My name is Dick Young, and my message for you today is quite simple. This is a historic moment for our great nation. The choices made by our dearly elected officials over the next 12-18 months could do more to shape the future of our economy, national security, and personal and financial futures than any other point in our collective memory.
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Never was that more true than today.
In the name of “helping,” the federal government has made a hash of America’s economy:
- Jobs are not being created, thanks to the mountains of paperwork, regulations and now ObamaCare that stand in the way
- Savers are not being rewarded—the lowest interest rates in decades have left retirees with little option but to take on risk to generate income
- Banks are gambling on trillions in derivatives, but you and I will have to pay for their destructive losses
- The Feds didn’t just cause the housing bubble and its meltdown—they’re now standing in the way of a legitimate recovery
- Instead of developing meaningful domestic energy supplies, they subsidize the great ethanol scam and keep us hooked on foreign oil
- A disastrous trade policy has outsourced our jobs—and the future—to China.
A Force-Fed Goose Is Good
for One Thing Only…
…Fois Gras!
Digging your own grave would be one way to get exercise—but it’s certainly not the method I would advise!
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Our economic environment is entirely manufactured, and I’m sorry to say, it simply cannot be sustained.
Call it what you will— election-year math, funny math, or simply outright ignorance or even lies. It’s all the same to me.
I have been analyzing our economy and the global investment climate, along with our government and central bank, for nearly 50 years. And the hard truth is that I simply have never been more concerned about the state of our national affairs or our economy.
The United States is bankrupt.
Since 1913, when Woodrow Wilson signed the Federal Reserve Act into law, they have guided the U.S. on an increasingly perilous course with few exceptions. The model developed by the politicians this century has been a predictable bust.
Our interventionist Federal Reserve has created a distorted illusion of prosperity that is ultimately going to snare millions of Americans in its ugly trap.
The Fed is printing new money at unprecedented, truly ridiculous rates. Meanwhile, “nanny” Bernanke has manipulated interest rates to exceptionally low, entirely artificial levels.
My friend, reality will prevail.
It always does.
And in this case reality is going to be a smelly rocket launch of soaring inflation.
Neither Barack Obama nor Mitt Romney want to admit that it almost doesn’t even matter which one of these clowns wins the keys to the White House this November.
The forces I’ve just described are already severely entrenched. The rocket, if you will, has left the launch pad—at this point it would take an act of God or the type of gutsy political maneuvering we haven’t seen in this country for generations to stop the nasty momentum already in play.
I don’t know about you, but I just don’t believe that either of these men has the gumption, or the political capital, to avert an economic crisis of this magnitude.
Let’s Stand United
My outlook is not rosy, I know.
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Investing is no different. I always operate with a paranoid, safety-first survivalist mentality—now more so than ever. A successful investor in today’s perilous economic climate must be able to defeat inertia… master the art of patience… understand the power of compound interest… and hold on to the wealth he or she already has, at all costs.
First, do no harm, as the docs say.
So, join me now. Let’s rail against Washington and thumb our noses at the economic calamities our “leaders” have created. Together, we will protect our wealth and map a sound investing strategy with our eyes wide open to the realities around us.
If you are a conservative, family-oriented constitutional originalist and small-business owner, like I am, you must be quite shaken and deeply concerned about your company’s as well as your family’s future. I write for this group of Americans, including retired investors and yield-oriented investors, young and old, diligently saving for a secure retirement.
Unfortunately today, Americans face headwinds caused by the single most destructive government in my lifetime. And the previous one was a stinker as well.
If you count yourself as a left-leaning progressive or a speculator, trader or investor who does not embrace the power of dividends and interest and their fueling of the compound interest miracle, honestly, you will not be comfortable with what I am about to tell you.
A Marxist-Type Stranglehold on the Economy
My clients, America’s risk-taking small business owners, create most of America’s new jobs. And now they’ve have been slapped in the face by four overreaching Supreme Court justices and one who simply short-circuited. The grotesque burden of ObamaCare will act as a giant anchor on economic growth as intrusive federal government overreach gains a further Marxist-type stranglehold on the economy. Thomas Jefferson and the Founders did not intend the Commerce Clause to be tortured as these overreachers voted.I recently looked at the 50-year record of federal regulatory activity, especially as it relates to social regulation. In 1960, my first full year of college, federal spending on social regulation totaled approximately $354 million. I project that when full-year 2011 fiscal year data is available, the number will be about $46 billion. And that’s before the specter of ObamaCare.
Roger Pilon, Cato Institute’s vice president for legal affairs, writes, “ObamaCare was a mistake from the start, a massive effort by the federal government to take over and control one-sixth of the economy… It’s the most ambitious example to date of the political hubris progressives have displayed for over a century now, the belief that government can solve all of our problems.”
A new president this fall may be able to use an administrative measure in the Senate to overturn ObamaCare. Sixty votes will not be required, only a simple majority. Americans, in defense of America’s small business job creators, must send the appropriate reps to Washington to sweep away ObamaCare. To get our economy going again, new jobs rank #1, and America’s small business owners cannot be faced with the creature that is ObamaCare.
