This Week in Barrons - 9-25-11

This Week in Barons: 9–25-11:

Face: “Murdoch, what’s going to happen?”
Murdoch: “Looks like we’re going to crash!”
Face: “Murdoch, what’s really going to happen?”
Murdoch: “Looks like we’re going to crash and die!”
… A-Team

This week everyone looked on anxiously as The Ben Bernanke pushed his one-day FOMC meeting into a two-day affair. The market was hoping for some real stimulus, but unfortunately all The Ben Bernanke gave us was the interest rate ‘twist’. And following that, we crashed for 600+ points in two sessions!

I have to admit, I thought (due to The Ben Bernanke’s thinking that the Great Depression could have been cut short if the government had just printed and shoveled more money into the system) that The Ben Bernanke would indeed let loose a ton of true monetary stimulus. I truly felt that he would cut the interest rate that the Fed pays to banks for their excess reserves, basically forcing them to push the money into the markets and into loans. And then there was Vice President Biden publicly saying: “What we need is more stimulus". Well, ‘Surprise’ - he didn't do any real stimulus, he simply gave us the interest rate ‘twist’, where he starts buying up longer term paper to lower the 10-year interest rates. Well, if you aren’t buying a home at 4%, it’s doubtful that 3.8% is going to even raise an eyebrow. The part that I got right was that if we didn't get some true stimulus, (if all he did was the ‘twist’) we were going to ‘roll over and plunge, and plunge hard.’ On Wednesday afternoon (after the decision), the DOW fell 280 points and Thursday (at one point) was off 530 and ended being off 395 points. So there was a point where the market was off well over 700 points in 1.25 days.

Now, as we told you Tuesday on Twitter, we sold out of all of our trading positions. However, knowing that if The Ben Bernanke cut loose with a ton of true stimulus the market was going to roar higher - you'd naturally wish to buy a CALL option (because calls pay you when the stock goes up). But we also knew that if The Ben Bernanke didn’t do anything, the market would fall, and therefore you should own a PUT option. We bought the October call options for about 2.60, and the October Put options for about 2.85. When the announcement came, we knew that it stunk and promptly sold the call options. When the market lost 240 points Wednesday, we ended the day profitable on the Puts. And when it fell another 500 points on Thursday, those puts had gone from our purchase price of $2.85, to over $6.00 – a 100% gain. The point being – we laid out all the reasons why The Ben Bernanke should reduce the reserve requirements – but he didn’t – and as part of ‘The Backup Plan’ – the strategy was to take advantage of the volatility that we knew would come.

OK - onto the Precious Metals. Everyone wants to know why gold and silver got so horribly whacked. The main reason was the coordinated central bank attack on the metals. JPM (in specific) has a dozen lawsuits pending where global traders have proven outright manipulation of the price, and yet there are no rulings. Then there were margin calls. Some of the real gold/silver selling was in anticipation of the waves of margin calls that would be flooding the market so market makers were raising cash. But then on Friday they added ‘insult’ to ‘injury’ by raising the margin requirements on Gold, Silver and Copper. So at the same time regular traders were doing "some" selling to raise money, the exchange comes out and hikes margin requirements on gold by 21%, on Silver by 16%, and on Copper by 18%. Do you think the big boys at JPM knew of this? With that knowledge in hand, the high frequency trading platforms then worked their magic to exacerbate that move – and suddenly we’re down a bunch. Remember – back in 1900 when J.P. Morgan himself uttered the words: “Gold is money, everything else is credit". I continue to always ask myself: What’s changed? Since Wednesday has Europe really been solved or just delayed? Has housing magically run higher? Has unemployment mystically healed itself? Isn’t the Government facing another shutdown next week? And as John A. writes: “With silver below the 200 EMA and gold down another $80, gold could be headed to its 200 EMA of $1,558.” I personally told you that I had stopped buying gold when it got over $1,650 (with my end of year prediction being $2,000 / ounce). On the other hand I have been buying silver as it hovered in the $35 to $40 area. And I don't think its day is done (at all) so I will buy more with it down here at $30. Could Silver drop to $20 – as those that didn’t sell, panic and sell at the lows – but come Monday I’ll be a buyer of silver and scale back into gold.

