Moderation
is a good thing, just don't overdo it As the editor of the Silver Bear Cafe, I spend most of my time researching current events. I explore the markets, the war, precious metals, the Federal Reserve and energy. In this weekly column I will attempt to condense the week's events and examine how the news might affect your pocketbook. JSB Despite a 20% increase in US drilling activity since April 2003, overall US gas production continues to drop, said St. Petersburg, Fla.-based Raymond James & Associates Inc. in a survey report released Monday. Survey results covering companies responsible for about 60% of US gas production indicated that first quarter production by publicly traded exploration and production companies this year dropped 4.2% from first quarter 2003 and 0.5% from fourth quarter 2003. The year-over-year change represents a 9.2% plunge in production by the majors and gas utilities, which provide the largest proportion of US supply. Independents, which increased by 34% their number of rigs working, grew production by only 0.8% year-over-year and actually decreased productionby 0.1% in first quarter this year from fourth quarter 2003. In the last month over 70% of all purchasing managers in this country are reporting price increases for everything they buy. They mean everything from aluminum, coal, corrugated containers, oil and natural gas, to fabricated steel. Natural gas prices have risen for over 20 months. In addition to natural gas prices, the price of oil has hit a two-decade high with prices over $40 a barrel. The cost of fuel has risen so much that companies are now adding surcharges on a regular basis. The nation's biggest company used to be a manufacturer, GM. Now, it's a company that sells Chinese-made goods to Americans, Wal-Mart. GM is still in business, but it earns most of its money not from making things, but from financing them. The average factory worker in the US earns about 15 dollars an hour. The average Chinese worker earns 1 dollar a day. With money it takes to pay one worker for one hour in the US you can hire 15 workers for the day in China. There is no way the US worker can compete with the Chinese worker. As a result of cheap labor, more goods are being manufactured in China. The demand for raw materials in China has skyrocketed to such a point, that demand is now outstripping supply. Because of this voracious demand, raw material prices are rising fast. As prices rise, the companies that have not moved to lower labor costs are forced into moving, because they have no pricing power. They have to move or die. Every manufacturer that wants to say alive will have to leave the western hemisphere and move over to China or India. This will leave behind a significant segment of the West's populations unemployed. With unemployment comes desperation. The energy sector has caught onto the Fed's wholesale inflation of the dollar and is now reacting in sync with the increase in the money supply. This fear of the future and rising energy prices will be the catalyst to start the raging bull in the precious metals sector. If you think people behave in an insane manner when they are greedy, just wait until you see how they react when they panic. There is no stronger emotion in the universe than fear. The inventory of unsold houses has reached its highest level in twenty-two years. Prepare yourself. Begin by living one or two notches below what you can afford. Become very responsible when it comes to your personal finances, and those of your family. Make up a budget that provides a weekly savings of at least 10%. Cut costs. Make do with what you have. Sell everything you don't need. Take the money you save and aquire some gold and silver bullion. Insiders are dumping company stock like it was 1999. If you have money in the stock market, transfer it into energy stocks. Do it now. Hopefully you have already started cutting your debt levels down as fast as possible. The next few years will not be suitable for the more traditional investing methodologies, as rising interest rates make it next to impossible for the broad market to move higher. Fresh water is going to become a very big deal in the next two years. Do you have control over any? Accumulate at least five ounces of silver every week.
More next week... If you have not yet joined "the Bear" and/or have questions, please call us, toll-free, at: 1 (877) 389-7626 May the Great Spirit be with you always,
Johnny
Silver Bear P.S. Refer two new members to the Silver Bear Cafe web site and earn twenty, (20), one troy ounce silver rounds. Bear Tracks Archive
All statements and expressions are the sole opinions of the editor and are subject to change without notice. A profile, description, or other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any securities mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein. The staff of Silver Bear Cafe are not registered investment advisors and do not purport to offer personalized investment related advice. The publisher, editor, staff, or anyone associated with, or associated to the Silver Bear Cafe may own securities mentioned in this newsletter and may buy or sell securities without notice. |
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.