Editor`s Rant:

As the Dow hits 13,000 I have to remind people that a `nominal` high and a `real high` are very different animals. People see the number and think that it is some great plateau and that the economy is great and the stock market is great and everything is peachy-keen. NOT! We must remember that the raw number itself is meaningless when put in perspective. Remember that the Dow`s old `nominal high` was in January 2000 at 11,722. So in roughly 88 months it went up 1,278 points. Not bad, right? Well. it works out to an annualized rate of 1.4%. In other words, a decent, run-of-the-mill savings account would have beaten the Dow in the same time frame. But guess what would have beaten both the Dow and the savings account? The rate of inflation. But which rate? The heavily-reported `official rate` of inflation or the REAL rate?

The official rate is the one that the government tabulates and reports. You can find it at www.bls.gov. As the folks at www.shadowstats.com clearly point out, the government UNDERREPORTS the rate of inflation. The government tells the world the rate of inflation is only about 2% and the financial media happily and mindlessly reports this. Yet, the reality is that inflation is much higher. Let`s get real, what consumer necessity has only gone up 2% in recent years? Let`s face it; inflation is at least 6-8% and probably higher. The American people deserve honest reporting! I wish that the media would wise up and do its job. Actually, the issue is again the same; the government is the problem. The government misreports inflation because they mismanage the money supply. They have done such a horrible job with the money supply that they stopped reporting the M3 money supply figure which is the broadest measure of the money supply. Again, the folks at www.shadowstats.com stepped in. They reconstructed the M3 figure and the result was quite disturbing. The money supply grew at about 11%. Some of that went into consumer goods (both here and overseas to China and elsewhere) and into financial markets (such as the Dow). Since inflation, the value of the dollar and the money supply are all symptoms of the same problem (government mismanagement of the currency), it pays to diversify into things that will benefit over the long-term because of it such as gold and silver. Enough said.

MAJOR EVENTS COMING THIS SPRING..

June to be precise. Please mark your calendars for the following events:

Saturday- June 9, 2007: real estate investing

with David Corsi & Dale Siegel Fort Lee, NJ area.

If you want to get involved with real estate either as an investor or homeowner, then this is the event for you. The full details will be provided in early May so stay tuned. For those of you that are truly serious about real estate, email me at paul@mladjenovic.com with questions & suggested topics for the real estate event so that we can make it a practical and beneficial event for all attendees.

Saturday- June 16, 2007: ADVANCED OPTIONS WORKSHOP

With Paul Mladjenovic.

If the intro to Options class wasn`t enough then consider the advanced workshop. The full details will also be provided in the May issue so again stay tuned. For those that are eager about the event, feel free to contact me directly at 201-585-0239 or email me at paul@mladjenovic.com. Take care. regards, Paul Mladjenovic

The following essay is reprinted with permission from the writer:

Simple, Simple, Simple... but Powerful

By Michael Kilbach

Apr 20 2007 10:53AM
www.investmentscore.com

Investment Scoring & Timing Newsletter

April 19, 2007

The objective of this article is to illustrate a powerful investment analysis technique by first examining a simplified hypothetical scenario.  We will then explore this concept on the markets of today.  To do this we will:

1. Outline some basic investing rules to be used as guidelines.
2. Present a hypothetical scenario for analysis.
3. Guided by our rules, form a conclusion for the purpose of understanding the markets.
4. Explain how we think this analysis applies to the markets of today.

1)  Rules to guide investment analysis:

1. All markets are cyclical.  No investment is constantly a good or a bad investment.  Where a particular investment is in its cycle is what is critical.
2. There is always a bull market somewhere.  When one investment class is at an extreme high, we believe there is always an investment at an extreme low.  The trick is to invest in the investment class which buys the most of that asset for the least amount of money. 
3. All major macro market trends will not end until an extreme is reached in the direction traveled.  Once that extreme is met, like a pendulum swinging, the new trend will start and will not end until the extreme is met in the other direction.  Bull markets start when public sentiment towards an investment is extremely pessimistic following a major bear market and end during extreme public optimism.

2)  Hypothetical Scenario for Analysis:

For this hypothetical scenario we ask the reader to ignore previous investment understandings and simply concentrate on the word problem below:

For this scenario assume there are only four major investment classes: Stocks, Bonds, Real-estate and Commodities.  It is the year 2000 and as a general rule:

1. Stocks have been in a bull market for about twenty years, and public sentiment appears to be at an extreme high.
2.  Bonds have been in a bull market for about twenty years, and public sentiment appears to be at an extreme high.
3. Real-estate has been in a bull for about ten years and public sentiment appears to be aggressively climbing.
4. Commodities have been in a bear market for about twenty years and public sentiment appears to be at an extreme low.

