Editor`s Rant by Paul Mladjenovic 12-31-07

First of all, I hope that this is a very happy and secure time for all. Christmas is a very special part of my life and this is greatly due to my religious values. This and the fact that it is also a new Year's celebration is important since I think that it is a time for reflection, gratitude and renewal. At the risk of offending someone out there, take it as a positive wish from my heart that God bless you and your family and that your mind & heart are ready to look forward and plan a good year for yourself and your loved ones. In 2008, I look forward to doing more to help you with your prosperity. Stay well ...

Regards, Paul Mladjenovic

http://www.amazon.com/Precious-Investing-Dummies-Business-Personal/dp/0470130873/ref=sr_1_1?ie=UTF8&s=books&qid=1199069920&sr=8-1

Ruff Interviews Williams Dec 7, 2007

I`m interviewing Dr. Walter John Williams, we call him John. He is a PhD in economics, and the editor of Shadow Government Statistics, a newsletter that is subscribed to mostly by money managers, bank managers, etc. to tell us the truth behind the government statistics that have been manipulated by various methods of reporting. I heard him speak at the International Investment Conference in San Francisco in November, and was very impressed I`m always impressed with someone who mostly agrees with me.

HJR: John, your following is pretty sophisticated? Right?

WJW: Yes, mostly professional investors – money managers. We publish an analysis of the government statistics: where they are right, where they are wrong, and the implications if they are wrong, which is generally the case. In fact, what has happened over the years is that changes in method-ologies have been implemented in reporting the key statistics, with the effect that economic statistics seem stronger than real growth, and inflation numbers tend to be weaker than reality, enough so that GDP (Growth Domestic Product) is overstated by three percent; the unemployment rate is really up around 12 percent as most people would look at it, and the inflation rate is now topping 11 percent.

HJR: This is very different from the published government statistics. I`ve been very interested in the inflation statistics because it has a direct effect on the investments I`m recommending, particularly gold and silver. If inflation was as low as the government claimed, that would pull some the props out from underneath the gold market.

As you know, I am a bull on inflation. I believe it will get a lot worse. I heard you say last night that you thought we are headed for an inflationary depression. I haven`t dared say that. I guess I want to be more acceptable to the world than I should, I guess. But you are unafraid because you have statistics to back up everything you say.

WJW: We already have inflation in place. The government is reporting 3½ percent inflation officially, but if you go back to the way it used to be reported before the era of Alan Greenspan and Michael Voskin, that methodology has it up around 11 percent. That is as of today (November 20, 2007). We are seeing inflationary pressures from oil and some from the money supply. The Fed stopped reporting M-3 measure of the money supply in March, 2006.

We primarily use the Fed`s numbers because they still publish most of the components, and I put together M-3 as it would be reported on an ongoing basis. Right now that is up over 15 percent. The less time you saw money grow that high was August, 1971 when Nixon closed the gold window.

The big problem with inflation is the fiscal improprieties of the federal government. Starting back at beginning of this decade, Congress mandated that the federal government publish financial statements on the government`s operations along the lines U.S. corporations have to do, using Generally Accepted Accounting Principles (GAAP). Weapons are put into inventory and expensed, and buildings are capitalized as assets and depreciated.

They also are accounting for two major items, Social Security and Medicare, in terms of the unfunded liabilities there, and the year-to-year change, discounted for the current value of money that really put forth remarkable statistics when you look at it. In 2006, the official deficit was close to $250 billion, now it is being reported as $162 billion for 2007. In terms of the GAAP statements, the way a corporation would look at it, we don`t have the 2007 numbers yet, but 2006 showed an actual deficit of $4.6 trillion. If the government wanted to balance its books, let`s say it raised taxes 200%, and took 100% of everyone`s wages, corporate profits, etc. the government would still be in deficit. It`s beyond containment from a standard fiscal approach.

