"Kip's VRA financial newsletter is a MUST read for every saavy investor in this country. Disregard it at your own peril. His mantra is my mantra: Buy Gold and China. Sell short on pretty much everything else. Kip Herriage's newsletter is my financial Bible."

--Wayne Allyn Root
2008 Libertarian Vice Presidential candidate
Author, "The Conscience of a Libertarian"

Twitter: @kherriage

Twitter: @kherriage

Karl Bessey

Mary Dee

Mike Budny 
Wednesday
Feb262014

Janet Yellen is Ben Bernanke on Steroids, with a Lobotomy

Now that Helicopter Ben is gone, in order to figure out exactly how this new FED will continue to manipulate the financial markets, we need to know more about new FED Chair Janet Yellen.

First, her background is as an Ivy league left wing liberal, and for many reading this, you may already know everything that you need to know.

Second, she’s a Keynesian economist, which means that she believes in big government and its ability to grow an economy, rather than the primary beliefs of Austrian economists, which credits the individual, and their abilities, with this power. Another primary distinction between the two schools of thought, and this is a major difference, is that Austrian economists define inflation by the amount of new currency printed into circulation. Keynesian economists define inflation as the increase in the price of goods.

If you’ve followed my work for any amount of time at all, you know my views on the definition and cause of inflation, and it’s quite different from the FED’s and Keynesian economists. As the FED’s 100 year history of failure has clearly proven, the FED’s massive increase in money supply over the last century has caused the US Dollar to fall by 97%...which has forced the population to continue paying more and more for the consumables they MUST purchase each month, as they have skyrocketed in price.

Those that argue these facts look like… well…the absolute morons that they are. How can I make such a bold statement with confidence? After all, in addition to Yellen, the FED has more than 1000 highly paid economists on their payroll, and calling this many so-called experts “morons” could make me the biggest moron of all.

Here’s how I can make my statements about the real definition of inflation with a VERY high level of confidence…a little thing called “the facts”. Right now….today…we have all-time high prices for electricity, beef, and home rentals. Last time I checked, we all use and must pay for electricity…most of us eat beef…and due to continued economic stress, more Americans than ever are renting instead of owning the home they live in. So, while the FED may not include these most important “real world” inflationary statistics in their CPI calculations (it’s a very small component piece now…they changed the way they calculate the CPI over two decades ago), for those of us that are forced to pay for these things, we know all too well that inflation is much closer to 10% than it is to their official CPI of just 2%. So….this is how I can call the FED’s government mouthpieces morons and do it with a straight face.

Back to Bernanke for a moment. Remember his horrible track record with our most recent FED induced financial collapse? If not, please go back and read any of my ten to twenty VRA updates, where I pointed out some of his most infamous quotes and predictions. Or, simply do a quick Google search for them.                                     

Or…how about this. I’ll give you this classic Bernanke video from the VRA way back machine: (Spoiler alert: Bernanke in 2007 – “The slowdown in real estate should have no serious impact on economic growth or on full employment).

http://www.youtube.com/watch?v=HQ79Pt2GNJo

Back to Yellen. Yellen’s team of government lackeys have done their best to paint her as a much better predictor of the future, going so far as to claim that she (unlike Bernanke) actually saw the mounting crisis in 2007 and spoke often of what was coming. Really?? Let’s see what Janet said about her own Nostradamus-like abilities, while she was the Chair of the San Francisco FED.

In 2010, Yellen told the Financial Crisis Inquiry Commission that she “had not explored the San Francisco Fed’s ability to act unilaterally, taking the view that it had to do what Washington said”.

“For my own part,” Yellen said, “I did not see and did not appreciate what the risks were with securitization, the credit ratings agencies, the shadow banking system, the S.I.V.’s …I didn’t see any of that coming until it happened.”

Her interviewers were stunned.

Yellen didn’t see or appreciate the risks with securitization?? You know…those CDO’s, CMO’s and CDS’s that played some of the single largest roles in bankrupting Wall Street and the entire banking industry, and almost the entire planet??

Yellen didn’t see or appreciate the risks with the credit ratings agencies?? The same credit ratings agencies that the entire world knew were PAID to rate the very same financial co’s that they provided ratings for??

The quote is beyond stunning; Yellen “didn’t see any of that coming until it happened”. It would seem impossible to believe if she hadn’t actually spoken these words into existence HERSELF.

And now, THIS is the person that we are entrusting the world’s financial future to?

Forgive me if I’m overly dubious about her abilities. I’m sure she’s a very nice lady, but when push comes to shove, we already know exactly what Yellen’s next move will be. She will PRINT, PRINT, PRINT trillions upon trillions in fiat currency into existence…just like Bernanke before her….and, Greenspan before him…ad nauseam.

The good news…and yes, there is some very good news for those of us that are able to keep an open mind and think as contrarians..is that we can construct our own playbook to profit immensely from increased levels of inflation. This is one of the keys to success for the VRA, and it has been for more than a decade. This mindset enabled us to buy gold and silver back in 2003 at prices 500% lower than today. It also enabled us to lock in 170% gains in options trading over a 3 week period in February, and it is positioning us for more than 1000% gains in as many as 5-7 grand slams that I’ve already identified.

