As I told some of you, my touch point for buying Gold was $1,750 – and well, it got to $1,751 so we purchased more anyway (missed the turn by $1 – I’ll do better next time)!

The theme continues to be simple – take profits and buy more currency – where currency means more: gold, silver and energy.

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 8-21-11

2011-08-21T08:08:00.001-07:00

This Week in Barons –8–21-11:

The desire for gold is not for gold. It is for the means of freedom and benefit… Ralph Waldo Emerson:

The markets are going crazy – 2,000 points erased in two weeks with 400 and 500 point up and down days. You've heard about European banking nightmares, austerity plans, ten-year treasuries falling to 1940 levels. Only a few understand why this is all happening, but we all understand that it’s bad.

As I look around I find thousands of people telling me about the evil Federal reserve, silver manipulation, high frequency trading, and the out of control bankers. Well, where were all of these people 5 years, 5 months, heck even 5 weeks ago? When you hear about Italy, Spain and Greece in trouble, and when you hear about the FDIC having to take over it's 66th bank here in the States – do NOT for a moment think that these things are not connected. I believe that we are rushing headlong into a global monetary reset. We will see debts discharged, enormous chaos as banks close up, and the derivative market implode. I know that I sound like a conspiracy theorist – but on May 13, 2001, I wrote: “It is time to buy gold. In the next ten years you're going to see the beginning of the end of the fiat currency experiment, and it will end very badly. Only gold is going to see you through it all". I was a little late to the Silver party because I didn’t understand how a metal of enormous industrial value, in huge demand and short supply, never seemed to move up or down in price. By mid 2006, I started paying attention to the Commitment of Trader Reports, and the mine supply and inventory reports. When you put these together, you begin to understand the manipulation that is going on. I started buying silver at $9.50 and since then it’s gone to over $41 an ounce.

But what about JOBS you ask? We can talk about Bank of America cutting thousands – but if you thought that going ‘green’ was going to get you there – think again. Evergreen Solar Inc. (the once-promising company that took tens of millions of dollars in incentives from state government) is now bankrupt. The company is filing for Chapter 11, and plans to cut more jobs on top of the 800 it eliminated earlier this year. So yes – JOBS are still an issue!

So what now? This coming week is the Jackson Hole Kansas City Fed symposium, and there are 2 big reasons why this is so important. One, is that it was at one of these very same Jackson Hole meetings that The Ben Bernanke announced the QE1 stimulus program. The second reason is that the economy has been declining to the point where each and every market ear will be tuned in to what The Ben Bernanke has to say when he speaks on Friday. I believe that most of the market volatility lately has been Wall Street’s desire for more QE, and that if Wall Street doesn’t get more – then we will fall and fall hard.

Now The Ben Bernanke has tried to put on a brave face in front of deteriorating economic news. The NY Fed came out this week with a ‘light’ manufacturing report, and then the Philly Fed went from positive to negative 30. We haven't seen that number since October of ‘08. So why would The Ben Bernanke NOT announce any stimulus this week? Possibly because he knows Obama is putting together his own version of a stimulus plan (to encourage jobs) that he plans on revealing after Labor Day! But I tend to think that if The Ben Bernanke doesn’t talk about QE3, Wall Street will show him how ugly they can make things – so please be careful this week.

And as for Silver and Gold – yes – you knew it was coming! Something happened this week that might be the rocket booster for gold and silver. Venezuela demanded delivery of some 211 tons of gold held in vaults in the UK, and money held by JPM etc. Now this could be huge. One of the problems with the SLV and GLD exchange traded funds is that I don’t believe that they have the gold and silver that they say they do. And as more and more people take physical delivery – you can begin to see the squirming start. Why? Because like all bankers, they've leased, sold, rented, and leveraged all the deposits. That is to say: if everyone comes knocking and asking for their gold and silver – there’s not enough to go around. And if other countries (like Venezuela) decide to call in their holdings, we are going to witness a massive panic at the upper levels. Now Hugo Chavez also nationalized his gold and silver mines, and I think others will follow suit in Peru and Bolivia. Therefore we may finally see Silver make a major move because:
- We’ve got countries trying to take back their metals.
- Bart Chilton is sending e-mails out to all the people that have written him concerning the Silver manipulations.
- We have a global economy on the verge of falling off a cliff.
- We have Gold soaring.
- And we have all the people that missed Gold, looking to buy Silver.

Which brings up the SLV again. In the back of your mind just remember that you could get trapped in some form of melt down fund. The SLV is good for quick moves, but potentially (as James T writes): “What is held there is simply certificates for the metal – and (by the way) – you don’t have the right to audit the inventory. Now there is a Canadian mint ETF called “PSLV” that is absolutely backed by the physical metal (verifiable – 400+ page inventory list) – however it does trade at a 20% premium to the SLV.”

The Market:
I can easily make a case for the market to continue to fall, but let’s suppose that the "insiders" find out that Bernanke is going to release QE3 news on Friday. We could see the market gain every day this week in anticipation. So I can make a case that we continue to crash, or that we soar higher. Heck: two days ago Deutche Bank said they still think the S&P will end the year with a 30% gain. That's a pretty major prediction, considering we're down 10% on the year right now!

Remember, we called for a summer drop, and then sometime in late September a move upward towards year-end. Now we had no clue that a 2,000 point smack-down in 2 weeks was in the cards, and I can easily make the case that without stimulus we simply continue grinding lower. Now even if The Ben Bernanke drinks the kool-aid, and announces $800 Billion in additional stimulus – I don’t think that we’ll make all new market highs. But for this moment, the trend has been established and it's down. Unless The Ben Bernanke or Obama come up with more free money for Wall Street, I don't see this drop stopping until a minimum of DOW 10K, but more likely a move to 9,400. Right now our plan is to look for more downside - especially if Bernanke gets lockjaw on Friday. But if he doesn't, and gets generous, we should see a few hundred points to the upside quickly and potentially enough to get us back to flirting with 12,500 by year-end. Be careful, but if you can grab some silver – it’s my opinion that it's going considerably higher. All in all, this is the most dangerous market I've seen in my years of doing this.

Shout Outs:
Doug L writes: “The Department of Defense is floating ideas to cut military pensions. The old deal used to be: put in 20 years and retire with 50% of your base pay. Well, they say they can't afford it any more, and want to alter it. Now this isn’t someone in the post office, or the secretary pool. This is a person that virtually wrote a blank check to the Government for everything including his LIFE – all in the name of duty, honor, and patriotism. And now Uncle Sam wants to cut his/her benefits?”

Bob W writes: “Last week saw mutual fund outflows total $40.3B, and $17B the week before. That’s the largest 2-week move out of funds since October 2008. That $57 Billion is going to leave a mark.”

Tips:
We stopped out of our short term holds last week for small gains in: SPY, FCX and BTU.

Gold is now around $1,850 per ounce, and Silver’s up over $41 per ounce. The miners (however) have gone the way of the indexes again – which makes them a buying opportunity to most.

John A writes: “This could be similar to the 1980 run. As the under valuation becomes even more extreme, the public and institutional investor will suddenly rush into the gold stocks. With gold up 20% and the gold stocks flat for the year, it’s going to take a realization by the public and hedge fund community that gold stocks are extremely cheap relative to gold. But like the gold rush in 1980, if you were not in BEFROE the move, it was very difficult to pay up for the stocks.”

If we get a dip in Gold and Silver, I do think that it’s buyable – but be careful with Friday and Obama coming – and be ready to be nimble.

The theme continues to be simple – take profits and buy more currency – where currency means more: gold, silver and energy.

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 8-14-11

2011-08-14T11:07:00.001-07:00

This Week in Barons –8–14-11:

TW3 – That Was the Week that Was!

Remember the old TV show – “That Was the Week that Was!” – code named TW3? Well, what a week we just lived through! When we woke up Monday morning, we wondered if the futures were going to be as ugly as they were late Sunday night given the S&P downgrade of the US debt. All last weekend people were talking about the debt downgrade and what it might do to their 401K's. I'm still standing on my premise that most of the reasons you're being given for the market volatility and collapse are just smokescreens. Europe – nah that’s been discounted for months. The debt ceiling – nah that’s just political bickering at it's finest. And then of course the S&P debt downgrade. First off, they told everyone for a month it was coming. And this is the same agency that during the ‘04-‘06 housing bubble had no problem taking 100% of those mortgages and creating a tranche labeled AAA. Now do you really think that they did not know they were selling junk securities as AAA investments? Of course they knew. They were TOLD to do it. Now everyone thinks they got religion by downgrading the U.S. debt. Nope – they were TOLD to do it. The whole game plan is to devalue the dollar to the point of it being worthless. This downgrade simply opened the door for Obama to create a "Super Congress" of 12 people who will be almost dictator like.

Now remember – there are about 50M 401k’s out there with a couple trillion dollars in them. The general public has more exposure to the stock market than at any time in history. This is exactly why the debt ceiling talks and the S&P downgrade got so much airplay. With the economy in the pits, with housing falling and jobs scarce, people are very concerned with what might hit their 401K. Now, there’s no question that the economic news of late has been horrid. From durable goods to ISM's the economy is sputtering, and therefore, for 12 days we’ve sold hard – from 12,7000 to 11,269. There’s also no question that Wall Street wants QE3 and will accept it in any form, but The Ben Bernanke knows that if he announces more stimulus, the dollar will fall, inflation will soar, gold will move higher, and China (who's already been very vocal about what we're doing to our currency) will move to get out of even more dollar denominated assets. But the bottom line is: if we don’t pump money into the system – we’re going to fall into a soft depression.

What's it all mean now? First off: Gold – my forecast for the entire year was that gold would see $1,800 and we did that this week. FYI – my gold goal for 2012 is $2,400 – and no it won’t get there this year! But then when QE3 is announced, gold could indeed break over $2,000 by the end of the year. Secondly: Silver – the issue is still JPM being allowed to naked short 75% of the world’s production of silver, high frequency trade it lower, and then step back out. One day they will lose control of that manipulation, and silver should see $75 or more. Thirdly: Stocks – I thought we would lose 1,000 to 1,500 points over 2 to 3 months – not 2,000 points in 12 days – so that caught me off guard – absolutely!

