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January, Wednesday 18, 2012

DOW + 96 = 12,578SPX + 14 = 1308NAS + 41 = 276910 YR YLD +.05 = 1.90%OIL +.39 = 101.09GOLD +7.30 = 1659.90SILV + .46 = 30.62PLAT +4.00 = 1527.00 “The global economy is entering into a new phase of uncertainty and danger,” so says the World Bank’s chief economist, Justin Yifu Lin. “The risks of a global freezing up of capital markets as well as a global crisis similar to what happened in September 2008 are real.” The bank cut its growth forecast for developing countries this year to 5.4% from 6.2% and for developed countries to 1.4% from 2.7%. For the 17 countries that use the euro currency, it forecast a contraction, cutting their growth outlook to -0.3% from 1.8%. For the United States, the bank cut this year’s growth forecast to 2.2% from 2.9% and for 2013 to 2.4% from 2.7%. In the event of a major crisis, “no country will be spared.” “The downturn is likely to be longer and deeper than the last one.” Many governments are in a weaker position than they were to respond to the 2008 global crisis because their debts and budget deficits are bigger. The World Bank said slower growth is already visible in weakening trade and commodity prices. Global exports of goods and services expanded an estimated 6.6% in 2011, barely half the previous year’s 12.4% rate, and the growth rate is expected to fall to 4.7% this year. Commodity exporters should brace for a fall in oil …

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The Update Case of Silver

Sinclair Noe is the host of “Financial Review” heard on moneyRadio.com and KFNN 1510 AM in Phoenix, Monday-Friday at 4PM MST. Sinclair has temporarily picked up the hosting duties for Pat Gorman’s “Hard Money Watch” radio program on moneyRadio.com and 1510 AM, Sunday mornings at 10AM MST. Mr. Noe has written six books; the most recent include: “Eat the Bankers” and the “Veterans’ Benefits Reference Manual”. Sinclair is the editor of Bank-o-Meter.com. He has also been a featured speaker at our Wealth Protection Conferences in Tempe for the past few years. The Updated Case for Silver I want to go back to my presentation at the 2011 Wealth Protection Conference; I spoke about several long-term trends. I think I presented several compelling and accurate predictions for long-term trends. I spent a lot of time talking about my investment pick for the next decade –silver! A friend recently chided me for what he considered an egregious mistake. Last April, silver hit $48.55. As I write, silver is around $29 an ounce. In my defense, I said at the Wealth Protection Conference that silver would most likely fall from the April highs and essentially every other speaker and several attendees at the conference confirmed this prediction. I remind you that my pick was for silver as the investment of the decade. Still, the past 9 months have been challenging for silver bugs. I hope you’ve been buying the dips. I think it will pay handsomely. Here is my updated case for silver.Precious …

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January, Tuesday 17, 2012

DOW + 60 = 12,482SPX + 4 = 1293NAS +17 = 272810YR YLD un=1.85%OIL + 2.30 = 101.00GOLD + 8.80 = 1652.60SILV + .09 = 30.06PLAT + 26.00 = 1527.00 On Friday, after the close of business in the stock market, S&P downgraded 9 European countries. Spain and Italy were both taken down 2 notches, leaving Italy with a BBB+ rating and Spain with an A.  But the headline damage was done to France, whose triple-A rating got downgraded to AA+. France had been rated AAA for 36 years.  The French bid adieu to their triple-A status…said they didn’t care about it, expected it, and didn’t need it anyway. But it was a blow. France, with Germany, was one of the strong, big economies at the center of Europe. It was one of the economies the others were depending on to bail them out. Over the weekend, The Wall Street Journal warned that markets needed to “brace for European fallout,” this morning.  And then to put an exclamation point on the matter, this morning Standard & Poor’s downgraded the creditworthiness of the eurozone’s rescue fund, putting the fund’s ability to raise cheap bailout money at risk. The EFSF, the European Fubar Slush Fund was cut by one notch to AA+. Quite the Tempest in Europe: “Some kinds of baseness Are nobly undergone, and most poor matters Point to rich ends.” Spain had a Treasury bill auction today and it went quite well. They sold twice the amount targeted and yields fell, …

