This Week in Barrons - 12-23-12

This Week in Barrons – 12-23-2012

“With a little help from my friend…”

Thanks to David S for the following:  Four months after President Obama announced the “Buffett Rule,” he killed a proposal for building the Keystone XL Pipeline that would carry oil from the Canadian oil sands through Montana, South Dakota, Nebraska, Kansas, Oklahoma, and Texas.  Many of us wondered why?

The original proposal was for the pipeline to be built over the Nebraska Ogallala Aquifer.  Citizens of Nebraska (with the help of Warren Buffet) protested the construction of the pipeline over concerns that an oil spill would seep into the major freshwater source.  This raised just enough eyebrows among skeptics, and forced the transport of the new Bakken oil by rail.  Well, Warren Buffett just happens to be the largest owner of railroads in America, owning all of Burlington Northern Santa Fe.  As it turns out, it is not just natural resources and aquifer purity that Obama had in mind when sealing the fate of the Keystone XL Pipeline; but rather it appears there were far more relevant numbers that determined Obama's decision.

Obama’s decision to reject TransCanada Corp’s Keystone XL oil pipeline permit was a huge benefit to the Burlington Northern railroad.  According to a Bloomberg report last week:

-       Crude oil and petroleum products transported by U.S. railways during the first half of 2012 increased 38% over the same period in 2011.

-       Rail deliveries of crude oil and petroleum products in June alone jumped 51% over a year earlier.

-       Burlington Northern is the biggest railway mover of U.S. crude, and the company's car loadings of crude oil and petroleum products increased 60% during the first six months of 2012.

Since Burlington Northern’s stock hit bottom in early 2009 (at the time when Bakken oil production just started to take off), their stock has skyrocketed.  Warren Buffet has done it again, even if he had to scratch Obama’s back to get it.

The Market:

If you run money and you’re not beating the S&P, you’d better be selling your gains (and that includes your gains in gold and copper) – in order to take advantage of any post-fiscal cliff run higher.  Well there are a ‘ton’ of upside-down money managers that are scrambling to improve their cash positions surrounding the fiscal cliff.  And even if that all gets worked out – many are selling in order to lock in known tax rates, rather than play roulette and guess what they might have to pay in the future.  Factually, there is so much demand for physical silver that it has currently out-stripped supply.  So people are:

-       selling to raise cash,

-       selling because they’re scared of the fiscal cliff,

-       selling to pay lower taxes,

-       trying to buy physical silver,

-       and JPM is still illegally naked-shorting silver.   

I listened to David Tepper talk the market higher on CNBC this week.  At the same time I was reading the Fed’s research paper called The U.S. Recession Probabilities Index.  Since 1967 it has been 100% correct in calling every US recession.  This year’s report came out the day ahead of the Obama election win and said: "The US will enter a recession in 2013."  So, the Fed is saying that we’re going to enter a recession DESPITE printing $85 Billion a month.  

We do have one other financial nightmare to navigate.  The U.S. Government's bills are cut into two sides: mandatory spending and discretionary spending.  Mandatory spending is the element that we MUST pay – such as interest on our national debt, Social Security, Medicare, Medicaid, and certain defensive projects.  Discretionary spending is the element we could ignore – such as pet projects, wars, research grants, and Government perks.  When it's time to talk about cutting spending it is always about the discretionary side of the ledger.  Well, our problem is that currently our Government’s income (coming in from tax receipts) does not cover our MANDATORY spending.  Clearly the only offset to that is to print more and more money – making gold and silver look that much better. 

Currently we’re still trapped by the fiscal cliff grandstanding.  This coming Monday the market closes early at 1pm.  The market will be closed on Tuesday.  The market is open on Wednesday but volume will be extremely light.  However, we often see huge moves on incredibly light volume days because one big firm can place one large bet and move the market.  So, despite the volume being so low, don't think things can't move and move big – because they can.

Tips:

I want to end with my wishes for you all. It's Christmas, a special time for so many millions, and I hope you enjoy it to the fullest.  I personally look forward to it each year.

My current short-term holds are:

-       DIA – Call Options for Jan 132’s – in at 1.91

-       SPY – in at 141.97  (currently 142.79) – stop at 142

-       VALE – in at 18.52 (currently 20.10) – stop at 19.45

-       ALTR – in at 34.40 (currently 34.49) – stop at 34.00

-       SDRL – in at 37.49 (currently 37.21) – stop at 37.00

-       MS in at 18.50 (currently 18.92) – stop at 18.00

-       RGR in at 42.00 (currently 43.44) – stop at 43.00

-       SWHC in at 8.00 (currently 8.10) – stop at entry

-       SIL – in at 24.51 (currently 22.24) – no stop yet

-       GLD (ETF for Gold) – in at 158.28, (currently 160.35) – no stop ($1,659.10 per physical ounce), AND

-       SLV (ETF for Silver) – in at 28.3 (currently 29.00) – no stop ($30.14 per physical ounce).

