Consumer Sentiment Drops to 11-Month Low

A survey conducted by Thomson Reuters/University of Michigan named Thomson Reuters/University of Michigan's Surveys of Consumers, found consumer sentiment has fallen to its lowest level in almost a year.

This is an extraordinary turn of events over just a month, as last month the highest level of consumer sentiment had been reached in almost 2-1/2 years. When it is built more on wishful thinking and hope rather than realities of the economy, these types of huge swings can happen quickly, and it of course now has.

In June the numbers were at 76.0, while in July the plunged to 66.5. Economists had been looking for 74.5.

Director of the surveys, Richard Curtin said this, "Income and job prospects were extraordinarily weak and those bleak prospects have made consumers much more cautious spenders."

After the Democrat-controlled Congress stopped their irresponsible spending spree, the reality the economy wasn't growing but was rather being artificially propped up is setting in, and consumers are understanding we've never left the recession, and there hasn't been a recovery.

Consumers also said in the surveys that they aren't going to be buying any big ticket items like automobiles in the foreseeable future, showing again the hype about a recovery was largely reported by the mainstream media as a reality to prop up Obama and the Democrats, rather than hard reporting on the fact that we're still in a recession.

Gold Prices Close at Record High

Gold prices didn't hit a record high today, but they did close at a record high, as the yellow metal gained $18.20 on the day to close at $1,248.70 an ounce, up from the June 8 record close of $1,245.60 an ounce.

Most of this is the result of continuing bad economic news, including plunges in new housing starts, increasing unemployment and the continuing European Union sovereign debt crisis which is far from over.

Data from the Philadelphia Federal Reserve's index of regional manufacturing plunged so far that some economic news outlets didn't even release the amount it dropped and how far it was below analysts' expectations.

The reading came in at only 8.0 for June, down from the 20 looked for by analysts, and down further from the 21.4 reading in May.

This is the lowest level of manufacturing growth in 10 months for the region, which includes Delaware, southern New Jersey and eastern Pennsylvania.

Marc Faber: US Bankrupt 10 Years

Marc Faber - US going bankrupt

Marc Faber states in about 10 years over 35 percent of tax revenues collected in the United States will have to be used to pay off the U.S. debt.

“Maximum within 10 years time more than 35% of tax revenues will have to be used to pay the interest on the government debt and then you are in trouble – because then there will be not enough money out of the budget to pay for other stuff. I’m convinced the US government will go bankrupt, but not tomorrow. And before they go bankrupt, they’ll print money, and then you get high inflation rates, you have a depression and eventually they’ll go to war,” said Faber

He also believes the credit rating of the U.S. could fall below its top rated 'A' status, especially if the economy grows much slower than estimates, and the more information that comes out, the more a reality that seems to be.

Inflation is coming, it's only a matter of when it becomes noticeable. Some prices are already significantly higher, but they're balanced by the drop in others. Pretty soon that scenario won't be able to survive in the realities ahead of us, and then the unthinkable will happen.

Marc Faber - US going bankrupt

Commodities: Riots in the Streets of America

Bob Moriarty in an explosive interview on what he sees in the not-too-distant future for America, and how people can prepare for the unsettling times.

The Gold Report: Bob, what do you think of the Fed’s latest move—cutting to a flexible zero to a quarter rate? Where do you see us going?

Bob Moriarty: We are to the point where we are about 14 feet from going over the edge of Niagara Falls. We haven’t gone over the edge yet; we haven’t gone to a total collapse. We don’t have riots in the streets; we don’t have a revolution. That’s coming; that’s about two to three months off.

Here’s what we’ve got: the Fed has committed to $8.5 trillion of taxpayers’ money to bail out the worst run companies and banks. It hasn’t worked. Now, they’re at a 0% to .25% on the Fed Funds rate for funds for banks, which means if you go down and you pay $100,000 for a T-bill for 90 days, your return is zero, which is to imply that there is zero risk to investing with the government. Anybody who actually believes that is going to be in for a real shock in the first quarter of next year.

GM has lost has lost $80 billion dollars in the last four years. They’re burning through $2 billion a month when everything is going well. Their sales are down 37% in November; the mathematical probability of GM surviving is zero. But we’re going to pour more taxpayer money down that hole. AIG's also turned into the proverbial black hole. I would think that at $300 billion or $400 billion or $500 billion or $600 billion, somebody’s going to wake up and say, “You know, we’re losing a lot of money here.”

