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Monday, 8 July 2013

What Governments Do When They're Dying

 

 
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YOUR BEST SOURCE FOR THE UNBIASED MARKET COMMENTARY YOU WON'T GET FROM WALL STREET
What Governments Do When They're Dying
by Larry Edelson

Dear Gerald,

The French government on May 23 banned all movement of gold and silver shipped into, around or out of the country by post. Cash and euro coins were also banned.

Is this the beginning of a global trend toward more and more capital controls?

I believe it is, as is the recent revelation that the U.S. NSA is monitoring everything you do.

Mark my words: As insignificant as some of these things may seem to you, they are not minor matters. They are telltale clues that the next phase of the financial crisis is about to erupt.

Look, the governments of Europe, Japan and the United States are all dead broke. They are operating on a wing and a prayer. On funny money. With smoke and mirrors added in too.

If they were corporations, they would be in bankruptcy court. Chapter 7 of the code, a liquidation. Where the company is so broke, there’s no chance of ever surviving or getting funding elsewhere. Where assets are liquidated and what can be sold is sold for pennies on the dollar.

I wish it weren’t that way. But that’s the stark reality we all face. Thing is, governments never go down without a fight.

Instead, they tend to take down everything and everyone with them. That’s what happened in Rome. In Byzantium. In countless other great civilizations where the government went broke.

They hunt down the rich and want to know where all their assets are. They increase taxes on everyone. They start spying on you. They start making it more and more difficult for you to make money in your business. To protect yourself financially. To hide anything from them.

They squash your liberties. They deny you your rights. They act like Leviathans and Big Brothers, watching your every move. They will fight you every step of the way as they sink further into an abyss.

It’s not easy to say all this, right on the heels of July 4th. And I sure hope I am wrong. Especially when it comes to the United States.

But I doubt I am going to be wrong. Which is precisely why I have recently taken some extraordinary steps for myself, steps I also suggest you take.

I have moved my cloud storage to secure, encrypted servers in Switzerland. Swiss cloud-storage companies are not likely to be spied on.

I will soon move my email offshore to an encrypted email service away from the spying eyes of Google and the U.S. government.

I will soon move some banking offshore, but not to your typical bank. Instead I’ll be seeking out custodial and trust banks where my deposits are not creditors of the bank and are instead fully segregated from the bank’s liabilities, and therefore protected.

And more. All actionable items that I will also tell my subscribers how to do so they can take similar steps to protect their privacy and their wealth.

But most of all, I will trade the dickens out of the new bull market that’s shaping up in the precious metals. It’s where I cut my teeth in the markets 35 years ago. I’m ready to rack up the profits once again.

To find out more, you should attend the last session of my special online summit on the gold market.

Just click this link at 3 PM Eastern Time tomorrow.

If you missed any of the first four sessions or would like to watch them again, you can do so by clicking here.

Best wishes,

Larry

Rate Watchdog
by Mike Larson

Let’s get one thing straight: “Communication” isnot the problem.

The so-called experts on Wall Street keep saying that if the Federal Reserve would only communicate better about its expected monetary-policy path, everything would be hunky-dory. Interest rates would remain low, bond volatility would stay suppressed, and we could all go on our merry way.

But it’s not that the Fed isn’t talking enough. Hardly a day goes by without another Fed press conference, another speech by a Fed governor, or an “anonymous source” report in the Wall Street Journal or elsewhere, reports that are obviously the result of planted quotes from Fed policymakers.

The real issue is that policy makers are completely boxed in.

Look, the Fed basically spent the last four years cornering the bond market. They’ve amassed a $3.4 trillion balance sheet, one loaded down with Treasury bonds, mortgage bonds and more. That was fine when bond investors were playing along, buying bonds aggressively so they could turn around and flip them to the Fed at virtually guaranteed, predictably profitable levels.

But now investors are running scared. They know the Fed is going to have to slow its bond buying, then stop buying and eventually start reversing course. And they can see that a “tipping point” has been reached in the 30-year bull market for bonds. Worse, fund managers no longer have the firepower to keep the markets propped up because their own investors are yanking tens of billions of dollars per week in money out of their funds.

Result: Neither the Fed — nor the bond fund managers who keep going on TV to tout Treasuries — can stop the selling wave.

Ten-year Treasury yields just hit a 23-month high of 2.72%. The iShares Barclays 20+ Year Treasury Bond ETF (TLT) just reached a 22-month low. And the iShares MBS ETF (MBB), an ETF that tracks mortgage bond prices, plunged anew, flirting with levels not seen since December 2008.

If you didn’t heed my advice several months ago to virtually eliminate your fixed-income exposure, what are you waiting for? Take advantage of any bounce — like the one we had earlier this week — to sell. I also strongly recommend that you consider investments that rise in value when bond prices fall. That would include everything from inverse bond ETFs, to put options on bond ETFs, to vehicles like Treasury bond futures options.

I will have more on these in the coming days and weeks. So do stay tuned.

Mike Larson,
Money and Markets Analyst on Interest Rates and Real Estate

Have comments? Tell Us!

About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets is a free daily investment newsletter published by Weiss Research, Inc. This publication does not provide individual, customized investment or trading advice. All information is based upon data whose accuracy is deemed reliable, but not guaranteed. Performance returns cited are derived from our best estimates, but hypothetical as we do not track actual prices of customer purchases and sales. We cannot guarantee the accuracy of third party advertisements or sponsors, and these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our Terms and Conditions. View our Privacy Policy. Would you like to unsubscribe from our mailing list? To make sure you don't miss our urgent updates, just follow these simple steps to add Weiss Research to your address book.

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Money and Markets: A Division of Weiss Research, Inc. | 15430 Endeavour Dr. | Jupiter, FL 33478 | 1-800-291-8545

posted by Informed Trading at 05:34
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Monday, 4 July 2011

Why the Great Greek Tragedy Has Barely Begun

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Monday, July 4, 2011
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YOUR BEST SOURCE FOR THE UNBIASED MARKET COMMENTARY YOU WON'T GET FROM WALL STREET

Why the Great Greek Tragedy Has Barely Begun

 

by Martin D. Weiss, Ph.D.
Monday, July 4, 2011 at 7:30am

Greek Debt Chart

This is a memorable day for the United States of America — both to warmly celebrate our past and coldly contemplate our future.

And this Independence Day weekend is also your ONLY time to view our brand new blockbuster video featuring Master Investor Kevin Kerr's response to the unfolding debt crisis. (Click here.)

His timing couldn't be better: Because if you want the truth about the what's about to happen next — in Europe or in the United States — you can't trust the happy talk of our leaders who are merely seeking to tame the debt monster they themselves created.

Nor can you believe Wall Street Pollyannas looking for any excuse to push the U.S. stock market higher.

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What's the connection between, the July 4th weekend, the collapse of BofA shares and your financial freedom?

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The only reliable measure of this debt crisis is the price thousands of institutional investors pay — and are willing to continue paying — for actual insurance contracts to protect themselves against future defaults. The more probable the default, the more they'll pay.

And for the country that's at the epicenter of this crisis — Greece —here's what this measure is telling you, loudly and unambiguously:

Despite the biggest sovereign bailout in history and despite all the happy talk last week about a new infusion of emergency cash, the probability of a Greek debt default is now the highest ever!

Have the bailouts made any difference? None whatsoever!

In fact, based on how much they're currently willing to pay for the insurance, institutional investors around the world have concluded that the probability of a Greek debt default is FOUR times greater today than it was when European officials announced their giant bailout package.

That's right. Nearly 14 months ago — on May 12, 2010 to be exact — when the European Union (EU) and International Monetary Fund (IMF) announced a 110 billion euro bailout for Greece, the cost of insuring $10 million in bonds against a Greek default was close to $540,000. Last week, it was $2.3 million, or 4.3 times more!

Think that's shocking? Then consider this:

Even when Lehman Brothers failed and even when the likelihood of a global collapse was at an all-time peak, the most investors were willing to pay for $10 million in Greek debt default coverage was only $52,000. Today, they're paying 45 times more!

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In other words, the world's largest investors now believe that the probability of a Greek default is FORTY-FIVE times greater today than it was at the height of the 2008 financial crisis.

Why are so many knowledgeable global investors who establish the price of these insurance policies so pessimistic, even while world leaders and markets are celebrating the "salvation" of the Greek economy?

Because they know that the Draconian austerity package just passed last week by the Greek parliament — higher taxes on entrepreneurs and the poor, spending cuts for seniors and others, and the fire sale of government assets — won't do a darn thing to help Greece avoid a default on its debts.

They fully understand that these measures will actually hurt the country's chances for survival in the near term.

They know that each time you raise taxes and cut spending, the economy takes a hits, government revenues go down, and the country finds it even closer to impossible to pay its bills and debts coming due.

Let's say, for example, that you own a manufacturing company that has fallen on hard times. You can't make your monthly payments. So you start downsizing — laying off workers and selling off equipment to raise the cash. Trouble is, your debts outstanding don't shrink by one iota. So unless you can find some new way to generate more revenues, the more you downsize, the more likely a default will be.

You are, in fact, signing your own death warrant.

That's exactly what Greece is doing now. Worse, it's piling on still more debt that merely buys a few weeks more time: The much-ballyhooed loans Greece just qualified for will only help it survive for two to three months — through the summer, but not a single second longer.

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All This Leaves You with Two —
And Only Two — Choices ...

  You can believe the same politicians who have consistently and deliberately deceived you about this debt crisis from day one (see also "Government Lying about Debt Crisis").

  Or you can believe the global investors who have no agenda but to protect their own investments from the true risks.

It also leaves you only two courses of action:

  Believe the politicians, forget about the crisis and go back to the old days of buy-and-hold investing.

  Or, believe the reality of the marketplace and continue to err on the side of caution.

The choice should be obvious: Despite what they may be saying in Athens, Berlin, Washington or on Wall Street ... no matter what the media may try to sell you ... the handwriting is on the wall: Greece is in the final stages of an historic collapse. Nothing can stop it now.

Not concerned? Think it's a far-away event that won't affect you? Then consider this ...

The Unfolding Great Greek Tragedy Impacts
YOUR Finances in Three Major Ways ...

If this were just an isolated financial crisis on the other side of the world, it probably wouldn't amount to much as far as most Americans are concerned.

