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Welcome to the September 2010
Full Edition Of The Dollar Vigilante
Volume I, Issue 3 / September 2010
Dear fellow Dollar Vigilante,
We have another power-packed full issue of TDV for you this month!
While news of economic collapse was quiet for the summer as most of Euroland and the northern hemisphere took their long summer vacations they will all soon be returning back to their offices and will realize that, still, most of the countries in Europe, the US, Japan, the UK and more are all completely insolvent.
Perhaps in anticipation of this the overall stock market sold off significantly in August. The Dow and Nasdaq were pushed lower while, as we go to publish, gold has risen to within a few dollars of its all-time high. Our gold holdings and gold stocks have done very well throughout August as we talk about in "The Markets" section.
We also feature two other sectors this month for our TDV Portfolio which we consider core holdings. Between your holdings of precious metals bullion and stocks and these two other sectors you should survive the coming financial collapse in fine form.
In our Expatriation section we feature one of the countries we consider to be the "safest" place to hide out for the next few years as economic collapse happens and possibly even wars follow.
And in our Safety and Health section we feature some great ways to get in shape that really work.
As we go to publish we just finished watching the speech from the Criminal-in-Chief of the United States, Barack Obama. CNN actually had a countdown to his speech throughout the day, down to the hour, minute and second! This isn't New Year's Eve, we thought! But CNN wanted to make it look as though the whole world was waiting with baited breath to hear what this Marxist sociopath had to say. And, of course, what he said were all basically lies and misinformation as Private Parts points out in his column, Dispatch From Within The Belly of the Beast.
As a final note, for those with any interest in meeting me in person I will be attending "Casey's Gold & Resource Summit" in Carlsbad, California from October 1st to the 3rd. They put on excellent conferences and cover many of the topics we cover here from a variety of different angles. I am told the conference will soon be sold out but if you wish to attend, try to get a seat at their website: http://www.caseyresearch.com/crpmkt/crpSolo.php?id=194&ppref=JEF194EA0810A. If you do plan to attend or even just live in the San Diego area and would like to meet for a cocktail please email me directly at [email protected].
Let’s begin!
Jeff Berwick
Chief Editor
The Big Picture
By Jeff Berwick
It is like the entire world flip-flopped 20 years ago.
Twenty years ago communism was still hanging on in the USSR and China still hadn't quite emerged from the Communist fog while the USA was still seen as a bastion of free markets.
Twenty years ago a prudent, conservative financial portfolio would include a mix of large US industrial and bank stocks and government and corporate bonds.
Segue to today and China and Russia, and many of the former Soviet states are, in many ways, more free market than the US. And the US, now, is much closer to being outright communist, with central control of banking, real estate (Fannie May & Freddie Mac), transportation (Amtrack, General Motors), the public education system and with it's tentacles intertwined into every facet of American life with rules, regulations, subsidies and taxes.
A portfolio that worked very well for the last 20 years, in US stocks and bonds has now gone from being very conservative to extremely risky.
This is never reported to the American sheeple via their government mass media cabal but many of the largest players in the financial markets, including TDV, have stated, openly, that almost all large western nations will default on their debts and/or promises (Social Security etc) at some point in the near future.
Arnaud Mares, an Executive Director for Morgan Stanley in London stated in a research report this month that, "the question is not whether they (large advanced economies) will renege on their promises, but rather on which of their promises they will renege, and what form this default will take."
Just looking at the balance sheet of every major western country from the USA to the UK, France, Spain, Ireland and many more and it is plain-as-day obvious that there is no way they can ever repay their debts. And once interest rates begin to rise, which they will, they won't even be able to make interest payments on their debt.
Yet, the American sheeple, based on experience from the last 30 years are stampeding into what they think is the most conservative investment: US government bonds. Little do they know that this is now the riskiest "asset" on the planet.
The Bond Bubble
How do the public do it? It's almost magical the way that they do the exact wrong thing at the exact wrong moment.
Right when people should be fleeing US & other western sovereign debt they are all running headlong into the coming disaster.
After the stock market collapse in 2008 investors fled with what remaining funds they had into government bonds. In 2009 investors added a record $376 billion to bond fund holdings, up exponentially from 2008, when only $28 billion was invested into this sector.
The bond sector cooled for most of 2009 but it is nearing record highs yet again. Look at this chart of the 30 year US Treasury Bond price.
Sadly, the great majority of people are doing this as a reaction after losing a great portion of their net worth during the market collapse of 2008. Reacting intelligently, Americans began to save more following the crash of '08. The American saving rate climbed to a one-year high of 6.4% in June. Unfortunately, for them, looking back at the last 20 years of their experience, they assume that US government Treasury Bills are the safest place to be.
Little do they know they are about to lose the last bit of wealth they have remaining. And all they are doing, in the process, is lending their last vestiges of saved wealth to the government to be completely wasted.
A Generational Perfect Storm - Boomerang Kids Meet the Homeless Baby Boomers
The Baby Boomers
At one end of the spectrum, the baby boomers have been getting annihilated. Not all, of course, but the majority. They lost trillions in the crash of '08 and now, like scared lemmings, are running headlong into the next great disaster, US Government bonds, where they will likely lose a significant portion of what they have remaining.
And, just as the baby boomers lose their last bit of savings the US government will announce that the bankrupt Social Security system will either be gone, altogether, or the payments will be inflated into worthlessness. This year, for the first time in nearly 30 years, Social Security will pay out more benefits than it receives in payroll taxes. The same goes for 2011 and by 2015 the program is expected to regularly operate with an annual deficit.
And for the baby boomers who have corporate pensions, who do you think lost the most money in the stock collapse of '08 and is also one of those running headlong into the coming bond implosion? You got it. The pension funds.
The Iowa state pension fund’s value dropped over $3 billion in the course of 2008, putting it at a total DEFICIT of nearly $5 billion. A report by the University of Kansas described that state’s pension fund as “bankrupt,” with a projected shortfall between assets and payout obligations of $8.3 billion in the next 25 years.
The New York state retirement fund lost $23 billion in 2008. And the largest fund of them all, the California Public Employee Retirement System (CALPERS) and the California State Teacher Retirement System (CALSTRS), together lost a total of $100 billion of their high of $260 billion in assets after the 2008 crash.
In other words, just as the baby boomers have been wiped out by the stock collapse of '08 and the coming bond collapse they will look to fall back upon their pensions and Social Security. Both of which will either be gone or inflated to levels not even allowing a meagre existence.
And that is if the government itself does not confiscate ALL pensions and retirement savings and demand that they be put into soon-to-be-worthless government debt. Far fetched? Spain's secretary of state for social security, Octavio Granada, was recently quoted as saying that - BY THE END OF 2010 - some 90% of ALL Spanish pension savings will be "invested" in domestic government debt. Spain isn't some 3rd world banana republic and they are already moving strongly in this direction. With trillion dollar deficits as far as the eye can see, where else can the US Government hope to get the money to fund all their debt?
So, that leaves two last options for baby boomers HOPING to retire. The value of their house and their "retirement" savings.
The housing market has been decimated, as is public knowledge, but many don't realize it is still going to get worse. Much worse.
A record 25.5% drop in home sales was just reported in July and has contributed to a record level of unsold inventories of homes for sale.