TGR: It’s getting to be real money at that point.

BM: What we have done is guaranteed hyperinflation in the United States. We have guaranteed the destruction of the United States. We will have riots starting in the first quarter of next year; we will default by the summer of 2009.

TGR: Default on how many of the bonds? All? Or just some?

BM: 100%. The US government is going to default. Treasuries, Fannie Mae, Freddie Mac, the whole lot. It’s the end of empire. The United States government will not exist in its current form a year from now.

TGR: When you say “its current form,” what form will it take?

BM: I don’t know. It’s a really good question. I’m sure it will be a total state of chaos. I mean we’ve never been here. I think the analogy of the Soviet Union is probably the closest; we could break up into a series of little fiefdoms. But here’s what’s important to understand—the United States government has failed at every single level. It is too big; it is too unwieldy; it doesn’t work.

TGR: So, what does it mean? We’ve got impending chaos in the United States—and the financial markets will continue to go downward. Are we talking globally or U.S.?

BM: U.S. primarily, but globally because the U.S. is so important. The U.S. is the linchpin right now, but the rest of the world is going to have to learn to get by without the United States. What George Bush and Dick Cheney have done is essentially destroyed the United States; they have bankrupted the country. We are going to end up having our troops march out of Iraq to the nearest border because we can no longer afford to pay for them. We’re going to go into Zimbabwe-type inflation where they’re printing off $200 million dollar bills to buy a loaf of bread.

TGR: Other than moving to a nice island in the Caribbean, what does an investor or a resident of the U.S. do?

BM: You have to prepare; first of all, it’s important to prepare mentally and that means doing some education. Second, you don’t want to be in debt. You don’t want to be buying real estate. You don’t want to be taking any chances financially whatsoever. You want to be investing in real resources: good solid producing gold companies or silver companies or energy companies. You want to really hunker down.

TGR: If the financial markets continue to get clobbered, I would assume the gold equity stocks would continue to get clobbered?

BM: I don’t think they will. Here’s what is going to happen. There is actually a lot of money sitting on the sidelines. I’ve heard there's billions of dollars waiting to be invested in resource stocks. Resource stocks are selling for 5 cents or 10 cents on the dollar; that’s not going to last for very long.

What I want to get across to everybody is and it’s very important, is that when you go through chaos, the worse it gets, the more inclined you are to solve it. There are some easy solutions to this financial situation in the United States.

First of all, we downsize; we stop spending all this money at the federal level; we stop spending money at the state level. We end up with a much smaller government that isn’t trying to make every decision for every person all the time. Big government doesn’t work any more. We need to change that. We need to go back to self-sufficiency; we need to go back to citizens participating in government.

We need to go back to Economics 101 where you invest to make money, save money. The gold companies that have the business model of print shares and drill, print shares and drill—those guys aren’t going to succeed. But the guys who have producing assets and real stories, they’re going to succeed beyond their wildest imagination.

We need to kill the Federal Reserve System and go back to honest money. That’s 90% of our problem right now. We are all playing at investing with Monopoly money backed by nothing. It’s about as smart as you sitting down at a high stakes poker game, you have a wad of $20 gold pieces and everyone else is playing with their Mobil Oil credit card. Those fools will bet on anything, it’s not real money.

TGR: Can they perform in a falling financial market?

BM: Of course.

TGR: Assuming gold is rising.

TGR: Do you see think a lot of these juniors have bottomed? A lot of the producers have doubled off of bottoms.

BM: Yes, they have actually—they bottomed in October. If you go back to what I was saying back then, I said we were at a bottom. They had definitely bottomed. The HUI has doubled since then and no one noticed.

The general stock market is going to be good until maybe January or February. But it’s going to get far worse after that. We have some real problems that will be surfacing between now and then. But there’s an enormous amount of money sitting on the sidelines waiting to go somewhere safe. When people realize that resource stocks are the only safe haven, they’re going to go up more than anybody can imagine.

