Distracted and Tyrannized

November 22, 2013

  • Marking an anniversary that’s not JFK’s death
  • Living in Orwell’s world… or is it Huxley’s?
  • First, a Chinese drone, now one that can be cloaked
  • New bear squeeze developing in gold?
  • A bargain so obvious even the Financial Times is noticing… The 5’s take on gold manipulation… small-business owners’ victory over the IRS… and more!

  Are we living in Orwell’s world, or Huxley’s? 1984 or Brave New World?

We started pondering the question this morning when we saw an item about how the JFK assassination 50 years ago today overshadowed the death of Aldous Huxley the same day (C.S. Lewis, too).

The question was first posed by Neil Postman in his 1985 book Amusing Ourselves to Death. “Contrary to common belief even among the educated, Huxley and Orwell did not prophesy the same thing. Orwell warns that we will be overcome by an externally imposed oppression.

“But in Huxley’s vision, no Big Brother is required to deprive people of their autonomy, maturity and history. As he saw it, people will come to love their oppression, to adore the technologies that undo their capacities to think…

“Orwell,” Postman wrote, “feared we would become a captive culture. Huxley feared we would become a trivial culture.”

  Arguing on the side of Huxley, we have the case of a big-box retailer in Cuyahoga Falls, Ohio…

“A week and a half before ‘Black Friday,'” reports Cleveland’s WJW-TV, “campers are already lining up outside the Best Buy on Howe Road to get their hands on the best of the bargains.”

The tents are outfitted with all the comforts of home — beds, microwaves, TVs and heaters. If you’re going to hold out for the latest and greatest TVs, tablets and game consoles, might as well do it in style, right? One shopper/camper said it’s worth it to wait for a $177 laptop that goes on sale one week from today.

We’re not sure if he’s run the numbers to see whether his savings on electronics are more than whatever he’s spending on gasoline to run his generator…

 Arguing on the side of Orwell, we have the PEN American Center — a nearly century-old nonprofit that works to advance literature and stand up for free expression.

The group recently surveyed 500 writers and found thanks to NSA surveillance…

  • One in six has avoided writing or speaking about a certain topic
  • Nearly one in four said they’ve censored themselves while on the phone or writing an email.

“I think people were afraid that something would put them on a watch list, impede their ability to travel,” says the group’s executive director Suzanne Nossel.

Think about it: Have you self-censored on the phone or writing an email? Be honest…

  Examining our anecdotal evidence, we come back to the question: Are we living in Orwell’s world or Huxley’s?

The answer is: Yes.

People are lined up a week in advance to indulge their cravings for electronic “stuff” — often bought on credit — that can be used by the government to track their calls, emails, Web searches and so on.

Our guidance: Step away for a moment from consumerism, turn off the TV and reclaim your freedom. That’s what our new 166-page book A Man’s Right to Happiness is all about. It’s packed with the proverbial 101 ways to muddy the digital tracks you leave behind for the NSA… protect your finances and your health from the ravages of Obamacare… and shrink your tax bill.

Here’s a tiny sample…

  • The one simple and easy move you must make when you log onto your computer. This tip allows you to build castle-like walls around your emails and private browsing activity. (See Page 40.)
  • A surprisingly affordable way you can take charge of your own health in the prevention and early detection of disease by getting medical tests without a physician’s referral or needing to involve your insurance. (See Page 12.)
  • How if you’re in the 28% tax bracket, you may be able to write off as much as $840 from a common medical expense that 11% of Americans have done each year. (See Page 85.)

The book covers a lot of ground without taking up a lot of time. Best of all, you can claim a copy of this book free. Learn how when you click here.

  Major U.S. stock indexes are little changed from yesterday’s close as of this writing. After its first close above 16,000 yesterday, the Dow has added a fraction of a point. Now it’s cracked 16,010. Woo-hoo!

Just to make sure we weren’t overlooking any big news, we moseyed over to Marketwatch. The banner headline right now is: “Is Marissa Mayer’s Star Power Too Distracting?”

Mayer is the CEO at Yahoo. The headline presumes if you don’t know who she is, you’re a loser. Here at The 5, we recognize you actually have a life.

Even in mainstream financial media, Huxley’s sway is large…

  On the geopolitical beat, we see China has flown its first “stealth” drone, presumably invisible to radar.

Or at least it’s the first time the Chinese government wishes to publicize such a capability…

With the nickname “Sharp Sword,” the craft made a 20-minute test flight over Chengdu.

China has been working overtime on stealth aircraft, including the J-20 and J-31 fighter jets. It’s also flown a drone near an island cluster claimed by both China and Japan. Now the stealth technology and drone technology have come together.

“China is joining a small elite club of nations that includes the U.S., Israel, France and the U.K. who are pushing the boundaries of UAV (unmanned aerial vehicle) technology,” says the BBC. “What is clear from recent air shows and the Chinese technical press is that Beijing has developed a variety of UAVs matching virtually every category deployed by the U.S.”

Speculation abounds about how much of China’s drone capability was made possible by know-how that was electronically pilfered from the U.S. Whatever the case, the Pentagon is beefing up its cyberdefenses. That’s a theme we’ve hammered at all year — and which has seven potentially lucrative investment angles uncovered by our Byron King.

For access to his research, gleaned from 178 pages of declassified documents, look here.

  Gold is fumbling around for direction as the week approaches its close. At last check, the bid was $1,245.

“This week has been very uncomfortable for long-term gold investors,” acknowledges Alasdair Macleod at Goldmoney. “The consensus in the investment community is uniformly bearish.”