The Market:
What about stocks? We lost 600 points in two days, and ended the worst week since ‘09. Then on Friday we went "flat" – so is the selling over? It could be. They held the bottom at the same levels that held during the end of August’s 2,000-point plunge. But we have to consider the Thursday/Monday connection. In the past, there's been a correlation between gigantic sell offs on a Thursday, and a pretty horrible Monday, because of margin calls. When you get a plunge like we did, so many positions become upside-down, and the margin clerks have to start rounding up the folks that need to put in more money or sell out. But when you get a little bounce on Friday, they have to ‘rejigger’ the books as some fall off the margin call radar. Then come Monday, the true list is published - the phone calls go out, and the selling begins. Now, this doesn’t happen every time, but it's happened enough to where it's something to consider for early this week. If Monday does become a slaughter, then what usually happens is that it carries into Tuesday and then late in the session Tuesday the market recovers and "soars" higher.

What about the bigger picture? Well, without the extra stimulus I think that the market will continue lower. This week FedEx said that they see lower shipments, and fewer electronics coming over from Asia. They said their "peak" season is not going break any records this year, because Americans just aren't buying. I don’t think that will change. So, that despite some certain 'up days'" that look wonderful (don't forget, markets only stage insane 300 point up days while in bear markets) the overall trend I believe is going to be downward. If they use the recent low as some form of bottom to work up off of, I could see the market making it to the 11,300 - 400 area, before again running out of steam and rolling back down, and breaking below the 10,719 August close. If that happens, then my next level would be around 9,700 as the next true workable bottom.

As you can see, we're fraught with all manner of uncertainty. Each day seems to bring us more and more insane situations. From political infighting, to European madness, to evidence of societal breakdown, things are NOT going well. If we had gotten the trillion in stimulus, even though it would be kicking the can down the road, we'd be in a position to move cash into some funds and take the ride upward. Without the stimulus, I feel the market risk is to the downside.

Tips:
By the way, additional stimulus will be announced one day. As elements continue to deteriorate, additional monetary stimulus will occur. I have scaled into very small positions in the short arena. There’s nothing more dangerous than buying something short when the market is down 600 points in 2 days.

I have:
- DOG at 45.38
- SH at 46.42
- Oct DIA 110 put options at 2.80 per share

I am not going to put a stop on these, but rather I am going to buy more of them on UP days. This trade isn't for the weak of heart.

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 - 9-18-11

This Week in Barons: 9–18-11:

It’s All Greek to me – anyway you cut it – Default by Christmas!

The European Community, Timmy Geithner, and the Greek authorities have laid the groundwork to provide the liquidity needed to supply banks with cash, when a national default is announced. The good news is, when a national default occurs people immediately rush to get their money. We know that the average Greek citizen has approximately $20k in the bank, but less than $200 in his pocket. Therefore, when all the citizens rush to get their money at the same time, under normal conditions banks would be forced to shut down after the first 2 hours of a day – then armed guards would show up – people would riot – and lives would be lost. The Central Bank Dollar liquidity that was announced Thursday is a way to stave off the "bad" parts of a National default. If you can capitalize the banks to a point that when the bank run hits, you have the assets to give the people the bulk of their holdings, you can then have an orderly default – which (in my opinion) will occur between now and December. The bigger question is this: If they capitalize the banks to take care of the citizens, are they also going to cover the derivatives that are held against these banks? And the answer is: Absolutely! You see The Federal Reserve is comprised of shareholders – like J.P. Morgan (JPM). Now JPM has significant exposure to Greece, and do you think the Federal Reserve is going to let JLM get burned for hundreds of billions of dollars? Heck no – so the capitalization will include the derivative holders such as JPM and others as well. And what about sovereign debt vs private debt? When a nation defaults, we must assume that the country has not taken in enough revenue to offset it's spending and has run up extreme levels of debt. So, who gets paid first, second, and on down the line is a good question? Now, there will be many "businesses" and services that are owed money, and will receive nothing. But the contagion of sovereign investments from other countries getting crushed, that is what they're trying to defuse, and further rationale behind over-capitalization. However, the much bigger issue is the fact that Greece is tiny, so what about Spain? The Spanish housing market was much or more of a bubble than ours, and is currently bottomless. The Spanish "green jobs" initiative was a dismal failure. Spain is in ‘worse shape’ and larger than Greece, and will probably be next to fall. Then, what about the tag team of Portugal and Italy? Diffusing Greece is the #1 job (and it will cost billions), and trying to keep it contained to just Greece is job #2.