Inventories of existing homes for sale as measured by months supply broke an all-time record in July. Normally it would take four to five months to sell the outstanding amount of homes for sale in the US. The current amount of supply available will take 12.5 months to sell at current levels.
This level of supply will put additional downward pressure on house prices. Total housing inventory at the end of July increased 2.5% to 3.98 million existing homes available for sale.
And so, just as Ma' and Pa' find themselves wiped out from the crash of '08 and the coming bond collapse they will receive notice that their pensions have gone under and/or have been cut back dramatically. They will then look to try to sell their home, or at least get a reverse-mortgage to get some sort of income, but the value of their house will have dropped massively.
As for savings, in a 2009 Retirement Confidence Survey by the Employee Benefits Research Institute’s, 53% of workers in the U.S. have less than $25,000 in total savings and investments and even most of that will likely disappear in the bond collapse and we will see millions of destitute baby boomers.
Where will they turn, to their kids?
Boomerang Kids
Much has been written over the last decade or two about “Boomerang Kids”. The term, generally, means an adult in their 20s, 30s and sometimes 40s who returns home to live with their parents after an unsuccessful foray in the real world.
Often this condition is caused by the inflationary world we have been living in for the last few decades. Stealth inflation has slowly stolen from everyone leaving many younger people without the ability to afford even basic living expenses much less a home for themselves. Not to mention student loans sometimes reaching into the 6 figures, for a degree most of them will never use or need, that they’ll be paying off for much of their adult life.
These 20, 30 and 40-somethings are heavily indebted and looking at a job market as estimated by Shadowstats.com (the most reliable measure of US unemployment) with unemployment at 22% and rising.
In fact, there is a new name for all the people who have been unemployed for years: "the '99ers". These people, who already number more than a million, are Americans who have already used up their 99 weeks (nearly 2 years) of unemployment benefits. You can see just how dire and desperate the situation is for millions of Americans by checking out the forum at a site called Unemployed Friends. It is a message board for the unemployed in America and, sadly, countless of the messages talk of and end in suicide.
And so, what happens when the heavily indebted, unemployed, depressed and sometimes suicidal boomerang kids find that mom & pop not only had to reverse mortgage their home just to make basic living expenses and may soon be looking to the working-age child to provide them with a means of subsistence?
We don’t know the answer to that but it isn’t going to be pretty.
*Editors note: This is part of the reason we write TDV, to help people realize what is coming and to prepare through saving, getting out of debt, taking any wealth out of traditional investments such as stocks and bonds, investing in gold and other precious metals and keeping a survival level of food and water in your home. And if you live in an area (major US or European cities) where trouble may arise try to move away, preferably to another country until the storm passes. If you know anyone who you believe may be at risk of being in the situation as described above please pass on this issue of our newsletter to help awaken them to protect themselves.
Downgrade Wars & Greece Update
It's been a relatively quiet summer. It seems that most of the population in the Northern hemisphere nations have retired to their watering holes to enjoy the 2 months of summer sun and tried to forget about the ongoing problems.
But you didn't believe the propaganda that Europe's "austerity measures" had ended all the problems, did you? Of course you didn't, you are a TDV reader.
Irish Overall Index (ISEQ) 1 Year Chart
Summer ended a little early in Ireland as the boys from S&P returned to work on August 25 and downgraded Ireland one notch to AA- and assigned a negative outlook. Ireland's Overall Index (ISEQ) has now collapsed from a high of 3,500 to 2,600 (25%) in the space of 3 months.
Meanwhile, in Greece, the Athex Composite made an Obama like "hope" bounce from below 1,500 in June to a high near 1,750 in early August but has now retreated back to near 1,500 again.
The yield on Greek debt rose to more than 900 basis points above that of Germany on the same day as the Ireland downgrade. That is its highest level since the European Union and IMF created a 750 billion-euro bailout package in May. The Irish-German yield spread rose to a record 347 basis points on August 25.
Germany's Spiegel reported on the situation in Greece on August 18th, "Stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70% in some places."
However, it should be pointed out, that the Greeks are much more able to handle this type of financial chaos than the Americans.
Here's Why.
Greece Can Handle It, The US Cannot
We have spent time in Greece personally. From Athens to many of Greece's most beautiful islands, including Myknonos, Ios and Santorini. In addition, our sources on the ground in Greece tell us that aside from the government workers (teachers, police, etc) in the socialist system, life is going on as usual at the moment. Greece, which many refer to as the "Mexico of Europe", has a much different culture than in America.
Much like in Mexico, the Greek people and their government aren't attached at the hip the way Americans are today. As well, most people never got leveraged and indebted there like in the US. If you have a house in Greece or Mexico, you have a house. If you have a house in the US, unless you are old or fairly wealthy, you live in the house the bank owns.
Greece still exists very much under the village and family structure type system that's used to fending for itself. Providing for itself. And, except under the most unusual of circumstances, has no direct contact or association with the government and banks.
Our Greek sources, in an admittedly unscientific survey, estimate that 90% of Greeks still live this way. And, they say, for them, not much has changed. For the 10% that weaned into the American way of credit and non-savings, they are in trouble. But that is the minority.
The Greek people will get through this. We can't say as much for the US.
And So, Where To Hide?
Returning full circle to where we began, given the ongoing global financial crisis and collapse, how do you even begin to construct a conservative portfolio today?
What worked in the 80's and 90's is anathema today. A smattering of large cap American industrial and banks stocks and US Government Tbills and corporate bonds are a sure recipe for disaster over anything but the short term.
We've already spoken in past issues about a general percentage of asset allocations. In the August issue we gave a general allocation of 30% gold bullion, 20% short term cash (in various forms, USD, CDN, Yen etc), 15% gold mining majors, 15% agriculture & commodities, 15% gold and silver junior stocks and 5% in uranium.
However, here is a VERY important thing to take note of. International diversification is key! To buy ALL of these items in ONE country is highly risky.
For example, you could be an American living in Texas and buy the exact percentages we recommended. You could have bought gold bullion and stored it in your home and in a bank safety-deposit box in Houston. You could have put 20% in cash in a US Dollar bank account at Citibank. You bought 15% in gold mining majors whose main operations are in the US and you hold those stock certificates in a US brokerage account. You then bought DBA, the agriculture ETF, the Uranium Fund (both of which we highlight in our Portfolio section this month) and some junior mining stocks who are all based in the US into the same brokerage account.
You could have followed our recommendations to the T. But you have just put all your assets at dire risk. Why? You have them all in one country.
What would happen tomorrow when due to the Chinese selling Treasury Bonds, (which they have been doing at a steady pace for months now) it causes the US dollar to plummet on foreign exchange markets and causes a stampede out of Treasuries. Instantly Ben Bernanke would meet with President Obama and demand that foreign exchange controls be put on all accounts in the US to attempt to stop the flight from the US Dollar.
This would further cause panic. Citibank would go under along with 20% of your total cash assets. Gold would skyrocket but you can bet that the US Government would be well aware of this and would place, at minimum, some sort of sales tax on gold, if not outright confiscation. The tax they choose could be as high as 50% or more. Whatever amount they decide. They've got all the guns. They make the rules.
So, you'd have wealth in your gold but you'd be stuck to sell it to get anything else of value for it except in the black market where, if caught by Homeland Security, you risk being put in one of the hundreds of detention centers currently being built by Haliburton with these type of situations in mind.