Regardless of what our feckless leaders do, we will be positioned to not only survive, but to thrive!

Until Next Time,

Kip Herriage

 

 

Wednesday
Jan082014

2014 - INFLATION HEADED OUR WAY - TIME FOR 1000% PROFITS

Important update from the Wall Street source that I refer to as "top secret", along with important recommendations for all VRA Subscribers.

As you will see below, top secret is looking for a year filled with massive spikes in inflation...and as any informed consumer knows, it has already started.

As I've been reporting, we should absolutely forget what the governments numbers tell us about inflation. They are bold face lies, and regardless of the reporting from the likes of CNBC (a government mouthpiece), the facts make this reality all too clear. 2013 brought us all time highs in the prices of electricity, beef and home rent rates, along with a slew of additional price hikes in the things that we MUST purchase on a daily basis.

From toll booths, to local municipal services, to the airlines price gauging us on luggage (including all of the new fees for carry on luggage) these "hidden" price hikes that we are forced to pay are robbing us ...the common man.

The governments official inflation statistics will not include the harsh realities that we are forced to deal with in the "real economy", but that's ok...and here's why. This gives us an opportunity to buy inflation hedges NOW and get in while the prices are extremely low...and that's exactly what we are going to do. Once the general public begins getting in, we will already have gains of anywhere from several hundred percent to over one thousand percent. And, we are going to do it (in part) by using options.

Before you read the update that follows, I strongly recommend that all VRA Subscribers open an options account with your brokerage firm. It's a simple process, and one that you should be able to do online, without ever having to complete via the old fashioned way (paper application using the US mail). When opening your options account, the only features you will really need are the ability to buy and sell "call options" and "put options". I will not be recommending straddles or any of the various hedges that some options traders employ. We simply won’t need those.

As an example, if you had purchased “put options” on the VRA short sell recommendations in 2011 to 2012, you would have booked gains of 4000-5000%, instead of the 50-80% gains from simply shorting shares. In fact, many VRA Subscribers used put options, as they were not able to short stocks (in many cases the shares could not be borrowed by their brokerage firm).

The great thing about using options (puts and calls) in this fashion is that your exposure is limited (you can only lose what you invest), and you can get involved for very small dollar amounts. I know of several VRA Subscribers that utilize options, particularly with high priced stocks, and while not for everyone…the risks are greater than buying/shorting common stock…they are particularly useful in special situations. This is exactly the case with the inflation investments that I will be recommending in 2014 and beyond…and I expect inflation to increase dramatically over the next 3 years.

If you have questions about the use of options investing, make sure and take advantage of the education that your brokerage firm provides, online. As you know, I cannot provide individual investment advice, but with the kind of options trading that I will be recommending, it should be simple to use.

As a sneak peek at the kind of options trades we will employ, you already know my favorite interest rate hedge against inflation…TMV (3 x short ETF – long term government bonds). I am studying the call options on TMV as they will provide the opportunity to make several thousand percent gains, assuming that we see the kind of spikes in interest rates that I expect.

I am also expecting a MAJOR move higher in gold and silver (especially from these prices), and the possibilities for multiple thousand percent gains here are endless…from 2014 to at least 2017.

So…get your options accounts opened. I will be pulling the trigger on at least one new recommendation…likely later this month.

In addition, my recent discussion of Bitcoin has sparked quite a bit of interest. A $1000 investment in bitcoins in 2009 would be worth more than $900,000 today, and the industry experts that I follow expect the price to rise from its current $900 today to as much as $100k to $1 million in the next 5-10 years. I am working on a new report now…one that includes the 2-3 most lucrative ways to play the bitcoin mania.

Finally, for those of you that could not attend last nights Vertical Legacy launch hangout, it was a huge success. If you’ve ever had a serious interest in Affiliate Marketing, or learning how to market anything and everything online, check out the video replay at:

http://verticallegacy.com/buildyourlegacy

You can also visit the home page at verticallegacy.com

My prediction is that over the next 2-3 years, Vertical Legacy will become a leading international brand name in the affiliate marketing space…an industry that is still just in its infancy.

Here is top secrets inflation warning….this guy is the best I know when it comes to the issue of money supply and currency inflation. Lots of money to be made here!

Until next time,

Kip

 

SPIKING PRICE INFLATION

!

Michael Aronstein, a hedge fund manager, with $18 billion under
 management, is preparing for a major spike in price inflation. He 
notes that shrimp, beef, chicken – and US lumber are among the areas
 where price spikes are already developing.

 Price strength is now spreading beyond these areas. Cotton futures 
rose sharply in early trading this morning after China, the world’s 
largest producer of the fiber, said it would reduce planting acreage 
by nearly 9% in 2014.