QUESTION:

Based on the rules in section one of this article, of the four investment classes outlined in this scenario, what investment is most likely to be starting a brand new, long term bull market? 

3)  Hypothetical Scenario Conclusion

ANSWER:

The answer is obviously (d) commodities.  If we consider the above rules we know that all markets are cyclical and Stocks and Bonds are likely at the end of their bull market after a twenty year climb while public sentiment is at an extreme high.  We also know real-estate is heading into its more aggressive growth phase as public enthusiasm picks up steam.  However, considering our rule that bull markets are cyclical, the real-estate market is likely maturing rather than starting at an extreme low.  Finally, commodities have been in a major bear market for twenty years.  This asset class is practically hated as an investment opportunity and as a result ready to start a new long term bull market.

4. You may be wondering, since we are in the year 2007 and not 2000, how does this hypothetical scenario apply to our understanding of the markets today? 

4)  Understanding the Markets Today

The answer to that question is simple.  The same rules expressed above can be applied to the markets of today.  Why?  Human behavior as a group is very predictable.  Individuals can be unique but given a certain set of circumstances people as a collective will behave in a predictable manner.  If a group of people outside are rained on, most will seek cover from the rain.  Some individuals may enjoy the rain but most will predictably seek shelter.  When dealing with an emotional topic such as money and finances this predictability is especially true.  For example, if an investment is rising in value our excitement and greed tends to make us want to buy more.  As a group we bid prices up until they are too high, the extreme is then met and the trend quickly corrects.  We believe this is the predictable behavior of markets.   

So if we apply the rules above to the markets of today how can we profit from this knowledge when we invest?  We know that since 2000 until now:

1. Stocks had a major correction starting in 2000 and have since bounced.  However, public sentiment has remained high.  We believe brand new long term bull markets do not typically start in these conditions.  Additionally, in our opinion it is highly unusual for a major twenty year bull market to end and then start with only a two year correction in between.  This is not nearly enough time for public sentiment to diminish and set the ground for a new prolonged bull market.
2. Bonds typically follow the same pattern as stocks and in our opinion bonds are in the same situation as stocks in this scenario.
3. Real-estate by our calculation hit an extreme high in price, public optimism, excitement etc.  The indicators of the publics extreme `can`t lose mentality` towards real-estate are simply too many to list in this article.  Recently we have witnessed a correction, however in our opinion this is not nearly enough of a correction to offset the imbalance of the massive bull market advance.  
4. Commodities have been in a bull market for about four to six years depending on how one determines the bottom.  We believe overall public sentiment towards commodities remains negative but awareness of this market is very slowly making it to the consciousness of the general public.  In our opinion this is extremely bullish for commodities.  The market is rising yet it seems most investors are not aware of the potential mega bull market.

In our opinion the commodities bull market is just getting started.  As the general public realizes the commodities bull has been roaring ahead, they will likely jump on board and push up prices to dizzying, unsustainable heights.  We think commodities are a long way from being overvalued and the time to invest in commodities is before the public becomes aware of this mega trend.  We believe fortunes will be made in this bull market as early comers grow their wealth and late comers try to catch the trend, but fortunes will be lost for those who overstay their welcome.

Having a set of rules, understanding market behavior and incorporating a trading system around these principles helps an investor ignore the day to day noise and misinformation of media hype.  Having a system helps an investor reduce common investor weaknesses such as emotional trading decisions. 

We encourage readers who enjoyed this common sense approach to the markets to visit our website at www.investmentscore.com.  Here you will find free commentary, learn about our unique system for investing in the markets and have the opportunity to subscribe to our free newsletter.  You may also learn how we plan to determine when we will sell our precious metals investments.

April 19, 2007

Michael Kilbach
Email: info@investmentscore.com

The following is reprinted with permission from Jason Hommel:

How to Buy Silver, & Avoid Getting Scammed

Silver Stock Report

by Jason Hommel

April 20, 2007

People continually ask me about all kinds of physical silver investments.  I have avoided writing this article for years because people are always telling me to not say anything bad about anyone, or your competition.  But I don't need to name names, and liars are not my competitors.  So, here's how to avoid getting ripped off.