 “There are many similarities between today’s market sentiment and that of September 1999,” Mr. Macleod goes on, “when the gold price jumped 27% in just two weeks.

“The bullion banks were bearish with gold at $255. The consensus then was that it was going to go lower, perhaps to $220, stock markets were hitting new highs with the dot-com boom and price inflation was not a problem.

“The bear squeeze in September 1999 would have been more dramatic had the Bank of England and the Fed not used their still considerable bullion stocks to intervene and rescue the bullion banks from their short positions. If a similar bear squeeze develops today, it is unlikely the Western central banks will have enough gold available to control the market.”

Shades of the “Zero Hour” scenario we’ve been developing all year…

  “The fundamentals for gold haven’t changed,” adds our own Dan Amoss. “Gold prices have been falling because trend-following traders are selling short gold futures.

“This can go on for a little while. But ultimately, the weakening health of paper currencies will restore strength to the gold market. Sustained tight money policies — which would be a legitimate reason to sell gold — can’t happen without throwing the global economy into a depression.”

  Meanwhile, “Gold mining stocks are the only cheap, detested sector of the entire market,” Dan goes on. “Most other areas of the market are hotly pursued and priced to deliver disappointing long-term returns from today’s prices.

“Strong, constant selling pressure has pushed miners to multidecade-low valuations relative to gold prices. Even the Keynes-worshiping, gold-hating Financial Times can’t ignore the cheap valuations! Yesterday’s FT Lex column notes: ‘This year’s sell-off has left gold miners’ undervaluation, relative to global equities, at its most extreme since 2000, according to Eastspring Investments. Australian miners, for example, are trading at about 70% of book value even after hefty write-downs.'”

In today’s 5 PRO, Dan spotlights an NYSE-traded miner that could easily double in a year. Not a PRO-level subscriber? You can become one here.

  “Fulmination, manipulation…defenestration,” reads the subject line of a worthwhile message in our inbox.

We made passing mention yesterday of the “gold manipulation” crowd yesterday in light of strange action in the market on Wednesday. We expressed a desire to step back and examine the bigger picture.

“I read some of those same Internet posts,” our reader goes on, “and I understand you’re taking a big picture look and essentially saying, ‘We’re interested in the trend and seeing where it goes, but down still seems more likely than up,’ which is both reasonable and logical.

“What I would really like to see is a few of your minutes spent addressing what seems to me to be the most interesting part… Three times in the last few months, ‘atypical’ trades have shut the market down for brief, but impactful amounts of time. Let’s presume this was a crime… we’d be interested in means, motive and opportunity… who, how and why… and is there anyone we can toss out the window for doing it.

“I don’t always agree with you there at The 5, but I appreciate you making me think and wonder why…”

The 5: At the risk of frustrating you, we don’t have an opinion about those atypical trades.

Don’t get us wrong: We’re sold on the notion that Western central banks have been “leasing” their gold to commercial banks, and the commercial banks have then sold that gold to buyers in Asia. That’s key to the “Zero Hour” scenario Eric Sprott helped us develop last winter.

But the day-to-day trading machinations that consume so much Internet bandwidth? As Doug Casey has long pointed out, most of those theories don’t meet the Occam’s razor test.

And even if someone proves conclusively there are shadowy forces jacking the gold price around, what do you and I do about it? If the feds couldn’t bring themselves to handcuff anyone for fraudulent mortgage securities, do you really think they’re going to suddenly discover their manhood examining the precious metals market? The Commodity Futures Trading Commission just spent five years looking at silver and concluded, “Move along, nothing to see here.”

We keep coming back to what Marc Faber said in our virtual pages in the spring of 2010: “If you have manipulation to keep the price down, it eventually goes ballistic. All the people bitching about the manipulation of silver and gold should be happy that it is manipulated, because it still gives them an opportunity to buy it at a depressed price.”

One of our favorite vehicles for doing so, by the way, is the Hard Assets Alliance. The fees are reasonable and it’s still hands down the easiest way to buy, sell, store or arrange for delivery online. You can add to (or start accumulating) your stash here.

Full disclosure: We may be compensated once you fund your account. But we wouldn’t back the Hard Assets Alliance unless we knew they’d give you a good deal.

 Score a small victory for the good guys in the war on small business.

Hey, it’s been a bummer of an episode today. The least we can do to wrap up the week is to bring you this encouraging 5 follow-up: The IRS has dropped his fatuous but nonetheless costly case against Terry and Sandy Dehko, owners of a grocery store in the Detroit suburb of Fraser.

“The federal government had no evidence of any drug activity,” reports Huffington Post’s Radley Balko, “but were still attempting to take $100,000 because the owners were making bank deposits in increments less than $10,000. The IRS considers that ‘structuring,’ or an attempt to get around federal laws that require banks to report any transactions over that amount.”

Never mind that many small-business insurance policies don’t cover cash losses from a robbery or fire for more than $10,000. “The IRS backed down,” says Balko, “but the Institute for Justice and the grocers are pressing on to challenge the constitutionality of such seizures without at least granting property owners a preliminary hearing.”

There is no evidence Thomas Jefferson ever said, “Eternal vigilance is the price of liberty”… but we see the truth of the statement all around…

Have a good weekend,

Dave Gonigam
The 5 Min. Forecast

P.S. Just because we’re living in a mash-up of Orwell and Huxley’s world, it doesn’t stop innovators from innovating… and investors from collecting impressive gains on those innovations.

If you’re looking for something to be optimistic about, there’s no better place to start than at this link.

rspertzel

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