You may have kept some cash hidden under your mattress so you head for the airport to get out of the US to avoid all the chaos. But the government is already there and already using cash-sniffing dogs. Think we are kidding? http://www.liveleak.com/view?i=7b9_1265973374 . They are already positioned at most major US airports.
As well, US stock exchanges would likely be shuttered as they drop precipitously, leaving the rest of your assets in your brokerage account inaccessible.
And this can happen in other countries than the US. Areas at distinct risk include basically all of the Eurozone, Canada, Australia and more.
The point being, international diversification is more important now than it has ever been.
Don't just have one bank. Have at least one other bank outside of your jurisdiction. If you live in the US, have one in Hong Kong or Singapore.
Don't just have one brokerage account. If you have one in the US, have at least one other in Luxembourg (Internaxx), Hong Kong, Panama or one of the numerous caribbean tax haven countries such as Turks & Caicos.
Many Americans, so used to living under oppression and having nearly no freedoms will ask, is it "legal" to have a bank or brokerage account outside the US? The answer is, yes, it is still fully legal. You may have to report its existence and pay taxes on any interest, dividend or capital gains income, but it is still allowed - so do it while you can.
As for storage of gold, there are two excellent outfits that help you store your gold & silver in vaults from Switzerland to the UK to Hong Kong and more. They are Goldmoney.com and Bullionvault.com.
Obviously to go through the trouble of all this you would need liquid assets worth, probably, more than $50,000 USD. Otherwise the time and effort to set up all these accounts may not be worth it.
However, easily building liquid assets of over $50,000 can be achieved in the next 12-24 months solely by investing in the stocks and investments we have been recommending. Just look at the results of our stock recommendations since August 1st.
We list our stock performance in the Portfolio section below and as well we have now set-up a realtime portfolio of our stock selections which you can view at any time by going to our Full Subscriber page. As you can see, just in the last 30 days, Agnico Eagle (AEM:NYSE) is up 16.7%. Newmont (NEM:NYSE) is up 7.25% and the Central Fund of Canada (CEF:NYSE) is up 5.63%.
Geographical Diversification of Mining Stocks
Even if you don't have the assets to bother setting up bank and brokerage accounts abroad but do have a small portfolio of investments in your local brokerage account you still need to be very cautious about diversifying and spreading out your risk between countries.
For example, let's say you own 5 gold major stocks and 5 junior mining stocks, including our most recent pick, Sabina Gold & Silver, whose operations are located in Northern Canada. You need to make sure that you don't have more than 20% of your total in any one jurisdiction.
Why? When governments are strapped for cash they scurry around and try to find the one or two industries that are making money. Invariably, in the coming years, one of the only industries making money will be precious metals mining. And, as soon as they notice that, it is all they can do to not slap on a new large tax, tariff or even nationalize the companies in whole.
We've seen examples of this already in places such as the US (The Hardrock Mining & Reclamation Act of 2009) and Australia (Australian Mining Tax). Both of these have come under fire and may not go through YET. But these sort of political robberies are just par for the course in the world we live in today. Similar occurrences have happened in Ecuador (Ecuador Suspends Mining), Eritrea and many more.
Therefore, as a prudent, conservative investor it is absolutely critical to ensure you have your mining properties spread out to avoid risk.
An excellent resource for assessing risks in various jurisdictions is the Fraser Institute that puts out an annual survey of mining companies asking them their thoughts on the jurisdictions in which they work.
Below is a chart showing how much confidence mining companies have in the current taxation in the region and in the taxation regime.
As you can see, our first stock junior stock recommendation, Sabina Gold & Silver which operates in Nunavut, rates around the middle of the pack. We don't feel very comfortable going much further down the list into such anti-business locales such as Bolivia, Venezuela, Zimbabwe and California.
But, as a point of reference, we have an upcoming stock selection we are currently working on that will be emailed to Full Subscribers at some point between September 2-15 which is based in Ghana, an area with an even better current tax regime than Nunavut and so we will be looking to diversify our portfolio into a very exciting opportunity arising there.
Conclusion
And so, even if you don't have the current assets to begin international diversification, be prepared to do so as soon as you achieve a certain amount of wealth.
And for those that do have the capability, we urge you to begin doing so IMMEDIATELY. We are not talking years anymore. It is literally months before many of these types of currency controls and issues begin.
And for those looking to expatriate not only their wealth but themselves, please check our Expatriation section this month where we feature the country we consider to be THE safest and most comfortable in which to sit out the coming financial system collapse in luxury, for very little money.
Economic Analysis
By Ed Bugos
The Rollercoaster Ride of Central Banking
It's no wonder everyone is confused or depressed and on prozac. It's been a crazy decade fueled by the ridiculous Soviet Union-style, communist notion that a group of secretive old white men can manage the economy better than the free market itself. AKA the Federal Reserve.
It was only as far back as 1999. It was supposed to be the “New Economy”, remember? There was no need for the basic commodities anymore. Everything was going online. The physical economy – manufacturing, mining and even retail was the old economy…obsolete. Inflation was dead too, declared the cheerleaders of this new era, even as the Fed kept inflating - yet no one noticed. Investors paid 100 or 200 times earnings for the next big tech success story. But, the Fed eventually slowed down its inflationary LTCM/Y2K rocket fuel bringing a quick crash to the "tech bubble".
Then we were all rallied to worry about the bogeyman that never comes, deflation. With Robert Prechter railing about the Dow falling to 1000, and gold falling to $150. The Kondratieffs and the Wavers, as well as certain Fed officials worried that the 2000-02 meltdown would revive the deflationary ghost of the Hoover-Roosevelt era, a deflationary winter. But, of course, that was back when money had some sort of a tie to gold and deflation actually was a possibility.
But, the Fed used this "deflation scare", as newsletter writer Steven Saville likes to call it, to slash the Fed Funds rate to 1% by 2003, and the government ramped up military expenditures soon thereafter. Surprise, surprise, they way overshot with their inflation, producing a housing and commodity bubble instead. Whoops.
And that was BEFORE appointing a deflation-phobe to head up the Fed.
The Fed increased the monetary base by 20% between 2001 and 2003. The banks created $80 billion in new demand deposits on top of that, and about $1.2 Trillion in new savings deposits thereby increasing the total money supply by almost 50%.
These numbers pale in comparison to the size of the current intervention but after some preliminary uncertainty in 2004 an economic boom soon fomented around the housing bubble, lasting a few years beyond its collapse.
Eventually it led to calls for hyperinflation as the dollar continued to fall, and oil prices soared to $150 along with a number of other commodities that went parabolic.
The new Fed Chairman continued to raise interest rates in 2007 despite warnings from the previous Fed Chairman that the housing bust was going to lead to a recession. Then the first domino fell.
The Fed tried to offset it by unveiling a rate-cutting program that would accommodate the illiquid credit markets without expanding the monetary base thereby allowing it to combat heightened inflation fears, simultaneously. But, as the Austrian business cycle theory would predict, it was not enough to keep the faltering boom from collapsing, leading to the failure and bailout of several of the world’s largest companies in the financial and insurance industries in 2008…buried in mortgages and other deals gone bad.
