Wednesday, December 31, 2014

Three Malaysian Owned Airliners Shot Down in Nine Months - False Flag?

December 31, 2014

When I first heard that only three, (then later six), bodies had been recovered (after an earlier claim of 40 by the Indonesian Air Force) and there was no floating luggage or identifiable debris, my false flag radar went off.  I also found it suspicious that one of the bodies was a Malaysian stewardess in uniform, about a one in twenty three chance, (or about 4%) assuming a crew of seven and 162 total passengers:

AirAsia has stated that there were 162 passengers on board: 156 Indonesians, one Singaporean, one Malaysian, one French, and three South Koreans.
Only 6 bodies have been recovered so far from the missing AirAsia flight, despite earlier claims of 40. Objects resembling parts of the plane, as well as what was thought to be the plane’s outline underwater, were seen in the search area.
The Indonesian navy initially said 40 bodies had been recovered, but the figure was later corrected. The plane itself has yet to be found.
One of the three bodies recovered on Wednesday morning was female dressed in a stewardess uniform .....

This crash could possibly have been due to an equipment failure, but if so, black boxes will eventually be recovered, or at least their signal detected.
Bingo.  Air Asia is a Malaysian owned airline.   The beeping of my false flag radar has now become deafening.
Three Malaysian owned airline crashes in a row should arouse suspicion, but how many people will even hear  the fact (in the mainstream media) that AirAsia is Malaysian owned?

So all three recent plane crashes were Malaysian owned airliners.  The black boxes were missing from the first one (MH 370), still impounded after five months by Dutch authorities on the second (MH 17) with only preliminary information released, and missing likely never to be recovered on the third (Air Asia).

20 Indonesian Air Force divers have already been dispatched to search for more bodies, the plane and the black boxes: 
Currently, at least 30 vessels, 15 planes, and seven choppers are looking for the AirAsia jet, Indonesian officials have stated. Most of the search is conducted by Indonesia, but Singapore, Malaysia and Australia are taking part as well.
Thailand is planning to join the search, while the US has sent a warship to help.

If nothing more is ever recovered to prove conclusively that this is the crash site of the missing AirAsia flight, I, for one, will be convinced that this was a false flag.  The pilot who made the observation marked the observed location using GPS , but subsequent claims could always be made that underwater currents carried off or buried the wreckage.
A reader comment by knesebeckbleibtreu on the above RT article:

"It's pretty easy to determine a real plane wreck with floating bodies, luggage and wreckage from something like MH370 which has revealed none of the above. The MH370 investigation requires far more than burning jet fuel over vast stretches of the south seas. It's almost impossible for the US military sitting there in Diego Garcia to not know jack about the events of that day. Of course they're withholding knowledge of the fate of American citizens on that flight. Proper investigation is also required for the likes of UA93 and AA77 which both left next to nothing in their "crash". Even when a flight is blown up, like that over Ukraine, you get remains scattered. Or even when the Air France flight hit the ocean at 300km/hr, you still find bodies, luggage and parts afloat within days, yet washing ashore for years. Where was the luggage, bodies and fuselage at the Pentagon, or in Shanksville? How on earth did the black boxes at the twin towers vanish out of sight a la MH370? What cracks me up most is people who cower and whine whenever legitimate questions like these are brought up. It's very scary to have a government-provided worldview questioned."
Malaysian low-cost airline AirAsia is believed to be one of the safest air carriers in the world. Until today there have been only two incidents with its aircraft. In both cases they overran runways. One took place in November 7, 2004, at Malaysia’s Kota Kinabalu airport (Flight 104, Boeing 737). Another incident with Flight 5218 (Airbus A320-200) occurred in Malaysia’s Kuching on January 10, 2011.  


Wednesday, December 31

02:53 UTC:
One of the three newly recovered bodies was female dressed in a stewardess uniform, F. H. Bambang Soelistyo, chief of Indonesia's search and rescue agency said. The other two bodies were male.

