On the war front

In February, the Venezuelan government publicly accused the US government of plotting to assassinate their President, Hugo Chavez. Tensions were further heightened when the Venezuelan government announced it had detected the secret presence of “US Marines, along with military planes and amphibious vehicles” on the Caribbean island of Curacao, just 75 kilometers from the Venezuelan mainland, according to an Associated Press report on March 1.

Venezuela's accusations against Washington were given added credibility when Venezuelan Vice-President Jose Rangel told the media that former US ambassador to Venezuela Charles Shapiro had informed him of a potential plot to kill Chavez.

Chavez repeated his threat to cease selling Venezuelan oil to the US in the event of any US or US-backed attack on Venezuela.

While Washington has been hostile to the Venezuelan government ever since Chavez's election in December 1998, a public campaign by both government officials and the US media has been underway since Condoleezza Rice became US secretary of state in January.

Get ready for a "new" war.

Financial Markets

If you were the FED, and were concerned that investors may be considering moving their capital into the energy commodity sector or even worse, the precious metals sector, instead of their cash cow, the bond market, and you had the power to suppress both energy stocks and precious metals stocks, what would you do?

When everything is red, and common sense tells you that it ought to be green, it's time to prepare yourself for the economic mayhem that invariably results from market manipulation.

Mortgage debt now stands at record levels, having risen $1 trillion last year alone, and dwarfing other types of consumer debt, like credit cards. Homeowners have turned the equity they have in their homes into a virtual ATM, supplementing their household cash flow through additional mortgage borrowing.

Mortgage rates are still relatively low -- about 6 percent for a 30-year fixed loan, according to financing firm Freddie Mac. But that's up almost a half a percentage point from just two months ago, and further increases are expected throughout the year by most economists. Mortgage rates are based upon sale of mortgage-backed securities, which generally follow bond yields, such as the benchmark 10-year Treasury.

Rising interest rates will not only raise monthly payments on millions of loans. It could close that ATM for many households unwilling to refinance again at higher rates. And without that ready source of cash, there will be less money to spend on everything from clothing to appliances.

Precious Metals

This week I want to look into selenium. Selenium has applications in ceramics and in electronics. It is used in copy machines, in photographic toner, and as an additive in the making of stainless steel. Recently many new uses have been found, including in a whole new generation of solar cells.

The average price of selenium six weeks ago was $53.00 per pound. Last week, the average price was $58.50 per pound, with the high during the week having reached $65. But just 22 months ago, selenium was $3.75 per pound. This is a change in the average weekly price of 1,460 percent over 22 months, or very nearly 800 percent per year.

Having already done the due diligence that got me excited about this sector, I think it would behoove you to find out how you can capitalize on the selenium market

Yukon Zinc Corporation (YZCCF.PK, YZC.V), is a pre production junior mining company with an asset holding 15 percent of the known world reserves of selenium (plus highly commercial grades of zinc, lead, copper, silver, and gold).

One should consider, however, that the selenium market has a volatile history. And, while new applications are currently supporting the market, the current price surge is unprecedented.

On gold and Silver

Two things the Establishment--and the General Government, while it remains under the Establishment's thumb--will never do of their own free will:

1. Return the United States to constitutional money of silver and gold, and

2. Eliminate or severely regulate the inherently fraudulent practices of fractional-reserve banking.

But one thing the Establishment will always do: deploy the General Government to stab in the back any attempts at true monetary and banking reform--thus prolonging the present mess beyond any hope of rectification along the lines of sound money, honest banking, individual freedom, and national independence.

As a result of this insanity, gold and silver are both going to the moon. Walk softly and carry a big stick.

Speaking of Energy

Energy Transfer Partners, L.P., (ETP), formerly Heritage Propane Partners, L.P., is a holding company that is engaged in the natural gas midstream and transportation business through its operating subsidiary, La Grange Acquisition, L.P. (ETC OLP), and is a retail marketer of propane in the United States through its operating subsidiary, Heritage Operating, L.P. (HOLP). In December 2003, the Company acquired 50% interest in Bi-State Propane in addition to the 50% interest it already owned. The Company wholly owns Bi-State Propane. In January 2004, the Company acquired Metro Lift Propane. In January 2004, the Company combined the retail propane operations of Heritage Propane Partners, L.P. with the natural gas midstream and transportation operations of ETC OLP. In March 2004, the Company changed its name to Energy Transfer Partners, L.P. In June 2004, the Company acquired the assets of TXU Fuel Company from TXU.

Magellan Midstream Partners L.P. (MMP) (formerly Williams Energy Partners) is looking to make money in ammonia and petroleum products. The partnership has refined petroleum products and ammonia storage, transportation, and distribution assets. Its portfolio includes six marine facilities, 29 inland terminals, and 1,100 miles of ammonia pipeline, 8,500 miles of refined petroleum pipeline, and 43 distribution terminals in the Midwest. In 2004 it acquired 14 petroleum terminals from Murphy Oil and Colonial Pipeline, and some 2,000 miles of petroleum pipeline from Shell Oil Products US. Magellan Midstream Holdings, the company's general partner, controls Magellan Midstream Partners.

