Addison Wiggin – June 15, 2011
- Where’s the outrage? Greece erupts anew, while Bernanke & Co. draw a crowd you can count on one hand…
- Vancouver iconoclast Doug Casey going mainstream? Reveals to Yahoo Finance the asset class (other than gold) he likes the most…
- Alan Knuckman finds beef on sale, while Chris Mayer adds to our vocabulary with his latest farm find…
- “Clueless fool” and less-vitriolic comments about strategic default… readers launch voting-or-violence debate with no prompting from us… and your next-to-last chance to get our full array of services for life
So the shit’s hitting the fan in Greece. Again. There’s a general strike today… the third one in 2011.
Cops in Athens unloaded tear gas on protesters who tried to surround the Parliament building. The vain attempt to keep members from gathering to vote on more “austerity measures” failed. Austerity measures are a condition of the next eurozone bailout.
“We don’t want any more bailouts from the EU,” a 67-year-old man told the BBC’s Paul Mason. “We’d rather be poor and broke.” Given what the previous bailouts have accomplished, we expect he may get all three.
“This thing has gone beyond left and right,” Mason reports. “It’s clear that for many people, it is the Hellenic republic versus the rest of the world.”
In the last 24 hours, traders in the credit default swap market have upped Greece’s five-year probability of default from 74% to over 75%. The yield on 10-year Greek debt has spiked from 17.4% to 17.9%.
Likewise, the hacker group known as Anonymous “engaged” its
“Operation Empire State Rebellion” yesterday.
The idea was to have people occupy “public spaces” yesterday until whenever Ben Bernanke resigned as Fed chairman. The group posted specific spaces on a Google map showing where the “engaged” should show up.
One of those spaces was Liberty Park in New York.
Greece it was not…
“Despite thousands of emails, tweets, comments and a video that already has 200,000 views,” writes organizer David DeGraw, “only four people in NYC were ready to put serious action behind their words.”
One of them, we see, included a V for Vendetta mask to underscore the point.
Bernanke presumably showed up for work as usual today at the Marriner S. Eccles Building in Washington. If so, we’re sure he was even less motivated by the protesters than he was in this archival photo flippin’ the bird at Congress. Ho-hum.
The yield on a 10-year U.S. bond is down slightly this morning, just below 3.1%.
Heck, even the Chinese like Treasuries again. According to figures out this morning from the Treasury Department, China was a net buyer of Treasuries in April for the first time in six months.
“Good investment ideas are not thick underfoot these days,” says our friend Doug Casey, whose LinkedIn profile features the V for Vendetta mask.
“The next few years will be marvelous from the point of view of a speculator, but horrible for the average guy,” he tells interviewers from Yahoo Finance, reiterating a theme he’s shared with us on several occasions.
Aside from gold, he figures your best bet is cattle.
“I recommend building herds, both dairy and beef.” It’s the cheapest major market he can think of.”
“Barbecue season is in high gear and meat is on sale right now,” chimes in Resource Trader Alert’s Alan Knuckman.
Live cattle prices reached an intermediate-term high of $1.26 a pound in April. From there, they’ve fallen back to $1.06 today. Thus, “a trading range has been established,” says Alan, “with the first upside breakout target at $1.16.”
Alan recently recommended a live cattle trade that could turn that modest price move into what he calls “unlimited profit potential”… and using his methods, you don’t risk anything more than the money you put upfront.
“Pulses are crops harvested for the dry seed,” says Chris Mayer, turning our attention to another opportunity down on the farm. “They include lentils, chickpeas, peas and a variety of beans. They are an efficient source of protein by weight, giving you almost as much protein as chicken and more than beef.”
And you get that protein punch using a lot less water. “It takes only about 40 gallons of water to produce one pound of pulses,” Chris says, “compared to nearly 2,000 gallons of water to produce one pound of beef.”
That’s a big deal when you consider agriculture is the single-biggest user of water on the planet, “accounting for about three-quarters of all water drawn from rivers, lakes and aquifers.”
“As farmers tap into more and more aquifers, food production rises. But the rate of water extraction exceeds the aquifers’ ability to recharge. So you have a water-based ’food bubble’ — meaning, production is unsustainable and will collapse at some point as water supplies run out.”
Pulses address that need… and demand for them is growing, especially in the developing world.
China is about to become a net importer of pulses. “We know what happens when China becomes a net importer of something,” Chris continues. “See iron ore, coal, oil, etc. It really juices the market. We’re only in the beginning of that wave for pulses.”