 Arabica beans for delivery in March climbed as high as $1.2260 a pound 
this morning. This now puts coffee into bull-market territory (defined
 as a 20% rise from a recent low).

 Except for outliers like Aronstein the financial community is not
 prepared for a spike in commodities.

 The recent commitment of traders reports showed that hedge funds and 
other speculators continue to remain bearish on the commodity complex.
 In fact, hedge funds have held minimal exposure towards commodity
 prices, never reaching above 400,000 net longs. Current cumulative net
 longs stand just above 185,000 contracts (custom COT aggregate). GET 
THIS,  amazingly, current exposure is about 10% of what it stood at in
 2011 near a major peak, when net long contract level was above 1.36
million. This is a perfect example of how investors have given up on
 the commodity complex, as we enter a third year of under-performance. 

Here's my view on price inflation: It is starting to percolate below
 the surface. This should be no surprise given the spectacular increases 
in money supply in recent years.  Further, the demand to hold cash is
 dwindling, as we move away from the panic period of late 2008. Falling
 demand to hold cash means more bidding for commodities. Given how 
unenthusiastic the investment world is about commodities right now, 
when the major spike up occurs, it will be fast and furious, as many
 will try to pile in.. Continue to trade commodities from the long
side--and continue to short the Treasury bond market, as rising prices
 will put added upward pressure on interest rates.

 

MAJOR INFLATION IS COMING…THANK YOU FED!

Thursday
Sep262013

Wall Street Was Shocked by the Fed’s Decision – The VRA Predicted It

Last Wednesday, the Federal Reserve…that criminal cabal of international bankers and global purveyor of monetary/financial/personal wealth destruction…shocked the so-called experts of Wall Street by continuing their shell game of Quantitative Easing (QE). The FED is moving forward with their unprecedented level of fiat money printing, rather than announcing a “tapering” of their $85 billion/month government debt purchase program. 9 out of 10 economists and stock market experts had predicted that the FED would reduce these purchases by $10-20 billion a month, which would have seen the FED buying ONLY  $70 billion/month in various sovereign debt vehicles. As usual, this overwhelming majority of guru’s was wrong. Dead wrong.

Instead, and as I have predicted and written for more than a year, QE is here to stay…PERIOD. And if we ever see an actual reduction in the FED’s QE, that reduction will be incredibly short-lived…and once renewed, will only ramp-up on steroids…bringing an eventual collapse in the US dollar and a brutal period of stagflation/hyperinflation with it. 

Will the US survive? Will the world survive? And most importantly, will WE survive as individuals when the next wave of dominos begin to fall??

The quick answer is “of course” we will survive…but the brutal reality is that “survival” will come in the form of widely different realities…and whether a country, a company, a state, a municipality or an individual, the world has never seen the kind of storm that’s headed our way. After more than 28 years of following economics and markets I wish for a much different outcome. Unfortunately, this is how I see things playing out. It’s also how every top economic/market expert that I know and trust sees things as well.

To date, the FED has purchased more than $2 trillion of OUR OWN debt (the biggest two-card monte game going), in the hopes of buying enough of our own debt to keep interest rates below what they would have otherwise been in an un-manipulated, free market economy. You know…the same free market economy that was responsible for the US becoming the world’s largest and most powerful economy known to man.

Here’s a most important reality that you will never hear discussed in the MSM; there is no longer any distinction between the US government and the FED. Historically, Central Banks maintained at least some degree of independence from their government, and acted based on their own views about the economy, money supply and interest rates. This is no longer the case. Instead, Obama and Bernanke act hand in hand on everything financial, and they will do anything and everything to pump up the markets and enrich their fellow elites and banking buddies…including printing trillions upon trillions in fiat currency, and issue trillions upon trillions in government debt…in complete disregard of the long term consequences.

Unintended Consequences and Black Swans

Make no mistake about it, the unintended consequences of taking our already bankrupt governments further and further into debt will soon devolve into global financial devastation. Led by Bernanke, the US is pushing the rest of the world into an all-out currency war…caused by today’s obscene level of money printing…and in the near future, governments around the world will battle each other for the funding required to keep their Ponzi schemes intact. There WILL be a black swan event, and much like the Lehman Brothers bankruptcy of September 2008, this future blow-up will also catch the lemmings completely off guard.

What will be the next major Black Swan event? My money continues to be on a financial panic created within the derivatives markets. The size of this STILL 98% unregulated market is gargantuan, with conservative estimates in the $1 quadrillion plus range, along with $10-15 trillion in actual cash at risk globally. In 2003 Warren Buffet came up with the quote that best sums it up; “derivatives are weapons of mass financial destruction”, and all it will take is the overnight collapse of a large financial institution somewhere on the planet…maybe Japan or China…that originated from a large and un-hedged derivatives position in government debt or the currencies markets. Something big enough and politically untenable that the local central bank cannot bail it out or paper it over…at least not without the help of the rest of the worlds central banks.   

