In the mean time my major long-term indicator has flashed a sell signal. This signal, which is not based on trends, can be one to two months ahead of the trend. When the trend signals a sell this will be a confirmation that the sell has started.

Because the QE2 buying will end the only defense the government has is to raise short-term interest rates. This will have a powerful deflationary effect on the economy which will have a selloff in commodities and a strengthening of the dollar. At some point in the future the government will have to step back in with another round of QE3.

So what can an investor do with this situation? For the short to intermediate-term buy the US Dollar; I use the ETF UUP. And because the EU is in terrible shape and will go down with the strong Dollar buy the ETF ultra-short EUO. To take advantage of the weak market buy the ultra-short S&P 500 SDS and ETF VXX when the market trend signals a sell. Also as the market trends down buy VXX. At sometime in the future because of inflationary pressures interest rates will start to go up and we’ll buy short bond ETF’s. I’ll let you know when the timing presents itself for these trades.

So what happens to gold and silver with the changes going on? They will start to climb again when the dollar weakens. I don’t expect this to occur until we get out of our dollar position. Again, I’ll let you know when the timing is right. So, right now I wouldn’t add to your metals position; hold your bars and coins and sell your stock positions as stops are hit.

In general there will be stocks that go up, but choose these carefully and tighten up your stops. Look at TTWO, its way under priced.

Today silver is showing some weakness. Since we’ve had such a strong run up it’s only natural that some profit taking occurs. Use this time to get out of speculative silver investments (such as mining stocks), free up some money to buy when the next signal occurs.

It’s been a while since I’ve produced a market summary, mainly because nothing significant has happened. With this mornings action, Dow down more than 200 points, there maybe a sell off of some magnitude developing. My preliminary indicators are showing that the sell off may last at least 6 months. I’m not ready to make that prediction yet and will do so only when the confirmations occur.

I follow the market in stages, short-term (1-2 weeks), intermediate-term (1-2 months) and long-term (5-8 months). Above is shown that the short-term S&P 500 down trend (up trend on the SDS charts) has been established. I have other indicators that show what the long-term is doing and will share that in one week after it’s confirmed.

The charts above are of the SDS, ProShares Ultra Short S&P 500, which move up at 2X the rate that the S&P moves down. This is my recommendation if you want to invest in market direction. The sixty minute chart is short-term, daily intermediate-term and weekly long-term. The trends are seen by the dotted lines with the faster crossing the slower being the signal of a trend change. The solid blue line shows momentum changes; up for increasing price and down for decreasing prices. The ups and downs of the solid blue line generally follows the cycle periods for each chart.

Other recommendations are to tighten up your stops and sell the weaker shock and prepare for a negative market.

I wonder how many of you feel the pinch of inflation? The government says there’s only a little; something like 2 %. The government doesn’t want you to know what the real inflation rate is. It doesn’t want you to know what, taking into account gas and food and depending on which authority you read, is really 6-10%.

Have you heard that April is financial awareness month? Want to guess how many in the government are financial aware? The answer to awareness is education. You need to make yourself financially aware and pass it on to your friends, family and government officials.

I’ve only got a few minutes to help you get started, after that you need to start listening and reading. The first you need to know is the history of the dollar, gold and silver and how it affects the economy. Then you need to know what your government is doing with the dollar and how it affects you. And lastly you need to know what makes inflation and what you can do about it. In summary the cause of inflation is the result of printing too much money. The dictionary definition of inflation is: a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency.

That’s exactly where we are now; money volume is increasing and the dollar is loosing value which is resulting in higher prices. What’s important to realize, in our education, is that sooner or later when the laws of economics clash with the rules of politics, economics always wins.                              

What’s happening is that it’s so much easier to get into debt than to get out of debt. The temptation to paper over bad debts is irresistible. In all of history, no paper currency has ever survived this simple human impulse. I believe man cannot create money nobler than gold or silver because man himself is flawed. Only nature is perfect and that’s why, for all of recorded human history, sooner or later, people return to natural forms of money. Gold and silver can not be produced by man; all we can do is mine it making the availability limited.

