This Week in Barrons - 8-7-11

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

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

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
>
>

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!

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