The other side of it in terms of the political aspects, if you were to slash the spending that is causing the problems, you would have to severely slash Social Security and Medicare. These are the programs that are so severely underfunded. No politician would even consider talking about this; it`s political suicide. There is no feasible way to approach it by raising taxes. So effectively, the federal government is bankrupt! In terms of total obligations, it has a negative net worth of roughly $54 trillion, which is four times the level of GDP. Big governments generally do not go bankrupt. They can repudiate their debt, but the preference is to increase the money supply and pay off in very cheap dollars.

As the Federal Reserve continuously monetizes the federal debt, the rapid growth of the money supply causes rapid growth in inflation which becomes hyper-inflation. I would define a hyper-inflation when the largest currency note prior to the inflation (in this case it would be $100 bill in the U.S.) becomes worth more as functional toilet paper than as currency. Then you have a hyper inflation.

HJR: It`s not very functional toilet paper, because it doesn`t absorb water well. So it isn`t even any good for that. When I heard you speak at dinner, you mentioned David Walker, the Comptroller General of the U.S. who reported the unfunded liabilities. I wrote about him in my new book. For my subscribers, I`d like to define that term: Unfunded Liabilities means liabilities for which there is no dedicated income and no assets to support it. He said at that time that if we were to meet those obligations starting today, it would take $440,000 from every American family to do so. He was testifying before a very poorly attended subcommittee meeting of the House of Representatives. As you listen to the debates of both the Republican and Democratic parties, no one is even daring to touch on that issue. My personal opinion is that you have to be mad to want to be President, and whoever does get elected for the next four years will probably go down for 50 to 100 years as the Hoover of the 2000s, because he couldn`t stop the juggernaut.

I have also assured my subscribers that if they are now getting Social Security they will probably get it until they die. But it`s the under-50 crowd, especially the under-40 crowd, which is paying into it who will never see it, or it won`t buy anything when they start receiving benefits.

One member of our party last night that said we should simply cut government spending, getting rid of waste and stupid things government spends money on. My comment to that was that wouldn`t even begin to touch the real problem, which is the unfunded liabilities because they dwarf anything we can do to make government meaner and leaner. They are already meaner, but need to be leaner.

The problem we face is beyond the ingenuity of human leadership, but we will someday have to pay the piper with no money to pay him. I used to worry about how we could stop the government from spending money, but it isn`t the discretionary spending the government votes on every year that is the problem, it`s the automatic entitlement programs that are unfunded. Now we have a huge wave of baby boomers going into Social Security. I think now we will probably get our Social Security, but it won`t buy anything later because it will be worthless.

WJW: Howard, I completely agree with what you said; I couldn`t have expressed it better. Let me just take it a step further and that is into the hyper-inflationary depression. I contend we are already in a recession, and see the depression coming. GDP numbers have modified over the years, it`s now very difficult to reflect a recession, at least as it was traditionally defined as two consecutive quarters of negative inflation-adjusted GDP growth. In fact, the 2000 recession has been revised away by the Bureau of Economic Analysis, using that definition.

You can see this in a number of statistics. Even the growth in payroll employment, although it is over-stated, is only at 1.2 percent. Every time the growth in payroll employment has dropped below 1½ percent, you have a recession in place.

We have had a very weak economy for years primarily because of the structural changes tied to the deterioration in our trade position over the decades where significant production jobs are moved off shores; basically U.S. wealth and income has been transferred offshore.

In the 1970s, the man of the house would support his family, and the wife would stay home with the kids. Today you may have two or three people working in a family to try to make ends meet, and they can`t keep their income growth up with the pace of inflation. That is being partly reported by the government, and it is worse than the government is reporting because they understate inflation.

HJR: Whoever comes up with the current inflation numbers has never bought a tank of gas, never had a medical problem, etc. Everywhere you turn, the things excluded from this data are the things real people have to deal with.

Let`s move to what we should do about this on an individual basis. Your letter is written for institutions; my letter is written for the average middle-class American, not even for Wall Street investors, although a lot of them subscribe.

