Just the Third Inning...

As you know from my posts of the last couple of months I believe the stock market is going to be a tough place to be for some time. Bear market rallies can be very powerful, and can even retrace 50% of their losses. However, I very much doubt that this will be the case in this particular bear. The reason: while the stock market may already be down 40% from its highs, the economy is just now heading into a recession…one which I believe will be an incredibly painful one for most people. Historically, the stock market begins to recover from a recession about half way through it, which tells me that we have at least 6 months to a year before that will be possible. In addition, this will not be an ordinary recession. For one, the credit market is dead to most, and it will continue to be very difficult to get loans. Since our economy is now a debt based one, this is bad news indeed, and once layoffs begin to ramp up (just as they did this past month with 159,000 people losing their jobs) the reality of this process will begin to set in. People go through 3 distinct phases when dealing with tough financial times in their life. Phase one is denial, which is the phase we are in currently. Right now most people see this as just a crack in the stock market, but believe that it will soon turn around…it will not. Phase two is when reality begins to set in. Layoffs, foreclosures and bankruptcies…which are only beginning to pick up in their intensity… become a reality. And phase three, “capitulation”. This is when things are so bad that an individual will sell everything left of value just to hold on to some semblance of their prior life. If this all sounds incredibly bleak…well, that’s because it is. 80% of the country is upside down financially, and as you’ve probably noticed, very little of the $3 trillion or so that is being pumped back into the economy by the Federal Reserve will actually help individuals directly. Yes, this newly printed flash cash will ensure that the banking system survives, but none of it will be deposited into any of our bank accounts, which is where its needed most. The following is an article from this weekends Barrons, and one that I concur on just about every point. I believe that this is the single best opportunity to buy gold and silver, and especially precious metals mining stocks. It has been incredibly difficult to watch these stocks get hit with the rest of the stock market, and it would seem to make no sense whatsoever. We bought these stocks for “exactly” the current situation; a stock market meltdown caused by a financial system based on paper money backed by nothing…a fiat currency. Yet, these stocks were hit as hard as anything. I encourage you to use this opportunity to average down on our precious metals recommendations as gold and silver begin what will be a huge move higher. The timing of this move is difficult as many see deflation as the biggest current risk, but in the near future it will become very clear that massive inflation must follow the $3 trillion of newly printed cash. Our debt balloon has a leak…no matter how much fresh air is pumped into it. Kip Herriage Editor, VRA www.vraletter.com

Opportunity...!

The announcements coming from the US, and global governments, clearly indicate that they will do ANYTHING to avoid a global economic meltdown. This includes “forcing” the largest banks and financial institutions in the US to take billions upon billions of dollars via government equity stakes. There is no doubt that this will ensure that the banking system will survive, and this removes the possibility of another Depression.

This is our new socialism, and like it or not, we have implemented many of the same polices that represent the “new China”.

This will no doubt remind lots of people of that infamous quote: “I’m from the government and I am here to help”

We own stocks that will continue to prosper in a “real economy” however if you are an investor in mutual funds or other large cap stocks, you may want to use this opportunity to sell and wait for much lower prices to re-enter those positions. It is very likely that we will make an attempt to “retest the lows” before this bear market is over, and I expect that those lows could even be broken.

GOLD

In the last 24 hours, both Goldman Sachs and Merrill Lynch have said that gold is headed much higher in light of the ENORMOUS amount of dollars that are now flooding the system. Merrill’s target, which was announced this morning, is $1500/ounce. Look…the system had to be reliquified to prevent a meltdown, and had they acted 30 days ago we could have avoided the crash of 2008. However, with this massive monetary inflation, gold and gold stocks (especially our small cap gold stocks) continue to be an excellent buy and I fully expect gold to break $1000/ounce in the not too distant future.

It’s the Economy!