A “Sort Of” Rebound
During the employment deflation of 2008 and 2009, non-farm payrolls were shrinking by as much as 0.3%, 0.4%, 0.5%, and 0.6% per month. In just late 2008 and the first three quarters of 2009, over seven million jobs went down the tubes.Now about our “sort of” economic rebound: There has not been a single monthly employment uptick of 0.5% or 0.6%. Not one! In fact, in this lame recovery, there has not been a 0.3% monthly uptick. The best monthly uptick in the “sort of” economic rebound came back in May 2010 with one lonely 0.4% aberration, quickly neutralized with a downtick the very next month.
1.3 Million Jobs Lost
Are Americans paying any attention to the massive fraud and mismanagement in Washington? And this crowd wants to re-deal the deck in 2012? It’s insanity.When Bush, thankfully, moved out of the White House, non-farm payrolls stood at 134,379,000. Today, under the lack of leadership of Barack Obama, non-farm payrolls stand at 133,088,000.
In other words, America has 1,291,000 (yes, 1.3 million) fewer gainfully employed citizens than was the case when President Obama took office.
And to top it all off, America has lost its AAA bond rating. I blame the Fed, the free-spending Bush administration, and the current Marxist-influenced group in the White House.
And what do you expect when the house of cards created by the Bush/Obama spend-borrow-print merry-go-round spins out of control and disintegrates? Do you really think we are going to get out of this mess without a veritable mountain of casualties?
American voters had darn well better get out the broom this November. If the fools who have been minding the store for the last four years get another term, you may as well kiss your (…) goodbye.
GDP Growth Revised Downward
Back in May, it was announced that GDP had advanced by a none-too-hot 2.2% for the first quarter of 2012. A month later, we got an Oops revision downward of 1.9%.
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Massive Job Losses Continue
The big elephant in the room is the lack of job creation. I keep a log of major job gains or cuts, and here’s how it looks. Recently, Hewlett-Packard announced that it would hack nearly 30,000 jobs. At the end of ’08, Citigroup chopped 50,000 workers. In early ’09, GM passed out 47,000 pink slips, and Circuit City bid adieu to 34,000 loyal employees. In September 2011, Bank of America thinned its ranks by 30,000 poor souls. And so on and so on.I left out the big gainers, right? No. Not one on my list. The economy as a whole only managed to generate a pitiful 80,000 new jobs on non-farm payrolls in June. Momentum is consistently being lost with snail-paced growth extending month after tedious month.
I have worked with all the economic data mentioned above for over four decades, and there is no way I would fail to spot a shift in the economic weather pattern. And there is also no way my current conclusion on the economy is wrong. I used the word stinker, and it fits here as well.
And you know what? The unsettling cherry on the American economic cake is that the p-poor economic momentum has occurred in the face of pedal-to-the-metal money supply growth courtesy of the Fed and borrowing, debt accumulation, and monster bailouts from the Washington folk.
Interest rates are at a secular low and, in the future, will be a thorn in the side of economic expansion. After-tax corporate profits as a percent of GDP are at a level well beyond any expected cyclical peak. The coming cyclical downdraft will result in a 50% decline.
Federal Regulatory Agency Job Growth
Outruns Private Sector Job Growth
A final note on the troubling employment front is that horrible overall job growth masks the fact that the only real pocket of strength is government hiring. Over the last couple of years, federal job growth has run at a 2.15% rate, almost double the puny private-sector job growth rate.And most troubling of all for America’s small-business job creators is the enormous growth in federal regulatory agency jobs. Government regulators need to be a declining sector, not a frontrunner. If you can imagine it, in the last two years, federal regulator agency jobs have increased at a growth rate nearly four times private-sector job growth.
Sure has the look of socialist France to me. I love France and the French, and use the country as my new international base of research, but its government and France’s competitive position in international trade are another matter.
A Payday That Will Never Come
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Were my Payday Indicator back at levels of the 1980s and 1990s, I would be right unhappy with a projected 3.6% annualized target. But the investment environment today is even worse than cruddy with my Payday Indicator reading barely more than 1%. Investors aren’t being paid squat to invest.
The reason? Fiscal mismanagement by our elected politicians, which then leads to artificially low interest rates courtesy of the Fed. I would vote out the entrenched lobbyist-controlled politicians. And the Fed needs to be shuttered.
A Sickening Merry-Go-Round
Americans are being duped and defrauded. The currency is being debased. I am unsure how voters continue to stand for all the duplicity and politically self-serving officialdom in Washington. You are aware that America has lost its triple-A credit rating, are you not?And, yet, the very folks who have dragged America down this Alice in Wonderland rat hole not only want to return to Washington, but also are able to raise tens of millions of dollars from successful, intelligent Americans who should know better. The reason for continuing financial contributions is, as usual, self-interest.
We are on a sickening financial merry-go-round that spins ever faster and faster. My advice for you is to do what I am doing and what I have been telling you to do for years: Get off the ride. Once the g-force becomes too strong, the financial merry-go-round is going to spin out of control and break apart. All remaining riders will be hurled into oblivion. Sound cool to you?
