Inquiries On Gold

November 14, 2012

• “Dr. Doom” and Jonas Elmerraji weigh in on Greece, the fiscal cliff and the S&P… disagreements arise, but one wants you to help him prove his point…
• Inquiries on gold: Why not gold ask a prime minister and a Republican senator… How much gold would it take asks a U.S. debt calculator…
• Patrick Cox arrives on the scene with another “forehead slapper”… 15 years in the making, one “blueberry cure” is set to change millions of lives…
• One unforeseen consequence of not voting… readers weigh in… and argue… blood, sweat and tears or grumbling, moping and whining? You decide… and more!

  “I don’t think markets are going down because of Greece,” our old friend Marc Faber offered as an alternative explanation for the market’s recent malaise to CNBC’s Squawk Box yesterday.

“I don’t think the markets are going down because of the ‘fiscal cliff,’” he added, “because there won’t be a ‘fiscal cliff.

“The market is going down because corporate profits will begin to disappoint,” Mr. Faber dolefully explains, “the global economy will hardly grow next year or even contract, and that is the reason why stocks, from the highs of September of 1,470 on the S&P, will drop at least 20%, in my view.”

  “Dr. Doom’s” gloominess stands in stark contrast our resident tech traders Jonas Elmerraji and Greg Guenthner.

“Stocks are flailing again,” Jonas Elmerraji reports, “threatening to plunge lower in this morning’s early action after moving sideways since the end of last week.

“It’s not just us,” Jonas goes on, “all markets are off today. But that shouldn’t come as a huge surprise. The media will probably blame selling on the latest news from Greece (even though they were giving a Greek debt deal credit for moving futures higher much earlier this morning).

“Greece, the fiscal cliff, doomsday on Dec. 21, 2012… Whatever news is getting the blame for the most recent rally or the latest drop, it all comes down to buyers and sellers. Right now, with the S&P pushing just below 1,400, the weak hands are getting squeezed out and fear is the biggest factor affecting stocks.

“Relying on the news cycle won’t make you rich — but identifying those pockets of buyers and sellers can.”

[Ed. Note: Jonas and Gunner want a chance to prove that assertion to you in what they call the "Trading Experiment." Their mission is to show at least 75 of our readers the ropes on how to be better traders in a mere five days...

They claim they can teach anyone how to turn $1,000 into $5,240 in any market. We're skeptical. Hence the wager. We're eager to see what takes shape during the experiment. If you want to take part...

It's free. Won't cost you a nickel. But be mindful... today is your last day to sign up.]

  “Why do we not switch, then, to a monetary unit such as gold,” Turkish Prime Minister Recep Tayyip Erdogan asked openly to the International Monetary Fund (IMF) and the U.N. yesterday, “which is at the very least an international constant and indicator that has maintained its honor throughout history?

“This is something to think about.”

Indeed. Why don’t they…

Erdogan’s questions and criticisms were the highlight of the fifth Bali Democracy Forum in Indonesia last week. (Iranian president Ahmadinejad’s mockery of the U.S. elections took second place, dubbing them a “battleground for capitalists and an excuse for hasty spending.”)

  “It is thought-provoking,” Erdogan goes on, “that the IMF is not using gold as a global currency rather than any currency, and it only gives aid on a where and what basis.”

His tartness most likely stems from a raw deal with the IMF sticking Turkey with over $23.5 billion of debt. But the challenge remains… if the rest of the world’s financial community can, as they have been trying to do for years, agree on a viable alternative to the dollar as a “reserve currency,” holders of dollar assets will get crushed.

Turkey’s Erdogan has been a busy man… He has systematically ended Turkey’s half-century “Era of Coups,” sliced the country’s IMF debt down to $1.3 billion (with plans to wipe it out next April), and has stealthily crept Turkey away from dependence on the U.S. dollar.