02:01 UTC:
Three additional bodies have been found in the morning, according to the National Search and Rescue Agency (BASARNAS) chief, Channel News Asia reports. The total of six recovered bodies have not yet been brought to shore to Pangkalan Bun in Kalimantan due to bad weather.

Tuesday, December 30

15:13 UTC:
A pilot flying a C-130 Hercules aircraft taking part in the search operation said he spotted seven or eight bodies in the water at the Karimata Strait on Tuesday, Indonesian media outlet Kompas reported. He added that three of the bodies appeared to be holding hands.

09:36 UTC:
The Indonesian navy says they have pulled more than 40 dead bodies out of the sea.


05:50 UTC
The Indonesia National Search and Rescue Agency (BASARNAS) Air Force Hercules found an object described as a shadow at the bottom of the sea in the form of a plane.

Monday, December 29

06:15 UTC
2.15PM: Passengers on other flights arriving at Changi Airport, Singapore, from Surabaya tell our reporters there was "nothing unusual" about weather conditions at point of departure. "It was slightly cloudy but there were no delays in the aircraft taking off," a Singapore Airlines passenger said.
Mr Hendrich Sugiarto, who was on Garuda Indonesia flight GA854 from Surabaya to Singapore about 1.5 to 2 hours behind the AirAsia flight, wrote on Channel NewsAsia's Facebook page that the flight was smooth with no turbulence. "Nothing was unusual...the sky was blue and not cloudy," he said.

23:26 UTC Sunday, December 28
07.26AM: With daybreak, the search for the missing AirAsia flight QZ8501 has resumed, reports Indonesia's TV1.
Sunday, December 28

11:26 UTC
7:22PM: Search and locate operations have been suspended for tonight, Indonesian reports say. Three planes had been combing three areas where QZ8501 was suspected to have lost contact for about two hours with no progress, the person in charge of Indonesia's search team was quoted as saying.
The search operations were suspended at 6:30pm Singapore-time "because it was getting dark", AFP quotes transport ministry official Hadi Mustofa as saying. He says they will resume the search at 7am or earlier.

11:04 UTC
7:04PM: AirAsia has issued a correction to the nationality breakdown of passengers and crew on board. There was one person from the UK on board and the French person is part of the crew.
Nationalities of passengers: 1 Singapore, 1 Malaysia, 3 South Korea, 1 United Kingdom, 149 Indonesia

Nationalities of crew: 1 France, 6 Indonesia

08:42 UTC
4.42PM: The Jakarta Post has quoted an official from Indonesia's National Search and Rescue Agency as saying that flight QZ8501 is believed to have crashed at the location 03.22.46 South and 108.50.07 East, in waters around 80 to 100 nautical miles from Belitung.

06:50 UTC
2.50PM: AirAsia QZ8501's return flight from Singapore to Surabaya, QZ8502, has been delayed by eight hours, and is now scheduled to take off from Changi Airport's Terminal 1 at 10.35pm   

05:45 UTC
1.45PM: AirAsia has released another statement on missing flight QZ8501: "The aircraft was an Airbus A320-200 with the registration number PK-AXC, and had undergone its last scheduled maintenance on Nov 16. The captain in command had a total of 6,100 flying hours and the first officer a total of 2,275 flying hours."

05:30 UTC
1.30PM: Officials said that AirAsia QZ8501 lost contact between Tanjung Pandan and Pontianak in West Kalimantan. According to Indonesian officials, in their last contact with the flight, the pilot asked to rise to 38,000ft to avoid clouds. 

03:41 UTC
AirAsia announced on Facebook and Twitter (six minutes later) that it regrets to confirm that AirAsia flight QZ8501 from Surabaya to Singapore has lost contact with air traffic control.

"AirAsia Indonesia regrets to confirm that flight QZ8501 from Surabaya to Singapore
has lost contact has lost contact with air traffic control at 07:24 hrs this morning. 