So, there are two things I would do with new money. First of all, gold and silver serve as an insurance policy against chaos. If you cannot put your hands on some physical gold, physical silver, it’s like living without an insurance policy. When you need food, if you don’t have gold or silver, you’re going to be a bit shocked. Second of all as far as an investment program, beyond the insurance policy, you want to be in real assets. That’s gold or silver or energy producers or near-term producers, or companies with a good business model.

TGR: Any names you could share with us?

BM: Look at the recent Haywood Securities report, "Junior Mining: Report on Cash Sustainability." Now, 96 companies currently traded at discount to their last reported net working capital. This is the greatest opportunity to invest that I have ever read or heard about; it’s absolutely unimaginable. It’s not going to last very much longer, but stocks could move up. The really bad gold stocks are going to move up 500%.

TGR: You mentioned that you looked at gold and silver as an insurance policy and recommend investing in real assets. Do you have a recommendation of a percentage of the portfolio that people should be holding in these? How much cash should they keep for future opportunities?

BM: Ah, very little. Cash is going to be the most dangerous thing you can invest in. Cash, T-bills, T-bonds are going away; they’re going to be worth zero. You’re going to walk into a bank one day and your ATM machine is not going to work, and your cash is going to be no good. I would think two to three months' living expenses, if you can do that in cash or silver, would be a very high comfort level. That percentage will change depending on what people have. Everybody—I really want to emphasize that—everybody needs to have some physical gold or silver.

TGR: Bob, you don’t see that we’re going to get this hyperinflation kicking in or it’s going to be so short, it won’t matter?

BM: Hyperinflation is starting to kick in now. I think you’re going to see it turn shortly. The government has been flooding the system with money and in short order it’s going to try to find a safe haven. Here’s what to look for. If you take a look at a chart right now, the 10-year, 30-year bonds have gone curve linear. They’re going straight up to the moon. Any time a market does that, it’s about to crash. When the bond market crashes, it’s going to be 15 on the Richter scale. It’s going to be enormous. It’s far more dangerous than the stock market crashing. When the bond market crashes, the hyperinflation starts.

TGR: And what’s your timeline on that? You were saying before, January or February?

BM: The bond market is literally going to start crashing any day now. I mean it’s very, very soon. I think that the stock market is good through January or February. I think the resource market will start up in an explosive way literally in a few weeks or so. It’s actually going up now. If you go back the last month or six weeks, it’s gone up a lot more than anybody would believe. Everybody thinks, “Well, my gold stocks are all down, I’m going to lose money hand over fist.” But they’re actually 50% better off now than they were in October.

TGR: Bob, earlier you mentioned investing in real assets. You said gold and silver and energy producers. That’s a pretty broad-based statement; could you give us an idea of what you mean when you say energy producers?

BM: Coal producers, oil producers, natural gas producers—energy is absurdly cheap now; it was absurdly expensive at $147. You can buy energy producers really cheaply, and I have written up a number of them on 321energy.com. I like anything real, anything that’s based on Economics 101. We’re going to take something of value and we’re going to increase its value, and we’re going to sell it to the public for a profit. That’s just a really good business model.

Here’s what I want to emphasize, and what’s important to get across—I don’t want to sound like I’m totally negative because I’m not totally negative. The worse it gets in the United States, the more impetus there will be to say, “Hey, what caused this in the first place? And what can we do to prevent it in the future?” And the answer to that is quite simple. We got off the gold standard in 1933 and in 1971, and that let government grow totally out of control. We need to rein government in; we need to go back to government of the people, by the people, and for the people. The way to do that is to go back to a gold and silver based currency. Once we do that we can start investing with some kind of common sense.

TGR: So the good news is that through all this chaos there will be some change in the way the government operates?

BM: Government will be much smaller; I think that any rational American can look at big government and say, “Hey, wait a minute. This doesn’t work.” And the funny thing is it’s not because I’m a liberal or I’m a conservative. I’m not sure there is any such thing as a perfect liberal or a perfect conservative, even though we act like they’re two totally different things. Big government doesn’t work; we need to go back to Economics 101 and only spend the money that you earn.

TGR: OK, other than getting mentally ready, getting into gold and silver and real assets, do you have any other thoughts on where to put our cash if we have any cash right now? What about other commodities, such as food commodities?