Chris recently recommended a pulse producer he sees doubling from current prices. Some of his previous ag-themed picks have generated gains of 109%… 137%… even 232%.
Alan, meanwhile, has delivered gains of … 94% on sugar… 217% on wheat… and 273% on corn — all in a time frame of four months or less.
A handful of readers had the chance to benefit from all of these plays. They belong to the Agora Financial Reserve. They have access to the full spectrum of everything we write about — from blue chips to microcaps to options.
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Stocks aren’t cheap, but they’re getting cheaper today. As of this writing, the major indexes have given up much of their gains yesterday, and the Dow is back below 12,000.
Greece may be weighing on traders’ minds. As may these impertinent nuggets:
- Consumer prices of 0.2% last month in the skewed estimation of the Bureau of Labor Statistics. The year-over-year increase is 3.6%. The “core” rate, excluding food and energy, actually grew at a faster clip, 0.3% — the highest since July 2008
- The Fed’s Empire State Manufacturing Survey went negative this month for the first time since last November
- Industrial production as measured by the Fed grew 0.1% in May, the second straight month of next-to-no growth.
Both gold and the greenback are benefiting from the uncertainty today. The dollar index is back above 75, while spot gold goes for $1,530.
A lack of supply will drive gold to $5,000 before it’s all over, say the writers of a report released yesterday from the old-school British bank Standard Chartered.
“There are very few large gold mines set to commence operation in the next five years,” says the report. “The limited new supply comes at a time when central banks have turned from being net sellers to significant net buyers of gold.”
Even if demand doesn’t grow, the falling supply makes a rising gold price a lead-pipe cinch, Standard Chartered says. Incidentally, $5,000 is also Doug Casey’s ultimate target once gold reaches what he calls the “mania” stage of its bull market.”
No matter how you calculate it, $5,000 is still a 227% boost from where the price sits today… so even if you’re late to the party, you will want to check out these nine ways to join in. As always, Reserve members — you get the advice for free. Gratis. On the house… our compliments grace of your extraordinary choice to become a member.
While the Greek government tries to service its debts by selling off state assets like ports and utilities… the Irish government may be taking the practice to new heights — or depths, as the case may be.
Ireland’s Department of Communications is mulling over a proposal to yank up the country’s now-dormant undersea cables and sell the copper for scrap.
“Various communications cables have been laid between Ireland and the U.S. since the 1850s,” reports the Irish Independent, “and would be easily recoverable” because they were never buried.
No one’s hazarding a guess on how much revenue this might raise, but one member of parliament is practically salivating at the prospect: “Old telegram and telegraph copper wires could easily be winched from the seafloor on to 40-50-foot tugboats,” says Joe McHugh, “and then sold on the market.”
Hey, wait a minute… these are transatlantic cables that extend to the United States? So we could do the same thing here. Just imagine… even if the cable is worth — let’s just pull a figure out of thin air and say $15 million — why, that’d be enough to cover this year’s deficit for… the next… five minutes.
Oh.
Forget it.
“The clueless fool who asked ’what happened to this country’ should have read the facts stated by others in the last couple issues of The 5,” writes a reader, adding strong dose of vitriol to our strategic default debate.
“Why should anyone pay back fiat, fake, fraud, fictitious, fantasy, fractional-reserve, debt-based toilet paper that was created out of thin air at zero expense by gangsters who never produced anything but misery their entire lives? You are an ardent believer in inherent elitism and authoritarianism, right? Otherwise, how can you justify one group of thugs gets to create money out of thin air, but everyone else is stuck borrowing it from them… plus interest?”
“You must be one of those clowns that believe obeying authorities is always and inherently ethical, no matter where and when you are, including in Nazi Germany and the fascist bankster-controlled USA. Wake up and try thinking with your own brain, if you have one.”
The 5: And yet the gentleman still believes in integrity… what a ’clueless fool.’
“If,” asks another reader ready for armed rebellion (by email at least), “the government is in breach of its original contract with the people and has entered into a separate contract with a banking system, which is also in breach of its contract with the people, are the people still required to fulfill their part of the contact with the government and the banking system?
“If such a scenario is true, do the people have a responsibility to take arms against a sea of troubles, and by opposing end them? Wasn’t if Jefferson who wrote, ’That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it’?
“Could opting out of continued payment to this system be an effective form of nonviolent resistance? Would continuing to support such a system be an act of treason against your creator and fellow man?”
