Remember this post I made on August 8, 2008?

In that post I called for $640 gold, $1100 platinum, $11 silver, $200 palladium, and Canadian dollar at 84 cents. I also predicted that the US would pull out of Iraq, and predicted that oil would slide to $55 a barrel. My prediction was that all of these things would happen before the US elections.

Let's look at just how remarkably right my predictions were.

When I made that post, prices were as follows:
Crude oil: $120/barrel
Gold: $870/oz
Silver: $16/oz
Platinum: $1550/oz
Palladium: $350/oz
Canadian dollar: 94 cents US

Today's lows?
Crude oil: $62/barrel (Prediction: $55)
Gold: $680/oz (Prediction: $640)
Silver: $8.60/oz (Prediction: $11)
Platinum: $760/oz (Prediction: $1100)
Palladium: $165/oz (Prediction: $200)
Canadian dollar: 79 cents US

Clearly some of the prices overshot to the downside but that's to be expected in any bear market.

So what about my prediction that the US would pull out of Iraq in October? Well, let's see...

US to pull out of Iraq within a timeframe of 18 months (Obama) to 48 months (McCain).

US forces to withdraw from Iraqi territory no later than Dec. 31, 2011.

I strongly encourage you to read both those articles so you can see for yourself that this Iraq timeline is a very important (and recent) development, and it applies to both Obama and McCain.

Stay tuned for the bitter-sweet celebration of the fulfillment of my final prediction: McCain becomes President.

It's official: The Council on Foreign Relations now calls the US dollar a "historical anomaly," a "piece of paper of no intrinsic merit."

Check it out - straight from the horse's mouth.

What is the Globo?

By now, you should have heard about the Euro, as it is Europe's currency. If you look hard enough you can also find something about the Amero - a proposed currency for North America. But the Globo?

The globo is the global currency to be imposed by Russia, Saudi Arabia, Brazil, Japan, China, the EU, Canada, Australia, and possibly the UK, in a joint effort to detach themselves from the US dollar.

Why do all countries want to detach themselves from the US dollar? Are they even attached to the US dollar to begin with?

Unless you've been living under a rock, you should know about the Bretton Woods agreement signed after World War II that gave the then-gold-backed US dollar reserve currency status for the entire world. The dollar then was said to be "as good as gold," and was in fact 100% backed by gold. $35 was an ounce of gold - literally.

In 1971, after a decade of deficit spending on the Vietnam War, Apollo, and Great Society programs, the US had to end the Bretton Woods agreement. The US-gold link had come under pressure from France and the UK which were buying up gold like mad and dumping US dollars, knowing that dollars were intrinsically worth less than gold. Thus, Richard Nixon was forced to terminate the Bretton Woods agreement on August 15, 1971. What followed was a decade of inflation known as the "stagflation" era, after the dollar essentially became a worthless piece of paper.

However, in the early 1980s, after the middle east was driven into bankruptcy, a new deal was established with the Arab nations (except for Iraq and Iran), whereby those countries would sell their oil in exchange for US dollars, which they would then keep in gigantic savings accounts - called "reserves" - for ever & ever & ever (because if they ever spent those dollars, the US would experience hyperinflation and the US empire would come to an abrupt end).

During the Reagan, Bush, and Clinton years, a new kind of American imperialism flourished, where the US struck deals with increasingly more countries for those countries to purchase enormous amounts of US dollars (like the Arabs did) to finance a growing US debt. Japan is now the world's foremost holder of US dollars. China also holds a lot of dollars. Keep in mind that the dollar is nothing but worthless paper. Worse still, all the countries holding US dollars must be forced (coerced) NOT to sell those dollars because if they ever did, the US would suffer a Zimbabwe-like hyperinflation.

Today, virtually every country in the world holds large quantities of US dollars in reserve. The US dollar is a price-fixed currency. The US treasury (or more accurately the Federal Reserve) sets the price of the dollar. The dollar has no purchasing power, because it's a worthless piece of paper. However, the Fed gives it the illusion of value by DECREEING what its value is. It does so by simply readjusting the number of dollars in circulation. The dollar is a FIAT currency (FIAT implies "by government decree").

Whenever the value of the dollar is driven upwards (by the Fed selling treasury bonds), all other countries suffer because their own currencies inflate relative to the dollar. Thus, it becomes harder for those countries to purchase things (like oil) on the market, because those things are sold in US dollars. However, if the dollar is driven downwards (if the Fed buys treasury bonds), the US dollar reserves of the other countries now become less valuable. Furthermore, the rapid appreciation in the domestic currencies of the other countries causes problems for exporters. So you can see why the more volatility there is in the dollar, the harder it is for other countries to maintain stable economies.

For countries other than the US, the US dollar as a reserve currency is extremely detrimental. The current system of US dollar hegemony (where the dollar is used as the de-facto global currency) is an offshoot of American imperialism and is a way for the US to control world markets.

The problem we are faced with today is an impending devaluation of global currencies (other than the dollar). The Canadian dollar has been devalued enormously this week. The Australian dollar has been totally decimated. Every currency other than the US dollar has been falling. The Japanese Yen thankfully was spared, but if the US has its way, all other currencies will be devalued massively. Why? Because the US must inflate away its debt. In order to do that, it has to print more dollars. It can only do that while maintaining stable prices (otherwise inflation will result). The ONLY way to do that is by devaluing the currencies of ALL OTHER COUNTRIES.

So China, Japan, Russia, and other economically-strong countries are now deciding (behind closed doors) that in order to maintain some kind of economic stability, they must - ASAP - decouple their currencies from the US dollar. The only way to do that is by making some other currency the global reserve currency, and therefore forcing the US dollar to be valued against that currency. And that currency is the Globo.

So as not to repeat the mistakes of the past, the countries proposing the Globo have decided that it will be backed 100% by gold. In other words, the Globo is gold. Therefore, gold will be the new global currency. One ounce of gold will be worth exactly G2461. (G=Globo)

This year, Yom Kippur falls on October 8th, 2008.