BM: Absolutely. I believe in peak oil, and peak oil is an analog of peak food. So, it requires X number of calories of energy to produce X number of calories of food, so when you run out of cheap energy, you run out of cheap food. Americans are going to be very angry. We have a very dangerous system in the United States where we essentially have a day and a half’s worth of food in our food stores. It’s a just in time now system. And it’s very vulnerable to civil disorders.

TGR: Is there an investment play within the food component?

BM: I think anything in food. Strangely enough, what I like is fertilizers. Fertilizers are a real cheap way of betting on food. Some of the big food companies, like R Gill, are just as corrupt as everybody in Washington, everybody in Wall Street, so I can’t recommend them. I don’t know that big food stocks are good, but maybe equipment manufacturers would be a good bet.

TGR: Bob, do you think there’s any gold in Fort Knox?

BM: That’s a really good question. I hope there is. But I don’t know. The really interesting thing is nobody in the government has ever even pretended that they might do something with it. If it was me, I’d go count the bars; I’d figure out who owns them and I’d come up with some kind of currency tied to gold, you know—1 gram notes, and 5 gram notes and 10 gram notes. I think mathematically there probably isn’t, but I don’t know. Nobody knows.

TGR: And there’s no accountability?

BM: Ah, are you kidding? George Bush is president of the United States.

TGR: Yes, but soon he won’t be. You know, I’ll write a letter to Obama and ask him. Well, Bob, as usual, it’s always great to do these interviews. We appreciate it.

Bob Moriarty and his wife, Barb, launched 321gold.com as a private website seven years ago, when they were convinced gold and silver were at a bottom and wanted to help others understand what they needed to know about investing in resource stocks. Since then, they’ve introduced a second resource site, 321energy.com. Bob travels to dozens of mining projects a year. He was one of the first analysts to write about NovaGold, Northern Dynasty, Silver Standard, Running Fox and YGC Resources, among others. Prior to his Internet career, Bob was a Marine F-4B pilot at the age of 20 and a veteran of over 820 missions in Viet Nam. Becoming a Captain in the Marines at 22, he was one of the most highly decorated pilots in the war.



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End The Fed - Houston Rally with Ron Paul Part Four

End The Fed - Houston Rally with Ron Paul Part Three

End The Fed - Houston Rally with Ron Paul Part Two

End The Fed - Houston Rally with Ron Paul Part One

Why the Federal Reserve needs to be abolished: Ron Paul



As the economy worsens and misguided government interference continues, it brings light to the reasons behind it, and it leads to the Federal Reserve, which Ron Paul calls to be abolished.

Commodities: Jim Rogers TV - Why Regulation Fails

Jim Rogers: Why real assets like commodities are so important today

Some of the things covered by Rogers in this video:

Regulation and its failures

Will pass blame and take wrong steps

Need to let companies fail so system can be cleaned up

Takes assets away from competent and giving them to incompetent

Inflation on the horizon

Hold on to real assets




Part One, Part Two, Part Three, Part Four

Commodites are going to be even more significant in the future as demand for natural resources will rebound with a vengeance!

Henry Paulson Announcement Sends Investors Fleeing to Safety

With traders and investors in a risk-adverse mode, anything they're unsure of sends running for safety and cover, and it was no different today.

When U.S. Treasury Secretary Henry Paulson announced the Troubled Asset Relief Program (TARP) would now be adding those in the nonbanking sector to their focus, investors fleed to the U.S. dollar and yen for protection.

The underlying assumption being made was things may not be as fixable through TARP than they orginally thought, and unexpected problems may be hindering the effort.

Right after Paulson's remarks went across the news wires, the stampede to the yen and U.S. dollar began.

The dollar and yen remain the investment of choice for those seeking safety, although the yen is getting more activity and holding strong, as the dollar fell Wednesday to 94.61 yen from 97.60.

Commodties: Recessions are Healthy

Recession wouldn't hurt commodities that much if governments didn't interfere in free market

Most Americans and people around the world need to get a better grasp of basic economics, as the ongoing boom/bust cycle which has lasted for decades is in motion again.

Much of this is happen because of the government attempting to "save" people from the pain of these times of adjustments and make it worse by their interference. This same old story is happening again in this period of time, and it always prolongs the pain and suffering, rather than help it.

Recessions can be likened to a human body that doesn't receive much nutritional input at all, and the body reacts by failing in some way that is painful. The body is speaking to us that there is excess somewhere, and we're doing something wrong.

