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January 9, 2011
Issue 130  -  Rights Under Attack
 
I'm not referring to republicans, but your God given rights.  These are spelled out in the constitution and are inherent and come from within.  You don't need anyone to "give" you your rights.  It seems that our "leaders" don't understand this.  In fact, they don't even know what the constitution contains.  Here's an example:
 
 
This a republican, but it applies to a majority of our representatives.  The constitution is the blueprint for their actions and they don't even know what it says.  It's a rather short document when compared to current "laws."
 
 
That large stack of paper is the new healthcare bill.  I'm SURE there's nothing in there that is a violation of the constitution or your rights.
 
 
Corruption and back room deals are the back bone of these bills.  They are full of unrelated nonsense.  Washington has become a town of smoke and mirrors.  Another example:
 
 
There is nothing honest about what comes out of politicians mouths.  This is just sleight of hand bs.  GM has not "paid off", that's a flat out lie.  But then again, I'm not surprised.  No one understands what they are really supposed to be doing, and more importantly, what they're NOT supposed to do.   Here's an example of that:
 

Obama Eyeing Internet ID for Americans


STANFORD, Calif. - President Obama is planning to hand the U.S. Commerce Department authority over a forthcoming cybersecurity effort to create an Internet ID for Americans, a White House official said here today.

It's "the absolute perfect spot in the U.S. government" to centralize efforts toward creating an "identity ecosystem" for the Internet, White House Cybersecurity Coordinator Howard Schmidt said.

That news, first reported by CNET, effectively pushes the department to the forefront of the issue, beating out other potential candidates including the National Security Agency and the Department of Homeland Security. The move also is likely to please privacy and civil liberties groups that have raised concerns in the past over the dual roles of police and intelligence agencies.

The announcement came at an event today at the Stanford Institute for Economic Policy Research, where U.S. Commerce Secretary Gary Locke and Schmidt spoke.

The Obama administration is currently drafting what it's calling the National Strategy for Trusted Identities in Cyberspace, which Locke said will be released by the president in the next few months. (An early version was publicly released last summer.)

"We are not talking about a national ID card," Locke said at the Stanford event. "We are not talking about a government-controlled system. What we are talking about is enhancing online security and privacy and reducing and perhaps even eliminating the need to memorize a dozen passwords, through creation and use of more trusted digital identities."

The Commerce Department will be setting up a national program office to work on this project, Locke said.

Details about the "trusted identity" project are unusually scarce. Last year's announcement referenced a possible forthcoming smart card or digital certificate that would prove that online users are who they say they are. These digital IDs would be offered to consumers by online vendors for financial transactions.

Schmidt stressed today that anonymity and pseudonymity will remain possible on the Internet. "I don't have to get a credential if I don't want to," he said. There's no chance that "a centralized database will emerge," and "we need the private sector to lead the implementation of this," he said.

Inter-agency rivalries to claim authority over cybersecurity have exited ever since many responsibilities were centralized in the Department of Homeland Security as part of its creation nine years ago. Three years ago, proposals were were circulating in Washington to transfer authority to the secretive NSA, which is part of the U.S. Defense Department.

In March 2009, Rod Beckstrom, director of Homeland Security's National Cybersecurity Center, resigned through a letter that gave a rare public glimpse into the competition for budgetary dollars and cybersecurity authority. Beckstrom said at the time that the NSA "effectively controls DHS cyber efforts through detailees, technology insertions," and has proposed moving some functions to the agency's Fort Meade, Md., headquarters.

 
An internet ID?  What in the hell is going on in Washington?  The internet is THE personification of the first amendment and Obama wants to put limitations on it.  This, all in the name of "safety."  NEVER give up rights for safety.  This is a trick of politicians to gain more control over you.  Politicians, for the most part, loath freedom, except when it applies to their actions.  There is one thing congress is excellent at, spending:  (from GATA)
 

Bill,
On last Thursday, the Federal Debt was $13,871,130,353,817.40. On Friday it was $14,025,215,218,708.52 for a one day gain of $154.08 billion. Since the U.S. has about 140 million full time workers, the debt per worker just went up over $1,000 in one day. Friday was the first time the debt exceeded $14 trillion. The debt first exceeded $13 trillion on 6/1/2010, so we increased a trillion in less than 7 months. The debt first exceeded $1 trillion in late 1981, so the first trillion took the country 205 years and the 29 years since have added another $13 trillion. Based on simple math, it is checkmate, game over. The U.S. government’s cannot reduce their thirst for power which takes money, so we will default on our bonds and social security obligations or bring vast hardship by hyperinflation. Regards,
-Bryant

Yes, they are good at going into debt.  Of course that doesn't take any talent, does it?  In fact, anyone can do it:
 

Deficits…

(CBS) - By now, just about everyone in the country is aware of the federal deficit problem, but you should know that there is another financial crisis looming involving state and local governments.

