May 7, 2004
MARKET NEWS DIGEST
-> My Mother's Day Prayer ...
-> Gold tumbles on jobless claims drop -Reuters
-> Fed loses 'patience' -CNNfn
-> Oil tops $39, a fresh 13-year high
-> Fed: Rate Rises `Measured', Stocks rise -BL
-> Sell in May, walk away? -CNNfn
-> Economic Data May 3 - 7, 2004
-> ALL COINS NOT CREATED EQUAL - Craig R. Smith
-> SIMILARITIES: BUBBLE #1 & TODAY -Richard Spohr
-> MAY 14: LEWIS & CLARK EXPEDITION BICENTENNIAL
-> THE "CAUSE" OF PRECIOUS METALS -Chris Temple
-> BULL'S EYE BOOK REVIEW -Matt Richey, Motley Fool
-> MAY 6: 54TH NATIONAL DAY OF PRAYER -The Federalist
-> 'THE LESSER OF TWO EVILS' IS NO OPTION -SOL
FOUNDER'S QUOTE OF THE WEEK
"The prosperity of commerce is now perceived and acknowledged by
all enlightened statesmen to be the most useful as well as the most
productive source of national wealth, and has accordingly become
a primary object of its political cares."
-Alexander Hamilton, Federalist No. 12
~ MOTHER ~
M - is for the million things she gave me
O - means only that she's growing old
T - is for the tears were shed to save me
H - is for her heart of purest gold
E - is for her eyes with love-light shining
R - means right and right she'll always be.
Perfect Peace in the midst of chaos, just a myth or an eternal truth?
"Thou wilt keep him in perfect peace, whose mind is stayed on thee: because he trusteth in thee. Trust ye in the LORD for ever: for in the LORD JEHOVAH is everlasting strength" : -Isaiah 26.3
* Peace in knowing that you are a good mother, and are one of life's greatest rewards -- Both now and in eternity.
* Peace in knowing that you always have a Heavenly Father to draw near to -- Both now and in eternity.
* Peace in cherishing font memories of your children's growth -- Both now and in eternity.
I thank God you are my Mom -- Both now and in eternity.
P.S. To commemorate Mother's Day 2004, you will soon receive a 1925 Silver "Peace" Dollar which celebrates ...
1) THE YEAR YOUR MOTHER GAVE BIRTH TO YOU,
2) A REMINDER THAT TRUE "PEACE" BEGINS FROM WITHIN,
3) A reminder that back when you were born, our money used to be "As sound as a Dollar" because it contained pure silver or gold!
Finally ... a few words on how to maintain perfect peace ... during a time that chaos is all around ...
PERFECT PEACE by Tom Stewart
The LORD Jesus promised us tribulation, while we were in this world. "These things I have spoken unto you, that in Me ye might have peace. In the world ye shall have tribulation: but be of good cheer; I have overcome the world" (John 16:33). However, not only have we been promised deliverance from the Tribulation Week, i.e., "Watch ye therefore, and pray always, that ye may be accounted worthy to escape ALL these things that shall come to pass [via the Pre-Tribulational Rapture], and to stand before the Son of man" (Luke 21:36), but we have been promised His peace while we endure these short testings in the meantime.
Perfect Peace is given only to those whose mind and heart recline upon the LORD, i.e., "whose mind is stayed on Thee: because he trusteth in Thee" (Isaiah 26:3). Our peace is perfect because it comes from God. "Peace I leave with you, My peace I give unto you" (John 14:27). Further, this peace is not oblivious to the world, but is confident that God is completely in control of our circumstances. "But be of good cheer; I have overcome the world" (John 16:33).
How are we to attain and maintain Perfect Peace?
First of all, peace is evidence that we are walking in the Spirit. "But the fruit of the Spirit is love, joy, peace, longsuffering, gentleness, goodness, faith, meekness, temperance: against such there is no law" (Galatians 5:22-23).
Second, peace comes from abiding in the Word of God. "Great peace have they which love Thy Law: and nothing shall offend them" (Psalm 119:165).
Finally, the peace that the LORD Jesus Christ gives, flows from a life that abides in prayer. "Be careful for nothing; but in every thing by prayer and supplication with thanksgiving let your requests be made known unto God. And the peace of God, which passeth all understanding, shall keep your hearts and minds through Christ Jesus" (Philippians 4:6-7).
MARKET NEWS DIGEST
May 7 (Bloomberg) -- U.S. companies added 288,000 workers to payrolls in April, exceeding the highest forecast, and the unemployment rate fell to 5.6 percent. Jobs were added in manufacturing, construction and temporary help services.
The increase follows a revised gain of 337,000 jobs in March that was larger than estimated last month, the Labor Department reported in Washington. Manufacturers added jobs for a third straight month, after revisions to February and March.
Payroll gains are chipping away at the number of jobs lost during President George W. Bush's term and may help him deflect criticism from Democratic challenger John Kerry. The report sent the yield on the benchmark 10-year Treasury bond to its highest in almost two years as investors saw the job gains encouraging the Federal Reserve to raise interest rates as soon as next month.