Or, maybe the next Black Swan will come in the form of a “mistake”. A mistake in someone’s military (honest or false flag)…one that could easily erupt into WWIII, especially with the existing tensions in the Middle East today. Or an economic mistake, like launching an untested and unproven health care system onto the world’s largest economy. At time of passing, Obamacare was to cost around $900 billion, yet according to the CBO, the costs will have already grown to more than $2 trillion by just the end of 2014. Health care costs make up a full 1/3 of US expenditures, and if the concerns expressed by many turn out to be correct, not only will health care costs skyrocket by an even greater degree than they already are, but the losses in employment nationally could quickly push us “officially” back into negative GDP. 

The mistake that I fear most is of the intellectual variety. There is not a single leading figure in this country today that voices their concerns about the extraordinary actions of our central bank…at least not with Ron Paul out of office. Our leaders have supported and allowed Bernanke’s FED and Central Banks globally to act without ANY level of oversight whatsoever…common sense dictates where this lack of restraint will wind up. The history books will not be kind to the leaders, elected and otherwise, of our time.

The reality is this; with the known economic and geopolitical risks that already surround us, the next surprise could come from any number of places, and it will most likely come from one that is of the unknown variety. This is, after all, the very definition of a black swan event.

The smartest moves that we can make today to avoid these risks are the ones that I write about on a regular basis. Resist the urge to plow money back into the stock market. Instead of trusting that the banks of today will remain open with all of your money tomorrow, diversify into real money…gold and silver. The 12 year bull market in precious metals has been incredible, but in a world of funny money backed by nothing, which will bring skyrocketing interest rates as currency wars pick up speed globally, we will soon see that we are only in the early innings of where gold and silver prices will eventually be priced at.

Start your own business, and control your destiny…financial and emotional. And most importantly, continue to search for the truth about the realities we have learned from history books. Bankrupt governments do not survive…regardless of the amount of money they can print into existence, or the amount of tax increases they can force on their citizenry. Instead, they print, print print…until the party is over and the punch bowl is empty…until no one else will even accept their paper money.

Watch Their Actions...NOT Their Words

Regardless of the promises and assurances we hear from the Bernanke’s and pseudo intellectuals of our day, deep down they know that the one thing they can never do is “come clean”…they cannot tell people the truth. This is why we watch their actions rather than their words. This is why the talk of reducing QE is just that…talk. Trust me when I tell you that there is one reason and one reason only that the FED decided against “tapering” QE. Bernanke and Obama’s minions know that QE is here to stay because the credit card bills wont stop coming, and there’s no other way to keep the shell game from imploding. That’s why there will soon come a day when the stock markets of the world drop by 10% plus on the same day that the FED announces an increase in QE. This, my friends, is when you will absolutely know that the medicine has ceased to work…and that the patient is near death.

Today, “don’t fight the tape and don’t fight the FED” continues to win the day…but when the next phase of economic turmoil kicks in, those that trust the old paradigm will be incredibly unprepared for the future we are being left with. The only question in my mind is timing…and that’s the only question.

Until next time,

Kip      

Friday
Sep202013

The Truth About The Obama Economy - It's Not the Legacy He Hoped For

With the out of control PR that we see in politics it's sometimes hard to separate the truth from the noise, and this is certainly the case when it comes to the truth about the economy. Determining whether or not we have seen an economic recovery (and how strong) under the Obama Presidency often depends on which side you see on TV, so instead, let's break down the cold hard facts...based in real numbers...and find out how our 44th President has done, economically speaking.

The following research comes from market strategist Michael Snyder, writing at Economic Collapse Blog. 

 Compared to when he first took office, a smaller percentage of the working age population is employed, the quality of our jobs has declined substantially and the middle class has been absolutely shredded.  If we are really in the middle of an "economic recovery", why is the homeownership rate the lowest that it has been in 18 years?  Why has the number of Americans on food stamps increased by nearly 50 percent while Obama has been in the White House?  Why has the national debt gotten more than 6 trillion dollars larger during the Obama era?  

The following are 33 shocking facts which show how badly the U.S. economy has performed since Obama became president.  

#1 When Barack Obama entered the White House, 60.6 percent of working age Americans had a job.  Today, only 58.7 percent of working age Americans have a job.

#2 Since Obama has been president, seven out of every eight jobs that have been "created" in the U.S. economy have been part-time jobs.

#3 The number of full-time workers in the United States is still nearly 6 million below the old record that was set back in 2007.

#4 It is hard to believe, but an astounding 53 percent of all American workers now make less than $30,000 a year.

#5 40 percent of all workers in the United States actually make less than what a full-time minimum wage worker made back in 1968.

#6 When the Obama era began, the average duration of unemployment in this country was 19.8 weeks.  Today, it is 36.6 weeks.

#7 During the first four years of Obama, the number of Americans "not in the labor force" soared by an astounding 8,332,000.  That far exceeds any previous four year total.

#8 According to the U.S. Census Bureau, the middle class is taking home a smaller share of the overall income pie than has ever been recorded before.