03:22 UTC

 Search and rescue (SAR) operations were activated by the Indonesia National Search and Rescue Agency

Saturday, December 27

23:55 UTC

AirAsia Flight QZ8501 was officially declared missing. Its last known position is over the Java Sea, Karimata Strait between the islands of Belitung and Kalimantan

23:18 UTC

ADS-B transponder signal was lost, with last position reported as 3.3708°S 109.6911°E, according to Indonesia's Ministry of Transport

23:17 UTC

Radar contact was lost, according to AirNav Indonesia. (AirAsia initially reported that contact was lost at 23:24.)

23:12 UTC

Pilots requested ATC clearance to divert left from the flight plan and climb from 32,000 ft (9,800 m) to 38,000 ft (12,000 m) to avoid bad weather. Jakarta air traffic controllers allowed the diversion, but deferred the request to climb because of traffic.

22:35 UTC
Flight departed from Juanda International Airport. Scheduled departure was 22:20.

Saturday, December 31, 2011

Bearish on Gold and Silver? What Fools These Mortals Be!

Bearish on Gold and Silver?
What Fools These Mortals Be!

Mark J. Lundeen

30 December 2011

I’m having difficulty dealing with current market sentiment for gold and silver.   The idiot-box keeps pounding into my head that gold and silver are sensitive to downturns in the global economy, and precious metals are not a safe harbor from the storm during good times or bad.  What a frightening thought that is, when we consider that from 1980-2000, as the economy roared upwards, and the latest price quote for Microsoft or Intel was the price for peace of mind, gold and silver saw bear-market declines of 69% and 91%.  These idiot-box “experts” must be expecting even worse declines in gold and silver as the global bond and stock markets melt-down sometime in the next few years.

Maybe the real problem with gold and silver isn’t that the economy goes up or down, but as the Federal Reserve approaches its centennial, there still is an economy?  The problem with that theory is that it wasn’t until 2001, after the NASDAQ bubble crashed, and after the “Masters-of-the-Universe” began making $250K sub-prime mortgages to the chronically unemployed, that gold and silver finally responded positively to Washington’s bubble economics.  We should also note that it wasn’t until 2000 when gold and silver began their bull markets, as Congress was inflating the mortgage bubble (2001-07), though the precious metals continued to appreciate long after the mortgage bubble crashed (2008-09). 

That would suggest that gold and silver have appreciated for the past eleven years


the “policy makers” have grossly overburdened the shrinking global economy with backbreaking levels of unserviceable debt, and insanely inflated the global-money supply to such extremes that global currencies can no longer be said to be backed by faith in sovereign credit, but by the economic ignorance of the masses.  

Looking at the world in this light, it makes perfect sense to believe that gold and silver * MUST * continue appreciating as the US Federal Reserve and European Central Bank continue bailing out the select but powerful few, at the expense of the many.  But since this is undoubtedly true, why on earth is my idiot-box telling me to sell gold and silver, and buy financial stocks and bonds?  Yes indeed: why?

Well one thing is for sure, the economy is seeing difficult times, as recorded in Barron’s Pulse of the Economy.  Even government statistics have to deal with the fact that the economy has not returned to its pre 2007-09 Credit Crisis levels.  In fact, just looking at the chart below informs us that economic activity has not even returned to the levels of the 1990s high-tech bubble.

Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\Cap Ulitzation.gif

Ah, but I hear that housing is on the rebound!  In fact, housing starts are up 41% over the past three years. That sounds mighty impressive coming from the talking heads in the idiot-box, until one examines the past forty two years of data in the chart below.  The fact is, the US housing industry was hamstrung, and will continue to be crippled for the next ten years, or more, because Congress with its Clinton era “affordable housing legislation” created unlimited inflationary funding in the mortgage market.  If the United States didn’t have a Federal election every other year, I suspect housing prices would have already declined by more than 50%.  It’s no secret that the banking system is holding years of supply off the market for fear of what this inventory would do to housing prices, and in the process, preventing the American people from having affordable housing.

Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\Hous Perm & Starts.gif

The media and the government are not the only entities to supply defective economic information to a gullible public.  On December 21, 2011 the National Association of Realtors announced (in an article deceptively titled “Existing-Home Sales Continue to Climb in November”) that they were revising their figures to show that 3.54 million existing home sales since 2007 never took place!  That’s right, folks.  You thought the real estate market was bad already, how about now with the “benchmark revisions” the NAR was so kind to make promptly, years after the fact so as not to panic the public with the truth.