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January, Friday 13, 2012

DOW – 48 = 12422SPX – 6 = 1289NAS – 14 = 271010 YR YLD -.08 = 1.85%OIL -.35 = 98.75GOLD – 8.90 = 1640.70SILV – .48 = 29.87PLAT – 7.00 = 1497.00 For all our triskaidekaphobic friends, Friday the 13th actually has a mild upward bias in stock market history. It’s up 55% to 60% of the time. That said, we were down today, and there was a massacre, of sorts, after the close of trade. We start with some shocking news – this is utterly remarkable – Standard & Poor’s has cut France’s credit rating by one notch to AA, down one notch from AAA. Shocking. And expected for about a month now.  More shocking news – S&P cut Italy’s credit rating to BBB+. The cut their ratings on 24 Italian banks and affirmed their ratings on 19 banks.  Now, here’s the fun part. S&P has to provide 24-hour notice to the countries if they are going to change their ratings.  S&P had Italy as A1 on negative watch, and just cut them to BBB+. Earlier today, Italy held a bond auction. Italy sold bonds while in possession of information that they were going to be downgraded. Are those bond sales valid? They sold $ 6 billion–dollars worth of bonds without disclosing insider information of an impending downgrade that would certainly be harmful to the value of the bonds. It doesn’t get more insider than that. But wait – there’s more! Then they cut Russia to BBB. Austria …

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January, Thursday 12, 2012

DOW + 21 = 12471SPX + 3 = 1295NAS + 13 = 272410 YR YLD +.03 = 1.93%OIL –1.65 = 99.22GOLD + 5.60 = 1649.60SILV + .28 = 30.35PLAT + 2.00 = 1504.00 In 2011, the market value of U.S. stocks went nowhere from the first trading day, January 3, to the last trading day, December 30. And I mean absolutely nowhere. The S&P 500 started the year at 1,257.64 and ended the year at 1,257.60. While the market value of the S&P 500 was going absolutely nowhere, its valuation was plummeting. S&P 500 trailing 12-month earnings (through September 30, 2010) started last year at $79 a share and ended the year at $94.64 per share. That means earnings grew at nearly 20%, but prices went nowhere. In fact, prices have gone nowhere for the past 12 years. That’s not exactly true – we are pretty much where we were 12 years ago, but prices moved quite a bit in between. We get into overbought and oversold positions. The question is: where can we find opportunity? Standard & Poor’s classifies every individual stock into one of ten primary sectors. They then publish specific indexes for each sector (as well as dozens of sub-sectors within the ten primaries). The worst performing S&P sectors for 2011 Financials (-18.4%), Materials (–11.6%), and Industrials (-2.19%). The top performers included Utilities, consumer staples, and health care. Only 3 of the ten sectors were down but the S&P 500 is capitalization weighted; that means each stock …

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January, Wednesday 11, 2012

DOW –13 = 12449SPX +0.4 = 1292NAS + 8 = 271010 YR YLD -.07 = 1.90OIL -.51 = 101.73GOLD +10.80 = 1644.00SILV + .03 = 30.07PLAT + 30.00 = 1500.00 Fitch Ratings Agency reminds us all that Europe isn’t in good shape. Fitch says the ECB should take a more active role in buying Eurozone debt to avert a cataclysmic collapse. Fitch said they’re not really predicting a collapse of the Euro; just that it is a concern. Meanwhile, Fitch downgraded Hungary to junk status. The euro hit a 16 month low of $1.27. Germany reported its economy shrank in the fourth quarter. European regulators will recommend blocking the deal that would have seen Germany’s largest stock exchange buy the New York Stock Exchange. France says they have not been informed of an imminent decision to cut the country’s credit rating.  In Italy, the banks stopped lending and organized crime has stepped in to fill the void for short-term lending, meaning the Mafia has become the number one bank in Italy.  And the rest of the Eurozone seems determined to grind Greece into the ground. Grecian formula austerity has seen unemployment jump from 13% to 19%. Rates of homelessness, suicide, crime, and HIV have skyrocketed; and public hospitals are facing severe shortages – they’ve run out of bandages and similar necessities. And Germany’s Angela Merkel and the IMF’s Christine LaGrande warn that Greece won’t get any more bailout money if they don’t pull themselves up by the bootstraps. So, it’s …

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January, Tuesday 10, 2012

DOW + 69 = 12,462SPX + 11 = 1292NAS +25 = 270210 YR YLD +.01 = 1.97%OIL +.84 = 102.15GOLD +21.20 = 1633.20SILV +.89 = 30.04PLAT + 39.00 = 1467.00  The S&P 500 Index moved back to its highest level since July. There was positive reaction to earnings. Alcoa kicked off the earnings reporting season by announcing they lost $193 million dollars in the fourth quarter. Go figure. Is the economy facing inflation or deflation? The answer is – yes. Two Federal Reserve officials laid out contrasting views of Fed attempts to bolster the economy, with one seeing a need for more asset purchases and another warning that current accommodation risks provoking instability. Federal Reserve Bank of San Francisco President John Williams sees a “strong” case for new purchases of mortgage bonds given his expectation that inflation will fall below 1.5 percent this year. His counterpart in Kansas City, Esther George, said officials must weigh whether their current policy is increasing the odds of renewed financial turmoil. In his speech, Williams credited the Fed’s emergency lending to financial institutions with keeping the U.S. economy from falling into an abyss in 2008 and 2009. He said it’s “vital” for policy makers to support an economy that’s hobbled by high unemployment, anemic spending and a weak housing market. Williams thinks the Fed should provide more stimulus for the economy. George, in her speech said “the economy is going through a deleveraging process and that takes time. Efforts to speed up that process run …