``A couple more months like this and they will begin to normalize interest rates,'' said Steven Wieting, an economist at Citigroup Global Markets Inc. in New York. ``You are seeing a very strong breadth of employment gains. This is a very desirable outcome. It should be celebrated.'' Citigroup economists had forecast payrolls would rise by 250,000, matching the highest of those surveyed.
May 6 (Bloomberg) -- U.S. stocks slid on concern the Federal Reserve will raise interest rates sooner than some investors expect, crimping corporate profit growth.
Citigroup Inc., the largest financial services company, declined after saying it's under investigation by the U.S. Securities and Exchange Commission over accounting for its Argentine business. McDonald's Corp. fell after Chief Executive Charlie Bell underwent cancer surgery.
First-quarter earnings for S&P 500 companies are increasing at double the rate analysts forecast at the beginning of the year. A government report tomorrow on April job growth may underscore the strengthening economy and heighten speculation that higher borrowing costs are warranted.
``Earnings news is good but inflation and interest rate news is starting to shake people up a little bit,'' said John Forelli, who helps manage $10 billion at Independence Investments in Boston. ``Investors are a bit confused right now.''
The Standard & Poor's 500 Index lost 9.44, or 0.8 percent, to 1112.09 at 10:36 a.m. in New York. The Dow Jones Industrial Average shed 74.87, or 0.7 percent, to 10,236.08 and the Nasdaq Composite Index dropped 22.56, or 1.2 percent, to 1934.70.
More than five stocks fell for every one that rose on the New York Stock Exchange. Some 347 million shares changed hands on the Big Board, 18 percent less than the same time a week ago.
Gold tumbles on jobless claims drop -Reuters
May 7, 2004
NEW YORK, May 7 (Reuters) - COMEX gold fell more than 1.5 percent early Friday after surprisingly strong U.S. jobs data lifted the dollar and spawned expectations that the Federal Reserve would soon raise interest rates. At 8:45 a.m. EDT (1245 GMT), June gold was down $4.60 at $383.80 an ounce, bottoming at $382.50 after the Labor Department said nonfarm payrolls rose 288,000 in April, well above the 173,000 jobs that had been expected by economists.
The dollar rose against the euro, which was quoted at $1.2106/09, down from its close at $1.2166/69. A firm greenback makes gold more expensive, and a better sell, for non-dollar investors.
The market wants confirmation from Friday's employment report that the expansion has become self sustaining. Wall Street forecasters on average see a 173,000 rise in nonfarm payrolls after last month's surprise 308,000 jump. The unemployment rate is forecast to remain at 5.7 percent.
Financial markets are confident that the Federal Reserve is moving toward lifting U.S. interest rates from 45 year lows at 1 percent to prevent overheating. A strong payrolls report could mean they hike rates in June, rather than at their August meeting as many expect.
BACK UP THE TRUCK ON GOLD -Doug Casey -- 4-21-04 -- People with such a short time frame shouldn't be in the markets; they should go to casinos. I believe we're looking at a gold bull market of historic proportions in the years to come. Retrenchments such as we're seeing now are not only normal, but trivial. You should use them to buy ...
NOTHING HAS CHANGED -The Aden Sisters - 4-23-04
MORGAN SILVER DOLLAR RESEARCH REPORT - 4-15-04
Fed loses 'patience' -CNNfn
Central bank policy-makers keep rates on hold, but drop long-standing pledge to be 'patient.'
May 4, 2004
NEW YORK (CNN/Money) - Federal Reserve policy-makers held a key interest rate at the lowest level in more than 40 years Tuesday, but dropped a long-held pledge to be "patient" before raising rates, setting the stage for future increases.
"With inflation low and resource use slack, the committee believes that policy accommodation can be removed at a pace that is likely to be measured," the statement said. The Federal Open Market Committee said the risks to sustainable growth and stable prices were now evenly balanced, a step toward an eventual rate increase. The committee also removed wording from previous statements promising to be "patient" before raising interest rates. The vote was unanimous.
The central bankers left their target for the federal funds rate at 1 percent, a level last touched in 1962 and not seen on a consistent basis since 1958. The fed funds rate is an overnight bank loan rate that influences many banks' prime lending rates, and most economists expect the Fed to raise it some time this year.
May 5 (Bloomberg) -- The Standard & Poor's 500 Index rose on optimism that the Federal Reserve's pledge to boost interest rates at a ``measured'' pace won't derail a 14-month rally.
``That should take concerns out of the market, and should let the fundamentals such as corporate earnings growth shine through a bit more,'' said David Chalupnik, head of equities at U.S. Bancorp Asset Management, which oversees $122 billion in Minneapolis.
Charter One Financial Inc. advanced after the company agreed to a $10.5 billion buyout offer from Royal Bank of Scotland Group Plc.
The S&P 500 added 4.85, or 0.4 percent, to 1124.40 at 2:35 p.m. in New York. The benchmark is up 40 percent since its 2003 low in March of that year. The Dow Jones Industrial Average gained 19.73, or 0.2 percent, to 10,336.93. The Nasdaq Composite Index rose 15.61, or 0.8 percent, to 1966.09.
Five stocks advanced for every four that fell on the New York Stock Exchange. Some 1 billion shares changed hands on the Big Board, 19 percent less than the same time a week ago.