#9 When Obama was elected, the homeownership rate in the United States was 67.5 percent.  Today, it is 65.0 percent.  That is the lowest that it has been in 18 years.

#10 When Obama entered the White House, the mortgage delinquency rate was 7.85 percent.  Today, it is 9.72 percent.

#11 In 2008, the U.S. trade deficit with China was 268 billion dollars.  Last year, it was 315 billion dollars.

#12 When Obama first became president, 12.5 million Americans had manufacturing jobs.  Today, only 11.9 million Americans have manufacturing jobs.

#13 Median household income in America has fallen for four consecutive years.  Overall, it has declined by over $4000 during that time span.

#14 The poverty rate has shot up to 16.1 percent.  That is actually higher than when the War on Poverty began in 1965.

#15 During Obama's first term, the number of Americans on food stamps increased by an average of about 11,000 per day.

#16 When Barack Obama entered the White House, there were about 32 million Americans on food stamps.  Today, there are more than 47 million Americans on food stamps.

#17 At this point, more than a million public school students in the United States are homeless.  This is the first time that has ever happened in our history.  That number has risen by 57 percent since the 2006-2007 school year.

#18 When Barack Obama took office, the average price of a gallon of regular gasoline was $1.85.  Today, it is $3.53.

#19 Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.

#20 Health insurance costs have risen by 29 percent since Barack Obama became president, and Obamacare is going to make things far worse.

#21 The United States has fallen in the global economic competitiveness rankings compiled by the World Economic Forum for four years in a row.

#22 According to economist Tim Kane, the following is how the number of startup jobs per 1000 Americans breaks down by presidential administration...

Bush Sr.: 11.3

Clinton: 11.2

Bush Jr.: 10.8

Obama: 7.8

#23 In 2008, that total amount of student loan debt in this country was 440 billion dollars.  At this point, it has shot up to about a trillion dollars.

#24 According to one recent survey, 76 percent of all Americans are living paycheck to paycheck.

#25 During Obama's first term, the number of Americans collecting federal disability insurance rose by more than 18 percent.

#26 The total amount of money that the federal government gives directly to the American people has grown by 32 percent since Barack Obama became president.

#27 According to the Survey of Income and Program Participation conducted by the U.S. Census, well over 100 million Americans are enrolled in at least one welfare program run by the federal government.

#28 As I wrote about the other day, American households are now receiving more money directly from the federal government than they are paying to the government in taxes.

#29 Under Barack Obama, the velocity of money (a very important indicator of economic health) has plunged to a post-World War II low.

#30 At the end of 2008, the Federal Reserve held $475.9 billion worth of U.S. Treasury bonds.  Today, Fed holdings of U.S. Treasury bonds have skyrocketed past the 2 trillion dollar mark.

#31 When Barack Obama was first elected, the U.S. debt to GDP ratio was under 70 percent.  Today, it is up to 101 percent.

#32 During Obama's first term, the federal government accumulated more new debt than it did under the first 42 U.S presidents combined.

#33 When you break it down, the amount of new debt accumulated by the U.S. government during Obama's first term comes to approximately $50,521 for every single household in the United States.  Are you able to pay your share?

 

Thursday
Jun062013

Twilight Zone Ponzi Scheme, Falcon News, Economic, Market and Precious Metals Update

Lots to cover in our ongoing, real-life Twilight Zone. The reality is that we now live in a Globalized, Central Bank Ponzi Scheme, Fiat Currency Counterfeiting, Tulip Bulb Mania, Cartel Controlled World…and the end-game is going to be ugly…on steroids. The question, as always, is one of timing. 

First, a positive note. It was incredible connecting with everyone in Las Vegas for this months m2 Wealth Conference. This was Wealth Masters 16th m2, and based on the feedback and surveys, it may very well have been the best m2 ever. A huge THANK YOU to all the WMI Members that joined us!

Our good friend Wayne Allyn Root received another standing ovation for his keynote address and his new best selling book is nothing short of sensational. If you have not picked up “The Ultimate Obama Survival Guide; How to Survive, Thrive and Prosper During Obamageddon”, I highly recommend that you do so today. It’s chock full of powerful and specific ideas and applications from Wayne, who I personally know to be the truest conservative living today. Wayne was kind enough to ask me to write a chapter with my predictions and solutions (which you can find on chapter 37), and it was an honor to participate…especially with the likes of Dr Marc Faber and Mark Skousen contributing chapters as well. 

For those that may be turned off by the title of Wayne’s book, allow me to set the record straight. Wayne would have written this (nearly) exact book, even if a Republican had won the Presidency. Be it Romney, McCain or whatever puppet “they” would have placed in the highest office in the land, Wayne knows, just as everyone with a pulse and half a mind knows, that the U.S. no longer has an independent and true, two party system.