To pour on more excess in order to temporarily take away the pain only prolongs the suffering. Yet that's what the government does when politicians try to buy votes by continually throwing money at problems.

Recessions are an event which tells the economy there are excesses going on, and that we need to change what we're feeding it if we want to retain a healthy economy.

In other words, a lot of people, businesses and banks have made mistakes when things were going good, and as a result a recession has occurred. Now that it's a reality, consumers and businesspeople need to make the types of adjustments that will make the economic body healthy again.

Things like building up their savings while cutting back on spending. Businesses will respond by cutting prices in order to spur spending; that makes things affordable for people buying not using debt (credit cards or home refinancing).

When things are forced to be liquidated, money is set free from poor investment decisions and put to work in more productive activities. Work production increases because people are concerned about losing their jobs. Businesses streamline operations and costs, and work hard to retain and grow their customer base by improving their products and services. If they don't, the company would go out of business, along with their jobs.

Government interference is an attempt to create an artificial economic surge, which ends up causing more damage than good, as the problems which caused the recession in the first place aren't dealt with and will extend the recession. This is what happened in the Great Depression in the U.S., which would have lasted only a couple years if the economy hadn't been tampered with.

In our current economic crisis, we are experiencing an unprecedented interference by governments around the world, and it looks like many more are ready to join the bandwagon. It's bizarre in that bad debt has been the main cause of the problem, and now more bad debt is being thrown at it.

What inevitably will happen is more money will be printed to pay off that debt, and inflation will spiral out of control. How long will it take to pay off the trillions being printed out of thin air? Nobody knows. The amount being put into the global marketplace is unprecedented.

That and the illusion things are getting better by businesses and consumers causes the same underlying problems to go on uncorrected.

So things will continue to go on in this cycle history repeats itself over and over again because the problems which caused the economic disease in the first place are doomed to happen again and again.

All of this happens because the government is attempting to keep people from experiencing pain. But like doctors will tell you: pain is necessary. If we don't have pain, we wouldn't know something was wrong with a particular part of our body.

Think of individuals who have bodies that don't feel pain, and when they're children they break their bones and injure themselves in extremely unhealthy ways because the body doens't send a signal of pain to communicate something excessive is going on.

That's what happens every time the government interferes and gives the economy the pain-free drug of more money. It keeps the pain from being felt or lessoned so people and businesses can keep on going without having to adjust their behavior.

We're doomed to see this type of economic response happen again and again until we learn and decide not to allow this to happen.

As for commodities, they'll participate in the decline in response to the misguided efforts of government interference.

Weakening Economy Continues to Drive Down Oil, Gas Prices

Weakening economic conditions continue to put downward pressure on oil prices, which in turn is also driving down the price of gasoline as consumers continue to tighten their wallets and spend only on necessities.

Oil for December delivery fell as low as $60.16 today, and ended up settling at $60.77 on the New York Mercantile Exchange. Brent Crude in London moved in step, falling by $4.44 to settle at $57.43 for December delivery.

Gasoline prices in the U.S. have continued to fall as well, with overnight averages coming in at $2.34 a gallon according to the AAA, and could fall to $2.00 a gallon by the end of 2008.

Commodities: Gold Mining Companies

Gold mining companies looking to preserve capital for yellow commodity business

Until the forced liquidation period is over, mining companies will have as their major goal the preservation of capital, rather than exploration and expansion. In other words, survival is the key during this difficult economic period.

None of the underlying fundamentals for demand has changed, as the needs of China remain. What all this will do is prolong the commodity bull market as we go through this temporary hiccup.

Like in any difficult time, commodity companies with heavy debt loads will suffer more than those that are run leaner. It's also probable that some of them either won't survive, or they will be bought up by healthy companies.

As far as commodities that at this time are being considered hot for 2009, tin, manganese, molydenum and bauxite are looking good. Others like cobalt, zinc and vanadium are probably going to tank over the next year.

Allan Trench, Australasian regional director of CRU research and advisory group said, "There is opportunity for the likes of tin, manganese and bauxite -- in the same way there was in uranium two years ago and as there was in phosphate earlier this year -- for IPOs."

Commodity companies that are well run will be looking to preserve capital throughout 2009.

