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Ron Hera, founder of Hera Research, LLC, and the principal author of the Hera Research Newsletter holds a master's degree from Stanford University and is a member of Mensa and of the Ludwig von Mises Institute. A native Californian, Ron is a self described "escapee" from Silicon... More
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  • Vancouver Resource Investment Conference: Ron Hera to Speak and to Teach in Cambridge House Investor College
    FOR IMMEDIATE RELEASE
     
    HERA RESEARCH TO EXHIBIT AT VANCOUVER RESOURCE INVESTMENT CONFERENCE
    Ron Hera to Speak and to Teach in Cambridge House Investor College

    OLYMPIA, WASHINGTON, January 19, 2012 – Hera Research is pleased to announce that it will exhibit at the Vancouver Resource Investment Conference on January 22 and 23, 2012.  The event will be held at the Vancouver Convention Centre West in Vancouver, British Columbia, Canada.  Hera Research will be located at Booth #515.

    Ron Hera will teach How to Make Money Investing in Junior Resource Stocks in the Cambridge Investor College at 12:00 p.m. on Sunday, January 22.  The class will cover inflation and taxes, resource company lifecycles, evaluating junior exploration and mining companies and more.  Entrance to all events in the Cambridge Investor College is included with regular conference registration.

    Ron Hera will present Global Competition for Natural Resources in Workshop Room 1 at 4:30 p.m. on Sunday, January 22.  All wealth stands on a foundation of physical economic inputs beginning with natural resources.  Competition for natural resources is the key to understanding world events, as well as price movements and trends in global commodities.  Ron Hera will explain how global competition for natural resources shapes geopolitics and financial markets.

    On Monday, January 23, at 8:30 a.m., Ron Hera will take part in the Eye Opener panel discussion moderated by Tommy Humphreys in Speaker Hall East.  Other panel members include Roger Wiegand, Greg McCoach and Sean Brodrick.

    Cambridge House is the world leader in producing resource investment conferences.  The Vancouver Resource Investment Conference features a world class line-up of speakers covering direct investments in public resource companies, speculative investing, resource exploration, oil and gas, green technology and clean energy, investment strategies and more.

    Press Contact

            Donna Rose
            info@heraresearch.com
            +1 (360) 339-8541 x102

    ###

    ABOUT HERA RESEARCH

    The Hera Research Newsletter delivers deeply researched analysis to help investors profit from changing economic and market conditions.  Hera Research focuses on relationships between macroeconomics, government, banking and financial markets in order to identify investment opportunities with extraordinary upside potential.  Hera Research focuses on natural resources, such as mining and metals, including precious metals (gold, silver and platinum group metals), along with select base metals, such as copper, as well as oil and gas, green energy, agriculture, rare earth element (REEs), uranium and more.  For more information, call +1 (360) 339-8541, email info@heraresearch.com, or visit herareserach.com on the Web.
     
    Tags: AG, UEC, UXG
    Jan 19 9:48 AM | Link | Comment!
  • Hugo Salinas-Price: What Every Politician Needs to Know About Silver
     
    Hugo Salinas-Price
    The Hera Research Newsletter (HRN) is proud to present a vitally important interview with Hugo Salinas-Price, Founder, Director and Honorary President of Grupo Elektra, S.A.B. de C.V., which is now run by his son, Ricardo Salinas-Pliego. Grupo Elektra is a part of Grupo Salinas, which owns businesses in the television industry, the telecommunications sector, banking and financial services, and other industries.  Grupo Salinas companies include TV Azteca, Azteca América, Grupo Elektra, Banco Azteca, Afore Azteca, Seguros Azteca, Iusacell, Azteca Internet, GS Motors and Italika y la Asociación del Empresario Azteca. Each of the Grupo Salinas companies operates independently, with its own management and board of directors.
     
    Born in 1932, Mr. Salinas-Price became a follower of Austrian economics at a young age and is the author of three books and of numerous articles, both in Spanish and in English, on the use of silver as legal tender in parallel with paper money.
     