Sure, Republicans will “act” different from Dems…and they will parrot the conservative party line to a naïve public…but at the end of the day we have a government controlled by the most powerful of special interests, and whether Republican or Democrat, it is the Global Cartels of the world that rule (just about) everything. Be it the Financial Cartel (currently the most sinister and powerful), the Military Cartel (always the most aggressive and deadly), the Energy Cartel (the source of massive, multi-decade, U.S. destroying wealth transfers), the Media Cartel (controlling/brainwashing the public) or the Drug Cartel (both legal and illegal), these cartels work hand-in-hand, functioning as a shadow government, to manipulate and control the masses. With this knowledge, we can view the events of the day entirely differently from the mainstream lemmings…allowing us to make informed and correct decisions, based in the truth and outside of this real-life matrix. Understanding what I’ve just written is the key to making great decisions for the rest of your life. It’s not always easy being a member of the “informed minority”, and in fact, can be more than just a little uncomfortable when putting your plans into place. However, once you begin to examine life by asking questions like; “Qui Bono?” (who benefits) and you begin to “Follow the Money” when looking for the truth, your search will become much simpler. And importantly, being a member of communities like the one we have in WMI, and the VRA, will make the journey even more enlightening and empowering…not to mention, a lot less lonely!

Economic/Market/Precious Metals Update

As I start this section of the update, I want to emphasize a point that was a focus of the m2. Regardless of the severity of the next major economic crash…and make no mistake, when the fiat currency and sovereign debt bubbles burst, the end result will be nothing short of epic…those that are prepared (both mentally and financially), will not only survive the chaos, but will become the new wealthy.

This is not an overstatement, in my view, and frankly undersells the record wealth transfer that is taking place from the uninformed to the informed.

For those that doubt this advice, let’s go back in time and take a look at the massive and unprecedented wealth destruction that has already taken place for those that have trusted in and used the fiat currency that is the US dollar (although this example can be applied with near identical results in your fiat currency as well).

1913 was an incredibly important and almost certainly the worst year for the future of the US. The Law of Unintended Consequences states, “There will be unintended results for every human action”. It doesn't take much effort to see this law's effects.

Prohibition is a great example to start with.  A law designed to improve the morality of the country instead made us a country of lawbreakers. How about welfare and its unintended consequences. Giving welfare checks to unwed mothers has produced more children to more unwed mothers, only making the problem worse. The same can be said for the unbridled expansion of both the food stamp and disability programs, with the unintended consequences here being the destructive loss of individual self worth and a massive addition to government handouts through already bankrupt entitlement programs…talk about a demoralizing combination for all.

1913 was the year that shows exactly what happens when the populace becomes complacent, doesn't pay attention, and is manipulated by the MSM (mainstream media) and lied to by those in power.  So, exactly what happened in 1913 that was so terrible?

Two major events:

1) The US Constitution was amended to permit the federal government to levy the population through an income tax, which directly led to the creation of our favorite government agency, the IRS.

2) The Federal Reserve Bank became reality, allowing Central Banks to control/manipulate our monetary system.

 With the news this week that the IRS has been targeting conservative groups for at least the last 3 years, I could spend much of this update detailing why our corrupt and progressive tax system is leading us down an almost identical path that led to the destruction of the Roman Empire. Instead, lets focus on the criminal cabal of international bankers that is our Central Banking System, the Federal Reserve.

The FED, since inception, has had one primary mandate (the dual mandate of “ensuring full employment” is only a recent addition, and of course they have failed miserably here as well). That mandate is to protect the value of the US dollar…THE currency of our country. So, what kind of job have they done since 1913? Answer: Since the US dollar has lost 97% of its value over these last 100 years; it’s safe to say that the FED has been across the board horrendous in achieving their one stated purpose for existing!

Let’s put pencil to paper and make the point crystal clear. In 1913, if you had placed $1 million in a bank account (non-interest bearing), or in a safe deposit box, or in your mattress, the present day purchasing power of your $1 million would be just $40,000…representing a loss of 97% of your money! 

However, if you had instead placed that $1 million into gold back in 1913, today you would have more than $74 million (with gold at $1400/oz). How amazing a difference is this! $40,000 vs $74 million. This is likely the most powerful example ever of both the FED’s destruction of our currency and its purchasing power, along with the importance of owning gold as an incredible store of value and insurance against the FED’s inept ability to succeed at its one job.

Here’s a chart of historical gold prices going back to 1833 so you can do the math yourself.

http://www.nma.org/pdf/gold/his_gold_prices.pdf

I will have more on the opportunity that this pullback in gold and silver is presenting us later, but keep the following in mind as well. If you had invested $10,000 into gold just over a decade ago at around $300/oz, you would have more than $46,000 today, giving you a gain of more than 360%. That same $10,000 invested in the stock market would be worth roughly $11,000, a gain of $1000 or roughly 10%. You be the judge as to which investment you would rather own.

“Don’t Fight the Tape - Don’t Fight the FED”

Since the inception of the VRA over a decade ago, I’ve written these words and explained this market truism more times than I can remember. Don’t fight the tape and don’t fight the FED is one of the first stock market/investing lessons I remember learning, and those that choose not to follow it can expect to pay the price. In fact, I have been guilty of this as well during the early phase of the stock market recovery. For those that may not fully understand its meaning, allow me to explain. First, “Don’t Fight the Tape” means that it is risky to bet against the primary trend of the stock market. A simple glance at the charts since the Spring of 2009 will tell you the direction of the tape since then…UP.