If you’ve never thought much about the role of gold and silver in the world’s economy, you should begin by understanding one key fact: The entire history of paper currencies contains not a single lasting success. All paper monetary regimes have collapsed. People who trusted and saved paper currencies have been wiped out.

It is our country’s debt that causes the government to print money, which in essence is borrowing from itself. Today it is not paid back because the dollar is no longer backed by gold or silver; it just makes funny money anytime it needs. This has caused the value of the dollar to decrease: 15% from 2008, 38% since 2002, and overall 90% since the 1970’s. All occurring after we’ve been taken off the gold standard. And they hope no one notices.

Why is the government doing this? They are purposefully creating inflation. If the value of the dollar drops faster in value than the debt increases they are ahead of the game. The net results are that the debt drops in real terms. It’s a Ponzi scheme in which sooner or later there’s not enough money available to pay the debt; the printing also has to stop sometime. This can lead to hyperinflation while the economy goes belly up. The people doing this don’t seem to care about how it affects you, the ordinary citizen, who’s trying to make ends meet.

During the founding of our country the benefits of sound money and the risks of easy credit were completely understood. The Second Congress of the United States passed the Coinage Act of 1792. The act established the dollar as the currency of the United States and defined precisely what a dollar was: 24.1 grams of pure silver. (That’s the exact amount of silver in the famous “Morgan dollar.” U.S. Mint Assistant Engraver George Morgan designed it in the 1870s to match the standards set by the Coinage Act of 1792.)

Interestingly, back in 1792 no one in America would have considered putting a person’s face (much less a politician) on our coins. Instead, dollars had an emblem of liberty on one side with the word “liberty” inscribed and the date the coin was struck. On the other side, the coins had an eagle with the inscription “United States of America.” (God wasn’t mentioned on dollars until 1957… about the same time the current great inflation began. I suppose nobody bothered mentioning God on the dollar until we needed a miracle to keep the dollar sound.)

To insure the quality of America’s money, three coins were taken from every major batch minted. Each year on the last Monday in July, the chief justice of the Supreme Court, the secretary of the Treasury, the secretary of State, and the attorney general witnessed these coins being assayed. If the sample coins did not meet legal standards, the officers of the mint would be dismissed and the $10,000 surety bonds they posted would be seized. Further, if any officer of the mint was found guilty of embezzlement or of debasing the coins, the penalty was death.

Consider a system in effect today where senior members of the federal government are in charge of maintaining the soundness of our money. Today the federal government has become the biggest counterfeiter in the world. Fed Chairman Ben Bernanke has tripled the monetary base of the United States in only two years. The dollar lost 50% of its purchasing power under Alan Greenspan. And since the dollar was taken off of the gold standard in 1971, it’s lost 90% of its purchasing power.

In the late 1950s and early 1960s, the U.S.economy began running a constant and growing deficit with the rest of the world. Borrowing – mainly in the public sector – fueled these deficits, as the government tried to expand its social spending and fight a foreign war without raising taxes. Facing the possible loss of all its gold reserves, sharply higher borrowing costs, or both… the U.S. simply repudiated these debts, abandoning the pledge we’d made at Bretton Woods in 1946 to always allow foreign central banks to exchange their dollars for gold. We cheated our creditors, rather than repay our debts.

The value of the U.S. dollar collapsed as a result. The loss was so severe that during the 1970s, the “real” value of the S&P 500 – as measured in silver – fell by almost 90%. Of course, since most people didn’t look at the world through the lens of real money, few people realized what was happening. In terms of paper dollars, stocks ended the decade of the 1970s about where they began. But in terms of purchasing power, stocks – in terms of real money – would not regain their 1960s highs for 27 years.

By using paper money instead of silver, politicians discovered they could easily hide declines in America’s standard of living and our national wealth. In short, they discovered it was easier to “paper” over our problems than allow failing institutions and businesses to go under. It was easier to cheat our creditors than pay our debts.

On the other hand, sound monetary policy (thanks to Paul Volcker) drove the big bull market of the 1980s and 1990s. But toward the end of the 1990s, debts began to explode again relative to the size of our economy. This second credit bubble, fostered by Alan Greenspan, wasn’t limited to the public sector. Private debts soared, too… especially credit card, mortgage, and student-loan debt.