“The National Association of Realtors (NAR) corrected its estimates of existing home sales today (December 21st), and 3.54 million previously reported home sales vanished, in revision, since January 2007.  Put in perspective, the amount of sales wiped out was the total amount of seasonally-adjusted existing home sales that previously had been reported in 2011, through October.  Post-2006, 14.3% of existing home sales were eliminated, with sales in the Northeast taking a 30.9% hit, followed by a 14.2% reduction in the Midwest, 12.3% loss in the South and 5.3% loss in the West.

In revealing recognized reporting problems, the NAR has addressed issues not commonly taken on by trade groups that report industry data, or by the federal government.  Where the nature of some of the problems (overly optimistic underlying assumptions) are common with many government series, including payroll employment and retail sales, the government would do well to overhaul much of its reporting.

Reflecting adjustments for some double-counting, mis-estimates of homes for sale by owner, and some improper inclusion of new home sales, the revisions were structured in such a way as to preserve as much as possible of the previously reported month-to-month and year-to-year patterns.  Sales levels were reduced by 10% to 11% starting in 2007, hitting a peak reduction of 17% in late-2008, and averaging around 14.5% in the most-recent reporting.”
End of Quote

The sticky residue of the housing bubble (US mortgages) is still gumming up the world’s pension funds and insurance companies’ financial reserves.  It’s just not reasonable to expect any real change for the better until Mr Bear is allowed to scrub clean the global financial system’s balance sheets with an industrial-strength degreasing agent.  So who is stopping the furry fella from going to work?  The same “policy makers” who are responsible for the mortgage mess in the first place!  These geniuses have yet to discover the correct verbiage to explain to pension fund beneficiaries worldwide that hundreds of billions of dollars or euros they’re relying on for support in their old age are in fact mostly fictitious ledger entries. 

These “policy” dudes are mostly former college professors, so they aren’t stupid.  I’m sure the “best-and-the-brightest” in “public service” long ago figured out that if they said nothing, pension beneficiaries would eventually discover their retirement problem on their own.  So why draw the current attention and future wrath of the masses by bringing up the subject now?  That is how these people think!

On this one issue (private and public sector pensions), we’ve barely begun seeing the earliest signs of the current economic upheaval that hangs over everyone’s head.  Everything these people touch dies.  So, until Professors Twiddle Dumb and Twiddle Dee, and their big ideas are driven from the halls of power, nothing will ever change.

Well, isn’t unemployment improving?  It is according to the US Department of Labor.  The only problem with this data is that it comes from the US Department of Labor, who employs plenty of college level Ph.Ds to their dirty work.  With a presidential election coming in 2012, it’s a political necessity that unemployment comes down.  So, I have great doubts we are looking at the real world in the chart below, rather than a new method of statistical manipulation required to keep incumbent politicians, and the US Secretary of Labor in office.  If the Dept. of Labor claims that unemployment is below 9%, I suspect it’s actually above 20%.

Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\US Unemployment.gif

Come on Mark; give us a glimmer of hope.  Well you can forget about that from anything I write, at least until Mr Bear finishes his cleaning duties, at which time I’ll become a roaring bull!  But as Obama offers you hope, from me you’ll get charts; like electrical power consumption (EP) which not only refuses to return to its highs of August 2008, but has completed a fourteen month inverted-bowl pattern to the downside.  Unlike the government’s funded data, EP in December 2011 is measured in the same exacting engineering unit used in August 1930; the kilo-watt.  This makes variations in EP invulnerable to the whimsical and ever changing statistical methods used by dubious government statisticians.    

One look at EP’s long-term chart below should tell you that our current economic situation really * IS * different.  Not since the post WW2’s retooling of the American economy, from wartime to peace time production, has EP declined so drastically.  Not since the Great Depression has so much time passed from one BEV Zero (new all-time high in electrical power consumption) to the next.  But what in the economy isn’t powered by electricity?  Unsold condos, shut-down assembly lines in darkened factories; stuff like that.  As goes the economy, so goes EP.  And right now, EP is once again contracting.

Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\Electrical Usage BEV 1930-12.gif

Below is EP’s chart from 2000 to 2011, and I direct your eyes to the red circle.  In Barron’s 26 Dec 2011 issue, EP has broken below its BEV -1.5% line.  A week later (Barron’s 01 Jan 2012 issue) EP slipped to -1.90%. We’ve had a warm winter so far, so maybe this decline is due to seasonal factors.  However, when I consider the idiots, morons and moral reprobates in charge of “economic planning” of our “free enterprise system”, I can’t rule out the possibility that we are witnessing the beginnings of an economic downturn that will eventually rival the -17.32% EP decline seen in 1933. 

Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\EP 2000-2014.gif

Okay, the economy is in decline, but why isn’t that bad for the price of gold and silver?  Well it might be if the “policy makers” were attempting to cause the current decline in economic activity, as they’ve done many times in the past to eliminate the “excesses” in the economy.  In the past, they induced recessions by raising interest rates, forcing banks call in business loans.  This would result in a contraction in the Fed’s monetary aggregates; M1 and M2.  In other words, they raised interest rates to contract the money supply, knowing that economic activity would slow down.  However; that is * NOT * the case today! 

Since October 2008, at the peak of the Credit Crisis, as our Congress held hearings on live TV, and Hank Paulson (then Secretary of the Treasury) told Congress he needed a bazooka to battle the beams of deflationary radiation directed at the US mortgage market from an unknown, possibly inter-galactic source, the Fed Funds rate has been held below 1%.  Okay, I’m making up the bit on deflation rays from outer-space, but today’s “0% Fed Funds Rate” (actually below 0.10% per annum) indicates the “policy makers” are frantically attempting to re-inflate the economy with absolutely no success.

One look at the Fed Funds Rate chart below tells us that Doctor Bernanke is riding on the back of a tiger.  He doesn’t dare raise the Fed Funds Rate back above 1% because he knows if he does, the monetary monster he and his predecessors created will consume him, and his precious Federal Reserve System.

Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\Fed Funds 1954-2014.gif

But if the good doctor can’t raise short-term interest rates, he sure can print dollars and “inject” massive volumes of cash into the economy.  And since he became chairman of the Federal Reserve in 2006, that’s exactly what he’s done.

Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\US CinC 1920-2012.gif

The dollars Doctor Bernanke creates may no longer be backed by ounces of gold and silver, but instead by something more socially scientific, and so much better for “policy”: US Treasury debt.  The wisdom of the debt-backed dollar and the folly of the gold standard had been beaten into the defenseless minds of college students since the days when tuition for college could be financed by the efforts of students themselves, (maybe with some help from their relatives).  But the quality of college education, instruction that provided actual economic benefits to the student didn’t last long after government began its guaranteed student loans program, even though the college professors and administrators of higher education prospered as never before. 

It’s not surprising that our educational elite present a united front in opposing the return of the gold standard.  When gold was money, costs for college, like everything else were set by market forces.  This was actually beneficial for students, as colleges kept their expenses down, and they actually cared that their students could go out into the world and become financially successful.  Grateful graduates had a way of becoming alumni, generous to their Alma Mater. 

But this superb system no longer exists. With the debt-backed dollar, a dollar managed by this same educational elite, the only factor limiting the price increases for tuition and text books (written by professors) is how much “aid” their colleagues in government are willing to extend in the form of student loans.  And as we all know, Washington has been very generous to “education” with its student loan program.  Today, any institutional interest colleges formerly had in the financial success of their graduates has been short circuited by the current college system’s direct connection to the hose of “liquidity” from the Federal Reserve.  Educational standards for both professors and students in our college system have been drastically cut to facilitate enrollment expansion, because that is how the big bucks in education are made.  And today, education is all about the big bucks.  That many, if not most of our educational system graduates struggle with crippling debt for many years, is something not discussed in polite academic society.