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: <http://rfcfinancialnews.blogspot.com> .

Please write to <rfc@getabby.com> 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: http://www.youtube.com/watch?v=K2Z9I_6ciH0

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: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@getabby.com>

<http://rfcfinancialnews.blogspot.com>

This Week in Barrons - 12-16-12

This Week in Barrons – 12-16-2012

Mayan Madness – It’s already here. 

On December 21the Mayan calendar screeches to a halt.  Pacal Votan (the Mayan "Science Guy") did NOT predict the end of the world, but rather predicted an end to a cycle.  The Mayans observed cycles in the stars, and calculated the grand cycle of the sun to be a 26,000 year journey.  The Mayan ‘long count’ calendar cuts that cycle into 5,125 year segments, and it’s this current segment that will expire on Dec 21.  What that means (according to Pacal) is that “the end of an age” will have passed.  While that means the sun’s orbit around the constellations has finally concluded, Pacal also added that man (in this past cycle) would be very obsessed with material things, technological things, ruthless for possessions and forget nature and human dignity.  This ‘new age’ (beginning December, 2012) would usher in an era where people would once again realize that the obsession with material things and ignoring nature would not be the way to happiness.  So, is the world going to end – no.   Will a major catastrophe happen – probably not.   Well, some people say that a catastrophe has already happened.  I am not going to address the events in Sandy Hook, CT this week.  Words cannot describe – but my feelings, thoughts, and prayers certainly go out for any and all effected.  And maybe that was the catastrophic event that Pacal spoke of – or maybe it was some of the following:

-       An active shooter goes off in Portland, shooting up a mall.

-       The North Koreans launch a successful long-range missile.

-       In NY a man pushes another onto the subway tracks.

-       Two kids shoot a woman and then post the video on Facebook.

-       In Detroit, 34.5% of the people are on food stamps and 45.7% are no longer in the labor force.

-       Syria fires scud missiles at insurgents.

-       Teens ask a woman for a smoke, and then kill her when she replies ‘Get a job.’

-       13 year-old boys were busted for a knifepoint robbery of condoms, and candy at Walgreens.

-       Two boys, aged 7 and 11, hold a woman at gunpoint, while demanding her car and cell phone.

Let's hope the Mayans are right and this age of death, destruction and selfish lust passes.

This week The Ben Bernanke announced that he would replace Operation Twist with an outright purchase of long bonds totaling $45 Billion a month – as we suggested last week.  However, the interesting news in the release was that he would keep the stimulus in place until the unemployment rate went under 6.5% - basically forever.  And that is why gold and silver are so important.

There are many ways to buy silver including: silver eagles, bullion bars, and ‘junk silver’.   What is ‘junk silver’?  ‘Junk Silver’ are coins (like quarters and dimes) that were minted prior to 1964 actually contained 90% silver.  So (years ago) dealers started offering bags of ‘junk silver’ based on the face value of the coins in the bag.  Usually they are sold in $1,000 bags or $500 ‘half bags’ worth of coins. 
If you believe that silver will go to $0 – then this may be the investment for you – as the coins will still be worth the currency value of the minting.  So silver could fall to $0, but a roll of 40 quarters would still be worth $10.  In 1965 a $1,000 bag of quarters and dimes, was worth about $1,000.  But due to the debasing of the dollar and silver increasing in value, a bag now sells for over $25,000.  So four 1964 quarters (or ten 1964 dimes) now cost $25.  As The Ben Bernanke continues to destroy our currency, the precious metals don't really have much choice but to go higher.  Therefore, this week’s release by the Fed was really quite large, and more aggressive than in the past.  Understand that the Chinese (and others that hold a lot of dollar reserves) are not going to sit around and watch their value fall.  They will be buying gold, oil, silver, lumber, land and more ‘stuff’.  Moving out of dollars into something ‘solid’ simply makes a lot more sense than letting The Ben Bernanke print them into oblivion.