Never buy silver from TV ads.  Ads are expensive.  TV ads sell silver for up to $50 or $100/oz., up to ten times more than the silver price.  They sell as "rare, limited, collectibles" things that are mass produced, and newly minted.  In coin shops, you can buy the same products that were sold on TV ten years ago, right at the cost of the silver itself.

Never buy the Silver ETF.  First, they may not own the silver as it is unaudited and unauditable.  The nature of silver, and the reason you are buying it, is that silver is "payment in full" not a promise to pay.  The ETF is not even a promise; for you can never withdraw your silver, but only sell it for dollars--if the institutions running it don't go bankrupt.  See Jame's Turk's recent analysis of the ETF for more on why you probably should not trust the silver ETF. http://www.dollarcollapse.com/iNP/view.asp?ID=52

Never buy silver "certificates" or any other form of "paper silver"; not even if guaranteed by a government.  Goverments are the least trustworthy to back silver certificates.  If governments were trustworthy, why would they issue unbacked paper money in the first place?  Think about it.

Don't let anyone other than you, store your silver.  If someone else is storing your silver, then you own a promise to receive silver, (for a fee), and you don't own silver itself.

Never buy "leveraged" silver products.  I don't trust futures contracts; they can default, and I expect them to default.  I believe it is a moral failure to gamble with futures contracts, and is not consistent with true Christian conduct.  Futures contracts are a major scam.  Minor scammers will offer you less leverage, and they will take your money and buy futures contracts for themselves, and keep the difference.  Even worse, the minor scammers will talk you out of your orders, delay your orders, refuse your orders, purposefully trade you into losing positions, or confuse you with undisclosed costs and commissions.

Never attempt to buy silver or silver futures from a major brokerage house that may have a short position in futures contracts.  They may offer you every excuse in the book to prevent taking your order.  They may say that they must speak to a manager, or must wait for the market to open or for the "next price fix" on another day.  They may bluff, saying "it's not worth my time", or that "you'd be killed by commission charges" (how contradictory!) or try to scare you with "unknown assay fees".  (The assay is free at Brinks in LA.)  They may try to get you to buy the ETF, or silver stocks, or futures contracts, instead.

Never buy rare coins or numismatics for investment purposes.  I believe that rare coins are like idols.  Stay away from idols made from silver!  Up to 99% or more of the value can be in the image quality, or rarity, and not the substance of the silver.  Further, you can lose up to 50% of what you paid for the item when you sell it back.  As little as a $300,000 investment can be enough to unknowingly "corner" a market in certain rare coins, wildly driving up the value, because you are the only buyer, and you will have nobody to sell to.  I've bought a few rare coins, a few Roman denari silver pieces for $20 that contained less than a dollar's worth of silver.  But I bought them for the novelty, and curiosity, and as gifts, not for investment.  Some dealers "push" rare coins because they get a larger commission on rare coins.  Rare coins are illiquid and not fungible.  Silver is money because it is fungible, and liquid.

Never buy a "pool" account of unallocated silver.  Never let others hold your silver, either in allocated or unallocated form.  A pool account is unallocated, meaning that no specific bars are yours.  But even if it is allocated, and you have the serial numbers of the bars that you "own", your warehouse company can go bankrupt.  Maybe you can invest a little bit into allocated silver; as a way to diversify the location of your physical silver.  Two companies I would trust (but do not use) are goldmoney.com and the Anglo Far East Bullion Company; they will hold silver for you in allocated form. If you want to trust someone to hold your silver; trust your family first.  

Personally, I avoid buying Silver-Eagles.  Why?  Because they typically cost about $2 over the "spot" price of silver.

Liberty dollars are even more overvalued.  $20/oz.?!  Ridiculous.  And the Liberty dollar paper warehouse receipts?  Even worse.

You do not have to pay more than about 7% over the spot price for your silver, in the U.S.  Old silver coins are currently being sold for under the spot price of the silver content, which is 72% of an ounce in $1 worth of coins.

Shop around.  Prices vary.  Refiners manage to buy about 200 million ounces of silver under the spot price every year.  Try to buy close to their price.  Everything is negotiable.  (But remember, the coin dealer also takes a risk just to sell silver, as silver prices can move up 5-10% in a single day, too!)

Beware of long shipping times.  Long shipping times are a warning sign.  Coin shops have been known to go bankrupt.  Never buy more silver at one time than you can afford to lose.  Therefore, if you buy silver from a dealer, break up your order over time, or use several different dealers at once.  Diversify your investments at every stage.