Is the bottom in? That’s tough to say. There are so many “Firsts” here that anything you say could be wrong the second you say it. We're making history here. If you look at the technical picture, you could have made an argument that 1140 on the S&P would hold, but it didn't. The ONLY reason I think that this drop will stop and counter trend higher is that the stock market is the single biggest business on earth, and when it looses value, companies get even tighter with layoffs, cost savings, expansion plans, and cutting work forces. If The Ben Bernanke, the Plunge Protection Team, and Wall Street don't put an end to the selling – the economy will roll over into a soft depression directly in front of an election year. And it’s tough to think that will happen! So I’m betting that there's an "emergency" meeting of Politicians, the Ben Bernanke, and Wall Street to announce another stimulus scheme relatively soon. That’s the only thing that will prevent us from reaching such lows this year – instead of late next year!

The good news is that: "We're living through history". We’re seeing the end game of 40 years of fiat currency. We're seeing the accumulation of Wall Street and banks taking over American Politics. We are also seeing a first hand look at what happens when it all unravels. I’m thinking that very few of us have ever been invited to:
- a Bilderberger meeting – where 500 of the worlds biggest elite meet to "chat" about things;
- Or invited to the Trilateral Commission just to sit in on what they're deciding about the world;
- Or invited to an exploratory committee at the United Nations, or the Council on foreign relations.

In 1935, Major General Smedley Butler wrote a book called "War is a Racket." General Butler was a career military man with 2 Congressional Medals of Honor who wrote: "I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents." Honestly we’re not in Iraq, Iran, Afghanistan and a half a dozen other places because of threats to us. We're there because currently, there is not enough of a middle class to pay enough taxes to keep ‘the military’ in a “lifestyle to which they’ve become accustomed!” So we’re fighting wars – on at least 3 fronts – to fund our global banking efforts.

The Market:
Right now most "smart people" think that QE3 won't be coming because it won't pass Congress. The other side of the coin knows that QE3 is coming because:
- Consumer Confidence just hit a 30 year low
- Shipping rates have fallen again, showing weakness in trade.
- Millions are hanging onto their homes by fingernails, hoping for a housing return (that will not return) and will eventually let go, adding millions more foreclosure properties to the already beaten down housing market.
- The Baby Boomers (who created this wealth) are downsizing very quickly and dramatically, and prices decline in a market place where there are more sellers than buyers!

The bottom line is that there’s no money to pay the credit bill. This is why things are going to get so ugly that they will be forced to pull off a global meeting and do a global economic "reset" on the debts and currency. Now here’s the interesting part: Each time The Ben Bernanke comes rushing in with money, inflation will surge – until one day the surge stops. That is what we have to monitor closely, because that's when we'll need to DUMP gold and silver. Right now we're in the inflationary period. Right now we’re creating money out of thin air to try and stuff all the holes in the dam. But there comes a tipping point where things become so bleak, everything contracts. Credit contracts, confidence contracts, and no one will risk anything. Instead of buying, people will begin to save. So with less demand, prices will start to fall. Eventually even "printed dollars" become more valuable than "stuff" because everyone fears the stuff will keep falling in price. When we get to that tipping point, if we haven't already had the global monetary reset, that's when it will be time to back out of gold and silver. I’m thinking that the worst hits in 2013.

In the coming weeks and months, (in order to sucker in the most investors), I think that they are going to bounce this market. As long as nothing really "meaty" hits the headlines, like a major bank going bust, or a default out of Europe, I tend to think we bounce upward for a few hundred points here. People have been trained to "buy the dip" and they probably will. But if Wall Street doesn't see enough dip buyers, it will twist The Ben Bernanke's arm for more stimulus by sending the market lower, much lower. The market isn't down because of the S&P downgrade, the debt talks, or French banks. It's down because OUR banks and Wall Street haven't heard the magic words out of The Ben Bernanke about QE3. When we get those words, we're going higher in a big way.

So, I think we’ll get a run up and potentially close to the 12,000 level. But if Wall Street doesn’t like the participation rate, you can bet we'll fall again, this time back to the 8200 level. Don't throw caution to the wind, but I think you can scale in with some positions and catch this next bounce.

Tips:
Nothing makes you more popular than winning. With the rise of Gold – it appears that I’m back on many people’s ‘Most Wanted’ list! For that I say: Thank You for all your correspondence – and please keep it coming!

David S caught the break-out in gold miner AUY last week – going from 13.5 to 15 – and if you were part of that – congrats.

In the short term account – last week – we picked up some:
- SPY at 115.28 – currently @ 118.24
- FCX at 45.03 – currently @ 45.50
- BTU at 47.24 – currently @ 48.45

Gold is now around $1,740 per ounce, and Silver’s dropped back to just over $39 per ounce. The miners have picked up as of late – now that people are realizing that with the price of gold – they can’t help but make money. I think you can buy this dip in gold and silver here, but buy in slowly – and if you don’t get into the ‘physical’ metal try the ETF’s (Gold = GLD, Silver = SLV).

The theme continues to be simple – take profits and buy more gold, silver and energy.

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 8-7-11

2011-08-07T09:53:00.001-07:00

This Week in Barons –8–7-11:

Mad Ben – Beyond Thunder-Doom!

In a world that’s based upon energy, food, and ‘shiny stuff’ – we’re beginning to re-create an old classic movie that is filled with ‘Firsts’!
- The Fed is supposed to regulate monetary policy and ensure low inflation and full employment. Never before has it been told to "manipulate the stock market.”
- Never before has any single country run up liabilities of $100+ trillion.
- Never before has a deficit been so large, or our trade accounts so skewed.
- Never before has our dollar been so purposefully devalued.
- Never before have our politicians come up with the idea of a "Super Senate" made up of just 12 people that will have more power than the entire congress, and be Dictators.
- Never before has the U.S. debt been downgraded from AAA to AA+!

What does the downgrade mean? In a "normal" time, it would mean interest rates would have to rise. In a “normal” time it would mean massive problems all around the globe as fund managers, and pension managers that have a directive to only hold AAA rated securities need to decide if they have to sell US treasuries since they are now only AA+. The new normal is: “Mad Ben - Beyond Thunder-Doom!”

We just came through a historic "mini crash". In ten days we peeled off 1,300 DOW points, and capped it with a 500 point down day. Then on Friday we saw some of the most volatile trading I've seen since 9/11. The market was up 170 points early on, then dropped all the way to -160 then rallied back, fell down again and finally finished out the day with a 60 point gain. But all this is still just the warm up pitcher for the "big First" that all of you are going to live through over the next 4 years – a Global Depression. Like I said in last weeks letter, no single item is the doomsday pill. It's not the credit rating downgrade, the debt ceiling, the unrealized liabilities, the jobs market, the housing market, the exporting of jobs, the make believe political correctness, our schools being more worried about diversity training than mathematics, or that people are more knowledgeable about “Jersey Shore” and football than how our government and economic policy works. It's not the manipulation of every market. It's all of this combined together.

We're watching a slow moving train wreck. The question to ask yourselves is: Is it really possible that all the ills we face are the accumulation of thousands of good intentions gone wrong? Or are we in the final stages of what was planned and carried out by the real money people behind the scenes that actually run our country? Just understand that history shows that when bankers run the governments – you get what they give you. Each time it's a default. Never fails.

Consider this for a moment:
- We have 12 people in congress that have more power than anyone!
- Our President wants to raise taxes on an already crippled economy
- Our food stamp program touches 45.6 million people.
- Over 2.2 million additional foreclosed homes wait to come to market.
- Our "high paying " jobs are over $15/hour.
- $1 out of every $5 dollars in income is on the back of a social program. (FYI in PA we just passed a law where people on welfare will get free cell phones and 250 free minutes. In Florida, Comcast has to give low-income people $9.95 Internet, and computers under $150.

So, what will The Ben Bernanke do? He will print more money! Now, do we have a ‘Black Monday’ for 400 points right out of the gate? Does The Ben Bernanke talk about QE3 on Tuesday – and if he doesn’t, will the market peel off another 1,000 points in a week? Could the whole AAA down grade be a ‘non-event’ and continue Friday’s late-day bounce, in anticipation of a more liberal Fed? But just remember, whatever comes out of the next few days, it’s all just band aids. My guess is: the White house needs a strong market. Wall Street demands more QE. John Q. Public wants his 401K. Therefore, I think we get very strong language out of the FOMC meeting this week suggesting that they see the need for a new program of stimulus, and it should be here soon. That will calm the markets, and probably induce a move back up. And if those words are not forthcoming, then the market will continue downward.

If I'm right, and we're in the end game for economic expansion, and heading towards recession / depression, you need to think gold and silver for investments. I can see holding some Hong Kong dollars. I can see a position in Swiss dollars. But if all goes to hell in a hand basket, is it really possible gold will have no value either? History says no! I truly expect the new global reserve currency to be backed by gold. For 6,000 years gold and silver have been money. Our Constitution says it's the ONLY money. So, I continue to buy it.

The Market:
Factually the jobs report came out this week and it stunk – but not nearly as bad as it should have. It said that we created 117,0000 new jobs – and yes that number is about as real as me selling you land in Florida – but we still need 200,000 new jobs to be expanding. So talks of ‘double dip’ are on everyone’s lips.

Monday will certainly be an interesting day. I can make the case for another crash. I can make the case for an up day. I'm not nearly connected enough to know what Goldman and the white shoe boys are going to do. Tuesday brings us the Fed meeting and I think all eyes will be on them. If we do not hear The Ben Bernanke say that he is going to / or hint that he is going to begin the printing presses again – ‘look out below!’ Everyone knows that the unemployment rate fell because the labor pool shrunk. The Household survey said that we lost 38k jobs, which is nowhere near the requirements for a ‘recovery.’ Without The Ben Bernanke and the Fed coming up with at least 2 trillion in easing/stimulus, there is simply nothing to keep the market up.

