Gold’s Clear Message

by Addison Wiggin – March 23, 2011

  • Gold approaches record… James Turk on the "clear message" it’s sending
  • One announcement sends nuclear renaissance close to its grave… Byron King on what to do now
  • The asset class up 656% in seven months… yet you’ve just been handed a buying opportunity
  • Where’s that housing recovery? Street’s expectations smashed with latest data
  • Readers share opinions on everyone from Boone Pickens to Bernard von NotHaus to… Paris Hilton

0:00 Gold may well have set another record by the time you read this episode of The 5. The spot price as we write is $1,441 — just $3 off the high set earlier this month. Silver, at $36.81, could burst through $37 by day’s end.

0:07 "The precious metals are giving a clear message," says GoldMoney’s James Turk, "namely, that the dollar is in trouble. Gold and silver are near their recent highs, and this shows both markets — the dollar and the metals — confirming the trend."

The U.S. dollar index, despite a minor bounce today, remains beneath a low set last November.

0:15 The greenback can’t even catch a break from the PIIGS countries. The yield on 10-year Irish government bonds pushed over 10% today, and 10-year Portuguese debt now yields over 7.5%.

The European Union, meanwhile, has put off deciding whether to increase the size of its bailout fund, currently around $624 billion.

Result: The euro is up against the dollar, trading right now for $1.414.

0:25 "The fundamentals behind the dollar are atrocious," James Turk continues. "With Europe on the verge of raising interest rates and the Federal Reserve set in its ways keeping interest rates low as far as the eye can see, people around the world are going to increasingly dump the dollar."

"At some point, there is going to be a panic as the flight from the dollar moves from the relatively orderly retreat we are currently witnessing to a stampede. The charts are telling me that panic is about to begin."

Prepare thyself accordingly, starting here.

0:41 Confirming our suspicions, NRG Energy announced this morning that plans to build two new reactors at a nuclear plant in Texas are in jeopardy.

In 2006, NRG filed the first application for a new nuclear reactor in the United States since the Three Mile Island accident in 1979. Now the whole shebang is in trouble after the explosions at Fukushima in Japan:

  • For starters, the project depended on financing from TEPCO, the company that owns Fukushima. Obviously, it has other priorities for its capital now.
  • Then on Monday, the San Antonio utility CPS Energy announced it was "indefinitely suspending all discussions with NRG" about buying power from the proposed reactors.

Couple that with uncertainty over federal loan guarantees for the project and NRG’s CEO figures on at least a delay, if not an outright cancellation.

"The end for nuclear energy has been swift," Byron King cautioned readers last weekend. "Rarely have we seen a public and political tide turn so quickly worldwide."

1:06 In the United States, the most obvious beneficiary is natural gas. It burns cleaner than coal, and it can be scaled up a lot more quickly than wind or solar. That’s why last week, Byron rushed to complete a special report called 11 Ways You Can Profit From the End of Nuclear and the Return of Natural Gas.

It’s yours free… along with a one-month trial of Outstanding Investments, the No. 1 performing investment newsletter of the last 10 years as rated by Hulbert’s… if you pledge a donation for Japan earthquake relief.

So far, we’ve raised $8,340. We’re aiming for a total 10 times as high. We raised over $80,000 for the Hospital Albert Schweitzer in Haiti last year. What’s stopping you this time around? Here’s where you can help.

1:25 China’s squeeze on rare earths is starting to have an effect. As we mentioned recently, China has cut its export quota for rare earths by 35% for the first half of this year.

Now comes word that Chinese export prices have risen ninefold from a year ago… while export volumes are well below historical averages.

Prices eclipsed a key mark last month — $100,000 per metric ton. February prices calculated by Reuters, using Chinese customs data, came in at $109,000. That’s up from $75,000 the month before — a 45% increase. It’s also up from just $14,000 last July — a staggering 676% increase.

The trend is bound to benefit the companies scrambling to bring rare earth supplies online outside China. And the present moment may offer an ideal buying opportunity.

1:46 Share prices of many rare earth stocks have slumped this month after the earthquake and tsunami in Japan. That’s because Japan is China’s biggest rare earth customer: Production of everything from Hitachi TVs to batteries for the Toyota Prius has been slowed or stopped.

But that’s a temporary phenomenon. The world still needs rare earths in the years to come, even if Japan needs fewer of them for the time being.

Readers of Byron King’s premium service Energy & Scarcity Investor have already collected gains of 109% and 178% on rare earth plays. They’re sitting on open positions up 137% and 147%. But Byron believes the best may be yet to come, in a rare earth play that’s flying under the radar. He makes a compelling case in this presentation.

