With American Lives in Danger, The Nobel Peace Prize Winner-in Chief Enjoys Brazil Trip

After illegally sending American armed forces into another war in the Middle East, the Great Nobel Peace Prize Winner Barry Obama is living it up in Brazil. The President has been seen drinking champagne, joking with the President of Brazil, and attending lavish banquets, all while Americans troops are in harms way. Does this criminal have any shame? Not Barry?

You would think that the war in Libya would be of primary importance to the President, but that does not seem to be the case. Traveling around Latin America seems to occupy most of Barry's time. And if you think Obama is not properly concentrating on protecting Americans in foreign wars, you can be rest assured. The President was briefed for a few minutes on the phone in between engagements in Brazil. So much for looking out for American interests.

Here are some of the highlights of Barry's luxury tour of Brazil. It is almost like there is no war in Libya at all. It is great living like a Roman Emperor. No need to get Congressional approval for air strikes against Libya, even though the Constitution DEMANDS it. But don't fret, Barry got his approval from the UN, which makes everything all right. I wonder what is next for Barry in Brazil? Perhaps the wonderful beaches of Rio de Janeiro. Don't let the risk of dead Americans prevent you from enjoying Brazil.

PICS from Barry's trip to Brazil

Barry and the Brazilian President pose for photographers

Barry's own Marie Antoinette sips champagne in style with Brazil's President. Nothing but the best for Michelle. While 17% of Americans are unemployed/underemployed.

War in Libya? American pilots in danger? No worry. Barry's still has time to crack jokes at a press conference. Besides he has already won the Nobel Peace Prize. He can starts wars with impunity.

Barry reviewing troops during his welcome ceremony in Brazil. It is good to be a tyrant.

Black Swan Insights


Barry Obama Leads US into Another Illegal Quagmire in Libya

Today our beloved anti-war President and Nobel Peace Prize Winner--in chief announced that he has ordered military action against Libya. The great leader did this without mandatory congressional approval, which is required to attack a sovereign country. No doubt the Democrats (and their vocal anti-war activists) will "fully support the President" like the hypocritical sheep they are. When Bush was starting illegal wars in the Middle East it was wrong, immoral, and an impeachable offence. But now that good old Barry Obama is in office and has a D after his name, war is suddenly a virtuous action to protect civilians. The always reliable pro-war Republicans will start to denounce military action because war is only acceptable when a Republican President starts one. Wash. Rinse. Repeat. These are the pathetic and corrupt leaders you have elected.

One would think that two full scale wars would be enough for Barry, but evidently power has gone to his head and he wants to "show leadership" by blowing shit up. Hey it worked for George W. Bush who perfectly timed the Iraq war so that he could win re-election by campaigning as a wartime President. Obviously, Barry could care less about the men and women of our military who are risking their lives for nothing in Libya. Instead the President is too-busy jet-setting in Brazil, schmoozing it up with the Brazilian President. But then again, Obama is not sending his daughters to battle or any of his family members so the rest is simply immaterial collateral damage. He can make it up by visiting a military hospital and handing out purple hearts to wounded American soldiers. He will smile, serve them food, chat for 20 mins and crack a few jokes. The pictures can then be used for his 2012 campaign to show how much he loves the troops. Is this really change? Or is exactly what George W. Bush did with the Iraq war?

Before you get the idea that I am some disgruntled anti-war liberal, let me state that I am not against all wars, just aggressive wars. If the communist Chinese attacked my home state of California you can bet that I would be ready to defend my home and community. This would be a just war because you are defending your-self from an aggressor. But the US, in attacking Libya and is launching another illegal war that will no doubt lead to unintended consequences and casualties on both sides. Why on earth should American taxpayers have to pay for this when it was not properly approved by Congress? Because America is no longer a country ruled by the people. Instead it is run by a world elite which decides policy. All it took to arrange the attack on Libya was for Obama to call up the leaders of France, Britain, and Canada. They agreed and suddenly we are all at war--without any public debate on the issue (and no, debate at the UN is not sufficient). Tyranny at its very best!

What is more bewildering is why so many Americans seem to support this illegal no-fly zone set up by the UN. According to a poll on March 14 by CNN 56% of Americans support a no-fly zone, while only 40% are opposed. This really shows how puerile the American public has become thanks to the deliberate dumbing down of the population through public education and popular culture. We have bankrupted this country by spending trillions of dollars in two wars over the last 10 years, on top of this we have spent the usual $500-600 billion on the defense budget. Millions of Americans are permanently unemployed/underemployed (17% ), our housing market is in a depression, we are 14 trillion in debt, and yet the American public in all their wisdom wants another war. Are we this fu-king stupid!!!! Apparently.