 

Second, “Don’t Fight the FED” means that its risky to bet against the actions of the Federal Reserve. And we know what the FED has been doing over the last 5 years…printing money like its Weimer, Germany circa the 1920’s.

 

Leaving emotion out of the conversation, along with our common sense thoughts on which direction the stock marketshould be going, based on the underlying economic global realities, the long-time investment advice of “don’t fight the tape/fed” is telling us that the stock markets of the world will continue moving higher, “until and unless” something changes. It’s always the timing of the next move…the change of direction…that’s the key.     

So, regardless of which way we might believe the stock market should go, when you have every Central Bank on the planet acting in unison, it sends us one clear an unmistakable message; Regardless of the costs…regardless of the unintended consequences…Central Banks, working hand in hand with governments around the world, will continue to print, print, print their fiat currencies in what has become the most epic of currency battles on record. You see, they view our depressionary, global economic realities as “war”, and will do whatever they feel necessary to win this war…even if it means risking our future and the bursting of the currency and debt markets…an almost certain reality that they have decided to face sometime down the line

There is an alternative theory to this madness, and I’ll share it with you now. Many geopolitical experts that I know and trust are certain that the actions of our global leaders are by design, and that the end-game is based on a desire for total control through one-world government…in other worlds, totalitarianism. They argue that by bringing down the economy through a coordinated and systemic financial collapse, there will be pleading cries from the masses of the world for HELP…at any and all costs. Those that doubt this as a possibility underestimate the mindset of megalomaniacs, especially those in a position of great power. Basic psychology teaches us that when people are desperate they will agree to pretty much anything tomorrow if it means the pain they are in will be lessened today. Remember the character Wimpy from the cartoon series Popeye? Wimpy’s quote “I will gladly pay you Tuesday for a Hamburger today” explains this concept perfectly. And guess when Wimpy first said his now famous phrase…1932…or just as the effects of the Great Depression began to kick in.

Which future will we face? Only time will tell, but this much we know for certain; the masses of the world…as always…will be ill-prepared to deal with it.

Mr. Market Always has a Game Plan

In the not too distant future, one that I have predicted will come by the end of 2014 (in my book, CrashProof Prosperity), the planet will come face to face with the collapse of all collapses…but here’s the key; Mr. Market is very, very smart. Mr. Market can best be identified as ensuring that the majority of investors get it wrong. Because that’s how it works…the majority is always wrong, especially right at a market top or a market bottom. Mr. Market loves to wait until every last sucker has bought into the insanity of the bubble. Be it Tulips in the 1600’s…stocks in 1929…the Dot Coms in 2000…or US Real Estate in 2007, the majority is on the wrong side.

Mr. Market has now decided to catch as many people on the wrong side as possible in what has become the two largest bubbles in the history of mankind; these bubbles are fiat currency and sovereign debt.  

The single best tool in discovering “when” the next bubbles will burst is technical analysis, and I rely on T/A a great deal when looking for the “turn”. Right now T/A is sending a clear message about the overall market, and it will be a surprise to no one to learn that in the current environment of Central Bank money printing that equities continue to head higher. Every Central Bank on the planet is printing unprecedented amounts of fiat currency. More than $10 trillion in just the US…more than $2 trillion in China…more than $3 trillion in Japan, and more than $5 trillion in Europe. That’s a total of $20 trillion printed since just 2007, yet global economies continue to struggle. Does this make sense to you?? Of course not…because it makes sense to no one that understands economics, particularly how the free market system is supposed to work. 

Japan is truly in never-never land. I’ve written and warned about the demographic nightmare of Japan for years, where a dramatically aging population will soon cause a tidal wave of bankruptcies, with entitlement programs imploding in their own footprints. The birth rate in Japan is now the lowest on record…they now believe that bringing children into their bleak world makes little to no sense…and combined with a debt to GDP ratio of more than 250%, Japan’s leaders have reached the desperation phase. Hence the actions of Japan’s Central Bank, where they have announced a massive stimulus program that even includes buying Japanese equities! Since January, Japanese stocks have surged more than 38%, so on the surface it may appear that the strategy is working…but it only appears that way…because in the end this type of blatant economic manipulation only works for so long. This is NOT a free market system at work! 

But in the short term, “Don’t Fight the Tape and Don’t Fight the Fed” applies in Japan as well. The Black Swan event that I’ve been warning about could easily start in Japan, so I will be watching their moves closely. However, in an era of print, print, print in order to rescue global economies, we should expect stock prices to continue to climb…until this Ponzi Scheme ceases to work and currencies collapse, sending bond yields screaming higher…with an end result of hyperinflation and never before witnessed economic decline. A Great Depression that makes the 1930’s look like a walk in the park.    