And in 2011, exactly how much “liquidity” has the college system injected into our youth?  I haven’t a clue.  But I’ll stick my neck out and guess that in 2011 alone,
the school loan program “injected” more inflation into their students than the total national debt of the United States in July 1938: $37 billion.

Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\US Debt 38-11.gif

Well, now that I have all that off my back, let’s see just how bad things really are for gold and silver as 2011 draws to a close.  No better chart than a Bear’s Eye View to illustrate how bad things really are, and after taking a quick look at how little success Mr Bear has had in clawing down the price of gold since 2001, all I’ve got to say to you “men” out there (and I use the term loosely) is: you’re pathetic!  As the year 2011 came to its close, the “policy makers” have done their worst in the gold market and they failed to get the price of gold to break below its BEV -20% line.  That is correct, since gold’s highs of August this year, on a daily closing basis, gold’s maximum decline in this correction was only 18.47%

If this is all the worst they can do, then the end of their reign of terror in the gold market draws nigh, and all I hear is boo-hoo-hooing from people who should know better!

Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\Gold BEV 69_10.gif

Let’s take a good hard look at the price of gold since 1969 with the Bear’s Eye View (BEV).  In a BEV chart, every new all-time high is converted into a zero percent, because to Mr Bear, that’s all a new high is worth to him – nothing!  Mr Bear is only interested in how large a percentage he can claw back from the bulls’ profits.

Geez Louise, look at the corrections Mr Bear inflicted on the gold bulls between 1969 and 1980!  From 1969-75, gold seldom saw more than a few new all-time highs before Mr Bear gnawed 20% from the bull’s gains.  And from 1969-75, did the gold bulls begin blubbering like a gaggle of girlie-men when gold declined over 20%?  THEY DID NOT!  Like men, real men, they kept a steely eye on their compass; and an iron hand on the tiller, even as gold declined 48% from an all-time high in August 1976.

Now compare the 1969-80 bull market with ours. Gold clawed its way back from the dead with barely a pause in its advance, and ONLY ONE PRICE CORRECTION in the past twelve years that might be compared with something from the 1970s, and that less than 30% correction DID NOT HAPPEN in 2011!

Last week I listened to Eric King’s interview with Jim Sinclair.  Mr Sinclair, has blood-shot eyes manning a 24 hour gold-bug suicide hot line, because the “policy makers” failed in their attempt to get gold to decline below its BEV -20% line.  Well it’s true, so-called gold bugs are in an emotional state of panic, keeping poor Mr Sinclair up all night because the former “Masters-of-the-Universe” failed to whack gold down 20% from its highs of August.  Funny, Wall Street’s Masters-of-Disaster could do a plus 20% whack-job on gold in 2001, 2006 (twice) and 2008. 

Let’s look at the next chart, with the BEV series beginning at the absolute low of the 1980-99 bear market.  What’s wrong with you gold bugs?  We are seeing the fourth deepest correction from 1999 to present, a correction of less than 19%, and you’re ready to run to the tall grass like a pack of poltroons!

And what’s wrong, New York and London; is this less than 19% decline all you got?  Of course not!  The GLD ETF must still hold a few bars of gold you can still lend, swap or somehow collateralize and entangle in the open market.  Hey, it’s what banks do with other peoples’ assets; they take a deposit of one and lend it to ten, or more people.  We would be foolish to believe the big banks haven’t maximized their own profits, by risking the assets of other people held in any precious metal ETF they control.

Description: C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 221 (No 219 or 220)\Gold BEV 1999-2014.gif

Hey you Big Shot Bankers; maybe one more huge margin increase would do the job, sending the price of gold towards its BEV -30% line.  But you’d better not take any chances, so you guys will need to whack another commodity futures trading firm, and then send the poor souls whose lives you’ve ruined into regulatory purgatory at the CFTC, exactly as you did with MF Global.  Hey!  Do you know what would really be funny?  Have your willing-tools at the CFTC send an official letter to all your future victims informing them they have to personally appear at the offices of the Commodity and Futures Trading Commission to be photographed and take a number for service.  Have the number series start at some odd number over a million. 