It has gotten much less attention because each state has a slightly different story. But in the two years, since the "great recession" wrecked their economies and shriveled their income, the states have collectively spent nearly a half a trillion dollars more than they collected in taxes. There is also a trillion dollar hole in their public pension funds.

The states have been getting by on billions of dollars in federal stimulus funds, but the day of reckoning is at hand. The debt crisis is already making Wall Street nervous, and some believe that it could derail the recovery, cost a million public employees their jobs and require another big bailout package that no one in Washington wants to talk about.

"The most alarming thing about the state issue is the level of complacency," Meredith Whitney, one of the most respected financial analysts on Wall Street and one of the most influential women in American business, told correspondent Steve Kroft.

Whitney made her reputation by warning that the big banks were in big trouble long before the 2008 collapse. Now, she's warning about a financial meltdown in state and local governments.

"It has tentacles as wide as anything I've seen. I think next to housing this is the single most important issue in the United States, and certainly the largest threat to the U.S. economy," she told Kroft.

Asked why people aren't paying attention, Whitney said, "Cause they don't pay attention until they have to."

Whitney says it's time to start.

California, which faces a $19 billion budget deficit next year, has a credit rating approaching junk status. It now spends more money on public employee pensions than it does on the state university system, which had to increase its tuition by 32 percent.

Arizona is so desperate it sold off the state capitol, Supreme Court building and legislative chambers to a group of investors and now leases the buildings from their new owner. The state also eliminated Medicaid funding for most organ transplants.

Then there's New Jersey. It has the highest taxes in the country, a $10 billion deficit and a depressed economy when first-year Governor Chris Christie took office. But after looking at the books, he decided to walk away from a long-planned and much-needed project with New York and the federal government to build a rail tunnel into Manhattan. It would have helped the economy and given employment to 6,000 construction workers.

Gov. Christie acknowledged that's a lot of jobs. "I canceled it. I mean, listen, the bottom line is I don't have the money. And you know what? I can't pay people for those jobs if I don't have the money to pay them. Where am I getting the money? I don't have it. I literally don't have it."

Asked if this is going on all over the country, Christie told Kroft, "Yes. Of course it is. It's not like you can avoid it forever, 'cause it's here now. And we all know it's here. And the federal government doesn't have the money to paper over it anymore, either, for the states. The day of reckoning has arrived. That's it. And it's gonna arrive everywhere. Timing will vary a little bit, depending upon which state you're in, but it's comin'."

And nowhere has the reckoning been as bad as it is in Illinois, a state that spends twice much as it collects in taxes and is unable to pay its bills.

Remember, the states can't print money either.  Illinois is spending twice as much as it takes in, and that can continue for how long?????  The clock is ticking on these deficit bombs.  It's just a matter of time until real trouble starts.  But wait, isn't the job market getting better?  Not really.  If you couldn't guess already, the numbers were "adjusted" to make them look better.  Here's urbansurvival.com's analysis:

 

Labor Force Edges down:  This number proposes that the number of people "in the work force' in December dropped by 260,000.  Sorry, but I have a problem thinking that that number of people available for work dropped.

 

CES Birth-Death Model:  The Labor Department figures assume that jobs were 'created but not measured' because the proposed hiring was by small business and the like.  24-thousand jobs appeared this way.  True, 21,000 jobs in construction went away, but that was more than offset by 12,000 more in trade, transporation, and utilities, along with financial activities (ahem, cough, cough, tarp me baby, tarp me) and education and leisure and hospitality.  Maybe it was a GREAT season for hiring at ski lodges, just can't say.

 

Total Unemployed and Underutilized:  Where my more skeptical (if now downright cynical) view of things really shows up is in the Table 15 U-6 statistics which shows that non-compensated unemployment and under employed zoomed up from 16.3% of the workforce to 16.6% of the workforce in December.

