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Well, it has finally happened.
USA Today has raised the cost
of their daily paper to one dollar. Knew the day was coming. The mining
industry continues to suffer along with the rest of the stock market. Definitely
a contrarian market now. The availability of credit is now zero and
blessed be those companies who have previously stock piled huge wads of cash.
They will have the best chance of surviving this market.
Cash is king.
The following material below
comes from Bill Bonner’s Daily Reckoning. A daily email commentary on current
events. Definitely worth subscribing to and it’s free.
The Daily Reckoning, Bill
Bonner, Dan Denning, 12-11-2008 - “More firms are going broke every day. And
others are desperately trying to stay in business by cutting payrolls. Sony,
for example, announced 16,000 job losses yesterday. We've done our part
to help the airlines...but the industry is facing $5 billion in losses for
2008. And Paulson has only $15 billion left of the $350 billion first
draw for his deflation-fighting campaign.”
How many of you out there
remember Johnny Carson?
I know a lot of the newer
generation will not know who the devil I am referring to. Almost 20 years
since the show signed off the air but seems like yesterday. And now Jay Leno
is reaching his final years as the late night host. History moves forward
relentlessly leaving all of us racing to catch up.
Gold and resource stocks are
way down. Many market caps are smaller than the company’s cash in the bank.
This is why they are called speculations. Gold remains insurance, but all
else remains speculation. This is the true definition of a contrarian
investor. You place your bet where you believe the future is heading.
And who knows for sure? Many of these resource shares were trading earlier in
the year for 5 or 10 dollars a share. Now, they are around a nickel or
a couple of pennies. This market is volatile and cyclical.
Alan Greenspan has predicted
that the US will have inflation for the next 25 years. And that he believes
the US dollar will ultimately lose its position as reserve currency status.
Right now the markets are still collapsing and seething in their own
blood.
Do by all means hold onto a
substantial portion of physical gold. Learn to live below your means
and of course reduce your debt as much as you can. Risk. Debt. Risk
Debt. The addition of those two have put us where we are today. If you
are going to risk, that’s ok, just get out of debt first. Let your risk
be money you can afford to lose and not borrowed money. That is what
drove the poor souls to jump off buildings in 1929. Don’t mortgage the
farm. Become a little more (actually a lot more) conservative in your
expectations and life style.
The time to buy is when
everyone else is selling. And the time to sell is when everyone else is
buying. The time to buy is always when the blood is pouring in the
streets and right now the streets are filling to over pouring.
“L. Frank Baum’s The Wonderful
Wizard of Oz has become popular as a teaching tool in economics. It has been
argued that it was written as an allegory of Populist demands for a
bimetallic monetary system in the late 19th century.” “One method of
enhancing student learning in economics courses is to introduce economic
concepts through literature…” “A well-known example in economics has
been the incorporation of L. Frank Baum’s The Wonderful Wizard of Oz into the
teaching of monetary issues.” “The primary evidence in support of the
allegorical interpretation is what appears to be an extraordinary number of
similarities between characters and events in the book and the people and
events of the 1896 presidential campaign (when the book was written).”
indiana.edu/~econed/pdffiles/summer02/bhansen.pdf
Sounds a lot like the journey
we have been on these past 20 years. The road to the beautiful emerald city
of Oz.
“The Wonderful Wizard of Oz by
L. Frank Baum (Chicago, 1900) is a parable about Money Reform and the 1890s
Midwestern political movement led by William Jennings Bryan…” “From 1891-1895
Bryan served in the House of Representatives, where he advocated the coinage
of silver at a fixed ratio with gold, in order to break the bankers' monopoly
and manipulation of the gold-backed currency.”
prosperityuk.com/articles_and_reviews/articles/wizzoz.php
Wow! Manipulation of the gold
market 100 years ago?
“Oz is short for ounce, the
measure for gold and silver.” “…Dorothy sets out on the Yellow Brick Road
(the gold standard) to the Emerald City (Washington), where they meet the Wizard
(the President), who appears powerful, but is ultimately revealed as an
illusion; the real Wizard being just a little man who pulls levers behind a
curtain.” “This can be interpreted in two ways: Either, the President himself
is really just a little man who pulls levers to sustain an illusion of power,
or, the real power of the President rests with the little men behind the
curtains who pull the levers and create the illusion.”
prosperityuk.com/articles_and_reviews/articles/wizzoz.php
Is this true? Are presidents
only puppets?
“…the world's small stock of
gold was controlled by wicked bankers in New York and London.” “…Emerald City
is only an optical illusion. (emerald-green paper money is likewise a
delusion.)” prosperityuk.com/articles_and_reviews/articles/wizzoz.php
Is the world adapting to
changing market conditions? Many remain in denial.
“To stand outside ones
history, culture, and language and see what has happened with
acciptrine scholarly vision is among the hardest of accomplishments,
and the least valued by those who deal with the certainty of a set
universe.” LE Modesitt, Jr.
Have you noticed how our
republican form of government is being slowly eroded during this financial
crisis with the appointment of “czars?” What is the true definition of a
“czar?”
“A male monarch or emperor” “A
person having great power; an autocrat” “An appointed official having
special powers to regulate or supervise an activity”
thefreedictionary.com/czar
We now have a financial “czar”
and soon to have a car “czar?” Does this not alarm anyone? The stage is being
set for a division of power held by non elected officials. Consider the
enormous un-checked power that is being given to this position. And
answerable to neither the constitution nor elected congressmen.