The Fed kept its benchmark lending rate at a 45-year low of 1 percent yesterday. Policy makers dropped their pledge to be patient about boosting rates. Concerns about higher borrowing costs sent the S&P 500 to a one-month low last week.
``At this juncture, with inflation low and resource use slack, the committee believes that policy accommodation can be removed at a pace that is likely to be measured,'' members of the rate-setting Open Market Committee said in a statement yesterday.
An index of U.S. service industries, which make up the largest share of the economy, unexpectedly climbed to a record 68.4 in April and more companies were hiring than at anytime since November 2000, a private survey showed. Readings greater than 50 indicate expansion.
Oil tops $39, a fresh 13-year high
By Myra P. Saefong, CBS.MarketWatch.com
May 4, 2004
SAN FRANCISCO (CBS.MW) -- Oil futures prices climbed past $39 per barrel Tuesday, poised to close at a fresh 13-year high as traders remained concerned about supplies of crude and gasoline with the summer driving season set to start at the end of the month.
"There seems to be very little in the current environment that one might point to and construct an argument for lower energy prices," John Kilduff, an analyst at Fimat USA, said in a note to clients.
"The list of woes is well known: thin inventories that can be traced all the way back to last year's strife in Nigeria and Venezuela, difficulty in restoring Iraqi production after the war, the burgeoning global economy ... and the insistence of U.S. drivers on purchasing vehicles that consume prodigious amounts of gasoline," he said.
Crude for June delivery climbed to a high of $39.15 per barrel on the New York Mercantile Exchange. It eased back a bit in recent dealings to $39 per barrel, up 79 cents.
On an intraday basis, futures prices are at their highest since the February 2003 high of $39.99. But if they close above Monday's $38.21 ending level, it'll be the loftiest close since October 1990.
June unleaded gasoline climbed by 3.2 cents to trade at $1.294 per gallon after a fresh record high of $1.2975. June heating oil traded up 2.11 cents at 98.9 cents per gallon.
Sell in May, walk away? -CNNfn
The old market saw doesn't always hold true. It may this year, even if accidentally.
April 30, 2004
By Mark Gongloff, CNN/Money senior writer
NEW YORK (CNN/Money) - Living by the old Wall Street saw, "Sell in May, then walk away," isn't always the wisest way to manage your portfolio -- but this year, the adage might prove to be true.
Since May 1945, on average, stocks in the S&P 500 have gained some 7.2 percent between the months of November and April, according to Standard & Poor's chief investment strategist Sam Stovall.
When the weather warms up, though, traders apparently head for the beach. Stocks have gained just 1.5 percent between the months of May and November. Thus the old saw.
Of course, like most old saws, it's sometimes not true. Last year, for example, stocks gained some 15 percent between May and October. In 1997, the S&P gained 14 percent in the same months. But Standard & Poor's says the November-April period has outperformed the May-October stretch 70 percent of the time.
And there are clearly sound reasons why stocks face seasonal headwinds this time of year and tailwinds in the winter, including big holiday bonuses, the April 15 deadline to invest in individual retirement accounts (IRAs), the fact that most pension and 401(k) contributions are made in January and the tendency of mutual funds to dump losing stocks before the end of their fiscal year in October.
What's more, unlike last year -- when the economy, corporate profits and stocks were bouncing back from the shock of the start of the Iraq war -- there are several fundamental reasons why stocks could fall this summer:
* Recent sterling gains in corporate earnings are likely to dull a bit, beginning in the second quarter, thanks to tougher comparisons with strong quarters a year ago.
* After a prolonged run-up starting about a year ago, stocks are already plenty expensive.
* Consumer spending growth could slow as the effects of tax cuts and a mortgage refinancing boom fade.
* Higher interest rates seem inevitably on their way, and that's not usually good news for stocks.
* All the while, geopolitical jitters and an intense presidential election campaign could keep uncertainty high and traders nervous.
"'Sell in May' very well may be the case this year," said James Awad, chairman of Awad Asset Management, which manages about $1.3 billion in money for individual and institutional investors.
Economic Data May 3 - 7, 2004
MONDAY, May 3, 2004:
ISM Index for April (10 am ET)
Construction Spending for March (10 am ET)
Treasury auctions 3&6-month bills
Auto Sales for April
TUESDAY, May 4, 2004:
Weekly Chain Store Sales (9 am ET)
Factory Orders for March (10 am ET)
FOMC Meeting (policy announcement 2:15 am ET)
WEDNESDAY, May 5:
ISM Services Index for April (10 am ET)
Treasury Refunding Announcement (11 am ET)
THURSDAY, May 6:
Productivity Index for Q1 (8:30 am ET)
Weekly Initial Jobless Claims (8:30 am ET)
Fed Chairman Greenspan speaks (9:30 am ET)
Chain Store Sales for April (11 am ET)
Weekly Money Supply (4:30 pm ET)
FRIDAY, May 7:
Employment Report for April (8:30 am ET)
Wholesale Inventories for March (10 am ET)
Consumer Credit for March (3 pm ET)
The fact is, no two coins are exactly alike. This reality can make a big difference in a coin's value and growth potential.
There are four major categories of U.S coins today...