    Mr. Salinas-Price serves as President of the Asociación Cívica Mexicana Pro Plata A.C. (Mexican Civic Association for Silver), which promotes the use of silver as legal tender in México. Mr. Salinas-Price is an outspoken proponent of sound financial and monetary policies in the country of México.
     
    Hera Research Newsletter (HRN): Thank you for joining us today. Would you tell our readers about your efforts to make silver coins legal tender in México?
     
    Hugo Salinas-Price: México is the first and only country where we have a Congress that is conscious of an alternative to paper money and that is favorable to it. México is the only country where this type of reform is being contemplated at the national level. The rest of the world is stagnating completely in the morass of un-backed paper money without considering any alternative.
     
    HRN: Why do you think that’s the case?
     
    Hugo Salinas-Price: We had, not too long ago, the experience of severe inflation in México. I used to graph the inflation but to keep that graph on the same scale I’d have to have a roll of paper hundreds of yards high. That’s what’s facing the United States right now. The U.S. is doing the same thing that México did, even worse.
     
    HRN: Can you comment on the Utah Legal Tender Act?
     
    Hugo Salinas-Price: The Utah Legal Tender Act was heralded with optimism and any effort to recognize gold and silver as money is praiseworthy, but it falls short because simply making gold and silver coins legal tender gives them no stable value that will be recognized by everybody.
     
    HRN: Do you mean the value of the coins fluctuates, like a commodity, with metals prices?
     
    Hugo Salinas-Price: Yes. In order for something to work on a large scale, it has to be very simple. In 1979 the President of México, José López Portillo y Pacheco, had a one ounce silver coin declared legal tender and asked the central bank to assign it a monetary value. The trouble was that the value was not stable. One day the value was X then, the next day, it was X minus a few pesos and the day after that it was X plus a couple of pesos. This created a great deal of confusion and the law was allowed to lapse. The mistake was that the monetary value wasn’t stable.
     
    HRN: And that’s an issue for the Utah Legal Tender Act?
     
    Hugo Salinas-Price: Yes. It’s almost as if gold and silver were not monetized.
     
    HRN: So, people who buy gold or silver coins are merely speculating on metals prices?
     
    Hugo Salinas-Price: In México the majority of people are poor and cannot afford to speculate. If they buy a coin for 500 pesos and it goes down to 480 pesos and they’ve lost 20 pesos, that’s a lot to them. That is why there is relatively little silver in the savings of the Mexican people. People are afraid of speculating. They can’t afford to speculate.
     
    Asociación Cívica Mexicana Pro Plata A.C.
    The Asociación Cívica Mexicana Pro Plata, based in México City, is actively lobbying the Mexican Congress to institute a new, one ounce silver “Libertad” coin with no engraved monetary value as legal tender in México. Making silver legal tender will provide a stable store of value for Mexican citizens to save money so that savings cannot be destroyed by inflation.
     
    To prevent savers from becoming speculators on metals prices, the monetary value, in Mexican pesos, of the new silver Libertad coin will be set by the Banco de México slightly higher than the commodity price of silver. The monetary value of the new silver Libertad coin can be raised by the Banco de México if the price of silver rises, but must remain fixed if the price of silver falls.
     
    HRN: Precious metals prices seem to be extremely volatile.
     
    Hugo Salinas-Price: Of course, volatility is constantly reported. They never talk about the fact that silver has gone up seven times in the last twelve years because of inflation. Volatility in gold and silver is artificially induced precisely to scare off savers. It’s really very cruel, but that’s central banking for you.
     
    HRN: Are you saying that central banks actively discourage people from exiting fiat currencies?
     
    Hugo Salinas-Price: Of course.
     
    HRN: Canmonetizing silver work?
     
    Hugo Salinas-Price: Unless the value of a legal tender coin is stable it cannot be used as money. It has to be given a firm value. What we are proposing is that the quote from the central bank be a stable quote. The value of the new one ounce silver Libertad coin will remain fixed unless the price of silver rises to a point where the value should be increased. The Utah Legal Tender Act does not address this. It has to be done at the federal level, not at the state level.
     