Lets get it straight to all of you good old boys out there who like the US invading other countries and flexing its military might. You (the average American) don't benefit from foreign wars. No, you are the sucker who pays for it through increased taxation and inflation. You are not part of the elite who benefits from war. The only beneficiaries from war are the defense and oil companies and other select corporations (and their owners). They use the American taxpayer as a chump to fund their adventures around the world. They profit while you pay for the war. You send your sons to die in foreign countries so that the elite can make a buck. So don't think for one second that you are part of "Empire America," dominating the world and imposing our will. Only the elite enjoy this privilege. The average American gains nothing from these for-profit wars, but pays dearly through their blood and treasure. Remember, we went into Iraq to get the oil, but the American people are still paying $4 gallon for gas. It was the oil companies who won, not the American people.

One last thing. Before I get hate mail saying I support Gaddafi please save yourself the time. I despise Gaddafi and his ilk and would enjoy nothing more than to see his dead body dragged through the streets of Tripoli. But that is up the Libyan people to decide, not the US military. If the US wanted to overthrow Gaddafi, why did we not arrest him when he was giving a speech to the UN in 2009? He was the same nefarious dictator back then, as he is today, but back then he was our welcomed guest! So there were plenty of times to kill or arrest Gaddafi in the past without war. I am surprised that our over-hyped Nobel Prize Winner could not come up with a better solution than war. It really shows you what a liar Obama is when he talk about peace, etc.

Black Swan Insights   


Investor Rick Rule: Uranium is the Trade of the Decade

King World News just released an interview with legendary investor Rick Rule of Global Resource Investments. Of note is Rule's comments regarding the Tokyo Nuclear Disaster and its impact on the uranium industry. As readers will remember, we here at Black Swan Insights are incredibly bullish on uranium and love the fact that most uranium stocks have fallen 60-70% in the last 5 trading days. It represents a great time to get in, regardless of what the doomsayers say. Well it seems Rick Rule is of the same opinion. He notes that the short-term (90-180 days) outlook is bearish for uranium as investor emotions run wild and everyone fears another Chernobyl meltdown (very unlikely at this point). The anti-nuclear crowd will put pressure on leaders around the world to review and update nuclear plant safety procedures. Furthermore, these activists are likely to capitalize on the incident to promote their ludicrous solar and wind power ideas.

While this is certainly a setback for uranium, the long-term investment thesis remains intact as demand for uranium will far exceed supply in the next five to ten years. In particular, Rule mentioned that the demand for nuclear energy is more dependent on emerging market demand, rather than the western world. Russia, India, China, and other Asian countries need nuclear energy and have little practical alternatives in supplying clean, reliable energy to support future economic growth. This is especially true for China, which has said it is will order a temporary suspension future nuclear power plants pending a review. Rule said it is likely that the Chinese will make a few adjustments to its nuclear policy, like not building nuclear plants near earthquake prone zones. After the review the Chinese can say to their people that they have made the necessary design changes to ensure public safety and will continue building more nuclear power plants.

In the case of the US and Western Europe, you will likely hear a lot of empty rhetoric about how we must stop the development of more nuclear power plants. This will not work in the long term and will not reduce North American demand for uranium. Rule goes on to say that 19-20% of US energy demand is supplied by nuclear power. If you eliminate nuclear power in the US, it would lead to lights out across the US. It is just not a realistic option.

Regarding the price of uranium, it has nowhere to go but up over the next few years. Because of the anticipated supply shortfall after 2013/2014, the world needs higher prices to encourage more supply. At $50 (down from $68 two weeks ago) the price of uranium is not high enough to increase future supply. Rule also mentioned a very important fact concerning the price of uranium and its impact on nuclear power plants. While higher prices can lead to demand destruction for most commodities, this is not the case for uranium. The cost of uranium as a % of total operating costs for a nuclear power plant is very low, meaning that the industry can easily absorb higher uranium prices without it materially affecting demand. This is a vital point that will help to accommodate much higher future prices for uranium.

For speculators, Rick Rule says the recent massacre in uranium stocks is a buying opportunity. The stocks will recover once nuclear meltdown fears abate and the market returns to normality. He expects this to occur in the next few weeks.