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Payback’s Coming
If you want to avoid getting torn apart in the coming payback collapse, you have only one first-call option: GNMAs. They are mortgage-backed securities that are guaranteed by the full-faith-and-credit pledge of the U.S. government—the only mortgage-backed securities with this guarantee. They are as safe as Treasuries, but they offer greater yield.Most of the risk in full-faith-and-credit-pledge GNMAs is what is referred to as prepayment risk, which takes hold in periods of rapidly declining interest rates. When rates are falling, homeowners tend to refinance, paying off higher interest loans for lower rates. Thus GNMA investors will be accepting a reduced rate of interest.
Today, with interest rates already on the floor, prepayment risk is as low as it can get. You have the perfect environment in which to buy GNMAs.
My two top picks are Vanguard GNMA (VFIIX) andVanguard Short-Term Investment Grade (VFSTX). These two low-cost Vanguard blue-chippers must be foundational building blocks of your portfolio.
For all the details on GNMAs and other investments with returns that double or triple what you can get in U.S. Treasuries, join my Intelligence Report advisory service today.
$100 Trillion in International
Derivatives
Can you even get a grip on this huge number? Even if you could, it is sadly outdated. Since 2000, the international derivatives market has grown exponentially at a compound growth rate of nearly 20% per year and now stands in excess of $700 trillion.Moreover, only the 10 largest banks in America control nearly 80% of total banking assets today. Talk about monumental risk concentrated in a small playing field. And you know what? Deteriorating financial conditions at home and around the world intensify the risk.
Case in point: J.P. Morgan’s stock has collapsed more than 25% from its March peak and has cost J.P. Morgan investors over $23 billion. Scandalous trading losses ran Morgan itself $5.8 billion.
These destructive losses came from trading credit derivatives and are but the tip of the derivatives iceberg. The rule of 72 shows that at a 20% rate of growth money doubles in only 3.6 years. As such, the worldwide total of derivatives would advance from the trillions to the quadrillions--more than the market capitalization of all the stocks in the world combined…even at their all-time high.
And whose money is J.P. Morgan speculating with? Yours. Because Morgan is labeled a commercial bank, the money being used for speculation is depositors’ money. Anyone smell a rat here? The federal government guarantees these deposits. And as we have seen when speculation once again ends up in a debacle, you and I are on the hook for a federal bailout.
America is badly overdue for a massive overhaul in Washington. The entrenched members of the Senate, in collaboration with a sadly overmatched administration, have piloted America’s ship of state onto the shoals. Most Americans are aware of the deficit/debt charade and how we have been head-faked by lousy leadership in Washington. The media, however, continues to hide the true state of the economy from the public.
My funds are at Fidelity and Vanguard—private firms that do not speculate in the derivatives market. Those two fund families are my top two choices for your mutual fund investments, and there is no #3. For the full story on how and why to consolidate and protect your assets at Vanguard and Fidelity, join Intelligence Report today.
The Perfect Fighting Machine
Ben Graham said it best, “Investing is most intelligent when it’s most business like.” That has led to the formation of Young’s famous Principles of Operation. These are the cornerstones of my success.
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Our Principles of Operation are like the armadillo. Nature and evolution have rendered the armadillo as perfect a fighting machine for the land as the shark is for the sea.
The Armadillo Is
God’s Sherman Tank
The armadillo is aggressive. Using our Principles of Operation, you could have turned $8,750 into $405,125 in just 13 WEEKS.These are exact figures and give you a real-life example of what this approach can do for you.
The armadillo carries a thick coat of protective armor. Use our strategy, and you will not lose principal. In the last 18 years of using this strategy, I have not taken a single significant loss.
That’s because I invest in companies with real profits, with built-in protections against price inflation and against price deflation, in areas where the trends are so locked in place, they cannot be stopped.
The armadillo is a survivor. One of Earth’s oldest animals, evolution has left him stripped of all cuteness. Our Principles of Operation ignores fads and crazes. It ignores flashy “peacock” stocks and today’s media darlings. It keeps things radically simple: hunt and protect.
Use our Principles and… turn off CNBC and get the newspaper for the comics!
This strategy doesn’t try to time, and it doesn’t pretend to know tomorrow’s headlines.
Many multimillionaire users of our Principles of Operation spend, so they tell me, less than three hours a month managing their entire portfolio.
These are top Fortune 500 executives, and some of America’s wealthiest families. And today, you have the opportunity to put it to work for you.
If you want to protect your principal, if you are ready to buck the fads and start making real profits, it’s time to take the first step. Order Intelligence Report today.
Dry Rot Setting In
As a punctuation point, it would appear that 2012 is shaping up to be a brutal year in terms of foreclosures. And I continue to read that one-in-four American homeowners are under water on their mortgages. Your elected politicians are at fault here, driving unqualified Americans to banks that were forced to make bad loans. The Fed is a complicit partner in the ongoing real estate charade.So let’s see here, employment and the real estate market are in the tank, and many of Young Research’s sensitive economic momentum gauges are in downtrends. My Moving the Goods and Relative Dow Transports vs. Dow Industrials chart has trended down for many quarters.
Get the feeling that you are being had, that you are being played for a sucker? The sad truth is that the politicians in Washington and the complicit Fed have bankrupted America.
The charts above are just two of 32 I analyze for my Intelligence Report subscribers every month. If you’d like to join them—a group I guarantee is better-informed about the true state of our economy than your broker or financial advisor—go here now.