1. CIRCULATED-MODERN COINS
2. HOBBY-NOVELTY COINS
3. SURVIVAL-BULLION COINS
4. NUMISMATIC-INVESTMENT U.S COINS
Sadly, many Americans have bought the wrong type of U.S. coins without as much growth potential as they deserve. As in real estate, location is critical, when investing in U.S. coins quality is critical. Lets take a closer look at the 99% of coins that Americans are most familiar with.
1. CIRCULATED-MODERN COINS...
These are the coins in your pocket or purse. They have a face value for use in financial transactions, but lack any intrinsic value based on their metal content. This would include the new Sacagawea $1 coins and the new State quarters. Because millions are minted they are not "rare" nor meet investment quality requirements.
2. HOBBY-NOVELTY COINS...
These are the coins you've seen on TV auctions or in your local coin shop. These may include the modern State Quarters, older circulated coins and even the so-called 'Washington Mint' ads for oversized bullion paper weights. Many of these coins represent an interesting means of studying American history for education and hobby, but they do not qualify as investment-grade coins.
3. SURVIVAL-BULLION COINS...
These gold, silver and platinum bullion coin come in different weights and are minted by every major nation on earth by the millions. They offer a convenient means of holding precious metal for survival purposes and have had fairly stable prices for over 20 years. Many believe this is a smart hedge from the financial storms of life, but most investors are disappointed with the price performance and rate of return on bullion coins compared to the superior performance of quality numismatics.
4. NUMISMATIC-INVESTMENT U.S. COINS...
These are true American treasures - the top 1% of all coins. These gems are the best known examples of uncirculated or proof issued 18th, 19th and 20th century U.S coins. Investment-grade U.S. coins are traded daily worldwide on a "sight-seen" basis. Numismatics have a certifiable value based on their scarcity, condition and market demand and meet all the qualifications for both investors and collectors, based a on 25-year average appreciation of 14.3% [Dr. Lombra Study 1973-1998]
Discover more about investment grade U.S coins from America's most trusted brokerage, Swiss America Trading Corporation celebrating 22 years of service in 2004. Call 1-800-289-2646 to discuss your portfolio needs.
Read more about Presidential One Dollar Coin Act of 2004 - which calls for new $1 coins with U.S. Presidents, Lewis & Clark Peace Coins and new bullion coins.
As someone who studies the economic fundamentals, perhaps it's time for me to look at whether things are different/similar today than they were at the top of the Stock Market Bubble I in the spring of 2000.
Stock valuations: They were ludicrously high then. They're still ludicrously high, particularly in the tech sector.
The Fed's Interest rate: It was fairly low, but the trend was up. Now, after 13 rate cuts, the Fed's rate is at ridiculously low, artificial, less-than-inflation levels...but there's pressure to raise rates - pressure that Greenbubble will attempt to resist.
Debt: It was abnormally high then. But now, it is SO MASSIVELY high that it defies description. Total US debt is now at $35 TRILLION. Total consumer debt, including mortgage debt, is at $10 TRILLION. The billions of dollars being poured into the war on Iraq is creating an absolutely unprecedented budget deficit. Speaking of which....
U.S. budget: Back in the spring of 2000, the U.S. had been enjoying budget surpluses. Today, the deficit is at record levels of close to $700 Billion this year alone.
U.S. trade balance: There was a significant trade deficit in 2000. Today, the trade deficit is at record levels of about HALF A TRILLION DOLLARS A YEAR.
Bankruptcies: Personal bankrupties in 2000 hit record levels. Those record levels were surpassed in 2001, 2002, 2003 and again this year.
Housing prices: They were high in the spring of 2000. But now, in some markets, these housing prices have DOUBLED in the past four years. This housing bubble is poised to implode. Interestingly, the U.S. homeowner now owns significantly less equity in his/her home than he/she did in 2000, thanks to the mortgage refi mania which pulled enormous amounts of equity out of real estate.
Wall Street's corporate governance: It stunk back in the spring of 2000. And it still stinks today, with earnings reports (pro forma nonsense and excluding all negative factors such as debt and debt servicing costs) continuing to resemble nothing more than bullish fiction.
Employment: It was a fairly healthy employment picture back in the spring of 2000. Since then, the U.S. has lost more than 2.5 million jobs. The bulk of the 'new' jobs created are Mcjobs and temporary, low-paying service sector positions.
Pension plans: Were, for the most part, fairly well funded back in the spring of 2000. Today, there are incredibly large funding shortfalls of corporate pension plans. And, worsening matters, Congress has recently voted a two-year, $80 billion 'vacation' for corporate funding of pension plans.
Conclusion: The economic fundamentals are worse today than they were at the peak of Stock Market Bubble I.
Unlike those giddy days of spring, 2000, the U.S. debt bubble is now horrendously larger, there's now a frightening housing bubble, a worrisome bond bubble, a horrendous budget deficit, an increased threat of terrorism and soaring personal bankruptcies.
The similarities include stock market bubbles, a woeful lack of corporate governance on Wall Street, bogus earnings reports, a grim trade deficit and a shrinking manufacturing sector.