The safest way to get silver is to buy from a local dealer, with "cash on the barrel".  Get cash from your bank.  If you plan to spend more than $5000 at once, order your cash from the teller a week in advance.  If you withdraw more than $10,000, be prepared to help your bank fill out the CTR or "Cash Transaction Report" Federal form which asks for your social security number and occupation.  In the meantime, locate various coin dealers that publish price quotes on the internet.  For a start, see here:  find-your-local-coin-shop.com  

Take cash to a local dealer, negotiate heavily on price; & show the dealer various price quotes from other dealers on the internet!  If your local dealer cannot fill your order at a reasonable price (within 1% of the lowest prices), then drive to another dealer, or break up your order, and order online from your sources.

Remember, coin dealers are the "working rich".  They take the risk of having a coin shop, which can be robbed, to make money, by serving you.  Most are very honest, and earn their commissions.  Many have had guns pointed in their face.  They are our industry's heros.  Treat them with respect; and don't waste their time; they are often too busy to write articles like this one to you; and most could not afford my advertising budget to be able to reach you.  
If you want to acquire $1 million in physical bullion, it will take some time, and a lot of work, and you will be one of less than probably 100 people worldwide attempting such a feat.   After years of searching, I have found only 5 coin dealers in the entire U.S. that consistently have as much as 100,000 ounces of silver in their own personal inventory.  Many dealers who claim to be "the nation's largest dealer" (and there are about 5-10 companies making such a claim) do not have so much in inventory.  Many dealers will claim that they can access as much, but that is because they will place your order with a larger dealer, and "drop ship" directly from the other dealer, to you.

Understand the difference between a price "indication" and a price "lock".  An indication is only a guess on what the price may be.  A "lock" means you are committed to buy at that price, and you have struck a deal, and cannot back out.  Be aware of the potential risk to bullion dealers who will give you a price lock, before they get your money, in a bull market.  (That is a standard business practice.)  Unless they are buying on the futures markets when they take your order with their own excess cash, or unless they have more metal than they want, then bull market conditions can eventually bankrupt them, if that is their standard business practice, and if their order volume is high enough.

This is why it is so important to do a cash for metal purchase in person.  It protects both you and your dealer.

The two largest dealers in the United States are Johnson Matthey, a silver refiner, and Amark who is Johnson Matthey's largest dealer.

Johnson Matthey has "run short" of silver several times in the last few years, where delivery times increased substantially, up to 6-8 weeks, and Johnson Matthey does not take orders from the public.

Amark will make you sign all sorts of government forms; and demand your social security number, and so I have never ordered from them directly.

If you live outside the United States, it may be much more difficult for you to find silver.  You might want to think about traveling to the U.S. to buy silver, and fly it back with you, or have it shipped.

Do not let yourself be confused by the flow of silver at your local coin shop.  In many cases, coin shops buy more silver from the public that continues to sell.  The coin shop must then "dump" this silver to another, larger dealer, or the refiners, like Johnson Matthey, who are the biggest buyers in the industry, the buyers of last resort.

It must be this way, given the market structure.  The silver mines produce about 700 million ounces of silver, and industry demands about 950 million ounces of silver annually.  The difference is largely met by "recycled" silver, about 200 million ounces per year.  In other words, investors are selling silver to the coin shops that ends up at the refinery.

Don't let your investment opportunity to buy silver go up in smoke, because if you don't act, it literally will.

And unless you end up with silver in your hands, you don't own silver at all.  Phantom silver, or a promise to pay silver, is not the same thing, and I hope you don't realize it when the promise to pay silver also goes up in smoke.

For more on what kinds of silver to buy, and where to get it, see
http://find-your-local-coin-shop.com/ 

Thank you!

"P.S. For my money in my IRA account, I invest in silver stocks and other natural resource stocks."

You can comment on this report at the "Hommel Forum" here: http://hommelforum.com/showthread.php?t=101

That`s all for now. I will try to get out 2 issues of the Prosperity Alert in May.

Regards,

Paul Mladjenovic

201-585-0239

www.SuperMoneyLinks.com

http://www.amazon.com/gp/product/0764599038/qid=1138517977/sr=1-1/ref=sr_1_1/104-9137451-8175124?s=books&v=glance&n=283155

A new e-commerce web portal www.SuperMoneyLinks.com was developed by the great professionals at www.NexWEB.com. They are a top-notch team that I have joined forces with to bring Mladjenovic content to the web.

For those of you that need excellent point and click Internet services, please contact them directly through their website at www.NexWEB.com.
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