tdvpremiummar2011
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Welcome to the March 2011
Premium Edition of The Dollar Vigilante
Volume I, Issue 9 / March 2011
Dear fellow Dollar Vigilante,
Welcome to the March edition of The Dollar Vigilante!
I write you today from my perch on the 29th floor of a highrise condo on the beach directly in the middle of Acapulco Bay. I make mention of this because later this week I am off to Toronto for the PDAC convention, then return for one day to Acapulco to unpack my winter clothes and re-pack my more tropical wear and then head south for Peru, Bolivia, Argentina and Paraguay for a few weeks in March on an expatriation fact-finding mission.
It's been busy, busy, busy. And that's not even to mention all the amazing action occurring worldwide. 2011, the year of the riot?
The seams are coming undone in this artificial, non-free market, cartelized financial system now and the proof is all over the news. Meanwhile, the bankrupt US Government is attempting to hold on to the last vestiges of its global empire but the ship has long been sunk. Captain Obama and Petty Office Hillary Clinton keep reading off their teleprompters or droning on into the cameras as though they somehow have some sort of relevance but the world has long since past them by.
All that is left is for the tax slaves of America to awaken and realize how they have been used, taxed, brainwashed and defrauded and we'll really get this party started.
In the meantime, here are some of the topics we cover this month. This, and every issue for the last few months could have easily been 500 pages long if we wanted to comment on everything that is happening. But we try to focus on the most important issues and details as there is simply too much to cover. Here is a sampling of what's in store in the March issue of TDV:
- “Tough Choices and Sacrifices” – How Obama's Budget Was Anything But
- “Can China Save the US?” – Will the Chinese Continue to Buy US Treasury Debt?
- “All Eyes On June” – The Market's Are Already Looking Past QE2 to QE3
- “Can the Snake Cut Off It's Own Head?” – Past the Point of No Return in American Democracy
- How Ben Bernanke Lit the Arab World Afire
- “The Federal Reserve Jumps the Shark” – Fed's New Rules Disallow Fed to be Insolvent
- “Who Would Sell Gold or Silver Now?”
- Gold/Silver Shortages
- Move into Bullion and Producers this Year
- In “The Markets” Ed Bugos shows how the Fed has Inflation in Full Throttle
- In the TDV Portfolio, Ed looks back at our results in the last 8 months and sells one of our holdings in favor of a near-blue chip miner in Tanzania
- The Expatriation section focuses on Canada this month… the positives and negatives of living and/or storing some assets in the US's great white neighbor
- Private Parts shares more mind-numbing stupidity from the top US brass in Afghanistan
- In Health, we get back to the basics on diet
And, as always, much, much more! Ipads or other similar reading devices and a nice beverage are highly recommended for readings of TDV.
One last note, I am speaking at the Prospector's & Developers Association of Canada (PDAC) in Toronto at 3:25pm on Sunday, March 6th. Also I appeared live on Jay Taylor's radio show, “Turning Hard Times into Good Times” on March 1st. You can listen to the archived version of the show here (My segment comes on at the 38 minute mark): http://www.voiceamerica.com/episode/52265/the-day-after-the-dollar-crashes/54807 . Or download the MP3 here.
Thanks, as always, for subscribing and being a part of our community of dollar crash survivors!
Regards,
Jeff Berwick
Chief Editor
The Big Picture
by Jeff Berwick
What a difference a decade makes.
Exactly ten years ago, on February 28, 2001, newly elected President George W. Bush released his ten year budget projection. He foresaw budget surpluses for the entire period from 2002-2011 adding up to $5.637 trillion in budget surpluses. The total official Treasury funded debt at the time was $5.736 trillion meaning that he expected the US Government to have no debt by 2011.
He was slightly off the mark. Instead of US Treasury debt reducing by $5 trillion over the next 10 years it has nearly tripled. Oops.
Government apologists might say that everything changed on 9/11 and that is what caused the projections to be so off-the-mark.
But a comparison to the Japanese Bubble peak and the US peak in 2000 shows that both credit/inflation fueled bubbles followed almost exactly the same route on the way up and on the way down – 9/11 or not.
Granted, the much more inflationary environment in the US since the bursting of the bubble has resulted in a larger nominal bounce but the trend over time is the same.
Even the balance sheet of the Bank of Japan versus the Federal Reserve, approximately ten years after the credit bubble first popped looks eerily similar.
Getting back to Bush's 2001 prognostication, you could give him a break and say that it is very difficult to predict anything ten years out. But, even in 2008, the Bush Administration was projecting the U.S. budget deficit to decline to $160 billion in 2010, $96 billion in 2011, and for the U.S. to have a $48 billion surplus in 2012. What is the projected 2012 budget deficit now, only three years later? $1.645 trillion. 17 times higher than projected.
On February 14th, Barack Obama released his budget and projections for the next ten years. Obama’s budget includes a deficit for every year through until 2021 with the smallest being $619 billion, in 2018 and the largest is for fiscal year 2011, ending on September 30, 2011, of $1.65 trillion.
The scariest part of this budget is that much like the one George W. Bush foresaw it will likely be well off the mark – to the downside.
For those new to how democratically elected governments work, they almost never achieve their projections. In the US, Senators are elected every six years, the President is elected every four years and Congressmen are up for election every two years. Since none of them have any “skin in the game” the great majority have no interest beyond the end of their term.
One of the only honest things Dick Cheney ever said was, “Deficits don’t matter.” And he is right. From a politician’s point of view, they don’t. As long as they can get in, enrich themselves and their friends, and get out before the whole apparatus collapses it is a success in their terms.
“TOUGH CHOICES AND SACRIFICES”
Barack Obama has stated, with a straight face, that this budget was one of “tough choices and sacrifices”.
Upon entering office in 2009 total Treasury debt was $10.6 trillion. By September 30, 2011, that debt will have increased by almost $5 trillion, or 46%, in just over two and a half years. How’s that for sacrifice!
It is all but plain to see that Obama’s projections are complete fantasyland. It takes all manner of near-impossible factors for granted.
It assumes that price inflation will remain under 2% until 2014 and then will remain at 2.1% from 2016 through to 2021. Perhaps it will if you believe in the most heavily massaged government statistic (the Consumer Price Index) in modern history.
However, if you calculate the CPI using the methodology used in 1980 (the blue line in the chart below) it is clear that the CPI has never been below 5% per year since 1987 and is currently at 9%.
In the budget projections, they also project revenue of $2.174 trillion in 2011, $2.627 trillion in 2012 and $3.003 trillion in 2013. That is a 38% growth in revenues over three years – incredibly optimistic.