These policies sparked another huge devaluation of the dollar, one that has continued almost unabated today. That’s why, in terms of silver, the value of the S&P 500 has been in a steady bear market since 2000. The supposed recovery we saw from 2003 to 2008 never shows up on the chart because it was all financed with funny money – debts the market knew would never be repaid.

An interesting question to consider is: What has been a better more sure investment then silver? Since there are no controls in place to stabilize the value of money the price of silver and gold will continue to rise. There are those who say the price of silver will go to 100 and others who say 400. We have no way of really knowing how high it will go, but if we watch what the government does to reign in their out of control fiscal policies we will know when it has peaked out. There will be a bubble, but I say climb on until things change. Remember that there will be ups and downs as they ascend and we want to try to buy in the dips and valleys.

The things I’ve been talking about are not our only concern; the U.S. dollar is not just the standard of value in the United States… It is also the world’s reserve currency. The dollar constitutes more than 60% of all banking reserves worldwide. By massively inflating the dollar over the last two years, our monetary authorities are stoking a massive global inflation. That’s why commodity prices and the S&P 500 are up 60% over the last two years. People all over the world are feeling the effects of inflation: Food costs are 30% of people’s income. It’s not here yet, but it’s coming.

It doesn’t make any sense for raw materials and stock prices to both move up so much over such a short period of time. The fact is, these price changes are not driven by real increases to earnings or changes to supply and demand. They result from the massive increase of the money supply itself.

The next three months will bring two significant challenges to the paper-dollar standard.

The first is already upon us. Portugal finally acknowledges it faces default and requires a bailout. It will later be shown that the European Central Bank was buying Portuguese debt before any official bailout was arranged. Despite this, the world’s currency markets seem to believe the euro currency is sounder than the dollar. But that’s like two prostitutes arguing about who is prettier. The euro will have to withstand a major reorganization of both Spain’s and Italy’s sovereign debts. This is impossible without a major devaluation of the euro, something Germany will resist. So the euro will not last through the end of 2012… And its breakup will be incredibly painful for holders of that currency.

Second, the Federal Reserve should end its massive “quantitative easing” in June. Who will buy our debts as the Fed steps away from the market? The Fed has been buying 70% of our own debt. The largest bond manager in the world… Bill Gross, the founder of PIMCO – the largest bond-centric investment fund in the world – is openly calling members of Congress “skunks,” and berating them for refusing to make any significant financial changes. Gross has since shorted the dollar showing his disdain for it.

It is outrageous that even after the crisis of 2008 – when our entire banking system collapsed and millions of Americans went bankrupt or lost their homes (or both) – our political leaders continue to act as if borrowing unlimited amounts of money is acceptable. Neither political party – not Obama and not the Republican’s Paul Ryan with his Roadmap for America – have put forth a balanced budget

There are some things you can do counteract the inflation being put on you so the hurt doesn’t affect you as much as it will others.

Given this outlook, my best advice, for you as an individual, is to be as cautious as possible.

1. Buy silver coins (pre 1965). A silver dime is worth about $3.00 right now. Save at least 3-6 months worth of expenses. After that silver bars are OK.

2. Keep your cash in Canadian funds. Take a road trip to Canada to open an account in a bank with no US branches.

3. Invest in stocks that are positive relative to gold or silver: These would be energy, biotech’s and agriculture stocks.

4. Stock up on supplies that have a long shelf life. Some of you have been setting up a one year emergency food supply.

5. Guns and ammo are also good a good investment.

6. Keep your government officials informed about your ideas on how to fix the situation you find yourself in. They have no way of knowing unless you tell them.

Thank you.

=============================================== 

By now, almost everyone reading the Digest knows we set aside Friday’s for me (Porter) to write personally. And though I’ve rejected the idea that people can teach anything (there is no teaching, only learning) – I can’t seem to help myself. If you’re tired of suffering through these lessons, you’ll be happy to know my impulse to empower our subscribers by showing them a few of the more unpleasant truths about finance has cost me a lot of money.