The 5: Uhhh… as philosophical as you might want to get about the mortgage mess, I think this next reader nails the mind-set of your average “strategic defaulter” more accurately than the high-minded straw dawgs you have imagined:
“Despite having a well-paying ’safe’ government job,” he writes, “my friend is thinking about giving up paying his mortgage. He can easily afford the mortgage. But he’s way underwater on the house.”
“’Do you think it’s ethical to just give up paying?’ I asked.
“’I don’t care,’ he shot back. ’I’m not losing more money. I’ve lost all the equity I’ve paid into it already.
“‘Here’s what I’m thinking…’ he continued. ’It’ll be at least a year after I stop paying before they foreclose on the house. In that time, I can apply for an apartment of my own, get it and then rent out the house for income…”
“’The rent from the house will cover my apartment rent, and then some. Doing it this way means that I’ll have my apartment covered for an entire year… all while not losing money on the house.’”
“Stating the obvious, I told him that his credit would be ruined for years.
“’Sure, but what do I care? I just bought a new car (a Porsche Cayenne, by the way)… so I won’t need to apply for a car loan anytime soon. And I’m not buying another house anytime soon.’”
“And then came the punch line…”
“After sitting silent for a second, he asked, ’Hey, do all these housing problems have anything to do with that interest-only loan I originally took out when buying the house?’”
The 5: You think?
“The way to start solving the economic problems caused by too many ’I’ll do anything to get re-elected’ politicians and too much government,” writes a fourth reader, chiming in on what’s become — for better or worse — our “voting or violence” thread, “is to vote them out of office, or at least put a scare into them.
“What most people don’t see is that replacing a Republican with a Democrat or vice versa is not the answer. When you go into the voting booth in 2012, imagine if a sizable percentage of people simply refused to vote for any Republican or any Democrat and instead cast their ballots for Libertarian, Constitution or Green party candidates?”
“What we need,” adds another, “is a few more strong major parties. The Republicans and Democrats control our country, and they are doing everything possible to prevent another party from becoming a major party.
“If people would register and also vote for third-party candidates, the parties would become stronger and the people would have more choices. This is the only way that we can use the vote to change the direction that our county is going.”
The 5: And that’s because multiple party elections work so well in Europe?
“The only way to solve our problems,” writes another, “is to eliminate the source. Vote the incumbent, regardless of party, out of office. Again and again and again and again. That is the only thing our Congress understands.
“We can make no exceptions. But I do hope the voters in Ron Paul’s district pay no attention to this plea.”
The 5: Weird. You’ll note Dr. Paul returned to the Republican party after running for president in 1988 as a libertarian.
“I choose violent revolt,” writes yet another. “I see it a lot on the blogs, angry threats from people. I like the scent in the air these days. Hopefully, I don’t regret it.”
The 5: Right.
“No revolution,” counters our final correspondent. “As far as we can see, the bums are going to be around forever.
“Solution: Earn a bit more and subscribe to [the Reserve and] International Living. Really isn’t this whole mess, and Agora, for that matter, about protecting your backside? Let the politicos and the zombies fight it out. I will watch from somewhere else with a bowl of popcorn and a beer.”
The 5: Clearly, you come down on the “flight” side of our fight-or-flight debate this year in Vancouver. It should be an eye-opening experience. Attendance in Vancouver, too, is a free benefit of your Agora Financial Reserve membership. (But maybe not for long.)
“How soon,” a reader inquires after yesterday’s issue, “might the audio of the Symposium sessions in Vancouver be available as an MP3 file attached to email?”
The 5: Last year, our team had high-grade professional recordings available of all the sessions (four days’ worth!) in less than a week. The ideas — and the investment recommendations, summarized in a handy PDF — were still fresh as a baby’s powdered bottom. This year’s Symposium is July 26-29. So you could expect them around Aug. 5.
If you can’t join us, the audio files are the next best thing. And if you move on it now, you get the best available price. Here’s where to reserve your set of CDs at the ultimate early-bird price… as soon as the conference begins, the price for the CD sets will also start to rise.
Cheers,
Addison Wiggin
The 5 Min. Forecast
P.S. If you can’t tell by the fever pitch of our writing, we’re now less than 36 hours away from closing the doors of the Agora Financial Reserve. If you’ve been thinking about joining, the time to act is fast approaching. Really, as members can attest, it’s the best deal you can find on the Internet.