The last thing the United States needs right now is another conflict in the Mid East to deal with, but unfortunately America's key ally in that troubled region is showing signs that they are on the brink of a civil war. With 25% of the world's oil at stake, our next military mission will likely be in Saudi Arabia.

For the worst possible reasons, the likelihood of oil and gold dropping much further in price seems highly unlikely. In fact, it is very possible we could see a sharp price spike.
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Today's civilization depends on an abundant and relatively cheap supply of oil. It fuels most of our vehicles, aircraft, ships, and trains. It provides the raw material for fertilizer, some clothing fabrics, most plastics, and many chemicals. Oil heats many of our homes and businesses.

So when experts discuss when oil production will begin to decline, the world pays heed. The question now making the rounds in energy circles: Has production already peaked? MORE>>

When the herd finally moves during the terminal phase of all Bull Markets, price movements become exaggerated! Rather than moving 5% to 10% during an earlier Bull Market timeframe, now they soar 20% to 30% or more in magnitude. This frothy period attracts an incredible influx of capital that stokes the Bull Market's fire and generates extraordinary and explosive price advances. When this time arrives and everyone is a true believer, it is time to exit the market! The masses never learn! They disbelieve and distrust all Bull Markets until their final stages. Then, like a herd of Lemmings, they cannot prevent themselves from moving en masse to their destruction.MORE>>

The United States of America is the only country in the world in which the gold, oil or natural gas, and other minerals in the ground belong to the surface owner who owns the land in fee simple. In all other countries these underground minerals belong to the King or to the state.

It is my opinion that this has been a great blessing to the USA in that this wealth has flowed through the people and enriched them rather than the state. Great wealth flowing to the state, particularly in less developed countries, tends to lead to corruption of politicians and bureaucrats that are handling the money, resulting in a very wealthy political class often among very poor people. MORE >>

This past Saturday I was watching Smarty Jones go for the Triple Crown. The pre-race favorite, Smarty was a shoe in to win it all. Never before had so many bet so much on one horse, and when the race was over, never before had so many been so wrong! So much for America's horse!

The conventional wisdom on Smarty Jones was that he could not lose. I know nothing about horse racing (even though I live in thoroughbred country), but the contrarian in me wondered if it was possible that everybody was leaning the wrong way. I wasn't trying to be contrary for contrary sake, but I did realize that maybe the odds on the other horses were higher than they normally would have been since everyone thought that Smarty Jones was a sure winner. Thus I reasoned why bother going to the window to bet on Smarty Jones just to win 20 cents on the dollar when the other horses presented themselves with more attractive odds. MORE>>

Suppose your doctor misdiagnoses your condition Ð he tells you that six months hence you'll be stone-cold dead, pushing up the daisies. As it turns out, however, you did not have leukemia after all, but were only suffering from Lyme disease. Would you not consider switching practitioners?

Say your stockbroker's picks leave you with a portfolio more volatile than Vesuvius and an eviscerated bank account. Short of buying shares in a Baghdad bed and breakfast, he did everything wrong. Would you still entrust him with your money?   MORE>>

Placing our faith in debt is going to swallow us whole as the entire financial system has mutated into nothing more than a very large debt kiting scheme. The most disturbing aspect has been the credit facilitators willingness to oblige rampant consumption. Debt must be repaid or destroyed. There is no free lunch and although we appear to be feasting upon prosperity, the reality is far removed from view and even more removed from the truth.