The only inflation hedge that has always worked is gold and silver. We are in a commodity bull market, and I`m sure there are a lot of other kinds of mining stocks that would be profitable during that time, but the average guy can`t have a couple of tons of copper dumped on his porch, which he would have to do if he bought a copper contract. But he can go to a coin dealer and pick up gold and silver bullion coins and take them home.

By a process of elimination, that is what I have concluded. If you are more sophisticated, there are some things you might do that don`t include gold or silver, but gold or silver is the safest best of all.

WJW: You weren`t kidding that you like people who agree with you. Indeed, gold is the primary hedge and there is where the average person should have his holdings. Bullion coins are the best bet. They are portable and liquid.

HJR: I watch the TV financial interview shows, and everyone is worried about the falling dollar relative to other currencies. They suggest lots of ways to hedge, but they ignore gold, as Wall Street always does. The safest best is to go to a coin dealer and buy some gold and silver coins, and keep it simple. At this conference here in San Francisco, there are more than 300 gold-mining companies, and they all have great stories. A lot of people are trying to figure out which one is going to be the big hit, which one they should buy.

The odds are about five to 95 against them when they do that. If you want to invest in gold or silver-mining stocks, put a list of them on the wall, throw darts at them, and invest in the holes; buy ten and create your own little mutual fund. The odds are then that you might catch a big one.

In the last bull market in the `70s, the ones that performed the best towards the end of the bull market were the holes in the ground surrounded by liars, because they didn`t have any numbers to define their growth possibilities. If you know a lot about a company, then you`re somewhat limited about what the price can be, but the holes surrounded by liars have no limitations. So keep an eye on them. But that is towards the end of the bull market, if there is an end to this bull market.

By Howard Ruff
The Ruff Times

Howard J. Ruff, the legendary author and financial advisor, has remained in the public eye for more than a quarter of a century. He is founder and editor of The Ruff Times Financial Newsletter. This E-Letter is appeared in the December 7, 2007 issue of The Ruff Times. The newsletter is much more comprehensive and deals with a broad spectrum of middle-class financial issues and includes an Investment Menu from which you can build your portfolio. (You can learn about it here). The Ruff Times has served more than 600,000 subscribers – more than any financial-advisory newsletter in the world.

Gold and Silver - Green Flags!

By Peter Degraaf
Dec 19, 2007
www.pdegraaf.com

" When people see gold and silver shining brightly amidst the battered economic ruins, they will finally realize that the gold bugs were right all along. "

Buy signals are popping up in many places as a result of today`s positive action in the metal pits.

Since I posted my last article, gold has made several `higher lows`, a sign that the bull market is alive and well. Admittedly the HUI, XAU and GDM, went lower than I expected. In retrospect I blame the various ETF`s for drawing money away from the gold and silver stocks. The GLD now has over 19,800.000 ounces of gold in back of it. Even during pull-backs in gold, while investors are dumping their gold stocks, fresh money keeps moving into the GLD.

We are now at a stage where mining stocks are severely under-priced , especially when compared to the ETF`s.  Gold production is in decline. The mining world needs 7 new mines to come on-stream every year, to reduce the deficit between gold demand and gold supply. In 1980, every gold producer with a listing was trading at 10.00 or higher.

The ongoing sub-prime credit problems, initially caused by Federal Reserve policy under (`easy Al`) Mr. Greenspan, are obviously going to be `solved` the only way the Fed knows how, and that is via the printing press, and via digital money.

Throughout history, once a nation embarked on the inflationary route, there has only ever been one final outcome:  total destruction of the currency. Since 1913 the Fed,  (supposedly created to protect the US dollar – must read: `The Creature of  Jekyll Island`), has managed to destroy 95% of the purchasing power of the dollar. Does anyone really believe the remaining 5% is safe?

Currencies in a number of countries are being inflated at double digit rates, while the gold supply can only be increased at about 1.6% per year. All the gold ever mined, piled up, would form a cube of less than 20 meters, growing by 12 cm per year. Most of the gold in this hypothetical cube is in the form of jewelry. The driving force behind the current bull market in gold is the fact that fiat money is being created some twelve times faster than gold. In 1980, when gold topped out at 850.00, the US M3 money supply was 1.8 trillion dollars. Today gold is pegged at 800.00, but M3 is now 13 trillion dollars (www.nowandfutures.com). A ratio similar to 1980 puts the potential gold price at $5,600.00. 