FD: I purchased uranium shares this week after watching many of them fall more than 60%. 10% of my portfolio is now invested in uranium stocks. I own Bannerman Resources, Tigris Uranium, Stathmore Minerals, Mawson, Cameco, and Denison Mines. I will most likely purchase additional shares on future weakness.

Related Articles on Japan and uranium:
Ruminations on the Japanese Earthquake: JGBs, Nikkei 225, and Nuclear Meltdown
Breaking News: Japanese Stock Market in Free Fall--Down 13%--Panic Spreads Worldwide

Black Swan Insights


Breaking News: Japanese Stock Market in Free Fall--Down 13%--Panic Spreads Worldwide

The Nikkei 225 has crashed over 13% so far in trading as concerns mount about that a nuclear meltdown in Japan has already occurred with large amounts of radiation released. Reports are circulating that radiation fallout may reach Tokyo within 8-10 hours. The market open down 2%, but started to crash after the lunch break as investors sold everything and moved to cash. Nuclear power stocks are naturally getting hit the hardest with Tokyo Electric trading ask only (no bids). Wow! There has been mention of the BOJ stepping in to sell the yen. This sort of market action remind be of the Oct 2008 word market crash. Fear, uncertainty, massive losses, etc. 

The Nikkei has now fallen 20% over the last two days. This is officially a crash folks!  

The Nikkei crash is reverberating across Asia as most bourses are now down 2-4%. In Australia, uranium stocks are like Paladin are being murdered, down around 15-20%.

As we postulated yesterday, markets are likely to continue to decline further. While the market is panicking, now is the time to start getting your buy lists ready. Particularly uranium stocks which are being battered. This is similar to what happened back with Three Mile Island in the US. The smart thing to do was not to panic and sell, but to buy! I think we are witnessing a repeat scenario. I am looking at Japanese large caps also. Imagine buying stocks after the 87 crash. Great deals and big profits to the brave investor who stepped in and bought stocks. Well, Japan has just crashed.   

US Dow futures are down 276. I wonder how many HGT algos are going to step in and "provide liquidity." They are more likely hitting the sell button on US futures, further exacerbating what will already be a scary open for stocks.

Good Luck



Ruminations on the Japanese Earthquake: JGBs, Nikkei 225, and Nuclear Meltdown

With Japan on the brink of multiple nuclear meltdowns, who the hell is still buying JGBs? When you think of a bankrupt country like Japan with total debt-to GDP of 210%, a yearly budget deficit of over 10% (and rising because of the disasters), and a government issuing more JGBs per year than in collects in tax revenue, you come to the conclusion that buying JGBs as a safe haven asset is nothing short of suicidal. But that is exactly what happened in our bizarro financial markets on Friday when Japanese debt across the curve rose as investors flocked to government bonds despite horrendous fundamentals. If this does not prove that the Japanese bond market is out of its mind, I don't know what will. Let's consider a few easily deducible facts concerning the disaster in Japan. Economic growth will slow dramatically (on the margin a positive for JGBs), but the government will likely face a serious deterioration in its finances. Lower growth, means less tax revenue, which inevitably leads to more JGB issuance (negative for bonds). Furthermore, you can guarantee that the Keynesian aficionados in Japan will be coming up with some kind of stimulus package to help rebuild hard hit areas. This means even more debt issuance coming to the market. No doubt the zombie markets are betting the BOJ will come to the rescue and simply print more counterfeit yen to "ease financial conditions." To be sure it has worked in the US as the Fed has successfully done to keep the world's largest ponzi economy floating on POMO asset pumping.

The question, then, is: When will the market start to turn on Japan and recognize that a default is not simply a possibility, but a 100% eventuality? The only debate is when: 1, 3,5,or 10 years? I wonder if this latest disaster in Japan could be the camel that broke the back of the JGB market. After all, foreigners have largely abandoned the JGB market as rates are unattractive compared to better countries like Australia, Indonesia, etc. Without foreign support, it is up to Japanese consumption of endless government bonds to keep the ponzi scheme running. Japan's saving rate has been declining along with the aging of the population. Look at the chart below. What makes matters worse is that Goldman Sachs is predicting that the savings rate will actually turn negative in the coming years.


If these factors were not enough to dissuade people from buying JGBs, how about the fact that Japan is literally facing a nuclear meltdown in 3-5 of its nuclear reactors. If the worst case scenario happens, large amounts of radiation could be disbursed throughout the country, rendering many areas inaccessible. Apparently, the government central planners in Tokyo never thought about the dangers of building nuclear power plants on an island that is prone to large earthquakes! What could possibly go wrong? But don't worry, the Japanese government has a plan: They are telling people to stay in their homes and cover their faces. Thanks a lot; that will keep the people of Japan confident in their government.

