This Week in Barrons - 9-4-11

This Week in Barons –9–4-11:

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

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

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

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

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

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

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

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

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

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

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

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 8-28-11

This Week in Barons –8–28-11:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 8-21-11

This Week in Barons –8–21-11:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 8-14-11

This Week in Barons –8–14-11:

TW3 – That Was the Week that Was!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 8-7-11

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
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