Once the madness of these stock market moves subsides, the reality will still be the same. The economy has cancer, and it is spreading quickly. The US, and the world, is awash in DEBT and a recession is here. With 80% of the population in the US upside down, and with housing prices headed still lower for the next 12 months at least, we will have to see how this washes out. China (and other parts of Asia and South America) will be the BIG winner in all of this, and you should continue to adjust your “portfolio mindset” with this in mind.

Hey….we just had a 2 day bull market of 20%….doesn’t it feel great? Didn’t think so….

Kip Herriage

Editor, VRA

www.vraletter.com

The real story about how we got in this mess...

Enghadl is one of the best investigative financial journalists out
there....You will probably never hear this story elsewhere.

http://www.321gold.com/editorials/engdahl/engdahl101008.html

...and I just learned that the next shoe to drop is commercial property. No
huge surprise of course, but its been the only thing holding up the
remaining banks. There's over $5 trillion in derivatives in commercial
property.all sold with collateralized debt swaps as well. In addition, there
are over 100 large hedge funds that invest in comm property, and their
liquidations will start next week.adding huge selling pressure to the
market.

The founder of Chesapeake Energy, Aubrey McLendon, was today forced to sell
all of his shares today..margin calls..he had bought stock all the way up to
$90.on margin.and now he's wiped out in less than a week. The stock closed
at $16 today.

The lesson from all of this will be that   "30 to 1 leverage, for lack of a
better word, is never a good thing"

What the next 3 years will look like for you and everyone you know...

I’m writing this because I want you to be as prepared as possible for what is coming. The following views are my personal opinions on what I see happening.

Confidence in the system has been lost. What we’ve seen so far is just the beginning, and it truly makes me sad to have to write this.

Most people have no clue about what’s really going on, and since Karl and I started WMI in January of 2005, we have done our absolute best to make sure that our Members are educated and ready for this possibility. Unfortunately for all of us, it’s become a reality.

Here’s What The Next 3 Years Will Likely Look Like:

• Unemployment will rise from 6% to over 15-20%. You or people you know and care about will lose their job.
• Home prices will go down for the next 3-5 years, and in some areas will drop 30-50% from current prices.
• Large and small banks will fail all over the world, and “bank runs” will be a common occurrence.
• The US Dollar will fall 30-50% from current levels, causing massive inflation.
• We will experience a “near Depression” that will feel like a serious Depression for millions.
• If you’re in the Middle Class, you will likely slide into poverty unless you take action.

But while most people will suffer, you have an opportunity to prosper.

A massive number of millionaires will be made during this very painful period, while sadly; millions will be made homeless as well. You don't have to come to this m². I'm not going to twist your arm. It's your future, not mine, but I will say this... If you do come, it will be the most valuable 4 days of your life, and here’s why…

• You’ll meet Mr. G Edward Griffin. THE economic researcher that predicted this exact scenario well over a decade ago, and he’ll provide you with a specific game plan for the prepared.
• Robert Kiyosaki’s person advisor on gold and silver, Mr. Mike Maloney, will be in attendance, and will teach you how to protect your money, and take advantage of the biggest “wealth transfer” in the history of mankind.
• Mr. Chuck Butler is one of the world’s most renowned economists, who has called the economy and stock markets moves each and every step of the way like a prophet. You’ll learn his step-by-step game plan that will help you make timely, wise, personal decisions that will help you protect your wealth and prosper immensely.
• These “three kings” will be joined by more than 15 world class experts in the areas of legacy building wealth creation opportunities, finance, real estate, credit, asset protection, wealth acceleration, personal success and empowerment, great health (naturally), and much, much, more.

This is it. This is a time that will go down in history, and this is why WMI was created.

This is why you’re a part of this group. Now is a time to be decisive. You can't afford to sit on the sidelines and there are no “do-over’s”. You will most likely be wiped out unless you take control of your financial destiny, but as always, the choice is yours.

If you’re going to overcome this… If you’re ready to take responsibility for your freedom, prosperity, and your future, I expect to see you at m².