Dump the Tax Code
There are 70,320 pages in the U.S. tax code. There are so many different variables that can affect an individual’s tax situation that it is insane. In short, our tax code must be junked. Everyone must pay a fair share.
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Tax cutting, of course, goes hand in hand with budget restraint. But the trimmed-down version of Uncle Sam I envision in Washington would weigh in at a svelte 155 pounds–far less than the current grasping Jabba the Hutt now in place.
In other words, Washington’s appetite for cash would be sharply reduced. With my plan, all Americans would have an opportunity to pay their fair share; American troops would begin a long-term pullout from foreign soil; redundant homeland military bases and cold war-oriented weapons programs would get the ax; and a wide array of federal agencies and programs would be shuttered.
Close Down the IRS
All in all, the right thing to do is not complicated. Remember Herman Cain’s 9/9/9 flat tax plan? It was a good plan, and, with a few touches, it is my advised plan today.
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The elimination of all individual and corporate taxes along with the entire tax code and the IRS would kick start a huge boom in the U.S. Deductions, loopholes, and political adventurism would be a thing of the past. Most of the IRS would be junked. And imagine this: Returns would be so small they could be filed on postcards.
Bailout Fiasco
The bailout precedent created in the 2008 financial crisis is very dangerous. The theory is that taking illiquid assets off bank balance sheets and replacing them with cash will encourage lending and thaw credit markets.The problem with the bailout mentality is that it doesn’t allow the market to correct itself, further extending the amount of time it will take to come out of the recession. The fastest and most efficient way to recover from a credit crisis is to let bad banks fail. The sooner the troubled banks fail, the sooner the economy can move forward.
The transition will, of course, be painful, but a continued asymmetrical response to economic weakness in the U.S. is disturbing and encourages irresponsible behavior by market participants.
And as much as Democrats would like Americans to think that bailouts are a gift Congress is giving to them, it’s really the other way around. Bailouts are money taken from Americans and given to special interests to buy votes and campaign contributions. Money that is borrowed from China today is stolen from the next generation of Americans. Someone will have to pay for the largesse of the past two decades; Americans have to choose whether it will be them or their children.
The Land Without Bailouts
Do you know that in Canada there were no bank bailouts? Canada did not have a banking crisis in 2008. Canada’s banks hold their residential mortgages. They do not sell them or repackage mortgages for securitization. And Canada’s residential bankers require a proper down payment and want to get to know their borrowers.Beginning in 2011, Canada has had the first conservative majority since 1993. Meanwhile, the country has balanced its budget and retired debt by collapsing government spending. Unlike the U.S., there was no sovereign credit downgrade for Canada. Canada has hacked its corporate tax rate to 15% and slashed its capital gains tax rate.
Combine excellent resource wealth (minerals, timber, oil, natural gas) with a strong financial system, great education (fifth-best in the world in science, reading, and mathematics according to OECD), and a free economy built on a strong democratic system, and you get an attractive investment environment.
All of this serves to underpin my advice that you move a portion of your wealth into Canadian investments. You won’t find a single U.S. bank on my list of recommended stocks, but you’ll find three Canadian banks. And my top Canadian ETF, iShares MSCI Canada Index Fund (EWC)will give you access to both banks and other sectors in Canada with instant diversification. JoinIntelligence Report today for all the details.
Oil: Not a Supply Problem
Another critical area where the Fed is working against you is energy. First, the lack of a coherent energy policy leaves us way too reliant on foreign oil.
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U.S. oil production started to decline in the early 1970s. Here we are in America nearly four decades later, and not a whole lot has been done to safeguard America and investors, except to start a few wars that have a lot more to do with oil than they do with spreading democracy.
But the key is not more oil. It is less oil demand, and I mean, as Shimon Peres meant, a whole gang less demand. Savagely reduced demand for oil must be the next U.S. president’s #1 domestic priority.
There is a direct link between oil and terrorism. Do you know that Saudi Arabia spends nearly 10% of its oil-based GDP on military expenditures? A real crimp needs to be put in this. Wahhabism, Saudi Arabia’s state-sponsored religion, is the most militant strain of Islam. We must stop importing oil from Saudi Arabia and, for that matter, stop doing business of any kind with Saudi Arabia as fast as is sensibly possible.
Young’s Intelligence Report subscribers have skimmed huge wads of cash off oil fields in Brazil, China, the Indian Ocean, North Sea, and many fields in between. Oil is big money, make no mistake.
But shale oil is big new money.
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U.S. oil shale reserves total 1.5 trillion barrels or 5 TIMES MORE THAN Saudi Arabia…
…enough to make the doziest sheik sit up straight and blink.
…enough to make your average Texas oil man, who missed the whole story, just about sicker than a dog.
How to Play This Revolution
I’ve made big money in ExxonMobil and the other Big Oil Guys in my career, and you know why? These guys don’t try to sell you on the critical “reserves,” next year’s rig counts or baloney “oil equivalents.”They stick to the math. They know how to add, subtract.
This sober discipline makes the ExxonMobil executives unlovable, yes, but mightily profitable, which is all my subscribers and I care about.
Finding the next great wave of energy success stories has nothing to do with luck.
It is just math. And the simple, inevitable, immutable Laws of Math will continue to rule our wealth in 2012. Nothing more, nothing less.