As I knew they would, my essays about the importance of cash and the one last week about asset allocation (when you buy what) resulted in a torrent of refund demands – about $1 million worth in the last two weeks. So if you got something out of those essays, do me a favor: Buy something. Anything. Preferably something expensive.

It is a quirk of human nature that most people don’t want to learn anything new and react negatively to anyone who challenges their deeply held views (even when they’re obviously wrong). You’ll know I’m truly a glutton for punishment when you realize the subject of this week’s Friday Digest: Our country’s severe financial crisis.

Writing about this topic has led to far greater problems than cancellations. I’ve gotten threatening letters and angry e-mails from folks who seem to believe that pointing out these dangers is tantamount to causing them.

More than two years ago (December 2008), I first warned in my newsletter that America would eventually lose its world reserve currency status and our debt crisis would lead to a massive inflation. I call this complex series of issues the “End of America.” Not because I believe it will lead to the end of our political union (though it might), but because I believe we’re heading into a crisis that will be far worse than anyone has yet realized. The crisis will result in a significant decline in our standard of living. These are deadly serious issues and I meant every word I wrote.

Even so, two years ago, lots of folks actually laughed at me – including a few in my own office. Not anymore. If you saw the Wall Street Journal headline yesterday (the “Why the Dollar’s Reign is Near an End”) or if you saw Sam Zell (the most successful real estate investor of all time) yesterday on CNBC, you know many of the smartest folks in our country take my warning seriously. Said Zell:

“My single biggest financial concern is the loss of the dollar as the reserve currency. I can’t imagine anything more disastrous to our country… you’re already seeing things in the markets that are suggesting that confidence in the dollar is waning… I think you could see a 25% reduction in the standard of living in this country if the U.S. dollar was no longer the world’s reserve currency. That’s how valuable it is.”

So today, I want to update some key figures of my End of America report. I want you to know where we stand. This is important enough to risk the inevitable criticisms (and refunds). But I want to take one criticism out of play right now. Don’t bother writing to complain about my “politics.”

This has absolutely nothing to do with politics. This matter is purely about economics. The facts, as you’ll see, are completely clear to anyone who bothers to learn them. We are spending way beyond our means – both publicly and privately. Worse, this spending has warped the incentives in our economy, resulting in not only debts we can’t afford, but outcomes we don’t seek. At the heart of this crisis, there’s a knowledge problem. Most Americans don’t understand even the most basic facts about our country’s financial position, nor do they take the time to consider the likely outcome of poorly structured government programs.

So please, don’t write to me about politics. I don’t care about the Democrats, Republicans, or even the Tea Partiers. I don’t care whose “fault” it is, because these debts belong to all of us. I care about the people who live in America… people who are going to be wiped out because of feckless leadership and genuine ignorance. I can’t do anything about our leadership – that’s up to you. I can try to do something about the ignorance.

In our search for facts and solid financial thinking, let’s start with Warren Buffett, who is neither feckless nor stupid. Buffett is the world’s best investor. He got that way primarily by figuring out how to correctly value equities and allocate assets… and because he learned one of the most valuable financial secrets in modern finance: why insurance companies are so valuable. (Hint: It’s the float. But that’s a discussion for another day.)

Buffett has become a sort of “rich uncle” to America, giving helpful advice about financial matters. And he recently said something that struck me as profound – something I’d wager almost everyone else ignored. Buffett explained why the buyers of his mobile homes (Clayton Homes) default at rates (1.86%) much lower than the national average for homebuilders (more than 25%). That’s true, even though the buyers of his mobile homes typically have low incomes, less job stability, and lower credit scores than the buyers of conventional housing. If you read nothing else in today’s Digest, please pay attention to what Buffett says here:

“Our borrowers get in trouble when they lose their jobs, have health problems, get divorced, etc. The recession has hit them hard. But they want to stay in their homes, and generally they borrowed sensible amounts in relation to their income.”

“In addition, we were keeping the originated mortgages for our own account, which means we were not securitizing or otherwise reselling them. If we were stupid in our lending, we were going to pay the price. That concentrates the mind. If homebuyers throughout the country had behaved like our buyers, America would not have had the crisis that it did. Our approach was simply to get a meaningful down payment and gear fixed monthly payments to a sensible percentage of income. This policy kept Clayton solvent and also kept buyers in their homes…”

“ … A house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender – often protected by a government guarantee – facilitates his fantasy. Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford.”