Again, the bi-polar world instantly flip-flopped back to the specter of deflation which returned louder than ever, prompting the Fed to break all the rules, temporarily of course (right!), and expand the monetary base like it never has before.
This brought a temporary relief in 2009 but as of this writing all the "stimulus" is again wearing off and we are now looking at the next deflation scare. Notice how these cycles are becoming faster and faster. It used to be that an inflationary cycle would last years, or even decades and the deflationary scare cycle would also last a long period of time.
What we are witnessing is the death of an artificial system. It is now in its death throes and there is only one thing we can truly be confident of at this point: it will be highly volatile.
In the end, when this entire financial system collapses the world will be a much better and healthier place. This artificial centrally controlled system of finance, which is actually one of the main pillars of the communist system has transferred trillions of dollars of wealth from the poor and middle class to the financial elite. It has also been the root-provider of every war of the last few hundred centuries - without the ability to create money out of thin air very few people would want to go to war if they received a bill in the mail for it each month. As well, because of the boom & bust cycles it constantly creates it destroys massive amounts of wealth as they are all misused for unproductive things - as row upon row of empty housing in places like Nevada and Florida clearly show.
Here at TDV we are sitting right and tight with gold, silver and some other hard assets such as energy and agriculture. We are also preparing for some chaotic times as the world transitions to a new, hopefully free market economy. As Ludwig von Mises showed, and anyone who understands free markets inherently understands, no planning body can substitute for the entrepreneurial calculation made on the free market.
The Markets
CURRENT MACRO OUTLOOK
| SECTOR | SHORT TERM | MEDIUM TERM | LONG TERM |
| 0-3 months | 3-12 months | 1 year+ | |
| US Stock Market | Neutral | **BULLISH** | Neutral |
| USD Index | Neutral | Bearish | Bearish |
| US Interest Rates | **BEARISH** | **BEARISH** | Bearish |
| Gold |
**NEUTRAL** | Bullish | Bullish |
| Gold/Silver Stocks | Bullish | Bullish | Bullish |
| Commodities | **BULLISH** | Bullish | Bullish |
**Highlighted areas show change from last month. Color shows in which direction it has moved from last month. Red=Downgrade Green=Upgrade
August has been kind to our portfolio - especially in relation to the majority of investors. While your average market participant experienced the worst August in nine years, with the Dow (1 year chart below) down 4.3% in August and the Nasdaq down 6.2%, our holdings skyrocketed.
Gold surged 5.46% in the last month and as per the chart below, barely registered a down day throughout all of August.
Our 3 major stocks in the TDV Portfolio surged even higher than gold. The Central Fund of Canada (NYSE: CEF) was up 7.58% since our August 1st recommendation. Newmont Mining (NYSE: NEM) was up 9.7% and Agnico Eagle (NYSE: AEM) soared 16.54%
But the big story, as we pointed out in our Big Picture section, has been the ongoing bull market in the US Treasury market. Many believe the continued drop in bond yields and bad economic news portend a deflationary depression ahead. But they've got it wrong.
Why Treasuries can-NOT be Forecasting Deflation Ahead
One of the biggest current myths about Treasury yields is that the low yields we currently are experiencing is due to the fact that the great majority of the public is expecting deflation.
But, thinking it through logically, what would happen to the government’s accounts in a deflation? Tax revenues would shrink. And probably shrink faster than expenditures. Quickly its budget deficit – already at nightmarish proportions in most Western countries – would consequently spiral. It might even face default on some or all of its debt. Risk premiums would increase. Indeed, one doesn’t need to look far past Greece to see what could happen to bond yields in a debt default.
The Greeks didn’t default, and yields subsequently fell. BUT they didn't fall because of deflation. They fell when the ECB started easing and buying the bonds. No matter how often the media insists that falling bond yields prophesize deflation, the fact is that deflation, if it were really to happen, would NOT be bullish for the value of the government’s debt.
There is only one good explanation for the strength in US bond prices…only one thing other than a financial or geopolitical crisis could persuade any investor with a modicum of sense to lock in a 2.5% yield for 10 years today. It certainly is not inflation, and it cannot be deflation either.
It is the sole expectation that the Federal Reserve will increase its purchases of long-term Treasury securities as part of a second phase quantitative easing plan. The market is front-running the Fed!
General Market Outlook
We use a number of indicators when trying to model where the market will go in the future but one of the most important in this day & age of fiat currencies and central banking is the money supply.
As we've pointed out in prior issues, don't allow yourself to be fooled, like the majority of the market, that M3 is a good indicator of money supply. We use our own proprietary "Austrian Money Supply" figures and they are still showing that the money supply is still inflating at a rapid pace. As well, the following points are true:
- US true money supply growth is at 10% year over year
- Monetary policy is still accommodative
- Authorities (and markets) are more afraid of deflation than inflation
On top of this, the Fed is not likely to tighten in the face of worsening economic news or ahead of the elections in the US this November, and stands ready to err on the inflation side in the event of a stock slide.
Reducing the balance sheet is a low probability event at the moment, or maybe ever.
Changes in money supply growth are fundamental in an analysis of the business cycle according to Austrian School theory. They lead the cycle by up to two years and their effects account for as much as 50 percent of the nominal gains in stock prices since the Fed was born in 1913.
Thus the assessment of monetary conditions is one of the most influential indicators in our toolkit. It is also the most leading of all indicators, so too much weight here can make you too early.
Follow The Money
In the following chart, note the tendency for stock market corrections to occur when this indicator turns down toward zero percent. The chart below ends on September 2007 –12 months before the 2008 crash.
You can see that this indicator was flashing a big fat sell then.
And now, as we pointed out in the first chart, money supply growth rate since 2008 has been ramped up even as credit has continued to contract.
Although the growth rate has tapered off its heady levels of almost 20 percent year over year, it is still growing at a healthy 10% clip. Thus, it continues to exert at least a moderately bullish influence on stock prices going forward.
Thus as far as stock and commodity prices are concerned, monetary conditions are bullish.
Technical Analysis
The Utilities are looking healthier but the Dow Industrials, Transports and other averages have lost 
momentum in recent months with a Head & Shoulders and Descending Triangle formation (both unconfirmed) coming into view respectively.
Neckline support for the Industrials comes in at around 9800 and about 3900 for the Transports.
Upside resistance lies at around 11000 for the DJIA, and at about 4700 for the Transports.
The bias is bearish, but it could be a trap. The technician is careful to wait until a break out up or down occurs before a bias becomes a forecast.
An upside breakout from bearish patterns on the charts is not uncommon, and typically bullish.
Conclusion
As volumes pick up in September the current consolidation will probably resolve. The news flow favors the bears but the fundamentals – money supply, valuation, earnings – favor the bulls. Thus our call is that the bears may push the DJIA to 9000 in the near term, but that the Fed would step in to limit the slide.
There are few signs of impending disaster at this time. The defense shares are not seeing much buying to forewarn of a military debacle in the short term.
And aside from a token bounce in risk premiums in the latest month, there is nothing new emerging there, and the authorities today are more likely to be ahead of the curve in anticipating the next financial calamity than they were in late 2008.
There is good reason to suspect that the current weakness in shares is a bear trap - in other words, the weakness exhibited at the end of August may cause a lot of bearish bets to be caught offside if a rally were to occur in early September.