It will trump Washington.
It will stomp healthcare hysteria.
It will drive, according to my math, nearly 100 major cities and even several states toward bankruptcy this year.
The Fraud of Ethanol
Second, federal meddling has created the ongoing scandal of using corn to generate energy.In the last few years, most of the surface energy yak has been about green energy—you know, solar, wind and the like. And the government has weighed in on the issue with the absolute fraud of ethanol, a wasteful, ridiculous source of energy that may not even be net-energy-positive. Over 40% of the U.S. corn crop is used to produce ethanol. Is it any wonder there are food shortages?
Ethanol doesn’t make any economic sense, especially when it’s produced from corn here in the U.S. That’s why there is a 54-cent tariff on an imported gallon of ethanol, and a subsidy of 45 cents for each gallon of ethanol produced in America.
Not only that, but many are forced to buy gasoline infused with ethanol to meet government standards. What a racket! Not only does ethanol need 99 cents a gallon of government protection, but it also needs a mandate to generate demand. Even Al Gore doesn’t believe in the merits of ethanol today, now that he isn’t receiving ethanol campaign contributions.
The Energy Bridge for
Solar & Wind
Last but not least, energy gives us the perfect case study of how good things happen when government stays on the sidelines.Because the national security of America hinges on securing our energy sources, entrepreneurial Americans like T. Boone Pickens, Amory Lovins, Lloyd Yates, Kelcy Warren and Richard Rainwater know that natural gas from shale is one central solution.
On the natural gas front, what is going on today will alter global geo-strategy game plans. Gas reserves are vastly above levels projected just a few years ago. Unconventional natural gas plays in the U.S. hold enough reserves to supply the country for a 100 years at current production levels. The Marcellus, Fayetteville, Haynesville, Barnett and Woodford shale-gas fields are each big time. Clearly there is a revolution in the gas fields of North America.
The abundant U.S natural gas reserves and persistently low prices are beginning to catch the attention of business. Low natural gas prices are spurring investment in facilities that use natural gas to make chemicals, plastics, fertilizer, and even steel. Liquefied natural gas (LNG) terminals that were built to handle natural gas imports are seeking approvals to export LNG. And the first two all-electric vehicles hit U.S. roads in 2011.
I look for natural gas from shale to be the bridge for solar and wind power. In combo, a smarter grid and the switch to compressed natural gas and to electric cars will lead to America’s energy security.
The opportunities for increasing substitution of natural gas for oil are finally starting to emerge. Natural gas shares continue to offer profound opportunity for long-term investors. My strongly favored First Trust Natural Gas (FCG) is the best way for you to start. Intelligence Report has the details on this ETF, and a couple of dozen more that take advantage of locked-in trends like the natural gas revolution. Go here to join.
Availability—Not Price
On the solar energy front and on energy period, my rule of paranoia is that it is guaranteed domestic availability that rules and NOT PRICE. Are you hearing me on this? Because most folk are 100% in the dark. All you read about is cost.
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That’s one reason I am pushing for single-term limits for all the lovely folk in Washington. With the exception of, say, Ron and Rand Paul and Michele Bachmann, there are darn few of these folk I need to see back for another term, never mind lifetime sinecures. The founders were against the political gravy train.
My solar installation at my home in Key West Florida, then, is not a cost-effective way to generate electricity. Rather, it is a way to help guarantee that I will have electricity through thick and thin: through hurricanes, outages, or blackouts. Cost is not a consideration here. It is guaranteed domestic availability that I care about.
It’s Alice in Wonderland Time
The Fed tells us that it will keep interest rates low for years, thus maneuvering to control both the price and the quantity of money. Something indeed is being smoked here, and like the song says, “Go ask Alice when she’s ten-feet tall.” In my musical analogy, Alice’s height today equates to the future rate of inflation.I classify the condition of the U.S. stock market as a stinker. The interventionist Fed has created a distorted illusion of prosperity. As the Federal Reserve authorities rap on about QE1, QE2, et al., you intuitively know you are being had. To get any type of yield today, investors are being forced out of the yield curve or into the foulest sectors of the stock market. Yup, the bad stuff in the stock market is going up and the good stuff is going down, or simply wallowing. What a nightmare environment.
And Mr. Bernanke is on his hands and knees blowing on the monetary fire. I expect the Fed chairman will soon rise to his feet and drop log number three on the monetary flame. Both the Obama administration and the Fed are terrified that the U.S. economy has caught a bad case of monetary bribery flu—a nasty sickness at election time. But just wait until the Fed’s mushroom-induced high wears off.
How About YOU, My Friend?
Natural resources—gold, oil, food, commercial real estate—these FOUR strategic resources in particular—will respond to this crisis as a hypoglycemic patient nearing blackout responds to a needle—with flat-out panic that will double, triple, quadruple, quintuple prices in a shockingly short matter of days.The case for natural resources at this moment in human history is no different from the case for rebuilding Europe after WWII.
When you follow our plan, you’ll find a lot to like in companies you’ve never heard of: Xcite, Nautical Petroleum, Encore Oil, Cariot O&G, and Parkmead to name a few. They handed out doubles (NPELL)… triples (EOL) and tenbaggers (CHAR.L), or better. PMG.L was up nearly 3,000% in 3 months, which is almost scary, but also shows how chronically undervalued many of these wildcatters are… and remain.