In the U.S. this week:
- The Empire State manufacturing report fell to -8.
- The Philly Fed report fell to - 17.
- The "Inflation Gauge" (which is rigged to start with) reported + 0.4% (very hot).
- The initial jobless claims spiked by 11K to over 428K.
- And the market this week had the S&P gaining 4.5%.

Now that the Central Banks are willingly open to supporting the market, this is a whole new world of investing. Think of it – we had a 20% crash in the summer – and now we’re working our way back to normal after all the Central Banks colluded to toss billions at the European Banks to keep them alive. Technically we’ve retraced 50% of the fall in the NASDAQ since that crash – and if the DOW can maintain levels above 11,488, and The Ben Bernanke is accommodative this week – we could be up for a run higher. Honestly, Central Banks aren’t supposed to band together and keep dead banks alive. Dead banks are supposed to die. The weak die, and the strong pick up the pieces. But today it’s all about: “Too big to fail".

Everyone is looking to the Federal Reserve meeting next week. Everyone desperately wants QE3 / free money. I think we're going to get something, and despite the fact that the market is telling me it's tired and wants to roll over (due to the desire for more stimulus) we very well might continue up. Not only that, if The Ben Bernanke coughs up some form of huge stimulus, we could just roar higher thru the end of the year.

This week was ‘options expiration’ week – and there is a ‘max pain’ principle. That is to say – around 70% of market movements are in the direction that will cause the ‘most pain to the largest number of people.’ Given options expiration week, we found that a lot more people had taken downward bets on the market vs upward bets. So – what did the market do – it moved ‘up’ in order to inflict the most (options) pain on the largest number of people.

This week is a Federal Open Market Committee (FOMC) meeting, and the entire world is looking for them to release some new form of stimulus. Two weeks ago even the Vice President said that what this market needs is "more stimulus". We then saw the FOMC change this meeting from a one-day event, to a two-day event. All of this is telling me that ‘something’ is coming. I think the immediate direction of the market is going to be in direct proportion to what comes out of that Fed meeting. If they don't do enough, the street is going to whine and fall. But if Obama has pushed his Chicago Style politics into the Fed's head, and he lets loose some wild amount of real stimulus, we very well could fly higher.

The Market:
We just came through a nice positive week. We had a hunch we would, although Friday did have the ability to be a bit scary - especially when in the Friday morning session we went from +100, to plunging all the way down to red, and then finishing green. In some ways, that's a real sign that the market is itching to go higher.

Remember, the market is yearning for something huge out of The Ben Bernanke's FOMC meeting. They’re not looking for some simple “twist” where they buy long dated paper to lower long-term rates. The Street wants cash, and what’s different about now vs then, is that NOW we have a Fed that loves the idea that their policies could move markets higher, creating a "wealth effect", which will drive people to spend more. So what’s the Fed going to do? I have a hunch that The Ben Bernanke is going to tell the member banks that their reserves are now adequate for the risk profile, and that they can release some of their reserves into the system. If he does that, $1 Trillion will come forth and it's going to be a party. The banks will use "X" amount of it to play cowboy in the stock market, and they'll use "Y" amount to start lending again. My hunch comes from a statement The Ben Bernanke made last week about considering cutting the interest rates that the Fed pays to banks for keeping their reserves there. Now, if he tells the public "Hey we're going to cut the interest rate we're paying the banks", it sounds good to the average listener, but what that really means is "Hey, banks instead of parking money with us (The FED) and getting a free 4%” – and therefore not lending to John Q. Public – we’re going to lower the rate we give you, and reduce your reserve requirements, so that NOW you’re free to use those excess reserves to make loans and invest!”

If Bernanke really cuts loose and frees up a $1 Trillion in stimulus, we’re going to rally, possibly right up into year-end. If he disappoints, takes a hard stance, and doesn't give up much more than the interest rate "twist", we're going to roll over and plunge, and plunge hard. Be very cautious.