“…a government "car
czar" will [be] given the task of handing out the taxpayers'
cash…” foxnews.com/politics, 12-10-2008
And no commentator, analyst or
even conservative talk show host is discussing the ramifications of this
newly created government position with absolute power and authority over an
entire industry? Well, who cares what is happening, right? Time to party. And
that is what Americans do best.
“Wall St financiers party like
there's no tomorrow – literally” “The hedge fund dealers partied at a New
York nightclub like there was no tomorrow -- which for some was probably
true.” “Swilling martinis and vodkas, they filled Manhattan's white,
tent-themed Nikki Beach to bursting. Waiters, trays of tapas held high in the
air, became stranded, wedged into crowds swaying to music under pink lights.”
“Yet with hedge funds in freefall, this was more funeral wake than
celebration.” “Job losses across Wall Street are forecast by New York state
accountants to hit 48,000 by the end of next year.” “…as clients run for the
exits, growing numbers of hedge funds have imposed emergency blocks on the
ability to withdraw money.” breitbart.com/article.php?, 12-5-2008
What’s new as jobs continue to
disappear and money is hoarded and credit disappears? As you can read bellow
this “recession” continues to grow and build up steam. Like a boulder rolling
down hill and growing in size.
“As bad as you think it is,
it’s worse,” said Diane Garnick, who helps oversee about $500 billion as an investment
strategist at Invesco Ltd. in New York. “The chances of the economy turning
around in the first half of 2009 are declining rapidly because unemployed
people can’t spur economic growth.” “There’s a concern out there that this
isn’t a recession, it’s the Great Depression II, or the Great Recession I,”
said Kenneth Schapiro, president of Condor Capital Management, which oversees
$500 million in Martinsville, New Jersey.” “Businesses are battening down the
hatches,” Stuart Hoffman, chief economist at PNC Financial Services Group
Inc. in Pittsburgh, said in Bloomberg Television interview.” “Job losses are
going to continue to accelerate.” bloomberg.com/apps/news?pid,
12-4-2008
The following text below is
from an analyst very much worth listening to. Ken Gerbino knows the gold
market and his speculations and longer term assessments are generally tight
on the money.
Kenneth J.Gerbino, 11-11-2008
- “…the gold mining stocks have been beaten up badly for various reasons that
are now basically played out. Concurrently, dollar strength has been based on
two overriding circumstances and these are about finished as well. This means
a very positive environment is about to affect the gold and silver mining
stocks.” “These three reasons and the fact the dollar needed some sort
of rest from the continuing multi-year down trend were why the dollar has
been so strong while the Feds have been debasing it beyond belief in the last
few months. As the dollar became in demand for the above reasons, gold which
is denominated in dollars came down. The reasons above have most likely
played out. This means the dollar should resume it weakness because when the
trillions of new dollars that are being created start circulating in the
economy, inflation will return to the U.S. with a vengeance.” “If you
own gold and silver and legitimate gold and silver mining companies, the
above means you are in the right sector. You do not have to make things
anymore complicated than that as your investment thesis.” “Commercial
banks do not trust each others paper. That is why the credit and commercial
paper market is currently effectively frozen. This is a crucial concept for
gold. Commercial bankers and central bankers have the same ethos, many times
come from the same schools, study the same bad economic text books, know and
adhere to the same misguided economic concepts. They think alike.” “…bankers
know the dollar is going to be debased dramatically in the future and gold
cannot be debased.” “The greatest mistake one can make is to think a
deflation is coming because houses and stock prices have collapsed. We are
entering one of the greatest inflationary periods in our history.”
kitco.com/ind/Gerbino/nov112008.html
What we just read above is
really very powerful stuff from an astute financial guru. Let’s repeat what I
believe Ken Gerbino’s most powerful statement from the above text.
“If you own…legitimate
[quality] gold and silver mining companies, the above means you are in the
right sector. You do not have to make things anymore complicated than that as
your investment thesis.” Kenneth J.Gerbino, 11-11-2008
Inflation is coming. Lots of
it.
The Daily Reckoning, Bill
Bonner, Dan Denning, “…the quantity of money is increasing, but its velocity
is not. That's because the new money isn't getting into the hands of people
who are just itching to spend it. But it will soon enough. And when it does,
look for bond yields to rise and the great inflation to begin.” “We think the
Money Migration is the long-term transfer of the world's wealth from the debt-based
consumption economies of the West to the world's savers and producers,
roughly in the "East."
Again, I say…inflation is
coming. A lot of inflation. And inflation is the best scenario
for gold and silver mining stocks. But again, do not risk the milk
money. Speculate only with money you can afford to lose. Hang in
there with the gold stocks. Gold is still going to be around even when
all this present economic mess settles down in ten or so years. Gold
mining stocks just may be at the bottom of a life time. Opportunity is
always about buying low. And the lower the better.
Click here to order Gold
Letter
We’ve just completed an
article recommending 4 gold stocks whose price has been driven to the
basement. These are quality mining companies with the gold in the
ground. And their market cap is less than the cash in the bank? These
are the type of companies to buy that have the potential to make a lot of
money. Find out who these 4 stocks are?
On Friday the bailout plan for
the big 3 automakers began to fall apart.
All blame, of course, was
shifted to the unions for making too much money. There aren’t too many decent
paying middle class jobs left out there. There are very soon going to be a
lot less. A lot less. Maybe as a country we should start making a real
attempt to make manufacturing competitive in the United States. Probably too
late now any way.
The choice tomorrow is minimum
wage or higher than average wage. There will be very, very few middle class
jobs available to the majority. Actually, soon, there will not even be a
middle class. Just the haves and have nots. No in between.
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