This Week in Barrons - 7-17-11

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

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

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

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

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

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

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