I have closely followed Doug Noland's "Credit Bubble Bulletin" for several years and amazed at the undercurrents that have begun to move to the surface over the past few months. Mr. Noland appears to be suggesting we are heading for a "worst case scenario", a catastrophe unseen in human history.  MORE>>

Twenty years ago, Microsoft was an integral part of the personal computer revolution, and fulfilled Bill Gates' daring dream of a personal computer on every desktop. But now, Microsoft has gone to the dark side and embraced an evil vision. Instead of liberating individual creativity through the personal computer, Microsoft hopes to use a Trusted Computer to chain the individual into the digital bondage of consumer serfdom. MORE>>

"In our view, gold is nothing more than a commodity. There will be times that gold outperforms other investments due to supply-demand imbalances that drive its price up. As an inflation hedge, gold has been replaced by more effective financial instruments. Alternatives to gold are short-term Treasury certificates or money market accounts that will benefit from higher short-term interest rates if inflation heats up. Gold has a poor long-term track record as an investment vehicle. In an inflation-adjusted basis, the metal is trading at roughly the same price it did in 1833." This is a direct quote (including ending a sentence with a preposition) from one of the foremost investment firms in the US. It was in answer to my query about gold. MORE >>

Humility is a great virtue...probably the greatest of all virtues. It helps you in all of life. In investing, it is essential. There is no better insight, no more precise tool, and no surer shield against folly. So, we are proud to be humble. In fact, we are almost arrogant about it.

We don't know anything, we say with pride, and we can prove it. Just a few weeks ago, for example, we thought gold had permanently moved above the $400 mark. It was likely, we said, that "we would never again see $400 gold." A few weeks later we wondered the same thing; gold had dropped to $375 and we wondered if it would ever come back! MORE>>

If these hundreds of thousands of houses, which are mortgaged to the hilt, go on sale because of foreclosures, our family may find their home is worth many thousands less than is owed. Suppose they keep their jobs, but several in the neighborhood don't? Suppose several homes go on sale, and are difficult to sell? Prices will go down till buyers are found. If you owed $200,000, and your home was saleable for $150,000, and you had a 30 year mortgage, what would you do? You'd probably try to sell, thereby exacerbating the situation. MORE>>

Cycles are a part of life. There are the cycles of the seasons, cycles of the calendar and the cycles of life from birth to death. Cycles are an integral part of nature. We have been asked a number of times to explain cycles especially as they relate to technical analysis. We thought in this short paper that we would center on the Kitchin cycle which fits well with the economic business cycle and is the proper name for the four year cycle in stock market. MORE>>

Before I start, let's review a little Venezuelan history. The Clinton strong dollar policy caused a dislocation ripple greatly effected the results of the Venezuelan elections. The price of oil dropped to around $10/bbl, a big benefit of the strong dollar. This caused their major export to be worth nearly nothing causing a massive recession. Chavez won the election in 1998 to bring about change. Chavez's butter and more butter campaign promises increased government spending and created a large budget deficit (similar to the US's guns and butter spending). Over those past 6 years the Bolivar has dropped form 350 Bs to the now official rate of 1920 Bs per dollar. Almost a 40% devaluation per year against the dollar (sound similar to our 30% devaluation in the US during the last two years). And they are only devaluing against the dollar, for a proper perspective you must take into account the dollars own devaluation (think 60%). MORE>>

The law in question is the Federal Reserve Act of 1913. By giving a small cartel of bankers the exclusive right to create unlimited money and credit, the Act virtually guaranteed long term price inflation. Since 1913, the US dollar has lost almost 95% of its purchasing power. This loss in purchasing power is a direct result of a massive increase in the supply of money that has occurred since the founding of the Fed. MORE>>

Almost everyone, including Keynesian and economists from the monetarist school, assume that the money supply can forever be expanded at will to overcome deflation.

To understand why that is a fallacy, you have to understand how money is magically created out of thin air in our fiat banking system. It starts with the Fed buying U.S. Treasuries from the banks that hold these instruments. Having sold their Treasuries, the banks now hold cash. But banks don't make any money holding cash, so they make all kinds of loans. MORE>>

One journalist asked us what unexpected trends or events we might see in the next two or three years Ð events that will surprise most governmental and business leaders in the U.S. Ð and how they might impact investors. The following is our reply:

World crude oil prices could spike to $60 a barrel

Natural gas prices in the U.S. and Canada could spike to over $15 a thousand cubic feet

The price of gold could exceed $600 an ounce MORE>>