They obviously expect all this revenue to come in from all the newly employed as they project unemployment to fall from the official current figure of 9.6% to 5.3% from 2016-2021.
Possibly worst of all is their projected interest rates that they will have to pay on the massive debt they continue to add to on a daily basis.
According to the projections, they expect bond yields to average 3.6% in 2012, 4.2% in 2013 and hit a high of 5.3% from 2017-2021.
This prediction comes at a time when the 10 year bond yield has risen 50% in the last 4 months alone, from 2.38% to 3.70%. If it were just to perform the same increase over the next few years, rising another 50%, the bond yield would already have broken their highest estimate, at 5.355%.
It’s not like the 10 year Treasury yield has never been above 5%. It spent the entire 1990s, with the exception of a few months in 1998, above 5%.
The projected debt, which TDV considers to be not just optimistic, but impossibly low, is charted below:
However, even at the 2011 debt level of $15.5 trillion, with total US Federal Government revenues of $2.228 trillion, it would only take an interest rate of 14.7% for the interest payments on the debt to take up every penny of government income. Interest rates last reached this level in the early 1980s.
In order to make such an assumption, that interest rates will not rise for the rest of the decade, they would, at minimum, have to presume that demand for US Treasuries will continue, and increase over time. An assumption not backed up by evidence – not even close.
CAN CHINA SAVE THE US?
China had one of the world's largest and most advanced economies prior to the nineteenth century.
However, in 1958, China began its “Great Leap Forward”, which like all government programs and plans, had the opposite name that it should have. An estimated 45 million people died or were killed in the subsequent two decades of practicing socialism/communism.
By 1978, few countries on earth were poorer or more destitute. Left with no other choice, China embarked on its great economic “reform” program. Or, what they called, “Socialism with Chinese Characteristics”. In essence, they allowed some segments of free markets and privatization to occur.
At the time, China’s foreign exchange reserves totaled about $2 billion. It took nearly two decades, until 1996, for that amount to reach $100 billion. Five years later in 2001, the total reached $200 billion. Five years after that, in 2006, reserves reached the $US 1 TRILLION level. They hit $US 2 TRILLION in 2009. At the latest count, Chinese foreign exchange reserves stand at $US 2.85 TRILLION.
However, when you look at Chinese Government ownership of US Treasury debt over the last year it paints a very different picture:
For the entire year of 2010, Chinese Government ownership of US Treasuries increased by $2.6 billion. Chinese buying of US Treasuries has basically come to a complete halt – and this at a time when the US Treasury needs to finance more than $1.5 trillion per year in new debt.
*note: As we went to publish the US Treasury Dept announced that it is revising China’s holdings upwards by $268 billion to $1.12 trillion. At the same time they lowered the U.K. ownership by $269 billion. This does not change our argument as the overall rate of change has not changed but China now is apparently said to own about $1.12 trillion Treasuries, still less than the Federal Reserve (see chart below)
The record high for Treasury ownership by the Chinese Government was in July, 2009 at $940 billion. The latest figure, for December 2010, shows ownership of $892 billion. Therefore, since July 2009 the Chinese have been net sellers of Treasuries to the tune of nearly $50 billion.
Since the launch of QE2 in October the Chinese Government has been a net seller. In fact, thanks to QE2, the Federal Reserve is already, by far, the biggest holder of US Treasury debt.
From November 1, 2010 to June 1, 2010, the Federal Reserve will have bought up practically all new issuances of US Government Treasury debt. When the only buyer of government debt is its own central bank the game is over.
And with further commitments through to June, the Federal Reserve will nearly own almost as much Treasuries as China and Japan combined.
ALL EYES ON JUNE
Because the Federal Reserve and it’s money printing (Quantitative Easing) is the single most important factor in all markets right now, all eyes are already on Ben Bernanke and what he will do in June when this current batch of fresh, hot money runs out.
The noose begins to tighten, now, on Bernanke. If he chooses to try to wean the money-addicted market off of an ever-increasing supply of new money it will immediately crash most major markets.
With the US Government needing to finance well over $1 trillion in new debt every year for the foreseeable future and without the Federal Reserve there to buy it up, there simply will be not enough buyers. In order to entice any sort of buying interest rates will have to go up – and not just by a few basis points. To entice that amount of money into Treasuries the rates will have to go up dramatically.
However, as mentioned above, once the rate begins to get much over 10% the US Government will become insolvent from interest payments alone.
And because there appears to be little or no political will to make any cuts of any significance in the US, the only politically feasible route will be to continue to print money until the US dollar becomes not only worth less, but worthless.
CAN THE SNAKE CUT OFF ITS OWN HEAD?
There have been many death knells wrung in the last few months and years. One was mentioned above: When the Central Bank of a country is the sole or majority buyer of all debt issued by its own Government the currency will soon enter hyperinflation and collapse.
Another death knell for the US democracy rang in 2007 when a Christian Science Monitor study conducted by Gary Shilling concluded that 52.6% of Americans were net tax recipients. The death of democracy quickly accelerates once more than half the population is a net tax recipient.
The reasons why can be seen in the US today. Once more than 50% of the population are recipients of largess from the producing minority there will be no possible way, in a democracy, to make cuts to government spending programs.
Remember the National Commission on Fiscal Responsibility and Reform? It’s ok, no one else does either.
They were assembled in late 2010 to come up with a plan on how to save the US from the massive debt sinkhole in which it has become entrapped.
Their conclusion was to cut $4 trillion from spending over the subsequent four years – an amount that is still not enough but is much larger than anything else proffered by the government to date. Within minutes of the release of the findings the report was attacked by every interest group from every spectrum of the political sphere.
The report was dead on arrival. The reason is clear, the majority of Americans are now suckling at the government teet and any attempt at taking away the gravy train will be violently opposed – a state of affairs made very apparent in Wisconsin where 70,000 protesters turned out and took control of the state’s Capitol in February.
They weren’t protesting big government… they were protesting the attempt to curtail big government.
THE THIRD DEATH KNELL: SOCIAL SECURITY
“Social Security is bankrupt and is a Ponzi scheme”, Gov Rick Perry, Texas
The United States Government has been living on borrowed time for years by pretending that the trillions of dollars taken off of American paychecks each month was actually being kept in trust to be paid out to them, plus interest, on retirement.
Reality is much different, however. The US Government has been including these payments as income of the Government for decades and has spent the surplus funds on its welfare/warfare projects. But now even that source of “revenue” has dried up. And, again, the Government’s own predictions of this inevitability were far off the mark.
As early as last year, the US Government estimated that Social Security would not be running a deficit until 2017. In actuality, Social Security will run a deficit of $45 billion in 2011 and continue to run deficits totaling $547 billion over the coming decade according to the Congressional Budget Office’s latest report.
