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Kenneth D. Worth
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Author of the book, Peak Oil and the Second Great Depression (2010-2030), A Survival Guide for Investors and Savers After Peak Oil. The book presents a fairly conservative strategy for growing savings in an world of declining conventional crude oil supply. We entered that world in 2005. Despite... More
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Peak Oil and the Second Great Depression (2010-2030)
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  • Precious Metals Bull Market Has Begun

    For reasons previously expressed by this author, precious metals are in a long-term secular bull market (2000-2030). Two years ago, however, the metals got a little ahead of themselves and a cyclical bear market was the result.

    I suggested at that time that bulls should exit the market or even go net short the PM's. For silver, $25 was given as a downside target (and purchase price target) with a period of consolidation to follow.

    What we got was a full-on bear market, with plenty of opportunities to purchase in the $20-25 range. That bear market appears now to have run its course.

    With the stock market back in "overvalued" territory and the Fed's money printing continuing unabated, PM's have once again become very attractive.

    The coast is now clear for the next leg of the PM bull market to begin.

    Recommendations: SLV, GLD, GDX, GDXJ and similar ETF's.

    Happy investing!

    Disclosure: I am long SLV, GLD.

    Aug 22 10:31 AM | Link | Comment!
  • Rebecca Black's "Friday"
    Most of us have seen, or at least heard of, what has been called "the worst music video ever made", a viral sensation that generated howls of protest from seemingly the entire American public.  As of this writing the official Youtube video of Friday has been downloaded 162,437,373 times.  That number exceeds all but a few of the most popular videos by the world's most popular artists.

    How can this be explained?

    Was it intentionally bad? But then why doesn't every intentionally bad music video, and thousands are made every day and uploaded to Youtube, generate such publicity?

    Whenever there is a strong emotional reaction to an event or piece of artwork  that is seemingly inexplicable, one should look a little deeper.  If you do, you will find that "Friday," which apparently simply features a teenage girl hanging out with her friends and singing about the days of the week in a fashion that can only be described as utterly banal, is filled with subliminal messages

    And these subliminal messages are not ones Americans want to hear! Hence, the emotional reaction and near lynch-mob hysteria accompanying the video's release several months ago.  And, hence, as well, its continued notoriety and viewing numbers that make even a star like Katy Perry jealous. You can see Katy's deplorable "Friday" parody here.

    The message of the video is significant on a number of levels.  If you look closely, it addresses four very serious topics: resource scarcity, racism, communitarianism and moral values. Talk about lighting a fire!!  Let me show you how it does so.

    Racism and resource scarcity: the subliminal message opens with a white American girl waiting for a bus and wondering whether she should sit in the front seat or the back. This is a subtle reference to the American Civil Rights movement and Rosa Parks, in case you missed it.  The girl then gets in a car with her friends and drives along, singing and happy. Middle-class Americans drive everywhere, right? Later in the video, after school, five girls are driving along in a convertible.  The three white girls are in the back seat, an African-American and Asian girl are sitting in the front and driving. Again, if you are paying attention, this is a clear reference to the ever-increasing demands on our planet's natural resources coming from the developing world.  The time has come, according to the creators of the video, for America to take a "back seat" and consume less. 

    Global resources are becoming scarce. High prices for food and fuel are creating havoc in the world's poorest nations. Note the lyics early in the song, "gotta have my bowl, gotta have cereal."  In the West, resource scarcity is a nuisance, one less trip to Disneyland.  Elsewhere in the world, it means going to bed hungry.  A veiled reference is made to American militarism and the invasions of countries with oil such as Iraq and Lybia.  You can see this in the distortion of the singer's voice so that she seems to say "7:45 we're a German on the highway. Cruising so fast, I won! Time to fly!"  Another reference to oil is made by the distortion of Ms. Black's voice so that she seems to sing, "Yesterday was Thirsty, Thirsty. Today it is Friday, Friday"  Listen carefully, the I in Friday is again distorted, placing emphasis on the syllable and what it might mean about the supposed selfishness of the developed word and the competition against far weaker nations for global resources.