    HRN: But what will happen if the price of silver falls?
     
    Hugo Salinas-Price: Nothing will happen. If the silver coin is valued at 500 pesos and the price of silver falls, it’s still worth 500 pesos.
     
    HRN: Won’t that encourage speculation?
     
    Hugo Salinas-Price: A speculator might sell his silver coins if the price of silver falls and perhaps invest in silver bullion, but speculators are a small number of people. The majority of people would keep the coins because they are better than a 500 peso paper note.
     
    HRN: So, people would hoard silver coins?
     
    Hugo Salinas-Price: That’s right. They would have savings. That’s the important thing. We need people to get off the drug habit of constant spending. People have to save again.
     
    HRN: You want to encourage saving?
     
    Hugo Salinas-Price: Absolutely. What we want is to create a refuge where those who can save—the middle class—can do so in a medium that will retain its purchasing power. There is no safe harbor for the middle class today. The middle class is being financially raped and decimated.
     
    HRN: Do you believe the same thing is happening in the U.S.?
     
    Hugo Salinas-Price: Yes. The U.S. needs a law like this too.
     
    HRN: Is saving the foundation of small businesses, jobs and of the middle class?
     
    Hugo Salinas-Price: Of course. The withering away of the middle class is a terrible situation for the economy.
     
    HRN: What is the current status of the Mexican legal tender legislation?
     
    Hugo Salinas-Price: In México we have a Congress that is quite well aware of the importance of this legislation and it has broad support both in the Senate and in the Chamber of Deputies, which is like the House of Representatives in the U.S. The idea is well understood and approved, but there is a problem.
     
    HRN: What is the obstacle?
     
    Hugo Salinas-Price: Under our party system, members of Congress rely on the guidance of the party leaders. If they fall into disfavor with their party leader, they will be denied the benefits that the party leader is authorized by law to distribute. The three most important party leaders are under great pressure from the central bank, Banco de México, to prevent party members from voting in favor of this measure.
     
    Estados Unidos Mexicanos
    Excerpt from the bill awaiting a vote in the Mexican Congress:
     
    “In order to palliate the financial crisis and the economic recession, central banks and governments have reacted by injecting more liquidity and credit; these actions have intensified the causes that provoked the instability, further weakened the whole system, caused a world crisis of deficits and sovereign debt and further increased penury and scarcity in the majority of the population.
     
    These “rescues” and emergency repairs have succeeded in prolonging for some additional months the life of the financial system, but they will cause its collapse to be much more dramatic and painful. The International Monetary Fund has itself warned that “the risk of a double recession has increased” (IMF Report, June 1, 2010).
     
    For families, the inflationary rise in prices, the evaporation of savings and the loss of purchasing power are causing a distressing situation of tightness and anxiety which are depressing and negative for interpersonal relations, as well as setting up a vicious circle of want and scarcity.
     
    The ultimate origin of the financial and economic problems of today dates to August 1971 when real money – backed by precious metal – was substituted by fictitious money, which can be issued exorbitantly because it consists of nothing other than paper and computer digits.”
     
    HRN: Banco de México is blocking the legislation?
     
    Hugo Salinas-Price: If it wasn’t for the central bank, this measure would have passed a long time ago. The party leaders are afraid to jeopardize their careers by becoming enemies of the central bank.
     
    HRN: What do you think might change the situation?
     
    Hugo Salinas-Price: The Congressional Finance Committee will hold a hearing this month, before the Congress goes into recess, to hear the objections of the central bank. It is possible they may decide that the objections are not materially important and they may approve the bill. In that case, the bill will be sent to the house for a vote. The party leaders will be able to vote for the bill if the Committee approves the law.
     
    HRN: Do you think it will pass if the Finance Committee approves it?
     
    Hugo Salinas-Price: We would be hesitant to submit the bill to a vote without assurances from the party leaders that they will give it a green light.
     