This, combined with the fact that current Government debt can only be serviced through money printing by the Federal Reserve means that hyperinflation or a complete default by the US Government on its debt and entitlement obligations are a near-term certainty. Either of the two outcomes will hit the average American very hard as hyperinflation of the dollar will economically destroy the American middle class while default on government entitlements will leave countless millions in dire poverty. A recent survey of Americans aged 45 and older found that 38.8% of survey respondents cited Social Security as their most important source of retirement income, up from 26.7% in 2006.
Doubtless, many more are counting on their state or corporate pensions, many of which are as unfunded as the Federal Government. Even those that are funded will likely find that the US Dollar will be inflated at a far greater rate than their cost of living and still find themselves in difficult circumstances.
ARAB UNREST: THE FOURTH DEATH KNELL?
In the February issue of TDV we stated that if Arab unrest spread out of Tunisia and Egypt into oil-exporting states that it would have major potential implications for the US.
In February unrest spread into North Africa’s largest oil exporter, Libya, sending oil prices rocketing higher as exports from Libya stalled amidst the rebellion which, at time of this publication, still hadn’t been resolved.
Little does Ben Bernanke know but he may have started the revolution which ends up destroying the US Government and the US dollar.
Due to his money printing, and the linkage and/or need by other central banks of the world to devalue in lockstep in order to “remain competitive”, Bernanke has fostered the following:
1. His printing of money has ignited massive price increases in all of the major food commodities leading to unrest throughout the Arab world and many other nations across the world including China, Bolivia, India and many more
2. This unrest, caused by Bernanke, is now resulting in a large spike in oil prices which will further damage the US economy
3. If this unrest leads to an overthrow of the Saudi Arabian Government (see chart of the Saudi Tadawul Stock Exchange below – it is off 10% in the last two weeks), the stronghold of US power in the region, it will almost certainly destroy the Oil for Treasuries agreement between the two countries which will further decrease demand for Treasuries and US dollars, requiring the Federal Reserve to print money at even faster rates resulting in hyperinflation even sooner than expected. Not to mention that any uncertainty in Saudi Arabia would see oil easily move into the $150-250/barrel range.
4. The unrest and loss of power in the Middle East may cause the military industrial complex to enter into yet another war/occupation – as they are currently discussing about Libya – in order to attempt to retain the “status quo” in the region… another war/occupation would push the US budgetary deficits beyond the $1-2 trillion/year range and again, only hasten the collapse of the US empire.
Will no one stop this man?
This is the madness of central banking and fiat currencies. One solitary man who spends his days slurping ice cream at Washington Nationals games and riding around in limousines can wreak havoc upon the world.
THE FEDERAL RESERVE JUMPS THE SHARK
The term, “jump the shark”, comes from an episode in Happy Days where the Fonz, in his leather jacket and jean-short cut-offs, waterskis and jumps over a shark. It has come to embody that point when a show, or institution, has completely run out of ideas and then enters into a world of ridiculousness that it is then incapable of recovering from.
The Federal Reserve hit that point on January 1, 2011 in an event that was not covered by any of the mainstream media. In fact, it even went unnoticed by us members of the underground media and blogosphere for a number of days as it was so intricately and purposefully hidden in a release from the Federal Reserve.
The release, which is well documented by Robert P. Murphy at the excellent Ludwig Von Mises Institute states that the direct result of the change announced by the Fed is:
“any future losses the Fed may incur will now show up as a negative liability (negative interest due to Treasury) as opposed to a reduction in Fed capital, thereby making a negative capital situation technically impossible regardless of the size of the Fed's balance sheet or how the FOMC chooses to tighten policy.”
In other words, as the article goes on to state:
“No matter how big the hit to its assets, the Fed will never be insolvent from an accounting standpoint. Even if the Fed's bond portfolio lost $1 trillion in an afternoon, the Fed would be fine: It would mark down its “Assets” by $1 trillion, and under its “Liabilities” it would list “negative $1 trillion owed to the Treasury.” Thus the left- and right-hand sides of the balance sheet would still balance, and “Assets” would still exceed “Liabilities.””
So, there you have it. The secretive Central Bank that controls the world’s reserve currency and can print up any quantity it wants and give it to whomever it wants, whenever it wants, has now ordained that it is not possible for the Federal Reserve to ever be insolvent.
Boy, it’s nice when you get to make the rules.
WHO WOULD SELL GOLD OR SILVER NOW?
Mainstream media, the majority of the public and value investors all believe that the precious metals were either in a bubble and/or the bubble has already burst. But that is because they do not understand the foundations underpinning a move into hard assets.
In this regard there are two camps:
1. The camp who believes that we live in a grand new world where governments can centrally plan economies better than the free market itself and where acceptance of government-sponsored, unbacked fiat paper monies is just a normal, unquestioned part of life.
2. The camp who sees central banks as being artificial and dangerous and who are quite surprised that this era of unbacked fiat currencies has lasted this long (nearly 40 years since the “Nixon Shock” on August 15, 1971)
Those in Camp #1 will never buy precious metals until it is already too late and the fiat currencies have all collapsed.
Those in Camp #2 will never sell their precious metals until they see an indication that the unpayable debts and deficits of the majority of western nations have reached a resolution – either by default (bankruptcy of the nations) or by hyperinflation (bankruptcy of the currency).
Which brings about an interesting state of affairs. Unlike any and every other bubble in the history of mankind, the holders of precious metals will not sell their holdings for fiat currency, at any price.
They may sell their precious metals to buy another asset which they deem as being undervalued in terms of gold or silver – which may mean they sell their precious metals, briefly, for fiat currency but then quickly sell that fiat currency in favor of another asset.
But for those who own precious metals for safety and/or profit against the assured demise of the global financial system there is no price at which they would sell their precious metals in favor of fiat currency.
Of course if someone offered you $10,000 per ounce today for your gold you would be crazy not to accept it. However, most holders of gold would sell at $10,000 and then immediately sell the fiat currency and repurchase the gold at the current market price near $1,400 to buy even more gold.
However, the great majority of people who hold precious metals as a hedge against the destruction of the US dollar reserve based financial system will never sell their precious metals, at market price, until they see a resolution of the debts of the western nations.
GOLD/SILVER SHORTAGES
This amazing scenario is playing out as we speak.
Reports have been coming in from all corners of the world over the last few months stating shortages in physical gold and silver bullion.
The operating capacity of domestic gold refineries in India (http://www.gata.org/node/9648) have reached very low levels due to scarcity of scrap. Currently domestic gold refineries are operating between 25-30% of their installed capacity as against 35-40% around the same time last year. According to Ajay Mitra of the India and Middle East office of the World Gold Council, “Used gold sales have declined steadily in the last one year as consumers are holding jewellery in anticipation of higher prices.”
