- "It's a jungle here-- right now
we're advising our clients to put all they can into canned goods and shotguns!"
--- Brain Gremlin in the movie Gremlins II: The New Batch.
- My name is Edgar J. Steele.
- Unlike paid market analysts, I willingly
admit that, most of the time, I haven't a clue what is going on or why
the markets or individual stock prices move as they do. (The biggest
difference is that I admit it.) However, when I study and follow
a market segment and/or particular companies, then I am driven by a compulsive
need to understand what is going on.
- I understand the fundamental shift that
occurred a couple of years ago in response to America's towering deficit,
debt and excess-liquidity problems, a shift which then quickened this past
Fall: This is a bull market for metals that likely will outlive me.
Certainly, it will outlive the general stock markets of all Western countries,
not to mention the dollar.
- Being in metals now is a "no brainer,"
as it is the only sure way to transfer your wealth from this side of the
economic chasm now yawning before us to the other side, which will appear
out of the mists only many years down the road. Picture yourself
descending by foot on the donkey trail into a fog-bound Grand Canyon, with
fully 95% of the journey to the opposite canyon lip ahead of you.
Therefore, when I get questions like, "Is it time (to move out of
metals)?" I have difficulty with answering temperately. No,
it is not time. Nor do I expect it to be time again during my lifetime.
- Already, you should have exited all equities
except commodity, mining and energy stocks. What will happen is that
there will come a time in the near future when a move from even those stocks
into Exchange-Traded Funds (ETF) will be advisable - that will be when
we see the wheels coming off the American stock market. Then, at
our leisure, though not too leisurely, we will withdraw all our funds altogether
from brokerage accounts, including IRAs, and buy physical metals.
Because ETFs exactly track metal prices, we can afford to take a little
time with this move. That is when metal prices will launch moonward.
Yes, of course we will take delivery.
- What you have just seen is a market
"correction." The very word correction implies a reversal,
which we now see taking place. There will be many corrections on
this journey, some larger, most smaller. Remember that the stock
market came almost all the way back even after crashing in 1929, before
it then meandered over the next three years back down to new Depression
- Conventional chartists/technicians call
the recent correction normal and the basis for consolidating a new floor
from which to launch a new, more graduated upward assault on metal high-water
marks that will surpass the peak of the parabola of a month ago.
Fundamental analysts refer to selling hysteria being over and the shorts
now adequately squeezed so that we can get back to the business of a normal
market. Think of it as a financial wedgie. Besides, options
expire today, which itself should lead to a boost.
- What has been new in recent years is
the government's illegal manipulation of the markets. The execrable
Robert Rubin, Treasury Secretary under Clinton, allegedly engineered the
beginning of the Plunge Protection Team (PPT) safeguarding against market
crashes and dealing in gold price manipulation to ensure America's "strong
dollar" policy of that era.
- Recall "Easy Al" Greenspan's
"irrational exuberance" speech, delivered in late 1996, as the
Dow (DJI) crossed 5,000, enroute to nearly 12,000, an untenable level in
tandem with the bubble in tech stocks which then burst in 2000, a level
once again approached by the Dow recently. Greenspan knew the score,
of course, but 1996 was the last time during his tenure as Federal Reserve
Chairman that he would admit as much.
- Without market intervention, sometime
during 1996 or 1997 the Dow would have corrected to the level dictated
by historical earnings-per-share (EPS) averages at the time, somewhere
in the range of 4,000 to 4,500, probably after dipping into the low 3,000s.
That would have presaged an economic recession which would have hurt, but
which also would have fixed the financial imbalances then building, which
were a pittance compared to those in existence today.
- Shortly after taking office in 1992,
Clinton signed the NAFTA agreement engineered by Bush the elder.
Sixteen months later, Clinton signed GATT. WTO and a giant sucking
sound followed (a sound eerily similar to that made by those new air-charged
toilets). The New World Order mold, one hundred years in the casting,
had been filled and set into place. America's planned economic destruction
(to subordinate America, consistent with the NWO elite's worldwide point
of view) then began in earnest.
- The men in control were not stupid -
they knew what they were doing, just as they do today. Recall that
Ross Perot told us exactly how it would go. How is that, you ask?