All in all, I'd say that thanks to Alan Greenspan and the deceitful Powers That Be, the U.S. economy is in a much more precarious position now than it was at the height of Stock Market Bubble I.
Since those heady days of March, 2000, the imbalances have not been corrected, the debt has increased and the malinvestment has continued.
I believe the crapola will hit the fan in the second half of the year, when comparisons to 2003 begin to sink in and when consumer spending stalls, without the benefit of more fiscal/monetary stimuli and without any more mortgage refi cash.
As I've mentioned previously, there have three stock market bubble implosions in the past century.
The first of these market bubble implosions took place in the U.S. in 1929. Following that implosion, it took 25 years (until 1954) for the Dow to return to 1929 levels.
The second market bubble implosion involved Japan's Nikkei in 1989. At the peak, the Nikkei was at almost 40,000. Today, 15 years after that bubble imploded, the Nikkei is at less than 12,000 - down more than 70 percent since the market peak.
Keep those time lines in mind: TWENTY-FIVE years for the Dow to return to pre-bubble implosion levels, and a more than 70% haircut for the Nikkei FIFTEEN years after that market implosion.
So, here we are, just four years after the third market bubble implosion in the past century. And during the past year, the markets have been rallying virtually non-stop.
Well, mark my words, if history is any indicator, we are currently only in about the third or fourth inning of this Secular Bear Market following the market bubble implosion that began in March, 2000.
The imbalances, the debt, the malinvestment, the mindless speculation, the greed, the overcapacity, the laughable overvaluation of stocks - these sad facts are still with us, four years following the latest bubble peak.
This bear market rally - or, if you like, this cyclical bull market within a Secular Bear Market - appears to finally be breathing its last tortured gasps.
The consequences of a mind-boggling bubble - such as we witnessed in the late '90s and which peaked in the spring of 2000 with the Nasdaq at 5,000 - do not disappear after only three years, with a new bull market beginning from clearly overvalued stock levels.
Remember history. Remember Santayana's words that those who do not remember history are doomed to repeat the same mistakes.
Mplsbear is right when he says that a depression -or a reasonable facsimile of one - has been 'in the cards' for some time now.
Prechter predicted a three-figure Dow when the Secular Bear is done. Pupluva reckons that we're overdue for the Perfect Economic Storm. Even mainstream players like Pimco's Bill Gross sees Dow 5,000 - or less than half the market cap of today's Dow. Templeton says there is NO value in the markets today. Buffett says the same thing and is betting against the U.S. dollar. Roach is convinced that the global imbalances will create devastating results. Grantham is calling for an "economic black hole" in 2005.
Mind you, Greenspan says the massive debtloads are "manageable," while Cramer, the CNBC cheerleaders and the Wall Street snake oil salesman all claim that every last stock is a screaming buy.
Forget those latter shills. And remember history.
Something wicked this way comes....and it will be worse than we expect.
MAY 14: LEWIS & CLARK EXPEDITION BICENTENNIAL
U.S. GOLD COMMEMORATIVES -- Good things DO come in small packages!
By Tom Rodriguez, SATC Sr. Broker
May 5, 2004
COMMEMORATING AMERICAN HISTORY
For years, Swiss America has recommended high-grade (MS-64-MS67) U.S. Gold Commemorative coins (minted 1903-1926) to our clients as part of a properly diversified portfolio of tangible hard assets.
With only 11 coins in the set (excluding the 1915-S $50 Round and Octagonal $50), U.S. Gold Commems are extremely popular with collectors, investors, and novice beginners.
This series contains the 100-year anniversary 1904 and 1905 Lewis and Clark coins. This year America celebrates the 200th anniversary of their exploration of the northwest United States. These two issues are the rarest of the 11-coin set.
On May 14, 1804, Capt. Meriwether Lewis and Lt. William Clark, charged by President Thomas Jefferson with finding a route to the Pacific Ocean, embarked from Camp Dubois, Ill., on the east bank of the Mississippi River, upstream from St. Louis. They were accompanied by a 33-member group skilled in botany, zoology and outdoor survival. The "Corps of Discovery" arrived at Oregon's Pacific coast in November of 1805 and returned to St. Louis on Sept. 23, 1806.
The Lewis and Clark gold commemorative coins were the only two-headed U.S. coins ever minted. They were originally sold in 1904 for two dollars at a Portland, Oregon, fair celebrating the famous expedition.
WHAT GOLD MARKET VOLATILITY?
The recent volatility in the gold bullion and lower grade generic $20 gold piece markets, the U.S. Gold Commemorative coin prices have remained steadfast and have not suffered any downward correction. Why? Well, to quote another major national coin dealer;
"They [Gold Commems] bridge the gap between gold bullion and the ultra-rare condition census coins. U.S. Gold Commemoratives are influenced by factors, which are independent of the price of gold. For example, collector motivation can be a significant source of demand for these coins, a factor completely absent in the bullion market. These factors have enabled these sectors to appreciate during bear markets for gold bullion."
The major national firm quoted above has also recently started to recommend Gold Commems to their clients as well as Swiss America.
U.S. Gold Commemoratives have been almost completely overlooked over the last year as demand for gold bullion and lower-grade $20 gold pieces have consistently moved up in price.