And while we don’t necessarily think that stocks represent the best investment opportunity in the current environment, they are not as dangerously extended as they were from 1999-2001 or from 2006-08. Our indicators suggest taking a bullish posture with respect to the second half of 2010.
Gold and Gold Stocks
There is risk in this analysis for gold in the short term, even if the quantitative easing policy is extended to a second phase. The gold sector has benefited from the growing uncertainty over the state of the economy this summer, on both sides of the ocean. Like the Treasury market, gold bulls also expect another monetary expansion by the Fed in the short term.
The obvious risk is that it doesn’t happen and both gold and the Treasury market sell off. What if, for instance, the news flow in the economy turned less bearish, and earnings started to roll out in a month’s time with no bombshells to report? This need not indicate an improving state of the economy, but it could give the Fed confidence to sit pat, while stock prices head higher.
Unfortunately, we don’t have a strong enough sense to predict whether the Treasury and gold markets are going to be right about the Fed or not, but our sense is that even if it does happen, both markets are likely to sell off –if only because those markets may have already factored it in, while stock prices haven’t. Either way, we see a countercyclical trade between stock prices and gold in the short term, and a positive relationship between gold and the Tbond in the short term.
Our view is that stock prices are poised to head higher into October, along with bond yields, and that after an initial correction in gold prices (possibly from higher levels than today) the market is set to hit our $1,400 target by year end.
In this environment we expect gold producers to outperform the stock market but not necessarily gold.
However, we are eminently more bullish on the development and junior equity segments of the resource market, as well as the commodity complex in general. This is reflected in our junior pick of Sabina Gold & Silver in August and our upcoming stock recommendation of another gold junior coming in the coming days.
The Dollar Vigilante Portfolio
| . | Stock/Investment | Symbol |
Chart | Last Price |
Reco Price | Change | Reco Date | Original Writeup |
| . | Junior Miners | |||||||
| Sabina Gold & Silver | TSX: SBB | Chart | $3.48 | $3.49 | -0.29% | 8/15/2010 | Click Here | |
| Gold & Gold Majors | ||||||||
| Central Fund | NYSE: CEF | Chart | $15.61 | $14.51 | +7.58% | 8/1/2010 | Click Here | |
| Agnico Eagle | NYSE: AEM | Chart | $64.97 | $55.75 | +16.54% | 8/1/2010 | Click Here | |
| Newmont Mining | NYSE: NEM | Chart | $61.32 | $55.90 | +9.70% | 8/1/2010 | Click Here | |
| . | ||||||||
Our stocks have performed excellent throughout August especially in relation to the overall stock market which was down significantly.
Gold was up and our gold mining majors outperformed gold. Our first junior pick, Sabina Gold & Silver treaded water but we are still hoping for it to go down in order to pick up our second tranche at lower levels.
We are hard at work on putting together our recommendation of our next junior gold mining stock. It should be in your email box between now and September 15th barring any major changes in the markets.
Food & Energy
While TDV is highly confident that there will be major financial volatility and turmoil in the coming months and years, no one can know with certainty exactly how everything will play out.
For this reason it is important to have some diversification in your holdings. In our August issue we stated that a very general portfolio should have 30% in gold bullion (direct holdings and/or through holdings like the Central Fund of Canada (NYSE:CEF)), 20% in short-term cash, 15% in gold mining majors such as Agnico Eagle and Newmont Mining, 15% in gold & silver stock juniors such as Sabina Gold & Silver (TSX: SBB), 15% in agriculture and commodities and 5% in energy, specifically uranium.
The two areas we have yet to go into specifics on are the areas of agriculture and energy and we will therefore officially add Powershares DB Agriculture Fund (NYSE: DBA) and the Uranium Fund (TSX: GUR) to our portfolio this month.
POWERSHARES DB Agriculture FUND (NYSE: DBA)
The Powershares DB Agriculture fund is a fund that is composed of futures contracts on some of the most liquid and widely traded agricultural commodities.
As of August 31, this is a breakdown of the futures holdings in the fund:
Live Cattle 13.61%
Coffee 13.14%
Soybean 12.8%
Corn 12.48%
Other holdings include sugar, wheat, hogs and cotton. It is a good "general" fund of agriculture commodites and gives a good diversification amongst the commodity groups.
The main risk with DBA is that all it holds are futures and not any actual, tangible assets. Therefore, if we were to enter a financial armageddon, we could see futures exchanges or trading halted, suspended or even cancelled, in which case DBA would be worthless. Therefore it is best to use DBA as a good way to get exposure to agriculture for the time being but if we see the warning signs of an impending collapse of the financial system it will be best to have your assets in something more tangible. We will feature more tangible agricultural holdings in upcoming issues of TDV.
Global Uranium Fund (TSX: GUR)
Much like with agriculture, even in the event of a complete financial system collapse there are basics that people will still need. Agriculture (food) is obvious and another obvious item is energy.
There are many ways to invest in various forms of energy including oil, natural gas, geothermal, hydro and all the other environmentally friendly forms of energy beginning to come onstream such as solar and wind.
However the one that is the most overlooked, in our opinion, is nuclear.
Many of the green forms of energy, such as wind and solar, are just not suitable to power large populations. They may be excellent additional sources but cannot be the main power source. The reason is obvious: at night there is no solar power and the wind doesn't always blow strongly, even in the windiest of places.
We believe the most important energy source in the coming decade will be nuclear. And we aren't the only ones. China, alone, intends to build 28 more nuclear power plants by 2020 to support their burgeoning population. And the list of countries following suit keeps getting longer and longer. Even Iran, with its large amount of oil, sees the need for a clean, cheap, powerful energy source that nuclear provides.
However, given the amount of nuclear plants coming onstream in the next decade there is insufficient current supplies of uranium to power them all. That's why we are betting on uranium.
The price of uranium, due to a number of factors, has been beaten down in the last few years and has taken most uranium stocks with it and so it is an excellent time to take a position in uranium. One of the easiest ways to get a diverse holding in this sector is through the Global Uranium Fund listed on the Toronto Stock Exchange (TSX) under the symbol GUR.
GUR holds a nicely mixed portfolio of 20 – 40 international uranium equities comprised of producers, developers, and explorers.
As we get further down the road and uranium stocks begin to take off we may feature some Uranium junior miners which may have huge capital gain potential but in the meantime taking a position in GUR gives you excellent access to the entire sector.
Expatriation of Ass and Assets
By Jeff Berwick
“Because you can’t fight City Hall, but you can leave town”
We are often asked, "If the worst case scenario occurs and the entire global financial system collapses and the world enters into a period of chaos for a time, where is the safest place to be situated?"
To answer that, let's begin by recounting what may be an urban legend, but whether true or not, makes our point.
In the early 1940s it was reported that a man from Europe saw the coming conflict arising in Europe and even foresaw that England and America would possibly be drawn into the battle as well. Given this he looked at a map and tried to pick the "safest" place he could possibly think of as far away from war as possible to "hide out" for a few years. Innocently enough, he chose a tropical paradise, thousands of miles from anywhere, to the northeast of Australia, in the Solomon Islands.