Alan Greenspan "Shocked" at Depth of U.S. Credit Breakdown

In one of the most pathetic comments I've ever heard from an alleged financial expert, former Federal Reserve Chairman Alan Greenspan told Congress Thursday that he was "shocked" at the depth of the breakdown in the U.S. credit markets.

If that's not bad enough, now Greenspan, who formerly opposed government regulation, has found government religion, as he is saying (under pressure) that he was "'partially' wrong in his belief that some trading instruments, specifically credit default swaps, did not need oversight."

While many big-government politicians are attempting to hide the government's direct culpability in the worldwide disaster, the only politician that understands what is going on, Ron Paul, had this to say about more government interference:
"In the midst of highly unpopular bailouts of Wall Street, many justifications have been given about why Washington feels the need to act. Some claim that capitalism and the free market are to blame, but we have not had capitalism. If you compare our financial capital to our aggregate debt, this would be obvious. In the same way, we have not had a truly free market. The monetary manipulations of the Federal Reserve, a complex tax code, the many 'oversight' agencies and their mountains of regulations show that we are far removed from a free market economy."

Additional regulation is being touted to hide the fact that all this is the fault of the government in the first place. Now they're making it look like the free market is the problem, when in reality it's the abandonment of the free market that has driven this fiasco.

To get more specific, Democrats are in particular to blame for this because they pressured Freddie Mac and Fannie Mae to offer the sub-prime loans to unqualified buyers, which when they did, overall led to this disaster. Now the outrageous Democrats are trying to add more regulation to the mix, setting the nation and world up for something worse in the future.

This is the old socialist idea that everyone needs to be equal: eqalitarianism. The problem is this is a false premise, and a idealistic notion that has failed over and over again in the past, as there is a reason many people aren't able to buy homes or other financially related things: they aren't able to manage the responsibility.

Get people with no personal financial management understanding or ability into a house they can barely afford, and you have set them up for failure; they don't even think in terms of repairs or outrageous increases in taxes.

Here's how Greenspan described what happened:

"Without the excess demand from securitizers, subprime mortgage originations -- undeniably the original source of crisis -- would have been far smaller and defaults, accordingly, far fewer.

"A surge in demand for U.S. subprime securities, supported by unrealistically positive ratings by credit agencies, was the core of the problem."

What did he just admit? He admitted that government pressure to get people in homes is the underlying problem of the credit crisis. That's what he really said in words most Americans won't understand, so he felt safe to say it.

The excess demand came from the lower interest rates instituted by Greenspan, and the demand came from government pressure, especially the Democrats, to get people in homes that normally wouldn't be able to afford it.

As far as Alan Greenspan goes, there went his legacy, and deservedly so.

A number of economists that understood the extraordinary dangers facing the economy because of Greenspan's decision to keep interest rates so low, and thus cave in to the pressure to bring them low enough (and terms loose enough) to get uncreditworthy people into homes, have been saying for years this disaster was going to happen, and evidently the financial celebrity didn't think he needed to heed the warnings.

The most dangerous and bizarre thing in all this, is the non-capitalist Federal Reserve, and by extension government, have been moving away from capitalism for years, unbelievably, in the name of capitalism. So now those that want to make the government even more powerful are lying and saying it's a failure of capitalism, when in fact it's a failure of an increasingly socialist-leaning U.S. government.

Commodities: Positive Secondary Effects of Commodity Slowdown

On its third-quarter earnings call today, Caterpillar (CAT) confirmed what most of Commodity Surge readers already know, that over the short haul commodity prices will probably continue to drop, even after their steep plunge over the first half the year.

If you're in investor in companies like Caterpillar, who count on the business of companies connected to commodities, you'll find that they'll continue to make significant investments in raw materials and equipment to take advantage of the fall in prices.

In a statment Caterpillar said: "A weakening world economy could continue to push prices down and impact producers' investment plans.

"The current investment cycle was already under way in early 2005 when the oil price was a little over $40 and copper was $1.40. Current prices remain favorable for investment."

So while the eventual return of higher commodity prices could negatively impact company investments, for now we should see an upswing to grab low prices while they can.

Of course we have the credit problem to deal with in relationship to getting the funding to make these purchases. But companies with a low debt load are in a strong place to take advantage of the declining prices, and companies like Caterpillar will be helped significantly from that.