Web Bots are saying there will be an important 9/11-like event on October 7th:

This correlates with my earlier prediction that we are "days away" from a world-changing event.

The common wisdom of Warren Buffett, Benjamin Graham, and other great investment mentors has always been that you should pick an asset that you believe is undervalued, and go long (purchase and hold that asset) for many years as its value increases exponentially. However, since the introduction of short selling, this age-old wisdom could not be more wrong.

In today's market, it is far more advantageous to be short for the long term, than to be long. The reason is simple: when you are long, you are paying a price for holding an asset that may or may not appreciate in value. Every day that you hold that asset, you are missing out on the interest that you would otherwise earn if you had not purchased that asset and instead kept your money in a savings account. However, when you are short, you don't have to pay that price. You borrow the asset at a specific lease rate. If the lease rate is less than the interest rate that you would earn in a savings account, then you are actually being paid for being short.

Nowadays, it is very hard to find an asset that grows by more than the interest rate in most savings accounts. It is (and has always been) very risky. However, it is very easy to find a bank that will lend you a particular asset (e.g. gold) at a near-zero lease rate. You then sell that gold immediately, pocket the money, and put it in a savings account where the growth rate is guaranteed. If gold goes down, you cover your short and make extra profits. If gold goes up, you simply double your short position. As long as the rate of return in gold does not exceed the rate of return of the savings account with virtually no volatility, you can always eventually cover your short position for a profit or simply use the interest to gradually cover your short.

Longs are getting killed, especially in the precious metals, precisely because shorts are always fundamentally favored. Lease rates on gold and silver are almost always zero or negative. Negative lease rates mean that you actually get paid for borrowing gold!

In recent news, the SEC banned short sales on all stocks. Too many ordinary people had caught on that short selling big financial firms could be extremely profitable. However, despite the short ban, the Dow plunged 7% today. Yet, the SEC remains silent on the shorting of commodities. If you cannot see the political agenda here, you are blind.

Bottom line - as long as short selling commodities is fundamentally favored by the banks (through low or negative lease rates), it is far more profitable to be short than long. Last month, three banks shorted one tenth of the yearly supply of gold (that's 250 tons), causing a devastating plunge in the gold price - all the way from $990 to $745 with no rebound. The shorts made it out with a 33% profit, even though they never sold any physical gold. The longs got destroyed. This is the sad reality of the "free market" casino. If you want to make money, you better be short, because long just doesn't pay.

We are mere days away from some VERY big news.

There is a greater chance than ever that the world will be VERY different by October 1.

Yom Kippur is approaching, and the Russians have expressed great fear of a second Yom Kippur War, between Israel and Iran. They are intent on "preventing" it, by launching an earlier strike in Iran - September 28th.

Israel has been positioning itself in Georgia, in order to invade Iran. NATO bases have been built in Georgia. Georgia represents the perfect strategic location (other than Iraq) for attacking Iran. Iran is now surrounded by enemies: Iraq, Georgia, and Afghanistan - all are now occupied either by the US (NATO) or Russia.

Russia has positioned itself in Georgia and Syria. Take a look at what countries border Georgia and Syria. The US is in Iraq, ready to help Israel with its Yom Kippur Iran invasion. Russia will attack Iraq from Syria and Iran from Georgia, and the US will not know what hit it.

Prophet Alois Irlmaier sees "two eights and a nine" for the start date of World War III. 9/28/2008.

Congress is going on vacation at the end of this week. McCain has decided not to show up for the debate in Mississippi. Americans will be totally taken by surprise by the events that are about to unfold.

Guess what, American taxpayers just got SCREWED OVER by their OWN government! The government just used their OWN money to erase the debts of PRIVATE COMPANIES.

If you're an American, now would be a good time to yell, "I'm as MAD as HELL, and I'm not going to take it anymore!"

Here's a video from Don Harrold that should get you fired up:




This is the greatest example of government tyranny since the days of Nazi Germany. Everyone should be up in arms. But the ignorant debt-slave sheeple are just happy that they still have their low-paying jobs at Walmart or McDonald's and their infinite lines of credit, while owning NOTHING.
 
Way to go America, land of the FREE, home of the BRAVE.

What is "indeflation"?

It's inflation and deflation, at the same time. And it's what's happening right now in the financial markets.

Let me explain to you how it works. As you may already know, inflation is a loss of purchasing power. Deflation is the opposite of that. So how can both be happening at the same time? Isn't that a paradox?

Right now, vast amounts of money are being wiped out as the Greenspan derivatives bubble finally implodes. There is no doubt that money is disappearing from the system at an alarming rate. As a result, prices are collapsing in just about every asset class, including commodities, and the dollar index has rallied from 70 to 80 in just a few weeks.

Yet, there is inflation going on as we speak. The dollar is losing its purchasing power. Just look at gasoline prices at the pump. Even though gasoline futures are now under $2.50/gallon (!), gas prices at the pump are unchanged! Check out the price of bullion on eBay. Just try to obtain any gold or silver at current spot prices. You will be faced with severe shortages. Bullion dealers are even offering to buy back bullion at a premium to the spot price!

Even though most asset prices are about the same as (or lower than) what they were in 2007, and even though the money supply has not grown at all, the dollar has lost purchasing power because you cannot obtain the same quantities of REAL STUFF that you once were able to obtain. The limitation is imposed by supply shortages, rather than price. The US dollar fantasy has finally slammed against the hard concrete wall of reality.

The cold reality is that the liquidity of the dollar has evaporated. The dollar is no longer liquid. Nobody wants dollars, even though the supply of dollars is dwindling. Basically, demand for dollars has dried up faster than supply. Demand for REAL things, on the other hand, is stronger than ever.

Remember how everyone was saying in 2007 that the global financial system was suffering a liquidity crisis? Well, now the US dollar is suffering a liquidity crisis. Soon, every currency in the world (since they are all backed by the dollar) will also become illiquid.

Check out the LIBOR rates this week. They were as high as 6%. The money markets are coming apart at the seams. All of this is indicative of a liquidity crisis in fiat currencies themselves. All signs are pointing toward indeflation. The REAL purchasing power of the dollar (and other fiat currencies) is going down at the same time as prices are falling and the US dollar index is rising.

A most dire thought ran through my mind... What if the US dollar has bottomed? What will happen between now and the US presidential elections?

Long-term trends in commodity prices would surely be broken if the US dollar staged any sort of rally. Already, the long-term bullish trends in palladium and oil have been broken (trends going back at least two years). Where will commodity prices be four months from now?

I have some rather shocking predictions which I hope will NOT come true, because if they do, the US will be going right back to its terminal oil addiction, and the world will not make the progress towards renewable energy that it needs to make.

I predict that by December, 2009, prices will be as follows (again, I HOPE this doesn't happen):

$55 a barrel oil

This has been predicted a while ago by Lindsey Williams, who has stated that the oil cartel will open up two gigantic oil fields: one in Indonesia and one in northern Russia. They will both be foreign, so America will continue to import its oil, when there is still plentiful oil under US soil sitting untapped.

$640 an ounce gold

We're going right back to mid-2007 levels. If you're invested in commodities, hold on to your gold because it will be the one commodity that will decline least. Gold is far less volatile than the other commodities, so you won't lose much if this scenario unfolds.

Canadian dollar at 84 cents US

This one seems almost incredible, but it will happen. The Canadian dollar is heading down, fast. Why? As commodity prices collapse, so will the Canadian dollar. Already it has broken down below a key level of support and it's now sitting at just 94 cents US! The resulting inflation, combined with extremely low oil prices, will push the Canadian economy over the edge into a recession. The only positive is that manufacturing would slowly return to Ontario thanks to the weaker dollar. Also, the lower Canadian dollar will cause Canadian commodity prices to decline less than in the US.

Collapsing commodities --
$11 an ounce silver
$1100 an ounce platinum
$200 an ounce palladium

Palladium will retreat to levels not seen since 2003. I have a feeling Russia has way more palladium than it's telling the world. Remember that palladium has only been mined for 200 years. Therefore, the total world reserves are still very uncertain. Also, palladium has virtually zero industrial applications. Plus, with cheaper platinum, the use of palladium as a cheap alternative to platinum in catalytic converters would decline substantially. Silver is also vulnerable because it's not gold. It's not held by central banks. The decline in all of these metals will be greater than the decline in gold. The prices I'm predicting are the absolute worst-case scenario bottom prices. So you might actually want to hold on to silver and platinum because the decline will be fairly small from where we are now.

And the October surprise will be...

The October surprise that will seal McCain's victory in November is this... are you ready for this?

Victory in Iraq

Yep! There. I said it. In October of 2008, the Iraq war will come to an end. Troops will be redeployed to Afghanistan temporarily while war plans are drawn up for a war with Iran, right after McCain's landslide victory.

You may wonder what sort of psychedelic drug I took to give me this level of clairvoyance. I'll tell you in November, right after all of my predictions are fulfilled :)

I've taken the liberty of coming up with a list of very specific things that I would do if I were US President...

• End all combat operations, in Iraq, Afghanistan, and elsewhere
• Bring those troops home and station them at the border (80% at the US-Mexico border, 20% at the US-Canada border)
• Place a permanent cap on military spending during times of peace (or undeclared war)
• Implement a GST (Goods & Services Tax), a national sales tax of 5% on all discretionary consumption goods
• Eliminate income taxes for incomes of $30,000 or less per year
• Institute a flat 20% income tax on all income exceeding $30,000
• Institute a 25% tax on gasoline and diesel fuel, to encourage the development of alternative technologies
• Give the US Treasury legal authority to produce silver coins and certificates
• Create a public education campaign on the benefits of using silver as opposed to Federal Reserve Notes as money
• Create a 3-year program for phasing out the legal tender status of Federal Reserve Notes and the Federal Reserve itself
• Give the federal government the authority to finance itself directly by issuing US Treasury bonds (denominated in silver dollars) rather than by borrowing from the Federal Reserve
• After the use of Federal Reserve Notes is phased out, finance the entire national debt using 30-year US Treasury bonds denominated in silver dollars
  
• Create a system of transfer payments between the states, where rich states give a small percentage of their tax revenue to poor states
• Create a 3-year program to move medicare, social security, and prescription drug coverage to the state level
• Eliminate the DEA and all anti-drug legislation, legalizing all drugs from cocaine to marijuana
• Eliminate the national minimum drinking age
• Get rid of the FDA and FCC
• Revamp the government statistics program so that official statistics are realistic again
• Create a federal (public) TV + radio station, with a clear mandate to provide balanced journalism, that competes with the private networks (like the CBC in Canada)
  
• Start a 10-year plan to develop an interstate rail system similar to the interstate highway system
• Deliver a state of the union speech with the sole purpose of telling the truth to the American people
• The speech would discuss false-flag attacks, the US constitution, the Federal Reserve, secret societies (CFR, Bilderberg, etc.), and who owns the private media
• The speech would conclude with, "My fellow Americans, we have nothing to fear but fear itself."

Of course, by the time I get to the silver stuff, I'd probably be assassinated, or some odd scandal would come up that would force me to resign, or I'd be impeached. Power always does what it wants folks. The owners of America would never allow any US President to do what I just stated.

Arguably the most important skill of any investor is the ability to predict the future. Why is this an important skill? Because investing is like placing a bet on a particular future outcome. If that outcome occurs, you can win many times your original investment. Take for instance Microsoft. If you could somehow have predicted in 1986 that Microsoft would take over the computing world, and placed money on that prediction by buying 1000 shares of Microsoft's stock, at 10 cents a share, you would now have $27,390 worth of Microsoft stock, from an initial investment of just $100. Predicting the future is clearly a lucrative skill.

Now, what if the primary goal for your investment strategy was less ambitious? Let's face it, Microsoft was just one tiny stock out of thousands. The chances of losing all your money were very high; over 95%; virtually certain. Not everyone has that kind of appetite for risk. Suppose you have $10,000 and want to primarily, above all, preserve its purchasing power for 50 years. How would you invest that money so as to minimize risk? How would you ride the waves of inflation and deflation safely into the future? Before we look at investment strategies, let's first look at what exactly happens to each asset class during inflation and deflation.

But before we can even do that, we need to define what it is we're talking about:

Inflation: When the value of money falls. As a result, prices generally rise.
Deflation: When the value of money rises. As a result, prices generally fall.
Steady State: When the value of money remains the same for a period of time.
Purchasing Power: The quantity of goods & services that can be purchased with a particular good or service

The Value of Money

Notice that in my definitions of both inflation and deflation I mentioned the value of money. What exactly is the value of money? How is it measured? It really depends whom you ask. But one definition which I believe to be the most correct is this: the value of money is the quantity of goods & services that one unit of money can purchase.

The CPI (Consumer Price Index) measures the price of a basket of goods & services. If you invert the CPI (take 100 and divide it by the CPI), you get the value of money. Thus, the value of money = 100/CPI. Why is this so? Recall that the value of money is the quantity of goods & services per unit of money. The CPI is the number of units of money (price) per (fixed) quantity of goods & services. Therefore, 100/CPI is the (fixed) quantity of goods & services per unit of money. That is none other than the value of money.

Note how we defined purchasing power. The value of money is exactly the same thing as the purchasing power of money. Keep this in mind for later on.

Asset Classes

Three asset classes are considered for this discussion. They are:

• Resources (Commodities)
  
• Obligations (Money, Bonds)
• Capital (Stocks, Real Estate)
  

Each asset class behaves differently during inflation and deflation, so let's take a look at each of these.

Resources

Resources are your typical commodities and hard assets. They are the physical products of an economy. They are no one's liability. Gold and silver, though considered monetary, are included in this category because they are not debt-based.

Whether it's inflation or deflation, resources (a.k.a. hard assets) are guaranteed to preserve their purchasing power. They are only subject to the laws of supply & demand. The value of money theoretically has no effect on the purchasing power of these assets, because purchasing power itself is measured in terms of hard assets. It is impossible for hard assets to lose or gain purchasing power, except through fundamental changes in supply and demand. Hard assets are a hedge against both inflation and deflation, in that they never lose purchasing power.

Many argue that deflationary periods cause hard assets to lose purchasing power. They argue that hard assets are only a hedge against inflation, not deflation. That is not the case. If milk goes down from $5 a gallon to $4 a gallon and you purchased 2 gallons of milk at $5 a gallon as an investment, rest assured that you'll still be able to exchange your 2 gallons of milk for 2 gallons of milk at any time. Now, suppose gasoline cost $2.50 a gallon prior to the deflation and $2.00 a gallon after the deflation. Before the deflation, your 2 gal of milk could buy 4 gal of gas. Guess what? After the deflation, your 2 gal of milk can still buy 4 gal of gas! As long as the supply-demand fundamentals remain the same for both items, the ratio between milk and gas prices will remain the same whether there's an inflation or a deflation.

In a steady state, something interesting happens. Resources fall in price, because production is increased. However, once again resources preserve their purchasing power, by definition.

Obligations

Obligations are of a different nature than resources. They are somebody's liability. Governments, corporations, and even individuals can finance themselves by issuing bonds. Money is also in this category because all money is created from debt.

In an inflationary period, stay away from obligations that pay less than the inflation rate in interest. Why? Suppose you hold a bond that pays 5% interest and the inflation rate is 7%. You're guaranteed to lose 2%. Worse still, the bond will have to collapse in price so that the interest rate can rise above the inflation rate. The same goes for money. In an inflationary period, money is by definition losing purchasing power.

In a deflationary period, however, money is the place to be. Debt is hoarded, especially if it pays an interest rate, no matter how small. Suppose the inflation rate is -1%. Now, suppose you hold a bond that yields 3%. In reality, you gain 4% in purchasing power. Plus, the bond will also have to appreciate in price so that the yield can fall to about 0% because it is too high above the inflation rate. Either way you win.

In the steady state, obligations generally gain in purchasing power, because interest rates always tend to be higher than the rate of inflation. For example, inflation might be 3% and interest rates might be 6%. In that case, you would be gaining 3% in purchasing power.

Capital

So what is capital? Anything that helps produce income. Stocks and real-estate are very similar to hard assets, but they are actually capital, because they help produce the goods in an economy. Also, both of these assets produce income. Stocks produce income through dividends or if the company's market cap expands. Real-estate produces income through rent. Real estate is very closely tied to stocks. If stocks do poorly, so does real estate, because as companies lose income, stocks fall, people lose jobs, and there is less money available for buying real estate.

Whether it's inflation or deflation, capital will lose purchasing power. In an inflationary period, income from stocks is weakened because input costs rise. The higher input costs are initially swallowed and not passed on to the consumer. The result is shrinking balance sheets. Real estate also suffers because people lose jobs, so there is less money for buying houses. In a deflation, it is a similar story. Deflation means that people prefer to save money rather than spend it. As a result, company balance sheets shrink (this time sales shrink, rather than input costs rising). The result is people lose jobs, less money for real estate, etc.

So what is a good time for capital? When neither inflation nor deflation are occurring. In other words, when the economy is in its normal steady state, capital tends to do very well.

Conclusion

So let's conclude by summarizing what the best investments are for each of three possibilities:

• Inflation
  100% Resources
  
  
• Deflation
  80% Obligations
  20% Resources
  
  
• Steady State
  50% Capital
  30% Obligations
  20% Resources
  

I used the 80-20 rule for things that gain in purchasing power versus things that only preserve purchasing power. Now let's suppose that over the next 50 years, there's a 60% chance of steady state, a 25% chance of inflation, and a 15% chance of deflation. What should your portfolio look like?

Final Portfolio

30% Capital
30% Obligations
40% Resources

Real-World Example (Canada)

30% S&P/TSX 60 Index (XIU)
30% DEX Bond Index (XBB)
40% Central Fund of Canada (CEF.A)

Real-World Example (US)

30% Vanguard Total Stock Market ETF (VTI)
30% 20+ Year Treasury Bonds (TLT)
40% PowerShares DB Commodity Tracking Fund (DBC)

I was reading the article about it on Wikipedia and came across several interesting things. But before I go into that, here's what Wikipedia has to say about the Georgia Guidestones:

"The Georgia Guidestones are a huge granite artifact in Elbert County, Georgia, USA. It is sometimes referred to as the "American Stonehenge"^[1], a title which has been applied at times to a number of other structures."

So, as I mentioned earlier, I found a few interesting things in the article...

1. It was erected on March 22, 1980. March 22! ... 322! That's the number used by Skull & Bones. These people are obsessed with numerology!
2. It was written in several ancient languages including Sanskrit, Babylonian, and ancient Egyptian hieroglyphs! At this point, it became clear what the intent was. It was to make a monument that could be unearthed and understood by future archaeologists. Like the Rosetta Stone. It's an archaeological artifact meant for future civilizations.
   
3. The stones themselves weight about 42,000 lbs each and are astronomically aligned. Why the astronomical alignment? Well, because future civilizations will be able to tell the time when the monument was erected by using past star alignments, in the same way that the Great Pyramid was found to be about 10,000 years old based on its astronomical alignment.

Clearly, the purpose of the Georgia Guidestones is to send a message into the future - several millennia into the future in fact.

So what is the message? It is this...

MAINTAIN HUMANITY UNDER 500,000,000
  IN PERPETUAL BALANCE WITH NATURE
GUIDE REPRODUCTION WISELY —
  IMPROVING FITNESS AND DIVERSITY
UNITE HUMANITY WITH A LIVING
  NEW LANGUAGE
RULE PASSION — FAITH — TRADITION
  AND ALL THINGS
    WITH TEMPERED REASON
PROTECT PEOPLE AND NATIONS
  WITH FAIR LAWS AND JUST COURTS
LET ALL NATIONS RULE INTERNALLY
  RESOLVING EXTERNAL DISPUTES
    IN A WORLD COURT
AVOID PETTY LAWS AND USELESS
  OFFICIALS
BALANCE PERSONAL RIGHTS WITH
  SOCIAL DUTIES.
PRIZE TRUTH — BEAUTY — LOVE —
  SEEKING HARMONY WITH THE
    INFINITE
BE NOT A CANCER ON THE EARTH —
  LEAVE ROOM FOR NATURE —
    LEAVE ROOM FOR NATURE

I found two articles that confirm my view that the US is currently insolvent...

The United States is Insolvent (by Dr. Chris Martenson)

Is the United States Bankrupt? (Google cached version)

Sign of a Speculative Bubble?

It is very possible that the recent rise in oil prices (after Hurricane Katrina) be due entirely to speculation. In fact, it is very possible that oil is in a gigantic bubble right now, just about to burst.

To understand why, let's go back to 1998 and check out what prices were like back then...

Oil: $16/bbl
Gasoline: $1.10/gallon

Now return to the present (2008) and check out what the prices are...

Oil: $135/bbl
Gasoline: $4.11/gallon

Something looks odd...

Did you catch it?

Oil went up 744%. Gasoline went up only 274%.

Since gasoline is produced directly from oil, this doesn't add up. Either gasoline would be $9/gallon today or oil would be $60/bbl. The oil-gas ratio was about 15 in 1998. Today, it's 33.

In other words, gasoline today is ridiculously cheap given the rise in the oil price. None of the oil price has filtered through to the cost of gasoline. The oil price is inflated 120% over "normal" levels. Oil would need to return to a price of $61/bbl to be "in line" with the price of gas at the pump.

Historical Perspective

Let's see how this ratio has varied over the ages (all-time highs are in bold type)...

1973 - 18
1978 - 23
1979 - 41
1980 - 28
1983 - 25
1988 - 19
1990 - 24
1993 - 17
1998 - 15
2000 - 19
2003 - 18
2004 - 27
2005 - 30
2006 - 26
2007 - 30
2008 - 33

The only time when the ratio was higher than it is today was in 1979! And we all know what happened that year. That year the 1970s oil bubble peaked. Huge inventories were suddenly "discovered" in 1980 and released onto the market.

Conclusion

The numbers confirm my hypothesis that this is a speculative bubble, which has been in force since 2005 and really picked up steam in late 2007. This oil-gas ratio of 33 cannot be sustained for much longer. Either gasoline will have to go up in price substantially (i.e. up to $8 or $9 a gallon!) or oil is set for a spectacular crash (from $130 down to $65 a barrel!). If I were an investor right now, I'd go long gasoline. It is ridiculously cheap right now.

The emperor has no clothes! The emperor has no clothes!

The collapse of Freddie & Fannie is the admission of the insolvency of two companies together holding about $5 trillion...
$5 TRILLION
in mortgages.

$5 trillion amounts to about 35% of US GDP, and about 50% of the US public debt!

We're talking about 35% of the entire US possibly being insolvent!

Here's a revealing video of what could happen now...

We are about to enter the last inning of the biggest financial unwinding in the US since 1979. There must be a reason why the gold price surged this week to almost $990 per ounce, during a time of extreme seasonal weakness.

Here's some data that will shock you:

• IndyMac which failed last week was 3 times bigger than all the bank failures since 2000 combined!
  IndyMac had $32 billion in total assets.
• The bond market is finally turning south. We are talking US treasuries here. These have been in a bubble since late 2007.
• A collapse of US treasuries would force the Fed to raise interest rates. Watch out! The Fed may raise interest rates early, and fast! Rising interest rates are the final step in this paper-bearish gold-bullish cycle.
• Oil fell the most in 17 years today.

I urge everyone to read this article: "What if gold gave a party and everyone came?"

What is transpiring here is nothing short of a perfect storm for gold. There are no other assets to be long right now. Oil is weakening. Housing has lost favor. The dollar is certainly not bullish. All US stock indices are falling precipitously. And now the last safe haven, treasury bonds, is overbought and crashing.

Next steps:

• Fed will raise interest rates surprisingly high, surprisingly fast. They will be forced to.
• More US banks will fail. Main Street banks where your average American holds money.
• The words "depression" and "hyperinflation" will come to be used to describe the US financial situation.

Sit back and relax because the show has just begun!

In this segment, I give you my view of where certain stocks/indexes/commodities will go during the next week, based on my own research into technical trends. I also look at my previous week's calls to see what I got right and what I got wrong.

Let's begin...

But first, last week's score: 4.5 / 6 (okay)

1. US Dollar Index

Last Week's Prediction: LONG (Stop 72)... HALF RIGHT (got the stop right)

Right now, the US dollar is at 71.89. This is lower than last week but it's not an all-time low. For next week, a short rally is to be expected followed by more downside. I'd jump in short on the next rally.

My call: SHORT
Stop: 72.70

2. Dow Jones Industrial Average

Last Week's Prediction: SHORT (Stop 11,450)... RIGHT

The Dow took its embedded stochastic and fell some more. It's sitting at 11,100 now. If you went short on 11,290 you'd be about 1.7% up. Continue to be short but take 50% off the table. Move your stop in to 11,240. Enjoy.

My call: SHORT
Stop: 11,240

3. Gold

Last Week's Prediction: LONG (Stop $925)... HALF RIGHT

OK I'll admit it - I was wrong about my stop. Gold fell to $918 this week then rallied all the way to $970! If you held in there, good for you. Otherwise, you just missed a gigantic move to the upside. I'd continue long but narrow my stop over to $945. Don't put too much money on the table now because resistance at 1000 is a sure thing.

My call: LONG
Stop: $945

4. Silver

Last Week's Prediction: LONG (Stop $17.70)... RIGHT

Unlike gold, I got silver spot on! (Pun intended). The pullback happened exactly as I described and if you hung in there with your long position you'd be up about 3.8%!! Booya! What's next? A slight pullback to $18.20 then the moon! $21 is the next stop to the moon so put your stop at $18.20 and continue long and enjoy the ride.

My call: LONG
Stop: $18.20

5. Crude Oil

Last Week's Prediction: LONG (Stop $140)... HALF RIGHT

Oil plunged to $137 this week then recovered to above $142. Not bad but not good either. If you were stopped out great. Now's the time to load up again. Keep trying that $140 stop with your long position. Something's bound to happen.

My call: LONG
Stop: $140

6. Pick of the Week - Platinum

I think platinum is going to make a move next week. Usually platinum leads gold and silver in rallying but this time it was the other way around. In fact, platinum has been sitting idle for months now. Resistance at $2100 is futile. Go long, put a stop at $1950 and enjoy.

My call: LONG
Stop: $1950

Last Week's Pick:

Remember last week I picked NVIDIA. I told you to go long after the stock had crashed 30%! I told you to put your stop at $10 (to allow for a bit more downside). Now, generally stocks like NVIDIA are for the long-haul so what happens in a week is pretty meaningless. However, this week NVIDIA didn't fall much. It fell to $11.67 a share. I was DEAD ON ACCURATE!

I stumbled upon this article randomly today...

Atheist soldier sues government

The headline got me to thinking: What business does a Christian have being a soldier? Isn't that an oxymoron? Shouldn't the army be composed entirely of atheists?

Here's how I got there...

The Bible, a text that is somewhat respected by Christians, says that you must fear God and respect His commandments. Why? Because if you don't obey God's commandments, you go to hell. At least that's what Christians believe.

So what are God's commandments? Well, one of them is "Thou shalt not kill."

So how come we have Christian soldiers? The job of a soldier is to kill. It is the ultimate oxymoron.

But is the commandment of "Thou shalt not kill" even practical? I mean, what if God meant that you shouldn't kill ANY living organism? Think about how many bugs you killed in your life.

This is why I enjoy being an atheist. I don't believe in an invisible man and I don't follow ridiculous "commandments" like "Thou shalt not kill" which are totally impractical in life.

And I know at least one person who agrees with me...

Need I say more?

I'm going to be as blunt as possible by putting several important historical truths in point form. These are all facts.

WARNING: You may be deeply disturbed by what I'm about to say. But I'll say it anyway.

1. Prince Philip, husband of Queen Elizabeth II, is quoted as saying, "In the event that I am reincarnated, I would like to return as a deadly virus, in order to contribute something to solve overpopulation."
2. The United States of America is a British private corporation. All US courts have a gold-fringed flag to indicate maritime admiralty (the law of the sea). Maritime admiralty is a system of international laws governing international commerce (done by merchants). ("mer"="sea" in French)
   
3. Franklin Delano Roosevelt, on April 5, 1933, issued an executive order requiring all American citizens to turn over their gold bullion to the Federal Reserve, or be subjected to a $10,000 fine. He enforced this executive order even though it was not in his jurisdiction to do so (executive orders only apply to persons in the US federal government).
4. The attacks of Pearl Harbor were aided by the US government. Not only did US officials have prior knowledge of the attack, they let it happen, so that it could be used as a pretext to enter World War II.
   
5. The sinking of the Lusitania in WWI was a staged event. It was done in order to gain public support for the US entering World War I.
6. The dropping of not one but two atomic bombs on Japanese civilians, authorized by Harry Truman in World War II, was an act of genocide by the United States of America. Japan had already surrendered.
   
7. The Vietnam War lasted 16 years, resulted in 58,000 American casualties, and over 1 million Vietnamese civilian deaths. It was a worse genocide than Hiroshima and Nagasaki combined, and neared the magnitude of the Holocaust.
8. Henry Kissinger often referred to military men as "dumb, stupid animals to be used as pawns for foreign policy."
9. The twin towers of the World Trade Center, along with WTC 7, were demolished in a controlled fashion using thermite on September 11, 2001.
   
10. Rudolph Giuliani hired a private company after 9/11 to carry away all molten metal debris from ground zero to private, guarded trash dumps so that no investigation could be carried out into what actually caused the buildings to collapse.
    
11. Dick Cheney ordered NORAD to stand down on September 11, 2001, while the attacks were taking place.
12. When asked to testify before the 9/11 commission, George W. Bush insisted that he testify only together with Dick Cheney (not separately).
    
13. The air near ground zero was unsafe to breathe on 9/11 and as a consequence thousands NYC citizens are experiencing respiratory illnesses. However, the EPA has consistently denied any link between the air quality after 9/11 and these illnesses.
14. The Gulf of Tonkin incident during the Vietnam War was a staged event, just like the Lusitania, and just like Pearl Harbor. It was used to justify an escalation of the Vietnam War because the public's approval of the war was vanishing.
    
15. George W. Bush received a warning stating "Bin Laden determined to attack in the United States," a few months before 9/11.
16. In 1972, Chester M. Pierce, a Professor at Harvard University, stated: "Every child in America entering school at the age of five is insane because he comes to school with certain allegiances toward our founding fathers, toward his parents, toward a belief in a supernatural being. It's up to you, teachers, to make all of these sick children well by creating the international child of the future."
17. David Rockefeller stated in 1991: "We are grateful to the Washington Post, The New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years. But, the world is now more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries."
18. Under the Treaty of Lisbon, the EU is officially a sovereign entity, with a privately-owned Central Bank, a European Court, a Parliament, and a President. The EU has its own flag, anthem, and currency.
19. The British Crown owns and directs almost all of the world's wealth. The current system of global commerce (a.k.a. globalization) is entirely set up and controlled by the British Crown.
20. Osama bin Laden remains at large. He is on dialysis and presumed dead, yet videos of him still surface occasionally.
    

To be continued...

In this segment, I give you my view of where certain stocks/indexes/commodities will go during the next week, based on my own research into technical trends. I also look at my previous week's calls to see what I got right and what I got wrong.

Let's begin...

But first, last week's score: 5 / 6 (excellent)

1. US Dollar Index

Last Week's Prediction: STAY AWAY... RIGHT

Right now, the US dollar is at 72.72. This is less than 0.5% higher than last week. There was no major change, so my call to stay away was right. Now, for next week, you should expect a rally in the dollar, to over 73 and maybe even over 74. Place your stop on 72.00 and enjoy.

My call: LONG
Stop: 72.00

2. Dow Jones Industrial Average

Last Week's Prediction: SHORT (Stop 11,700)... RIGHT

The Dow took its embedded stochastic and fell, but not by much. It's sitting at 11,290 now. If you went short on 11,350 you'd be about 0.54% up. Continue to be short. Move your stop in to 11,450. Enjoy.

My call: SHORT
Stop: 11,450

3. Gold

Last Week's Prediction: SHORT (Stop $930)... RIGHT

Last week I called gold SHORT. Well, gold called my bluff by crashing (up) through $930. If you placed your stop on $930 you would not have lost anything. The spike up to $950 was nothing, so you couldn't have gone long either. But now, gold's stochastics are starting to embed (on the BUY side). Gold is at $934 now. Go long with $925 as your stop.

My call: LONG
Stop: $925

4. Silver

Last Week's Prediction: SIT TIGHT... WRONG

If you followed my prediction and stayed out of the silver market, you would've not lost any money, but you would've stayed out of a very nice rally. My predicted pullback to $16.80 never materialized.

Silver now is sitting at $18.15. I could not be more bullish on silver right now. We may see a pullback to $17.70 but there's the very high chance that silver will challenge $19 next week and maybe even make it up to $20.

My call: LONG
Stop: $17.70

5. Crude Oil

Last Week's Prediction: LONG (Stop $140)... RIGHT

Oil struggled this week. Although it hit $146 at one point, it's back down to $144. If you went long last week you would've made about 2% on your investment. What should you do now? I'm waiting for a pullback to $140, but then we should see crude challenge the $150 area. However, if we fail to hold $140 next week, all my money will be on the short side at that point. In any case, reduce your long position.

My call: LONG (cautiously)
Stop: $140

6. Pick of the Week - NVIDIA

Everyone knows NVIDIA. They make excellent graphics cards. So why did they fall 31% today? Earnings forecasts weren't very good. However 31%? It seems like an over-reaction, and a great time to buy this amazing company at a discount.

My call: LONG
Stop: $10

Last Week's Pick:

Remember last week I picked the S&P/TSX Composite. I told you to go short. Well, I was RIGHT! It never touched 14,500 but it came close... my stop was DEAD ON accurate! Now it's down to 14,000 and you'd be foolish not to take a profit at this point. Hope you enjoyed the ride!

May 5, 2018. Somewhere in New York City.

It was just after 10:00am on a Saturday and Richard and his 7-year-old son, Jake, were getting close to Central Park. It was a wonderful spring day, and the fresh breeze almost made Richard forget that he hadn't gotten much sleep last night.

As they got closer to the park, Richard started remembering the dream he had where the Empire State Building collapsed in a huge cloud of smoke. Then, he remembered World Trade Center and the attacks that took place on September 11th. He couldn't remember the exact year, but he could remember that, on that day, he was in his high school music class and the music teacher came in with a radio describing the attacks as they unfolded.

Richard: "Hey, Jake, you know, back when I was a kid there were these two towers in New York City called the World Trade Center. They were huge! Over 100 stories tall. Then one day, there was an attack by some evil people, who crashed two airplanes into the towers. And the towers fell down and lots of people died. And the planes were full of people too! It was a horrible tragedy."

Jake: "Wow. That must've been so sad... Hey dad, what's an airplane?"

Richard: "You don't know what an airplane is? I thought they taught you in school... It's a machine that people used to fly around in. Like a giant bird, made of metal. And people could live in it, while it flew high above the Earth!"

Jake: "Awesome! How come we don't have airplanes anymore?"

Richard: "Well, it's complicated... I'll tell you when you get older."

Jake: "Oh... Daddy, I want to fly too."

Richard: "Hey, you never know. Maybe someday we'll be able to fly again."

(To be continued...)

Last week, I did my first installment of my "Weekly Market Calls."
In this segment, I give you my view of where certain stocks/indexes/commodities will go during the next week, based on my own research into technical trends. I also look at my previous week's calls to see what I got right and what I got wrong.

Let's begin...

But first, last week's score: 2.5 / 6 (pathetic)

1. US Dollar Index

Last Week's Prediction: LONG (Stop 72.90)... HALF RIGHT

If you went long on 73.04 with stop on 72.90, you would have lost 0.19% (1.9% leveraged 10:1). Not a major loss, but I admit I got this one totally wrong. However, I did get the stop right.

Right now, the US dollar is at 72.37. This is not a bad time to cover your shorts (if you went short). Why? Because we are hitting the bottom of the Bollinger bands, so my prediction is the US dollar will rebound next week but it may fall further by the end of the week. There is too much uncertainty to go long though.

My call: STAY AWAY!

2. Dow Jones Industrial Average

Last Week's Prediction: LONG (Stop 11,800)... HALF RIGHT

Boy did I ever get this one epically wrong! However, with that tight stop in place you would've lost only 0.4%! I got the stop right, but I got the direction wrong.

The Dow took a beating late this week, or better said, it crashed like it was 1929. For the moment stochastics are getting embedded, which means SELL the next rally. This is a classic case of a downward spiral, and we may have a lot more downside room remaining. My feeling is we could see Dow 8,800 before we level off.

My call: SHORT
Stop: 11,700

3. Gold

Last Week's Prediction: LONG (Stop $890)... HALF RIGHT

Gold fell through $890 down to $880, so if you followed my stop you would've been stopped out. However, if you only followed my call, you would've been right (and up by 2.8%).

Gold is now extremely overbought. I'm looking for a (potentially sharp) pullback next week to perhaps as low as $876. I'd be willing to venture a short here with my stop on $930. If you went long, SELL SELL SELL...NOW (unless you can stand losing 5% next week).

My call: SHORT
Stop: $930

4. Silver

Last Week's Prediction: LONG (Stop $17.00)... HALF RIGHT

Well, this week silver fell well through my stop of $17.00, so on that part I was wrong. However, I was right about going long, because silver is up 1.8% on the week.

Next week, I see a pull-back to the $16.80 area, before the next rally. I certainly wouldn't go long at this point, nor would I go short. Just sit tight, and if you went long last week, reduce some of your position now.

My call: SIT TIGHT

5. Crude Oil

Last Week's Prediction: SHORT (Stop $140)... HALF RIGHT

Well, last week I told you crude was overbought and would probably break down. I was wrong on that part. Crude just burst through $140 today! However, my stop was DEAD ON ACCURATE.

Now that we've busted through the "psychological" $140 number, it's basically smooth sailing ahead (and up). This one is easy to call: Go long, set your stop at $140, and enjoy the ride!

My call: LONG
Stop: $140

6. Pick of the Week - S&P/TSX Composite

The Canadian version of the Dow has been doing quite well this year. However, has the tide turned? The chart looks ominously bearish. There's a triple top, followed by a break-down. However, for the medium term, we're looking at a potential rally back to the 50-day moving average at 14,500. So if you're going to go short, set your stop there. In any case, this is NOT a bull market.

My call: SHORT
Stop: 14,500

Last Week's Pick:

Remember last week I picked palladium. Well, as it turns out, palladium is down now but only by a bit. My call was wrong and my stop was wrong, so I got that one TOTALLY WRONG. Oh well...

Today, the Dow just crashed below the all-important 11,800 support level... and all hell broke loose. Here's a collection of MAINSTREAM articles that just came out showing the gravity of the situation:

CNN Money - "Buffett vs Bernanke: The Inflation Showdown"

New York Times - "Fuel Prices Shift Math for Life in Far Suburbs" (i.e. the end of suburbia!)

USA Today - "Hitting Home: New faces join ranks of the homeless"

The last one reminds me of a prophetic quote by Thomas Jefferson:

"If the American people allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."

But on the plus side, gold is up today...by nearly 3%!

Remember how, before its collapse, Enron was driving up energy prices in California through unregulated futures trading?

Remember how traders at Enron cheered every time a transformer burned out or every time there were forest fires?

Well, try applying this idea to oil. How do you control the oil market? If you make a country politically unstable to shut off its oil supply, what happens to the oil price?

This is exactly what Iraq was about. It was NOT about gaining access to "highly valuable" oil supplies. It was NOT about finding those weapons of mass destruction. It was NOT about Iraqi freedom!

It was about DESTROYING oil supply in order to drive up oil prices!

Just like Enron, the cartel controlling oil which included Bush, Cheney, Haliburton, and the Carlyle Group, decided it was time to boost profits for their little share of the oil industry by creating events which would lead to a rise in oil prices.

Think about it: Bush & Cheney live off-grid, independent of oil. In fact, they're some of the "greenest" individuals in America! There's a good reason for this, and it has nothing to do with peak oil. It has everything to do with the fact that they knew that they would cause an oil price spike of gigantic proportions and they simply didn't want to be paying those high prices. I mean, what good is a rising investment if you then have to pay more for the things you need?

Right now, for example, the price of oil is significantly higher than all other commodities. It's out of sync. The gold-to-oil ratio which has traditionally stayed around 15, is now below 7! Oil is at a ridiculously high price even when priced in gold! That cannot be explained by inflation alone.

Even more puzzling is the fact that oil supplies have remained flat or declining since about 2003. Now, you could say peak oil has arrived, but I think far more likely is that supply has been deliberately kept at that level. Why? First of all, peak oil theory does not predict