By stroke of fate, on August 7, 1942, the Allied forces launched attacks against the Japanese in the Solomon Islands with simultaneous naval bombardments and amphibious landings on the Florida Islands at Tulagi and Red Beach on Guadalcanal. The Solomon Islands theatre was considered to be the location of some of the most intense fighting in World War II and by the time it was over tens of thousands were dead.
And so, suffice it to say, that given a bit of bad luck and bad timing, no where is a 100% sure thing.
However, if we had to pick one country that we see as being one of the least likely to have major problems in the upcoming financial collapse, Argentina would be near the top of our list.
ARGENTINA
There are numerous reasons which we will outline below which makes us believe Argentina has an excellent chance of surviving the coming crisis in stride. The #1 reason, however, is that Argentina has had their own currency and financial collapse twice already in the last twenty years and look set to be well on their way to their third!
In other words, mention "financial system and currency collapse" to an Argentine and the response is most likely to be a shrugging of the shoulders and, "Otra vez?" (Again?)
The other reasons for considering Argentina include cost, quality of life, lifestyle and more as outlined below in "The Basics".
THE BASICS
I have personally visited Buenos Aires a few times but never ventured further out into the country but from all accounts I have heard the country has immense beauty with a wide-open diverse growing climate with very fertile soil and breathtaking sweeping mountains and ski slopes with blue water rivers and 
Argentina's Andes Mountainsbeautiful beaches with clear and cold water for diving.
But someone once said, "Argentina is a place blessed by God but cursed by it's government," and that is probably the best way to sum it up.
In many ways Argentina is more European than Europe, in that massive migrant populations from Africa and the Middle East are quickly changing the face of most European centers. Meanwhile spending time in Buenos Aires definitely has the feel of a European capital - the way they used to be. It is nothing but light skinned people for the most part. 86.4% of Argentine's self-identify as being of European descent.
Unfortunately, for Argentina, the Europeans brought all their wonky Euro-socialist ideas along with them and have spent the last century ruining the potential of the country which once stood as a world leader.
Take, as example, one of Argentina's most well known political periods, made famous by Andrew Lloyd Weber's 1978, "Evita". Everyone has heard the theme song, since covered by the likes of Madonna, of, "Don't Cry For Me Argentina."
Other Beautiful Scenery In Argentina
Those words were supposedly spoken by Eva Perón, the wife of President Juan Perón in the early 1950s. She actually held the official title of, get this, "Head of the Ministry of Labour and Social Welfare of Argentina"! It's no wonder her story ends in tears!
And it's been one socialist disaster after another ever since. What more would you expect from a country who still holds a sociopathic sicko like Marxist Che Guevara in such high esteem. At The Dollar Vigilante we have a soft spot in our heart for almost any anti-government revolutionary. But Che was only in favor of overthrowing the government in order to put in his own twisted brand of Marxism. Something which still, to this day, has left a curse over Cuba.
However, we shouldn't dwell on the government in Argentina too much because, for our purposes, it isn't of too much concern. We are only looking at Argentina as a possible place to wait out the passing global financial storm.
RESIDENCY
For this reason, we won't delve much into residency in Argentina. Our preferred way of using Argentina is as a place to "live" as a tourist. However, for those who wish to gain residency in Argentina it is a fairly straight-forward process, albeit a long one. For your first three years you can get what is called a "temporary residency". After that, for 2 years you can get a "permanent residency". After those 5 years you can apply for citizenship if you so choose, although we don't recommend it (see below).
In fact, we don't even recommend getting residency even if you want to live in Argentina. It is far preferable to just visit, and even have an apartment or house/ranch in Argentina and stay as a tourist for as long as you like. We hear there is hardly even a slap on the wrist for overstaying a tourist visa. Plus, if you live in a place like Buenos Aires, it is just a short half hour flight or 3 hour ferry ride to Montevideo, Uruguay. Or depending on what other part of Argentina you are situated, you can make easy excursions into Paraguay, Chile or Brazil as well to restart the clock on your tourist visa.
CITIZENSHIP/PASSPORT
For much the same reason we don't recommend becoming a resident of Argentina (the government) we don't recommend going through the trouble of becoming a citizen. However if this is something you wish to do, once your 5 years of residency are complete you are eligible for citizenship. But while an Argentine passport is a decent travel document we attempt not to become citizens of countries where the government takes an active role in what it's citizens can or cannot do. So, unless you really want to live there for the rest of your life and are comfortable with whatever obligations the government may throw on you, we again suggest just living in the country as a tourist.
LIVING/TOURIST
This is the area where we have a great interest in Argentina. Owning a condo in Buenos Aires or a nice ranch house anywhere in the country is an excellent way to escape "the world" for the next few years. Buenos Aires, like many large cities, has its "seedy" areas but the nice areas are quite cheap. You can find a very livable condo in a nice area for under $100,000. Much less depending on what you are willing to do without.
But the living costs and the quality of life is what really attracts us to Argentina. As we stated earlier, you can have world class cuisine, world class wines and world class ambience and service for the same amount you'd pay at T.G.I.F's in the US or McDonalds in Europe! As for downsides, Argentina is about as far away as you can get from nearly anywhere (this can also be considered an upside as the further you are away from trouble spots during the financial collapse the better). Expect a minimum 12 hour air journey to Buenos Aires from almost anywhere except from other countries in South America - and even from there it can still be 5 hours or more as the continent is so massive.
And for those who are willing and able to spend a bit more (quite a bit more, actually), one of my mentor's (in terms of knowledge I have learned from him over the years), Doug Casey, has started a luxury resort in Argentina aimed at expats who want to escape the coming financial collapse and stay in comfort with other like-minded people. It is located in the northern province of Salta and while I have not visited it personally, it looks phenomenal.
It has its own health club, winery and world class golf course. You can get more info at http://lec.com.ar.
If you would like more information on this development I have asked them to set-up a personal email address solely for our readers in order to get priority responses from them. Send an email to [email protected] to request more information if you are interested.
Stay tuned next month when I will tell you why everything the "news" is saying about Mexico is wrong and why it is actually the safest place in North America.
Perspectives From the Original Silver Trader
By Dr. Tom O’Brien
Editor’s Note: We include these casually written statements from Dr. Tom O’Brien each month as an interesting way to get a perspective from one of the most central figures in the last gold/silver bull market
Greetings TDV'ers!
I have looked into the face of death many times and walked into fire without fear.
If we should have learned anything from centuries of life changing events, it is those who face fear without fear who triumph. The heat of battle is most intense just before the tide of battle changes. I am somewhat of an ardent fan of the History Channel and every night since its inception in the mid-90s, I avidly watch these well documented revisions of legendary historical battles that changed history.
Napoleon lost at Waterloo ONLY because he hesitated at crucial midafternoon tide before the Prussians entered the battlefield. If he had committed his reserves, he would have completely defeated the Austrians and English and the Prussians would likely have retreated back to Germany.
My point is this. If this is the phase III bull move in gold & silver - September to December - commit all your reserves for the blowup and exit prematurely in late December like I did in December 1979. In fact, I did exactly that in December 19, 2003 and hedged my gains at over $255,000 having invested only $110,000 - I doubled my money in four months.
In the game of commodity trading timing is everything and you bet the farm when fate deals you that rare royal flush!
Fate favors the fearless!
