Buy On The Cheap

"Most Americans know little about gold. While they sleep, we buy on the cheap."
Sean Broderick, Weiss Research

Of vs On

"Move most of your money to safe, short-term cash parking places. Yes, I know — the yields stink. But in a sinking economy, the return OF your money is far more important than the return ON your money."
Martin Weiss, Weiss Research Inc.

Bear Market Rally

"This bear market rally was indeed a huge affair. But still not out of the realms of former bear market rallies, which are mostly forgotten today. A prime example is the rally following the 1929 crash.  Stock prices rose more than 50 percent, and contemporary economists declared the crisis over. But the crash was only the prelude to the devastating bear market that got going after the bear market rally of early 1930."

 Claus Vogt, Weiss Research

Weiss Research and The Double Dip

Weiss Research presents six reasons that they believe that a double-dip recession is hitting the U.S.:
-First, the economic rebound since March 2009 was bought with unprecedented fiscal and monetary stimulus. There has not been a real, market-generated recovery.
-Second, despite the huge sums of taxpayer money and serial bailouts, the rebound is the weakest on record.
-Third, at least 80 percent of this huge stimulus program has been used up. There isn't much left to keep the economic engines running.
-Fourth, aside from government debt, the wheels of credit creation are still sputtering. And that's a problem, since former recoveries have always been driven by credit growth.  Last week's employment report spells bad news for retailers.
-Fifth, the labor market is still in dire straits — and so is consumer spending. Friday's disappointing payroll report is a very strong hint that the labor market is again deteriorating. Following the ECRI data, this is not surprising. Historically, there has been a strong correlation between the ECRI weekly index and payroll numbers. Furthermore, I expect much weaker employment reports in the weeks and months to come.
-Sixth, the housing mess has not been cleaned up yet. I expect another huge wave of mortgage debt defaults, leading to another round of falling home prices and problems for the banking sector.

http://www.weissgroupinc.com/research/index.html

The Bear Market Rallies Of 1930 and 2009

From Claus Vogt, Weiss Research Inc:
"In 1930, the market rose roughly 50 percent from its 1929 crash low thus recouping half of the preceding losses. This monster rally led many contemporary economists, politicians and financial market experts to reason that the worst was over. But it was not to be ... The Great Depression had barely started, and the stock market suffered losses of another 85 percent measured from this interim high of 1930.
How does the current rally compare to this frightening potential predecessor? There is a scary similarity between the 1930 rally and 2009's. Well, from the March low the S&P 500 has soared 69 percent in nine months. In doing so it recouped a bit more than 50 percent of its former losses. But it's still 27 percent below its all time high of October 2007. Yes, the market rallied strongly in 2009. But it did the same thing in 1930. History then tells us that the current stock market rally is not sufficient enough to reason that the worst is over."

The Grand Experiment

"None of the experimenters saw this crisis coming, but all of them claim to know the remedy! And a lot of talk about a market failure is being presented as the alleged root of this crisis. Sure, hedge funds, bankers, and regulators certainly played a role. But their reckless behavior is but a symptom of what had been going wrong and was not the cause. This crisis is not a market failure. It's a monumental policy failure! So we have to look into what causes a speculative bubble to understand the real culprits of the current predicament. The answer is fairly straight forward: Expanding money supply and credit growth. Since the central bank controls the money supply and credit growth, it's obvious that the central bank is accountable for the evolution of bubbles and the consequences of their inescapable bursting. Unfortunately we're not hearing or reading much about this obvious truth. Instead, fairytales about market failure are dominating the media. And an old and cynical policy joke comes immediately to mind: 'When the day of reckoning arrives there is but one policy solution: Lying, lying, lying.'. This seems to be the conclusion, the current credo of our politicians and the vast majority of economists. Many of whom are in the business of consulting politicians."
Claus Vogt - Weiss Research Inc.

The Seven Consequences

Martin Weiss at Weiss Research Inc. provides seven consequences of the rapidly accelerating debt and Federal Reserve's loose monetary policy:

"Consequence #1 is a recovery in the U.S. economy. When the government creates that much monetary and fiscal stimulus, it naturally has some impact, of course. That's why a recovery is now under way and why it is likely to continue for a few more quarters.
Consequence #2 is the rally in the U.S. stock market. Again, when so much liquidity is pumped into the economy, it's only natural that some of it would flow into equities.
Consequence #3 is a recovery in emerging markets. Here, unlike the U.S. and other Western economies, not only are the economies benefiting from government stimulus, but they are also benefiting from strong domestic fundamental growth factors.
Consequence #4 is the decline of the U.S. dollar. The greenback is falling against the euro and virtually every major currency on the planet, and it will probably continue to do so. The U.S. Dollar Index, which measures the dollar against a basket of six major currencies, is now nearing its lowest level in history. Once that level breaks, the pace of the dollar's decline could accelerate sharply.
Consequence #5 is the decline in the value of paper money as a whole, and the parallel rise in gold. Friday, gold pierced the $1,100 per-ounce level. Next, despite any intermediate setbacks, it could rise to $1,300.
Consequence #6 is rising interest rates. Yes, the Federal Reserve can hold its official short-term interest rates near zero, and this is precisely what it's doing. But the Fed does not exert the same control over long-term interest rates. Nor can it control foreign central banks, some of which are beginning to raise interest rates. And most important, the U.S. government cannot control foreign investors who now own over half of the publicly traded U.S. government securities.
Meanwhile, the forces driving long-term interest rates higher are powerful and enormous — the same forces we told you about earlier: massive monetary inflation and equally massive federal deficits.
Consequence #7 is an anemic U.S. economy overall, weighed down by high unemployment, low spending, and most important, the largest debts of all time. Don't expect this recovery to last very long. A second recession could come quickly on its heels.
I am often asked: Is the recession over? My answer is "yes." But to the more important question — is America's long-term depression over? — my answer is a firm "no." In the years ahead, we're likely to see a series of longer-than-usual recessions interrupted by shorter-than-normal recoveries, all adding up to a long depression.
Such is the inevitable consequence of the massive, revolutionary changes that have already taken place ... with more changes of similar magnitude still ahead."

Early Warning Indicators

"Rising gold and oil prices are symptoms of the inflationary monetary and fiscal policies that have been implemented. These were without doubt global governments' absurd and counterproductive answers to the popped real estate bubble. The breakouts in gold and crude oil are like early warning indicators. And the commodity markets are clearly telling us that inflation will rise sooner rather than later and will become a major problem for the world economy. Fortunately as investors, we can turn that problem into a tremendous opportunity."
Claus Vogt, Weiss Research Inc.

The Chart Speaks Volumes

The Fed's money printing machine has been busy since the Reagan years, but all presidents since and including Clinton have kept it on constant "full throttle". The last year even makes the prior years look tame. This is a chart that won't show up on the evening news that's for sure.

Source: Weiss Research Inc.