If the government continues to mislead people and generally F-k up the whole disaster relief situation, why on earth would the people of Japan continue to buy JGBs? If anything,  they may have to sell their government bond holdings to pay for necessities like food, water, shelter, and clothing. I am thinking that the original safe haven buying of JGBs was more of a knee-jerk reaction which should not be short-lived. In fact,  JGBs should be selling off as corporations and  individuals raise capital for reconstruction activities. This would have the affect of raising Japan's interest costs, further burdening an already battered country.

Regarding the Nikkei, this is probably the easiest trade in the world--Sell short! If you look at what happened back in 1995 with the Kobe earthquake, the Nikkei fell 8% in the first few days and went down 25% over the next 6 months (while the yen surged). Below is a chart  from Bespoke which shows the Nikkei in 1994-1996. If a similar event occurs now, it would make Japanese export stocks a pretty good value. Marc Faber has recently said that the Japanese stocks were cheap based on valuation and that the 20 year bear market in stocks was coming to an end. With the earthquake depressing stocks further, investors may be able to make some money bottom fishing Japanese equities after the initial decline. You would want to focus on companies with little exposure to the domestic Japanese economy (except reconstruction activities) and levered to global and Asian growth.

Chart Nikkei 225

You can see from the chart above that there was no reason to try to pick a bottom early in the Japanese market. It took about a year for equities to finally bottom out, giving investors a good opportunity to select high quality stocks.

One last thing I wanted to discuss is the impact the Japanese nuclear fallout will mean for uranium and nuclear energy (both of which I am bullish on). It is obviously a short-term negative as the environmentalists use this as a way to prevent the development of more nuclear power plants around the world. Despite the fact that nuclear energy is the only practical option for replacing oil, nat gas,  and other fossil fuels. And no, little greenies (including Barry Obama in the WH),  solar and wind will not save us. Sun has an arch-nemis called night, which renders it as useless as a little girl to a Catholic priest. Wind is hindered by the fact that it is not constant and requires natural gas to turn the damn windmills as a back up energy source. But how about ethanol? Brilliant suggestion-- let's burn much needed food to produce fuel when food prices are near all-time highs,  and millions around the world are starving to death. Genius! If you believe in ethanol as a legitimate fuel source,  you obviously need to be lobotomized and given powerful anti-psychotic medication. Furthermore, people like you should lose their right to vote based on a severe lack of reasoning skills.

While the greenies will impact the short-term development of nuclear plants in the Western countries,  construction in developing countries (which are building the majority of new plants) like China, Russia, and India will be largely unaffected (see proposed nuclear plant construction below). According the World Nuclear Association, nuclear power capacity is expected to double by 2030 as countries look for alternatives to traditional energy sources. Dictatorships like Communist China could really care less about anti-nuclear protesters blocking the constriction process. If anybody puts up any resistance,  they simply send in the military to beat back the crowds and take the leaders to undisclosed torture facilities for re-education. What this means is that longer term, the Japanese incident will not materially impact future construction of nuclear plants, except for the obvious fact that you should not build nuclear reactors near earthquake prone regions!

Nuclear Power reactors under construction, or almost so

Start Operation* REACTOR TYPE MWe (net)