But what if the price momentum for gold bullion stalls, or moves sideways for weeks, months or even years? ...
TAKING THE EMOTION OUT OF PRECIOUS METALS -Chris Temple
And Replacing it With Common Sense and a Greater Purpose
By Chris Temple, Editor, The National Investor
April 30, 2004
I believe the time has come to—in addition to getting the emotion out of our investment decisions in the precious metals area—actually turn our knowledge and even passion into something positive. Something useful. Even a movement toward monetary and, eventually, social reform, if you will.
I was sharing these thoughts this past week with my friend Steve Carr, co-founder of the Honest Money Group and an accomplished author, political activist and media expert (who can be reached for those who would like to do so at email@example.com.) He, too, was decrying the fact that—among other things—gold and silver bugs have for too long been caught up in too much hype and hoopla, whipsawed regularly by market swings and all the rest, and have generally been lacking in any “game plan” that would both bolster their portfolios as well as the “cause” of precious metals.
He detailed for me the example of what has recently occurred in the silver market; one which he and I are both bullish on longer-term. Recently, boosted even more by hedge funds chasing this metal’s momentum and, for a time, making “dollar contrary” bets, silver soared. Finally catching up with its big brother gold, silver spiked to a July contract high of $8.49 per ounce; its highest level in many years. On the COMEX, some 120,000 “open interest” contracts were accumulated at one point recently by speculators. Each of these represent 5,000 ounces of silver; doing the math, you come up with leveraged “bets” on some 600 million ounces of the junior precious metal.
After reaching its high, silver plunged on the July contract to well below $6.00 per ounce (it closed today at $6.09 per ounce.)
Rather than playing in the “manipulators’ ball park,” Steve suggested, what if some of the people out there who got caught up in the SPECULATION over silver—and, in effect, ended up trading paper bets on the underlying metal—had done something different?
On paper, the losses incurred on these contracts from the contract high (which came in early April) to the low of $5.55 per ounce come in at more than $1.7 billion. This would purchase the better part of 300 million ounces of the metal itself, were the price to stay static (it wouldn’t, naturally, as such demand would overwhelm the physical market.) The point is, if more people who really believe in precious metals as a cause would to at least some extent be wise and accumulate the physical metal at times like this rather than chasing the futures markets and, as just happened, getting whipsawed, a couple things would happen.
First, this activity alone would drive the price of silver dramatically higher; not because speculators are making paper and other derivative bets on the metal, but because it is really in demand. Second, many thousands—and, maybe one day, millions—more people would be in a position to join some of the fledgling efforts already underway to do business in a true free market by using their silver as money.
A rapidly growing segment of the population which understands history, our current monetary predicament and the need to do something pro-active to develop an alternative monetary regimen would be a potent force! Further, as this growing number of people acquired a form of money NOT dependent on debt, NOT dependent on markets, and NOT dependent on whatever manifestation of Greenspan we are treated to this week, a true free market might actually break out! As many are already attempting and even implementing with other forms of trading regimens based on silver, gold and even community currencies not based on precious metals, people of good will can further what I have in the past called a “peaceful monetary revolution” that is way overdue.
This and more will become more likely as the day arrives when the precious metals community approaches the asset classes it is most passionate about with more strategy and sense, and less emotion (meaning, of course, the kind of counterproductive emotion and hysteria that time and again leads to major financial losses during debacles such as we’ve just seen.) If you want to be emotional, then be passionate—nay, driven—about the kind of portfolio you could have by changing your approach. More so, be driven about the kind of future your children and grandchildren can have if we break out of the mold so many have been in for so long, and look at precious metals as a greater means to an end we all hope for. No conspiracy or manipulations, real or imagined, could stop millions of awakened people who realize that—at the least—they need an alternative to Greenspan’s fiat money. Those millions, grounded in truth, sound investment strategies and with a noble purpose even beyond their own investment success, can change society for the better.
Will you be on board?
BULL'S EYE BOOK REVIEW -Matt Richey, Motley Fool
Hot off the press, John Mauldin's new book, "Bull's Eye Investing," offers critical insights on how to manage your portfolio during what will likely be a continued bear market for several more years.
April 23, 2004
Tonight, per my Friday evening habit, I will print out a newsletter that I consider must-reading every weekend. It happens to be free, but I guarantee you the author could charge upwards of $200 per year and retain the vast majority of his 1.5 million readership. His name is John Mauldin, and I rate him as one of the top investment thinkers around.
What I especially appreciate about Mauldin's e-letter is that it provides me with intelligent perspective on the Big Picture that I, as a bottoms-up stock picker, would otherwise miss. Each week, Mauldin reads literally hundreds of reports (many of them are high-dollar subscriptions) on everything from economics to behavioral finance, from politics to demographic trends. Then on Friday afternoon, in what must be a blitzkrieg on the keyboard, he synthesizes it all into an articulate report that typically runs seven printed pages. Each issue carries the reader one step closer to understanding today's investment landscape and, significantly, how it might change tomorrow.