Tips:
Our bets (this past week) have been in the "swing" trade. What we like to do is pick entries that let us hold something for 3, 5, or 10 days. This is fairly easy when the market romps for 5 up days! For instance we picked up WPRT early this week at 28, and sold half of it at 32.35 – netting 15% in a week. We also bought SNDK at 40.22, NVLS at 28.8, KLAC at 38.02, HES at 60, ORCL at 28, and some SPY at 118.53. We sold the SPY at 121.54 taking in $3 per share. We stopped out of WPRT at 30.98, taking almost $3 per share. We sold HES at 61.90, taking in almost $2 per share. And we sold ORCL at 29.19 taking in a little over $1 per share.

That leaves us some:
SNDK bought at 40.22, with a stop at 42.20,
NVLS bought at 28.80, with a stop at 29.80, and
KLAC bought at 38.02, with a stop at 38.60.

I think we see the market "hover" on Monday into Tuesday, and then we'll know by Wednesday what The Ben Bernanke is going to do. This should prove to be interesting, so hold onto your hat!!

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 9-11-11

This Week in Barons –9–11-11:

"What is the point of being able to forgive, when deep down, you both have to admit you'll never forget?" … Jodi Picoult

This is the 10th anniversary of that dreadful day that forever changed most of our lives. I was on my way to teach a class at Carnegie Mellon University when monitors started showing ‘The Event’ in real time. The emotions cannot be described. ‘The Event’ touched virtually everyone that I came in contact with. My thoughts and prayers go out to everyone involved in that incredible day.

Switching gears – I don't understand The Ben Bernanke. Although he's certainly a very smart man, he has no problem lying and he does that often. Just the other day he said that he was perplexed as to why consumers aren't consuming more. Please – spare me the drama. I listened to Obama very intently thinking – this man is incredibly dangerous because of one thing – his ability to speak the written word. He is a tremendous, very dangerous speaker. He gets people very excited about Government (for once) doing the right thing, and then stabs everyone in the back for not doing EXACTLY what he says. He is a very good salesman. Both he and The Ben Bernanke are selling hopes and dreams – just not reality. In the past three weeks I've heard the world "entitlements" so many times my head is going to explode. The words normally refer to “Social Security”- referring to it as some form of ‘social program’ rather than a legal contract that you have paid into and the government has the obligation to pay back to you! For years Social Security had its own separate fund. Then Lyndon Johnson (looking to find money for his pet projects) found the Social Security account – and merged it with the General Account – and in an incredibly short period of time all the money was gone. I'm not saying that Social Security would be in great shape if they didn't raid the fund. I'm simply saying that Social Security would still be “Manageable.”

Continuing along the lines of politics – last week Dominion Resources applied for permission to turn part of its Cove Point, Md., terminal into an export facility. The Cove Point facility was built to "import" natural gas in liquefied state, but because we've found so much natural gas in the U.S. over the past ten years, Dominion is now looking to export it! We could easily increase production by 25% a year, creating thousands and thousands of jobs and not even put a dent in the supply we've found in the ‘Shale Deposits’ from NY to North Dakota. In fact, the biggest danger is that there is too much natural gas, and the price will fall! So where's the giant push from our politicians to get us off foreign oil and onto natural gas? I’m watching with anticipation the Dominion Resources request.

Globally, Europe's hanging on by a thread, and ‘frankly’ the PIIGS can't be saved. Greek default is just a matter of time. In Austria, they've made regulations that the general public can only buy approximately $20,000 worth of gold at any time. With Europe in such turmoil, people are doing anything they can to get rid of the Euro, and buy gold. You can bet similar actions will come to the UK and to the US as things continue to deteriorate. If you don't own gold and silver right now, I think you'd best "get on it" because I could see them trying that here.