Pretty simple, eh? Don’t sell houses to folks who can’t afford them. And make sure both the lender (who kept the note) and the borrower (who made a down payment – equity) have plenty of “skin in the game.”

You don’t want to create any incentive for the deal to go bad. You want both parties to have a powerful incentive to do what they’ve promised. After ignorance, almost all our country’s core problems come back to these same issues: a lack of equity and poorly designed incentives. Remember these concepts. You’ll see them again: skin in the game (equity) and properly designed incentives.

Let me take on the toughest problem first: Medicare/Medicaid. Since the government established this program in 1965, it has amassed a $5.6 trillion deficit. This program alone accounts for 40% of our government’s total debt. If you could erase these debts, our most recent two foreign wars (Iraq/Afghanistan), and the losses associated with the recent financial crisis, you could eliminate more than half our entire federal debt – a debt threatening to destroy our way of life.

Whether you’d choose to eliminate these debts by eliminating these programs is a political question. I’m not going to discuss politics here. The point I’m trying to make is, regardless of what you’d choose, we have to make a choice. We can’t afford to do all of these things.

Like the subprime buyers in the housing bubble, we’ve bought a government we cannot afford. That’s a simple fact. It should be obvious to any thinking person that when government spending makes up 45% of GDP (as it does today) and there’s one government employee for every six households, something has gone terribly wrong with America.

When my parents were born, America was still the land of the free. The incentives people faced were different. Before World War II, the federal government made up only 3% of GDP. It didn’t provide health care. People had to maintain their health, as best they could. People didn’t depend on Ponzi finance (Social Security) for their old age – they had to save. They had to take care of their families and help take care of the unfortunate in their communities.

We didn’t spend a lot on the military, either… which gave us an incentive to mind our own business. In fact, back then, our presidents promised to keep us out of foreign wars. Both Wilson and Roosevelt came to power promising to keep us out of the war in Europe. They lied. Almost every other president since has sent our boys to die for others wherever they could. War is good for business… and good for the government.

Lots of people reading this e-mail will say, “I don’t want to live in a country like that, where the government doesn’t provide a social safety net.” Other readers might say, “I don’t want America to be ‘isolationist.’ We need more troops overseas to fight terrorism.” OK… So maybe 3% of GDP is not enough for the government we will choose. But 45% of GDP is much too large – again that’s not a political choice; we simply cannot afford it.

So how then will we decide? My suggestion: Pay more attention to incentives. And demand much more equity from the voters.

Here are some interesting facts:

In 1965 – when Congress created Medicare/Medicaid and greatly expanded the federal government’s role in health care – about 13% of Americans were obese. Today, 32% of Americans are obese.

Before the government enacted Social Security, Americans typically saved between 15% and 20% of their incomes. Today? Almost nothing. In fact, for many years, the savings rate in America was actually negative.

Before the Great Depression, there wasn’t any government unemployment insurance. Not surprisingly, there was almost zero long-term unemployment.

One more interesting fact… the U.S. didn’t experience a Great Depression until the Federal Reserve was created. The main purpose of the Federal Reserve is to ensure that banks don’t fail. Sounds good. But it provides a perverse incentive for banks to act recklessly, which causes bigger booms and busts – just like the one we’re experiencing right now.

I’m not arguing government spending is the primary cause of any of these problems. But I am saying you’d have to be a fool to believe incentives don’t play a big role in human action. Think about why all politicians try to spend more than they collect in taxes. They have a huge incentive to promise more than they can deliver – and to make up the difference by borrowing against future taxes or printing more money.

The problems created by the perverse incentives of collectivist actions are well known. They are as old as the ideas themselves. They explain why socialism and communism always lead to failure. And yet… we seem eager to pursue these policies in an almost mindless pursuit of bankruptcy. Why? That’s not hard to figure out either.

