A Surreal Feeling of Helplessness

  • Watching on live TV from hundreds of miles away…
  • …as vandals come within four blocks of your editor’s home
  • Meeting the preppers who were “too sensible” for reality TV
  • Silver bars and solar panels: File them both under “hard assets”
  • Expert who saw crisis looming in 2007 identifies best asset for next seven years
  • Why no one’s throwing a party to celebrate new all-time highs… the tapir makes an unexpected return to The 5… the real real reason Bush bought all that land in Paraguay… and more!

  The experience was surreal. My wife and I… sitting in a motel room eight hours from home on Saturday night… watching live aerial images of troublemakers smashing windows and turning over newspaper boxes… on streets we recognized well.

Far too well… It was happening only four blocks from our (street-level) apartment in Baltimore.

Police Attempt to Disperse Crowds Gathered in Downtown Baltimore

Too close for comfort: This location is also five blocks due south of Agora Financial HQ…

Talk about feeling helpless. We were fretting at a distance. We felt we’d have had more control over the situation had we actually been at home. Maybe we couldn’t have fortified a window in time, but if it were broken, we could have blocked it off so our cats wouldn’t get out.
In the event, four blocks from home was as close as the troublemakers got. Not a thing looked out of place in the Mount Vernon neighborhood upon our return yesterday.
  The experience was made all the more surreal by what we’d been doing earlier on Saturday — looking up-close-and-personal at the prepper lifestyle, far from any city center.
We were among nine people attending a “resilience” workshop hosted at the homestead of our new friends Cam and Michelle Mather, in a pristine and woodsy part of Ontario about three hours northeast of Toronto.
Some people talk about off-grid living. The Mathers have been walking the walk — living off grid for 17 years. Along the way, they’ve chronicled their experiences in several books and videos, along with articles for Mother Earth News.
  “We are accidental preppers,” Cam told us. They started out in 1998 with a commitment to reduce their “carbon footprint.”
But as the years wore on, they became increasingly aware of how fragile modern interconnected society had become. To say nothing of the fragility of fiat currency: Among the books that affirmed and expanded their outlook was Bill Bonner and Addison Wiggin’s Empire of Debt, still the foundational work for much of what we do here at Agora Financial.
[It might seem strange, a melding of climate-change evangelism with a suspicion of government funny-money… but we noticed Empire of Debt nestled on their bookshelf next to The Essential Chomsky. Heh…]
  Their property is three miles from the nearest power line. But with solar panels and a wind turbine, they enjoy almost all the comforts of home.
There’s a gasoline-powered generator, too, but Cam is committed to progressively decreasing his reliance on it. “We’ve turned it on maybe three or four times in the last year,” he said.
They don’t worry about power outages. A software bug at a power plant in Ohio can knock out power to 55 million Americans and Canadians — as happened during the Northeast blackout of 2003 — and the Mathers will keep on truckin’.
Heat for the home? That comes from a wood stove, with logs cut from trees on their property. “It’s totally carbon neutral,” he pointed out. A burning tree releases the same amount of carbon as a dead tree lying on the forest floor. “You’re just speeding up the process.”
  “There’s nothing like eating food that comes from the seeds you planted in the ground,” Cam told us over a lunch that included vegetarian chili made in part with the bounty from the sandy soil on their property.
He and Michelle run a community-supported agriculture (CSA) operation. Forty people have bought in; for a fixed price, they collect the goods from the Mathers’ garden for 16 weeks of the year.
You won’t find any No. 10 Mountain House cans in the Mathers’ substantial pantry. “Freeze-dried food is fine for what it is,” he said, “but gosh, it’s expensive.” If you want to be resilient and cost-effective, grow-your-own — and a good root cellar — is the way to go.
  “No paper currency has held its value for very long,” wrote Bill and Addison in Empire of Debt.
“Some paper currencies are destroyed almost absentmindedly. Others are ruined intentionally. But all go away eventually. By contrast, every gold coin that was ever struck is still valuable today…”
The last part of our day was about a discussion about “hard assets.” The means to generate your own electricity? That’s a hard asset. The property on which to grow your own sustenance? That’s a hard asset.
Precious metals? Of course those are hard assets too… and they’re an essential part of the Mathers’ resilience plan. “We had a friend who bought gold at $700… and then sold it around $1,000 and felt really good about himself. ‘That’s not the idea!’ we tried to explain.”
  For 17 years, the Mathers’ resilience experience has been one of learning by doing, trial and error. They are pioneers of sorts, affording the chance for others to learn from their mistakes.
True, there’s only so much you can learn in a seven-hour workshop. But the point wasn’t about learning “how to do it” as much as “it can be done.” You see it and touch it in a way no book allows you to do.
But for the next best thing, there’s their latest book, called The Sensible Prepper. Sensible in the sense that reality TV turned down Cam and Michelle because they didn’t live in a concrete-reinforced bunker with No. 10 Mountain House cans, apparently.
Even if you don’t anticipate the zombie apocalypse, there’s ample information to help you ride out an extreme weather event.
The book is so new — we got our copy at the workshop on Saturday — that I haven’t had much chance to tuck into it yet. But to a great degree, it’s a revised and updated version of Cam’s 2009 book Thriving During Challenging Times, which was a terrific guide.
Thumbing through the new book’s pages, I see…

  • The best source for an inexpensive but reliable “bug-out bag” (Page 68)
  • The one thing you must do if you have a gasoline generator (Page 139)
  • An ideal means of precious-metals storage (Page 260).