They aren’t so much anticipating “higher prices” of gold & silver as they are anticipating “lower prices” in their fiat currency. Until there is any indication that the ongoing, systematic destruction of fiat currencies worldwide will cease then there is no reason for anyone to sell their precious metals in favor of holding the fiat currencies.
Canada’s biggest bullion bank, ScotiaMocatta “sold out” of all its silver coins and bars in January. They have apparently sourced some new supply of silver coins but as of the time of writing they still show 100 oz. Silver Bars as being “sold out”.
Eric Sprott, a billionaire and one of the smartest men in the precious metals business stated that he expects gold to hit $2,150 and silver to hit $50 this year citing extreme shortages and great challenges to secure 15 million ounces of silver for his fund. He stated that “no supply exists in volume except from the margin of immediate producer output”.
MOVE INTO BULLION AND PRODUCERS THIS YEAR
Up until this year it has been relatively safe to “play” in things such as gold/silver ETFs, futures and other “paper” assets. TDV believes that 2011 will be the last year in which it is still relatively easy to find and purchase gold/silver bullion and that those who have not yet begun to do so consider making this move immediately.
Please see the TDV Special Report, “How to Own Gold” from November 8, 2010 for more details on how and why to move into bullion products.
As well, as Eric Sprott pointed out above, one of the only liquid sources of gold and silver bullion now and in the future may be actual producers. The TDV Portfolio contains numerous large, mid and small cap producers. These equities may rise exponentially if it becomes clearer to the public that they are one of the only sources of accessible bullion available on the market.
Remember to diversify geographically to reduce political risk. We attempt to include miners from different parts of the world as part of this strategy. To date we have miners in Papua New Guinea (Nautilus Minerals), Ghana (Golden Star Resources), Canada (Sabina Gold & Silver and Merrex Gold), Brazil (Jaguar Mining), Nicaragua (B2Gold) and more included in the TDV Portfolio.
The Markets
by Ed Bugos
CURRENT MACRO OUTLOOK
|
SECTOR |
SHORT TERM |
MEDIUM TERM |
LONG TERM |
|
|
0-3 months |
3-12 months |
1 year+ |
|
US Stock Market |
Neutral |
Neutral |
Neutral |
|
USD Index |
Bearish |
Bearish |
Bearish |
|
US Treasury Bonds |
Bearish |
Bearish |
Bearish |
|
Gold |
Neutral |
Bullish |
Bullish |
|
Gold/Silver Stocks |
Bullish |
Bullish |
Bullish |
|
Commodities |
Bullish |
Bullish |
Bullish |
**Highlighted areas show change from last month. Color shows in which direction it has moved from last month. Red=Downgrade Green=Upgrade
The Fed continued to inflate bank reserves in February (more on that below), fueling future protests somewhere in the world, hopefully.
And the banks, well, at least up until the end of January, were happily increasing the money supply at the usual double digit rate that we’ve become accustomed to since 2008. Even the official numbers for M1, M2 and shadow M3 started turning up again during the last few months. While our own estimate of the money supply is growing at 11% annually, shadowstats.com still reports the growth in M2 at just 4% and shadow M3 at around –2%. Expect these figures to rise.
Unfortunately, this bodes well for our thesis.
But it doesn’t really make a difference in the short term. Many things influence the markets in the short term, like expectations about the future driven by the news of the day. The effects of money supply increases can take months, even years to finish filtering through the economy. But what is dangerous is the expectation that they will not stop.
Even more dangerous is that they might continue. It might feed into the idea of a price revolution, and that prices are never going to fall again. Can you say crack up? That’s all it takes.
So it is no surprise and rather amusing to hear the media and other pundits speculate about when QE2 will end. They will be the last to get it. It cannot end or the Treasury market is ruined (as Jeff commented on in The Big Picture). Even a traditional tightening will be difficult for the Fed to pull off this time around. Not only is the government so much in hock that it won’t be able to absorb the higher rate of interest itself, but also, since it pays interest on reserves now any attempt to push the target rate higher will cause those reserves to inflate even more…not to mention give banks the incentive to accelerate money creation.
Generally, stocks and commodities continued to charge ahead in the short month of February, but the equity trade is beginning to wobble again on the strength in crude prices related to events in the Middle East.
I do suspect this will reverse once it is realized that the flow of oil is not in any real danger of stopping.
Of course, we are bullish on oil prices, but I don’t think that oil price hikes will stop this boom – except if they are straight up. No, I am convinced that what will trip up this boom is the bond yield, which actually fell in February on the return of the fear trade, as it approaches at least 4%, if not 5%. These booms have a way of holding out longer than we expect.
But somewhere between 4 and 5 percent on the 10yr Tnote we see trouble given equity valuations.
Today we’re still at 3.5%.
I foresee a lot more inflationary fall out from these quantitative easing policies before the next crisis appears, but do not rule out the normal corrections –one of which is in the process of working itself out.
In the chart below (Sep 2008 to Feb 2011), take note that the Federal Reserve has been busy creating fresh reserves again. This is independent of “the money supply” but it gives the commercial banks the extra ammo to bump up the money supply. This reserves figure (total not excess reserves) is arrived at by tracking changes in the Fed’s accounts and represents the net amount that commercial banks can basically pyramid on.
Reserve requirements are out of fashion these days because of the blurred line between demand and savings deposits, and their treatment by the banks, so the relationship is unclear except we know that more reserves mean more money printing by the banks, and today the excess reserves remain at historic proportions. Note the nearly 20% ramp up in reserves in February alone.
The statistic people usually refer to is the monetary base but that has a confused meaning. It includes currency in circulation which does not factor into the causes of money creation by the commercial banks. Reserve balances and/or excess reserves represent the real base of the commercial banking system.
The chart below (also Sep 2008 to Feb 2011) is just one of the accounts that influences those reserve balances, but by far it is the most important one. It is the one that is directly affected by the Fed’s purchases of securities and other loans. But it has to be netted against currency in circulation and changes in deposit liabilities of the Fed before arriving at actual reserve balances. Nevertheless, it makes up more than 95% of the asset side of the Fed’s balance sheet that everybody else publishes.
The important thing in this chart, however, is the contrast between the types of activities that the Fed undertakes – securities held outright reflect open market operations – where the Fed spends money directly in the market (usually creating reserves in the process) while “nonconventional tools” here reflect the sum of those special facilities the Fed initially set up after 2008 instead of going directly into the market to buy Treasuries, etc. The top line represents the trend in the combination –i.e. Total reserve bank credit. The gap between the lines represents securities held outright. And you’ll notice that the Fed has practically collapsed its nonconventional policies kit in favor of brute force intervention in the Treasury and mortgage markets during 2010.