Central banks are battling the gold price, and they are capable of slowing down its ascent, but they cannot stop it. If they could stop it, gold would still be selling at 260.00 an ounce, the price where Gordon Browne made his last ditch effort, by selling 25 tonnes of British Government gold.

Following are just a few reasons why gold will rise:

• Annual deficit between production vs consumption.
• Federal Reserve is printing dollars.
• USA government is running a fiscal deficit.
• Congress does not worry about deficit spending.
• U.S. private debt is at a record high.
• Many large banks are over-exposed to derivatives.
• The world is at war against militant Islam. Wars cost money. Wars always last longer than anticipated. Wars are inflationary. 
• The US has gone from a net creditor to a net borrower.
• The US dollar is in a bear market.
• `Real` interest rates are negative. Whenever the true rate of price inflation rises to or above interest rates, gold rises.
• Gold is rising in virtually every currency.
• Central banks, including the USA, are overstating their gold reserves (www.gata.org)

Featured is the daily gold chart. Price is working out a pennant formation. Pennants formed atop `flagpoles` in bull markets most often resolve to the upside. The green arrows point to `upside reversals` (bullish). The RSI is finding support at the 50 level (green line). A close above the blue arrows will cause a lot of short covering, and will send gold upwards, to challenge the previous top at 850.00

Featured is the gold price expressed in Canadian dollars. Despite a strong dollar, gold has just broken out on the upside of an Advancing Right Angled Triangle (ARAT).

The 50DMA is in positive alignment to the 200DMA (bullish). The RSI and MACD are positive (thin black lines). The target for this move is $1,000.00 (10.00 on the chart).

Featured is the gold price expressed in Australian dollars. The cup with handle formation is a common and reliable chart pattern. The breakout is expected from the handle, and most often occurs on the upside.  The RSI and MACD are positive (green lines).

Featured is the XAU gold and silver stocks index. In September the XAU broke out from a multi-month trading range. It appeared that the breakout had been tested several weeks ago, but alas another test came along. This test took price back to the line of breakout. Today the index produced an upside reversal (blue arrow), at the 50% correction mark. That is a bullish signal, another green flag. The RSI and MACD are positive (top and bottom of chart).

Featured is the daily silver chart. Price pulled back to the 50% correction mark, just above 13.67 before turning positive today.  It is a `first sign`. A close above the blue arrow will turn silver bullish again. The 50DMA is in positive alignment to the 200DMA (green arrow), another bullish sign. The RSI is ready to turn up from 40 (top of chart).

The great merit of gold is precisely that it is scarce.  Its quantity is limited by nature.  It is costly to discover, mine and process. It cannot be created by political fiat or caprice.

Henry Hazlitt.

Gold is durable, not like wheat; Gold is divisible, not like diamonds, Gold is convenient, not like lead, Gold is constant, not like property.

Aristotle 384 -- 322 BC.

Peter Degraaf, PM,
December 18, 2007 AD

DISCLAIMER: Please do your own due diligence. I am NOT responsible for your trading decisions.

Peter Degraaf is an online stock trader, with 50 years of investing experience.  He issues a weekly alert for his subscribers.  For a 60 day free trial you may contact him at itiswell@cogeco.net or visit his website www.pdegraaf.com

Our Lady of Mt. Carmel and Paul Mladjenovic present
The OLMC INVEST-A-THON
January 5 & 6, 2008
Start off your year with powerful wealth-building knowledge to help you prosper in the coming years!