The problem for Caterpillar hasn't been sales, which for the quarter were at a record high, it was the high costs of materials which undermined the profits; falling by 6 percent even with the increased sales.

Steel prices were the primary culprit in downward profit results for the quarter.

The commodity slowdown is only going to be temporary, be prepared and watch for when the commodity bull market continues.

Commodity: Shorting VIX

If you want to make some potentially big money, you should look at the VIX and think in terms of shorting it.

What is the VIX? It's an index that measures the swings in the S&P 500 ... similar to the Dow Jones. What it specifically measures is the price of options contracts in the S&P.

So if you have a low VIX, it's another way of saying things are going pretty smoothly, but if the VIX goes high, you know there's a lot of volatility and fear in the market.

When the S&P is at a healthy state, it'll usually trade at between 10 to 15. It's former all-time high was in 1998 when it reached 44.28. The reason for that was the Russian default. Today it's measuring at 81, by far the highest level its ever reached. For the last two decades its averaged a little over 22.

The reason today's moves are happening is because options sellers are charging much higher prices to write option contracts. With the huge risk of current swings in the market, they charge the higher premium to offset that risk.

How can a person make money on it? By shorting it.

There are only two things to consider when thinking about this. Either you must know and understand the options market, or have a broker you implicitly trust to help set up the options trade. All you have to do is tell your broker you want to short the VIX.

This is a window of true opportunity that won't be around for a long period of time, so if you're interested, it's something to contact your broker about very soon, or if you know how to trade in options, get into it now. Shorting the VIX is at a prime moment.

VIX Chart

Commodities: Pardo Capitol Holding its Own

Pardo Capital Enjoys Solid Growth, Steady Rise

CHICAGO, Oct 16, 2008 (BUSINESS WIRE) -- While stocks tumble and surge, the roller coaster ride for Americans may be starting to grind to a halt. But for those who have invested in XT99, an automated algorithmic trading system, the trip has been a steady climb.

Pardo Capital Limited and XT99 had an impressive September -- while Wall Street plummeted,XT99 rose9.7% for the month.

"We're pleased with the performance and integrity of our automated system, to say the least," said Bob Pardo of Pardo Capital."Year to date, we're up 33.9%, and the ten year track record is a compounded annual return of more than 22%."

According to information provided by Pardo, when you consider this compounded annual rate of return, the overall return is an impressive 547%.

XT99 trades exchange traded futures markets on a global scale.This includes currencies, agricultural commodities, energy, stock indices and fixed-income instruments.

"We've designed this model to exploit long-term, macro-economic trends," Pardo said. "Unlike many long-term trend followers, XT99 is better at anticipating trends and that is proven in our substantial results."

According to Pardo, risk management is accomplished through traditional pathways such as market diversification and trading pace diversification, but the foundation of the risk model is a proprietary asset allocation methodology developed by his partners.

For more information on XT99 contact Marketing Director Rich Sternal at 630.355.2337 or rasternal@pardocapital.com or visit Pardo Capital.

SOURCE: Pardo Capital Limited
Pardo Capital Limited
Rich Sternal, 630-355-2337
rasternal@pardocapital.com
www.pardocapital.com

Copyright Business Wire 2008

Commodity Surge: China's Slowdown

While I don't see expectations of an ongoing boom in commodities changing in any way over the long haul, in the short term we could definitely see a period of time when commodities will be out of favor, as demand stalls.

Leading the way in commodity demand is China, and they are definitely looking like they're going to be slowing down. China is estimated to account for over 40 percent of the commodity demand in the world.

Much of this is coming about because of the vulnerability of China to the slowing consumer product demand in America, which much of its growth is dependent upon. If America slows, China slows, and there's no way around it.

This will cause a period of slowing growth in China, although it'll definitely keep growing, as the momentum they carry can in no way be stopped. It's a matter of how fast they grow, not if they grow.

Before the pullback of consumer spending in America, China was expected to grow in 2009 by between percent and 10 percent. Now it's more likely that'll drop by a percentage point or two to around 7 percent to 8 percent. While that's not shabby, it's pretty huge when you consider the size of China's economy.