In addition, I can't prove my theory but I believe the Republic of China is secretly taking on the Gold Cartel of Central Bankers in a life and death struggle for supremacy. From my sources on the floor of the Comex and other close observors, someone is placing large block orders on the floor. Especially when the Floor Brokers for JPM (JP Morgan-Chase) come to the ring to sell.
Who is big enough to challenge the 200 year Master Plot of the Banksters? Answer: the Communist Chinese with $2 Trillion US Dollars. How ironic that our "Saviors" may well be the Chinese protecting their own self interests. We know China's Central Bankers have openly encouraged, nay, almost mandated every Chinese Citizen buy Gold and Silver.
Ancient China was home to the World's first central currency over 5,500 years ago. Chaldean Miners mined silver and cast it into huge trade bars sent on Chinese junks sailing the Silk Trade of the ancient east.
Now the Chinese are making a triumphant comeback and it is my belief that China and Russia will join forces to create a very powerful new rival to the West.
Regards,
Dr. Tom
Dispatch From Within The Belly of the Beast
By Private Parts
Editor’s Note: We include these casual comments from a former US NCO (Non-Commissioned Officer) currently working as a contractor of the US Government on the ground in Afghanistan as an eye-opening look into what American taxpayer dollars are being used for in the “War on Terror”
Hello from Afghanistan!
President Karzai made a surprising announcement last week when he gave all private security companies (PSC) in Afghanistan 4 months to disband. He gave a nice speech about it actually, claiming PSC’s “loot and steal from the Afghan people”, have links to criminal groups, fund insurgents, etc. etc.
But while Karzai always talks a good game, he is the king of disingenuousness. And this is probably just an attempt to distract the US from their new anti-corruption probes into several of his top officials in Kabul.
While Karzai may actually try to force some of the international PSC’s out by the end of the year, I’m sure he’ll find a way to keep all of his ex-US Special Forces “shooters” who provide his own security. And I’m sure Karzai will give an exception to the Afghan PSC that his cousin owns. And all the Afghan PSC’s that helped supplement the Afghan Police in “election polling station security” last year (most of whom are really just various warlords’ fighters dressed up as “security guards”), I’m sure they’ll get a pass too. There’s no telling how many voters they intimidated and coerced into casting ballots for Karzai last year. Karzai will definitely need their support again when it’s time to steal another election.
Personally, I’ve enjoyed watching some of the Afghan PSC’s, even if just out of sick bemusement. The Afghan PSC’s that secure the fuel convoys entering from Iran will often attack or hijack each other’s shipments trying to discredit each other and trying to steal each other’s contracts. While some of the Afghan PSC’s in the east and south have been caught paying protection to the Taliban to ensure delivery of their cargo. Ironic, since much of the security contract funds originate from the US, and only to have a portion of it paid directly to the Taliban. The US taxpayers should be so proud.
As for the international PSC’s, I doubt much will change. The Afghan National Security Force can’t even be trusted to show up to work sober and not high, do you really think any international agency will trust them to secure either personnel or cargo? And it’s not like the US has another 30,000 troops ready to deploy to pick up the slack if all the PSC’s disappear. With polls showing 60% of Americans think the War in Afghanistan is a lost cause, that’s just not an option.
So I’m pretty confident this all just bluster from Karzai trying to get some breathing room from the US State Department so he and his cronies can go back to pillaging and plundering before the whole country collapses and the Taliban takes over again.
But even if Karzai does go through with his threat to revoke the rights to carry weapons for internationals inside Afghanistan, which would put all of us contractors out of work, I’m not really worried about it. For hired guns there’s always someone hiring.
And just now, while Obama is congratulating himself for the “end of combat operations” and “troop withdrawal from Iraq”, the US State Department (DoS) will soon be sending tens of thousands of additional contractors to secure and support their 5 massive DoS camps in Baghdad, Erbil, Basra, Kirkuk and Mosul. I’ve also been seeing quite a few new job postings for “security” in Pakistan. Only the US government could jump from one quagmire to another like that, on your dime of course.
Regards,
Pvt. Parts
Survival & Health News & Notes
By Jeff Berwick
This month we are going to focus on health. In turn we will focus more on survival next month.
The main reason I chose health before survival is because health should be your number one concern. Even beyond your financial situation. Would you rather be a heavily overweight billionaire immobilized in a wheelchair due to some degenerative disease and unable to perform basic tasks or a healthy person with a nice toned, slim body who is broke?
The answer should be simple. If you chose the immobilized billionaire option then you may want to take a long walk and really think about where your priorities are at!
My entire life I have always considered health to be the only thing of import. Money, or success, was always secondary. And it should be for you as well.
If you are reading this right now and have noticable body fat, the kind that you can grab a hold of with your hands, please read the rest of this section and then get right to work on correcting this problem. This has to be your #1 concern.
Almost ALL, yes ALL, health problems come as the result of bad diet and lack of exercise. Western "medicine" takes the exact wrong approach. The western approach is to ignore good diet and exercise and when the inevitable problems arise, such as diabetes or cancer, the biopharma industry is there with a million toxic chemicals for you to "fix" some of your symptoms but never to actually address the root of the problem.
If western doctors were of any value at all, upon the entrance of an overweight patient complaining of aches, pains, headaches, depression or other like symptoms, they would immediately put them on a healthy diet and a training regimen. But, perversely, when that patient enters most doctors offices' they will emerge with prescriptions for a host of dangerous chemicals - something that never fixes the root of the problem and will result in a downward spiral where-in they will need more and more medications to fix the problems caused by the medications themselves.
I have spoken with many overweight people and I always hear the same two excuses. 1) I just don't have the time and 2) I just don't seem to be able to keep the weight off.
In answer to #1: MAKE TIME! Nothing is more important.
As for #2, EVERYONE can be lean and healthy. EVERYONE. If you have "tried everything" and can't keep the weight off, you haven't tried everything.
There is so much misinformation about fitness that it is easy to become very confused. But, in actuality, it is all very simple.
Below I will share with you some basic information on the ONLY two tools you need to be in tremendous shape: diet & exercise. And, as with all things TDV, I not only talk about these things but have and am doing them. To the left is a photo taken of myself last week. I don't post this because I want to "show off". I just want to show that what I am doing is working.
DIET
I have tried nearly every diet known to man in my quest to find the right "diet". I was vegetarian for 5 years, vegan for 2 years. I have done Atkins low carbohydrate diet many times and numerous others.
A vegetarian diet can be quite healthy but it is difficult to have a high enough protein intake to keep muscle and lose fat.
On a vegan diet you actually will not be able to have a muscular, lean body. This is because you will not have sufficient protein. And because you don't have sufficient protein you will replace the missing protein with carbohydrates. 90% of vegans I know are soft and weak. The other 10% really focus on exercise and are less soft and less weak but they will never be really firm, muscular and lean. It is just not possible on such a restricted diet.
As for Atkins low-carb diet, it actually works, for a while. I have shed most of my body fat by going on an extremely carbohydrate limited diet. BUT, you can not stay on Atkins forever. It is too unhealthy and your body needs carbohydrates. And so, once you go off of Atkins you will just gain the weight back.
As far as other diets, when many people try to "diet" they try to "eat less". In actuality, to have a muscular, lean body you want to eat MORE (but of the right foods). You also want to exercise MORE. The reason why is it increases your metabolism. If you just eat less and don't exercise you may lose a few pounds but soon your body thinks it is starving and it clings to all its fat to protect itself.