2011 India, NPCIL Kaiga 4 PHWR 202
2011 Iran, AEOI Bushehr 1 PWR 950
2011 India, NPCIL Kudankulam 1 PWR 950
2011 Korea, KHNP Shin Kori 1 PWR 1000
2011 Argentina, CNEA Atucha 2 PHWR 692
2011 India, NPCIL Kudankulam 2 PWR 950
2011 Russia, Energoatom Kalinin 4 PWR 950
2011 Korea, KHNP Shin Kori 2 PWR 1000
2011 China, CGNPC Lingao II-2 PWR 1080
2011 Japan, Chugoku Shimane 3 ABWR 1375
2012 Taiwan Power Lungmen 1 ABWR 1300
2011 Canada, Bruce Pwr Bruce A1 PHWR 769
2012 Canada, Bruce Pwr Bruce A2 PHWR 769
2011 Pakistan, PAEC Chashma 2 PWR 300
2011 India, Bhavini Kalpakkam FBR 470
2012 Finland, TVO Olkilouto 3 PWR 1600
2012 China, CNNC Qinshan phase II-4 PWR 650
2012 Taiwan Power Lungmen 2 ABWR 1300
2012 Korea, KHNP Shin Wolsong 1 PWR 1000
2012 Canada, NB Power Point Lepreau 1 PHWR 635
2012 France, EdF Flamanville 3 PWR 1600
2012 Russia, Energoatom Vilyuchinsk PWR x 2 70
2012 Russia, Energoatom Novovoronezh II-1 PWR 1070
2012 Slovakia, SE Mochovce 3 PWR 440
2012 China, CGNPC Hongyanhe 1 PWR 1080
2012 China, CGNPC Ningde 1 PWR 1080
2013 Korea, KHNP Shin Wolsong 2 PWR 1000
2013 USA, TVA Watts Bar 2 PWR 1180
2013 Russia, Energoatom Leningrad II-1 PWR 1070
2013 Korea, KHNP Shin-Kori 3 PWR 1350
2013 China, CNNC Sanmen 1 PWR 1250
2013 China, CGNPC Ningde 2 PWR 1080
2013 China, CGNPC Yangjiang 1 PWR 1080
2013 China, CGNPC Taishan 1 PWR 1700
2013 China, CNNC Fangjiashan 1 PWR 1080
2013 China, CNNC Fuqing 1 PWR 1080
2013 China, CGNPC Hongyanhe 2 PWR 1080
2013 Slovakia, SE Mochovce 4 PWR 440
2014 China, CNNC Sanmen 2 PWR 1250
2014 China, CPI Haiyang 1 PWR 1250
2014 China, CGNPC Ningde 3 PWR 1080
2014 China, CGNPC Hongyanhe 3 PWR 1080
2014 China, CGNPC Hongyanhe 4 PWR 1080
2015 China, CGNPC Yangjiang 2 PWR 1080
2014 China, CNNC Fangjiashan 2 PWR 1080
2014 China, CNNC Fuqing 2 PWR 1080
2014 China, CNNC Changiang 1 PWR 650
2014 China, China Huaneng Shidaowan HTR 200
2014 Korea, KHNP Shin-Kori 4 PWR 1350
2014 Japan, Tepco Fukishima I-7 ABWR 1380
2014 Japan, EPDC/J Power Ohma ABWR 1350
2014 Russia, Energoatom Rostov 3 PWR 1070
2014 Russia, Energoatom Beloyarsk 4 FNR 750
2015 Japan, Tepco Fukishima I-8 ABWR 1380
2015 China, CGNPC Yangjiang 3 PWR 1080
2015 China, CPI Haiyang 2 PWR 1250
2015 China, CGNPC Taishan 2 PWR 1700
2015 China, CGNPC Ningde 4 PWR 1080
2015 China, CGNPC Hongyanhe 5 PWR 1080
2015 China, CGNPC Fangchenggang 1 PWR 1080
2015 China, CNNC Changiang 2 PWR 650
2015 China, CNNC Hongshiding 1 PWR 1080
2015 China, CNNC Taohuajiang 1 PWR 1250
2015 China, CNNC Fuqing 3 PWR 1080
2015 Korea, KHNP Shin-Ulchin 1 PWR 1350
2015 Japan, Tepco Higashidori 1 ABWR 1385
2015 Japan, Chugoku Kaminoseki 1 ABWR 1373
2015 India, NPCIL Kakrapar 3 PHWR 640
2015 Bulgaria, NEK Belene 1 PWR 1000
2016 Korea, KHNP Shin-Ulchin 2 PWR 1350
2016 Romania, SNN Cernavoda 3 PHWR 655
2016 Russia, Energoatom Novovoronezh II-2 PWR 1070
2016 Russia, Energoatom Leningrad II-2 PWR 1200
2016 Russia, Energoatom Rostov 4 PWR 1200
2016 Russia, Energoatom Baltic 1 PWR 1200
2016 Russia, Energoatom Seversk 1 PWR 1200
2016 Ukraine, Energoatom Khmelnitsky 3 PWR 1000
2016 India, NPCIL Kakrapar 4 PHWR 640
2016 India, NPCIL Rajasthan 7 PHWR 640
2016 China, several
2017 Russia, Energoatom Leningrad II-3 PWR 1200
2017 Ukraine, Energoatom Khmelnitsky 4 PWR 1000
2017 India, NPCIL Rajasthan 8 PHWR 640
2017 Romania, SNN Cernavoda 4 PHWR 655
2017 China, several
* Latest announced year of proposed commercial operation. Rostov = Volgodonsk

Black Swan Insights


Utah to Recognize Gold as Money--a Blow to the Federal Reserve Monopoly!

