This week I'd like to ask you a serious question that requires a
little imagination.
It may well be the most important investing exercise you ever complete. It was for me, and I'll tell you why.
Let's get started ...
Imagine you had your total net worth in a small leather sack ... and you were being hunted down by the Four Horsemen of the Apocalypse wielding steel bladed weapons of war, ready to tear you open from collar bone to groin.
You would do anything to defend yourself from such an onslaught. Imagine that your life and your financial future and your wife's/husband’s and children’s financial future were all at risk -- how far would you go to protect them and yourself?
While none of us have any plans to experience such terror, this nightmare of biblical proportions is already being visited upon millions of Americans in the form of what I call “the four horsemen of financial terror”.
Make no mistake: Just like during medieval times, when roving bands of marauders would come through villages and burn your crops, kill your cattle and steal your food, the same is happening today, albeit in a more polite and civil form.
The end result is the same -- feelings of total powerlessness, loss of peace of mind, injustice, and the potential destruction of all you hold dear.
This is the reality for millions of Americans, and could be your reality if you are not prepared. What I have learned in this life is to never say never. From the age of 18 to 28 I made millions, enjoyed a lifestyle that was the envy of all, and yet in just one year I had it all stripped away from me.
Financial devastation can be visited upon anyone at any time. Regardless of how smart or prepared you think you are, there is always more to learn.
The Key to Long Term Winning is to Forever Remain Teachable.
The minute I think I know it all, I am done for! It took me a few million in losses and a near death experience for me to get that lesson into my thick skull! No matter how much wealth you have or aspire to have, there will always be others out there trying to part you from it.
This is why it is so important that we educate ourselves constantly, and why I feel it is my duty to help prepare you for the trials ahead.
Let’s begin today with the problems, and then we’ll move on to the solutions.
There are four key events on the horizon -- four horsemen if you will -- that are getting ready to rip you apart from your money, from your home, from your retirement, and from your security ...
HORSEMAN #1: Fed Money Printing Devaluing the Dollar
Back on April 20th I asked the question, "is Ben Bernanke a Traitor to his Nation?" This question seemed to inflame my readers both pro and against the concept of Bernanke being a bad guy. But think it through before automatically rejecting this idea.
Bernanke either has to be complicit in the devaluing of the dollar, or he has to be an incompetent. There is no middle ground here, friends, it is one or the other. The ugly naked truth is that Bernanke is committed to killing the dollar.
Why Kill the Dollar?
This is a back door way of defaulting on your debt, and it’s exactly what happened in Germany after World War I, when the German central bankers started devaluing the Deutsche Mark in order to meet their war reparations debt.
Will we see post World War I German style inflation here in the States?
While unlikely, I can't say it is completely out of the question. If I had told you 10 years ago that Lehman Brothers, Bear Stearns and Merrill Lynch would be out of business, that GM would file for bankruptcy, and that AIG would essentially go belly up, you would have called me insane and would NEVER have read another word I wrote.
Think about that -- don't shoot the messenger, I have no axe to grind against Bernanke. I'm sure in his private life he is a very pleasant man ... this isn't personal. It is an unvarnished appraisal of the unspoken truth that lies behind Bernanke's actions.
Truth is seldom pretty, or neat and tidy, but there are a million other sources that you can read if it’s only the "pretty" news that you are after. I trade my own money in the market every single day, and I cannot afford the luxury of a more socially refined view.
The motives of the men and women who run the world that we live in are far darker than you could ever imagine. Men and women of great power will always, always act in their own best interests, while cloaking it in your best interest. That, my friends, is exactly how we got hoodwinked into allowing the Federal Reserve to come into being back in 1913 ... but that's an article for another day.
HORSEMAN #2: Debt
In times gone by, the overlords would simply compel the peasants to work for nothing, providing only the land to live on. Their tools were fear, death, horrific punishment, and absolute authority.
Today, their primary weapon has changed. Today they bind us through the bonds of DEBT. Easy access to credit is both the carrot and the long sword held by the moneyed barons of today. While the overlords of ancient times are gone, they have been replaced by a hegemony of corporations.
The sadness of this, though, is that many of us are willing participants in this bondage.
We cannot continue to abdicate our good sense and sense of self worth just for the sake of a few pieces of silver. And that, my friends, is what cheap, easy to access credit is: The promise to pay tomorrow what I buy and consume today. It is an illusory dream that has ensnared millions within its narcotic grip.
What is the Exact Nature of This Hallucination?
The great fraud perpetrated upon the masses has been the trading of real personal wealth for the symbols of wealth. We have been confused into believing that the car we drive, or the watch we wear, or the clothes on our backs, equal wealth. Nothing could be further from the truth -- it is just another part of the great hallucinogenic cloud that has enveloped our country for more than 50 years.
Each day we trade our future financial security away for another hollow symbol of wealth. Real wealth can only come from living beneath your means, from consuming less than you earn, and investing the rest for a profitable return. Real wealth cannot be acquired by owning the right brand names!
In the pursuit of this hallucination, our country, both on a national and personal level, has seen its debt explode. At some point this debt overload will cause interest rates to skyrocket, as the world wakes up to the fact that America cannot pay its bills without first printing more greenbacks.
An immediate impact you will see in your life will be more of your paycheck and/or business income eaten up by taxes. Your social security, pension payments and medical benefits will all be cut. This is absolutely unavoidable, and if you are living beyond your means or you have extensive debt, you will be devoured by this series of events.