What’s the No. 1 reason people make bad decisions? They don’t have to suffer the consequences. Which investors made worse decisions during the mortgage bubble? Was it the private hedge-fund managers, whose entire net worth was made up of the assets in their own funds and whose friends and families had invested alongside them? Or was it the senior managers of publicly owned banks, whose creditors were protected by the federal government and who owned little of their own company’s equity?

That’s easy to answer, even if you knew nothing about the financial crisis. Unless people have a stake in the outcome of an event, they are very likely to choose poorly or recklessly.

The most difficult problem we face today is, far too few Americans have any equity in our government. Less than half of all Americans pay any federal taxes. Don’t listen to the nonsense about how almost everyone pays payroll taxes. It’s true, but it’s irrelevant. Payroll taxes don’t come close to covering the costs of the entitlement programs they support.

Cutting government spending will be easy compared to trying to increase the average citizen’s equity in government. But we must. People will always demand more from the government until they realize how expensive government solutions really are. And the only way to show them is to share the burdens of government more equally.

Now, I know what you’re thinking… I’m making a political argument to reduce the progressive nature of our tax system. I’m not. I’m pointing out a simple fact: When half the voters don’t pay for any of the true costs of the government, your society is going to suffer terrible governance.

A democracy that concentrates the overwhelming burden of government on a tiny minority of the population is no different than an investment bank making bad loans and then selling them to someone else. You can’t separate the people making the decisions from the costs and the risks of those decisions. And yet, that’s what we’ve done.

We’ve reached a point where we can longer continue on our current path. America spends 800% more than its nearest rival on its military. We spend 200%-300% more per capita on health care than any other similarly wealthy country. Are we safer? Are we healthier? I honestly don’t think so.

And even if you believe we are, can we afford it? Here are the simple numbers. Americans now owe $56 trillion in total debt, much of it held by foreign investors. We must spend $3.5 trillion each year on interest. That is already more than the federal government spends, in total. I do not exaggerate when I tell you we cannot afford these debts. We will never be able to repay these debts – already equal to roughly four times our country’s GDP. The largest components of the debts we owe are government debts… and they are growing rapidly and show no signs of stopping.

The only way to stop the debt crisis we face is to reduce the total level of government spending – immediately and permanently. We have to stop giving our citizens improper incentives. We have to increase the “skin” voters have in the game by spreading the burden of government more equally. And most important, we must take away the politicians’ ability to debase our currency.

You see… politicians believe, as Dick Cheney famously said, deficits don’t matter. They believe these debts can be safely printed away – which is what the Federal Reserve is doing right now.

How can we accomplish these goals? I believe we need three simple amendments to our Constitution. First, we should have a balanced budget amendment. It’s hard to imagine why anyone would object to this, regardless of his politics. Politicians ought not have the right to burden future Americans with debt. It’s disgusting that we would leave a burden like this for our children and grandchildren.

Next, we need a constitutional amendment that ensures sound money. If you tell the politicians they’re not allowed to borrow, they’ll inflate instead. There is no reason Americans shouldn’t enjoy the stability and safety of sound money.

Every argument you’ll hear against backing our currency with gold comes from bankers and swindlers who need the ability to be bailed out so they can make risky bets with enormous amounts of borrowed money. Let’s put a stop to this, once and for all.

The American government is the world’s largest holder of gold. Let’s put it to work for us, right away, in the form of sound money.

Finally… we need a logical way to put a stop to the narrowing of the tax base. Everyone who votes should share in the burdens of government – otherwise the incentive will always exist to vote for more government spending.

I suggest a constitutional amendment limiting tax rates and abolishing all taxes except for income tax. Tax every adult over the age of 65 20% of his income – whatever the source. Give everyone a $24,000 annual personal exemption. Above that, everyone pays. No other deductions. We could get rid of the IRS. You could do your taxes on a post card. How much did you make? Send the government 20% of it.

Why do I think 20% is the right rate? The church has always asked for 10%. Surely the government can survive on twice what God needs. And… we should word the constitutional amendment to make clear our intentions: Every U.S. citizen has the right to keep 80% of his income. Let the feds and the states fight over your tax dollars. Remember, your assets and income are part and parcel of your freedom. A man cannot have his liberty without his property and the right to his wages.