So, hopefully you're all mostly in "cash", and considering a move to gold/silver. I know that gold is $1,600+ per ounce. I know the TV wizards say that it's a bubble. They told me that at $500 too. But last year we said gold would see $1,800 this year, and we’re almost there! From there I'd expect a top at about $2,600 over the next year.

Now – because many of you must be tired of me talking about ‘gold and silver’, here’s a potential hedging strategy: The US Post Office sells what is called the "Forever" stamp. This is the current single letter stamp that can be used forever to mail an item, with no currency denomination on it. It is currently 44 cents, and the next jump will be 50 cents in the next couple years (most people’s opinion). So, why not take on a position in postage stamps? They’re real – I just don’t know how many you can buy!

This week gold and silver could take a bit more "hit". If this market falls any more, margin calls will go out again. If you're a fund manager and you have no spare cash to meet the margin calls, you have to sell something. Some fund managers will sell more stocks, but some will sell the huge gains in their gold portfolios to generate the cash they need. If we get a dip, I’ll be buying it. Good luck! This week has the ability to be one of the most dramatic of the last two years.

Tips:
Gold is now over $1,650 per ounce – with Silver’s dropped back to just over $38 per ounce. The market continues to punish the miners as it does everyone else – so if you have the chance to get into the ‘physical’ metal – or the ETF (Gold = GLD, Silver = SLV) please do. There is a buying opportunity coming for the miners, and just follow me on twitter for that notification.

The theme continues to be simple – take profits and buy more gold, silver and energy.

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This week in Barrons - 7-31-11

2011-07-31T07:09:00.000-07:00

This Week in Barons –7–31-11:

Republicans vs Aliens:

Yes, I saw the movie “Cowboys vs Aliens” this weekend. And yes, it would have been better filmed solely as a western – without the aliens. And yes, I realize that the roots of the movie date back to a comic book. And not to take political ‘sides’ – but realize that there is a comic book ‘side’ of what’s going on in our government today. And like that – many of us (including me) miss the ‘finer points’ of what's really happening in the market place. Allow me to fill in some gaps:
1 – Going back a little bit - Lehman was crashing – the market was at 6,600 – the Government (‘Aliens’) started a program (QE1) where they would give banks a lot of money – with no obligation to pay it back – and the banks started playing ‘Cowboy’ in the stock market. Results: The market went up. And then we hit a ‘soft patch.’
2 - Another ‘Alien’ program was announced – QE2 – where The Ben Bernanke announced that he would begin buying Treasuries to keep rates down and put money in the system. Now – it’s ILLEGAL for The Fed to do this – so they are required to purchase treasuries from 18 primary ‘Cowboy’ dealers – such as Goldman Sachs (GS), J.P. Morgan (JPM), etc. Now everyone knows what J.P. Morgan pays for treasuries – but NO ONE knows what The ‘Alien’ Ben Bernanke PAYS it’s ‘Cowboy’ dealers for them. JPM could mark these up 100% or 200% and no one would know!
3 – One more time: The Ben Bernanke is head of a privately owned banking cabal called The Federal Reserve. The Federal Reserve prints money out of thin air. Institutions like JPM are shareholders of the Federal Reserve. They sit in private rooms with The Ben Bernanke, and when The Ben Bernanke wants to buy treasuries – he goes to JPM and buys them. What are the prices – no one knows – but they’re not cheap!

For most of 2010/11 the monthly average spend for QE2 was about $80 billion. Assuming a 100% mark-up that means that the banker/’Cowboys’ get $40B per month of free money to play with. So they take their billions and buy stocks, and (as history shows), the market shrugs off the soft patch and soars even higher. But eventually the stimulus runs out. Now it’s mid summer, and the economic news is getting worse and worse each day. Honestly, stocks only move up when there are more buyers than sellers. Now what if consumer confidence is rattled so much – due to all the talk of the debt ceiling and downgrades, that people stop buying everything? And what happens if the U.S. Treasuries are downgraded – and all of it hits the skids. That is the day that QE3 will be announced. They won't call it QE3, they'll attach some esoteric name to it, but it will be the same thing. The ‘Alien’ Ben Bernanke is going to hand more stimulus to the ‘Cowboy’ banks, try and keep rates down, and the banks will go back to playing reckless ‘Cowboy’ in the market. I think QE3 will happen in the fall, which will ignite a major market run into the year-end.

Factually:
- Jeffrey Immelt (CEO of General Electric) is the White House "Jobs" Advisor. Recently GE decided to send their entire X-Ray/MRI division to China. They will be hiring thousands in China and spending over $2B in China – and Jeff is the White House “Jobs” Advisor? The reason Jeff gave: On any given day, a manufacturer in this country might have to deal with any of up to 38 regulating bodies. EPA, DEP, OSHA, FCC, FDA, EEOC, NLRB, etc.
- On Thursday, CNBC had a phone conversation with David Stockman the former CBO director and Reagan’s economic budget director. He laid it right on the line, he called the US a banana republic, here’s the link: http://video.cnbc.com/gallery/?video=3000035640
- JT sent us an interesting idea: Sovereign governments such as the United States can print new money. However, there’s a statutory limit to the amount of paper currency that can be in circulation at any one time. Ironically, there’s no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some suggest that the Treasury create two $1 trillion coins, deposit them in its account in The Federal Reserve and write checks on the proceeds.
- Currently: 50.5M Americans are on Medicaid, 46.5M are on Medicare, 52M on Social Security, 5M on SSI, 7.5M on unemployment insurance, 44.6M on food stamps and other nutrition programs, and 24M get the earned-income tax credit, a cash income supplement. NONE of this includes the ObamaCare entitlement that will place 30M more Americans on government health rolls! In 2010 payments to individuals were 66% of the federal budget, up from 28% in 1965. We now spend $2.1 trillion a year on these wealth redistribution programs, and the 75M baby boomers are only starting to retire.
- Mr. Obama (arguably) is the most spendthrift president in history. He inherited a recession and responded by blowing up the U.S. balance sheet. Spending as a share of GDP in the last three years is higher than at any time since 1946. In three years the debt has increased by more than $4 trillion thanks to stimulus, cash for clunkers, mortgage modification programs, 99 weeks of jobless benefits, record expansions in Medicaid, and more.

Please – when I say be careful out there – please be careful out there!

The Market:
As I'm sure you're all aware, the market has been sinking for days now, and with good reason. It's not just the debt ceiling; it's the credit worthiness of the nation as well. What do you do as a pension manager if your charter says you can only invest in AAA rated paper – and then the U.S. Treasuries are downgraded to AA+? Do you re-write your charter? Do you sell them out and go to private AAA rated bonds? Do you drop the US and look for notes issued out of Switzerland?

There's a lot of confusion, and tension over the mess we've gotten ourselves into. But one thing is for sure; the circus that you are witnessing is completely political in nature. Both sides are scaring seniors and those on disability that they won't get any checks because the mean people on the other side of the aisle won't let us spend more than we take in. As I write this on Sunday morning, there are still no decisions either way. My guess is that they hike the ceiling and come to some form of a deal. It might be a temporary deal to stave off the "no checks go out" threat, but a deal nonetheless. Factually, as SF writes:
- The US GDP for Q2 came in at 1.3%, AND Q1 was revised lower to 0.4%!
- Now remember, the U.S. Government’s "deficit " model is based on a pre-established revenue model – where GDP was presumed to be 3.9%. What revisions will necessary for a 1.3% forecast?
- How will the Government spend less, raise taxes, and still put people back to work at productive jobs? Neither political party has begun to address this economic reality.

FYI, This proves what we have been saying for months: There never was a recovery out of the recession. Despite hundreds of billions in stimulus (QE1 and QE2), the economy weakened horribly. A couple years back, when we were talking about the housing implosion and the debt implosion, I said something that probably less than 1% of you believed. I said "This time it's different". There would be no recovery to the Great America we once knew. Oh sure they can jerk the market around to suit them, but the true economy, where the middle class was the single largest group of relatively well off people is GONE! None of this will work for the long haul. They are still going to inflate the currency, so it devalues. There's a massive bear market ahead of us, the only question is the timing. I can make the argument via statistics that it should start later this year and build into to a full blown disaster next year. I can also however, make the case that they stave it off with QE3 until 2013, so the President doesn't look like the buffoon his policies represent. Imagine if the bear hits in the next 4 months, when it truly should – What could Obama campaign on next year: a failed economy, a failed market, Obama-care nightmares for employers, unemployment over 10%, housing still crashing – wow pick one!

In the short term, I think they get a deal done. I think we get some form of relief rally on that news, but it may be a short lived rally unless they hold a gun to the ratings agencies heads and make sure we don’t get the dreaded credit rating downgrade. Now, if we get a deal AND the ratings agencies come out and say: "With this new deal we feel confident we do not have to lower the US credit rating" we will see a rally of many hundreds of points in a very short period of time.

Last week we bought some ‘cheap’ call options on the DOW ETF (DIA) in anticipation of the deal being struck. If we do get the deal and a relief rally, we'll make some decent short-term cash. If we get a deal and the credit agencies back off of the downgrade, we're going to make more – we’ll see.

I continue to buy gold and silver. I like physical much better than buying the GLD or SLV, but I do both. I’ll say it again: “Look at Gold again – it’s at another all time high.” But do not buy it here. I still think we are going to get some form of deal announced, and gold and silver will take a hit on that announcement. When that happens, that will be the TIME to load up.

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

This week we bailed out of CRK, POT and NBR flat – so no harm no foul there.

Gold is now over $1,630 per ounce – with Silver hanging over $40 per ounce. The miners took a hit with the rest of the market – so a buying opportunity is coming for them.