Conclusion: There is no end to QE2 in sight in this data…the cracken has been unleashed. The Fed would have to undertake massive deflationary activities or exercise tremendous moral suasion to put the inflation genie back in its cage. It’s just a matter of time now.
The Dollar Vigilante Portfolio
by Ed Bugos
| Stock/Investment | Symbol | Chart | Last Price | Reco Price | Change | Reco Date | Original Writeup |
| JUNIOR MINERS | |||||||
| Sabina Gold & Silver | TSX:SBB | Chart/Quote | $6.61 | $3.49 | 89.40% | 8/15/2010 | Click Here |
| Golden Star Resources | NYSE:GSS | Chart/Quote | $3.16 | $5.04 | -37.30% | 9/15/2010 | Click Here |
| Jaguar Mining | NYSE: JAG | Chart/Quote | $5.30 | $7.56 | -29.89% | 10/18/2010 | Click Here |
| Nautilus Minerals | TSX: NUS | Chart/Quote | $2.97 | $2.05 | 44.88% | 11/29/2010 | Click Here |
| Market Vectors Junior Gold Miners | NYSE:GDXJ | Chart/Quote | $38.50 | $36.18 | 6.41% | 11/1/2010 | Click Here |
| Gold Explorers ETF | NYSE:GLDX | Chart/Quote | $18.32 | $17.80 | 2.92% | 12/1/2010 | Click Here |
| Merrex Gold | TSXV:MXI | Chart/Quote | $0.50 | $0.405 | 23.46% | 12/1/2010 | Click Here |
| B2Gold | TSX:BTO | Chart/Quote | $2.53 | $2.32 | 9.05% | 2/1/2011 | Click Here |
| AGRICULTURE & ENERGY | |||||||
| Powershares DB Agriculture | NYSE:DBA | Chart/Quote | $34.97 | $25.98 | 34.60% | 9/1/2010 | Click Here |
| Global Uranium Fund | TSX:GUR | Chart/Quote | $4.22 | $2.14 | 97.20% | 9/1/2010 | Click Here |
| GOLD & GOLD MAJORS | |||||||
| Central Fund of Canada | NYSE: CEF | Chart/Quote | $21.44 | $14.51 | 47.76% | 8/1/2010 | Click Here |
| Agnico Eagle | NYSE:AEM | Chart/Quote | $70.35 | $55.75 | 26.19% | 8/1/2010 | Click Here |
| Newmont Mining | NYSE:NEM | Chart/Quote | $55.27 | $55.90 | -1.13% | 8/1/2010 | Click Here |
| Market Vectors Gold Miners | NYSE:GDX | Chart/Quote | $59.83 | $57.29 | 4.43% | 11/1/2010 | Click Here |
Since the launch of the TDV newsletter in July, 2010, we’ve put out buy recommendations on six ETF’s and eight precious metal miners representing a general asset allocation that acts as a proxy for the ideal financial portfolio given our world view.
This allocation was as follows:
Gold Bullion (and/or CEF:NYSE) 30%
Cash (a mix of Canadian, US, Australian and Yen) 20%
Agriculture & Commodites ETF (ex. DBA: NYSE) 15%
Blue Chip Precious Metals Producers 15%
Gold & Silver stock juniors 15%
Uranium Fund (GUR: TSX) 05%
We continue to stress the importance of keeping a fair level of “cash” for those big corrections we cannot predict!
Some investors choose to interpret their gold holdings as cash, which is perfectly legitimate as long as you realize that at those times you want to draw it down – to take advantage of an opportunity in the equity space – it probably will also be down in dollar terms. And if you don’t ever envision selling your gold to buy equities then it shouldn’t be interpreted as cash.
Our allocation assumes it isn’t, even though from a political point of view it is more progressive if we insisted it be.
But you can see that we have a strong leaning towards the precious metals – with 75% of our committed positions exposed to the sector. That is no accident. Nor is it a mere extrapolation of the past decade. And it is especially not an automated contrarian reaction to the fortunes (what’s left of them) returning to Wall Street. Need we remind you that while we did not recommend owning any of the Dow stocks our outlook on stock prices has been resolutely bullish.
It is of course a direct implication of the theme of our newsletter – the dollar vigilante – which attempts to bring awareness to the masses of the imminent meltdown of the world’s reserve currency. How imminent?
Good question. But not up for topic today.
Today I want to focus in on our portfolio, specifically the weak points.
Most of our picks have performed well. The top performer – and one of Jeff’s timely decisions – the Global Uranium Fund, listed on the TSX (GUR), has returned 97% in six short months. The picks comprising the better half of our portfolio (the top 7) have each returned more than 25% in that time; four are up between 3 and 9 percent; and three are down:
Golden Star Resources -37%
Jaguar Mining -30%
Newmont Mining -1%
As one who recommends eternal vigilance in portfolio management the performance of Golden Star and Jaguar beg scrutiny. The reason for this performance, in case you haven’t kept up with our updates, is that in both cases the companies’ mining operations performed poorly during the second half, and management lowered guidance on production for 2011. We can’t say that these things were entirely out of management’s control, but we feel confident that they are temporary and that management is taking the correct steps to earn back its credibility.
For now we are content to believe that the worst is behind Golden Star and Jaguar.
Unfortunately, I can’t say the same for Newmont. We’re going to drop Newmont, the latest miner to lower guidance in production. Newmont is the sleeping giant. It is waking up but too slowly. It needs to be more aggressive in acquiring new resources in order to offset the risk that the market perceives in its maturing Nevada, Indonesian and Peruvian mines. Initially we put Newmont in the TDV portfolio because we were looking for a blue chip to anchor it before recommending more speculative issues, and it had been reporting good numbers on the bottom line. We felt the market didn’t appreciate this or its growth prospects, and still feel that these things exist.
However, since then we’ve added the Market Vectors Gold Miners trust (GDX), which has a 10% weighting in Newmont, and have discovered another deep value quasi-blue chip gold miner we would rather buy. Quasi? -because it doesn’t quite produce 1 million ounces per year…but it is pretty close.
New Stock Selection:
AFRICAN BARRICK (LSE: ABG): BUY UP TO 650 pence
What is African Barrick and what do we like about it?
African Barrick Gold (ABG Group) is a spinoff of Barrick Gold's Tanzanian assets that went public on the London Stock Exchange (symbol: ABG) in March 2010, issuing approximately 101 million shares at GBP 5.75, or about $8.70 (U.S.) each, to raise $834-million (U.S.). Barrick Gold retained 75% in the company – approximately 303 million shares – subsequently diluted down to 73.9%. The company operates four mines in Tanzania, all started up between 2001 and 2009, and has become the country’s largest gold producer – with production of 701,000 ounces in 2010 – and one of Africa’s five largest gold producers.