The Market:

The Ben Bernanke is going to print money (QE4) until the unemployment rate falls below 6.5%.  Currently his printing stands at $85 Billion a month, but when that is found lacking in market response, he'll make it $100 B, then onto $120 B, etc.  Some will argue that as more and more people fall out of the labor force – the unemployment rate will come down fairly soon.  Unfortunately, it’s my opinion that if we hit 6.5% unemployment because so many are not looking for work – then social unrest will be our first priority. 

When the news first hit about QE4 the market didn't quite know what to make of it.  But within 30 minutes they figured it was ‘good’ and we were up 65 DOW points.  As The Ben Bernanke prints dollars and buys long dated paper from the broker dealer primary banks, the broker dealers make massive profits on that buying.  Those profits will offset the losses that they’re holding on all of the mortgage backed securities and CDS’s that they previously purchased.  Interestingly, after Ben’s Q&A session you could feel the market acting oddly.  The Ben Bernanke was telling everyone that a lot of the problems are the fault of the politicians bickering and the fiscal cliff.  He said that while the Fed is doing it's best, they can't do all the lifting alone, and Washington isn't helping. 
Now, I don’t think they are giving up on trying to end this year on a big bright note, and The Ben Bernanke certainly gave them the ammo to do it.  Therefore, I'm still cautiously leaning long.

Remember when The Ben Bernanke was appointed, he was incredibly confident and almost pompous about his ability to solve any and all economic problems via monetary policy.  Remember his famous talk: "We have this thing called a helicopter...." in reference to printing hundred dollar bills and raining them down across the land from a helicopter.  He was so sure he could fix anything he often snickered at people that questioned him.  But now (in 2012) he's not the same guy.  His policies and the injected trillions have not solved anything.  He realizes that for all his huffing and puffing, we're in a world of trouble, and he knows there is no way out.  I really do believe that after Ben’s Q&A, it cemented (in a lot of people’s minds) that "Hey, we really are screwed here."   In any event, the Fed is going to print, the games will continue and we're still going to see the market fade or pop over fiscal cliff talks.

On Friday China and Germany posted PMI's that were above the estimates.  And as you know the market is very concerned about the fiscal cliff.  Every whisper, rumor, and talking head moves the market up or down.  There is no defense for it, and there is no way to be protected from it.  You must either sit on your hands or take small positions and only hold them for a few days.  Honestly, if the market was at DOW 8K, we could buy and hold any of this junk and look forward to the last push higher.  But we're at DOW 13K, and close to the all time market high.  That is no time to just load up, ignore the ups and downs and "know" you're going to be okay.  Between the resistances of multi year highs, a lousy economy, a lousy Government, a fiscal cliff, and other problems – it will be a massive struggle to force this market over the top – so please trade carefully. 

Tips:

With the supposed resurgent strength of the Chinese economy, the material sector lit up nicely on Friday.  I had considered putting out BTU as a buy on Twitter, but was afraid for the ‘pop and drop’ so I refrained. 

We’re seeing that the Chinese lust and necessity for gold (and commodities in general) is increasing.  David S wrote us that gold premiums in Hong Kong rose to their highest level in about five months.  Also China is bypassing the U.S. dollar by signing direct currency deals with other countries such as: Brazil, UAE, Australia, Russia, and Turkey.  Chinese companies are also going on a worldwide buying spree for commodities, most recently talking about buying more gold miners and copper projects in Africa.  At some point, China has to eliminate its currency being ‘pegged’ to the U.S. dollar.  To do that, their currency must be seen as a valuable, stable asset.  That means that China needs to convert its foreign currency reserves into gold.  Currently China holds only a tiny proportion of its official foreign exchange reserves in gold (just 1.6%).  If China wants to increase its reserves to meet its emerging market peers and make its currency a true global currency, it must buy somewhere between 3,000 and 6,000 tons of gold.  When China purchased between 1,000 and 2,000 tons of gold – the gold price doubled.  And, if China were to increase by that amount – they would need to acquire the equivalent to the entire global gold output (approximately 3,000 tons / yr.) – further signaling potential price increases for the metals. 

In looking for possible short-term plays, I came up with Petroleo Brasilerio S/A (PBR) on Friday.  After falling from 24 back in October, it bottomed at the 18 level, and has started back up.  While the chart picture isn't perfect, if it can continue to hold over the 19.50 level, there's a decent chance it's ready to make a move back up and even if it only retraced half the fall, it would be a good gainer. You might consider looking at it.  Also, if this market holds up, I'd consider purchasing: Alpha Natural Resources (ANR) over 9.80, James River Coal Company (JRCC) over 3.80, Petroleo Brasilerio S/A (PBR) over 19.50, and Nokia (NOK) over 3.90.