 
This is not seen by the majority of people as they just hear the headline, which looked great.  9.8% to 9.4% seems awesome except when you realize that a lot of job growth was seasonal, which will go away as Christmas has passed.  Also, the government has been lowering the number of available workers continuously.  Here's a chart from Zerohedge:
 
 
Some added commentary from Zerohedge:
 
While today's unemployment number came at a low 9.4%, well below expectations, the one and only reason for this is that the labor force in America has plunged to a fresh 25 year low. Assuming a reversion to the mean in the long-term average participation rate back to 66%, means that the civilian labor force, which in December came at 153,690, a drop of 260,000 from November, is in reality 157.6 million, a delta of 3.91 million currently unaccounted for. Maybe someone can ask Bernanke during his imminent presentation before Congress what happened to the unemployed population, which would have been 18.4 million if this labor force delta was incorporated, resulting in an unemployment rate of 11.7%.
 
So an unemployment rate of 11.7% is more like the true number?  This just keeps on happening and nobody cares.  The main stream press remains mum and the sheeple dumb.  So we plug on with the extra knowledge and try to take advantage.
 
Precious Metals 
 
It was a lousy week for the metals and metal stocks.  It's hard to say how much of this was a breather in a large rise versus intervention.  It is like clockwork that the price of the metals goes down right before the jobs number is released.  I'm leaning more toward intervention as that is the normal mode of operation.  This downtrend will probably be shortlived.  
 
There was some very good news, if true, regarding silver.  It involves the world's richest man, Mexican magnate Carlos Slim:  (from King World News)
 
From King World News

A source in mergers and acquisitions out of Europe has alerted King World News that Carlos Slim may be looking to enter the silver market in a big way.  Gold and silver are in big bull markets and this is attracting the attention of some of the smartest money around the globe.  James Turk commented, “If this deal does happen Eric, this is going to make the silver shorts choke.”  Fresnillo has a current market cap of roughly $19 billion.

The European source commented, “This deal has been floating around for a while, but I think this time it is going to happen.  It’s in his backyard.  This is the world’s richest man wanting to get into silver.”

I view this as the only way for the richest man in the world to enter the silver market at this point in terms of any scale, is that your take as well?

“Yes, I agree with that.  Let me just add that when he buys into it (Fresnillo) he will have the leverage to silver he is looking for.  There are very few ways to get into silver with the amount of money he has, this is the most likely option at this point.  He has to pay a hefty price or otherwise the deal will not happen.  It is beginning to look like the longer he waits, the more he will have to pay.  It is a bull market and things to tend to get more expensive, not less.”

King World News reached out to James Turk to get his comments.  When asked about the potential buyout Turk stated, “If this is true he is following in the footsteps of John Paulson and his exposure to gold through Anglo Ashanti.  In Carlos’s case, when you have billions of dollars to invest, it is impossible to buy physical silver in any significant quantity with the market so tight.  The point I am making is that Paulson ended up buying 30% of Anglo-Ashanti for a few billion dollars giving him exposure to the gold price.
 
The beauty of investing in silver is how small the market is in total size.  These rich guys just can't buy enough physical silver to make a difference to their net worths.  This is good for you.  Please buy some silver.
 
In that regards I am once again going to stop putting any of my option purchases here on the site.  I've been getting an increasing number of emails asking about options.  For 99% of people reading this, the answer is No!  Do not buy options until you have a physical position in gold and silver AND silver and gold stocks.  After building that portfolio, you can put 2 or 3% into options.  I just lost on my gold stock options that I purchased.  They are now worth nearly 0!!!!  This happened in two weeks!  I knew the risks and only risked a small portion of my portfolio.  I'll live to fight another day.  You should not be buying options as a lottery ticket.  Start buying gold and silver, which are your life boats for the coming turmoil.  Enough said.
 
 
Positions
 
Goro  (closed at $26.42, down $2.98, average price paid, $6.10) 
 
Goro also had it's first recommendation from Wall Street.  A buy with a target of $45 from Jefferies.  I believe we had a "sell on the news" reaction and I expect the price to move up after the gold and silver prices stop falling.
 
Mexus Gold  (closed .26, up 1 cent, average price paid, $0.20)
 
Other stocks I'd buy  GG, NEM, RBY, SLW, PAAS, VLCCF, PVX, DNN, CJJ, and TGLDX.   
 
I'll finish this week with a video of a huge homemade luge/sled track, have a great week!