The theme continues to be simple – take profits and buy more gold, silver and energy.

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 7-24-11

2011-07-24T06:42:00.000-07:00

This Week in Barons –7–24-11:

Want to Impress the Teacher – Bring an Apple to Class!

Did you see Apple's earnings? They were truly incredible. Do you know why? Well the first thing that comes to mind is that they sold a lot of iPhones and iPads. Yes, that’s what made the earnings, but that’s just the end result of something tremendous. Years ago GM, Ford, DuPont, GE were no different from Apple. In fact, years ago, many companies in America were just like Apple. They invented and created great products and people devoted themselves to buying them. But then Uncle Sam stepped into the car industry, the chemical industry, and into virtually every area of manufacturing and effectively screwed it up. Has anyone voiced the opinion that the reason the U.S. is still a leader in ‘technology’ is because the U.S. government doesn’t micro-manage it. Technology is like America was 100 years ago. 100 Years ago, two people could start baking pies in their kitchen, sell them around town and eventually become Swanson frozen foods. Today that would be illegal. But in technology, two people can build a gadget in their garage and sell it over the Internet and become a Dell or an Apple. Technology is really the last bastion of freethinking, ambition and drive that people have left. Why is it that none of Uncle Sam’s ventures can create $20B in profits in a quarter? Amtrak – nope – it’s broke! The Post Office – nope – it’s broke! Medicare, Medicaid, Pension Funds, FDIC – nope – all broke! ONE of the things that made America great was that anyone with a dream could cobble something together in their home, test market it around town, and if things went well, would become a success. Now the U.S. shuts down your child’s lemonade stand because you have no permit, and it's got to be made in an approved kitchen. Uncle Sam kills everything it touches. For the most part, technology is still "free" to dream, and create, and we do that well. The minute Uncle Sam gets involved, that industry too will become subpar!

On a different note – David S writes: If you're still bearish on long-term silver prices, you'd better reconsider your stance. Dollar-denominated Chinese silver futures started trading on the Hong Kong Mercantile Exchange on Friday. This development will grant Asian investors direct access to the metal, and will blunt the U.S. dominance in silver-bullion trading. It's also highly bullish for long-term silver prices.

On a political note: I listen to both sides of the debt ceiling debate and I shake my head. Not because of the wrangling and bickering, but rather because most people really think that these groups are interested in healing America. All they are interested in is their own pet projects and dreams. Steve Forbes writes: Given where negotiations are today on the budget/deficit, the country will actually show slowing GDP, increasing unemployment combined with reduced benefits. The U.S. could easily slip into a deep recession and possibly, depression. Values will be challenged. This will be no ordinary rebound.

Factually:
- A judge yesterday dismissed a lawsuit of over $1B against Goldman Sachs from Australia's Basis Yield for fraudulently selling securities to it, in a 2007 CDO. The judge made her decision based on a Supreme Court ruling that U.S. securities-fraud laws apply only to transactions in the U.S! WHAT – it’s only ‘fraud’ if the transaction occurs within the U.S?
- A panel of judges rejected a new SEC rule that would give investors more power to oust corporate directors. The court said the SEC acted "arbitrarily and capriciously" because it failed to adequately analyze its economic costs and benefits!
- On 7/19 over 50,000 contracts of silver were "traded" in about 4 minutes. Now one contract is 5,000 ounces of silver. So you’re telling me that someone dumped 250M ounces of silver ($10B) in a minute. That is about one/third of ALL the silver mined in an entire year on this planet!

Finally – an audit of the Fed's emergency lending programs by the Government Accountability Office, ordered by the financial reform law passed last year and released Thursday, revealed: "that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world." In a statement: “This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else." Our Federal Reserve, with no Governmental oversight sent $16 trillion to banks around the world! But wait, we found out that the CEO of JP Morgan Chase (Mr. Jamie Dimon) served on the New York Fed's Board of Directors at the same time that his bank received more than $390 Billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs. Then what happened? Obama appointed another JPM employee, Mr. Bill Daley to be his "Chief of Staff". Do you really think that this is simply coincidence?

The Market:

So the market went up, and up, and up this week. Frankly it was quite the amazing performance considering the ills that face us from Europe, our own debt dilemma, and deteriorating economic news. For instance has anyone been paying attention to the layoffs picture? Cisco, Lockheed and Borders laid off over 23,000 – and that’s on top of the Challenger layoff report that was over 43,000.

Yet the market responds to good earnings – and for the most part they're coming in nicely. However, looking between the lines, Americans are beginning the credit card journey again. If you buy a big screen TV today, your payments don't start till June of 2012, yet the store books the sale in total. Are those ‘good earnings’?

In any event, the market rallied this week and we got lucky catching a large portion of it. But of course the question is, what now? The last run up basically ran out of steam at the 12,800 level on the DOW. Thursday we hit a high of 12,751 and faded off, and Friday we faded off again. So, is this just a pause ahead of the weekend? Was everyone too worried about bad news out of Greece, or more bombings in Oslo? Or is this just a market running out of gas as we get half way through earnings, and we've heard from most of the majors?

On Friday afternoon, there was something of a meltdown concerning the debt ceiling talks, and Boehner simply walked away. Evidently Obama is still pressing for tax hikes, and we all know that tax hikes aren't the problem. The problem is that we spend more on programs than we take in. Obama is blaming the Republicans and scaring the old folks with the rhetoric about how they won't get social security, Medicare and Medicaid. In any event, it's going to be a burden to the market.

I tend to think that we're in "stall" mode here. Of course we're going to get some form of wicked one day-pop when they finally hike the debt ceiling and kick that can down the road, but the market feels tired. I'm siding with the idea that we're going to try one more time to attack 12,800, and we might actually get it for a day, but then we will slide back down for a while as August is usually a flat month, and September often sees true selling.

As I look out over the week ahead, the pace of earnings starts to slow. The market will hope for a good resolution to the debt issue, and will do its best to rally on it. But again, we all know that's coming, and we all know it's basically priced-in; so any "pop" could be a last gasp. I think it's probable that we do more selling later in the week than buying.

Just remember the fiscal issues surrounding: Greece, Italy, Spain, Portugal, Belgium, and Ireland are not solved. That can was kicked down the road by the IMF/EU. And the U.S. still can’t pay its bills. At some point, either this economy improves, or we’ll see QE3. In the not so distant future all of this will come to a head, and you're going to live through history. That will be exciting!

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

We come into the new week carrying a few positions; we sold out of quite a few and booked profits on Friday morning. We still have some CRK, POT and NBR, but we will bail out quickly if things don’t go our way on Monday.

It was another great week for the metals and the miners! Gold is over $1,600 per ounce and Silver is over $40. The miners continue to do well for us – and even DNN gained over 9% on Friday – and is continuing to recover nicely from the Japan fiasco.

The theme is simple – take profits and buy more gold, silver and energy.

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog: rfcfinancialnews.blogspot.com/>
Until next week – be safe.

R.F. Culbertson
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This Week in Barrons - 7-17-11

2011-07-17T08:51:00.000-07:00

This Week in Barons –7–17-11:

Want to Lose Weight – Buy Stocks / Want to Make Money – Buy Gold!

OK, remember when we talked about (a) the run on the Italian banks, (b) The Ben Bernanke edging toward QE3, and (c ) inflation soaring; well – they’re all here with us!

Factually:
- Nearly 2/3 of small-business executives say they're not expecting to add to their payrolls in the next year and another 12% plan to cut jobs, according to a new Chamber of Commerce survey.
- CSCO just announced they were going to cut 10,000 jobs to "cut costs".
- Moody’s just downgraded Ireland’s debt - with outlook negative – because they believe that Ireland will need "further rounds of funding" once the current bailout dries up at the end of 2013.
- Novellus and AMAT both are cutting their 2011 chip equipment spending outlook, citing weak spending.
- Our Trade Im-Balance went from $-42.7B to $-50.2B!
- Deutsche Bank and its MortgageIT unit seek to dismiss a $1B lawsuit by the U.S. government. The suit accuses the bank of lying to qualify thousands of high-risk mortgages for FHA insurance, thereby making them "highly marketable" for resale.
- JP Morgan is to pay a $9M fine for Philadelphia City bid rigging for their city bonds.
- The CPI ‘core’ (a measure of inflation) came out with a gain of 0.3, which is purely inflation.
- The Empire State manufacturing report came out at -3.7, which continues the ‘negative’ trend line.

And then there’s the debt ceiling – that we’ve increased 80 times since WWII, but what would happen if we wouldn’t increase it? Stocks would fall because a huge number of publicly traded companies get their money via contracts with the Government – and depend upon Uncle Sam for their revenues. No revenues and stocks fall. But what would happen to interest rates? Common thinking says they would have to rise sharply and people would bail out of treasuries. Well, let’s think through that a bit. OK – if people can’t buy stocks due to no revenue; can’t flee to Europe because they're falling apart; some will buy gold and silver, so they will soar; some will buy Brazil, Hong Kong, China and India; but the absolute bulk of the money will "HAVE" to go back to Uncle Sam. There's nowhere else for it to go. And it’s my contention that with a stampede of people buying treasuries, rates would actually fall.

Bizarre? You bet. But more likely, it's all a head fake anyway. So what happens when they raise the debt ceiling - frankly not a lot? Sure we'll get the knee jerk reaction and stock will rejoice for a bit, and gold and silver will pull in a bit. The spending cuts they're jockeying for are all smoke and mirrors – we’re still broke. And afterward gold and silver will rise and The Ben Bernanke will announce QE3.

