International Forecaster Weekly

Your Choice

We know the economy is fake, we know our debts too large and we know that some day, one day… the wheels will come off. So what are your choices?

Bob Rinear | August 20, 2014

            We’re all familiar with the so-called reality TV shows, which really push the envelope of believability. But the one reality show that never gets mentioned is the reality of just where the US population is when it comes to their financial position.



            On Monday morning one of the first things CNBC was discussing at the 7 am time slot was that a recent poll showed that in the US, 36% of the population had absolutely NO savings for retirement. None. Not a 401K, not a savings account, or even a handful of bonds they got as kids for their birthday.

            One might suggest that those 36% are part of the 77 million that are in some form of credit collection situation. But it isn’t just the dismal savings rate that is a problem for us and you all know that. The problems run deep and wide, and they’re covering them over with paper. Literally folks. They’re printing up paper to jam into stocks, to hide the disgusting reality of the average American’s situation.

            Consider this…

            PRINCETON, NJ — Twenty-two percent of Americans are satisfied and 76% are dissatisfied with the way things are going in the U.S. at this time. Americans’ satisfaction has been quite stable this year, ranging narrowly between 22% and 25%.

            The last time a majority of Americans were satisfied with the direction of the country was more than a decade ago, a 55% reading in January 2004. Further, satisfaction has not topped 40% since July 2005, amid a struggling economy, wars in Iraq and Afghanistan, and declining confidence in government. This period also saw satisfaction sink to an all-time low of 7% in October 2008, shortly after the financial crisis hit.

            So, while CNBC touts the supposed “consumer sentiment” numbers they make up, the fact is 76% of us are not happy at all. I can’t blame them, there’s simply too many problems and not enough answers.

            In finance land, we see companies borrowing money to buy up their own stock. Corporate borrowing broke all the records over the past two years. But even there, there’s a hidden bug-a-boo as we get this little factoid…

            We are building a bigger time bomb” with $500 billion a year in debt coming due between 2018 and 2020, at a point in time when the bonds might not be able to be refinanced as easily as they are today.

            What’s being said there is that it is one thing to borrow money at insanely low rates. But what happens if rates rise? Then all hell breaks loose. It isn’t just that the US Government gets killed as they have to pay multiple billions more to finance their debt, the whole of the Corporate world that’s gone into hock to buy up their shares and grant themselves bonuses will not be able to refinance the roll over’s. This is why Janet Yellens “job one” has been to keep rates low, via QE and reverse Repo’s.

            On the global front, we all know of the horrors that is indeed the situation in Gaza. We also know that the Russian/Ukraine situation is pushing many nations to try and find a way out of this predicament without crushing their economy. As more and more nations join the BRIC’s and decide to use the Chinese Yuan and the Russian Ruble for trade, we also see nations pushing back against the insanity of the sanctions that Europe and the US are implementing.

            The "western" alliance getting increasingly weaker: SANCTIONS ON RUSSIA MAKE NO SENSE, CZECH FINANCE MINISTER SAYS

            So in response to all this, what have we seen them do? Well we’ve changed the description of what manufacturing is. We’ve changed the way GDP is calculated so we can make it look better. We’re changing the way FICO credit scores are compiled, allowing more and more people with credit issues to buy things they can’t afford. We change the way inflation is measured so we can hide the most egregious instances of it. We also give them free reign to push the market to all-time highs in the face of our problems, to mask the pollution of our actual economy.

            But the most hideous thing we do is make up war problems around the globe. As much as this might be a slap in the face to many, there are quite a few people on this planet that don’t like the US because they believe we’re always telling everyone else how to run their lives, while our own society has some pretty massive issues. Consider what’s happening in St. Louis.

            According to KTVI, at least 200 St. Louis County Police officers were on scene and helping handle the situation. They confirm the Domino’s Pizza on West Florissant was set fire and burned. They also confirm multiple businesses vandalized and looted. But the shocker happened when county Police told Fox 2 News that its officers were at the Ferguson Market earlier when looters showed up, but were ordered to “Stand down” by Missouri State Highway Patrol incident commanders at the scene and basically withdrew and allowed the looters to have their way with the store

            Now we heard that the National Guard is amassing in Louisiana getting ready to roll into town and try and keep the violence to a minimum. We can try and hide this all we want, but the fact is that society is indeed creaking and groaning here in this country, and unfortunately our President and his justice department are a large part of it.

            So I ask the simple question. I need you all to ponder this, and put some real thought into it. What are you going to do? We know the economy is fake, we know our debts too large and we know that some day, one day…the wheels will come off. So, what are your choices?

            You can try and work longer and harder. You can try and get a better job, but they’re often fleeting. So again; just what are you going to do to get through all this? While I’m certainly not against the “preppers” I personally don’t want to live in the woods eating MRE’s and playing Rambo. I want to see a world where things get rough, but we get through it. If that’s the way it will go, how are you going to get through?