By the way, the U.S. Constitution already decrees all citizens should be equal under the law. Making the tax code truly equal will merely be living up to the obligations our Constitution is already placing on the government. Likewise, the Constitution says Congress shall have the right to coin money. It says nothing about printing or the Federal Reserve.

And finally… the founding fathers of our country once rebelled over a 2% tax on sugar, and they expressly forbid income taxes in their Constitution. Can you imagine what they would think of marginal income tax rates in excess of 50% on people in certain states? These new amendments I’m suggesting aren’t really new at all: They’re simply a return, a restoration, of the real America – the greatest country in history.

If you like these ideas… please share this Digest. I’m sure it would be difficult to get these amendments passed. But if things in America get as bad as I think they’re going to, maybe people would be willing to rethink our government’s structure.

Sooner or later we have to learn to live within our means. Sooner or later, a preference for sound money will appear because inflation will have destroyed our currency. And sooner or later, the idea that you can live at the expense of your neighbor (through progressive taxation) will lead to a collapse. My preference would be to learn these lessons sooner, so the pain of this transition can be minimized.

I’m interested in organizing a conference about these ideas… maybe call it The Project to Restore America. I’d host it personally (and invest heavily in this effort). I don’t know where yet… but I know when – sometime later this year. My goal will be to get as many well-known people as I can to endorse these ideas and speak about them in public at the conference. I’ll try to lure my friends in the media (I have a few) to join with us… plus business leaders… plus regular folks across America.

If we want the government to listen to us… we have to start talking with one, unified and loud voice. I’ve got a pretty loud microphone here with my publishing company, but I can’t do it alone. I need your help. Please pass this Digest around to folks who you think will be willing to read it. And if you want to get involved, please get in touch and tell me how you can help.

If you’re interested in these ideas and want to keep up with my efforts, just sign up for a dedicated e-mail list. I’ll keep you up to date on what’s happening with The Project. And please, get in touch with me if you want to be an active supporter. Again, please pass this e-mail around to folks who you believe would be interested in these ideas and interested in backing The Project to Restore America. Click http://www.stansberryresearch.com/pub/psi_conference.asp to have your e-mail address automatically added to the list.

(Just to be clear, I will not sell or rent your name to anyone else. And I will only use this list to promote The Project to Restore America.)

 The mailbag will continue on Monday. Send your comments on these ideas to feedback@stansberryresearch.com. Please put “The Project” in the subject line.

Regards,

Porter Stansberry, Baltimore, Maryland March 4, 2011 

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For the last 30 years I’ve studied the market and what makes it ticks; these include my own analytical chart reading system and other indicators that have a high ratio of correctness.  My conclusion at the moment is that the longer trends can not be determined, so we have to wait to take any actions on the market as a whole. Some of the things to take note of is Wal-Mart, it took a big hit the other day and this stock is usually like watching grass grow. Gold, silver and oil are moving up in concert with the world unrest we are experiencing. If you’re not invested in these you will be eaten up by inflation, which in spite of government numbers is anywhere from 7-9%. People are in dire need of food around the world; the price of food is souring because China is buying it all up and the value of our dollar is getting less and less. We haven’t experienced it too much here yet but it’s coming. Cotton, gasoline and coffee, to name a few, are up dramatically. Other things you should be doing is stocking up on those staples that can be stored for a long period of time, turning things you don’t need into cash and buying silver or gold. consider these things not as investments but as insurance.

Back to the market: The market is going to crash some time, but I won’t know when until it has started. All I can say is that all your investing should be defensive as indicated above. Other things to consider are world dominator stocks, insurance short ETF’s, resource stocks and inverse bond TBT, which goes up with interest rates. One last investment you can make when the market is headed down, that I like, is the VXX ETF. This a short-term picture of what the option speculators are doing, who usually are ahead of the game. It was priced around 400 a year and a half ago and now is at 33, so when the market goes down in earnest a lot of money can be made.

As soon as I have more information I will publish a new post.

Good article that explains it all. Some amazing things in progress, Sandy

Posted by Patrick A Heller on February 14, 2011 5:30 AM