  All of which is bullish for gold… and ghoulish for greenbacks. According to Turkish Energy Minister Taner Yildiz, Turkey “will not reduce the oil and gas it imports from Iran when an exemption from U.S. sanctions expires on Dec. 3,” Tehran Times reports.

So much for NATO alliance solidarity with the United States, eh?

Mid-July, we noted that Iran supplies about 40% of Turkey’s oil, despite the U.S. sanctions. Since then, according to Turkish trade data, Iranians have been acquiring an estimated $2 billion worth of gold each month using the Turkish lira as a middleman.

  Meanwhile, Montana’s state Rep. Jerry O’Neil wants to cut out the middleman completely…

According to the Kalispell, Mont., Daily Inter Lake, Sen. O’Neil “is spooked enough about the country’s fiscal picture to request that his legislative pay come in the form of gold and silver coins.”

O’Neil sent a letter to Montana Legislative Services this week citing Article 1, Section 10 of the Constitution, stating that no state shall “make any Thing but gold and silver Coin a Tender in Payment of Debts.”

The senator also stipulates in the letter that he would rather not be paid in retail value of the metals, but according to market prices… just in case. “Let’s say I made $1,800 in a month,” O’Neil explains to the paper. “They could give one gold American Eagle.” He’ll also take a few silver Eagles, says the paper.

No reply yet from Montana Legislative Services. But whenever it comes, it should prove amusing — stay tuned.

  “How much gold,” the Political Calculations blog wonders, “would the U.S. Treasury have to pay out from the nation’s bullion depository at Fort Knox to fully pay off the national debt of $16.222 trillion (as of 1 November 2012)?”

For fun, let’s pretend that the U.S. does plan on paying back the national debt… and in gold.

Again, for fun.

How much would it take? As of Nov. 1, Political Calculations writes, it would take “a solid gold cube that is nearly 80 feet tall by 80 feet long by 80 feet wide. Transporting all that gold would require over 431 of those standard 20-foot-long shipping containers.”

There’s a problem: If you add up all gold plucked out of the Earth, it makes up a cube only 66.1 feet by 66.1 feet by 66.1 feet… and fills only 249 shipping containers.

And Obama’s contribution since taking office? $5.595 trillion, or a cube 55.7 feet by 55.7 feet by 55.7 feet, or 60% of the world’s recorded gold.

  Steering our focus to the markets…

As Jonas mentioned, the Dow is wagging back and forth this morning. Upon last check, it was down 17 points, at 12,738. The Nasdaq is keeping its head above water, up 7 points, at 2,890. And the S&P is up a point, at 1,375.

Gold creeps up a dollar, to $1,727, and silver a few cents, to $32.48.

  “Once again, I’m stunned by the technology that I’m bringing to you in just a few weeks,” Patrick Cox writes, referring to one of his latest discoveries.

“In many ways,” he goes on, “this company’s transformational technology is a ‘forehead slapper,’ meaning that it is an incredibly simple idea, given what we know about genetic engineering.

“Moreover, it has been in development for nearly 15 years, though almost nobody knows of its existence — yet.”

  What’s the “forehead slapper”? Pterostilbene and its effect on sirtuins…

Come again?

To put it simply, Patrick writes, “pterostilbene is a naturally occurring anti-microbial found in blueberries, though in small quantities,” explains Patrick. “We believe that it optimizes metabolism by activating sirtuins and stimulating insulin production.”

Sirtuins are a class of proteins that regulate important biological pathways in our bodies. Finding a way to activate these pathways could potentially reverse complications associated with Alzheimer’s and diabetes and slow down the aging process by repairing DNA.

This is why Patrick is so excited about this discovery — and, of course, the company doing the research.

“Essentially,” he writes, “I believe that the promise of resveratrol is fulfilled in the very similar, but more stable pterostilbene molecule, and one company owns most, if not all, of the relevant intellectual property.”

You can learn everything you need to know about this “blueberry cure” here.