Take a closer look at The Sensible Prepper on Cam’s website. You can order a copy via the Amazon link on the right side of his page. No, we don’t get a kickback if you do; we just like to bring new ideas to your attention now and then.
  The major U.S. stock indexes are little moved this morning, traders perhaps sleeping in. The S&P 500 is inching further into record territory, at 2,118.
“You’d be forgiven for not noticing the S&P’s record close Friday,” says Jonas Elmerraji of our trading desk. “Despite the new highs, the broad market is only about 1% higher from where it sat at the end of December. Stocks are making new highs, but it just doesn’t feel like it.”
And no wonder: Jonas points out 60% of S&P 500 stocks fell on Friday.
Still, the index remains in its long-range uptrend going back to the Panic of 2008.
Earnings will likely dominate this week; 500 publicly traded companies will report. If they’re anything like the companies that have reported already, earnings will be fine… but revenue will disappoint. The Federal Reserve’s Open Market Committee also meets this week, but it’s already committed to leaving the fed funds rate alone this time, so there’s no drama.
  Gold is bounding back after its smackdown to five-week lows on Friday. At last check, the bid was up nearly $23, to $1,203.
And only some of the credit goes to a weaker dollar. The dollar index is down, but by less than half a percent, at 96.6.

Elsewhere in the commodity complex, crude is holding on to its big gains last week, at $57.34.
  As long as we have hard assets and wood heat on the brain today, we draw your attention to “the best asset to own for the next seven years,” as Jody Chudley of our natural resources team puts it.
Jody spotted a recent report from legendary investor Jeremy Grantham. Grantham is the guy who in the spring of 2007 warned a major bank would fail and a “very slow-motion train wreck” was upon us.
“Every month, Grantham’s firm, GMO, provides a seven-year forecast for returns that they expect to be generated by various asset classes. The firm is forecasting negative annual returns over the next seven years for all classes of stocks other than emerging markets.”
Likewise, bonds aren’t looking good, except in emerging markets. GMO’s best-performing asset for the next seven years is… timber.
“Over the past century,” says Jody, “the price of timber has risen by an average of 5% per year. Since 1970, that annual return figure is closer to 14%, which means it has soundly beat stocks and bonds. More important to me in this world of rampant quantitative easing is that timber has historically generated its best returns during periods of inflation.”
Byron King recommended Plum Creek Timber (PCL) in Outstanding Investments six months ago. It hasn’t made the big move yet, so there’s time to get in… and collect a 4.2% dividend in the meantime.
  Tapirs — they’re good for more than a cheap laugh in The 5.

World Tapir Day

Yes, Greg Guenthner of our trading desk informs me today is World Tapir Day, honoring the trunk-nosed herbivore native to Latin America and southeast Asia.
The tapir came to prominence in our virtual pages two years ago, when Ben Bernanke first suggested the Federal Reserve might begin to “taper” its quantitative easing. Soon it took on a life of its own, including our infamous “tapermeter” featuring actual tapirs every time the Fed dialed back its bond purchases. (If you’re a newer reader, let’s just say you had to be there.)
The organizers of World Tapir Day inform us that “tapirs are invariably the first species affected by human encroachment into their territory and amongst the last to return to regrowth forest. They require substantial tracts of undisturbed land to maintain a genetically diverse population.”
Now you know. There’s even some tapir-themed swag at tapirday.org, if that’s something you’d like to support.
  “After seeing Greg and Jonas referred to as chart chimps,” a reader writes on a topic that’s already dragged on too long, “I hereby declare that those of us reading The 5 are nothing but a bunch of chair monkeys!
“This term was laid on a number of us at a big drag race in Las Vegas. It was the late ’90s. We were there to represent the National Electric Drag Racing Association. We would race our electric car conversions against the gas-powered muscle cars and generally win! Since those early days, Tesla has brought knowledge of the performance aspect of EVs to the general public, but back then, it was a very new thing.
“A construction worker in the stands said to one of my colleagues, ‘You guys are just a bunch of chair monkeys!’ It bothered him quite a bit, and he may still be nursing that wound, but I found it to be hilarious. Actually, a badge of honor!
“More power to the chart chimps!”
  “BS!” a reader writes succinctly after we discussed the Bush family’s water investment play on Friday.
“Bush bought that land in Paraguay to have somewhere to run and hide in case the international community turns tough on him and his family. Doesn’t seem odd to you that he bought that land shortly after a war crimes tribunal declared him a war criminal and Switzerland announced he will be arrested and tried for war crimes if he dares to set foot on Swiss soil?… And guess what? Paraguay didn’t sign the extradition treaty for war criminals!”
The 5: Oy. We remember reading comments to that effect at the time of the purchase in 2006 — fueled perhaps by the fact the first media outlet to report the story was Cuba’s state-run Prensa Latina.
It sounded compelling then. And it’s true, certain members of Team Bush have to be careful about where they travel. But even before he took office, Bush’s successor expressed “a belief that we need to look forward as opposed to looking backward.” Bush can remain stateside and paint his carrot trees as long as he pleases…
  “OK, that’s impressive, but are we comparing apples to apples?” writes a reader after we pointed out $10,000 put into Berkshire Hathaway in 1965 would be worth $180 million today.
“Are these numbers adjusted for inflation? In other words, are we talking about 10,000 1965 dollars and 180 million 2015 dollars? Not as impressive (still, I’d take if I had the chance!). Thanks for The 5!”
The 5: When the gains become that big, nothing short of Weimar-style hyperinflation matters much, no?
Best regards
Dave Gonigam
The 5 Min. Forecast
P.S. In case you missed my note on Friday… Some shocking new audio has just “leaked” online.
It contains a private conversation involving the VP of a tiny early-stage biotech firm.
You can listen to this private phone call for yourself by clicking here.
I guarantee this recording is 100% legal.
But the parties involved could take it down from the Web at any moment.
You won’t believe the things they say on this call. Click here to listen for yourself…

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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