Murphy Oil USA (MOUSA), a wholly-owned subsidiary of Murphy Oil, (MUR) markets refined products through its network of gasoline stations and branded and unbranded wholesale customers in 23 southern and midwestern US states. It operates about 750 gas stations (under the Murphy USA brand), located in Wal-Mart Supercenter parking lots, and nearly 400 branded wholesale SPUR stations nationwide. In addition, MOUSA owns and operates two refineries in Meraux, Louisiana and Superior, Wisconsin. The company plans to add about 150 new Murphy USA stations at Wal-Mart sites during 2005.

Atlas Pipeline Partners (APL) shoulders the burden of getting natural gas from wellheads to major gas utilities such as Peoples Natural Gas, National Fuel Gas, and East Ohio Gas. The company was formed to acquire the gas pipeline gathering systems of its former owners, oil and gas firms Atlas America and Resource Energy (both owned by Resource America). Atlas Pipeline Partners operates 3,280 miles of natural gas pipeline gathering systems eastern Ohio, southern Oklahoma, western New York, western Pennsylvania, and northern Texas. Some 5,100 wells, which are capable of producing 110 million cu. ft. of natural gas, are connected to its systems. Resource America controls 23% of Atlas Pipeline Partners.

Oil is now 146% more expensive than before September 11, 2001, yet demand surges. OPEC has promised to do something, as has Saudi Arabia, but they can't deliver. Neither can Iraq, where US plans for a world of cheap oil has started to go all wrong.

Crude oil prices recently reached $58.00 a barrel. Putin's continued admonishment of Russian oil giant Yukos doesn't help matters and there's that "situation in Venezuela." Asian demand is soaring. There's ethnic trouble in Nigeria; China is trying to sate its unquenchable oil thirst; there is a widespread speculation frenzy propelled by pension funds; and continued serial pipeline bombing in Iraq. Production capacity is maxed out and cannot be increased rapidly. China has been paying for its oil with the revenues from Wal-Mart commodities. As prices rise, China will start paying for its oil with the $400 billion in US treasuries it holds. That will spike domestic interest rates and our economy will spiral downward.

Global refining capacity, in the face of heightened demand driven by economic growth, has suddenly maxed out. Global reserves have been grossly overstated.

The only thing that could possibly bring down the price of oil is a global recession, and the resulting drop in demand. One thing is for sure, "they aren't making any more of it".

Long term, the energy sector is one of the best places to be.

The Fed

I believe that humanity is approaching a crossroads. For years I have harped on the misinformation campaign and the unfettered issuance of fiat. As I have suggested many times before, if any person or group is granted the ability to invent, (counterfeit), money, then they are also granted absolute power. If I had the ability to invent money, I could buy anything I wanted, including the vast majority of the human population of the earth. If you believe that you are above temptation, just start adding zeros. Of course, I don't have the ability to invent money, and those that do aren't buying patriots. In fact the people that they are interested in are those who can help them squash patriotism, national sovereignty, and our constitutional way of life. To lend to my perception that this is an international dilemma, I need look only as far as the the New York Times:

Last week, both the International Monetary Fund (IMF) and the World Bank, two conservative institutions not known as alarmists, issued warnings on investments and the global economy. They pointed to evidence that large banks may have gone too far in loosening credit standards in order to attract hedge funds as clients for both trading and lending.

In a separate report, the World Bank warned that the global economic recovery has peaked and linked the severity of the pending slowdown to the willingness of foreigners to continue buying huge amounts of dollar-based assets. The bank pointed out that the global recovery has papered over structural imbalances that cannot be ignored indefinitely, and that the problem has received renewed attention with the decline of the dollar and hints from a number of Asian nations that they may diversify their monetary reserves into other currencies.  Francois Bourguigon, the World Bank’s chief economist stated, “The global economy is at a turning point.  Growth has peaked, and pressures to address global imbalances are growing, exposing important risks facing both developed and developing countries as the needed adjustments occur.”  The bank urged a “coordinated response” to minimize the risk of a crisis.  They called for the U.S. to reduce its budget deficit, the EU not to tighten its monetary policy, and the Asian nations to let their currencies appreciate against the dollar.
 
In sum, the two world organizations touched upon a number of issues that we have been concerned about in our various comments, mainly the fragility of the recovery, the underlying structural imbalances, the potential danger of derivatives unraveling, and the risks of a market free fall.  Their warnings also fit well with previous concerns by Ottmar Issing, the EU central bank’s chief economist, that central banks (read the U.S.) were not paying enough attention to the potential pitfalls of asset inflation.

Financial Survival

I believe America is steeped in a crisis of uncertainty. I am disturbed and concerned about the social aggression of extremists who start, escalate and perpetuate culture wars, the deeply entrenched education establishment that has robbed generations of students of their education, the two-party political system of government growth by bureaucracy, punishing taxation, over-regulation and activist courts, anti-consumer corporate corruption, legal terrorism, the gross lack of judgment and common sense, the overall deterioration of our society and ordinary citizens' rights, biased media-driven chaos, our national security and the betrayal of our Constitutional tenets, originally intended to protect and preserve our liberties and freedoms.

Our health care system is breaking down. Costs are outrageous and insurance has gone through the roof. 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. The American Health Care System is on the verge of implosion..

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.