Who is there to stop you?  I’ll tell you who: Mr Bear.  When I think of all the dollars of currency and debt you’ve created with your debt-backed dollar since 1980 (the end of gold last’s bull market), I know that you are growing weaker, as Mr Bear grows stronger.  That’s why since 1999 you’ve been * UNSUCESSFUL * in dragging the price of gold down a full 30% from a new all-time high even once.  To my way of thinking, that makes Mr Bear is the biggest gold bug in the market, and he is someone Washington and Wall Street can’t stop out!

That’s enough free “financial advice” for the malignant narcissists community; let’s move on to the table below and see just how good the markets have been to people who were wise enough to buy and take delivery of their metal, and refrained from playing the devil’s favorite game at the COMEX: trading paper metal.

Look at the cumulative gains in gold and silver since 2000, and then tell me that precious metals haven’t been a safe harbor for investors during the financial turmoil of the past decade.  As always, for thousands of years anyways, gold and silver have been the investment of choice during times of economic trouble.

Against my better judgment, I was listening to the idiot-box (CNBC) with the volume turned up as their “experts” were making their predictions for 2012.  Guess what; they made the same predictions they’ve been making since 2000, and once again gold and silver didn’t make the cut.  Well; stupid is what stupid does, year after year.  So I’d like to recommend a New Year’s Resolution for my gold and silver buddies: in 2012 we will all turn down the volume on the idiot box, we will not leverage our positions, and most importantly, we will all grow some guts.  Come on, let Mr Sinclair get a little sleep!

Mark J. Lundeen
30 December 2011

Wednesday, March 23, 2011

Aggressive Retirement Portfolio For the Next 3 Years

Yesterday I put up an article on a simple retirement portfolio for the next three years, and described the results of the picks I had made three years ago (with much less market knowledge than today).

This was an exercise to illustrate how well a simple portfolio of just ten equities could perform compared to a widely diversified portfolio constructed using standardized financial planning principles. The idea was to show how identifying a long term fundamental market trend and investing to capitalize on that trend would outperform a portfolio designed on fixed percentage allocations in various asset classes.

The major issue to be debated is how much extra risk is involved with this strategy. Certainly, if you misidentify the long term trend on which you base your portfolio choices, the risk would be greatly magnified. This article assumes that you correctly identify a market trend, in this case, the extreme underpricing of silver based on years of price suppression and exhaustion of above ground inventories, and closing of primary silver mines which were no longer economically viable. Also, the long term uptrend in food and oil prices driven by population growth and peak oil.

In the year 2000, a median priced home in the USA cost about $225K. Silver was about $5 an ounce. The average home would have cost you 45,000 ounces of silver.

Today, a median priced home in the USA costs about $175K, and silver is currently at $37.35 an ounce, so today the average home would only cost you 4,685 ounces of silver.

If you sold your home in 2000 and bought silver, today you could buy nine identical houses with the proceeds and still have $105,000 left over.

I will not be going into the supply and demand fundamentals of silver here. For those unfamiliar, here is an incredibly well written, well researched series of articles by Jeff Nielson to use as a starting point:

History of Silver, Part I: the Metal of the Moon – Jeff Nielson

History of Silver, Part II: the great "build" – Jeff Nielson

History of Silver, Part III: inventories gone! – Jeff Nielson

The Silver Price-spiral, Part I: today – Jeff Nielson

The Silver Price Spiral, Part II: paper "inventories" – Jeff Nielson

The Silver Price Spiral, Part III: tomorrow – Jeff Nielson

Fifty Years of Suppressing Silver – Jeff Nielson

Before posting the more aggressive model portfolio, I need to emphasize that I would NEVER recommend for ANYONE to put 100% of their investment capital into equities of ANY kind. Depending on your age and personal situation, I would recommend for EVERYONE to have at least 50% to 90% of your investment capital in physical silver and gold bullion kept IN YOUR OWN POSSESSION. This is because of the MANY layers of counterparty risk involved with ANY investment in equities. For the uninitiated, I will list a few of them here:

