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!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 11-20-11

This Week in Barons: 11–20-11:

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

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

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

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

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

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

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

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

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

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

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

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

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 11-13-11

This Week in Barons: 11–13-11:

These are the Worst of Times…

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

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

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

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

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

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

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

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

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

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

The Market:

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

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

Tips:

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

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

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

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

Please be safe out there!

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