The company’s largest mine is the Bulyanhulu gold-silver-copper mine in the goldfields just south of Lake Victoria – it is a steeply dipping narrow vein structure (reefs) containing high grade Au mineralization in sulphides that has produced almost 3 million ounces since starting up in 2001 and is expected to produce an average 250,000 ounces per year over more than 25 years. In 2010 it produced 260,000 ounces at a total cash cost of $539 per ounce.
With reserves of approximately 11 million ounces Au grading around 12 grams per tonne (0.38 opt), plus additional resources, including silver and copper, it is a core asset, and cash flow generator.
The Bulyanhulu project was acquired in 1999 in the acquisition of Sutton Resources, a Canadian junior.
I remember the development of the asset well. The stock soared to $50 on the original drill program, collapsed in 1995, soared to around $40 again a couple years later when they proved up 5 million ounces, and then it collapsed again before Barrick took it out for $12 per share (the equivalent of $24 pre split) in 1999.
Barrick put it into production in 2001.
The group has two other significant mining operations in the same greenstones – south and southeast of Lake Victoria. The North Mara and Buzwagi open cast mines, which started up in 2002 & 2009 respectively, produced 213,000 and 186,000 ounces in 2010 (30 and 27 percent of the total). The Tulawaka underground (formerly open pit) mine has produced about 550,000 ounces since starting up in 2005, including 42,000 ounces in 2010.
Between these four mines the company has a total inventory of 16.8 million ounces of reserves, and another 8 million in resources (measured, indicated and inferred), as well as an extensive exploration portfolio with a pipeline of projects forming one of the largest land packages in Tanzania.
What do we like about it?
The shares are not listed on the AMEX, NASDAQ, TSX, NYSE, ASX or the JSE…they are listed on the LSE, which means it has a strong institutional following and virtually no one else knows about it. I’m sure there are good reasons for this.
Indeed, a Barrick Gold hater, of which there are probably a few in our ranks, might paint the story this way. Barrick took advantage of the bear market in gold prices back in 1999, which some allege it created, to steal assets from junior miners – as perhaps it did in the case of the Bulyanhulu gold-copper-silver mine which it bought for less than $300 million in shares via the acquisition of Jim Sinclair’s Sutton Resources (STT) in 1999. Maybe this is one of those events that formed Jim’s view of Barrick’s complicity in the suppression of gold prices scheme that GATA has tried to prove this past decade.
So my guess is Barrick is trying to avoid the publicity from that crowd by listing on an exchange they don’t pay attention to in the US, but in the process is it is not marketing the brand well, and that spells opportunity.
And the metrics check out.
For example, the shares currently trade at an 11% discount to NAV (net asset value) using a 10% discount rate, which is hard to find. Most producers (mid tier and large cap) trade at a 10-20% premium to NAV at a 5% discount rate.
At this latter rate of discounting future cash flows, for comparison’s sake, ABG is trading at a 35% discount to NAV.
It trades at 6x forward cash flows (8x trailing) and 7x EBITDA compared to an average of about 13x cash flows for the industry. And finally, African Barrick gets only $139 in enterprise value for every ounce of gold inventory in the ground – compared to an industry/segment average of around $219, representing a 36% discount to industry wide values.
So, based on the standard measures, it sells for less than its peers.
The main thing we like about African Barrick is that it is a cheap mid-tier producer not widely followed; it has a lot of ounces in the ground and covers a lot of ground in relatively underexplored greenstones in a region we like (geologically speaking) for its exploration potential; it has a core asset with a 25 year mine life that produces revenues of nearly $400 per tonne (good margin of safety); it generates a positive cash flow; has the protection of the world’s largest gold miner who has a 75% interest in the assets; and, we feel, it might become Barrick’s takeover vehicle for other assets in Africa.
Consequently, as of today we are selling Newmont and adding African Barrick.
Our 18 month target price for Barrick is GBP 10 per share, which is a 68% return from today’s price; in the long run, beyond that we expect the shares to match the sector. Maybe it’ll even pay dividends.
Expatriation of Ass & Assets
by Jeff Berwick
“Because you can't fight city hall, but you can leave town!”
Many Americans looking for ways to get their ass & assets outside of the US have looked to Canada as a possible safe haven. In some ways, it may be. But in other ways, it definitely isn't.
In this month's “Expatriation of Ass & Assets” we will look at Canada as a possible place to sit out the coming storm as well as its suitability for storing assets or investments.
OH CANADA
Anyone who has been reading TDV for any length of time likely is aware that not only was I born and raised in Canada but I also am not a big fan of the country.
It's a nice enough place, in actuality. Besides the cold weather, the main reasons I don't like it are because I dislike how socialist it is and the taxes that go along with that. Also, the country is very un-free in that there are rules and regulations for almost anything you can possibly think of. Besides that, however, the main reason I don't live there now and will likely never live there again have more to do with me looking at the world as a giant, interesting place to explore… the thought of living in just one or two countries for my entire life sounds like a prison sentence. However, I've known and met countless people from around the world who have immigrated to Canada and they love it. It all depends on perspective.
EXPATRIATING TO CANADA
If you are an American thinking of using Canada as an escape route in case the US turns into even more of a police state and/or erupts into massive civil unrest then you are taking their chances in Canada. Here are the considerations you should weigh:
GOOD
- At 9,984,670 square kilometers, Canada is the second largest country in the world (Russia is the largest). And with one of the lowest population densities in the world (3.3 people per square kilometer) the chances of you being overwhelmed by the masses anywhere but in the main population centers is highly unlikely. You'll possibly die of boredom or could get beat up by some small-town hockey players or drunk Native Canadians – but nothing too much worse than that
- Canada is very self sufficient – producing most of the agriculture, energy and resources it needs which could come in very handy in event of global trade slowing or stopping in the event of a fiat currency crisis
- Canadians look, talk and act like Americans – just a bit smugger and proud of their “free medical care” – so you can easily integrate. In fact, the country is so multicultural that any person of any ethnic background will easily blend in
- Easily accessible by Americans via car, train, boat or plane
- No real need for Visas for Americans (unless you wish to work in the country for an employer). You could, very easily, as an American, live in Canada for decades and never have a problem with “visas”. As long as you have a valid US passport you can basically come and go as you please.
BAD
- The Canadian dollar is almost completely dependent on the US economy and US dollar (see below) so running to Canada to avoid currency collapse does not make sense
- Canadians, for all intents and purposes, are almost identical to Americans – which means they have all the bad parts too. Canada has become much more of a police state in the last decade.