The Federal Reserve has declared a state of emergency. Rumors are circulating that Fed Chairman Bernanke has a squadron of helicopters on standby, filled with Federal Reserve notes to help quell the rebellion. The people of Utah should be prepared for a barrage of dollar drops within the next 24-72 hours. Residents are advised to take cover and exchange their Federal Reserve Notes while they can still purchase gold.

Today the Utah Senate approved a bill to officially recognize gold as money, all that is required is for the governor to sign the bill,  and it is done. This is a big first step for supporters of gold. Utah may become the second state (after Colorado) to recognize gold as an equal to the Federal Reserve Note. The Utah bill de-criminalizes the ownership of gold by removing punitive state capital gains taxes and sales taxes. More importantly, gold will be able to be used to pay your state income taxes.

This action by the state of Utah could prove to be a real catalyst within the US to reassert the role of gold as money. By abolishing taxes associated with gold ownership, Utah has really made it possible for citizens to use gold as a real form of currency. Utah will be a good test case to show how willing the pubic is to consider alternative forms of currency. Will they choose to pay for goods and services with FRNs, which can be printed by the trillions or real money like gold. I wonder what people will do when given the choice? The only reason people accept  FRNs at all is because the federal government mandates it and threatens its own citizens with force. The Fed and US government both know that fiat money only works when people are not given any other choice. Thanks to a government enforced monopoly over money, the elite of the country are able to steal money from the general population through inflation. It works great for the banksters, but it is killing the American middle class.

  • No doubt the banksters and their fully owned subsidiary, the Federal Reserve will be contemplating ways of preventing other states from following Utah. But for now, the monetary tide is turning in our favor in a very golden way. It is about time because the only thing that can save the US from ending up like a bankrupt degenerate third world country locked into perpetual austerity is to abolish the Fed and its ability to print money. I have an inking that the time may come when the dollar is as good as gold While we might aways from this outcome, the action in Utah is certainly encouraging. May more states follow suit and just say not to Federal Reserve Notes.

Related Articles:
Time to Dump Your Federal Reserve Notes

Black Swan Insights


The Fed Lets The Market Fall--Finally!

Even the Fed's non-stop POMO could not prevent stocks from falling today, as major markets declined 1.7% across the board. This is in contrast to the never ending POMO melt-up over the last 4 months where the markets churn higher by 0.2-0.4% on ever decreasing volume.  It looks like we may finally have Marc Faber's anticipated correction (about 2 months late but I will take it). All it took to scare markets was an S&P downgrade of Spanish debt (not surprising) and some chatter about riots and demonstrations in Saudi Arabia. Not to mention the fact that Portugal, the soon to be EU welfare recipient, watched its CDS trading to 500 bps--signaling that a EU bailout is not only guaranteed, but that a debt restructuring is almost a given sometime in the next few years.

The only real surprise during today was the decline in gold and silver. Contrary to what your hear on garbage TV channels like CNBC, precious metals are not part of the risk trade, like other commodities. Gold and silver are the anti-currency fear trade. They are your go to currencies when you do not trust fiat paper money to retain its value. Gold, in particular is a safe haven because demand is not correlated to economic growth, while silver is somewhat more sensitive to global growth. So why on earth is gold and silver down more than 1 and 2% respectively? Fears in Saudi Arabia should be bullish as investors digest the potential for a crisis in the world's largest producer of crude oil. No doubt JP Morgan and HSBC (the largest holders of short positions in the metals) played some role.

Despite the fact that the market is likely headed for a 5-10% correction, I am not shorting the market. The risk/reward is not on your side as the government along with the all-powerful Federal Reserve are doing everything they can to pump stocks--even if it means destroying the dollar in the process. So with that in mind I am getting a list of stocks to buy during the correction

Here are a few stocks and plays I have my eyes on:

1. 3D Systems(TDSC)--leader in 3d printing--promising growth story despite high valuation. Volatile stock!

2. Allana Potash---I am still long this name and will continue to add on weakness. Drill results have dramatically increased their Ethiopian potash deposit. This is probably one of the largest potash reserves outside of Canada.

