Ok…I am back…financial advice. Comments and opinion…Oh yes, the end of the world…

I received this email from my Father:

[Frank],

apparently there is something going on  behind the scenes….check out King World News –Gold Pool…yesterday a gent named Richerds(spelling?) wrote  an article on the suppression of Gold price and the Deutsch mark… look it up…what do you think of this idea…buy now? or wait it out? I do not think there is enough gold  in the world to stabilize any government now. Dad

The link to the article he mentioned in King World News no longer exists, but it referred to the end of price manipulation of Gold and Silver-

Here is my answer:

Hey Dad,

Sorry it took so long to get back to you.  

I looked at the article…Kind of suspect, as the information is a bit exaggerated.  ‘Price fixing’ has been used instead of the original intent of ‘Price Stability.’  Of course this was also at a time before computerised transactions, Credit Default Swaps (CDS), Special Investment Vehicles (SIV’S), and ‘Bundled Securities’ (BS’s)-wonder why no one noticed the connection?

For a quick answer, (before I get onto my soapbox),   Gold will in all probability go to over 2000$ by years-end.  (About 90% probability)  So yep, now would be a good time.  Maybe 10 to 25% worth, if you can get it through a Jeweller, (or maybe buy in Canada through someone you know, as the Loonie took a hit…)  The problem I see is that the Governments seem to have a propensity in times of crisis to come and confiscate the stuff.  So any transaction through a bank or brokerage is going to give you-know who a map to your door to come pick it up. 

Silver is still an industrial metal.  Also priced in Dollars, so any crash in the dollar would also be protected.  Silver is at around 34$, the ratio between the price of gold and silver is at almost 52%.  Somewhere I read it should be around 18-20%.  This would seem to indicate a historical disconnect in price.  If silver goes up to 44$, than gold would have to go up to over 2200$ to get the same return.

Palladium:  Is at 646$.  I already told you about the short supply and the demand.  However, I do not know if it is possible to hold physical quantities of the stuff, or even where to buy it.  So a solid company that deals in the stuff is your best bet.  As a caveat, if everything tanks, the demand for autos and Palladium will also be affected.

Stocks, I would take a look at:

Siemens.  They have a really good track record of screwing everyone to keep costs down, and are really on the ball with R&D.  You will have to check if they split the medical division from the company.  Even if they were dumb enough to hire Lisa, the medical division is tops.  The tech division also, even if they gave away their mobile division before I could present by land-line conversion technology.

BP.  Well, no one listened to me when I said to buy the stock with both hands after they poisoned the Gulf, and the stock price was driven into the cellar.  Of course they continued to post profits, and the stock is no longer a bargain.  However, there should be upcoming legal action that could drive the stock down again…

Oil Stocks:  Look for those that produce oil anywhere outside of the Middle East…especially in the North Sea.  One word: Isreal.

Sony Ericsson, They are not Apple with an I-phone, but have a solid market base.

Trekstor (http://www.trekstor.de/de/index.php9) they are a German company, that naturally produces all of their crap in China, but they are a leader here in cheap storage solutions.  Heck, they even tried to name one of their products ‘i.Beat blaxx’…they have since changed the name, but here is the link (in German) http://www.chip.de/news/TrekStor-i.Beat-blaxx-Player-fuer-Musik-und-Videos_28487815.html

Oh yes, Storage solutions.  Take a look at companies like Seagate, Western Digital and of course, Hewlett-Packard.  Surveillance needs the capacity for Data storage, and these are the companies that are supplying the media.  There are two other companies; look at who makes “SanDisk”, and other flash-media, as these ‘Flash Media’ products are really an alternative for Hard-drives.  It does not matter which company, just look at the 1: P/E ratio and 2: the Debt to earnings ratio and pick the best one.

More in the last paragraphs about Data and tech.  Can you say “Carrington Event”?

First the soapbox about Gold:

Gold in the moment is only being driven up in price because it is being viewed as a ‘safe-haven.’   As an industrial metal, the value is probably supportable at around 1200$ an ounce.  However as the price is in Dollars as the dollar tanks, you are safe…look at the rate on T-bills; when the rate starts to go up, in order to ‘entice’ buyers; you know the jig is up.  Oh crap…it is already going up.

Last time I checked though, no country was on the gold standard.  Now however, it is becoming a topic of discussion that nations use their gold reserves to provide stability to their currency.  

Isaac Newton?  Everyone seems to forget that he not only discovered gravity, but also introduced the gold standard.  http://www.jstor.org/pss/3020836 http://maxkeiser.com/2011/06/19/sir-isaac-newton-invented-the-gold-standard-circa-1700/.

The gold standard is not possible, for as you said, there is no possible way that countries can back their Fiat Money with Gold, unless there is a devaluation of currency by oh, 10,000%…Silver would be an alternative perhaps.

The financial system is in meltdown mode.  There can be no doubt about it.  I have assembled enough information to almost write a book, but why?  Thomas Woods’ book series ([/amazon_link][amazon_link id=”1596985879″ target=”_blank” ]Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse[/amazon_link]) has almost all of the same information in it.  Even he, however, has a few facts that don’t seem to add up.  One thing is certain though, all of the money that has been created out of thin air is suddenly creating big problems.   [amazon_link id=”0802144659″ target=”_blank” ] J.P. Morgan[/amazon_link] was no saint, but at least in his day he knew the importance of maintaining a sound currency.  

The folly of the Kings who slowly lost their power to the Barons and Bankers in order to finance wars seems to be continuing.  In this day and age unfortunately, there are no longer any kings, just governments.  The people are still on the hook, and it remains the prime objective of the bankers that they remain peasants.

OK, off the soapbox. 

Have you heard about the coming Solar Flares?  Here is the link that got me thinking: http://www.shtfplan.com/headline-news/noaa-warns-of-monster-solar-storm-region-facing-earth-for-next-two-weeks_11082011.  Being ADD and paranoid has its advantages.  I can take in a lot of information, but trust none of it until a bunch of different pieces fit together.   I read the article, and noticed all of the ‘power-words’ (like the ones Politicians use to get people worried), and did a bit more research.  Also the site advertises survival supplies…Hmmn.  Gloom and doom are good for profits.

Here are the links I found about the Solar Flares:  Washington Post (not such a good source)  http://www.washingtonpost.com/politics/storm-activity-on-sun-heats-up-in-area-called-benevolent-monster-by-scientists/2011/11/03/gIQAROTVjM_story.html

Here is the information on the Carrington event (Trusted source, but from 2008) http://science.nasa.gov/science-news/science-at-nasa/2008/06may_carringtonflare/

Here is the most important excerpt: 

These statistics suggest that Carrington flares are once in a half-millennium events. The statistics are far from solid, however, and Hathaway cautions that we don’t understand flares well enough to rule out a repeat in our lifetime.

And what then?

Lanzerotti points out that as electronic technologies have become more sophisticated and more embedded into everyday life, they have also become more vulnerable to solar activity. On Earth, power lines and long-distance telephone cables might be affected by auroral currents, as happened in 1989. Radar, cell phone communications, and GPS receivers could be disrupted by solar radio noise. Experts who have studied the question say there is little to be done to protect satellites from a Carrington-class flare. In fact, a recent paper estimates potential damage to the 900-plus satellites currently in orbit could cost between $30 billion and $70 billion. The best solution, they say: have a pipeline of comsats ready for launch.

(But they do not have them)…

Here is a ‘what-if’ from National Geographic:  http://news.nationalgeographic.com/news/2011/03/110302-solar-flares-sun-storms-earth-danger-carrington-event-science/

More Later…