Are you financially ready for what is coming in the economy and financial markets? Are your retirement accounts in the right investments? As you read this, there are powerful megatrends heading our way that will have a negative impact on the unprepared. Many will be blind-sided while the few that prepare will either be financially secure or get wealthier. I am doing these seminars because I want the OLMC community to be prepared, financially secure and prosperous. I want you to have the information, resources and strategies that you will need as some worrisome historic trends hit our country`s economy. Since 2000, these are some of the events I had forecast for my clients and students:

* The recession of 2001 * the fall of the US dollar *The rise of precious metals *record prices for energy *the popping of the housing bubble *the mortgage meltdown *skyrocketing debt and foreclosures *and more. In the coming years, here are some challenging events facing us…

* Oil will pass $100 and head toward $150 and beyond  * A nation with $45+ trillion in debt * in 2008, the first wave of 78 million baby boomers will start to retire * major financial difficulties for major companies and cities * inflation will soar past 10% * Social security and other pensions will experience major financial difficulties.

Most of these Megatrends are unavoidable but with proper planning, you can survive and thrive. During the 2-day event, we will cover topics such as…

• How to avoid the 5 major pitfalls facing your finances today
• The most powerful and unstoppable trends that will greatly affect your money, career and family.
• Which investment sectors will boom and create the next wave of millionaires (and which to avoid!)
• How to choose the right stocks, bonds, ETFs and mutual funds for your situation or objectives
• Several strategies you can easily implement immediately to protect your investments
• How to reduce expenses (such as debt and taxes) while increasing income
• Strategies that can increase income from your portfolio by 10-20% or more
• Both active and passive ways to increase income or build wealth for any financial situation
• You will even learn how to start a home-based business to generate income and save on taxes, too!

I`ve only scratched the surface! Here is the schedule of information-packed seminars that weekend:

Each individual seminar is only $25 for Parishioners and 100% of that goes to OLMC! (See details below). In addition, all attendees will get a CD packed with information and resources to help you with your finances and with the Megatrends we will be facing. Keep in mind that these seminars are the same as those done nationally that people pay hundreds to attend. For a fraction of that cost, you can help yourself and OLMC. I guarantee it.

Your presenter

Paul Mladjenovic is a certified financial planner, author and national seminar leader. Since 1981, he has helped thousands of individuals and businesses increase income and build wealth. Since 1986, Paul has done up to 150 seminars per year across the country. He wrote the books The Unofficial Guide to Picking Stocks, Zero-Cost Marketing, Stock Investing for Dummies and his latest book, Precious Metals Investing for Dummies. He earned his CFP designation in 1985 and he is the editor of the financial ezine, the Prosperity Alert. For more information, see Paul`s website www.SuperMoneyLinks.com.

The details on the OLMC Invest-a-thon:

When & Where: Saturday, January 5, 2008. Starts 9am and ends 5pm. On Sunday, January 6, 2008 it starts 11:30am and ends 5:00pm. It will be held at the OLMC auditorium

How much?: OLMC parishioners rate: Each seminar is only $25. you can register for the entire weekend for only $99. The non-OLMC rate is $40 per seminar and only $149 for the entire weekend.

What if I can`t make for one seminar or for the weekend?:  All the seminars will be recorded for the same price and again…the proceeds go to OLMC.

What do I get?: Each seminar is a full two-hours of practical, nuts`bolts strategies and information from the presenter`s 25+ years of financial experience. He has taught over 100,000 people about financial and business matters during the past two decades. In addition, all attendees will get a CD loaded with information and resources (reports, audio, etc.). Attendees will even get 30 days of follow-up. You can call or email the instructor with any questions regarding the topics covered.

How do I register?: Fill out the coupon below and bring it with payment on January 5 and/or 6, 2008. You can sign up for any or all seminars of your choice (check off your choices below):

PAYMENT TYPE:            ___CHECK         __CASH        TOTAL  $_____________

NAME_____________________________________________________________________

ADDRESS___________________________________________________________________

CITY_____________________________STATE ___ZIP__________ TEL_______________

EMAIL________________________________________________________________

FREE mini-report on financial & economic resources:

In case you missed it, here is the link to a free mini-report with some of my favorite resources to help you with your prosperity:

http://tinyurl.com/2lay8f

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.
Tell them Paul sent ya!