- The Weather. Other than Vancouver (which is much balmier in the winter – although it rains nearly every day) the great majority of Canada is bitterly cold. Canadians laugh at American news broadcasts when people in NYC can't handle 0F weather. Many parts of Canada average -40F for weeks at a time during the winter.
- If the US were to truly collapse it is possible the US Government, in a “last grasp” attempt at salvaging itself could attack/occupy Canada to take its resources which would leave Americans in the same situation in which they had tried to avoid
- The North American Union is also a possibility. A merger of Mexico, the US and Canada would obviously negate any benefits to having moved to Canada from the US. Not to mention that the US & Canadian military already have an agreement to enter into the other's country to help support during a “civil emergency”
STORING ASSETS IN CANADA
I have heard countless stories about Americans going to Canada to open Canadian bank accounts and keep their money in Canadian dollars to avoid: a) a US bank collapse and/or b) a US dollar collapse.
This is a highly questionable proposition. The Canadian dollar is, for all intents and purposes, not a global currency. You can only, really, use it in Canada. It is often described as a “commodity currency” but not many realize that almost all of the “reserves” backing the Canadian dollar are US dollars (and US Treasuries). The Canadian Government sold 99.5% of it gold in the 1980s. They used to hold 653 tonnes but now have one of the lowest gold holdings of any central bank in the world at 3.4 tonnes. Mauritius, Macedonia, Mexico, Laos, Cambodia and numerous others have more gold in reserves than does the Bank of Canada.
Don't fall for the propaganda that Canadian banks are much better than US or European banks either. They aren't “as” leveraged, but they are still very leveraged. As well, Canada tends to follow behind the US by a few years and Canada's housing bubble, built upon the same shaky foundations as the US real estate bubble, could easily take down the Canadian banks once the bubble bursts. The US had Fannie Mae and Freddy Mac and Canada has the Canadian Mortgage and Housing Corporation – a Government owned entity that enables first time home buyers to buy homes with only 5% down. Again, not quite as bad as the 0% down banking that reigned in the US during the final years of the housing bubble but it is naive to think that the Canadian banking system and the Canadian dollar will protect you from a US banking/dollar collapse.
However, storing gold in Canada makes excellent sense for Americans as, at least, it is one step removed from the direct control of the US Government. As well, investing in many of the Canadian listed mining companies that we regularly feature in TDV is another way to get some foreign diversification.
Dispatch From Within The Belly of the Beast
by Private Parts
Editor’s Note: We include these casual comments from a former US NCO (Non-Commissioned Officer) currently working as a contractor of the US Government on the ground in Afghanistan as an eye-opening look into what American taxpayer dollars are being used for in the “War on Terror”
“Each death sends one entire family over to the Taliban.” -Afghan businessman in Wardak province, when asked about the impact of civilians mistakenly killed in US airstrikes.
It never ceases to amaze me just how little US government officials know about the countries they work in, especially the countries they occupy. And how little they understand about the enemy they fight, what motivates them and what sustains them (local sympathy, Pakistan support on the border/sanctuary/refitting, etc.)
Now, in full disclosure, when I crossed into Iraq during the invasion I didn’t know s*** about that place. Sunni? Shiite? Huh? Aren’t they all Arabs? You get the idea. But as I got older I quickly realized my own ignorance and when I decided to come back over as a contractor I made sure I knew at least the very basics of where I was, its history, demographics, politics, culture, economy, etc. I figured, if you’re going to destroy a society you should at least have the common courtesy to learn a bit about the people themselves while you’re doing it. Sort of like the gentlemen train robbers in the Old West. Sure they were robbing you but at least some of them could be polite. There’s no need to be a jerk about it.
I mention that because I just had the opportunity to tag along with some VERY high-ranking officials while they toured Bamyan province and its beautiful Band-e Amir lakes. Keep in my mind, these weren’t old, senile visiting congressmen like John McCain who you wouldn’t expect to know much about the country. These people actually LIVE in Kabul and are some of the top US decision-makers on the ground. Some have actually been here for years. And their total lack of situational awareness in the country they work in was just astonishing.
Bamyan is also where the huge Buddha statues were before the Taliban blew them up. It’s pretty much the only tourist spot in the entire country (domestic tourism). And of course the visit had absolutely ZERO “mission essential” need. We didn’t even meet with the US and Kiwi troops at the nearby PRT! It was nothing but a sightseeing trip, a chance for higher ups to leave their fortress in Kabul and waste taxpayers’ money being shuttled around to take pictures for their scrapbook (Do they realize those choppers and fuel aren’t free? Let alone the lost productivity from the air crew and security personnel who have to do all the mission planning?)
Anyway, I had a great time, in a comical, disgusted way, listening to their idiotic questions to our tour guide. So let me recap my favorites (their questions in italics):
“How many attacks does Bamyan usually have? …How dangerous is it here for the troops at the PRT?”
Do these people pay attention during their own daily HQ’s briefing in Kabul? I know it’s hard to see the power point presentation sometimes, the screen is only about 20 freaking feet tall! “How many attacks…?” They show all the attacks that occur in A’stan EVERY single day up on the screen, they’re all marked with cute little stars and markings. You see a ton of them in the south and east every day, with a few stragglers up in the north and west. You see an attack in Bamyan maybe every 6 months! Bamyan is by far the most secure and stable province in the entire country, hell, it’s the ONLY secure and stable province in the country. For someone who’s lived in A’stan for a year (the person who asked) to not already know that Bamyan is the closest thing to “safe” as any area will ever be in an active combat zone is as ridiculous as asking “So, is Helmand province dangerous? I’m not familiar with it.”
“How much support is there in Bamyan for the Taliban?”
Ugh. Hazaras have an overwhelming majority in Bamyan, and anyone who studied the Taliban’s rule for even 10 minutes already knows how brutally oppressed the Hazaras were (they make up less than 10% of the country’s population AND they’re Shiite…double whammy). The Taliban massacred 8,000 Hazara civilians alone in Mazar when they took over the city during the civil war. Actually, the Hazaras hate the Taliban so much that last year when a renegade Afghan soldier from a Hazara tribe killed 3 British soldiers and then fled to join the Taliban it was the talk of the entire country. No one could believe it. It was as shocking to the Hazaras as when we found “American Taliban” John Walker Lindh back in ’01.
“What happened to them? (the famous Buddha statues) Were they stolen? Or did they just decay and crumble?”
“Bamyan’s governor is a woman? (under his breath) I didn’t know women here could serve in politics yet.”
