This Week in Barrons - 1.8.2012

This Week in Barons: 1-8-12:

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

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

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

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

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

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

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

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

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

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

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

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

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

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 1-1-2012

This Week in Barons: 1-1-12:

This Ain’t Your Father’s Market Anymore…

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

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

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

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

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

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

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

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

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

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

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

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

Tips:

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

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

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 12-25-11

This Week in Barons: 12-25-11:

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

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

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


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

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

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

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

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

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

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 12-18-11

This Week in Barons: 12-18-11:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 12-11-11

This Week in Barons: 12-11-11:

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

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

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

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

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

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

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

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

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

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

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

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 12-4-11

This Week in Barons: 12–4-11:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 11-27-11

This Week in Barons: 11–27-11:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Please be safe out there!

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