            The stock market is rigged. You can read that a hundred times and it will say the same thing. I don’t mince the words, it’s rigged. BUT and this is important, it is rigged to go up. So it stands to reason that owning stocks while they’re being pushed higher makes a lot of sense. But of course it also makes sense that when the market finally wheezes its last bull breath, it is a brilliant idea to go short and try and capture the gains on the way down.

            But the fact is that you’re still going to be taking in “dollars” and those things are about worthless today. Each time I accompany the wife to the grocery store, I burst vessels. 90 bucks for a rib roast? 5 bucks for a bottle of A-1? 4.50 for a gallon of milk? 10 bucks a pound for water injected cold cuts?

            Inflation is roaring folks, and it seems to me that holding dollars is pointless. Every day they buy less and less “stuff”. But the fact is that we need them to do business, buy food and fuel and run our households. So amassing as many of them as we can has to be job one. We can think of no other place to do that really well than in the stock market. If it’s rigged to go up, we might as well go with the flow. And, even when it stops going up and rolls over, as long as the financial system is functional, we’ll make a ton more on the way down. Don’t forget that in our twenty year history, our single biggest income year was shorting the financials during the 2008 – 09 melt down. Shorting works.

            The question then becomes, “what do you do with the dollars you amass? If you sit on them making 0.1% interest you’re losing money. If you stuff it in a mattress, it loses buying power every day. So you have no choice but to deploy it. Some goes right back into stocks, but some has to be put somewhere else. Something solid. Now just what that is, depends on what you feel about the future. If you’re convinced that we’re facing absolute societal breakdown, then food, weapons, ammunition, training, and survival skills are where your money should be spent.

            If however you think that things will indeed get ugly, but maybe not “live in the woods and eat bugs” ugly, then you have to consider the idea of our precious metals. No one likes the metals any more because they’ve been capped by the powers that be. When gold was running from 300 to 800 everyone dismissed it as crazy. Then when it hit about 900 people figured they best buy up some. They felt like a genius when it ran to almost 1900, and wanted more. But when they decided to pound it down, and it has lived around the 1250 level for almost 2 years, no one likes it.

            That’s exactly when you should like it. It’s on sale. Same with silver. I find it interesting that you’ll go all the way across town to buy an item that’s on sale, but when the metals are on sale, you don’t want any. How odd.

            I don’t know anyone that knows the future. We can all guess and make our best prognostications, but it is nothing more than connecting the dots and coming up with a picture of where you think things should be. That said however, it is my guess that indeed, the metals will again shine. The Chinese and Russians and Indians etc are awful tired of these quasi-fiat dollars that have no basis in value. When they’re all satisfied that they have enough of the metals, then they will rise. Why? It’s their hedge.

            Think of it like this folks. The Chinese have trillions of assets based in dollars. They know those dollars become more worthless every time the Fed’s print another one. History shows us that when markets are working fairly normally, as the dollar falls, gold goes up. So, they’ve been buying all the gold they can get their hands on, and I wager a guess that they have an awful lot more of the stuff than what the financial press states.

            So, when the dollars that they hold fall like a rock in value, the gold they hold will offset that fall, and they’ll be “hedged” so to speak. But also along that line of thinking is this…once they’ve got all they think they “need”, then there will be less of a reason for them to “cap it” as we’ve seen since 2011. ( and yes, the Chinese are a very big reason the metals are capped, they’ve been allowed to naked short the paper market to facilitate buying the actual metals cheaper)

            As you can guess I’m still a metals bull. Yes they’ve kept a lid on it for a long time and even through some tense times of global instability. But that’s being done on purpose and there will come a day when the caps are lifted and they’ll want it to soar in price. When will that be? I don’t know. I can guess like the next guy, but I’m the first to day I didn’t think they could cap it as long as they have already.

            Our plan has been the same since the big melt down. We buy stocks, we take some profit and we buy some silver. Am I happy that it’s sitting at like 20 bucks for so long? In a way, yeah. If it was 60, I might be selling some instead of amassing more. But the underlying theme is the same as it always was. I don’t believe the dollar can regain enough value to make me want it. I do however think gold and silver will increase in value over time.

            So our approach is really quite simple. We want to use the market for income, then “save” our money by way of precious metals. Along the way we pick up other items that we feel will have solid value in an inflationary world. High quality guns for example. If we ever break past the levels of say the “Carter Inflation rates” and edge into hyper inflation you might be surprised what turns out to be a good investment. Cigarettes, booze, and even the lowly flashlight battery will be worth an awful lot of money.

            The bottom line is that I can think of no other vehicle that can produce the kind of income the stock market can provide for the average person. Yes you’ll need some education to make it work, but the education is available and learnable. In some upcoming issues we’re going to lay out some ways for you to learn how to trade the market for income in a rising or falling market. Stay tuned folks, this will be IMPORTANT for you.