But in today's shrinking, hyper-connected world, the consequences of a Greek default could not be more important to you, me and every other U.S. investor.

In fact, I count no fewer than three major impacts this crisis will have on your wealth and well-being:

IMPACT #1: It will crush U.S. banks. It's no secret the real estate crisis is back — falling home prices, a tsunami of home foreclosures and more. And despite short-term rallies, it's virtually impossible to envision a scenario in which bank earnings are not adversely impacted.

This is why bank stocks took such a big hit in May and June. Wells Fargo, for example, was flying high near $34 per share. Then, without warning, it suddenly plunged 24% — to $26.

Bank of America hit $15 per share and then plunged more than 30% — all the way down to $11 per share. And nearly every major bank — JPMorgan Chase, Regions Financial, and others — show the same pattern.

But here's something that not everybody knows: Those same U.S. banks have loaned huge amounts of money to European banks.

And because those European banks have, in turn, loaned billions to Greece, they will be among the first casualties of a Greek default.

IMPACT #2: U.S. money market funds: Did you know that U.S. money funds have invested half of their $1.6 trillion in assets in European banks?

It's true: And 50 million Americans have money in those funds!

That's not good news. When Greece defaults on its loans, many European banks will find it impossible to repay what they borrowed from U.S. money market funds.

That could force many to "break the buck" — allow their shares to fall in value below $1 each. Even the worry that it could happen can cause the financial markets to freeze and send investors stampeding to withdrawal money.

Impossible? Absolutely not! That's exactly what happened after the collapse of Lehman Brothers in 2008. One fund that owned Lehman debt, the Reserve Primary Fund suffered mass withdrawals, which, in turn, caused a run on many other funds.

Last week, even the eternally oblivious Fed chief Ben Bernanke fretted publicly about the stability of U.S. money funds:

"They do have substantial exposure to European banks in the so-called core countries: Germany, France, etc.," he said. "So to the extent that there is indirect impact on the core European banks, that does pose some concern to money market mutual funds."

Many investors aren't waiting. In the last two weeks, they have withdrawn $45.6 billion from prime money market funds, according to data from the Investment Company Institute.

But the risk goes beyond just money market funds. After the Lehman panic in 2008, virtually the entire global market for short-term debts — especially corporate IOUs called commercial paper — froze up.

Without the Federal Reserve stepping in to make massive, blanket guarantees, thousands of companies could not have borrowed — even to roll over debts coming due — no matter how good their credit rating. We would have seen a chaotic chain reaction of defaults.

This is the kind of SYSTEMIC risk that caused Washington to throw $700 billion in TARP funds at the problem last time around. But this time, with Congress vowing never to do such a thing again, there is no safety net.

The consequences could be catastrophic.

IMPACT #3: Washington is suffering from the same debt disease as Athens. Yes, in Greece, the illness is more advanced. But including government agencies like Fannie Mae and Freddie Mac, the U.S. government, like Greece, has passed the critical danger threshold of more money tied up in debts than the entire economy produces in each year! (A debt/GDP ratio of over 100%.)

Indeed, nearly everything you're seeing in Greece right now:

The huge cutbacks in government spending on seniors ...

The substantial tax increases — not just on "the rich," but on every portion of the population ...

The soaring interest rates and unemployment ...

Even the protests and riots ...

Are little more — and little LESS — than a sneak preview of what could be in store for us right here in the States, barring a major miracle in Washington.

So How Do You Keep Your
Money Safe at a Time Like This?

First, the obvious: Do not believe the authorities. Distrust what you hear from Washington or Wall Street. Follow the facts and nothing but the facts.

Second, do not count on government guarantees to always protect you from losses. Ultimately, as governments seek to protect their own finances, they will pull back from their role as lender, investor and guarantor of last resort.

Ultimately, if a major bank like JPMorgan Chase or Bank of America cannot meet its obligations, it could be on its own, and investors or even depositors may have to pay a steep price.

Third, make sure your bank or insurance company has the financial wherewithal to fulfill its promises independently — without government handouts or guarantees. That's what our Weiss Financial Strength ratings do for you. For a free Weiss Rating on your institution,

* Go to www.weisswatchdog.com.

* Sign up. Or if you're already registered, simply sign in.

* Search for your institution. (Use strictly the FIRST word of its name.)

* Add it to your watchlist and then check your watchlist for our rating.

Fourth, continue to monitor the rating as this crisis unfolds. Hard to do? Not at all! Once you've added your institution to your Weiss Watchdog watchlist, we will automatically notify you whenever the Weiss Rating has changed, giving you the new rating along with specific instructions on what to do next.

Fifth, reduce the risk in your investment portfolio. While you're at www.weisswatchdog.com, check the investment ratings of your stocks. Especially if they are D+ or lower, they are likely to be among the most vulnerable.

Sixth, buy hedges to protect the balance of your portfolio from losses. Or, if you have money you can afford to risk, use those same instruments as vehicles with the potential to rapidly grow your money.

Which Instruments? How and When?

Those are the questions we just asked Kevin Kerr, one of the most astute traders we've ever known. And Kevin answered with one of the most fascinating video presentations we've ever seen.

I feel Kevin was the right person to ask — for three reasons:

1. His recommendations with similar instruments could have multiplied your money 12 times over since 2004 — enough to turn $100,000 into more than $1.2 million ...

2. His win ratio has been nearly seven out of ten for the last seven years, and ...

3. His average winner has been nearly double the average loser.

Click this link to discover the little-known, but powerful instruments Kevin Kerr is using now.

Just remember that tomorrow is your last day to do so.

Good luck and God bless!

Martin

 
 
Money & Markets TV
 
 

Protecting Yourself from Another Recession

MAM TV  

The economic data over the past week are warning of another recession. And Mike Larson says it's because we didn't lay the groundwork for a healthy recovery. He tells you how to protect yourself and profit from the next wave of the economic downturn.
Click here to view [»]

 
Highlights
 
 

TWO great debt crises threatening America's very survival
Up to 100 MAJOR American cities are likely to go bust THIS YEAR! Immediate action is required to protect your money and your family!
[More »]

How to harness the world's most profitable stock markets exclusively with ETFs
There are more than 225 international ETFs that let you invest in individual countries ... entire regions ... and even ETFs that are designed to make you richer as markets decline!
[More »]

Standing on the Shoulders of Immigrants
Recently, Sean Brodrick's family got together for a reunion. And there are some important lessons he would like to pass along for you to do with your own family ...
[More »]

The New Ethanol Reality
The U.S. Senate voted to eliminate a tax credit and a tariff for ethanol production, opening the way for ...
[More »]

The robust recovery isn't underway; time to take matters into your own hands!
Just months ago, Wall Streeters and politicians were cheering that a recovery was well underway. Many forecasters were projecting 2011 to be a big year, with growth to be better ...
[More »]

 
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UNCOMMON WISDOM

Two China ETFs Ready to Explode with Profits
by Tony Sagami

Weiss Research

The loud noises of fireworks were made to scare away evil spirits as well as a way to pray for happiness and prosperity. Fireworks are made with ...
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About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets is a free daily investment newsletter published by Weiss Research, Inc. This publication does not provide individual, customized investment or trading advice. All information is based upon data whose accuracy is deemed reliable, but not guaranteed. Performance returns cited are derived from our best estimates, but hypothetical as we do not track actual prices of customer purchases and sales. We cannot guarantee the accuracy of third party advertisements or sponsors, and these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our Terms and Conditions. View our Privacy Policy. Would you like to unsubscribe from our mailing list? To make sure you don't miss our urgent updates, just follow these simple steps to add Weiss Research to your address book.

Attention editors and publishers! Money and Markets content may be republished with a link to the full story on MoneyandMarkets.com. Such republication must include attribution with a link to the MoneyandMarkets home page as follows: "Source: http://www.moneyandmarkets.com"

Weiss Research, Inc. | 15430 Endeavour Dr. | Jupiter, FL 33478 | 1-800-291-8545


 

 

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posted by Informed Trading at 17:02
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Saturday, 2 July 2011

The robust recovery isn't underway; time to take matters into your own hands!

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Saturday, July 2, 2011
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YOUR BEST SOURCE FOR THE UNBIASED MARKET COMMENTARY YOU WON'T GET FROM WALL STREET

The robust recovery isn't underway;
time to take matters into your own hands!

by Bryan Rich
Saturday, July 2, 2011 at 7:30am

Bryan Rich

Just months ago, Wall Streeters and politicians were cheering that a recovery was well underway. Many forecasters were projecting 2011 to be a big year, with growth to be better than 5 percent — the kind of "snap-back" you might expect following a typical recession.

Stocks had doubled from the 2009 crisis-induced lows. Manufacturing had shown signs of recovery. Commodity prices were soaring. Inflation was ticking higher here in the U.S. and abroad. And central banks were all talking about "normalizing" interest rates — i.e. reversing the emergency measures they had rolled out in response to the global financial crisis and recession.

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They also admitted that the key fundamentals, like jobs and consumer spending, weren't confirming the recovery. But they explained it away, saying these components were just lagging.

Even when the devastating disasters hit Japan — a very important piece of the global economy — they managed to dismiss the still open-ended nuclear crisis. And they touted the fabulous growth contribution that would come from rebuilding after the earthquake and tsunami.

What about Europe?

The European monetary union (EMU) had all of its flaws exposed in the global financial crisis. It was obvious that the critical deficit and debt limits set forth to govern the fiscal conformity of euro-zone countries — the rules that made the common currency concept valid — were completely disregarded and unattainable for several members.

The rules behind the common currency are falling apart at the seams.
The rules behind the common currency are falling apart at the seams.

As such the borrowing rates for PIGS countries finally began to reflect reality in early 2010, giving a clear signal that the gig was up in Europe. There was no solution for dealing with fiscal recklessness within the EMU. The weak countries couldn't remain solvent if left to borrow at realistic market rates. Default and contagion were inevitable. And a break-up of the euro, the second most widely held currency in the world, was quite possible.

Global financial and political leaders assured everyone that Europe's problems were contained, yet hedged themselves by adding "unless there is an exogenous shock in the global economy" to their forecasts.