Fyi, while Bamyan has the only female governor, the Afghan constitution actually guarantees something like 20% of all parliament seats for women. Not exactly breaking news. That question was so stupid I just have to assume that guy only arrived in country last week. How could he not know that already?
“Are the Hazaras Pashtuns or Dari?” (my personal favorite, comparing an ethnic group with a language)
I don’t even know where to start. Pashtuns are an ethnic group just like the Hazaras are. Dari (Farsi) is a language and spoken by most Hazaras, just like Pashto is a language that Pashtuns speak here.
Well, you get the idea. And these people are making critical, life and death decisions on how to “rebuild” this country? People who don’t even know that Dari is a language and not an ethnicity? Or that Pashtuns are a people and not a language? In a country they live inside of?!
Should it be any surprise that the US government actually believes it can beat an enemy at a cost ratio of more than $1,000,000 per enemy killed vs. a couple thousand dollars spent per US/coalition killed? Especially considering the ONE thing the enemy has is a nearly unlimited supply of bodies. And the one thing we do NOT have is unlimited money (at least not in real terms).
But the US will fight on, “driving back” the Taliban from their strongholds in the south, or so the propaganda goes. Come on. The Taliban aren’t stupid. They watch CNN and read the internet. They know where our upcoming offensives will be. They just leave a 1,000 IEDs behind and then most a) blend into the civilian population b) retreat into Pakistan or c) move up to the north to destabilize there, all just waiting us out. All the while we’re killing a few insurgents here and there, killing a helluva lot of innocents, sending entire families and villages over to the Taliban and flushing tens of billions down the toilet, also known as the Afghan National Security Forces.
Best,
Private Parts
Survival & Health News & Notes
by Jeff Berwick
In case you haven’t noticed by the tone of The Big Picture and many other of our recent writings, we really believe that we are very close to entering a highly chaotic period wherein almost anything can happen. Unless you took our advice last month and went to live on a sheep farm in New Zealand you should make preparation for food shortages, bank closures, social “safety-net” system collapse and even outright war over the coming months and years.
In this regard, being healthy has never been so important. If you live in a major population center in the western world in the coming years you can realistically expect to have to face heightened levels of crime, riots and even attacks from your own government. Having an extra 30 pounds of fat around your waist will seem like a poor choice if you find yourself having to run away from an attack.
THE BIGGEST LOSER
I rarely watch “regular” TV. However there is one American television program that I have found myself tuning into. It’s called the Biggest Loser and it is a reality TV show where-in a few dozen really obese people compete with each other to lose the most amount of weight.
I would have never believed it if I hadn’t seen it but some of these people, many of whom are over 400 pounds, lose between 100-200 pounds over the course of only 4 months! The record for most weight lost was Michael Ventrella who lost 264 pounds. The biggest percentage weight loss was 55.58% by Danny Cahill. He literally was less than half the man he was when he started the program – and again, all of this in only 4 months. It is really unbelievable what we can do if we really want to do it.;)
Last Season's Biggest Loser Winner – Click to Enlarge
As well, many of these people come onto the show on a multitude of different medications. Last season, a contestant named Frado came on the show lugging something that looked like a fishing tackle box, full of medications that he had been “prescribed” by doctors to help him with all of the symptoms of his obesity. You see, in the US especially, when a person with a poor diet or a non-existent exercise regime go to the doctor complaining of aches or are “diagnosed” with related “diseases” like diabetes, the doctor will rarely even mention the fact that they need to change their diet or get some exercise.
Instead they will be put on a number of chemicals which don’t do anything but mask the symptoms of their problems and result in them spirally worse and worse, taking more and more chemicals, to treat the problems caused by the other chemicals they are taking.
This is why watching The Biggest Loser can be so enlightening. Frado entered the show on no less than 15 different medications. Within 2 months of just exercising and eating a good, healthy diet, he had lost more than 100 pounds and had gone off every one of his medications.
ONLY EAT NATURAL FOOD
It really shouldn’t even have to be said. But with 90% of the money spent on food in America going towards processed foods, apparently, it needs to be said!
Only eat real, whole foods. If it is packaged and processed, do not eat it.
If you can’t recognize it (ie. Like an apple… a steak… broccoli), don’t eat it. It’s incredibly simple but somehow the majority of people have missed it.
As example, don’t buy a cereal that says it has blueberries or other fruits in it. For one thing, most of the time, they don’t even have the fruits in it they say they do (http://naturalnews.tv/v.asp?v=7EC06D27B1A945BE85E7DA8483025962). And, even if they do, they have been so processed, colored, salted and treated with chemicals so they don’t “spoil” that it is more toxic than anything.
I took a photo of my morning cereal. You can’t even see the cereal it is so heaped upon with fresh ;)
Morning Cereal – Click to Enlargebanana, strawberries, blueberries, almonds and raspberries.
There was recently a news story about people who were upset to find out that in Taco Bell’s beef there is only 35% beef. But they should be more shocked at some of the other ingredients in a typical Taco Bell “meal” besides the half-beef:
• Autolyzed Yeast Extract (which contains MSG, an excitotoxin)
• Red #40, Blue #1, Yellow #6 artificial colors
• Corn syrup solids
• Partially Hydrogenated Corn Oil
• Soy Protein
• Propylene Glycol Alginate
• Dimethylpolysiloxane (an anti-foaming chemical)
It is simply absurd that people even classify things like this as “food”.
Get exercise, daily, and eat just whole, natural foods and you will be in much better shape to survive the coming years.
Q&A: Ask The Dollar Vigilante
Q: On his way to the status of a Latin American dictator, Barack Obama now proposes to confiscate 5% of all mining revenues on US Federal lands. This is part and parcel of the greater dilemma of “where does the state obtain the funds to cover its $2 trillion or so annual deficit?” – Laurence H., Kenora, ON, Canada
A: Yes, even when we beat ‘em, we can’t beat ‘em! When we bet against their fiat currency system by buying gold we make money on gold but then they can just increase the taxes on our gain to take it right back! For this reason it is crucially important to keep gold mining holdings very geographically diversified and move away from the countries who tax more to the countries who tax less. Now if they could only discover some new gold deposits in the Channel Islands or in the Turks & Caicos Islands then we would be the first to invest!
Please email any questions or comments you have at any time to [email protected] and every month we will endeavor to answer them either publicly or privately.
Conclusion & Items to Watch in Coming Weeks
All eyes continue to be on the Arab states, and the revolutions they have sparked off around the world, including in China. Thanks to the internet things are happening at lightning speed. As we go to press, the American Empire is sending warships off the coast of Libya. Iran's warships are also in the area. Tensions are high and gold & oil have rocketed higher.
End Quote
“No one is more hopelessly enslaved than those who falsely believe they are free.” -Goethe