  1. Currency collapse
  2. Bank closures (euphemistically called "bank holidays")
  3. Insolvency of or mismanagement by your brokerage
  4. Changes in government taxation policy
  5. Government confiscation or forced annuitization of retirement accounts
  6. Dilution of common stock equity by secondary share offerings
  7. Mismanagement, embezzlement, fraud by company management (think Enron)
  8. Large scale internet outage (think you'll be able to get your broker on the phone?)
  9. Interest rates will likely double soon, causing ALL bonds to lose 50% of their principal
  10. Temporary or permanent closure of stock exchanges
Don't think your stock exchange can close up shop? The NYSE closed for one week after the 9-11 attacks, and lost 7% of its value on the next trading day. It also closed for 4 ½ months at the onset of World War I and the US was not yet even a combatant. The Egyptian stock exchange closed yesterday, and when it reopened today, it was closed again after just one minute of trading. No investment strategy is without its risks. I am just highlighting here the risks involved in holding equities, that most people never even consider.


    Aggressive Retirement Portfolio For the Next Three Years

Ticker            %Holding        Sector      Equity___________________

PSLV            20%            PM        Sprott Physical Silver Trust ET

SIVR            20%            PM        ETFS Physical Silver Shares   

PHYS            5%            PM        Sprott Physical Gold Trust ETV

GTU            5%            PM        Central Gold Trust

CEF            5%            PM        Central Fund of Canada Limited

SLW            10%            PM        Silver Wheaton Corp

EXK            5%            MINING    Endeavour Silver Corp

GPL            5%            MINING    Great Panther Silver Limited Or

GDXJ            5%            MINING Market Vectors Junior Gold Miners ETF

BPT            5%            OIL        BP Prudhoe Bay Royalty Trust

CAG            5%            FOOD        ConAgra Foods, Inc

KFT            5%            FOOD        Kraft Foods Inc

RGR            5%            WEAPONS MFG     Sturm, Ruger & Company


This new model portfolio was prepared quickly with very little analysis of the individual stocks. The purpose was not to be reckless, but to illustrate how quick and easy it is to improve on the returns of standard investment strategies. This time I expanded the portfolio from ten to thirteen different equities, and once again it includes no bonds. I wanted stocks in well established companies that were in industries with good prospects for the next few years, in either good or bad economic times. I also added a couple of junior precious metals miners to add some leverage to the precious metals play. I will be coming back 1, 2, and 3 years from now to gloat, or possibly, to eat crow. Time will tell. I wouldn't be surprised to see this portfolio double in the next one to two years.

Once again, the aggressive model portfolio is heavily concentrated in precious metals (80%) and heavily overweighted in silver, with 10% in food, 5% oil and 5% in a weapons manufacturer. All 13 equities in the model portfolio will be purchased at today's closing price. Clearly, I'm not looking for diversification here, I'm looking for profits, and to beat the major indexes and standard portfolio allocations, without taking any excessive risk. There are no inverse funds and no leveraged funds, or funds of any kind other than precious metals and miners. Out of the seven individual common stocks of corporations, four have respectable dividend yields, and the three that don't are two junior miners, and Silver Wheaton, a unique company with all the benefits of a silver miner and few of the risks. There are a lot of other investments with excellent prospects over the next few years, but these were eliminated to minimize portfolio risk. Such investments include a dollar depreciation play (UDN), a rare earths play (MCP) and an inverse bond play (TBT). I'm sure all will do quite well based on current trends. The only way I can see that this portfolio losing money over the next three years is if the primary trend in precious metals were to reverse, but it is clear (if you've done your homework) that we are still quite early in the precious metals bull.

Disclaimer: Do not use this model portfolio as investment advice. Your own portfolio should be customized for your individual situation. Always consult a financial professional, but avoid the 98% of financial professionals that don't think for themselves, and don't have a thorough knowledge of the fundamentals and long term trends in the precious metals markets.

Disclosure: I hold none of the equities listed in the above article, and have no intention of purchasing any in the near future. I am long physical precious metals.