The Math Works
Not just the math, either, as I have explained in this report. My advice: Do your homework—and don’t let John Paulson walk off with all the profits.My team and I have prepared the answer to these crucial questions in great detail. We have a plan. Follow it. Protect your wealth and use the months ahead to grow it meaningfully.
Stay Out of China
If you don’t have enough evidence yet of the damage that too much government can do, just look at the ultimate case—China.
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The CPC’s policies have resulted in a grand misallocation of capital. A mercantilist currency policy, perverse incentives for provincial government officials, and crude monetary policy tools have helped inflate a fixed asset and real estate bubble that puts the U.S. real estate bubble to shame.
It should be obvious to most that things are not as they seem in China. China has reported GDP growth of 7% or more in every quarter over the last two years, but the Shanghai Composite Stock Index has plunged more than 20% during that time. If China’s economy were truly booming, Chinese shares would most likely be trending up.
China suffers not from a quantity of economic growth problem, but a quality growth problem. China’s GDP statistics are being propped up by unproductive fixed asset investment. The real estate sector is the most obvious example. To prop up GDP growth rates the Chinese are building entire cities, but they are virtually empty.
It is perplexing that the world has allowed a command style economy run by an unelected political party to become such an important player in the global economy. China is now the world’s second-largest economy and America’s second-largest trading partner. If China heads into the tank, the world economy will suffer.
The Rare Earths Debacle
China doesn’t play by the same rules or have the same motives as the world’s other large economies. China has consistently manipulated its currency to gain export market share and it has subsidized favored industries through its financial system to the detriment of non-Chinese companies.
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Rare earths companies ramped up production in the ’80s and ’90s and drove prices down to unprofitable levels. The Chinese government was more interested in maintaining stability through high employment then, as they are today. Low prices pushed rare earths producers in the U.S., Australia, and elsewhere out of business.
With the support of subsidized loans, China’s rare earths companies were the only companies able to remain in business at such low prices. Now the U.S. relies on China (at least temporarily) for a supply of metals vital to the defense industry and other high-technology industries. Sound like a smart strategy to you?
Chinese Hacking
There is also mounting evidence that China has been hacking into the networks of U.S. companies and organizations. The Wall Street Journal reported in December that a group of hackers (read: the Chinese government) hacked into the U.S. Chamber of Commerce’s computer network. The Journal reports that the hackers may have had access to the Chamber’s network for more than a year before the breach was discovered.The full extent of the damage from the hacking incident will be difficult to determine, but it is possible the Chamber’s network was used to send booby-trapped emails to Chamber members (large U.S. companies) to gain access to their computer networks with the likely intention of stealing trade secrets. According to the U.S. counterintelligence chief, the Chinese are “the world’s most active and persistent perpetrators of economic espionage.”
So then, China unfairly manipulates its currency to gain export market share, it subsidizes favored industries driving companies in America and other countries out of business, and it illegally hacks into U.S. company computer networks. Sound like a country that should be our #2 trading partner? How about a country you want to invest in? I continue to avoid Chinese shares and advise the same for you.
Steer Clear of the Social Network
As I’m hoping you are realizing, bad government policies are not just hamstringing our economy—they are crippling investors, too. A decade of mediocre returns has caused investors to gamble on rank speculations with little chance of earning real returns. For my money, the worst of the bunch is Facebook.
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The Wall Street promoters tasked with peddling Facebook’s shares successfully convinced investors that a company founded only eight years ago and run by 28-year-old CEO Mark Zuckerberg was a better bet—by a factor of 10—than Apple.
Greed enabled Wall Street to once again dupe the investing public to line its own pockets. Facebook IPO investors were led to believe that a young Internet company run by the hoodie-wearing bathroom bandit (Zuckerberg hid in the bathroom at a New York investor presentation) could consistently generate the astronomical earnings growth needed to justify Facebook’s lofty valuation. Almost as soon as the shares started trading, the market decided otherwise.
No Barriers to Entry
Even if Facebook were under the leadership of a more seasoned executive, the company wouldn’t be worthy of your investment. Facebook is speculative. It is a business with almost no barriers to entry. How long will it be until another 20-something college dropout comes up with a better mousetrap?It should be telling that only months prior to Facebook’s IPO, Zuckerberg paid $1 billion for Instagram, an 18-month-old start-up that was founded by two Stanford grads. Instagram has no revenue and only 11 employees. The company’s only product is a basic social networking application built around photo sharing. Facebook engineers could have created a similar product over a long weekend.
So why did Zuckerberg pay $1 billion for the company? Likely because Instagram, which already has 30+ million users, threatened Facebook’s dominance in social networking.
Privacy Problems
Low barriers to entry aren’t Facebook’s only problem though. A recent New York Times article,Like It or Not, His Face Is on Ad, highlights some serious privacy issues with Facebook.By example, did you know that if you “like” President Obama’s website (solely to stay informed of what the President is up to), Facebook can use that information to create what is called a sponsored ad of you endorsing the President? In fact, anything you “like” can be turned into a sponsored ad. Sounds unreasonably invasive to me.