Why, exactly as it has been going, with American industry, including jobs,
heading overseas and the rich getting much, much richer while the middle
class devolves into poverty. And the pain has only just begun, gentle
reader, as America slides into place alongside all other second- and third-rate
- The financial imbalances set in motion
by NAFTA and GATT have been exacerbated by America's intractable monetary
and fiscal policies during the past ten years. "Easy Al,"
once a gold bug himself, got into line with everybody else in Washington,
DC and thereafter claimed not to see the bubbles building in stocks, bonds
or real estate. Now that he has passed the baton to "WhirlyBen"
Bernanke (who mentioned increasing liquidity by raining dollar bills down
from helicopters, needs be), Easy Al occasionally discusses the aftermath
of the bubbles he never saw, showing that he still knows the score.
As I said, these are not stupid men.
- And that is how we have come face to
face with the huge financial pit now before us. Some will fall in.
Some will trudge down the path. Some will trudge up the facing wall's
path. A great many will be lost in the swift-flowing currents at
the bottom. Commodities, particularly precious metals, particularly
silver, will serve as life preservers for some. In fact, some will
make great fortunes during the coming journey through Depression II and
look down upon the carnage from on high. Regrettably, America will
not survive or, if she does, then she will not be recognizable.
- Of course, considering the Beast into
which the NWO crowd has transformed America, best exemplified by her wars
of aggression and genocide against the innocent children of nations like
Afghanistan, Iraq and now, apparently, Iran, perhaps it is best that she
be put down like the crazed animal she has become. The coming economic
catastrophe alone will accomplish that, I believe, but I also think it
increasingly likely that the mad little dictator now in the White House
will get us nuked in the process, too. Frankly, we deserve it.
Nor would I be surprised to see our erstwhile European allies join in or,
at the least, stand aside while the dirty work is done by the likes of
China and Russia.
- History likely will show that WWIII began
with 9-11. Think not? A bill to draft all men and women, age
18-42, has been introduced in the House of Representatives. Frankly,
I thought those craven, perverted cowards who somehow get reelected (oh,
yes, that's right - those Diebold automatic tallying machines used by Bush!)
would wait until after the mid-term elections even to introduce it.
You can bet they won't act upon it until then.
- So, lessee....bull market for metals...corrections...Depression
II...WWIII...end of the world as we know it... I sound pretty certain
about all those things, don't I? For good reason, grasshopper.
For good reason. Even a blind man could smell this elephant in his
living room. My bafflement concerns smaller things set within the
context of this chaos.
- I talk now and again about my pitifully
modest stock market investments (you see, there is no money in defending
the politically incorrect...in fact, usually I have to pay for the privilege
of defending your civil rights via their lawsuits). I have been a
cheerleader for Gold Corp (GG) for many years now, beginning with my touting
that stock in my book, Defensive Racism, when it traded for a mere $8 and
change. Recently, GG topped $40 and was struck down more severely
(25%!) than most mining stocks (about 20%, versus the 10% decline in the
spot price of gold, from $720, along with its ETF: GLD) during the
recent correction. Gold continues to have its head held under water
(beneath the $650 level), along with GG, but other issues seem to be on
the rebound. Indeed, the new gold-mining-stock ETF (GDX), despite
GG, which is a major component, has risen steadily since recently opening
- All metals and all mining stocks got
hammered in the recent correction. You see, the rest of the world
treats gold (and silver) as "real money," since gold possesses
what is called inherent value. By comparison, the inherent value
of a one-hundred-dollar bill is about 2 cents, its cost of manufacture.
Why does gold have inherent value? Because everybody in the world
thinks so. Why doesn't the dollar? Because everybody but Americans
knows better. Seeing the dollar go into freefall, evidenced by gold's
price going hyperbolic earlier this month, the PPT considered it imperative
to rein in both gold and the companies that produce it. They are
going to let the dollar become valueless (they have to, a fact set in concrete
by America's unrepayable debt structures), to be replaced by a new currency,
likely the Amero, enroute to the all-electronic Globo, but not so fast
that the American people notice, then rise up and rip the financial elite
to shreds, as they so richly deserve.
- Both the timing and the way in which
the recent correction began reflect the fingerprints of government lackeys,
especially Goldman Sachs (from which the still-execrable Robert Rubin came
to the Treasury position under Clinton). Incidentally, and not at
all coincidentally, Bush just named his newest Treasury secretary, going
against all Street recommendations in a move reminiscent of his attempt
to place his personal lawyer on the Supreme Court: Bush crony Henry
Paulson, moving over from his position as CEO and Chairman of (all together
now) Goldman Sachs. Hmmmmm...do we see a pattern emerging or, at
least, smell an elephant hereabouts?