By now you might be thinking, "Hey, isn't all that macro-schmacro stuff just a waste of time? The world economy is far too complex for any one person to grasp entirely." Granted, the macro equation presents a bewilderingly complex set of puzzle pieces -- but Mauldin just happens to be exceptionally skilled at assembling those pieces. His track record proves he's an exception to Peter Lynch's quip that "10 minutes per year studying the macro economy is 10 minutes wasted." Consider the following examples.
In late 2000, Mauldin correctly discerned that the inverted yield curve was signaling a coming recession and that investors should clear out of the stock market. In 2001, he further warned readers that U.S. stocks were likely entering a decade-long secular bear market (more on that in a moment). Then, in March 2002, after years of being negative on gold, he turned bullish on the yellow metal as a way to benefit from a declining U.S. dollar.
These are but a few of Mauldin's profitable insights from the past several years. When I first encountered Mauldin's writing in early 2003, I so enjoyed his analysis that I was motivated to read back through his online archives dating back to 2001. You can still do that (and it's free), but now there's a better way. All of Mauldin's analysis and opinions are packaged and updated in his just-released book, Bull's Eye Investing: Targeting Real Returns in a Smoke-and-Mirrors Market.
This is a must-read book for serious students of investing. Broadly speaking, the first 15 chapters are on trends in the stock market and economy, while the final nine chapters offer investment strategies for successfully navigating those trends. The largest of these trends -- and I happen to agree with Mauldin on this point -- is that we're in a secular (i.e., long-term) bear market.
"Prayer is an opportunity to praise God for His mighty works, His gift of freedom, His mercy, and His boundless love. Through prayer, we recognize the limits of earthly power and acknowledge the sovereignty of God. According to Scripture, 'the Lord is near to all who call upon Him. ... He also will hear their cry, and save them.' Prayer leads to humility and a grateful heart, and it turns our minds to the needs of others. On this National Day of Prayer, we pray especially for the brave men and women of the United States Armed Forces who are serving around the world to defend the cause of liberty. We are grateful for their courage and sacrifice and ask God to comfort their families while they are away from home. We also pray that the people of Iraq and Afghanistan, and throughout the Greater Middle East, may live in safety and freedom. During this time, we continue to ask God's blessing for our Nation, granting us strength to meet the challenges ahead and wisdom as we work to build a more peaceful future for all."
-PRESIDENT GEORGE W. BUSH, by proclamation for the 54th National Day of Prayer to be observed Thursday, 6 May 2004.
History of the National Day of Prayer
1775: The First Continental Congress called for a National Day of Prayer.
1863: Abraham Lincoln called for such a day.
1952: Congress established NDP as an annual event by a joint resolution, signed into law by President Truman.
1988: The law was amended and signed by President Reagan, to be the first Thursday in May.
On 6 May 1982, Ronald Reagan offered these words: "Today, prayer is still a powerful force in America, and our faith in God is a mighty source of strength. Our Pledge of Allegiance states that we are 'one nation under God,' and our currency bears the motto, 'In God We Trust.' The morality and values such faith implies are deeply embedded in our national character. Our country embraces those principles by design, and we abandon them at our peril. Yet in recent years, well-meaning Americans in the name of freedom have taken freedom away. For the sake of religious tolerance, they've forbidden religious practice in the classrooms. The law of this land has effectively removed prayer from our classrooms. How can we hope to retain our freedom through the generations if we fail to teach our young that our liberty springs from an abiding faith in our Creator?"
The mission of the National Day of Prayer Task Force is to communicate with every family the need for personal repentance and prayer, and to mobilize families to personal and corporate prayer, particularly on behalf of the nation and those in leadership on all levels of local, national, church and educational areas of influence.
The Federalist's National Advisory Board and staff invite you to join us, and millions of Americans in prayer for our nation this Thursday at 1200. Link to the National Day of Prayer website at -- http://nationaldayofprayer.org/
QUOTABLES ON PRAYER
"Prayer does not equip us for greater works -- prayer is the greater work." --Oswald Chambers
"Above all, I know there is a Supreme Being who rules the affairs of men and whose goodness and mercy have always followed the American people, and I know He will not turn from us now if we humbly and reverently seek His powerful aid." --Grover Cleveland
"A churchless community, a community where men have abandoned and scoffed at or ignored their religious needs, is a community on the rapid down grade." --Theodore Roosevelt
"The higher state to which [America] seeks the allegiance of all mankind is not of human, but of divine origin. She cherishes no purpose save to merit the favor of Almighty God." --Calvin Coolidge
"Without God there could be no American form of government nor an American way of life. Recognition of the Supreme Being is the... most basic expression of Americanism.” --Dwight D. Eisenhower
P.S. " Over the years of operating Swiss America, I have many rewarding memories, but most of all, I cherish the memories of answered prayer. That's right, answered prayer. In our humble twice a week company prayer meeting we've seen the miraculous unfold in front of our eyes. From physical healing of cancer ... to restored family relationships ... to the smallest details of life, which are all of great interest an concern to our Creator. Indeed, I am a blessed man ... with a blessed company ... and a blessed family." --Craig R. Smith, CEO, SATC
When 'The Lesser Of Two Evils' Is No Option -SOL
Sons Of Liberty - Central Florida
April 26, 2004
Taken For Granted
The most effective argument to convince patriotic Americans to support the Republican Party has been that "The Republicans will do less damage to the Constitution than the Democrats will - and besides, what other choice is there?" The conservative vote is taken for granted by the Republican leadership because they believe that we have nowhere else to turn; from a purely pragmatic short-range view, perhaps they are correct. The result has been a Republican Party that ignores conservative values because it has no incentive to do otherwise.