My current short-term holds are:

-       DIA – Call Options for Jan 132’s – in at 1.91

-       DBA – in at 28.30 (currently 28.48) – stop at entry

-       NFLX – in at 90.07 (currently 93.38) – stop at 92

-       SPY – in at 141.97  (currently 142.15) – stop at 142

-       VALE – in at 18.52 (currently 19.60) – stop at 19

-       SIL – in at 24.51 (currently 23.21) – no stop yet

-       GLD (ETF for Gold) – in at 158.28, (currently 164.10) – no stop ($1,695.80 per physical ounce), AND

-       SLV (ETF for Silver) – in at 28.3 (currently 31.20) – no stop ($32.22 per physical ounce).

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: <http://rfcfinancialnews.blogspot.com> .

Please write to <rfc@getabby.com> 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: http://www.youtube.com/watch?v=K2Z9I_6ciH0

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: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@getabby.com>

<http://rfcfinancialnews.blogspot.com>

This Week in Barrons - 12-9-12

This Week in Barrons – 12-9-2012

The Fiscal Cliff – Watch that First Step!

We're seeing a market torn apart by a lot of opposing forces. The big one is the threat of the ‘fiscal cliff’, where on January 1^st (if we don't get a compromise) there will be higher taxes and automatic program reductions put in place.  This is why many companies have decided to pay out dividends now, so that they're taxed at this year’s rates versus possibly being taxed at the much higher rate next year. 
But with the path we’re on as a country, it really doesn’t make that much of a difference whether we hit the “fiscal cliff” or not.  Certainly if both sides of the aisle stand staunch and don't reach a compromise, the ‘fiscal cliff’ will speed up the arrival of the nightmare.  Both sides are bickering over tax increases of a few hundred Billion dollars over 10 years.  Excuse me, but we ‘racked up’ $1.6 Trillion in debt THIS YEAR.  This was simply tossed on to the $15.7 Trillion in debt that we already have – and then people realized that we’re going to hit our spending ceiling again (very soon) and we have to raise the debt level (again).  

Treasury Secretary Geithner suggested this week that we don't even bother Congress about the debt ceiling any more, that we should have an unlimited debt ceiling.  If that wasn’t so sad, you could laugh – but allow me to explain.  Let’s assume that the US was a stand-alone nation – creating and consuming everything within our borders.  As more and more people decided to use the benefits of our social programs such as Disability, Social Security, Medicare, Medicaid, Food stamps, Welfare, Unemployment payments, etc. – eventually there would be a problem when outflows of dollars from those funds exceeded the inflows created by hard-working people.  At that point the Government would have to resort to printing more money.  But given we’re just trading within our ‘four walls’; a nation could live like that for a long, long time.  Of course in the end, the hard-working folks would look at themselves and say: “What – are we nuts?  Why are we working when we could do nothing and get paid too?"  And eventually the nation would die, NOT because of the debts or even the inflationary printing, but because no one would want to work to produce the fuel and products we all need.

Now, because we are NOT an isolated nation – but rather trading in our currency on a daily basis – the question that always comes up is: “What is that dollar worth?”  I.E. when we buy oil from Saudi Arabia and pay in dollars, they constantly evaluate the value of that dollar.  If the dollar was backed by something physical, then the foreign producers could feel good about accepting them for their hard work and resources.  But when Mr. Geithner says “let’s have no debt ceiling and just borrow for as long as we wish”, every trading partner on the planet is looking on in disbelief.  Saudi Arabia doesn’t want our inflated dollars any more.  They still drudgingly accept them, because that is the way the system is set up around the world, but we see some interesting things taking place.  It is now common for virtually all of our trading partners to instantly take those dollars and rush out and buy up "real things".  For example the Chinese are using dollar denominated assets to buy up land, buildings, toll roads, oil, coal, iron, gold and silver.  Brazil has gone so far as to call us a currency manipulator, and has imposed tariffs on our imports. 
The reason we're facing an economic crisis of epic proportions is not simply: (a) because we're becoming a socialist state, (b) because many of our jobs have gone idle and our standard of living is falling, (c) because of our spiraling debts, (d) because of our horrific inflation in food, education and medicine, but rather it’s because the rest of the world is tired of selling us goods and services in return for paper that is constantly worth less. 