    HRN: If México passes this law, do you think other countries in Latin America will follow México’s example?
     
    Hugo Salinas-Price: Yes. I think they would and they would do it soon after.
     
    HRN: Thank you for being so generous with your time.
     
    Hugo Salinas-Price: I hope what I’ve said will be of some use.
     
    After Words
    Déesse Héra, Reine des Immortels
    With the encouragement of Hugo Salinas-Price, the country of México may become the first country to provide its citizens with a guaranteed store of value. Enabling citizens to save hard money offsets the inflationary power of the central bank and protects the savings of ordinary people from financial system turmoil and profligate government policies. Savings represents capital formation and capital, in the hands of ordinary citizens, is the foundation of small businesses, jobs and of the middle class. Without savings, there can be no middle class. A strong middle class is a fundamental requirement for higher living standards and for a strong and vibrant economy. Without a middle class, the overall wealth of society is reduced, upward mobility evaporates and the economy becomes less resilient. While the United States seems to be heading in the direction of a 3rd world country, México may soon lead the way to a brighter future for the Mexican people and for Latin America.
     


    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Dec 11 2:16 PM | Link | Comment!
  • Globalization and Global Chaos
    As social and political upheaval and civil unrest have spread across the globe, it has become clear that the problems facing Western countries are neither transient nor temporary. Europe, the United Kingdom and the United States share a common set of problems over and above economic decline and sovereign debt issues linked to problems of the global financial system. The issues surrounding civil unrest comprise a lack of economic opportunity, political disenfranchisement, erosion of individual rights, a systematic lack of accountability from local authorities to national leaders, deteriorating credibility of political and financial leaders and disintegrating national government legitimacy. The reason that the above problems are common to Europe, the United Kingdom and the United States is that they are all linked to globalization.
     
    National governments have become increasingly subordinated to international bodies, such as the World Trade Organization (WTO), International Monetary Fund (NYSE:IMF), Group of 20 (G-20) or the European Central Bank (ECB), as well as to large multinational corporations. Large multinational corporations, which are a central feature of globalization, enjoy privileged status granted to them by governments. The bailout of large multinational banks by Western governments in the face of the financial crisis that began in 2008 illustrates that the well being of sufficiently large multinational corporations preempts national interests. The rationale that large multinational banks cannot fail stems from the fact that they make up the infrastructure—the valves, pipes and pumps, so to speak—of the international financial system. What is important is that the same rationale can be applied to virtually any international industry. The precedent of bank bailouts ushered in a new paradigm wherein the agendas of international industrial cartels take precedence over the laws, regulations, economic and trade policies of national governments. Although the world financial system is at a more advanced stage of globalization relative to most other industries, the bank bailouts revealed, with startling clarity, a new world order.
     
    The financial crisis of 2008 and the global recession that followed suggest that globalization may fail for basic economic reasons. Globalization, as opposed to promoting sustainable, economic communities, advances an agenda of central economic planning designed to optimize global output, mainly for the benefit of multinational corporations. Policies or regulations that benefit multinational corporations do not necessarily promote economic stability or sustainability and may run counter to the interests of local or regional commercial concerns.
    The law of unintended consequences states that when a simple system attempts to control a complex system, unintended consequences are the result. Globalization places the relatively simple, rigid bureaucracies of international bodies and large multinational corporations in a position of oversight and policymaking over the affairs of roughly 196 countries and 6 billion human beings around the world. Unintended consequences are, therefore, endemic to globalization. What is more important than the economic failure of globalization, however, is its imminent political failure.
     
    International trade and capital flows are emergent phenomena that exist as a consequence of the individual human actions that form the basis of every local and regional economy in the world. Economies, like biological ecosystems, are spontaneously self-organizing systems that develop naturally in a local or regional context. Breaking down naturally occurring local or regional economies in order to reassemble their components, e.g., capital, labor or natural resources, in a wholly artificial, centrally planned system, is a profoundly flawed and politically dangerous concept. Specifically, the political structures required for globalization breed unrest. Political systems that require human beings to behave in ways contrary to human nature are, by definition, oppressive. Since political structures arise in a social context, replacing local and regional economic relationships, characterized by ethnic and cultural social structures, with an abstract concept, such as the global economy, requires oppressive political structures.
     