The time has come to provide that incentive.
The political system of America is, by default, a two-party system. It was not designed this way - political parties are never mentioned in the Constitution or any of the early founding documents. It just evolved that way. As it continued to evolve, it took the form of an elaborate game where the winning team (party) was the team that could gather the most votes.
Capturing votes became the sole purpose of the parties; platforms exist only to better define the targeted voters. Platforms and principles became meaningless beyond their usefulness in luring a gullible voting population into their snare.
As with most games, it just seems to work out better for those in the game if there are only two teams. Other teams ("third party" organizations) complicated things and did not benefit the key players. They were, for all practical purposes, shut out of the process. They still exist, but as long as voters believe that a vote for a third party candidate is a vote wasted, it will continue to be a game between two players who have no incentive to be held accountable to the people beyond winning the game.
REPUBLICAN EXERCISE OF POWER
The Republican Party is the dominant party today because it has the conservative vote. Let's look at what Republicans have done with the power that conservatives entrusted to them.
President George W. Bush has presided over a dramatic increase in the size, cost, scope, and power of the federal government that would be the envy of even the most radical socialist. He has stated his support of the clearly-unconstitutional Clinton gun ban and has vowed to sign a replacement into law (the current law has a sunset provision that expires in 2004) should it reach his desk. His Attorney General has made it his personal crusade to get ever-greater power for the government to snoop into the private lives of citizens. Bush has used the military to invade a sovereign nation that had no realistic chance of threatening America, while at the same time encouraging a flood of illegal third-world immigrants across our borders. Yet many conservatives continue to support this administration. Why? Because they believe they have no other choice - the alternative is even worse.
Conservatives have fallen into the trap of only looking at the short range. It is probably (but no longer certainly) true that America would be better off with a Republican administration than with a Democratic administration - in any given year. However, that completely misses the point. The direction that the country is headed in must be looked at in terms of decades and generations - not as a four-year presidential term.
1) Continue to vote for the Republican Party candidates. Maybe we won't end up with a Democrat - or maybe we will. Either way, the Republican Party learns once again that they have the conservative vote no matter what they do.
2) Vote for the Democratic candidates. Some on the far edges of conservatism have suggested this as a way to hurry along what they see as the inevitable collapse of America, and see a rebuilding as freedom's opportunity.
3) Don't vote at all. This is a common strategy in other parts of the world. The objective is to demonstrate that the elections are not valid by boycotting the election. Another objective of this strategy is to voice dissatisfaction with all the candidates - effectively saying "None of the above."
4) Vote for a third party candidate.
We have already discussed Option 1 - continuing to vote Republican just means hoping that instead of heading toward a cliff with the accelerator to the floor, the Republicans will drive toward that cliff and stay within the posted speed limit.
We won't even discuss Option 2. That should be dismissed without a second thought; it doesn't even lend itself to rational discussion.
Option 3 is based on the assumption that anyone would notice that people were not voting. It is also based on the assumption that the parties would know why people were not voting. Not voting at all simply means that the political strategists ignore you. Being ignored is not our intent.
Option 4 is what we believe to be the best choice at this point. There are two possible outcomes - both of which work toward greater liberty:
a) Third party candidate wins. Although it is highly unlikely, circumstances could evolve resulting in the third party candidate actually winning. Again, highly unlikely, but still possible under the right conditions.
b) Third party candidate loses, but garners a significant percentage of the votes. The objective here is to show that there are votes available that the Republican Party will not get until they change their ways. The objective is not based on finding and supporting a third party candidate who can win an election. For the foreseeable future, the chances of that happening are remote. Instead, the objective is to demonstrate to the Republican Party that voters will leave the party if they are not represented by that party. The working assumption by the Republican Party has always been that conservatives have no where else to turn, and that they are pragmatic enough to not "waste their vote" by voting for a third party. Our objective is to show that assumption to be false.
Either outcome results in a net gain toward restoring the Republic.
The question then becomes "Which third party?" When this document was first released, we had no firm reply. There was considerable debate over whether we should recommend any specific candidate at all. That has now changed with the announced candidacy of Michael A. Peroutka of the Constitution Party.
Read more at:
ABOUT THE EDITOR
David M. Bradshaw is Editor of Real Money Perspectives, publisher of Rediscovering Gold in the 21st Century: The Complete Guide to the Next Gold Rush (7/01) and has been an economic commentator since 1987, when he produced the World Economic Perspectives radio show. In 1997, he produced a one-hour TV documentary, "Preparing Wisely for the Next Millennium," which was distributed free of charge at Blockbuster Video nationally. In 1999, he produced a one-hour radio special, "The Big Picture: The Shape of Things to Come" discussing geopolitical, economic and spiritual trends in the 21st Century. MORE...
DISCLAIMER: All of the information in this story is believed to be true, however errors are possible.
Past performance is no guarantee of future performance. All investments have risk. -SATC