Our politicians can argue over the fiscal cliff all they want, but it’s like the Captain of the Titanic wondering where to place the deck chairs.  Yes, falling over the fiscal cliff will cause some sharp and immediate economic pain, but in the grand scheme of things it changes nothing.  This is why I've been harping on Gold since 2001, and Silver since 2007.  By the way, if you live in California, New York City, or Hawaii, and if we go over the fiscal cliff, the highest marginal taxpayers will be paying over 50% of their income in taxes.  How long do you really think individuals and corporations will continue to pay over half their income in taxes?  You will see more ‘off-shore’ banking and tax loopholes being taken advantage of than ever before.  Government revenues won’t increase – but rather individuals and corporations will just manage their businesses differently.

The Market:

First:               The Ben Bernanke is going to give us a Christmas present this week by replacing the outgoing "twist" with some new version of pumping billions in to the system.  (Yawn).  Despite the Billions that The Ben Bernanke has printed:

-       The DOW is at the same level it was in March,

-       500,000 people stopped looking for work, and

-       370,000 people had to sign up for first time unemployment.

Unless The Ben Bernanke replaces the twist with something much bigger, the market will yawn about it.  We already know what $80 billion a month has given us.  Will anyone rejoice over $85 B – nope!.  But if Ben shorts out and goes crazy, hiking the buying to say 100 billion, then yes – the market will pop higher on the news.

Secondly:      The Unemployment Data released on Friday was nothing short of embarrassing.  According to the Bureau of Labor Statistics we made 146,000 new jobs last month and unemployment fell to 7.7%.  Are you kidding me?  You're asking me to pay no attention to:

-       the adjustments in the past 2 reports which removed 50,000 jobs from each monthly total,

-       the household income which fell - again,

-       the unemployment rate going down because of another wave of folks leaving the job market. 

These numbers are basically fake, and will be revised over the next several months.

Finally:           For all you chartists, if you look at the big picture over 20 years, you see a pretty classic "jaws of death" pattern – basically a huge megaphone.  In the past this has always led to a massive melt down. 
Soon we will be entering the sixth year of all of the QE-type gimmicks – that have been used to keep us treading water.  During that time food stamps have hit an all time high and continue to grow, and the amount of people signing up for disability has outpaced the amount of folks getting a job.  We now face: (a) higher taxes, (b) increased costs associated with Obamacare, and (c) foreign nations not wanting our treasuries or our currency.  It is my opinion that at some point in 2013, the market will start to head south, and will do so in spectacular fashion.

But in the short term, we're still in a situation where everyone wants to end the year on an up note.  December and January are usually two of the best months of the year for stock gains, and you can see how badly they want it to happen.  It is still my guess that a "deal" announced concerning the cliff, will send stocks sharply higher and yes we'll end the year "up" and probably see good gains in January going into February.  I’m trying to "lean long" for that very possibility.  I think we "should" have one more market spurt higher and it could be a really strong one.  But that will mark a multi generation high and we'll sink considerably lower from there.  However, if we don’t get a  ‘fiscal cliff’ deal by Christmas, I suggest we could see a massive sell off in a short time.

Tips:

We sold out of AAPL for a nice profit this week – and depending upon Monday’s action – may dive back into it at the 535 level. 

I’m beginning to hear more and more of this type of discussion that David S brought to my attention:  Although gold prices hit a one-month low ($1,701.55 an ounce) this week, Peter Schiff (CEO of Euro Pacific Capital) and Anthony Grisanti (President of GRZ Energy), think that gold prices are going to come back with a vengeance.  Peter Schiff says:  “I think gold will go $3,000 to $5,000 higher.  A lot depends upon how much money are we going to print? How long are we going to try to keep interest rates artificially low?  And how long is it going to take before the world realizes that we’ve been conning them?  The Federal Reserve’s massive easing over the past four years and the exploding U.S. debt burden are very bullish for the precious metal.  We're asking the world to give us money indefinitely so that we can live beyond our means.  When the world figures this out and decides it doesn't want to play this game anymore, it's going to mean a much bigger drop in the dollar.  Consequently the Fed will have to print even more money to keep interest rates artificially low, and gold prices will skyrocket."

My current short-term holds are:

-       AAPL – in at 525.35 (currently 586.30) – stop at 572.00

-       DBA – in at 28.30 (currently 28.82) – stop at entry

-       SIL – in at 24.51 (currently 22.46) – no stop yet

-       GLD (ETF for Gold) – in at 158.28, (currently 165.14) – no stop ($1,704 per physical ounce), AND

-       SLV (ETF for Silver) – in at 28.3 (currently 32.03) – no stop ($33.05 per physical ounce).

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: <http://rfcfinancialnews.blogspot.com> .

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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: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@getabby.com>

<http://rfcfinancialnews.blogspot.com>