2:02 Stocks are taking a beating this morning. As we write, the Dow is in danger of breaking below 12,000 again.

2:11 One reason, perhaps: New home sales collapsed 16.9% in February, to an annual pace of a 250,000. The Street was figuring on a slight increase in the month-over-month sales figure.


The year-over-year change is even worse — down 28%, says the Commerce Department.

House prices, meanwhile, have fallen to their lowest levels since December 2003, an average $202,100.

The Federal Reserve may not place much importance on rising food prices, but it cares a lot about falling housing prices. Numbers like today’s make "QE3" look as certain as Charlie Sheen is nutso.

2:38 Even so, this morning, Penny Momentum Trader Jonas Elmerraji added three stocks to his watch list. If the charts subsequently move in a way he likes, they’ll become recommendations.

"Technical trading is significantly different from the fundamental approach," Jonas explains to his newest readers. "I understand that it’s tough to ‘wait’ for a setup to trigger once it’s been identified as a potential play.

"That said, the key to technical analysis is consistency: There will be losers and there will be winners, but by focusing on consistently high probability setups, we’re able to minimize the former and maximize the latter."

So far, so good. Jonas’ premium service, Penny Momentum Trader, aims to do what few other services do — deliver consistent double-digit gains in a month or less. So far this year, readers have bagged gains like 20% in two days… 26% in three weeks… and 27% in one week.

Earlier this month, they captured 51% in five days.

"Good call on BPOP," writes one reader. "I have already made enough to pay for your service for the year, plus!"

"I made enough net profit on a $5,200 bet to pay for your one-year subscription," says another, "so I look forward to the coming year and beyond."

"I did great," writes a third, topping both the other stories. "I made 19% on a large investment. It paid for my Reserve membership… all over again."

For the next 36 hours, we’re still offering access to Penny Momentum Trader at the charter subscription rate. After midnight tomorrow, the price of entry jumps 67%. Here’s where to act.

3:22 Here’s an interesting factoid: Americans have just surpassed the French as the world’s biggest consumers of wine.

Figures from the Wine Institute reveal Americans consumed 330 million cases of vin in 2010. Those fussy Frenchmen downed a mere 321 million. Of course, France is a much smaller country, so on a per capita basis, the U.S. still doesn’t hold a candle to them: 12.2 gallons a year in France, a piddling 2.6 in the States.

Still, we take some small pride (and perhaps share some responsibility) in the trend.
"Forty years ago, [wine] wasn’t thought of as an everyday beverage," says WineAmerica CEO Cary Greene. "That is not the case anymore. It’s being picked up by Millenials, aged 21-37, who are already drinking wine at a steady clip."


3:45 "Your opinion," the angry subject line of a reader mail begins "that the tax reductions passed by Congress in 2002 were wrongly continued tells me that you do not understand Mr. Nu."

That was the subject line. This was the body:

"That Addison is bulls*** and you know it. If you did not, you do now! Bush had a change of Congress to the Democrats in 2006. To hear Obama tell it, they did not. I expect a response if you have the guts to do so!"

The 5: We’re seriously reconsidering our "double dog dare" policy of reprinting any uncouth d-bag who dares us to share their email with you. Perhaps we’ll institute a base standard of coherency first and see how that works.

For starters, who is Mr. Nu?

4:09 "I think if you check the records," another reader asserts gently, "you will find the latest extension of the tax cuts were passed while the Democrats still controlled both houses of Congress and was signed by the president. The Democrats could have stopped it anytime they wanted to."

The 5: Thank you for once again highlighting how pointless it is to discuss politics with anyone in the U.S. Neither party wants to raise taxes or cut spending. You only want to blame each other for slights invisible to the rest of us.

Here’s a question: Who the f*** cares whose freakin’ fault it is?!!?

Why not extend the tax cuts permanently AND cut spending? What a novel approach that would be. Oh, but that would mean lawyers, lobbyists and all the rest of the leeches in Washington would have to give up their self-prescribed mandate to boss everyone else around. Darn.

4:09 "We ran into the Liberty Dollar evangelists several times over the past few years," writes a reader after seeing our coverage of Bernard von NotHaus’ guilty verdict. "They were usually behaving in ways that looked to me like they deliberately wanted to invite a crackdown. They seemed to revel in the possibility of conflict.

"I don’t believe using the word ‘dollar’ was an oversight or an unfortunate choice in any way. It was a deliberate choice designed to make Nuthaus [sic] a martyr for his cause. Hey, it’s a time-proven way to get a message known widely.