3. Manas Petroleum--oil exploration company with interests in Albania, Mongolia, and Kyrgyzstan. It is a gamble play with big potential and high risk. This is one of those plays that either goes up 500% or goes to 0. It like these types of plays because if you are right you make a huge profit. On the downside you know exactly how much you can lose (100%). So treat it like an option. (2% of my portfolio is in this stock)

4. Gold/Silver--Have to agree with Faber that you should always be adding to gold and silver on weakness. On the gold stock side, be very careful as they have been lagging bullion for a while. Just look at GOLD, AEM, etc. Looking at these pathetic charts, one would falsely conclude that gold must be plunging. This is the problem with owning gold stocks--they are not necessarily correlated with the gold price. There are management problems, production difficulties, and other mining risks. Another reason to avoid gold stocks is the rising price of oil which, hurt margins. For gold stocks to really outperform bullion, you would need to see a prolonged period of rising gold (to say $1800-2000) and stable to declining oil to help margins. Seeing $2000 gold is of no benefit to the gold producers if oil is at $185.

5. Uranium--While it is hard to be bullish on commodities after their huge run-up over the last two years, uranium stands out as the most attractive energy commodity. Here is a good article on why uranium has a good future. In short, by 2013/2014 there will be a large uranium shortage worldwide as Russia stops converting nuclear warheads into uranium. This is a simple suppl/demand situation where the price of uranium has to rise.

Because you cannot buy uranium directly, you have to focus on the stocks. In particular, I like the small exploration plays with marginal deposits, which are highly leveraged to the price of uranium. One I am looking at is Bannerman Resources. It has a large, low grade deposit with high production costs. The mine is not economical at $50-$70 uranium, which is why the stock is cheap. But if uranium continues to go up (as I think it will) Bannerman's deposit will look much more economical.

6. Emerging Markets-- Most of the EM complex has already sold off over the last few months due to inflation fears, etc. These markets should continue to fall along with the developed markets. This in my opinion, provides a good entry point for adding new positions. Favorite emerging markets are India (INP), Russia (RSX), and Chile

7. Short Volatility (XIV)--this is a relatively new and more efficient way of shorting volatility. If the VIX got to around 30, I would be willing to go long XIV. This is a product that trades inverse to the VIX. Because the VIX is mathematically guaranteed to go down thanks to the nature of volatility (short upward spikes followed by prolonged periods of declining volatility.) Furthermore, volatility futures are almost always in contango, which benefits XIV. To me, XIV is superior to shorting VXX and other volatility products because you do not have to short it (and get the borrow), which can be very expensive. All you have to do with XIV is go long. The only time you will lose is during brief spikes in volatility.

Black Swan Insights


Surging Oil Wil Not Stop Zimbabwe Ben From Printing More Money-QE 3 Next?

In a world of surging oil prices, one would think that inflation would be the chief concern of central bankers around the world. That would be true if we had a responsible Fed Chief, but, alas, we have a criminal-megalomaniac in the person of Comrade Ben Bernanke. Don't take my word for it. Let's take a look at one of Bernanke's research papers titled "Systematic monetary policy and the effects of oil price shocks," which argues that high oil prices are not inflationary. This is false: recessions are not caused by the oil shock, but rather, the monetary response by central banks is to blame. By raising rates to counteract the perceived inflation threat, monetary policy makers are the ones responsible for depressing the economy--not oil.

The general conclusion from Bernanke's long-winded paper is that central bankers should not tighten monetary policy in response to oil prices shocks. Of course! What else would you expect from Zimbabwe Ben? In the Zimbabwe School of Economics, interest rates should remain at zero forever to "encourage economic growth." Inflation, you may say? Inflation is a myth, according to the Zimbabwe school, created by evil people who want responsible monetary policy. The Zimbabwe school believes prudent monetary policy is responsible for recessions, unemployment, and world wide suffering. Unlimited amounts of liquidity will solve all of these problems with no negative consequences. Insanity personified!

This ludicrous paper from Bernanke completely ignores oil's impact on businesses and consumers. This is what leads to the eventual economic downturn. Rising oil prices hurt companies by substantially increasing raw materials costs across the board. Companies have two choices: They can either try to pass through the higher costs to consumers and sustain margins or eat the cost themselves and watch margins contract. The US consumer has been destroyed over the last three years with the implosion of the housing market. Unemployment, and, more importantly, underemployment remains in the high double digits. Under these economic conditions, companies will find it very hard  fully to raise prices (especially brand names). If they are unable to pass the costs to consumers, businesses quickly see margins (and therefore profits) shrink. When margins are contracting, businesses are less likely to increase capital spending, which reduces business investment. In fact, most companies will start to downsize and lay-off workers to counter the effect of  falling margins. This is where we see how oil could lead to a serious recession. Rising oil prices reduce corporate profitability, severely hampering consumer spending. This is what causes recessions.