- Goldman Sachs, you see, is the prime
player on the PPT and in manipulating markets of every stripe, as evidenced
by the incredible stack of derivatives built up in its back rooms.
Sometimes I wonder if our "elected" officials don't take their
orders via Goldman Sachs - it and AIPAC, of course. Heaven knows
that, if I were one of the world's elite, I would not sully my hands by
dealing directly with the likes of George W. Bush. But, I digress.
- GG perhaps is the single strongest gold
mining stock on the board (no debt, no hedging, good management, good reserves,
low cost production), despite the outlandish recent looting of its treasury
by its own officers via stock options, thus obviously was chosen for special
treatment. Skating along at just under $31 today, I think GG is a
real bargain that will come back even further and faster than the rest
of the pack.
- Silver also dropped 20%, from $15 to
$12.50, but keep in mind that it had trebled in price during the same period
that gold "merely" had doubled. As we have come to expect
in recent months, silver has shown more strength in response to this correction,
with a closing spot price above $13 today. The new silver ETF (SLV),
of course, parallels that price movement.
- Still no mystery. These aren't
the 'droids we're looking for.
- But, I follow palladium (the poor man's
platinum), too, and therein lies the source of my befuddlement. The
two palladium stocks I consider worthy of primary attention are North American
Palladium (PAL) and Stillwater Corporation (SWC). Both fell about
20% during the recent correction, just like other mining stocks.
- Before I did any sort of fundamental
analysis of either PAL or SWC, and based strictly upon their technical
(historical price chart) aspects, last Fall I took small positions in both
and was touting them simply because the market price of palladium looked
to me to be ready to take off, as it had been bumping along just beneath
$200 per ounce for...ever, it seemed.
- Right on cue, palladium took off, with
both PAL and SWC baying in pursuit. PAL proved about twice as volatile
as SWC, which suited my mood at that time (I refuse to do options and futures,
just as should you). Both companies turned in year-end losses for
2005, just as expected, but the price of Palladium crossed $250 at year's
end and never looked back until it bounced off $400, just two weeks ago,
when the market carnage began. SWC had marched dutifully upward,
doubling to $18 early in May. Meanwhile, PAL tripled, jumping to
- The recent correction took palladium
down 10%, to about $350, where it still sits. SWC dropped 22%, to
$14, but PAL fell only 17%, to $10. Here's the problem: neither
are coming back yet, with SWC closing at $13.86 and PAL closing at $9.43
today. I must admit that I absolutely am baffled by the market price
movement of both PAL and SWC. Palladium has shown signs of moving
up sharply since this last correction's long knives came out, yet both
continue to slide sideways, even trending down a bit.
- Here's another problem: I have
since crawled extensively through each company's annual reports, financial
and operating statements for both 2005 and the first quarter of 2006 and
concluded that SWC, by far, is the superior company, yet PAL's stock price
seems to do better, even in decline now.
- Early this month, I mentioned that I
thought PAL should be sold, just prior to the correction. I hope
you got out. I always buy and sell with limit orders and got outrun
by PAL's plummeting price all the way to the bottom of the correction,
with the result that I didn't follow my own advice. Given the odd
way in which PAL's stock price seems still to be outperforming SWC's, I
am going to risk it for a few more days, but then I certainly am dumping
PAL for SWC, with some of it going into both molybdenum and energy stocks.
- I still believe in palladium, but, now
that I have done the fundamental analysis that I should have done long
ago, I simply can no longer recommend PAL. SWC clearly is superior
in all respects: management, stability, financial condition and,
especially, reserves. The only thing PAL has had on SWC in the past
is a lower production cost, but that went by the wayside during PAL's recent
difficulties and, what with the very recent, huge surge in palladium's
market price, becomes of less significance, anyway.
- Knowing that I still own PAL, you certainly
can conclude that I get paid nothing by anybody for these occasional recommendations.
- I do these financial pieces for two reasons:
First, it is critical that those in the "Patriot Movement" do
everything they can to protect their families during the upcoming unpleasantness,
even if it means our buying and putting away only a silver dollar or two
each and every payday. Second, I hope to entice the unsuspecting
back to my lair (www.ConspiracyPenPal.com), where I then can have my way
with their politically-correct belief systems. Do your part to help
make it a better world: send the unsuspecting a copy of this newsletter
- New America. An idea whose time
- Copyright ©2006, Edgar J. Steele
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