    The communitarian as well as religious themes are expressed in the somewhat bizarre emphasis with which the lyrics are sung.  "Fr-iiiii-day, Fr-iiiii-day, getting down on Friday, looking forward TO the WEEEkend."  Parse that out; the emphasis on certain syllables generates the message, "I to We."  The message is not unlike one of those, "Live simply so that others may simply live," bumper stickers. This message is reiterated in the much maligned lyrics, "We, We, We, so exc-iiiii-ted, we so exc-iiiii-ted. We gonna have a ball today."  The "We" syllables ring out loud and clear.  The "I" syllables are again distorted, and thus discredited in a way.  The ball, referred to, of course, is that spinning little rock on which nearly seven billion of us now live, a rock possessing very limited food, water and fuel.

    There are numerous other subliminal references in the video (many explicitly Christian in nature) that are outside the scope of this article.  Part of the extreme reaction to the video was certainly due to the way in which the video condemned and even mocked the mindless pleasure-seeking and the abandonment of moral values of American popular culture.  The video vaguely suggested that sinners are going to "Fry"(day) in hell, kinda skipped over Saturday and then extolled the beauty of Sunday, which comes, naturally, after-WORD-s.  How we do hate our flaws being pointed out to us.

    It is clear, however, that at least part of the extreme reaction to the song is indicative of the extent that Americans are in a complete state of denial that the modern lifestyle simply cannot continue as it has for the past several decades.  The resources of planet earth are limited.  The most immediate problems are oil and food.  The video presents the prospect that the West will simply extract the resources it "needs" from the developing world by military force, or perhaps, will adopt a communitarian view and consider the resource needs of other people.

    I cannot predict the actions of future American leaders.  However, one thing is certainly clear, like baseball fans in 1941 focusing on Joe DiMaggio's hitting streak while Japanese and German tanks rolled across Europe, Asia and Africa, Americans wish to remain oblivious to the tremendous threat that lies ahead, and if reminded of it, even subliminally, react with extreme emotion.


    Disclosure: I am long UGA, BNO, XLE, XOP.
    Jun 10 1:10 PM | Link | Comment!
  • Time to Sell Those Silver Puts
    Silver is trying to form a bottom with trading over the past two weeks bouncing around in the low 30'sHere is the three month chart for the iShares Silver Trust, SLV:

      

    Clearly, there has been support for silver at $33 an ounce.  But will it hold?

    Hard to say at this point, but given the support at 33 and a current price around 34, I think it is probably time to sell the Jul 11 SLV 45 puts I recommended when SLV was around 46. Cost basis for the puts was $2.91Friday's close was at $11.02Return: +279% in three weeks.  Readers will be reminded that I recommended the calls at 35 and selling them at 45.  That was also a trade that worked out rather nicely for those on the long side.

    Is it time now perhaps to go long again?

    If you are dollar-cost-averaging into physical metal, by all means make your usual trip down to your local coin or bullion dealerThe mania has passed, and a dollar here or there won't matter much for the long-term investor, especially those readers whose holding period ends with the arrival of Armageddon.

    But what about speculative long positions?

    After any violent downward move, such as that seen in late April and early May in silver, traders should be very cautious establishing new long positionsIt is often best to let the dust settle a little. There are probably institutional investors out there who probably still want to close out their long positions for a gain, but the price just dropped too quickly for them to get out at their desired price point.

    Those late to the party who bought on the way up in the high 30's and 40's will want to at least break even because everyone hates taking a loss, even if it is the smart thing to do. These institutions and individuals will likely be selling into any strength.

    A crash creates a lot of overhead resistance whether you are talking equities or precious metals because it leaves a lot of sellers waiting on the sidelines still wanting to get out at the old higher prices.

    I would be a buyer on any dip below $30, unless the downward move looks like a resumption of the intense selling pressure of the past which could take us even lowerThe Jan 12 $36 SLV calls are looking pretty tempting at $3.60, but I think I'll just head down to my local coin dealer insteadI want to see a good solid base form before taking any speculative long position

    On the other hand, if you pay a little more for physical metal than you really have toyou can at least rest in the knowledge that you won't be selling anytime soon, so it won't very much matter in the long run whether you paid $35 an ounce or got a bargain at $25.  And it still looks just as pretty either way.

    Doesn't it?

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Long physical silver.
    May 21 8:38 PM | Link | Comment!
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