Bernanke's thoughts regarding oil and the economy makes QE 3 much more likely. If the market falls 10-20% over the next few months and other central banks raise rates (as the ECB recently threatened), Bernanke's natural reaction would be to print more money to stimulate the economy. He would be justified as he wrote a 65 page paper about this exact possibility and has a fancy computer model which shows he is correct. Bernanke will not doubt leak his policy shift through Jon Hilsenrath at the WSJ. You will start to read articles in the press about how oil is deflationary and that the Fed has to print money to counter this effect. This is the exact same way the Fed communicated QE 2 to the market back in Aug 2010. In fact, we have already seen Fed President Lockhart mention that the Fed may have to ease in response to high oil prices. Let's see if other Fed presidents start to say similar things and refuse to rule out further money printing after QE 2 concludes. We may see QE 3 by the third quarter of 2011. The Fed is succeeding in its mission to destroy the dollar. The scary part is how quickly they are accomplishing their task. Between 1913-2008 the dollar lost approx. 95% of its value. Does anyone want to see whether the Fed is going to break that record much sooner? I bet they could easily devalue the dollar by 95% over the next 10 years at the current rate of money printing. The Fed is becoming more efficient! Got Gold?

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What Ron Paul Should Have Said to Bernanke

It is a shame that Ron Paul, the only decent person in Congress, always gives Bernanke a pass during his Q &A session. Oh sure, Ron Paul will go through long, rambling statements regarding the virtues of the gold standard and the monetary history of the late 1800's, but it stops there. Ron Paul fails to expose Bernanke as a dangerous terrorist who is deliberately stealing the wealth of the American public and handing it directly to the major banks. I wish Ron Paul would say something like:

Hello Mr. Chairman, thanks for appearing. You are doing a great job of destroying the American middle class through your criminal money printing, while simultaneously giving free money to the banks by manipulating interest rates. You are nothing more than a nefarious thief who works on behalf of the banks, bailing them out  whenever they want with monopoly money you create with a keyboard. Sure, the dollar's purchasing power plummets, increasing food and energy prices, which has resulted in millions of people around the world starving (including Americans) to death. And when seniors freeze to death in their homes because they cannot afford heat, their last thoughts should be of you and your gang of tyrants on the Fed Board. Hats off, Mr. Chairman; you are the envy of every third world dictator who wants to steal the wealth from their citizens. And best of all, you carry out your insidious task almost in complete secrecy.

I wonder, Mr. Chairman, how much you will charge for your consulting services when you retire from the Fed? After illegally giving your bankster overlords trillions in bailouts, so they can continue to pay themselves $100 million a year bonuses, your next step should be to work for the major banks like your predecessor did. It must be great knowing that you are making your future bosses happy by keeping interest rates at 0% so that the banks can then turn around and charge 23% on credit cards. Immoral? Sure, but don't let that stop you and your bankster oligarchs who run the USA as their personal fiefdoms. Whenever someone questions your actions, just reply that we had to give the banks all of our money or the world would have collapsed, and everyone would have died. Proof? Highly organized criminal mafias don't need facts or evidence to bank up their conclusions-- fear and empty threats do nicely..

Finally, I would like to praise you, Mr. Chairman, for your perspicacity. The mere fact that you still have your job after the whole 2008-2009 financial crisis is evidence that the bankster elite are in complete control of our Congress and government (Democrat and Republican). This is the only logical conclusion considering the fact that you were personally responsible for creating the crisis by keeping interest rates low from 2003-2007. This created a nightmarish bubble in housing, but at least it brought some temporary profits to your bankster overlords. They were able to make billions packaging fraudulent mortgages and selling them to incompetent pension funds and other institutions. When the cracks in the ponzi scheme started to appear as in the case of the sub-prime scandal, you purposely disregarded facts and reason by stating it was all "contained." In fact, Mr. Chairmen, you went as far as to say that there was no such thing as a housing bubble! Assuring the dumbed-downed masses that all was well, you lied just to keep the debt-ponzi scheme going a few months longer. After completely missing the most severe financial crisis since 1929-1930, you still have the temerity to lecture others on monetary and economic policy. It is incredible that a miserable piece of filth like you still has any credibility left. God Help America! Guards, please arrest the Chairman in the name of the American People.

But instead of really challenging Bernanke, Ron Paul politely said the following:


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