In the short term, we should also pay attention to another piece of sage market advice. “Sell in May and Go Away”, encompasses the fact that historically more than 90% of all stock market gains occur between September to May. There is an important distinction to keep in mind, and that is when the year starts with gains in January and February (as we saw to start this year), Sell in May and Go Away does not actually hold true. Either way, here’s what we should me mindful of…technical analysis, or “The Tape”. As long as the trend remains higher, don’t be surprised to see the smart money continue to push the market higher, and that for the declines to be small in nature. The insanity of Central Bank manipulation WILL end, and technical analysis will give us the advance warning that we need to go aggressively short the equity markets.

Finally (for now at least), the following article is from my friend and former beltway insider Paul Craig Roberts. It sheds new light on the drop in gold and silver prices, and I’ve seen his very informed opinion stated nowhere else. Gold and silver remain the only true currencies on the planet, and should be purchased on a monthly basis…or as often as possible.

Until next time,

Kip

 

Gangster State America  By Paul Craig Roberts May 14, 2013 "Information Clearing House" -  There are many signs of gangster state America. One is the collusion between federal authorities and banksters in a criminal conspiracy to rig the markets for gold and silver.

My explanation that the sudden appearance of an unprecedented 400 ton short sale of gold on the COMEX in April was a manipulation designed to protect the dollar from the Federal Reserve’s quantitative easing policy has found acceptance among gold investors and hedge fund managers. 

The sale was a naked short. The seller had no gold to sell. COMEX reported having gold only equal to about half of the short sale in its vaults, and not all of that was available for delivery. No one but the Federal Reserve could have placed such an order, and the order came from one of the Fed’s bullion banks, one of the entities “too big to fail.”

Bill Kaye of the Greater Asian Hedge Fund in Hong Kong and Dave Kranzler of Golden Returns Capital have filled in the details of how the manipulation worked. Being sophisticated investors of many years of experience, both Kaye and Kranzler understand that the financial press runs with the authorized story planted to serve the agenda that has been put into play. 

Institutional investors who have bullion in their portfolio do not want the expense associated with storing it securely. Instead, they buy into Exchange Traded Funds (ETF) and hold their bullion in the form of a paper claim. The largest, the SPDR Gold Trust or GLD, trades on the New York Stock Exchange. The trustee and custodian is a bankster, and only other banksters are able to turn investments into delivery of physical bullion. Only shares in the amount of 100,000 can be redeemed in gold.

The price of bullion is not set in the physical market where individuals take delivery of bullion purchases. It is set in the paper futures market where short selling can drive down the price even if the demand for physical possession is rising. The paper gold market is also the market in which people speculate and leverage their positions, place stop-loss orders, and are subject to margin calls. 

When the enormous naked shorts hit the COMEX, stop-loss orders were triggered adding to the sales, and margin calls forced more sales. Investors who were not in on the manipulation lost a lot of money.

The sales of GLD shares are accumulated by the banksters in 100,000 lots and presented to GLD for redemption in gold acquired at the driven down price. 

The short sale is leveraged by the stop-loss triggers and margin calls, and results in a profit for the banksters who placed the short sell order. The banksters then profit again as they sell the released gold into the physical market, especially in Asia, where demand has been stimulated by the sharp drop in bullion price and by the loss of confidence in fiat currency. Asian prices are usually at a higher premium above the spot prices in New York-London. 

Some readers have said “don’t bet against the Federal Reserve; the manipulation can go on forever.” But can it? As the ETFs such as GLD are drained of gold, their ability to cover any of their obligations to investors diminishes. In my opinion, these ETFs are like a fractional reserve banking system. The claims on gold exceed the amount of gold in the trusts. When the ETFs are looted of their gold by the banksters, the gold price will explode, as the claims on gold will greatly exceed the supply. 

Kranzler reports that the current June futures contracts are 12.5 times the amount of deliverable gold. If more than 8 percent of these trades were to demand delivery, COMEX would default. That such a situation is possible indicates the total failure of federal financial regulation. 

What the Federal Reserve has done in order to maintain its short-run policy of protecting the “banks too big too fail” is to make the inevitable reckoning more costly for the US economy. 

Another irony is the benefactors of the banksters sale of the gold leeched from the gold ETFs. Asia is the beneficiary, especially India and China. The “get out of gold line” of the US financial press enables China to unload its excess supply of dollars, accumulated from the offshored US economy, into the gold market at a suppressed price of gold.

Kranzler points out that not only does the Fed’s manipulation permit Asia to offload US dollars for gold at low prices, but the obvious lack of confidence in the dollar that the manipulation demonstrates has caused wealthy European families to demand delivery of their gold holdings at bullion banks (the bullion banks are essentially the “banks too big to fail”). Kranzler notes that since January 1, more than 400 tons of gold have been drained from COMEX and gold ETF holdings in order to satisfy world demand for physical possession of bullion. 

Again we see that institutions of the US government are acting 100% against the interests of US citizens. Just who does the US government represent?

Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. 

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