  “Upset over the result of last week’s presidential election,” Gawker reports, “an Arizona woman ran over her husband with her car, believing him to be directly responsible for Obama’s reelection because he didn’t vote.”

Yes, dear reader: We’ve discovered a downside to our long-standing guidance.

According to the Gilbert, Ariz., police department, Holly and her husband Daniel argued loudly in a parking lot before Holly got in her SUV and chased Daniel down, eventually pinning him underneath the car.

Apparently, Holly was angry with Daniel over his “lack of voter participation” and now believes her family will face hardship because Obama won. (Hope when we scour our reader list we don’t find Mr. Gilbert’s name appended. We’d feel terrible. Sheesh.)

Imagine if he’d voted for Obama…“Daniel’s presidential preference likely wouldn’t have mattered much to Romney,” Gawker points out. “He won Arizona by a margin of some 200,000 votes.”

  “Judging from the comment that you got yesterday,” writes a reader, “from someone who was offended by the email ‘Obama Camp claims referendum on progressive agenda,’ he seems to think that he can speak for nearly all of the readers of The 5.

“He doesn’t speak for me.

“He also seems to believe that because he has purchased a subscription or two to some of your publications that means he should be able to control The 5′s content. Unwittingly, this obvious [expletive deleted] fool is proving the very point that he is complaining about.”

  “Think the fiscal cliff and the impending dividend and cap gains increase,” writes another, “is just another way the government puts the screws to anyone who put together enough to be considered ‘rich’? Think about it. Everyone sells even if just to lock in the lower tax rate. Obama looks great with all the revenue he collects… but the country will be worse off in the end.

“All my life, I have been taught to save and invest for the long term. But now my own government makes me change everything I thought I knew about investing.

“I feel like a buffalo forced to stampede to the edge of a cliff, while the tax man sits at the bottom waiting for me to fall to my death, stripping me of my pelt and wealth!

“My poor kids.”

  “Taxes and redistribution is not sharing,” writes a third reader, with whom we’re pretty sure we share some DNA. “It is coercion; plain and simple.

“I guess I am one of those rich guys whining about high taxes and regulations. There is a reason. In the last four years, our business has been inundated with regulations that cost us money and benefit no one but a bloated government.

“The endless reporting and record keeping require me and another employee to keep track of statistics that may help the government look better in the press. The health care laws and taxes that have come and are coming not only directly affect my bottom line, but also will affect how many new people I can afford to hire.

“I am one of those 250,000 millionaires that are about to have their taxes go up. I am a small business (51 employees) that files as an S Corp.

“Although I take only a $120,000 salary, my income will appear to be much over the tax increase line. It doesn’t matter that I have taken only enough dividends out of the company to pay the onerous taxes for the business and put every last dollar back into building the business and hiring additional staff. In 2006, we had three employees. Our current revenue is over $20 million. We have done an extremely good job of growing this business, and now we get to watch some guy sit on his lazy ass and reap the benefits.

“That is why I would like to move the entire operation to a different, more business-friendly country. This is not the America I grew up in, built a business in or have raised my kids in. There are now more takers than makers.

“You call it whining. I call it blood, sweat and tears. I call it my personal sacrifice and the sacrifice of my family, because we all work at it. If it is you who is calling it grumbling, moping or whining, kiss my ass.”

  “Your ‘insights’ to the world of politics make one grow weary,” grumbles a fourth.

“I think you guys are great,” responds a fifth.

“My dear grandma always told me,” says the fourth, “self-praise stinks.”

“Keep up the good work,” the fifth encourages, “I enjoy the insights.”

“Your pompous posturing is beyond annoying,” writes the fourth.

“Please do not listen to the whiners,” implores the fifth.

The 5: “Can we all get along?” asked Rodney King after getting his ass kicked by the LA police department and having his life turned into a national public punching bag.

Regards,

Addison Wiggin
The 5 Min. Forecast

P.S. Jonas and Gunner’s excellent experiment begins tomorrow… last chance to participate, here.