I’ve decided to deactivate my Facebook account because of privacy concerns as well as a total lack of interest. I advise you to consider the same.
Avoid IPOs
Waning interest in Facebook may also explain the timing of the IPO. I eschew IPOs, and I advise the same strategy for you. IPOs are often a raw deal for all but the well-connected. You have to ask yourself why the folks who know the most about their business have decided that now is the time to go public. If there is not a well-justified reason for a company to raise equity capital, the founders may be looking to cash-in while public sentiment is still positive.The Facebook IPO appears to be just such a situation. Facebook didn’t need to go public to raise capital. It had no problem raising money in the private market. It appears as though the IPO was merely a ruse to provide top-of-the-market liquidity to Facebook’s early investors. Naturally, America’s favorite bank, the self-proclaimed Muppet-master, Goldman Sachs, is among Facebook’s early investors.
Unfortunately, the patsy in this con job was once again the unsuspecting investing public. Based on SecondMarket trading (an exchange for private companies), Facebook’s share price momentum peaked over a year ago. IPO investors looking to make a quick buck on Facebook instead lost 30% or more. Stay far away from Facebook and avoid all other “hot” IPOs.
Will You Have a Chair When the Music Stops?
It is musical chairs time for investors. When the music stops, are you going to have a chair? You will do just fine if you deploy exactly the strategy I lay out for you. First, you’ll want to consolidate all of your financial assets, as I have, at Fidelity or Vanguard.
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How do metals fit in? Silver and gold are insurance policies that I hope I will not need. I do not buy gold to profit from a rise in its price or to sell to someone else. I buy gold as the ultimate store of value and pray the price trends down. Why? Because most likely everything else I own would trend up.
If gold should soar in price due to the destruction of the fiat dollar (likely), I not only will be glad I own every ounce of gold that I now own, but will also wish I had bought a whole lot more.
Likewise, strong foreign currencies like the Swiss franc, Canadian dollar, and Swedish krona will protect you from dollar debasement.
Switzerland has one of the strongest currencies in the world, and one of my top picks to hedge against the U.S. dollar debasement. I own jumbo positions in the Swiss franc throughCurrencyShares Swiss Franc (FXF). I advise you do the same.
Another country I’m investing in is Sweden.
Who is the most successful conservative finance minister in the world? My bet is on Sweden’s Anders Borg. And yes, you can spot Borg by his trademark ponytail and earring.
Swedish conservatives won re-election for the first time by promising Swedes that they would cut taxes, giving the average worker an extra month’s salary every year. The Borg response to the 2008/2009 financial panic was a permanent tax cut to speed recovery. The opposition screamed Borg was bonkers.
Well, last year Sweden celebrated the elimination of its deficit. Borg believes that wealth for Swedes comes from the people, not from the government. Maybe Washington should give Stockholm a call…
Here’s what sets Borg apart from the rest of the world: He is a trained economist, which is unusual for finance ministers. Borg likes to emphasize that in Britain, the economic argument is all about how government can create jobs—the exact position that holds sway with the income-redistribution-oriented Obama team. But Borg has a much different slant for the fast-paced Swedish economy.
He looks for incentives to work. Borg deploys supply-side logic with a thoroughness that is unthinkable in a country like Britain. Borg has published his ideas in a massive book in which he explains how Sweden can reform and adjust the labor market and lower structural unemployment. Such a detailed, thoughtful strategy is well beyond the scope of the British or, for that matter, Obamanomics.
It’s for these reasons that the Swedish Krona is a great hedge against the U.S. dollar. I recommend CurrencyShares Swedish Krona Trust (FXS).
Get the best ways to invest in metals and currencies when you sign up.
The Shame of Executive Order 6102
Back in 1933, Franklin D. Roosevelt (a national disgrace), issued Executive Order 6102, which outlawed the private ownership of gold coins, gold bullion, and gold certificates by Americans, forcing citizens to sell gold holdings to the Federal Reserve.Even though the United States Bullion Depository holds over 4,500 metric tons of gold bullion, the government, the Fed, and the Washington political elite will always be anti-gold. Why? Because gold-backed paper money forces fiscal discipline on politicians and their lapdog, the Fed.
I put gold in the same camp as guns and ammo as assets the government will most often wish to confiscate. I have for decades operated under this premise and have acted accordingly and have advised the same for you. Your mandate is armadillo-like self-protection. I care about asset protection and purchasing power protection—period.
If some pleasing capital appreciation comes my way, great, but I do not invest with price appreciation as anything but an afterthought. Give me my interest and dividends and protect my capital and leave me alone. That’s my investment creed.
I Pay No Attention to Wall Street Research
I operate on behalf of myself, my family, and discerning investors like you with the competitive advantage of nearly five decades in this business and a paranoid, safety-first survivalist mentality. You come to me when you are fed up, tired of being BS’d, and ready to commit to a formula of consistency, organized thought, and reduced portfolio volatility.
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So how do I plan? Most of what you read in the media is hogwash. To reduce static, I do not listen to the media, I do not turn on a television, and I pay zero attention to most general readership newspapers and magazines.
I however do aggressively dig into the online edition ofThe Wall Street Journal six days a week, but that’s the extent of my interest in general-circulation news and events. The material I use to formulate strategies comes from books, specialized journals, and reports of special and narrow interest. In other words, white-paper sources. I have never paid any attention to Wall Street research, and I spend no time on the phone asking people what they think.