"They were also interchangeable with the sign-waving, slogan-chanting political cattle who relished every opportunity to bring as much of the wrong kind of attention to Ron Paul’s presidential campaign.

"I call them the ‘Poison Fans.’ There was a lot of overlap in the Poison Fan crowd and the Liberty Dollar herd."

The 5: Ahh, we’ve known Bernard von NotHaus for many years… since we first met him at Bertha’s, an Irish pub famous for garlic mussels, while he was on a nationwide tour in his VW bus opening up the first phase of silver certificate "redemption centers" that were at the heart of the Liberty Dollar scheme.

A few tumultuous years later, early in our tenure at the Fairmont in Vancouver, Bernard and some of his "Poison Fans" seated themselves squarely in front of the podium, seeking to gain some notoriety with the audience we’d assembled there.

By 2008, Bernard had gone off the deep end. Or swam further out into the deep, as the case may be. In a diatribe covered by "blog of bile", he labeled us, alongside Bill Bonner, Doug Casey, Ron Paul, Ed Crane, Lew Rockwell and a few others, "traitors" to America, saying we "steadfastly blocked or secretly worked to undermine the Liberty Dollar and its ideals."

Um, yeah… because we thought his name was divinely inspired, perhaps. Or maybe it was because we came to a similar conclusion expressed by author who posted Bernard’s "bellybutton" list on the blog of bile.

All the same, we could see Bernard had been itching for this fight since he conceived the Liberty Dollar in the first place. In the personage of U.S. Attorney Anne Tompkins, he found it.

5:00 "Around three years ago," writes a fourth reader, jumping tracks "there was this guy in Texas who was pushing for development of natural gas. I guess everyone thought he was just a shyster pushing his own agenda — maybe so, but he may be right… ahhh, is that why he has deep pockets?

"Now everyone is looking to jump on the bandwagon for natural gas now that there was a major crisis.

"People, government and investors, for the most part, can see no further than the 10 feet to their TV and can think no longer than one day into the future. Politicians write regulations only to benefit their constituency and buy votes.

"I think Byron King could honestly build a long-range viable energy plan and present it to the public, and with the backing of the right people in the private industry, we could maybe, just maybe, begin to rebuild this country."

The 5: The guy in Texas you’re talking about is T. Boone Pickens, who’s on our short list for Vancouver this year. Sure, his ideas would work, assuming Congress went along with his proposal to double the subsidies on natural gas-powered cars and issue tax credits for construction of natural gas filling stations. Seeing as Pickens owns the leading builder of those fueling stations, of course he’s "pushing his own agenda."

As for Byron, we think if he were elected to propose "a long-range viable energy plan," he’d probably demand a recount. Better to focus your attention on the long-range energy trends staring us in the face and place your bets accordingly. Here’s Byron’s latest idea on how to do just that.

5:41 "The moment I read your blurb in The 5 about CKE Restaurants relocating to Texas," writes a fifth, "I wondered how long it would be before someone proposed a Public Stability Law similar to the one in Atlas Shrugged.

"Then I read the next story about Jimmy John’s Subs and the Champaign County Economic Development Corp. You didn’t mention anything about the nature of the ‘efforts to retain local business.’ Can we assume they’re in the form of tax incentives and such, or should we be concerned?”

The 5: The local rag’s coverage was sparse on details, but sure, that’s a safe assumption. God forbid they actually create a tax environment favorable for all businesses… instead of making exceptions for the business that made the state look bad when its owner moved.

6:02 “Carl’s Jr. just opened a restaurant in Missouri City, Texas, last week," adds our final correspondent. "The lines have been so long I have not had the patience to wait to order!

"Maybe the manager and the workers are from California, and haven’t caught up to how we do things in Texas. Or maybe Paris Hilton is in there and no one wants to leave."

The 5: Maybe… did we mention that one of the chain’s signature products is called the Monster Thickburger?


Addison Wiggin

The 5 Min. Forecast

P.S. Our friend Patrick Creadon, who directed the ill-fated documentary effort I.O.U.S.A., has turned his attention to series directing television dramas. He recently wrapped up an episode of Law & Order: SVU.

Yesterday, he forwarded us a picture of himself, Dann Florek and Ice-T making nicey nice for the camera and announced the episode will air tonight on NBC at 10 p.m. EDT.

"The episode really turned out great," Patrick says, "and working with those folks was an absolute blast." Nice work, Patrick.


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