When you want to find out how to do something right you should always go to the people who are DOING it. Much like in finance, you have the Ben Bernankes who THINK they know everything but have never done anything. If you want to learn how to make money you should listen to people who have actually made money. Such as Jim Rogers, Marc Faber and others.
And so, with diet, who should you listen to? Go straight to the people who live and breathe having a perfect body: bodybuilders.
One of the best books I have read is an E-book by bodybuilder Tom Venuto. It is called "Burn the Fat, Feed the Muscle". You can order the ebook at his website: http://www.burnthefat.com/order.html. The website looks overly promotional and hype-ish but the actual information in the book itself is excellent and worth the price.
To quickly summarize most of the contents of the book it basically states that in order to have a lean, muscular body with low body fat you need to do a minimum of 40 minutes of cardio, 5 days per week and eat a carefully designed diet of 50% carbs, 30% protein, 20% healthy fats (avocado, olive oil, nuts) 5 to 6 times per day. By eating so often, but in small amounts, of precise amounts, you rev your metabolism tremendously.
If you add in weight training on top of the cardio then you increase your metabolism even more as your body will spend days afterwards burning calories to repair the muscle you have "torn down" by training with weights.
EXERCISE
That brings us to the topic of exercise. The second pillar in having a healthy lean, muscular body.
As far as cardio is concerned, in the eBook Burn the Fat, Feed the Muscle, Tom Venuto states that almost any type of cardio activity where you can get your heart rate up to around 70% of its max is suitable. This can even include fast walking on a treadmill with a slight incline. It can also include jogging, biking, rowing, eliptical machines and many other forms of exercise.
Beyond that, I want to talk about two other forms of exercise that are excellent and can help you achieve your health and body goals.
YOGA
Many people, mostly men, hear the word yoga, and think it is something for girls. Believe me, it takes years of practice to even get close to having the strength and stability to perform some of the poses that many "girls" can do in yoga.
As I stated above, when you want to learn how to do something, you go straight to the experts who are DOING it, not those who TALK about it. In this case, if you want to get into excellent shape who should you listen to? Athletes of course.
Pro football players have been turning, en masse, towards yoga in recent years. Here is a recent article on this subject: http://sports.espn.go.com/nfl/playoffs2008/news/story?id=3816419.
In recent months I have begun doing Power Yoga to start my day and I have found it is excellent. If you don't want to go to a class or gym to do yoga, like me, just buy some yoga videos. The one I like most is Rodney Yee's Power Yoga. You can see an example of it here on YouTube: http://www.youtube.com/watch?v=ZT5ton_WQLk.
I consider myself to be in fairly good shape but even getting through the first 6 minutes of this yoga routine, which you can see on YouTube, was a struggle at first! Even after two months I max out at around the 12 or 13 minute mark of this particular video!
The benefits to yoga go beyond strength and flexibility. It is also an excellent way to help clear your mind of clutter and put yourself in a positive mood for the rest of the day.
As well, as Dollar Vigilantes, we are aware that there could be periods of time in the future where we may need to stay fit without things such as electricity and access to gyms as the financial system collapses. In this case, yoga is an excellent thing to practice that you can do from inside your own home cheaply (free) and easily.
POWER PLATE
I hesitate in recommending this technology for one reason. Health and fitness takes effort and I don't like to recommend any "easy" options because the strength of character, mind and body you achieve through a focussed, disciplined exercse and diet strategy is almost as important as the actual results you achieve through the process.
However, I am well aware that many TDV'ers just do not have a lot of time at this current point in their life to put aside 1 to 2 hours per day to exercise but still want to be able to achieve a healthy, strong body.
In this case, there is a new technology that actually works to achieve excellent physical results in a workout of less than 15 minutes. It is called the Power Plate and it essentially works by having you hold positions on a machine that vibrates very rapidly. What happens is that your body has to make thousands of adjustments per minute to these vibrations, giving you a deep, total body workout very quickly.
Again, listen to the pro's. Besides yoga, what are other professional athletes using? The Power Plate. Just look at the list of professional football, basketball, soccer and baseball teams that use the Power Plate here: http://uk.powerplate.com/EN/benefits/high_profile_users.aspx.
For those who really just cannot make time in their current lifestyle to get in a good workout 5 days per week yet still desire to have a healthy, strong body then look into a gym or studio with a Power Plate near you. Or buy one if you have the financial means.
And for those who already have a good physical routine the Power Plate is still of value. I personally know many personal trainers who use it in addition to their regular workouts because it gives them a full core workout that you simply cannot get with traditional exercises.
Q&A – Ask The Dollar Vigilante
Q: I am a full subscriber and thank you for all the work you do! I also want to thank you for adding info about the importance of Self Defense. Beside you and Gerald Celente it is rare to even hear of this most important need. I have a good size martial arts organization specializing in nerve incapacitation and as such if you ever need input in this area please let me know as I offer it to you as a thank you free of obligation.
Sincerely,
Evan Pantazi
www.Kyusho.com
A: Thank you for your note, Evan. As we often mention, we don't just want The Dollar Vigilante to be a one-way newsletter. It is our hope to build a world-wide network of freedom-loving individuals who are awake to the tyranny of governments and the central banks that empower them. As you can see from the note above from a TDV subscriber, Evan is an interesting individual who has founded an entire new form of self-defense and health through "vital points" (essentially, pressure points). He has also written several books on the topic (http://www.amazon.com/Evan-Pantazi/e/B0036F7KT0). Evan is fairly typical of our subscriber base which includes authors, fund managers, self-made billionaires and more.
We intend to start a message board on our website soon solely for subscribers so you can meet and talk amongst yourselves. As well, please join our Facebook page at http://facebook.com/DollarVigilante as another means to keep in contact.
At some point in the next year we may host a TDV conference where we can all get together and trade news and information from all of our areas of expertise. The first conference may be in Acapulco, Mexico where I am currently located.
As the US Dollar and global financial system collapse continues it will be very important to have a network of like minded individuals who may able to offer support and information at crucial moments and that is part of what we wish to accomplish here at TDV.
Please email any questions or comments you have at any time to [email protected] and every month we will endeavor to answer them either publicly or privately.
Conclusion & Items to Watch in Coming Weeks
What is it about September and October that something interesting usually happens in the capital markets? Undoubtedly something of interest will happen between now and our October 1st issue but what exactly is anyone's guess. The problems in Greece have not gone away and Credit Default Swaps on Greek debt have nearly returned to their highs during the last crisis indicating more problems are soon to come on that front. Meanwhile, in the US we watch with interest as the US media seems to be sending out trial balloons by quoting, regularly, other directors of the Federal Reserve. This is in great contrast to when Alan Greenspan was the Chairman of the Fed. When "the Maestro" was the head of the Fed you never heard from anyone but him. But in recent months the President of the St. Louis wing of the Federal Reserve, James Bullard, has been featured more and more in the US media. What is different about him than Bernanke? Unbelievably, he is even MORE of an inflationist than Helicopter Ben! Keep your eye on this.
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"The men the American people admire most extravagantly are the greatest liars; the men they detest most violently are those who try to tell them the truth." - H.L. Mencken