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Your Security Strategy
I look at financial and personal security in the same light, as should you. Since 9/11, I have spent much time and money upgrading our personal security. My initial target for you is to devote 1% of your liquid net worth to personal security.If that sounds excessive to you, remember this: you don’t just have to worry about the federal government. Your state and local authorities are in all likelihood letting you down, too.
Thanks to decades of mismanagement, three sizable California cities—San Bernardino, Stockton and Mammoth Falls—all declared bankruptcy in the last few months. They follow on the heels of Jefferson County, Alabama, and dozens of smaller towns, too.
The causes are no surprise: wasteful spending, bad investments, greedy public unions, falling tax receipts, and on and on. What is not apparent (yet) are the effects: fewer cops on the beat, slashed emergency services, postponing repairs to decaying infrastructure like water, sewer, power grids and more.
Add it all up, and you can see why it makes no difference if the next threat is severe weather or a terrorist attack…you’re a fool if you expect a government official to come to your rescue. You may be in the dark, without food or water or communications or transportation or prescriptions for days at a time.
Are You Ready?
The first thing you want to do, whether it’s financial or personal security, is to conduct a rigorous risk analysis. On the financial front, risk analysis takes priority over the subject of gain. In my experience of nearly five decades of advising conservative small business owners and investors, proper risk analysis rarely receives the exalted position mandated—far from it. Unfortunately, the same omission often comes into play with personal security. My wife Debbie and I both have a Florida concealed weapon/firearm license. In Florida, you have to take the handgun safety course (in our case as administered by the NRA).I would start out on the personal security trail with a concealed weapon/firearm license from your home state. When on the road on the Harleys, especially in Canada, and when flying, we, of course, cannot carry firearms. Instead, we both carry a “Travel Wrench” (order through Amazon). I cannot begin to tell you how many “Travel Wrenches” I have given away to friends.
We also carry razor-sharp yellow school pencils. Right, school pencils. The ones sold in plastic see-through cases at any CVS. An aggressive attacker would be slowed to a crawl with a stab into a hand or neck. All right, you are off and running on the personal security front and you’ll be much more so when you sign up for Intelligence Report today.
EMP Threat Exaggerated?
Late last year, The New York Times authored an article suggesting that the threat of EMP attack is nonexistent, or at least much exaggerated. Whew, what a stinker. I have read the Report of the Commission to Assess the Threat to the United States from Electromagnetic Pulse (EMP) Attack, and it serves up a chilling look.
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An electromagnetic pulse (EMP) attack is a real threat. In simplified terms, EMPs are caused by detonating large nuclear payloads in the atmosphere, thus raining electromagnetic waves down on the country. Electromagnetic waves have a crippling effect on unshielded electronic equipment.
The results of such an attack would be frightening. Mass failures of traffic signals, air traffic control centers, pipelines, power plants, and machinery used to harvest food would cripple the country. Famine, cold, and hysteria are the likely outcomes for those unprepared for such a situation.
In light of the scenarios outlined in the EMP report, some basic precautions can be taken. These precautions will not only keep you safe in case of disaster, but will also make your life more comfortable in times of hurricane-related power outages or droughts. Get my 10-step guide to security in the face of EMP attack when you sign up.
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Thus putting you in a perfect position to know with absolute certainty that listening to my advice was the smartest thing you ever did. I’ve been doing this for over 40 years, so I have some knowledge about how that decision gets made.
I win. Because you win. Perfect.
It is precisely on such principles that I have run my life.
My guess is, you are somewhat familiar with these principles yourself and are perfectly comfortable with them.
Financial and Personal Security is Within Your Reach
As I hope I’ve illustrated, our very own U.S. government is tops on the list of threats to your financial well-being.Running a close #2 is the Wall Street crowd. They have perfected the art of tempting investors into taking bigger and dumber risks in search of a safe return. When those bets blow up—as they surely will—investors will be even farther from their financial dreams.
To defend yourself from the Washington gang and the Wall Street crooks, you will find no greater ally than Dick Young, and this is the perfect time for you to join myIntelligence Report.
When you do, you’ll get all the wealth-defending and wealth-building strategies that 20,000 loyal subscribers employ every month. You’ll learn how to invest with an eye on risk first, and reward second, so that you win by not losing.
Not only that, but you’ll also learn about the critical steps you must take to prepare for disaster, whether it be a financial crisis, an unnatural terrorist attack, or natural disaster.
My goal for you and your family is personal and financial security.
I could write reams about the many benefits of Intelligence Report, but if you’ve read this entire report and found yourself agreeing with me about the dangers you face…and more importantly, how to counter them…you can rest assured that it’s the right fit for you.
So I’d like to make it easy for you to try Young’s Intelligence Report, by giving you my ironclad guarantee: At any time, you get your money back if you don’t like what I have to say. Anytime.
You keep everything you’ve received from me—all the monthly issues, the bonus reports like Freedom and Fortune Are Yours that I’ll tell you about in a moment, my Monster Master List of recommended stocks and mutual funds, my monthly economic analysis chart packs, all of it.
All just for giving Young’s Intelligence Report a try.