This will definitely hit a variety of commodities companies like miners, who in many cases are betting everything on China. Companies like BHP Billiton and Rio Tinto will definitely be hit hard, and already have, as they've already lost 10 percent of their market value, equal to about £10bn. It's suspected that this isn't through yet either, and we'll see more pain before we start to see a gain.

What all this may mean for commodities investors, is the growth period could extend longer than thought, while the pace of growth slows down. That could me less volatility (once things settle down), but smaller yearly gains; at least for the next couple years.

There of course will always be exceptions to that, but that probably will be the general rule.

Don't forsake the idea of commodities, just watch the market and be ready to dive in again when things start to turn around.

Commodities: Plunge in Copper Prices

In spite of all the enthusiasm engendered by those who misguidedly think the government interference in the markets through the bailout plans will change the realities of the marketplace, all you have to look at the base metal commodity copper to see the folly in that belief.

Since copper is one of the more important commodities, being used in so many applications, it is definitely a bellwhether as a key measurement of the health of the economy.

With that in mind, we can see from the charts below that over the last year demand has slackedned, and the price reflects that accordingly; not only in America, but across the world.

While copper enjoyed a little temporary jump over the last 24 hours, it feel last week to a low of $2.12 a pound. It's been about 3 years since we've seen prices this low.

30-day Copper

The point? Don't let temporary fixes and the governments around the world attempting ease our minds as a reason to think this is going to change the economic realities we currently live in. It'll take years to flush out the problems in the system, and throwing money at the problem historically has fueled the fire, rather than help put it out.

60-day Copper

Copper is a key measurement in the demand for products around the world, and a bellwhether for commodity demand in general, as it's used in cars, new homes and appliances, along with many other products. And as you can see from the charts, demand has been falling for some time.

1 Year Copper

Commodities: Jim Rogers on "Inflation Holocaust"

Talking on CNBC Friday, billionaire investor Jim Rogers, CEO of Rogers Holdings and commodities expert, said we are facing an "inflation holocaust" because of government interference in the markets. He's right of course, as governments will have to issue more debt and print more money in an attempt to not allow the market to clean itself out as it has for a "few thousand years."

It is amazing to see the government to take these unprecidented steps in order to make it look like it has some value to the market. It's main and really only purpose in this arena should be to enforce contracts. Nothing else.

But as Rogers and many others are pointing out, this is in reality setting us up for an inflation disaster as the artificial propping up of poorly run companies will make us all pay a lot more for goods and services in the long run. The government and politians are counting on the general population to forget this as this go ahead in time.

Rogers added that we should simply allow businesses and people to go bankrupt in order to clean out the excesses and unhealthiness in the markets. That is how it's always been done in the past, and each time things start over again with many helpful lessons learned from the mistakes made.

In a desperate attempt to make prove they have relevancy to the general populations across the world, governments and politicians are scrambling to interfere and tread in places they have no idea of the consequences of their actions.

There is nothing more short-term in thinking than what is being wrongly foisted on people in American and across the world at this time. As Jim Rogers says, we are setting ourselves up for an inflation holocaust that will happen based solely on the actions of the U.S. governement, and other governments at this time.

Since when don't human beings have to go through failures and mistakes? When have we designated taxpayer dollars of responsible people to be used to bailout finance and business leaders for the poor decisions they've made?

As Rogers concluded concerning the upcoming G7 meeting where government leaders of the stronger economies are getting together in order to attempt of figure out a solution, "What they (G7 leaders) need to do is go down the bar and leave the rest of us alone."

Referring again to the usual solution by governments, printing more money and offering more debt will do more harm than anything else. It simply needs to be allowed to play out as it usually is. There's nothing the G7 countries will be able to do other than that.

These are markets made up of billions of actors and consumers. Nobody, no matter how much they try to convince us, is able to centrally plan or salvage this mess. Socialism has already proven itself a failure, and this is nothing more than corporate socialism.

As many people know in their individual lives, when they live in excess they will have to go through some real pain in order to overcome those excesses. For someone to interfere with that isn't kindness, but a form of hate, as they enable the person to continue on in their folly.

It's no different with government interference in the marketplace. To shore up poor management and irresponsible decisions isn't a form of help, it's only reinforcing terrible choices and behavior, and possibly setting the rest of us up for more and more significant pain in the near future.

See Video Here

Rogers maintains commodities will continue to be a good place to put your money. We're simply on pause for the time being.