Now someone wrote in and asked me when I think that this will really ‘hit the fan?’ I said sometime in early 2013. Right now Obama is fighting for his life. His approval rating is in the toilet. (In a recent poll they put Obama against ‘a Republican’ (NO NAME) and the Republican won!)   But to save face, since he can't create jobs and he can't fix the economy, he can push Wall Street and The Central bank to keep the market's elevated. That way he can point to your 401K and say "see, in 2008 the financial sector was blowing up, the DOW was at 6600 and look at it now! My policies saved your retirement and there's more to come.” With that in mind, they'll do all they can to keep this market looking like it's not in intensive care. They might not be able to pull it off, but they'll try. Now, what happens come January of 2013 when either Obama is sworn back in or we get a "new guy?" What's changed? We're still broke; we still can't afford our social programs; there's still no industry; and the "best job" is at Wal-Mart! So, it's my guess that it would be the perfect time for a massive pullback. I could see sometime in the Spring of 2013, the world would pull off a “Bretton Woods” type agreement where the whole world defaults and we emerge with a new currency, new reserve, etc.

The Market:
First off, I'm going to harp on Gold and silver. If you did NOT take advantage of the big silver dip, and if you didn't take advantage of the bear raid in gold, I feel bad for you. You might not see those prices again. Even if all you did was buy the GLD when it dipped down to 145, you'd be up 10 dollars a share now. I personally purchased more coins – and the silver raid was a pure gift and we took advantage of that too. Gold hit another high this week – and the miners are rejoicing!

It was interesting when Ron Paul asked The Ben Bernanke (in his remarks to Congress this week): "Mr. Bernanke, is gold money?" The Ben Bernanke said "No".   Well of course – to him - Gold is the anti-money. It's like Kryptonite to superman, because you can't just "print" more gold.   If I had 35 U.S. / Central Bank dollars in 1915 and one ounce of gold, in 2011 the $35 would be worth about 2.45 cents; and the one ounce of gold would buy me a finely tailored Italian suit – the decision is yours.

This market is moving now on the idea that The Ben Bernanke is setting the stage for QE3 sometime later in the year, and Wall Street is the FIRST PLACE that gets QE. I think that all we can do is to continue to trade stocks, take our profits and continue to buy gold and silver. On Friday we picked up five positions, and when the bell rang all five were green: BEXP, PCX, NBR, FCX and POT.

Right now the S&P has been rescued from below it’s 50 day moving average, and the DOW looks to be forming some kind of temporary bottom. So, I think they'll try and rally us up through some more earnings before they once again yank the rug and we fall back pretty sharply.

Until Bernanke announces QE3, I think the pressure will be to the downside. Yes they'll try and save the day with "new" rescue news about Greece or Ireland or Italy, but that's just daily manipulation to keep us from sinking. We can be sure that the closer we get to QE3, the higher materials and oil will go. If we lose say 131.20 on the SPY we'll go short for a while, but if we exceed 133.20 we'll go long. In the meantime, be careful okay?

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

What a week for the metals and the miners! Gold is approaching $1,600 per ounce and Silver is looking at the $39 level. The miners continue to do well for us – and DNN is beginning to recover nicely from the Japan fiasco.

But we’re still taking our profits and buying more gold, silver and energy.

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog: rfcfinancialnews.blogspot.com/>
Until next week – be safe.

R.F. Culbertson
>
>

This week in Barrons - 7-10-11

2011-07-10T05:43:00.001-07:00

This Week in Barons –7–10-11:

Truth, Fiction or Internet News?

Here's a link to the latest in Silver Issues: http://www.examiner.com/precious-metals-in-national/rico-suits-against-two-banks-metals-to-soar-review#ixzz1RC1yGhJs

The hi-lights are the following: “On 30 June 2011, Federal RICO Suits were filed against JP Morgan Bank and HSBC for gold and silver manipulation, resulting in extremely large short positions which the Banks then precipitated drastic selloffs in Jan 2008 and Feb 2010 by manipulating the prices of both the bullion itself, underlying options, ETFs and other mining stocks as well. Chris Weber of Weber Global Opportunities announced this weekend that silver should rise rapidly to at least $100/ounce, as it is very undervalued due to the alleged manipulation by the Bullion Banks named.”

Now the interesting part of this story – is that I cannot find a shred of evidence that this story is either true or false. No corroborating story – and on the Internet that’s a little weird! But most economists still believe that Silver – below $75 an ounce is a buying opportunity. With the Governments of the world printing paper dollars like madmen, I'd suggest to all of you that Gold and Silver still have a very bright future. Buy one 10-ounce bar of silver and you will be amazed at the "weight" of it. It's really an amazing thing and for the recent price of $35 an ounce, it’s still affordable. If you did nothing but use it as a paperweight, you'd be making a wise investment. Why - because one day we will see Silver at $75 an ounce and not many paperweights appreciate by 100%!

Now, you’ve heard me preach time and time again that we cannot cure our economy without curing housing. Factually:
- On Friday at 10:27 AM - Legislation was introduced in the House calling for the merger of Fannie Mae and Freddie Mac into a new company to purchase mortgages and sell them to investors as government-backed securities. Now didn’t we do this in the 2008 nightmare – and with the same ratings agencies around – how do we prevent Déjà vu all over again?
- Factually – approximately 17,000 borrowers with FHA-backed mortgages go delinquent each month - mostly due to unemployment. This new bill is asking Uncle Sam to "help" the situation by pushing the FHA to give unemployed homeowners 12 full months of "no payments". So is the new, ‘young’ business model to buy a house with an FHA approved mortgage – then lose your job – then take on part-time (under the table work) while you live in your house rent-free?
- Factually - most of these mortgages are packaged and sold as investments. So who’s going to purchase this new ‘batch’ of mortgages fully knowing that a significant portion could be allowed to go without paying a dime for 12 months? AND based upon that – how is this helping housing?

The Market:

On the 27th of June the DOW was at 11,950, and looking darned close to losing all control. To quote Jim Cramer: "I don't like this market here". From that "low" the DOW powered up and up and up, and was flirting with 12,700 by July 7th. That's one of the most powerful moves "up" we've seen any market make in that amount of time. Which begs the question, "Why?"
- Is it because the Feds said that they were ending the extra stimulus? Nah!
- Is it because despite oil coming off its high – big names were telling us that they’re seeing less demand from the consumer. Nah!
- Is it because on Thursday the ADP employment report hit, and they said that 157K new private payroll jobs had been added – which is quite a number considering last month we added around 35K. So despite no resolution to the debt ceiling issue, no idea what "Obamacare" is really going to cost, gasoline still above $3.50 a gallon, sinking housing – companies went on a hiring binge? Nah!
- Is it because initial jobless claims for first time unemployment were still above 400k at 418k? Nah!
- Is it because the jobs report on Friday just STUNK to high heaven? The estimate was to add 125k jobs – and we simply added 18k. BUT wait – due to the ‘birth-death’ model we added a fictitious 131k included in that 18k number – so we actually LOST 116k jobs in the past month! Nah!
- Is it because everyone is waiting for QE3 to be announced and most traders will try and stay invested, so that when the big announcement comes, they can reap the benefits of the big pop? BINGO!

Now, our guess going forward is a sideways and down stutter step that begins next week. The cheerleaders want nothing more than to see the market rally more and bust through the old highs at 12,800. But, I think some backpedaling has to happen first. We gained 900 points in a little over a week on nothing but air and hope. With ‘hope’ still being a four-letter word – we need some substance and on Friday we didn't get it. Now if the first earnings reports of the week are found to be "good" then we could indeed move back up and challenge the May 1st highs. But even if that happens, I'm having a bit of a hard time understanding what will push the market higher. At ‘some’ point you have enough people not working, or on unemployment that they simply cannot buy products other than necessities. While I find it amazing that we've allowed some people to collect unemployment for 99 weeks, without good higher paying jobs to wean them off the Government handouts, I tend to see the economy mired in a mess for a long time.

Yes we should get some form of a fall run-up, everyone counts on it for bonuses – but between now and then, a lot of sideways chop with a tilt toward "lower" makes more sense to me than anything. Often times markets climb what is called a ‘wall of worry’ and debt ceilings, presidential races, jobs, and Europe certainly add to our ‘wall of worry’ – and what normally follows is a market roll-over. The market has been pretty ‘silly’ as of late – so be on the look-out for that market roll-over.

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

Gold and Silver are once again above their $1,500 and $35 levels respectively – so watch for potential breakouts here. AND the miners have done very well for us as of late – as people realize that their earnings will be spectacular based the materials being at these numbers.

We sold out of 4 of our 5 short-term long positions on Friday morning, ringing out some very healthy profits. Heading into next week, our best guess is that we're going to be sitting on the sidelines some, trying to determine how they're going to move this market. Now having said that – look at WTSLA – the chart is getting interesting and the compensation package of its leadership is just as interesting. When we see these elements – just like AMSC – it begs us getting involved and often for the better.

But we’re still taking our profits and buying more gold, silver and energy.

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog: rfcfinancialnews.blogspot.com/>
Until next week – be safe.

R.F. Culbertson
>
>

This week in Barrons - 7.3.11

2011-07-03T05:10:00.001-07:00

This Week in Barons –7–3-11:

Happy 4th of July!

I'm going to start off by asking you – if you have a chance, and want to know a little bit more about the July 4th Holiday, the meaning of the Start Spangled Banner and how it came to be – please feel free to watch a 10 minute video that will change the way you think about our national anthem forever - at:
http://www.myspace.com/video/vid/21689194#pm_cmp=vid_OEV_P_P

On the day that we broke from Britain – a very famous European banker named Rothschild said: "I care not who runs the country, if I control the money". In so many Instances men like Ben Franklin, George Washington, and Hamilton made comments about how they had to keep the viper bankers out of Government or they'd ruin America – yet despite their best laid plans, alas it was ultimately the bankers that did take over. In 1913, the Federal Reserve was born in the US. No longer would the Treasury print the money and keep an eye on the supply. No longer would Americans run their own Treasury. No, from then on it was a cabal of private bankers that would do that for us. Then, in the 30's when they confiscated everyone's gold, it was a done deal - the bankers had absolute and complete control over our money. Today: taxes are killing us, the money supply is so corrupt that inflation is rampant, and the Bankers have become (once again) “too big to fail” and they run the Country. Did you know that at the signing of the Declaration of Independence the taxes levied on the public ran around 3 - 5%?