    Globalization and Individual Liberty
    Understanding the political failure of globalization requires some familiarity with political philosophy. The Greek philosopher Plato wrote that “excess generally causes reaction and produces a change in the opposite direction, whether it be in the seasons, or in individuals, or in governments.” Under a policy of globalization, national governments defer to international bodies and to the agendas of large multinational corporations, which are thought to make up the global economy, but the removal of economic and political control to international bodies represents a radical centralization of power.  The European Union, for example, has been described as a centrally planned economic union where unelected, unaccountable bureaucrats make decisions in place of democratically elected national leaders. If Plato is right, then the more excessive the centralization of power becomes, the more forceful the reaction against it will ultimately be.
     
    Philosophically speaking, the institution of the state always opposes individual liberty to some degree. There is an enduring, inherent conflict between the rights of individual human beings and the rights of human collectives. By nature, human beings are social animals, thus the survival of the collective, e.g., a family, clan, tribe, village, etc., takes precedence over the survival of individuals. However, individual human beings innately desire freedom to pursue their own selfish interests. Of course, the pursuit of selfish interests on the part of individuals includes behaviors that benefit the collective, of which they are a part, i.e., it is in the self interest of individuals to maintain their own collective. Thus, selfish pursuits are not necessarily destructive to the collective and can be supportive of it, which is the basis of philosopher Ayn Rand’s view of selfishness as a virtue. The limitation on individual liberty in the context of any collective is that behaviors that impair the capacity of the collective to survive cannot be tolerated. Conversely, behaviors that are not harmful to the collective can be safely tolerated even if they do not benefit the collective.
     
    The great complexity of human social and political organization springs from the constraints on individual behavior necessary for the survival of the collective and from how such constraints are enforced by the collective. In a political context, the most important, defining issue is the treatment of individual liberty. According to Ayn Rand, “individual rights are not subject to a public vote; a majority has no right to vote away the rights of a minority; the political function of rights is precisely to protect minorities from oppression by majorities (and the smallest minority on earth is the individual).” Since the global collective is the ultimate political majority, it is also the greatest threat to individual rights.
     
    The social contract, under which human beings live harmoniously in collectives, is reflected in the legal and political structures of a society. As a practical matter, laws require law enforcement and law enforcement presupposes the existence of an enforcing authority. It has been said, for example, that government is “...an institution with a monopoly on the legitimate use of deadly force within a specified geographic territory” (Max Weber 1918). Globalization violates the social contract.
    While no government can be separated from the use of force, the use of force is only legitimate if it serves the interests of the collective, e.g., of a particular nation. The use of force by a government against its own citizens in order to serve private, rather than public, interests or to serve the interests of another nation is not legitimate and is merely violent oppression. The latter distinction is clear to Westerners when observing, for example, the shootings of nonviolent protesters in countries like Iran or Syria, but is less obvious when observing police violence against nonviolent protesters in Spain or Greece.
     
    Globalization and Government Legitimacy
    Human social structures, such as those of families, clans, tribes, villages, etc., naturally have elders or other leaders that, in theory, have an understanding of the structure of the collective and of what is necessary for or harmful to its survival. Throughout human history, the relationships of human collectives and their leaders have been based on various combinations of force, rational or irrational beliefs, social class structures, economic factors, and on the will of the collective. For example, oligarchies are typically based on beliefs, e.g., religious beliefs, or on material wealth, e.g., land ownership. Military dictatorships are based on force; while democracy, at least in theory, is based on the will of the collective, and so forth.
     