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January, Monday 09, 2012

DOW +32 = 12.392SPX + 2 = 1280NAS + 2 = 267610 YR YLD un = 1.96%OIL -.25 = 101.31GOLD – 5.60 = 1612.00SILV +.30 = 29.15PLAT +20.00 = 1433.00 Remember the Eurozone crisis? Maybe you haven’t heard much in the past couple of weeks, what with the holidays and everything. Well, it’s still a problem; they didn’t fix anything. The Greek government is still trying to agree a bond-swap deal with banks that is crucial to a new 130 billion euro bailout package from European partners and the International Monetary Fund (IMF). Without that package, Athens faces the threat of a debt default in March. Banks and investment funds are being asked to accept 50 percent losses on their Greek bonds to help pay for the bailout have dragged on for weeks. German Chancellor Angela merkel said today that Greece must restructure its debt. Merkel said: “From our point of view, the second Greek aid package including this restructuring must be in place quickly. Otherwise it won’t be possible to pay out the next tranche for Greece.” Greece is entering its fifth straight year of contraction, with no hope of paying down its massive debt. There is a chance there won’t be a deal. Greece might default. Both France and Greece are scheduled to hold elections in a few months and that could complicate decision-making at the national level and make it tougher to finalize agreements sealed at an EU summit last month. Greece has been operating under a technocratic …

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Financial Review

Financial Review for Tuesday, January 07, 2012

DOW + 33 = 12, 878SPX + 2 = 1347NAS + 2 = 290410 YR YLD +.06 = 1.96%OIL + 1.74 = 98.65GOLD + 25.00 = 1744.90SILV +.47 = 34.15 PLAT + 36.00 = 1647.00 I talked with a friend this weekend about the unbelievably better than expected jobs report on Friday. My friend was a bit surprised that I viewed the report favorably. I tried to explain that the report was deeply flawed, seriously imperfect, and likely not accurate, however it is probably still the best report to track the jobs picture, even with strange seasonal adjustments. The debate continued that the jobs report was certainly nothing more than a big BLS snow job, and if I bothered to look at the tax rolls, I would see that tax revenue declined while jobs were supposedly increasing. Of course, that’s what happens when you cut the payroll tax rates. Then I heard the argument that if we really counted the way we used to count in 1994 the unemployment rate would be 22.5%, and I was politely told about shadowstats. Well, I’ve met John Williams and I’ve cited John Williams, and if we compare today’s  unemployment rate to 1993, then he has a good point, but if we compare the unemployment rate from a year ago or 3 years ago then the jobs picture is improving; apples to apples and oranges to oranges. Then my friend asked if the economy was recovering. I think we’re still in a small “d” …

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January, Friday 06, 2012

DOW –55 = 12359SPX –3 = 1277NAS  +4 = 267410 YR YLD -.03 = 1.96OIL +.12 = 101.93GOLD – 4.80 = 1617.60SILV-.62 = 28.85PLAT –9.00 = 1407.00 OK, I know the Bureau of Labor Statistics manipulates numbers; I know it looks like the overall labor force is shrinking, and this is the reason the headline unemployment rate dropped in today’s report; I know that if you don’t miscount, the number would really be 11.4% and not 8.5%; and I don’t believe people just drop out of the labor force; and I know there was a freakish gain in new jobs for messengers and couriers and I can’t explain that; and I know the U6 measure of underemployed and marginally employed puts the rate at 15.2%; and I know the non-manipulated number is really closer to 22.4% un-under-marginally-unemployed. Still, today’s monthly jobs report looked pretty good. The economy added 200,000 jobs in December. The headline unemployment rate dropped to 8.5% from an upwardly revised 8.7% in November. Unemployment has fallen fourth straight months. Over the past six months, the U.S. has added an average of 142,000 jobs, the most job growth in more than six years. Virtually every major industry added jobs and only the government sector cut employment. The private sector added 212,000 jobs in December, offset by a 12,000 drop in government employment, primarily state and local government jobs. we’ve now added 3.2 million new private sector jobs over the last 22 months — nearly 2 million jobs last …

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