Recently I’ve gotten a ton of e-mail surrounding Gold being at 1485 and Silver at 34 – and, do I consider that a buying opportunity. Well, never in recorded history has a Country or Government solved it's debt problems by issuing more debt. In this modern era, every country on earth is issuing bogus dollars in order to combat the ills of borrowing too much in the past. This will not stop. Here are some interesting tidbits:
- The Bank of Moscow joins the bank bailout train, getting a $10.6B no-interest loan from Russia's central bank. The Bank of Moscow’s capital is missing and may have been wiped out from fraud. At least we know that fraud isn’t unique to the U.S.
- A famous hedge fund manager John Paulson – recently advised Bank of America to ‘shaft’ and ‘settle’ with mortgage investors. Bank of America settled on Wednesday on an $8.5B toxic mortgage debt – and John Paulson reportedly sold a majority of his $124M share in Bank of America – about 2 months ago! This is a guy who knew most mortgage backed securities were garbage, so he shorted the sector – back in the day. And now pushes bank executives to fight back against investors claiming that the bank was selling them toxic waste – so that he could sell his stock before the bank crashes. Wow!
- Also, sovereign countries have recently declared that they will no longer consider assets that have been rated by Ficht, or Moody's, because they are "fake" ratings.
- Finally the government is going to change how it reports inflation. We told you that this would happen. The government is going to ‘re-arrange’ how the CPI (consumer price index – our consumer measure of inflation) is measured – especially concerning fuel prices – and this is almost criminal. Since people tend to change their driving habits when gasoline goes higher – the U.S. wants to capitalize on that by changing it's reporting. If you drive LESS when gasoline is expensive, they will report that as a FALLING consumer price index. So, if gasoline goes to $5 a gallon and that forces 25% of the people to quit driving completely, the CPI will FALL despite the actual price rising 40%!

I’m firmly convinced that hyperinflation is here – it’s growing – and it’s going to get out of control.

The Market
The "true" read on inflation right now is about 10%. You can be sure that within a year it will be 15 - 18 and rising. Based upon numbers like 10 to 18% - that leaves alternative measures of money – such as gold and silver – a very ‘sane’ investment. But in what other areas can you look:
- Real Estate: In some areas of Florida and Las Vegas, houses that were 150K before the bubble, then 500K during the bubble can be had for 129K now.
- Agriculture: Food will continue to be an important part of any world. The amount of people continues to rise, and food is expensive. Unfortunately, food is one of the things people will indeed kill and die for. Anything that helps food grow such as fertilizer, to the seeds and tractors that reap it, has a stable future.
- Energy: The demand for electricity will continue to increase. Producing it, from coal, oil, shale/natural gas, nuclear, is going to continue. Yes alternatives will continue to come on board, but my bet is that 20 years from now we'll still be using coal, oil, natural gas and nuclear to run the grid. Good companies in exploration, drilling, electric production and distribution via the grid rebuild will continue to reward you.
- Finally consider the Hong Kong dollar. Hong Kong isn't the US. It isn't Greece, Spain or Portugal. It's an economically conservative country with surpluses and NO debt. No matter what gets hammered out as the final currency solution to a fiat world, Hong Kong dollars will always hold intrinsic value. I'm not against it at all.

So, gold and silver top the list for me. Then Energy and Agri are next in line. An incredible in Real estate is next, followed by a few good choices in currency.

In the meantime enjoy your July 4th Holiday, and reflect back on what it really means.

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

In fact – with Gold being pushed down to the $1,500 level on Friday - the GLD and SLV are long-term buying opportunities.

We did some very short term buying this week:
- We liked CLF at 91.98 and sold at 93.95.
- We like AMSC for being an oversold, beaten down, and noticed "insider buying" speculation. We bought in at 8, and it crosses 9 this week.
- We also CRZO, and off the radar energy play. We were in at 40, and it's 41.75 now.

We take those profits and buy more gold, silver and energy.

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 6-26-11

2011-06-26T13:37:00.001-07:00

This Week in Barons – 6–26-11:

Is this ALL just a “Control Issue”?
President Obama visited Carnegie Mellon on Friday and gave a talk on jobs and manufacturing, reinforcing his words – with (well) more words. The same day - I saw two headlines concerning our Nanny state, and our desperation to create zombies.

Headline #1: Obama's food police are launching a crackdown on foods sold to "children", under the theory that Uncle Same can truly regulate obesity. He is ordering manufacturers and restaurants to “either retool the recipes to contain regulated levels of sugar, sodium and fats – or no more advertising and marketing to tots and teenagers.” Now, although the intent of the guidelines is to combat childhood obesity, foods that are low in calories, fat, and some considered healthy foods, are also targets, including: hot breakfast cereals such as oatmeal, pretzels, popcorn, nuts, yogurt, wheat bread, bagels, diet drinks, fruit juice, tea, bottled water, milk and sherbet. Estimated impact if in-acted as written: $5.8 Trillion and 20 million U.S. jobs lost.

Headline #2: The Federal Government has introduced legislation to make marijuana no longer a crime at the Federal level, but rather to let the states decide. Factually - marijuana is the single largest cash crop in the US. However, the issue could be Headline #1 above. Marijuana consumption creates a sense of hunger – often for ‘junk food’ – and if you regulate junk food out of existence – you may find that marijuana consumption decreases and so would revenues from both sources.

Betsy C reminded us of the stages of a nation’s progress: from bondage to spiritual faith; then to periods of great courage; followed by liberty – then abundance – then complacency – then apathy – then dependence – and finally from dependence back into bondage. Factually – the majority of the people that voted for President Obama (vs John McCain) were: (a) from areas that had a 600% higher murder rate (than John McCain’s constituents), (b) from areas best described as low income housing, and (c) often living off various forms of government subsidy. With 40% of all Americans being dependent upon the government for some sort of support – I think we’re ripe for the ‘Dependancy’ stage – and I’m wondering if ‘Bondage’ isn’t right around the corner. Which begs the question – is this ALL about Control?

Higher prices – are by themselves – an excellent form of Control. The Fed pretends that it had nothing to do with them and The Ben Bernanke routinely says that prices are formed by supply and demand — which is true enough in a free market, but money creation complicates the picture. It’s also very clear that The Ben Bernanke doesn’t care about inflation as much as he cares about the solvency of the banking and financial systems. Savers living on pensions just don't have the political clout to stop the money machine. And contrary to The Ben Bernanke's promises, he does not have the ability to turn off the monetary spigot once prices start zooming. The economy is too globalized for that. History is littered with monetary managers who believed they were in total control — until the disaster hit. Continuing to purchase treasuries – whether you call it QE3 or an extension of QE2 – is like a third dose of meth, or another bottle of Jack. Choose your metaphor – but it’s all built on the insane view / hope that if you stimulate a zombie enough with fiat money, it will start to live and breath on its own.

There is a concept out there termed the Misery Index. The Misery Index is the unemployment rate added to the inflation rate. Well, if you listen to the politicians – you’re adding 9% unemployment with 2% inflation and you get an 11% misery index. In reality you’re adding close to 18% to 9% - totaling a 27% Misery Index. That is getting awfully close to the +30% of the Great Depression. I’m seeing more and more of us becoming increasingly ‘self-sufficient’ – more chicken coops in affluent areas, along with more ‘victory’ gardens. As the Misery Index gets worse over the next 2 years, gold and silver will continue to be the "go to" safety gauge, with physical demand triumphing over paper shorts.

The Market...
The words “Roller Coaster” come to mind, although that really doesn't depict the insanity we've seen this past week. After falling for 6 weeks in a row they dug in their heels and rallied the market up into the FOMC meeting which we told you last Sunday they would. But then something "bad" happened. It seemed that Wall Street was sure The Ben Bernanke would tell them of the great QE3 program he had hiding in the wings if the economy soured, but nope – The Ben Bernanke said nothing. In fact when questioned about more stimulus, he said "We're in a different time than last year when I rolled out QE2. Now deflation is off the radar and employment is growing...."

Well Wall Street hated that, and an hour after he said that the market was down 80 points. Then on Thursday it was lower (at one point by 240 points), but a series of news releases made specifically to hike the markets hit. First: “Obama allows tapping of the Strategic Oil Reserves.” Factually: we use that amount of oil in 9 hours. But it worked and got the market up. Then when the market rolled back down and was in danger of losing 200 points, the news hit: "Greece is saved." We were told that Greece had agreed to an "austerity" plan with the IMF, and the market gained 150 points in about 7 minutes. Factually: that agreement has to be ratified, the Greek people screamed "hell no" and the real "money" meeting” doesn't take place until Tuesday. The news blasts were strictly to calm the market. On Friday the weakness crept in again. Shortly after the open we were down 100 DOW points, but they dug in their heels and for most of the day hovered down around 70 points. Finally in the last hour, we slid a bit more, ending the day down 115 points at 11,934.

I remember wrongly predicting the market’s direction in the past – using technical indicators such as the “Death Cross” – which surely signaled the market rolling over – and the market simply powered higher. In early May, we had about 8 long side positions on – we felt the market was finally ready for a decent drop and took our profits. Since then, we have fallen a thousand DOW points. Most are blaming it on the fact that Bernanke won't release a QE3. Oh The Ben Bernanke will most certainly release a form of QE3 – it’s simply a matter of time. And with that in mind – it’s very tough to go short – knowing that the day he announces the next asset purchase / stimulus plan – the market will probably gain 300 points.

Tuesday is going to bring us news out of Europe over what they're going to supposedly do concerning money and Greece. It could end up being the catalyst that creates a massive bounce. But every bounce we get (until The Ben Bernanke announces his new plan), is going to be a short sale opportunity. They can kick the can down the road on Greece, it makes no difference, Greece is doomed. Depending upon what kind of news that hits us this weekend, we could see a market bounce Monday, or more sliding lower. I think that Tuesday is the day that the short term will be decided. Some "Great News" could light a 3 or 4 day rally. But again, it will be a Selling Opportunity. Without additional stimulus, the market is destined to sink.