    Globalization corrodes the legitimacy of national governments. Setting aside leadership based purely on force, e.g., military dictatorship, legitimate leadership depends on the assent of the collective. The assent of the collective is lost when leaders fail to understand the structure of the collective or what is necessary for or harmful to its survival. Just as individual behaviors that are injurious to the collective are not tolerated, leaders that are injurious to the collective can be rejected by the collective, sometimes violently, i.e., revolution. Of course, revolutions are relatively uncommon and, throughout history, the vast majority of human beings have lived as subjects.
     
    The American Declaration of Independence states that “…governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed.” Thus, loss of legitimacy on the part of a government is a necessary condition for revolution but it is not sufficient. Generally, subjects that receive benefits from their rulers or that feel they have something to lose, e.g., their livelihood or property, will not revolt unless they stand to lose more by failing to act, i.e., when a long train of abuses and usurpations evinces a design to reduce them under absolute despotism. However, when economic mismanagement threatens the survival of individuals, the probability of revolt greatly increases.
     
    Globalization and Political Disenfranchisement
    As the collective encompassed by a government grows wider in scope, the constraints on individual behavior, and on the rights of individuals, grow accordingly. In a family, clan, tribe or village, leaders are more or less directly accessible and accountable and individuals have direct input on decisions affecting the collective. As the scope of the collective grows, individuals are increasingly subordinated, eventually having no meaningful input on decisions, no significant access to leaders and no influence over the policies of the collective. Political disenfranchisement, therefore, follows globalization in lock step.
    The European Union, for example, has arguably devolved into an autocracy were unelected bureaucrats dictate fiscal, monetary and trade policies based substantially on the requirements of the largest European banks.   In other words, national governments and democratic elections in Europe have become largely irrelevant.

    While democracy ensures that leaders have the assent of the collective, given sufficient resources, elections can be influenced, e.g., through the news media. Theoretically, in a republic, the fickle majority is constrained by principles enshrined in fundamental laws, but, for better or worse, laws can be changed. Roman Senator Gaius Cornelius Tacitus (AD 56 – AD 117) wrote “the more corrupt the state, the more laws.” The political duopoly in the United States is dominated by large, corporate sponsors that fund political campaigns and that, through professional lobbyists, write many of the laws passed by the U.S. Congress. The U.S. Federal Code contains tens of thousands of pages of laws and regulations written by lobbyists that certainly benefit their employers more than the public. At the same time, American politicians are accountable to corporate sponsors that can, in effect, dismiss them from their posts by withholding campaign funds. Thus, outside of the careers of individual politicians, the input of American voters has a limited impact on government policy.
     
    Globalization, which reflects the agendas of large multinational corporations, has had the effect of alienating the citizens of Europe, the United Kingdom and the United States from their own governments. National governments are increasingly accountable to international bodies while elected officials are increasingly accountable to large multinational corporations. Thus, the citizens of Western nations have been reduced to the status of politically disenfranchised subjects.
     
    Climbing the Wall of Ruin
    While the economic failure of globalization is already evident, its political failure is only just beginning. Civil unrest in Greece and rioting in England, for example, are only cracks on the surface of a much deeper and more complex problem. Since globalization is the agenda of the largest corporations in every country, leaders in Europe, the United Kingdom and the United States almost universally support it. In the face of growing global chaos, political, financial and business leaders do not appear to be contemplating a return to simpler, genuinely democratic, self regulating and sustainable economic and political structures. Nonetheless, the economic and political consequences of globalization will continue to escalate until efforts to force economies and political nation-states into an artificial global collective cease.
     
    As globalization progresses, it leaves in its wake political disenfranchisement, reduced individual rights, unaccountable leadership, illegitimate governments and the potential for violent oppression. It is perhaps a profound irony that the positive vision of a unified, global human collective is one of harmonious, peaceful cooperation, without warring nation states. Sadly, the unintended consequences of globalization include social and political upheaval, civil unrest and, eventually, revolt. In the best case, the foreseeable future holds greater, more widespread and increasingly severe economic and political volatility. In the worst case, any number of civil conflicts or international wars might erupt.


    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Aug 18 7:57 PM | Link | Comment!
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