What Made America the Great?
The other day, I was wondering what my dad would have said (when I was growing up) if I would have told him that in 50 years:
- The U.S. would no longer be the manufacturing arm of the world,
- Our biggest employer would be Walmart (a discount store),
- GM and Chrysler both have gone bankrupt and the Government now owns them,
- Our national debt (then in the Millions $) is now in the Trillions (and impossible to pay back),
- The U.S. dollar is worth (by Uncle Sam’s stds.) 7 cents of buying power,
- 45 Million people are on ‘food stamps’,
- One out of every 6 people in the country are on some form of government assistance,
- We don’t produce oil any more, the Middle East does all that.
- The house he purchased for $11,000, would sell for $485,000 in 2006, and only 3 years later would sell for less than $200,000 again (and going down in value),
- AND now our own government allows banks to run two sets of books – one for ‘real’ and one to ‘show the stock market.’
I’m assuming my dad would have said that this was a ‘joke’, because there’s no way the U.S. would have done all of those things – someone would have had to step in and say STOP. BUT – HERE WE ARE!
In my dad’s time, it wasn't all wine and roses. People worked very hard, doing just about anything they wanted as long as it didn't hurt anyone else. With that freedom they figured out how to create the strongest nation on earth. Can we do that again – I don’t think so. Outside of the military we are not the same country as 50 years ago. Our steel mills are laying-off people here, because it’s cheaper (due to the lack of EPA guidelines) to build and operate steel making facilities in Brazil. Believe me, I'm not against clean air and water – I love it – and live in Pittsburgh, Pa to prove it! But if you’re telling me that ‘JOBS’ are the #1 priority – then the EPA and Congress didn’t get the memo! Just 30 days ago, 1 Million people applied for 50,000 jobs at McDonalds – just for the right to earn $8.50 per hour and say “Would you like fries with that?” Why - because the manufacturing plant where they ‘were’ working was closed in favor of doing production overseas. So I don’t see how we go back?
Think about the world:
- Greece is on it’s death bed.
- Spain, Italy, Portugal, Ireland and probably 4 others are Zombie economies, being propped up by stimulus.
- China, despite being the worlds manufacturer, is facing serious troubles with inflation, and still trying to figure out how to employ the hundreds of millions. (FYI - Estimates are there are 20 ‘multi-billion dollar’ cities in China – complete with houses, shops, streets, and lights – with NO people – all built – just to keep people employed!)
Now, the U.S. – because we’re once again at the debt limit and virtually bankrupt – we are going to use Government employee pension plan money to ‘tide us over.’ The U.S. is at 19% ‘under employment’ and initial jobless claims still hover over 400,000 each week. Gold and Silver are not bubbles – the only real ‘bubble’ we have is that we are printing fiat dollars, and taking on debt we cannot repay. Gold simply shows you the level of the currency bubble, and considering gold is at record highs, you can rest assured that the world has never seen such currency destruction. No, I'm not scared away from gold and silver, in fact I’m continuing to buy more.
The Market:
Heavy, is a word I would use to describe the market for the past 2 weeks. It's been pushed and prodded, forced to yield to higher levels despite "knowing" that the global economies are slowing. This is nothing more than The Ben Bernanke's money getting put to work via the major institutions. Remember the old market adage: “Sell in May and Go Away!” If not for POMO, where the Fed is giving 18 primary dealer banks billions each day in return for Treasuries – we would be thousands of points lower on the DOW and hundreds lower on the S&P. Mutual fund flows for months have been flowing “out" of stocks. The individual investor is using his 401K as a means to support himself. The level of "loans" against 401K's and complete “cash outs” have hit record levels. With all that negativity, and in an “open and free market”, stocks would probably be heading lower. But we have a manipulated market, and that makes this whole thing a lot harder to figure out.
We are still above the 50-day moving averages on the DOW and the S&P. The 50-day on the S&P is 1,325 and we finished the week at 1,333 (only 8 points away from violating a MAJOR technical support level). The DOW 50-day moving average sits at 12,383, and we closed on Friday just 129 points away from it at 12,512.
If either of these break below the 50-day, even with all The Ben Bernanke money, I have to suspect we'll get a flush out that could be pretty severe. But until that happens, all we can do is continue to lean long, but with incredible care. What we’ve been doing is quick and heavy buying and selling. For example (and use your own multiplier) – buy 1,000 shares of SPY @ 10am – noticing at 11:20 we are up 60 cents – so we sell out of half (500 shares) – but not allowing the other ‘half’ to go below our entry point. If the SPY ends the day above our entry level, we'll let it run for as many days as it is up for us.
It's not easy money any more. This week I suspect more battles between real investors wanting out, and Bernanke's banker buddies trying to keep it up. But, I do think we have a date with at least testing those moving averages, so be very careful out there friends!
Tips:
Not much has changed actually:
Our long holds still look like: SLV, NG, AAU, DNN, AVL, SLW, SQM and USSIF.
We continued nibbling with small positions on SLV, SLW, GLD, SPY last week – and continued to purchase physical silver and gold with the profits on the previous short-term holds.
Honestly – my purchases are smaller than normal and we’re holding them shorter than normal so tweeting about them almost defeats their purpose – but the show must go on. Please be safe out there!
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