On the other hand, if there is no "Great News" we're going to be in striking distance of the next major milepost lower, which is losing the June DOW low at 11,862, which would set us up for landing on the 200 day moving average down at 11,776. And if we lost that - we'd be looking at the March low at 11,555. On the S&P we're already just 5 points above the 200 day moving average, and if it looses that, it would then visit the March low of 1,249.

The only way the market moves higher for an extended period, is when the worlds biggest Central Banker, The Ben Bernanke comes out with more free money. Until then, "Buy the Dips, and Short the Rips".

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

In fact – with Gold being pushed down to the $1,500 level on Friday - the GLD and SLV are long-term buying opportunities. I’m still watching:
- SCO is an inverse ETF that looks at oil. If it were to run to the 200-day moving average at 53.18, count me in.
- DUG is also involved in energy, focusing on oil and gas but more along the lines of suppliers – a move over 32.00 is attractive.
- DOG is the inverse DOW index and it looks good at 42, then especially at 44.

We continue buying physical gold and silver and will actively lean on the short side going forward with double and in some cases triple EFT’s such as DXD and TZA. Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 6.19.11

2011-06-19T09:11:00.001-07:00

This Week in Barons – 6–19-11:

The Child is the Father to the Man?
First off – Happy Father’s Day to all you dads out there. We may not always be in control, but ‘hopefully’ we’re part of the solution. Unfortunately we as Fathers will someday need to ‘fess-up’ to our children how we created such a financial disaster that only ‘bankruptcy’ and ‘devaluation’ can mend. As Steve Forbes writes: “Consider this: (a) we haven't paid off the Savings and Loan bailout from the late '80's, (b) our Government has borrowed ALL of the cash from the Social Security System, with forward estimates in excess of $50 Trillion owed, and (c) the Medicaid estimates are in the range of $30 Trillion owed. Now, how will future generations pay for these debts? What is the business model? Just how much “Government Help" can this economy and its constituency afford?”

As President Obama prepares to come to Carnegie Mellon University this week, to talk on Jobs and the Economy – it begs the questions: "What Jobs?" “What Recovery?” “What Economy?” People are acting like we came out of a recession, and if you remove the stimulus money – we’re still in a recession.
- The Philly Fed Report (a measure of economic activity) was at 44 in March, dropped to 18 in April, and fell to -7.7 in May!
- China’s inflation continues to accelerate.
- Well's Fargo stopped doing reverse mortgages, refusing to (for example) give people the $290k to live in their house for the rest of their lives, knowing that in the end the house may only be worth $160k.
- Initial jobless claims were still over 400k this week (that’s bad).
- Inflation is close to 10.5% and climbing.
- Real under-employment numbers are 22%.

Without QE3 to talk about - Greece is now the issue. As long as there is free money to play with, nothing's ever a problem, but as soon as the money dries up, then we care about Greece, jobs, and inflation. Realize with the trillions that we injected into the economy – very few jobs were created, very few factories were built, the ‘Food Stamp’ (Government Assistance) expanded dramatically, and no one responsible for the melt down of ‘07 – ‘09 went to jail.

With Greece, we continue to kick the Greek can down the road. They will eventually HAVE TO DEFAULT – and probably will take Spain, Portugal, Ireland, Italy, and Belgium with them. But where's the money coming from? The hard working Germans can only do so much. France is facing social program bills they cannot pay. So this is Central bank money. Our major Wall Street firms hold approximately $160 Billion dollars worth of Greek credit default swap debt. Now, did they hedge that by laying off some of that risk to someone like an AIG? Maybe, but no one’s talking there. As of right now, when Greece folds, our "Too Big To Fail" banks will again be begging to be saved. And if they did lay off the risk, what reinsurer has that kind of resources, and who saves them? That's right, just you and me and the Father’s Day children.

Now – here’s where it really gets interesting – right now we are witnessing a credit lockdown that’s under the radar. We are also witnessing a quiet run on some very large European banks. Yield spreads are widening, and credit is becoming more costly. Fear is just beginning and will get worse. Over in Europe, UniCredit (based in Italy) is going through a quiet "bank run", where depositors are slowly withdrawing funds, as they know the austerity measures imposed in Italy, Spain, Greece are forcing bank losses and UniCredit is the bank behind a lot of those other banks.

Now, why is our stock market selling off (losing over 1,000 DOW points in a month)? I believe that The Ben Bernanke truly believes that the economy is going to stand on it’s own, and Wall Street knows this is absolute horse manure, wants more free money, and will hold The Ben Bernanke hostage until he agrees to give it to them. Remember the only element President Obama can point to is the stock market for his re-election! Yes, Wall Street will eventually get it's wish – QE3, 4, and 5 – but until it’s announced, the markets will continue to slide. And when it's announced we'll get the counter rally back up. Now as we approach 2012, don’t be surprised if you hear of yet another war in the Middle East, a big one involving ground troops, Syria, and a host of other nations. History is complete with examples of how major wars are created when global economics are unraveling.

The Market
The Market fell, and fell, and finally got a shot at bouncing a bit. As I said above this is Wall Street pouting about no official QE program. They will continue to take this market lower, with the occasional bounce higher, until Bernanke cries uncle, or Obama and his cronies put a gun to his head and force him to come up with another stimulus package. Now, until we get that new program, the commodities market will tumble. We saw some of that with oil falling $10 quickly and several other commodities rolling over. Gold will hold up, Silver will eventually go higher – as it needs to get past the JPM (and others) naked shorts – but gold and silver will be looked upon as money, unlike oil, coal, copper, and lumber. The two-day bounce could work for another week, or it could end Monday, as it’s simply an oversold technical bounce, nothing more.

Now be careful if we don’t get some kind of resolution by the start of August concerning our debt limits, as Uncle Sam will become desperate. They've already borrowed from public pension plans and they are seriously looking at private 401k’s now, where there are trillions of dollars. It’s the traditional Central Bank ploy, print money, hope it lights an economic fire, continually uttering the words: “This time it’s different!” Unfortunately the pattern that repeats always involves the Government growing too large for itself, promising too much, expanding too far, and then at some point the money just isn't there to support it all. In the past it WAS different. I was reminded of that while watching the U.S. Open Golf tournament yesterday and seeing police close down a child’s lemonade stand (set up outside the tournament) because they didn’t have the correct permit!

It’s my bet that we make it through 2011, and in 2012 the fighting between Democrats and Republicans will be vicious. Yet, despite the money printing – jobs fall. Despite the currency devaluation – there’s no growth. Despite artificially depressing rates – homes don't sell because millions more are coming to market with foreclosure prices. But until then, there will be a QE3, that will try and support the sitting President, and whistle past the graveyard.

Tips:
Not much has changed actually:
Our long holds still look like: SLV, NG, AAU, DNN, AVL, SLW, SQM and USSIF, but let me expand this section this week.

The papering over ‘old money’ with ‘new’ isn’t cutting it, and without larger amounts of money being printed, we have no choice but to fall. But say I’m wrong – what good is 1% money if no one can borrow it? Or what if a large spending program is announced, won’t that just further trigger hyperinflation? Doesn’t anyone find $10 for a pound of lunchmeat, $6 for a jar of mayonnaise, or $13.79 for a can of coffee excessive? Knowing that Wall Street will hold the market hostage until it gets the next round of free money, I think it's time to explore some longer-term, short side plays. Thinking 2013 – when the Euro could be gone, and Spain, Italy, Portugal, Belgium, Ireland, and Greece could all be back on their own currency after defaulting.

I'm considering taking on some longer term put options and inverse ETF's.
- On the DIA's (which is the proxy for the DOW) the bargain that I’m seeing is the January, 2013 - $120 put options – for $14 and paying $13.30. If you believe that the DOW will sink hard over the next 18 months then this is a no-brainer!
- On to the Financials (the XLY is proxy there), if we move all the way out to January, 2013 the $38 put options are $4.90 – and with Greece and everything else – these could pay out very nicely indeed.
- Oil has many reasons to come down. One is over supply. Two is the nations that pump it need money and if they can't get it by high prices, they'll pump more to lower the price and "push" people to indulge. The SCO is an inverse ETF that looks at oil. If it were to run to the 200-day moving average at 53.18, I'd be all in, and I could even get brave and try some at 52.50
- The DUG is also involved in energy, focusing on oil and gas but more along the lines of suppliers – a move over 32.00 is attractive.
- The DOG is the inverse DOW index and it looks good at 42, then 42.50 then especially at 44.
- And Sagar M writes: “With China being the fastest growing economy in the world, with only 1.8% of it’s reserves being in gold compared to an average 11%. If China increases it’s reserves to the average – it will require 6,000 tons gold (the world’s entire supply for 2 years). Continue buying gold because: (a) Limited gold production and limited production capacity, (b) Continuous buying by Central Banks, India and China, and (c) Relative weakness of US$ and inflation / deflation issues in the world economy.

We continue buying physical gold and silver and will actively lean on the short side going forward with double and in some cases triple EFT’s such as DXD and TZA. Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This week in Barrons - 6.12.2011

2011-06-12T07:03:00.001-07:00

This Week in Barons – 6–12-11:

If this is Control – What does Out of Control Look Like?
Thanks to all of you that asked for my son’s movie link – here it is - enjoy: http://vimeo.com/24734772

Many years ago I was one of a VERY small handful of forecasters. In 2000 I suggested that the stock market bubble was about to bust – and recommended gold for the first time. In 2002, I talked about War in the Middle East, in 2003 we talked of the upcoming housing bubble, and then in 2006 talked of the entire financial backbone being in trouble. I’ve always preached silver and gold to the point that it’s sounding like a broken record to many of you, and me!