Unfortunately, based on history, financial crises tend to produce economic shocks with surprising frequency. And given that the situation in Europe has proven to be unsolvable and on an inevitable path toward sovereign debt defaults, an "exogenous shock" happens to be a high probability event.

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Yet, the likes of global central bankers, the IMF and Wall Street conveniently chose not to include it in their forecasts — the same forecasts that tend to give investors like you the courage to keep your money passively invested, to invest more and to confidently spend again.

That means following this so-called leadership's guidance ends up hurting the consumer — the average Joe — again, in a seemingly perpetual cycle.

And on top of that, while they were trying to convince us to be active participants in the recovery, they chose not to eat their own cooking!

  The corporations didn't hire,

  The banks didn't lend,

  And the banks and government did nothing to help workout the debilitating housing crisis — one that will continue to saddle consumers, absent any solutions, indefinitely.

So now it's become increasingly accepted that robust recovery isn't underway. Rather another global financial crisis is looming! And it's time to take matters into your own hands — to protect your hard-earned wealth and potentially profit.

The jobs we were promised never arrived.
The jobs we were promised never arrived.

For Protection:
Build up Your Cash!

We're experiencing a balance sheet crisis. And it's left consumers, companies and governments trying to climb their way out of a hole of debt.

Raising cash can help you avoid exposure to the destructive events likely in store for financial markets.

Plus, while a potential inflationary spiral has received the most attention, another global financial crisis could send the world back into deflation-mode. For instance, if the speculation-led rise in commodities reverses under the weight of another global economic downturn, expect the warnings about inflation to flip.

In a deflationary environment cash is king!
In a deflationary environment cash is king!

For Profit:
Go the Short Side

The events unfolding in Europe and the global economy represent a lot of risk. But only if you're on the wrong side! Positioned correctly, they represent opportunity.

So what is the correct position in this environment? The same as it would be in any investment environment ...

You should always be positioned so the expected return more than compensates you for the risk taken.

And in my opinion, the best reward-to-risk profile in this environment is on the short side.

"Naked ambition and political cowardice have sentenced our once-great nation to AN ECONOMIC ARMAGEDDON of biblical proportions."

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I expect the two markets that led the bounce in global risk appetite from the depths of uncertainty ... to be the leaders on the way down. Those markets: The S&P 500 and the euro.

You can look to hedge your portfolio against a loss or make a trade to capitalize on a decline through inverse ETFs.

For example, the ProShares Short S&P 500 (SH) is meant to give you a 1 percent gain for every 1 percent decline in the S&P 500. And the ProShares UltraShort Euro (EUO) aims to return 2 percent for every 1 percent decline in the value of the euro.

Both of these inverse ETFs can be purchased in your normal brokerage account, just like any stock.

Also, consider my World Currency Trader service. This is where I give members more extensive analysis and precise easy-to-follow instructions on how to use three revolutionary currency instruments to preserve your wealth and profit in any economic environment.

Regards,

Bryan

 
 
Money & Markets TV
 
 

'Going Naked' as an Options Strategy

MAM TV  

Nilus Mattive discusses naked call writing, and why it is such a dangerous options strategy to pursue. However, he says that naked put writing can be an effective strategy for income generation, if it's done carefully and correctly.
Click here to view [»]

 
Highlights
 
 

The Richest Market in the World!
This is the only market that can generate profits for investors in any market environment, no matter what happens in the economy or the stock market.
[More »]

A special series of reports dedicated exclusively to dividend opportunities
Nilus' proprietary research reports give you everything you need to start earning the safest and richest dividends available today.
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Holiday Markets Upon Us
Right now, light volume, pre-holiday trading is dominating the sentiment in the market ...
[More »]

Online Dating Booming in China
Millions of Chinese are turning to online dating as a solution to relationship woes. The business of helping these lonely hearts is big business, and ...
[More »]

Recession Warning Flags Flying Again!
The United States emerged from a grueling 18-month recession just two short years ago, according to the business cycle arbiters at the National Bureau of Economic Research. Yet for many Americans, the "recovery" felt like anything but ...
[More »]

 
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Investing Insights
 
 

UNCOMMON WISDOM

Standing on the Shoulders of Immigrants
by Sean Brodrick

Weiss Research

Recently, my family got together for a reunion in Saratoga Springs, New York. Since my maternal grandmother had 13 children and many of those kids had big families, it's a lot of people ...
[ More » ]

 
Internal Sponsorship
 

About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets is a free daily investment newsletter published by Weiss Research, Inc. This publication does not provide individual, customized investment or trading advice. All information is based upon data whose accuracy is deemed reliable, but not guaranteed. Performance returns cited are derived from our best estimates, but hypothetical as we do not track actual prices of customer purchases and sales. We cannot guarantee the accuracy of third party advertisements or sponsors, and these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our Terms and Conditions. View our Privacy Policy. Would you like to unsubscribe from our mailing list? To make sure you don't miss our urgent updates, just follow these simple steps to add Weiss Research to your address book.

Attention editors and publishers! Money and Markets content may be republished with a link to the full story on MoneyandMarkets.com. Such republication must include attribution with a link to the MoneyandMarkets home page as follows: "Source: http://www.moneyandmarkets.com"

Weiss Research, Inc. | 15430 Endeavour Dr. | Jupiter, FL 33478 | 1-800-291-8545


 

 

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Saturday, 2 July 2011

Recession Warning Flags Flying Again!

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YOUR BEST SOURCE FOR THE UNBIASED MARKET COMMENTARY YOU WON'T GET FROM WALL STREET

Recession Warning Flags Flying Again!

 

by Mike Larson
Friday, July 1, 2011 at 7:30am

Mike Larson

The United States emerged from a grueling 18-month recession just two short years ago, according to the business cycle arbiters at the National Bureau of Economic Research. Yet for many Americans, the "recovery" felt like anything but a rebound. And now, it looks like it's already coming to an end.

Just consider what we've learned in the past few days ...

Grand Finale Video Begins at Noon!

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* Personal spending went nowhere in May! That missed the forecast for a gain of 0.1 percent, and it was the worst reading in 10 months. Moreover, the gains stemmed from higher prices not strong underlying demand. Inflation-adjusted spending shrank 0.1 percent, the second monthly decline in a row!

* The Dallas Fed's latest manufacturing gauge imploded! It fell to -17.5 from -7.4. That was the worst reading in 11 months. It's not an isolated disappointment, either. The New York and Philadelphia indices also tanked, and the overall plunge we've seen in these up-to-date manufacturing surveys over the past couple of months is one of the worst on record!

* Housing keeps sinking like a stone! New home sales fell another 2.1 percent in May, while existing home sales dropped 3.8 percent. Home prices, according to S&P/Case-Shiller, dropped 4 percent from a year ago in April. That was the biggest annual drop in 17 months, and it leaves prices at their lowest level since eight summers ago.

* Consumer confidence is tanking! The Conference Board's consumer confidence index slumped again to 58.5 in June from 61.7 in May. Not only did that miss economist forecasts, it was also the worst reading in seven months.

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What might we see next? What are the ramifications for stocks? Bonds? Currencies? Let's take a look ...

Why the Second Recession in as
Many Years May Be Looming

How could we possibly be in this dismal situation? Weren't we told several times over the past couple of years that brighter times were ahead?

Neither  Bernanke nor Geithner have offered any practical solutions to ease the pain  Americans are feeling.
Neither Bernanke nor Geithner have offered any practical solutions to ease the pain Americans are feeling.

Sure, we were. By politicians in Washington. And you probably know the old joke: "How can you tell a politician is lying? His lips are moving!"

The fact is, we didn't lay the groundwork for a healthy recovery. We didn't allow the debt destruction that had to take place, proceed. Instead, we tried to bail out and backstop everybody and his sister in order to make things less painful. That means that even now, we're still too buried in debt to fund a healthy, long-lasting rebound.

As The Wall Street Journal reported on Monday ...

"The Federal Reserve is just days away from ending one of the major steps to aid the U.S. economy — but the effort has done little to solve the original problem: The government and individuals alike are still heavily in debt."

The Journal goes on to make the same argument I've laid out for you:

"The fundamental problem is that reversing the trend of piling on the debt requires some combination of cutting spending, growing income or the economy, and inflation. But wage growth is stagnant and home prices, which underpin much of the debt problem, are still falling.

"Meanwhile, in a vicious circle, businesses aren't hiring or investing because they know consumers are tapped out. Banks, for their part, are hoarding cash, being stingy with new loans."

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The amazing thing is that policymakers at the Fed and Treasury don't seem to understand this fact — even as it's been obvious to me for the past couple of years! Ben Bernanke himself admitted in his most recent press conference that ...

"We don't have a precise read on why this slower pace of growth is persisting ... Some of the headwinds that have been concerning us, like the weakness in the financial sector, problems in the housing sector, balance sheet and deleveraging issues, may be stronger and more persistent than we thought."

That sure is encouraging, eh? It just goes to show you that if you're counting on the Fed to get things right, good luck! They got the dot-com bubble wrong. They got the housing bubble wrong. And their plan to underwrite an economy recovery has proven to be the wrong medicine for what ails us.

Practical, Real-World Ways
to Protect Your Wealth!

My simple advice: Stop listening to the happy talk coming out of Washington. Take steps immediately to protect your wealth from a looming recession!

One of my favorite vehicles is inverse ETFs — exchange traded funds that rise in value as sectors of the stock market fall. In the first phase of the recession, sectors like real estate and financials got crushed ... driving the value of select inverse ETFs through the roof.

If I'm right and sectors like REITs are going to tank again, then the actions I recommended in my June 17 Money and Markets column will pay off handsomely.

You could also consider something like the ProShares UltraShort MSCI Europe (EPV) to hedge yourself against the risk of a meltdown in the PIIGS nations. The only problems with this leveraged ETF, and the many others you can choose from, is timing and pricing.

You need to know when to get in, and when to get back out, because tracking errors between these ETFs and their underlying benchmarks increase with time. You also have to control your risk with tools like profit targets and stop losses.

That's precisely what I'm helping my subscribers do in Safe Money's Crisis Trader, and if you'd like my help navigating this potential recession, I'd love to welcome you aboard. Just click here or give us a call at 800-393-1706.

Until next time,

Mike

 
 
Money & Markets TV
 
 

Master Investor Series Episode 4

Our special guest is one of the most astute investors ...

 
Highlights
 
 

More and more companies are writing richer and richer dividend checks
This presentation shows how some of the DULLEST dividend-paying stocks in America are now paying early investors annual yields in excess of 10%!
[More »]

The IMF's plan to replace the U.S. dollar as the world's reserve currency!
If you don't defend your buying power now, it could soon be too late!
[More »]

Latin Stocks That Are Making a Bundle from China
You shouldn't ignore companies in other regions of the world that are making big profits by doing business with China ...
[More »]

America's Next Crisis Is Dead Ahead!
America's economic recovery is sputtering, and the market's recovery may be on a rough road ...
[More »]

Three Often-Overlooked Risks of Inverse ETFs
The ETF revolution allows everyday investors to achieve the impossible. Just a few short years ago, short-selling, leverage, spreads, and commodities were practical only for the Wall Street insiders. Now, with ETFs, anyone can ...
[More »]

 
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UNCOMMON WISDOM

Don't expect too much right now ...
by Larry Edelson

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Larry here with my latest video update. Right now, light volume, pre-holiday trading is dominating the sentiment in the market, so don't expect ...
[ More » ]

 
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About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets is a free daily investment newsletter published by Weiss Research, Inc. This publication does not provide individual, customized investment or trading advice. All information is based upon data whose accuracy is deemed reliable, but not guaranteed. Performance returns cited are derived from our best estimates, but hypothetical as we do not track actual prices of customer purchases and sales. We cannot guarantee the accuracy of third party advertisements or sponsors, and these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our Terms and Conditions. View our Privacy Policy. Would you like to unsubscribe from our mailing list? To make sure you don't miss our urgent updates, just follow these simple steps to add Weiss Research to your address book.

Attention editors and publishers! Money and Markets content may be republished with a link to the full story on MoneyandMarkets.com. Such republication must include attribution with a link to the MoneyandMarkets home page as follows: "Source: http://www.moneyandmarkets.com"

Weiss Research, Inc. | 15430 Endeavour Dr. | Jupiter, FL 33478 | 1-800-291-8545


 

 

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Thursday, 30 June 2011

Three Often-Overlooked Risks of Inverse ETFs

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Three Often-Overlooked Risks of Inverse ETFs

 

by Ron Rowland
Thursday, June 30, 2011 at 7:30am

Ron Rowland

The ETF revolution allows everyday investors to achieve the impossible. Just a few short years ago, short-selling, leverage, spreads, and commodities were practical only for the Wall Street insiders. Now, with ETFs, anyone can play.

Yet availability doesn't guarantee success. You have new opportunities, yes, but they all have risks. You need to know what can go wrong and be ready for it — before you place an ETF order.

Yesterday's Master Investor Session

Here's what you missed in yesterday's third installment of our Master Investor Series:

How the "Greek Tragedy" will intensify America's banking crisis ... Ben Bernanke's rude awakening ... why gold will shoot the moon ... why your grocery bill is about to explode ... and much more!

If you missed portions of the video or would like to watch it again, click here and it will begin playing immediately.

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Lately I've received many questions about inverse ETFs, which are designed to go up when the indexes they track go down. With markets volatile, the economy sputtering, and a global debt crisis all over the headlines, now may be a great time to consider trading on the short side.

But inverse ETFs carry some unique risks. And today I'll talk about three you may not have considered.

Inverse ETF Risk #1:
Bad Timing

This one may go without saying, but I'll say it anyway. You don't want to buy an inverse ETF (or make any kind of short sale) unless you are very confident your target market is heading down soon. Timing your entry and exit is critical.

Why Risk Huge Losses in U.S. Stocks?

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The same is true for bulls, of course, but it's doubly important on the short side. Markets tend to fall faster than they rise. The downturn can easily be over by the time you notice it and decide to jump aboard with an inverse ETF.

Inverse ETFs can change directions quickly, so be  ready to jump off!
Inverse ETFs can change directions quickly, so be ready to jump off!

Even for professionals, differentiating between a temporary drop and the beginning of a bearish trend is tough. And as we'll see in the next section, time is not always on your side.

Inverse ETF Risk #2:
Holding Too Long

Many inverse ETFs include a built-in leverage factor. The intent is to amplify your gains by 2X or 3X. Sounds great, right? Go 3X short and a 5 percent drop for the market turns into a 15 percent gain for you, right?

Not exactly. In most cases, the leverage factor is reset every day. This means that, over time, the value of your shares can drift down even if the market moves in your favor!

Leverage can be helpful or dangerous.
Leverage can be helpful or dangerous.

I explained this just last month in What Silver's Recent Plunge Teaches Us about Leveraged ETFs. And for more details and examples, see my 2009 column Understanding Leveraged ETFs.

The bottom line: Leveraged and inverse ETFs are intended for quick strikes. Get in and get back out as soon as possible. If you make a mistake, admit it. Don't just sit there and hope for a recovery.

[Editor's note: For clear, concise alerts on when to get into a position — and when to get out — you should check out Ron's International ETF Trader service.]

Inverse ETF Risk #3:
Derivative Exposure

Inverse ETFs employ various techniques to get the correct market exposure. In many cases they include derivatives like futures, options, and swaps.

The main concern in derivatives is "counterparty risk." These instruments are nothing more than legal agreements in which two parties agree to do specific things in specific circumstances. One party is you — or really the ETF manager, acting on your behalf.

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In the case of an inverse ETF, the counterparty agrees to pay your ETF if the selected benchmark goes down. Likewise, the ETF will pay the counterparty if the selected benchmark goes up. Counterparty risk is the possibility the other side won't make good on their bet.

Most inverse ETFs achieve their desired exposure by holding swaps. And it is important to note here, that swaps typically involve only the gains and losses in an index, not the base value of the index itself.

For example, if an index has a starting value of 100 and moves 2 percent, the swap only covers the 2 percent move (4 percent if it happens to be a 2x fund).

If the counterparty were to default, the ETF might not be able to collect on the 2 percent or 4 percent gain, but it would still have the initial cash representing the original index value of 100. This example is oversimplified of course, but I think you get the idea.

Counterparty risk is everywhere.
Counterparty risk is everywhere.

Counterparty risk isn't unique to derivatives contracts. When you buy a plane ticket, for instance, you agree to give the airline a certain amount of money. They agree to have a seat available for you on a plane going to your destination at a defined date and time.

If you don't pay for your ticket, or the plane takes you to the wrong city, then it is a form of "counterparty default."

Defaults on equity swaps are very rare, but there is always the possibility that it could happen. This is one factor to consider when deciding whether an inverse ETF is what you need.

Every ETF has a prospectus with detailed information on its characteristics, fees, and risks. Always read it before you invest a dime. You can find it on the sponsor's website. If you don't understand something, get clarification from a reliable source.

Best wishes,

Ron

 
 
Money & Markets TV
 
 

Master Investor Series Episode 3

Our special guest is one of the most astute investors ...

 
Highlights
 
 

I'd rather invest in tiny Sri Lanka than in the mighty Dow
U.S. stocks pose substantial risks to your capital while offering pathetically low profit potential ...
[More »]

My "INCOME KICKERS" can give you additional annual yields of up to 58%
In my free presentation, I'll show you how you can get the best of both worlds: Steady, substantial income ... without high risk!
[More »]

Big Stocks with Big Dividends
The U.S. economic data has been dismal lately, which would normally be bad news for the dollar ...
[More »]

Monthly Market Update for the Precious Metals Sector
Larry Edelson gives his latest update on the precious metals sector ...
[More »]

Why Obama's Desperate Move
Could Send Oil Prices Soaring!

The sudden announcement last week that the International Energy Agency (IEA) would release strategic oil supplies onto the world markets caused a significant selloff. And crude oil prices ...
[More »]

 
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UNCOMMON WISDOM

Latin Stocks That Are Making a Bundle from China
by Tony Sagami

Weiss Research

This column is devoted to Asian investment opportunities, but it doesn't mean you or I should ignore the rest of the world. That is especially true when companies in other regions are making big profits by ...
[ More » ]

 
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About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets is a free daily investment newsletter published by Weiss Research, Inc. This publication does not provide individual, customized investment or trading advice. All information is based upon data whose accuracy is deemed reliable, but not guaranteed. Performance returns cited are derived from our best estimates, but hypothetical as we do not track actual prices of customer purchases and sales. We cannot guarantee the accuracy of third party advertisements or sponsors, and these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our Terms and Conditions. View our Privacy Policy. Would you like to unsubscribe from our mailing list? To make sure you don't miss our urgent updates, just follow these simple steps to add Weiss Research to your address book.

Attention editors and publishers! Money and Markets content may be republished with a link to the full story on MoneyandMarkets.com. Such republication must include attribution with a link to the MoneyandMarkets home page as follows: "Source: http://www.moneyandmarkets.com"

Weiss Research, Inc. | 15430 Endeavour Dr. | Jupiter, FL 33478 | 1-800-291-8545


 

 

Recommended reading David Icke Books, Get access to exclusive newsletters, Video streams, Downloads, Podcast, And lots more

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Wednesday, 29 June 2011

Why Obama's Desperate Move Could Send Oil Prices Soaring!

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Why Obama's Desperate Move
Could Send Oil Prices Soaring!

 

by Kevin Kerr
Wednesday, June 29, 2011 at 7:30am

Kevin Kerr

The sudden announcement last week that the International Energy Agency (IEA) would release strategic oil supplies onto the world markets caused a significant selloff. And crude oil prices dropped around $9 in about two days.

Mission accomplished? Hardly!

The 60 million barrel release from the Strategic Petroleum Reserve (SPR) is merely a drop in the bucket of global usage, and will likely have the opposite effect on prices longer term. The move is simply more psychological window dressing for the comic theater that is happening in Washington right now. It would be funny, if it wasn't so sad.

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Here's how to catch up ...

You missed the second blockbuster video of our five-part series airing THIS WEEK ONLY with one of the world's greatest investors.

But you can still register for the rest of the series and even receive a transcript of the video you missed.

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In fact, it's really a sign of ...

Desperate Measures

By releasing supplies from the SPR with crude at around $90, if prices do run up again, the administration will have to fill the SPR back up at a higher price. And as shown in the chart below, a big chunk of that oil will come from outside our borders.

The Strategic Petroleum Reserve is  intended solely for emergencies that threaten the U.S. economy or national  security.
The Strategic Petroleum Reserve is intended solely for emergencies that threaten the U.S. economy or national security.

It's another foolish rob-Peter-to-pay-Paul action by the imploding U.S. government.

The careless action taken by the IEA and President Obama, has now underscored how worried they actually are about global economic growth and tight supplies. So in essence this move could actually stoke the fire to drive prices much higher, much more quickly.

In a recent Bloomberg report, Caroline Bain, of the Economist Intelligence Unit, was quoted as saying:

"Although the immediate impact of the IEA's reserve release will be to depress prices, in the more medium term, it could actually be bullish for prices. Reserves are finite and cannot be released forever."

Unlike Uncle Ben's printing press that never seems to run out of ink, oil supplies are not something the U.S. government can simply print more of.

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Make Fortunes

Are you worried about rising interest rates ... the falling dollar ... and the bearish impact these events could have on your fixed income portfolio?

Right now, up to $4 TRILLION of currency trades change hands DAILY. That's more than ALL of the world's stock and bond markets combined! And with that huge trading volume in currencies comes a unique advantage over all other investments: There's ALWAYS a bull market in currencies!

If you can dial a telephone and read some words to your broker you can harness the enormous profit potential of currencies. Want to learn how?

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To put the gravity of the situation in perspective, this is only the third time in the past 50 years that IEA has released strategic reserves. And in order to tap the SPR, President Obama had to authorize it.

Frighteningly, the prior two times resulted in super-spikes. And I think we can expect that record to hit 3-0 very shortly.

It'll Be Different This Time,
Just Not in a Good Way

Many things are very different this time around that make it even more unlikely this small release of oil will have any measured impact to the downside.

For instance, we don't have the added supplies of barrels of North Sea Crude to help cushion prices.

Supplies from Norway are falling fast, and Norwegian oil production decline is devastating. The figures from some of the producers are downright scary ...

According to reports, production has fallen in the region by more than 20 percent from 1991 levels. Problems have included: Corrosion of old infrastructures combined with a lack of proper investments prior to the merger of Norway's two largest oil groups, Statoil and Norsk Hydro.

Meanwhile production from Mexico's oil fields, which the U.S. also has counted on heavily in the past, is also falling drastically. So the likelihood of the SPR release bringing any sustained relief to oil prices and thus consumers, is highly unlikely.

Will America COLLAPSE
in the next 11 months?

Top analyst warns:
"This rapidly approaching event
will END the American way of life
FOREVER."

Is he right? View the video for FREE, then decide for yourself. Warning: Content may be too disturbing for some viewers.

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No Real Answers ...
Just Fairy Tales!

The recent correction in commodities across the board is a welcome opportunity for those who can step out of the land of unicorns and candy canes for a moment, and see the true disaster that is unfolding before us, especially in the energy sector.

Bloomberg recently quoted a top trader, Michael Cuggino, who helps manage $13.5 billion at Permanent Portfolio Funds in San Francisco:

"I still like the growth story. Commodity prices are going to continue to go higher. Worldwide, the economy continues to grow and monetary policy is going to stay relatively consistent with no changes."

Amen.

Basically, by wasting valuable years that could have been used for research and development, drilling, and creation of alternatives, the U.S. has set itself up to be dependent on oil supplies from people whose ultimate goal is to destroy us.

A nightmare.

Couple that with the ongoing endless printing of dollars by the Fed and the ever-rising debt ceiling, and you have a recipe for disaster. So what is an investor to do?

Bent Over a Barrel

As investors and consumers we have to choose our own belief in what the reality of the situation in the U.S. is right now. But clearly job losses and lower wages, at the same time as rising food and energy costs, are a very bad combination. Regardless of what some government reports may show.

The national debt just seems to grow and grow and grow, and yet no real answers are being sought on how to change the underlying problems. And the partisan bickering and lack of any true energy policy in the U.S. is the biggest joke of all.

We need oil — and lots of it — to make everything from bubble gum to shower  curtains to bandages.
We need oil — and lots of it — to make everything from bubble gum to shower curtains to bandages.

The fact of the matter is that when it comes to oil supplies the U.S. is bent over a barrel and not doing anything about it. The days of cheap energy supplies are over. And that translates into higher costs for everything that uses oil or related products. Transportation, manufacturing, industrial, building ... you name it. Basically everything.

The bottom line: We all have exposure to higher oil prices, so we must find a way to invest in the rise to offset some of the costs and even profit from the inevitable.

There are many ways to invest in the energy markets ... from commodity futures and options to individual energy stocks. But often the volatility and risks of these vehicles can dissuade some investors.

However one of the best ways I know for investing in rising energy prices are key energy ETFs, and ETF options should you want more leverage. Here are two possible opportunities you might consider:

PowerShares DB Oil (DBO): To play energy in the short-term, futures-based ETFs such as DBO are designed to help you accomplish that. While these funds aren't intended to track the spot price of oil, they'll often correlate better than equity-based funds.

SPDR S&P Oil & Gas E&P (XOP): Oil companies have been raking in profits hand over fist for the last several years, so it only makes sense that higher oil prices will continue that trend. And with this IEA-inspired pullback we could see those prices surge even more. So XOP, which tracks the performance of the oil and gas exploration and production portion of the S&P Total Market Index, could be a real winner.

There are many more oil-related ETFs to keep your eye on, and you can expect more to come out as this story is just heating up.

Yours for resource profits,

Kevin

Kevin Kerr has successfully traded commodities professionally for the last 22+ years. He a regular contributor to news outlets including CNBC, CNN, FOX News, CBS Evening News, and Nightly Business Report.

 
 
Money & Markets TV
 
 

'Going Naked' as an Options Strategy

MAM TV  

Nilus Mattive discusses naked call writing, and why it is such a dangerous options strategy to pursue. However, he says that naked put writing can be an effective strategy for income generation, if it's done carefully and correctly.
Click here to view [»]

 
Highlights
 
 

Why central bankers want to devalue everything you own
Some governments will continue to attempt to pay off their debts with CHEAPER MONEY. In other words, DEVALUE their currencies! Learn how you can beat them at their own game.
[More »]

Bernanke's massive counterfeiting scheme
The big danger: If a new currency replaces the dollar, the prices of just about everything you buy will skyrocket!
[More »]

My Forecasts Are Right on Track
Larry Edelson told you that
"... nearly all markets are now in a position of rolling over, creating potential ..."
[More »]

Emerging Markets Telecom Play
Of all the classic defensive sectors, the one that has the most compelling global fundamentals is telecom, especially ...
[More »]

When it's actually okay to "go naked" ...
A few weeks ago, I told you about covered call writing ... which is my favorite income-generating options strategy. And in that article, I told you that I absolutely, positively did NOT recommend ...
[More »]

 
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UNCOMMON WISDOM

Big Stocks With Big Fat Dividends
by Sean Brodrick

Weiss Research

The market correction has punished some big companies -- some unfairly. Especially when they pay nice dividends. Now, those dividends on those big names are looking even bigger. Here are some names ...
[ More » ]

 
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About Money and Markets
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Money and Markets is a free daily investment newsletter published by Weiss Research, Inc. This publication does not provide individual, customized investment or trading advice. All information is based upon data whose accuracy is deemed reliable, but not guaranteed. Performance returns cited are derived from our best estimates, but hypothetical as we do not track actual prices of customer purchases and sales. We cannot guarantee the accuracy of third party advertisements or sponsors, and these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our Terms and Conditions. View our Privacy Policy. Would you like to unsubscribe from our mailing list? To make sure you don't miss our urgent updates, just follow these simple steps to add Weiss Research to your address book.

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Wednesday, 29 June 2011

You’ve just missed our brand new video! here's how to catch up...

 

Dear Reader,

You’ve just missed the second blockbuster video of our five-part series airing THIS WEEK ONLY with one of the world’s greatest investors.

But you can still register for the rest of the series by clicking here. And in a moment, I’ll give you a full, unedited transcript of the video you missed today.

The No-Nonsense, Investor-Friendly,
Commercial-Free Value of Today’s Video

If one of the world’s greatest investors was willing to show you exactly how he does it ...

How he was able to recommend seven winning trades in every ten since 2004, plus ...

How those recommendations could have produced a total return, including winners and losers, of 1,133% — enough to turn $100,000 into $1.2 million in less than seven years ...

And if he was also willing to show you — step by step — how he plans to continue to achieve similar gains throughout the rest of 2011 and in 2012 ...

Would you be willing to listen?

Well, that’s precisely what Kevin Kerr is doing in this 5-part series!

In today’s fast-paced session, Sean Brodrick joined me as we explored the strategies and investments Kevin is using to profit from the weakening U.S. economy, and it was a huge hit with our readers. Our inboxes are already filling up with their “thank-you” notes.

There was nothing to buy: Just valuable, investor-friendly information you could use to go for the same kind of profits Kevin has produced month-in and month-out for nearly seven years!

Unfortunately, you haven’t yet registered for this series. So you weren’t able to join us for the video session earlier today.

But because I believe the investment intelligence Kevin is sharing with us is absolutely essential to your success, I’ve included the transcript of today’s session in this email.

In the transcript below, you’ll discover ...

>> The two megatrends that Kevin is most excited about now — and the investment vehicles he believes could help you double your money in the weeks and months ahead ...

>> Why bank stocks are plunging ... why this disturbing trend is only just beginning ... and how you can multiply your money as weak banks implode ...

>> How to grow richer in 2011 whether the U.S. economy sinks into a double-dip recession or not ...

>> The secret Kevin uses to win nearly seven trades out of every ten ...

>> And much more.

IMPORTANT: To make sure you don’t miss any of the money-making insights Kevin’s sharing with us this week, be sure to take the following two steps right away:

FIRST, be sure to click this link to gain access to tomorrow’s session at 12 noon Eastern Time (5 PM GMT) ...

And to be on hand for the rest of the videos in this series, including the grand finale session this coming Friday — the session in which Kevin Kerr reveals the unusual investments he’s buying right now.

SECOND, to help you prepare for tomorrow’s all-important episode, be sure to review the transcript of today’s session, below.

Good luck and God bless,

Martin

Here’s Today’s Transcript ...

Master Investor Series — Part II

Martin Weiss: Welcome to part two of our five-part Master Investor Series, in which Kevin Kerr, one of the world’s most astute investors, will give you the strategies and investments he’s using to help generate consistently large gains even in these tough times.

Kevin has been a frequent guest with Cavuto on Fox, Kudlow & Company on CNBC, Nightly Business Report on PBS and many others. But what makes him so unique is not what you see of him on TV. It’s his track record. And it’s the investment recommendations he’s been giving to a small, private group of investors, using instruments that he has never mentioned before in any public appearance.

In fact, Kevin’s record is so good, we decided to spend several months meticulously examining each and every one of the trades he has recommended since 2004. We found that investors who followed his recommendations could have achieved a total return — including winners and losers — of 1,133 percent. That’s enough to make them more than twelve times richer in less than seven years. In other words, if you had started with $25,000, you could have over $308,000 today. Or if you had started with $100,000, you could have more than $1.2 million today.

Also joining us is Sean Brodrick, whom you know from his great work here at Weiss Research. And it just so happens that Sean has been working closely with Kevin for ten years. Sean, I want to thank you for continually nagging and prodding me and our research team to look seriously at Kevin’s work.

Sean Brodrick: Well, it was a pleasure. I kept telling you Martin, “You gotta look at Kevin Kerr’s track record. You gotta tell our subscribers about him. You have to give them the chance to at least meet him here on Money and Markets TV.”

Martin: Yes, and thank you very much Sean. I appreciate that.

Sean: I hate to say I told you so, but I did tell you so. And just in the months since then, look at all the missed opportunities to make money with Kevin’s signals.

Martin: Hey Sean, give me a break. We’ve been busy verifying and validating his track record. We dug up every trading signal he published in real time. We bought the historical data from the exchanges. We checked every one of his signals to make sure they were actually executable in the real market. And we tallied all the losses and all the gains. And listen, you can’t make these kinds of claims without ...

Sean: 1,133 percent!

Martin: Right. You can’t make that kind of a claim without hard proof. But that said, since you’ve been working so closely with Kevin for over a decade, I want to give you a chance to grill him about what he does and how he does it.

Sean: That’s what I’m here for. Hi Kevin, how are you?

Kevin Kerr: I’m just fine, Sean, how are you?

Sean: I’m great. I wasn’t here for your session yesterday, so please tell me everything you covered in two minutes or less.

Kevin: Well I know you’re a fast guy, so I can do it in one minute or less.

First, the U.S. economy is sinking again. All the numbers now tell us that it’s confirmed. It’s a double dip, it’s confirmed.

Second, the sinking economy is going to hit the bank earnings, and hit them hard.

Sean: It’s already hitting them hard, you know.

Kevin: Third, the Fed has no choice but to continue its mass money printing. And fourth, the mass money printing is going to continue driving up the price of tangible assets.

This gives you not just one but two major profit opportunities right now.

Sean: Okay, let’s hear what those are.

Kevin: Well first, you can ride the decline in one sector, the stock sector of the banks. They’re going to get hit the hardest. I think that can give you a quick injection of cash into your account.

And second, you can go for a long string of profit opportunities in one tangible asset that I think will go up even in the recession — FOOD.

Sean: Ah. But are these future opportunities, or are they past opportunities?

Kevin: Well they’re both, Sean. I mean we’ve just been through a similar cycle and now we’re coming around again. This cycle is bound to be even bigger and more profitable actually.

Sean: Okay. So please tell me how much you could have made in the last cycle, and then tell me why you think this next cycle is going to be bigger and more profitable.

Kevin: Well, in the last cycle, if you just bought and held a regular broad-index ETF — no leverage, no stock selection, no fancy in-and-out trading — you could have made 82 percent with the decline in bank stocks in 2009. Then, when the Fed stepped in and started printing money like crazy, if you just bought and held an ETF tied to food, you could have made 130 percent. And that’s just capturing about half of the move.

Sean: Okay Kevin, so tell me — do you use ETFs?

Kevin: No. I use an even more powerful instrument. I’ll tell you about it in the fifth part of this series on Friday.

Sean: Okay. But even just with simple ETFs though, I mean, those are some very nice numbers, right? 82 percent, 130 percent.

Martin: Guys, that was then. What about now?

Kevin: Well Martin, I think that was just a warm-up for what’s coming next. Look, before we sank into the last recession, the official unemployment rate, and you guys reported it, was about what, 5 percent?

Martin: Right.

Kevin: And now, as we sink into this next recession, and I believe we are, it’s 9.1 percent. That’s almost twice as bad. Remember, the last time, the Fed, they were crying out loud, they said we have to, because of surging unemployment, we have no choice, we have to print trillions of dollars. Well now, they’re going to have to print even more. It’s a staggering number.

So I want to go back to what I said yesterday. You have two huge opportunities as an investor. First, take advantage of the sinking bank stocks, as you’ve pointed out Martin. And second, to ride that surge in food prices, which we know is inevitable.

Sean: So is that it? Just those two things, banks and food?

Kevin: No Sean, you know me better than that. Of course not. There are all kinds of ways to make money in this kind of turmoil. I mean, it’s everywhere. For example, there are some very intriguing ways to make big money from the debt crisis that’s exploding here in Europe, especially in Greece. There are great ways to make money from the revolutions that are hitting the oil-rich countries — Saudi Arabia, Egypt, all throughout the Middle East. There are great ways to make money from a whole host of other markets that are about to go wild in the days ahead I predict.

Sean: Okay. But today, let’s just focus on the opportunities in banks. Then tomorrow, let’s you and me talk about food and the other commodities.

Most people think the only way to invest in banks is to buy a CD or the bank’s shares, right?

Kevin: Well, not true. In this climate, you can make a heck of a lot more money — and more quickly — by betting on the decline of the bank stocks.

Sean: Also, most people think that you have to be an expert stock picker, or a short-seller, to target the weakest banks, which is a challenge for a lot of people.

Kevin: Not true again, Sean. You’ve known me a long time, and I never claimed to be a big expert on anything. The bottom line is as a trader you don’t have to be doing any of that. In the last cycle, all you had to do was buy some simple instruments that anyone can put into any basic brokerage account, online, offline, it doesn’t really matter. You’ve got a solid bet on these powerful forces. These are huge bulldozers, about to implode, and they’re about to hit the nation’s megabanks. I’m talking about mortgage defaults, home foreclosures, and well ...

Sean: The sovereign debt crisis.

Kevin: Yeah, you said it. You took the words right out of my mouth actually. Not just Greece but also dominoes like Ireland, Portugal, Spain and Italy. Probably in that order.

Martin: I’d like to jump in here and add something to this. As you know, our Weiss Ratings division has been covering the nation’s thousands of banks since the 1980s. And throughout that period, we have consistently been able to pinpoint, ahead of time, which banks are the most vulnerable. But there’s a big difference between the 1980s and today. Back then, almost all of the failing banks were smaller institutions. I can recall only a couple of rare exceptions like Franklin National and Bank of New England.

But now, in addition to thousands of smaller institutions in a weakened state, we have scores of medium-sized banks and super-regional banks loaded with commercial and residential real estate loans that are going bad. And more importantly, in addition to the super-regional banks, we have a couple of the biggest megabanks that are also vulnerable — JPMorgan Chase, Bank of America. So this is big.

Sean: Okay, so why don’t the other rating agencies agree with you?

Martin: Well, good question, Sean. Exactly how they arrive at their ratings is kind of murky to me.

Sean: The conflicts of interest are huge! They get paid by the same banks that they give ratings to.

Martin: Right. Plus they figure that these banks are just too big to fail. They assume blindly that Uncle Sam will always come to the rescue. Even if he does, the fact is they’re overlooking big, gaping holes in the banks’ own financial statements. Even if they don’t sink the banks, they’ll sink the bank stocks!

Sean: Kevin, what’s your solution?

Kevin: My solution? That’s above my pay grade! I’m a trader, I just make money. Look, foreclosures are already a tsunami in the economy. And home prices in the top twenty U.S. cities have just plunged below their worst levels at the height of the debt crisis. That’s already hitting bank earnings like a sledgehammer. The recovery is evaporating, gentlemen. And we know that’s going to hit bank earnings hard. I don’t care what the Fed does at this point.

Sean: And even when they bailed out banks last time around, what did it do for bank stocks?

Kevin: Well exactly Sean. The bank stocks still plunged, even with the bailout, to brand new lows.

Sean: So you think that it’s a slam dunk to bet on these falling bank stocks?

Kevin: Well look, you’ve known me long enough to know I never say anything is a slam dunk. If it were, I’d never make a losing recommendation, and no one can do that. I’ve had lots of losing trades in my day.

Sean: Okay Kevin, I appreciate that you’re being frank about that. But based on your record, I see that over the past seven years, you’ve had nearly seven out of ten winners. And I see that your winners are nearly triple the size of your losers.

Kevin: Well, thanks for pointing that out, Sean. I appreciate that. Look, my point is, and very honestly, nothing is guaranteed. And losses come with the territory. That’s trading. But if you could have good money placed on a bet on falling bank stocks last time around the block, I think you stand a good chance of making even better money this time on the bank stocks.

Sean: A lot of what you’re saying seems to be riding on the forecast that the economy is sinking into a double-dip recession. Why don’t you tell us what happens if that forecast is wrong.

Kevin: Wishful thinking. Wrong? No. Well sure, all arguments aside, it could be wrong in two different ways. It could be wrong in the sense that it’s not as bad as we fear. And then, well ...

Sean: Wait, slow down there a sec. What happens then?

Martin: Guys, let me answer that question. What happens is that all the bad mortgages and all the foreclosures continue to flow through the system. They’re in the pipeline already. And what also happens is that nice little recovery that the banks were counting on to help buffer them against all those losses, that fails to materialize. Even the most optimistic economist today is not expecting the kind of economic growth they were expecting just a few months ago. They’ve all downgraded their forecasts.

Kevin: I agree, Martin. But the recession forecast we’re talking about could also be wrong the other way.

Martin: Yeah, right, it could be worse than we expect!

Kevin: Exactly. No one knows how bad it’s going to get! Look, if the financial companies are sinking, or what happens if Congress can’t cut a credible deal on the federal deficit, the ceiling? Or how many dominoes are going to fall when Greece defaults? I don’t say if, I say when. So let’s not get fixated on just one scenario. I mean, we’re traders here.

Sean: Or on just one profit opportunity either, right?

Kevin: Right, on one predetermined profit target. I mean, the way I like to trade Sean, and you know this because we’ve known each other a long time, is to put on two positions at a time. When I have a decent profit on the first position, I grab it. I take those profits off the table. But then I let the second position ride to capture as much of the move, when I’m right, as reasonably possible.

Sean: And man-oh-man, some of the moves lately have just been breathtaking. Look at silver. Look at the euro! But all right, we’re covering commodities tomorrow. Our main topic today is the big opportunity in the falling financial stocks. So how much money do you think people could make as the bank stocks fall in this new cycle?

Kevin: Well, you know me Sean, I don’t want to speculate about how much you could make in the new cycle. I mean, there are just too many variables. But I can give you some hard data on how much you could have made in the last cycle.

So let’s break it down. Citigroup, which by the way, I think, in reading through all your material, Weiss had panned as a likely candidate for bankruptcy.

Martin: Yes, yes we did.

Kevin: That’s an incredible statement to have to make after all these years, but Citibank, bankrupt, before it peaked, and you guys predicted that. Saw its shares fall sharply. March 6, 2009.

Martin: That was the bottom.

Kevin: Bank of America, also on the Weiss weakest list, I believe, if I’m correct.

Martin: It was, yes.

Kevin: It also tanked during that time. Even if you’d caught only the second half of those moves, you could have seen up to 124 percent profit.

Sean: Now, are those the same banks that are going to be slammed this time around?

Martin: Well, it really doesn’t matter.

Kevin: I agree with Martin, I don’t think it’s going to matter. The investments I’m going to give you use huge leverage, right Martin? And they don’t require stock picking. So it doesn’t matter the specifics. I just ride the trend. And the risk control is automatic, it’s built into the instruments we’re going to use.

Sean: And I understand you’re going to tell us a lot more about those investments in the grand finale of this five-part series.

Kevin: I definitely am.

Sean: And we’re going to be back here same time tomorrow, right?

Martin: Yes, and don’t forget to tell the folks about the importance of the registration.

Sean: Absolutely, I will in just a minute. So, tomorrow the big topic is ...

Kevin: Well, the big topic tomorrow Sean, is the one sector that’s not only rising because of the Fed’s endless money printing, but also rising because of massive, secular changes in global demand that you and I have both discussed.

Sean: Well, by that I assume you mean essential commodities, right?

Kevin: Yes, especially food. Tomorrow, I’m going to show you how food can put money in your account month after month, year after year, without ever touching any exoteric investment or fooling around with any complicated strategies.

Sean: Remember, this is just the second in a series of five intensive sessions like this one. Plus you’ll want to definitely attend the grand finale, when Kevin will tell you about the kinds of things that are on his radar screen for upcoming recommendations. And he’ll give you the chance to join the small, elite group of investors that get Kevin’s signals right now. But whether you join them or not, there’s huge value just watching this series.

We’ll see you here tomorrow at noon, and every day for the rest of the week, also at noon. I mean, noon for us here in the Eastern time zone in the United States. In London, it will be 5 pm. We’ll see you then.


Weiss Research, Inc.
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Tuesday, 28 June 2011

When it's actually okay to "go naked" ...

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Tuesday, June 28, 2011
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YOUR BEST SOURCE FOR THE UNBIASED MARKET COMMENTARY YOU WON'T GET FROM WALL STREET

When it's actually okay to "go naked" ...

 

by Nilus Mattive
Tuesday, June 28, 2011 at 7:30am

Nilus Mattive

A few weeks ago, I told you about covered call writing ... which is my favorite income-generating options strategy. And in that article, I told you that I absolutely, positively did NOT recommend writing naked calls.

Just as a refresher, the difference between writing a covered call vs. a naked call is simply that in the former case you own the underlying shares you're writing against whereas a naked call is written without owning the underlying stock.

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Join us for our Master Investor Video Series. Our special guest is one of the world's most astute investors — a man whose recommendations could have made investors 1,133% richer since July 2004!

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Click here to watch the first installment of this exciting five-part series.

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To understand why writing naked calls is so dangerous, let's consider a simple example:

XYZ's stock is trading at $28 a share when you decide to write a call option on it. The option expires two months out, and has a strike price of $35. You sell the contract for $200.

Importantly, you decide not to purchase 100 shares of XYZ nor do you already own them.

A few weeks later, XYZ announces that it's being acquired by rival ABC for $60!

Now, if you had opted to write a covered call and bought the stock at $28, this wouldn't be a big deal.

Sure, you'd be kicking yourself as you missed out on roughly $32 a share in upside but that's the worst thing that would have happened.

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Instead, you have literally lost at least $5,800 on your naked call. I say "at least" because there is still additional time left on the contract and the stock could go even higher should a bidding war ensue!

Reason: YOU are responsible for delivering 100 shares of XYZ when the contract is exercised. And that means you have to go out on the open market and buy them at $60 a share. That's $6,000. Subtract the $200 in premium you collected and you're down $5,800.

So now you can see why writing naked calls is so dangerous. Your profit is completely capped at the premium you collect while your losses can grow without limit.

Don't get me wrong. Some people do use this strategy to make money. But they are very adept at writing contracts that will likely expire quickly and without being exercised. Most investors will be best served by avoiding naked call writing altogether.

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However, There Is a Different Naked Options Strategy
That I Consider Safe and Effective for Income Generation ...

It's called naked put writing, and it's like the mirror image of covered call writing. You are basically telling someone that you'd be willing to buy their shares if they fall to a certain level.

The investor buying your "insurance policy" is hedging against potential downside. And as with call writing, you're collecting a nice premium upfront!

In short, naked put writing is yet another solid way to get income from options trading.

However, the key here is that you must be ready to take ownership of the underlying stock, too!

Like all options contracts, a naked put covers a round lot of stock, or 100 shares.

So let's say you want to buy 100 shares of XYZ stock, but you think it's overpriced at today's level.

Well, instead of placing a good-till-cancelled limit order with your broker — or watching the ticker tape relentlessly for weeks on end — you could write a naked put near your buy price instead.

Then, if the stock falls to that level (or below it), odds are very good that the contract holder will "put" his shares to you. And since you also get to keep the options premium, you've actually gotten them a little cheaper than the strike price of the contract!

Alternatively, if the stock doesn't reach your strike price during the life of the contract, you keep the premium and are free to write another put. Keep pursuing this same strategy and you could really make a lot of money just for waiting around!

There are just a few things to note:

First, you could start off with an immediate paper loss when you take possession of your shares if they've fallen below the strike price.

Second, those losses could be substantial if the price implodes.

Third, you must have enough cash in your brokerage account to cover the potential stock purchase under the put contract.

For all these reasons, I consider naked put writing riskier and more aggressive than writing covered calls. But if you're looking for a way to target specific stocks upon further downside, this approach proves that it isn't always a bad idea to go naked.

Best wishes,

Nilus

 
 
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Master Investor Series Episode 1

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Highlights
 
 

"Total return" stocks can hand you five times MORE income — up to 32% per year!
And if you want to do it prudently with investments that let you sleep at night, watch my FREE presentation.

Washington's Judgment Day is speeding towards us
Click here for free report on how to survive and profit through America's next debt crisis.

China's Booming Hotel Business
In this video, Tony Sagami gives you the names of five hotel companies making a mint in China, plus ...
[More »]

Frequently Asked Questions with Rudy Martin
My inbox gets crammed with questions every day, but here are some recent queries from my subscribers ...
[More »]

Government lying about debt crisis! What to do ...
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by Larry Edelson

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In last week's column, I told you that "... nearly all markets are now in a position of rolling over, creating potential massive downside moves that will ...
[ More » ]

 
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For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets is a free daily investment newsletter published by Weiss Research, Inc. This publication does not provide individual, customized investment or trading advice. All information is based upon data whose accuracy is deemed reliable, but not guaranteed. Performance returns cited are derived from our best estimates, but hypothetical as we do not track actual prices of customer purchases and sales. We cannot guarantee the accuracy of third party advertisements or sponsors, and these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our Terms and Conditions. View our Privacy Policy. Would you like to unsubscribe from our mailing list? To make sure you don't miss our urgent updates, just follow these simple steps to add Weiss Research to your address book.

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Monday, 27 June 2011

In just 45 minutes, Masters Investers series episode 1

 

Dear Reader,

In just 45 minutes, I want you to join me and my special guest online for the GALA LAUNCH of our Master Investor video series.

Just click here to watch episode 1.

Then please wait a few minutes for the show to begin – 12 Noon Eastern Time (5 PM GMT).

Our special guest is one of the world’s most astute investors — a man whose recommendations could have made investors 1,133% richer since July 2004!

What’s more, a remarkable seven out of every ten trades he has recommended have been profitable ... the average winner has generated an 87% gain (almost three times larger than the average loser) ... and no fewer than 39 of his recommended trades have doubled, tripled or even quintupled his followers’ money.

Chances are you’ve seen him — many times — on your favorite financial TV programs: He is a regular with Cavuto on Fox, Kudlow & Company on CNBC, Nightly Business Report on PBS, plus Fox Business News, CNN and many others.

But in our Master Investor Series this week, he’ll be covering a unique topic that’s he’s never discussed in any public appearance.

I repeat: The first in this exciting five-part series will air TODAY, Monday June 27 at 12 Noon Eastern Time!

In it, our guest will reveal ...

  • Today’s two most promising megatrends for investors — special situations with the power to multiply your money in 2011 and beyond.
     
  • Why today’s plunging real estate values virtually guarantee a stock catastrophe in one particular sector that most investors are extremely complacent about.
     
  • Why Washington’s panicky response to this crisis means a very unique class of investments will explode in 2011 and 2012.
     
  • Which investments are likely to do unusually well regardless of a slowdown in the U.S. economy — and why.

PLUS, in the rest of the series, you’ll also discover ...

  • Details on each of these mega-profit opportunities and how to play them.
     
  • The ETFs you could use to grab good profit potential — but why some investors will actually regret using them.
     
  • The little known and often overlooked investments that can make the gains from ETFs look small by comparison.
     
  • Four expert tips for harnessing the money-making power of these megatrends.
     
  • The ingenious risk-reduction strategy he swears by — and that he credits with making him one of the world’s most successful traders.

These are all hard-hitting videos that are dedicated to helping you cope with and profit from these unusual times in ways we’ve never covered before, giving you valuable information that you get entirely for free.

Just click here to watch episode 1.

Then please wait a few minutes for the show to begin – 12 Noon Eastern Time (5 PM GMT).

Good luck and God bless!

Martin


Weiss Research, Inc.
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Jupiter, FL 33478
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Monday, 27 June 2011

Government lying about debt crisis! What to do ...

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YOUR BEST SOURCE FOR THE UNBIASED MARKET COMMENTARY YOU WON'T GET FROM WALL STREET

Government lying about debt crisis! What to do ...

 

by Martin D. Weiss, Ph.D.
Monday, June 27, 2011 at 7:30am

Martin D. Weiss, Ph.D.

Do you believe what government officials and experts are saying about the debt crisis?

If so, you're taking your financial life into your hands.

Just consider how many times they've been wrong, issued deliberately misleading statements, or simply lied:

In 2007, they swore on a stack of Bibles that the debt crisis was limited to subprime mortgages.

Today at Noon: Brand new video series

We are launching our first-ever Master Investor Series — a series of five brand new videos dedicated to two MAJOR megatrends now under way — today at noon.

Our special guest for the series is one of the world's most astute investors. Be sure to check your inbox later today for more information on how to attend!

Click here to learn more.

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But the crisis promptly spread to all kinds of mortgages, ripping through giant mortgage lenders like Countrywide, Fannie Mae, and Freddie Mac.

In 2008, they admitted it had spread, but swore that it was strictly contained to the housing and mortgage sector.

But in a few short months, it had enveloped commercial paper, money markets, and nearly all of Wall Street. Nearly every one of America's largest banks either failed or came within a hair of insolvency.

Warning: Shocking Video

Many people say it's shocking. Others say it's more than shocking. But that's not a bad thing, because they also say it's motivating them to finally take protective action — or to help persuade their loved ones to do the same.

We're talking about American Apocalypse, the video which has already been viewed by thousands of readers like you.

The timing could not be better — click here to watch it now.

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In late 2009, they rescued the bankrupt banks and mortgage lenders using the $700 billion in emergency capital approved under the Trouble Asset Relief Program (TARP). Then, they ran deliberately lenient "stress tests" on the biggest banks to "prove" to the public that the emergency had passed.

But with the government now assuming liability for trillions of mortgages and other bank obligations, they transformed a Wall Street debt disaster into an even larger Washington debt disaster: The federal deficit ballooned to four times its pre-crisis size. And in the euro zone, where governments had also pumped massive sums into bankrupt banks, the weakest countries like Greece began to collapse.

In 2010, the European Union and the International Monetary Fund put together a sovereign debt rescue package that was even larger than TARP. They pulled Greece from the precipice and vowed never to let the contagion reel out of control.

But within a few short months, the contagion toppled Ireland and Portugal ... threatened a similar fate for Spain, Italy, and Belgium ... and even raised serious questions about the financial fate of the two largest economies in the euro zone — France and Germany.

Clearly, each outbreak of the contagion, each government rescue, and each new happy-talk pronouncement has merely spawned a bigger disaster, impacting bigger institutions ... gutting the portfolios of more investors ... and ruining the lives of millions more Americans.

Now, here we are halfway into 2011 and they're at it again — this time with a complete package of misleading statements and lies that make all previous ones seem candid by comparison.

"A Tremendous Amount of Profit to Be Had"

One breaking opportunity we've come across could generate "an earnings windfall from 2011 through 2013," according to one top financial news source. "There is a tremendous amount of profit to be had," they added.

We agree. To find out how this situation could benefit you, simply click here.

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Lie #1. They're again saying that the debt crisis of 2008-09 is "history."

The truth: The core cause of the crisis — the gigantic pyramid of high-risk derivatives — has never gone away.

Quite the contrary, the pile-up of derivatives on the books of major U.S. banks is now much larger — $244 trillion, compared to less than $200 trillion before the debt crisis, according to the U.S. Comptroller of the Currency (OCC).

Lie #2. They say that America's largest banks have virtually no exposure to a Greek debt default or a broader European sovereign debt crisis.

The truth: All major European and U.S. banks are linked through an even larger global network of derivatives, now representing more than $600 trillion, according to the Bank of International Settlements.

Therefore, even though U.S. banks may not hold large amounts of European debts themselves, they are directly exposed to European banks that do hold large amounts of loans to Greece, Ireland, Portugal, and others in jeopardy.

Lie #3. They insist that America's largest banks are safe.

4 Giant banks

The truth: The largest U.S. banks continue to hold nearly all of the derivatives in the country.

Goldman Sachs has $44.9 trillion in derivatives.

Bank of America has $52.5 trillion.

Citibank has $54.1 trillion.

And JPMorgan Chase towers over all others with $79.5 trillion of these potentially dangerous investments.

In total, JPMorgan, Goldman, Citibank, and the BofA alone are exposed to $234.7 trillion in derivatives. In contrast, among the thousands of other U.S. banks, the grand total of derivatives is a meager $9.3 trillion. In other words, these four banks are exposed to more than 25 times the sum total of all derivatives held by every other bank in the United States.

Never before has so much financial power — and risk — been concentrated in the hands of so few!

Yes, these numbers, reflecting the "notional" value of the financial instruments at play, are far larger than the actual amounts invested. But still, the risks are huge ...

  • The derivatives held by Bank of America are 36 times larger than TOTAL assets;
     
  • At JPMorgan Chase, they're 46.1 times larger than the assets;
     
  • At Citibank, 46.6 times larger; and
     
  • At Goldman Sachs Bank, a shocking 533 times larger!

Yes, in recent months, some banks have reduced somewhat their exposure to defaults by their counterparties. But here again, the exposure remains massive: According to the OCC, for each dollar of capital ...

  • Bank of America has $1.82 in credit exposure to derivatives;
     
  • Citibank also has $1.82;
     
  • JPMorgan Chase has $2.75; and
     
  • Goldman Sachs is, again, at the greatest risk of all — with $7.81 in credit exposure for each dollar of capital.

That means that if JPMorgan's counterparties defaulted on 36% of their derivatives, every last dime of the company's capital would be wiped out. And at Goldman Sachs, defaults on just 13% of its derivatives would wipe out its capital.

Lie #4. Misinformation about the government's supersized debts is equally egregious. They want you to believe that, although large, the government's debts are far below the danger zone — thought to be around 100% of GDP.

The truth: According to the Fed's latest Flow of Funds report, the U.S. Treasury owes a total of $9.6 trillion, 64% of GDP, which isn't too bad. But the U.S. government is also responsible for $7.6 trillion in debts owed by government agencies, such as Fannie Mae and Freddie Mac.

The U.S. government's total debt burden: $17.2 trillion or 115% of GDP — similar or WORSE than that of countries like Greece, Ireland, Portugal, and Spain!

Lie #5. They argue that America is special because it controls the world's dominant reserve currency.

The truth: Yes, that gives Washington the ability to print money with impunity ... press other rich countries to accept its debts ... and borrow huge amounts abroad to finance its deficits. But it's more of a curse than a blessing!

It means that, more so than any other major nation, the U.S. government is beholden to investors overseas — often the same investors who have repeatedly attacked countries like Greece and Ireland. Ultimately, that could make the U.S. even more vulnerable than Europe.

What to Do

First, needless to say, don't believe government officials. Follow the hard facts and protect yourself accordingly.

Second, if you haven't done so already, check the Weiss Financial Strength Rating of your bank, credit union, or insurance company. Simply go to www.weisswatchdog.com, sign up, add your institution to your watchlist, and you'll get our Weiss Financial Strength rating immediately.

(Just be sure to enter strictly the first word of your institution's name. Our search function will do the rest.)

If your institution has a Weiss Financial Strength Rating of D+ or lower, seriously consider shifting all — or almost all — your money elsewhere. And if you have a choice, stick with institutions that are rated B+ or higher.

Third, join me at 12:00 noon today Eastern Time (5 PM GMT) for the gala launch of our Master Investor video series.

About 45 minutes before it's time to log on, I'm going to send you an email invitation with the login details. So look for an email from me with the subject:

"45 minutes from now: Master Investor Video #1"

Then follow the simple instructions and you'll be there online with us as soon as we begin at noon.

Good luck and God bless!

Martin

 
 
Money & Markets TV
 
 

Using the Same Playbook for a Different Crisis

MAM TV  

The European sovereign debt crisis is unfolding much like the private credit crisis of 2007-2009, because politicians and policymakers are using the same tired playbook to fight it. Mike Larson tells you how to protect yourself and profit from it.
Click here to view [»]

 
Highlights
 
 

The Fed is STILL running the printing presses 24/7!
So, global investors have been dumping dollars on a massive scale, sending the greenback into a nosedive and your cost of living soaring.
[More »]

I'd rather invest in tiny Sri Lanka than in the mighty Dow
U.S. stocks pose substantial risks to your capital while offering pathetically low profit potential ...
[More »]

The Next Move Higher in Gold Miners?
We may be coming to the time when you should be adding to your portfolio of mining stocks. Why? Well ...
[More »]

Global Assault on the Dollar
A sinking dollar sends your cost of living spiraling higher and threatens the quality of your life. The good news is, you are NOT powerless ...
[More »]

Why the Smart Money Is Running for Cover!
Earlier this year, I wrote a Money and Markets piece titled "Social Unrest Setting the Stage for Sovereign Defaults." We had already seen ...
[More »]

 
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UNCOMMON WISDOM

Six Ways to Play China's Booming Hotel Business
by Tony Sagami

Weiss Research

Ten years ago, I booked a luxury suite in a 5-star hotel in China for less than $100 a night. Today, the same room in Shanghai, Hong Kong, or Beijing can cost ...
[ More » ]

 
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posted by Informed Trading at 17:28
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