The Market:
On Friday the DOW lost 300 points – most of it on developments from Europe. Just before the open we learned that a board member of the European Central bank decided to resign, which is usually a harbinger of bad news coming. So now it's all in Bernanke's hands, and he’s been playing tough, not mentioning more stimulus. There are several ideas floating around regarding the next Fed move, most of them revolving around the "Twist". This is simply a change in the way the Fed manipulates interest rates. By buying up short-term Treasuries, they have been able to keep short-term rates low. Now they might focus on longer dated paper, trying to drive those rates lower – thinking that corporations are not expanding because of excess long-term interest rates. (Honestly, corporations are not expanding because there's no demand. And (fyi) our country’s production output is running well below capacity.) On top of that, some think that a ‘Twist’ will spur housing. In my view, housing is in a death spiral, and no one wants to catch that falling knife. If 4.5% mortgages won't spur buying, it’s doubtful that 4.25% will either. So the ‘Twist’ isn't going to do much. And (of course) the Fed will continue buying treasuries with the billions that mature in the portfolio they have amassed, so in essence QE3 is in effect right now.

So, what else does The Ben Bernanke have up his sleeve? A couple months ago I suggested: "One day the banks are going to unleash all that excess reserve they've been hoarding and push it into the economy. It will be highly inflationary, but it will spur activity". I tend to think that one of the items that will be mentioned is that the Fed is going to back away from making the banks pull in more reserves. In fact, I think The Ben Bernanke might suggest that banks are overfunded compared to the risk and encourage them to reduce their reserves. This would be fancy talk for "Go forth and Lend", and that could inject between $1.5 - $2 Trillion into the system. Now that could be quite an interesting policy.

Obama is in trouble. The polls are showing that 87% of Afro-Americans think Obama's doing well, 48% of Hispanics and 33% of whites. Obama’s jobs speech was a complete flop on Thursday – nothing but another "Give a union man a job today, and we'll pay for it in the future" scam. So it’s left to The Ben Bernanke to potentially tell the banks to release $1.5 Trillion in reserves. He could easily tell banks to relax lending standards in order to buy more homes, cars, virtually anything! And if The Ben Bernanke comes out and let's his banks go nuts – we’re going to have the ‘mother’ of all stock market runs, with the ONLY fly in the ointment being Europe. Although a Greek default is immanent, it will be looked upon as a massive problem that could spread.

In the meantime, there have been various gold raids over the past week. The raids are coming closer together now, but it's evident they’re not working all that well. For example - on Friday – gold was beat down by $50 as 4,000 contracts were dumped in under 28 minutes. This is virtually impossible – and the only way that can happen is if the major bankers ‘literally’ call each other up, and determine a price they want for gold. On Friday they set their boxes to trade paper back and forth, each time a bit lower – it’s happens quickly and quite dramatic. However, over the course of the day gold was bid back up and cannot be stopped now. As I mentioned before, it’s just a matter of time until they put ‘buying restrictions’ in place.

We have some tough times ahead as unemployment will get worse, and businesses refuse to hire. Housing isn't going to recover for years, even if the Government "takes over" the foreclosed houses and rents them out as some have suggested. Be prepared, and raise some cash. If you're in “Long Only” mutual funds, be very, very careful. It’s my guess that a massive release of stimulus will propel the market higher, but it’s a head fake. In many ways you’re living thru historic times. Economically, the world has never seen what we're going through because until now the world was not a completely "fiat" basket of currencies. We're going to see some very disturbing things coming out of the EU, and contagion is not just possible, it's probable.

Tips:
We had purchased GDX (which is an ETF basket of gold "miners") at the 61 level and we sold out of it at 67 on Friday. Although we think gold goes to 2400, miners are sometimes looked at as a way to get gold cheap, and other times as a "stock" that should be sold. Although I think the GDX has more upside to it, possibly much more, I'd like to see it bust up and over 67 dollars before getting involved again.

Gold is still around $1,850 per ounce, with silver being close to $42.

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

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 9-4-11

This Week in Barons –9–4-11:

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

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

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

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

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

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

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

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

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

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

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

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 8-28-11

This Week in Barons –8–28-11:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 8-21-11

This Week in Barons –8–21-11:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Please be safe out there!

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

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

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

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

To unsubscribe please refer to the bottom of the email.

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

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

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

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

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

Remember the Blog:
Until next week – be safe.

R.F. Culbertson

This Week in Barrons - 8-14-11

This Week in Barons –8–14-11:

TW3 – That Was the Week that Was!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Please be safe out there!

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R.F. Culbertson