Well, now that every major bank in the U.S. has TWO sets of books – do you think the Central banks, the IMF, the World bank, or the Federal Reserve are any different? My point is: if the real world movers and shakers can simply print all the money they want (and keep it off one of the sets of books) then what is all of this manipulation about? I suggest that it’s all about ‘Control’, and ‘Control’ is all about making money – and in many cases: JOBS! Currently, the U.S. Government offers up security (in the form of ‘assistance’) to one out of every six individuals (16.6%). Now, is that 16.6% enough to get elected/re-elected? (FYI – often ‘tipping point’ theory looks at 18% to be the controlling percentage from which much of a remaining market place will ‘turn’ your way.)

Taking a step back, money is simply the exchange of value for labor, and if you produce something of value you will be rewarded for your efforts by receiving "money". But what if those at the very top don't really need your money (since they can make all they want), maybe what they really want is your LABOR to be directed by THEM? So what if the goal is to get the 16.6% to 18% - suddenly much of our ‘backward’ job creation theories make sense. For example: what if you’re a 20-something, and you can’t even get a job at McDonalds because they’re busy hiring college grads or professionals who’s jobs have been eliminated? Where's your hope for a "brighter future? Your hope lies (at least right now) with the U.S. Government – and that same Government probably has ‘purchased’ your vote!

Switching gears - everyday we hear about Greece and how it really doesn’t matter if they default on their obligations – because they’re just (well) Greece! Well I ask you, how many of the big banks in the U.S. are involved in insuring Greek debt? The answer is all of them! When Greece defaults, major American institutions will be on the hook for several hundred Billion dollars. Do these institutions HAVE several hundred Billion lying around? Absolutely not – they’re insolvent with the toxic crap they have on one of those sets of books now. So, when Greece rolls over, and the default insurances are demanded - where's that money going to come from? It needs to come from these banks, and yes these are the: “Too Big To Fail” Banks! So the U.S. taxpayer is going to foot that bill as well – yes? But since tax revenue isn't great enough to pay for the existing Government obligations, they will have to hunt for more money in very unusual ways. The Government has already borrowed public pension funds money, and they will be coming after your 401K next (mark my words)! There are very limited avenues left:
- Companies can’t expand when facing Obama-care, $100 oil, and the EPA.
- Infighting will be supreme during the upcoming presidential race (due to the closeness the Government is to that ‘tipping’ point).
- The Federal Reserve will continue QE3 via reinvesting the maturing debt they've already amassed, and they will "force" banks to mop up Treasuries in order to keep interest rates down.
- The dollar will continue to plunge in purchasing power, and gold, will slowly continue to move higher.

So, what do you do? The message is the same as it was 11 years ago – buy gold. Spend below your means. And with Father’s day coming up – share a meal or two with friends and family – the really important things.

The Market:
We’ve dropped 1,000 DOW points in a month – and we’re Down Again! We sold out of most of our long positions on May 2nd – 4th figuring the end was near, but did make the mistake of not going short. I said last week – I continue to be scared of going short simply due to the manipulation that the Ben Bernanke and POMO money have shown so many times in the past. I’m also very conscious and deeply respectful of the thousands of readers and your wellbeing – and therefore I never want to steer anyone into trouble. Yet, I should have followed my gut. I should have jumped to the short side. The economy is not in a soft patch as so many are suggesting, the economy is showing it's true colors. The selling is being blamed on the end of QE2, but that's so silly – there will be no end to QE, it just wont' be labeled QE. Yet without ever growing amounts of stimulus, the economy will continue to slow.

Failing to close above DOW 12,000 was indeed significant. They may try and rescue it as we come into this week, but the overall direction still appears to be sideways and down. I tend to think the best move for those that don't play the short game is to sit on the sidelines and not get long. Sure there will be bounces, some of them powerful, but this is the first time in two years where the market looked ripe for a fall and "They" DID NOT rescue it. Remember, we’ve peeled off almost 1K DOW points since May 1, and some form of dead cat bounce is in the cards. But frankly there's nothing out there to suggest any bounce is going to hold.

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

We continued buying physical gold and silver and will being to lean on the short side going forward with double and in some cases triple EFT’s such as DXD and TZA. Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This week in Barrons - 6.5.2011

2011-06-05T12:41:00.001-07:00

This Week in Barons – 6–5-11:

Security – Oh Me - Oh My - Oh
Apologies for the lateness in this week’s report – as I’ve been in Chicago moving my son – and watching the premier of his first short film – called ‘Cadence’ – look for it on YouTube if you will!

This week the economic reports began to give us a clear view of what happens when your stimulus injections wear off. It’s no different than a heroin junkie – in the beginning a little goes a long way, but in the end even A LOT only goes a little way. And along comes ‘Rehab.’ That is indeed where we are right now in the economy.
- It wasn't just the $800 B in bail outs for the Banksters run amok.
- It wasn't only the $878 B in pure Stimulus.
- It wasn't just the $1 T in Treasury bills/notes that The Fed has had to buy.
- It wasn't only the toxic assets that The Fed has had to soak up.
- It wasn’t just the tax breaks to buy houses, or even cash for clunkers.
- It was ALL OF THE ABOVE and then some – and NOW the hangover is rearing it's head.

And then there is the issue of jobs. With Friday’s Non-Farm Payroll’s report we found out that there’s basically no hiring going on in the country! Instead of the 155K jobs they were expecting we got 54,000. Of those, 62,000 new hires were by McDonalds. But wait – it gets better – this month the ‘birth/death’ model said that 206,000 jobs were created by people starting their own business (just a made-up number). So from the 54k jobs – we subtract 62,000 ‘Do you want fries with that’ – and another 206,000 ‘fantasy job creations’ – and we really LOST 214,000 really GOOD jobs!

Add to that:
- The latest business survey suggested 62% are not hiring or expanding,
- The ISM manufacturing survey took it's biggest downward hit in years,
- Greece is folding like a cheap card table,
- Housing prices are plummeting and financing is really hard to come by,
- And Moody's is suggesting it might have to "put the US on review" if we don't move quickly to raise the debt ceiling.

In so far as ‘Quantitative Easing’ (QE) is concerned → The Fed has purchased roughly $1.5 T of Treasuries in the past 10 months. Now, if The Fed doesn’t buy our notes – our interest rates will need to rise substantially to entice others to buy ‘devaluing’ dollars. And if we can’t sell homes with 4% mortgages, we’ll never sell them at 7%. Now – would rising rates cause things to improve? Well YES is the answer – but it would take a couple of years as people returned to SAVING money if there was the return to be gained there. This would create a large pool of real dollars to borrow from, and we could then start expanding the way economics are supposed to work. But in the short term there would be an Economic Disaster – and what politician is going to promise that to his people? So, QE MUST continue (in some form) because no one wants to face the pain of “Mopping up that Mess in Aisle 4” – while they continue to whistle past the graveyard, hoping that something is going to catch on and life will be fine. Potential outcomes:
- Hyper inflation = probable,
- Deflationary spiral = possible,
- Stagflation = already here!

The Ben Bernanke knows we're on the verge of a depression. He also knows the people that make him who he is, the banking families - need to be made whole and rich. But there is the other side – there are ‘good people’ out there that (in normal times) would never consider sticking up a bank, might very well do so when their personal economic situation comes to a point where they see everything as hopeless. Well I spent this weekend in Chicago shops – and a visible level of increased store security. My son noticed it – and as I began to dig a little deeper, I found headline after headline of material crimes being committed with those being caught having had stellar backgrounds. The U.S. currently has 44 million on food stamps. What happens if this program ends as more and more social programs get cut? We’re beginning to see more and more criminal elements such as train derailments where people steal the tracks to melt them down for scrap. More high-end boats were stolen last month than ever before. “Home invasions” are on the dramatic increase, and many are beginning to fear a new level of soaring, violent crime.

I personally have not stopped buying gold. Many people think it's run is over; however, it’s run will only be OVER when our monetary policy will be grounded in reality – and that won’t be for a least several years.

The Market:
If you look around the world, there’s a lot of evidence that global markets are receding. In the US, the market has risen in the face of what can only be aptly described as The Bernanke Put option. People naturally figure that if the market ‘blows-up’ – The Ben Bernanke will simply rush in and rescue it! But now what’s next? Of course QE will continue – but here’s where the ‘heroin junkie’ analogy gets interesting. Right now the Fed owns enough mortgages and treasuries that as they mature, they could conceivably put $600 B back into the system without printing more money. But just reinvesting into maturing assets isn't going to increase GDP, so The Ben Bernanke will need to come up with some other absurd plan to get more money into the Banker’s hands.

Now we’ve peeled off a little over 600 DOW points from the May first highs. Need I remind you of our letter on May 8th stating that the market ‘feels heavy’ and we were looking for a ‘rug pull.’

Frankly the word I use is fear. I've been afraid to short. The fact is some very good traders began shorting the market – “Sell in May and Go Away.” Now we've crashed through the 50-day moving averages AND the 100-day on the DOW and the S&P. Technically this is "Bad". The biggest support any market has is the 200-day moving average, and that’s still 600 points below on the DOW and 50 or so on the S&P. Are we actually going to go down and test this area? Good question given in the wings is Ben Bernanke and his darn POMO money – and his possible announcement of QE-3. If I had to guess I'd bet on a bounce Monday into Tuesday, but then a resumption of the slide lower. I'd continue to use the big index's for liquid trading like the SPY, and DIA's for bounces and the inverse ETF's like the DXD and SDS of those same vehicles to "short it". But on either side of the trade I'd sure be cautious and "quick to take profits"

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

We continued nibbling with small positions on SLV, SLW, GLD – and continue to purchase physical silver and gold with the profits on these short-term holds. Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This week in Barrons - 5-29-11

2011-05-29T10:38:00.001-07:00

This Week in Barons – 5–29-11:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This week in Barrons - 5-22-11

2011-05-22T08:29:00.000-07:00

This Week in Barons – 5–22-11:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson