Financial Markets

For the first time since World War Two, the overall income of Americans decreased for two consecutive years after the Internet stock market bubble burst in 2000.

The total adjusted gross income on tax returns fell 5.1 percent, to just over $6 trillion in 2002, the most recent year for which data is available, from $6.35 trillion in 2000. Because of population growth, average incomes declined even more, by 5.7 percent. Adjusted for inflation, the income of all Americans fell 9.2 percent from 2000 to 2002.

The recession that hit the economy in the Spring of 2000 has not gone away. New information shows that its continued effect on Americans' incomes, particularly the wealthiest, has been much more severe. IRS reporting methods, which don't take into account the ravages of inflation, have turned out to be grossly misleading. Duh!

Recent trends have caused many more ordinary employees to join high-level executives in having at least part of their compensation dependent on stock options and bonus plans. This dependency, given the increasing volatility of the stock market, does not bode well for the reversal of the direction that incomes have taken.

As a country, we are getting poorer by the day.

Airplanes are one of the most successful new technologies of all time. Invented only a century ago, now the skies are full of them. Yet had you bought the shares of all airlines as they came to market, you would have actually lost money over the entire period.

Employees made money. Passengers enjoyed the convenience of air travel. Airplane manufacturers and suppliers made money. A lot of money changed hands. But the capitalists who financed the airline industry made nothing.

The possibility that airline stocks will ever provide any substantial return on investment is now more remote than ever before. With fuel costs continuing to rise into the foreseeable future, a pattern of forced consolidation will even further the dilution of share holder interest.

Sell airline stocks.

How many times have you heard some investment house commercial tout the security of long term investment. All you have to do is invest a lump sum in the market and, on average, you will make ten percent a year.  Hooey. Yes, it’s true that over a long period of time the market has returned an average of 10% a year, but remember that this is just an average that includes the bad times as well as the good.

Timing is the deal.  For example, the average investor in the DOW lost 16% per year from 1886 to 1903; 15% per year from 1906 to 1921; 58% per year from 1929 to 1939; 17% per year from 1959 to 1966: and 22% per year from 1974 to 1982.

The essence of successful investing is a result of buying when the market is undervalued and selling before the crash. Presently the market is more over valued than in any other time in history, including the period right before the legendary crash of '29.

Transfer you equity into commodity stocks.

On the war front

Last week, a drama of epic proportions was played out in Najaf, Iraq. This drama involved a cast of thousands, bombs, rockets, guns, and grenades and was produced and directed by a production team worthy of an Academy Award.

Not since "Wag the Dog" has such intrigue been manufactured for the sole purpose of duping the audience, in this case, the rest of the world.

The hooey factory has been working overtime on this one. Grand Ayatollah Ali Sistani rises up out of a hospital bed to come to the aid of his protégé, rebel Shiite cleric Muqtada al-Sadr. Ali Sistani assumes the role of the White Knight and charges over the hill in his white SUV, with thousands of "pilgrims" in tow, to convince his co-star to stand down from the holy temple.

After pledging to "fight to the death", rebel Shiite cleric Muqtada al-Sadr has an abrupt change of heart and calls for his followers across Iraq to stop fighting against U.S. and Iraqi forces and said he planned to enter Iraqi politics in the coming days.

Enter Iran, stage right, with all the support necessary to allow for the continuation of conflict. Here comes Teheran's quiet takeover via a bevy of bozonic Islamic Clerics. What a show! I not sure whether to direct my kudos for exemplary direction to Teheran, or to Washington.

Perhaps the point of this whole debacle is to foment a conflict with Iran. After all, Iran is second on the "Axis of Evil" list. If it turns out that Washington is doing this on purpose, their spin doctors are even more devious than even I had previously given them credit for.

Before 2005 is over, the US will be at war with Iran.

Precious Metals

How much gold is there? It is said that 95% of all gold mined in the history of the world continues to held by folks the world over. How much does that amount to? According to the World Gold Counsel, the world has mined 145,000 metric tonnes by the end of 2001. If we add the 2500 tonnes per year through the end of 2003, it's 150,000 metric tonnes, or 4.82 billion ounces. If 95% if that gold is still with us, that's 4.58 billion ounces of gold in the world. Another way to say it is that mankind holds about 50 years' worth of mine supply of gold.

Now, how much silver is there? According to the two industry silver surveys by the Silver Institute and the CPM Group, all the people on earth collectively hold about 650 million ounces of silver. There is about seven times as much gold in the world as silver! Another way to say it is that mankind holds less than one year's mine supply of silver.

Silver, above ground, is more rare than gold! There is seven times as much gold above ground as compared to silver! Most people don't know that. Remember that. Tell others. Shout it from the rooftops. Wear it on a sandwich board downtown, followed by the words, "Save yourselves. The end of your financial world is near!"

Buy silver.

Speaking of Energy

Both candidates have good reason to worry about the price of oil. Oil price shocks have played a decisive role in ending a presidency, as in the cases of Presidents Jimmy Carter and George H. W. Bush.

The Nov. 2 election may well hinge on the effect current gasoline prices are having on consumer's pocketbooks. If they are well off enough not to care, they will probably vote for Bush, (unless they are Hollywood movie stars, or George Soros), If they are beginning to feel the pinch, they most likely will vote for Kerry.

A vote for either will not change anything. Gas prices will begin to soar, right after the election, no matter who wins. Gas prices have been artificially suppressed by the Administration and the Fed in the hopes that Dubya will get re-elected. The real oil shocks, much more damaging and sustained than ever before, will come a bit later, but not much later. The source of the shocks is a place that, although both candidates are well aware of the impending crisis, they don't want you to be concerned about before the election.

That place is China.

China's phenomenal rate of economic growth, and an insatiable consumer demand for cars, will soon come into direct conflict with the rest of the World over oil, the world's most valuable and increasingly scarce industrial commodity.

The pressure on supply will inevitably cause prices to reach levels unimaginable by the political pablum filled "sheeple", whose lives revolve around the cheerful spin emanating from the mainstream media.

The conflict is unavoidable. It will become an issue so large, it will overshadow our naive preoccupation with global terrorism. There is no way around it. It didn't have to happen. It will happen as a result of the irresponsible leadership of our Country over the last thirty years. It will happen because of this nation's missed opportunities in decades past to develop viable alternative energy sources and lessen U.S. dependence on imported oil.

Invest in the energy sector.

The Fed

It's time to take the bull by the tail and look the facts in the face. The Fed sucks.

Financial Survival

Our health care system is breaking down. Costs are outrageous and insurance is simply unaffordable. Uninsured patients are inundating our emergency rooms; it has been going on for years and it is getting worse. There are 43 million uninsured in America. Twenty percent of doctors refuse to accept new Medicare patients. Sixty-three percent of those under 65 got health insurance through an employer and employers are cutting back or eliminating health care benefits. I see a medical disaster ahead.

I believe that economic forces in Brazil a planning flood the market with cheap sugar.

Keep your eyes on the sugar market.

Check out Clifton Mining (CFTN).

A study released by the Census Bureau yesterday shows that the number of Americans living below the poverty level has jumped by 1.3 million to 12.5%, and the number of those without health care rose to a staggering 45 million.

But for some reason, consumer sentiment is up.

For those of you who are in a quandary over your portfolios, I have repeatedly suggested that you get out of general equities and into commodities, like energy and precious metals. I can add to your choices by suggesting that you take whatever cash you have and convert it to Yen. Over the next twelve months I believe that the Yen will appreciate substantially against the dollar. Remember, the sun does not go down, the horizon moves up. Prices are not going up, the dollar is going down.

What else can you do?

First of all, wake up! Either you support freedom with laissez-faire capitalism,
an economic doctrine that opposes governmental regulation of or interference in commerce beyond the minimum necessary for a free-enterprise system to operate according to its own economic laws, or you support a statist/collectivist ideology that believes in taking the production of a person and placing it out of their control. Your choice is regain your freedoms or or suffer encroaching slavery.

There is a huge difference between the ideologies that support liberty and democracy. The ideology of Liberty suggests and implies that people should choose to be benevolent and productive, as part of God's moral code. That society will create for itself non-governmental organizations to deal with social needs, that government is established by society to sustain and defend the unalienable (God given) rights of the individual, and limited only to this function. Political power was to remain within the individual and his society.

Then why do so many of our politicians and teachers keep trying to shove this concept of democracy down our throats, as if freedom naturally followed? Maybe it's because majority rule sounds legitimate and moral on its face. Consequently, the majority of Americans have shown their willingness to give up their liberties in exchange for a handout.

Understand what is happening and "Spread the Word".

Higher oil prices should stimulate people to add insulation to their houses...or to buy a more energy-efficient automobile. It may also cause a lot of folks to become desperados. You might consider getting into the burglar bar business

Keep you eyes open about any news that has to do with the delivery of fresh water. If you don't already have control over some fresh water, get some. Go out into the country about sixty miles from the city you live in and buy five or ten acres of property with the water rights. Dig a well. You will be amazed at the peace of mind you will gain by this action.

If you are depending on Social Security, stop.

Get out of debt. Figure out ways to conserve. Take up gardening. Sell everything you don't need.

Follow the course opposite to custom and you will almost always do well...

Its not what you don't know that will screw you up, it's what you know that is wrong. The spin you hear from the mainstream media is intended to mislead you. Open your eyes and face the future. If you leave your head in the sand and ignore it, you are only leaving your butt exposed for the world to kick. This all may sound like gloom and doom, but when you get a handle on what is going to happen, you will have a future filled with opportunity. Fortune favors the Informed.