HORSEMAN #3: China Labor Costs Rising
For years now, the emerging markets, China chief among them, have been instrumental in keeping the costs of goods down all across the world.
It's a fair assessment to say that, because of China’s very low labor costs and non-existent pollution and labor laws, they have been effectively exporting deflation.
Prices for manufactured goods have been shockingly low for decades now. In fact, electronic goods have been rapidly dropping in price while rapidly improving in quality and features since the late 1970's. But all of that could be under assault as the average Chinese worker starts to demand a better standard of living.
The last time we saw this phenomenon at work was in the 1970's when Japan, which had been the low cost manufacturer to the world, went through a great social change. All of a sudden, Japan started to see dramatically higher labor and regulatory costs wreak havoc on their cost structures. Profit margins across the globe came under pressure, business ground to a halt, and stock prices got devastated.
HORSEMAN #4: Inflation
Whenever a nation spends more than it takes in, and then attempts to pay those debts by printing more money instead of embracing spending cuts, inflation always results.
And not mild inflation, but massive, retirement eating inflation is always the result of this policy of “print now, pay later”.
There are several reasons why this has not yet shown up as extensively as one would imagine that it would or should. The first is that global growth has been in the dumps for several years now, and this has helped put a lid on the price of everything.
The second reason is that the numbers at the government level are, for the lack of a better word, actively "massaged". Things like food and energy are not counted, as if they did not matter. But ask yourself this: Outside of your rent/house payment, aren't your two biggest bills food and energy?
In fact, we can already see the politicians sweating the inflation picture as they desperately try to manipulate oil prices down by "strategically" releasing 60 million barrels of oil. We've also seen attempts to massively manipulate other commodities lower in the futures market, as the CFTC (the body that governs the futures market) has acted very aggressively to pump up margin requirements to try and contain runaway commodity prices.
Over the last 10 years, commodity prices have skyrocketed while the value of the dollar has plummeted. And while this relationship of a weak dollar and strong commodity prices can invert from time to time, the bigger long term trend of a weak dollar and strong commodity prices will be with us for many years to come.
Pick Your Weapon Wisely
So how are we to combat these “four horsemen” that are threatening our financial well-being?
ETFs Are My Weapon of Choice.
I imagine myself in this medieval scenario all the time. Remember, I came to the US with literally $150 in my pockets ... my ENTIRE net worth.
ETFs were the sword I used to keep the horsemen of the 1990's and 2000's at bay. ETFs were critical to my financial recovery after going broke in 1998. From 2000 to the market lows of 2003 I used sector ETFs to make a killing on the short side.
From late 2003 to 2005 I used equity ETFs to ride the move back up, and then in 2005 I made the switch into energy and commodity ETFs. The profits from those levels were staggering. Market timing, matched with sector and commodity ETFs, were the tools I used to rebuild my wealth.
Don't let anybody tell you that you cannot time the market. I've worked with thousands of people over the years, teaching then exactly how to do just that. If market timing didn't exist as a viable strategy, it would be the death of professional trading firms.
(And don’t get confused here, either -- I’m not saying that PERFECT market timing is possible. Michael Jordan wasn’t a perfect basketball player, but he sure was successful, wasn’t he?)
Wall Street has spent billions to get you to believe that market timing is not worth pursuing. This has been done in pursuit of their own interests rather than your own interests.
You see, most firms cannot beat the averages, because brokers and financial advisors (not all, but many) are salesmen first and advisors second. That’s why literally hundreds of stockbrokers have taken my training courses. Their firms just never took the time to train them because, when you become a broker, all of your training is geared around selling stocks, NOT SELECTING STOCKS!
This is why Wall Street has spent so much money trying to convince you that you cannot time the market. They make more money when they train their guys on how to be better salesmen rather than better advisors. Again, I know this is an ugly looking truth, but it is the truth, and when it comes to the stock market you must have no illusions about how things actually are.
How to Protect Yourself with these ETFs
ETFs are the only instrument that make it simple for the individual investor to profit ... ESPECIALLY in commodities.
Last week I mentioned some of my key ETFs to trade these waves, including: GLD (gold ETF), SLV (silver ETF), CORN (corn ETF), SLX (Steel ETF), OIH (Oil Service ETF), FXA (Australian Dollar ETF), FXE (Euro ETF), JJC (Copper ETF), DBO (Oil ETF), and USO (Oil ETF).
Precious Metals
Today I'd like to talk about SLV, which has been on my radar for some time.
Silver is a metal that we have successfully traded numerous times over the last year in my private mentoring program. I first recommended it at $17 in a special report I authored last year. We then traded it several times from the mid $20's to the mid $30's. Our last successful trade in Silver was right before it peaked, when we got long in March of this year at $35, and then got out in the mid $40's in late April.
Keep your eye on Silver -- if it can hold $32 it should trade higher. If it falls off to $31, I'd take a step back, because it will probably settle lower in the mid to high $20's.
Right now, the US Dollar is catching a safe haven bid, and this is pressuring both gold and silver. But as the downtrend in dollar reasserts itself, silver will re-emerge as a preeminent wealth creation vehicle.
In a scenario where the dollar collapses, it is conceivable that silver could trade to $150 per ounce. Before you flame me in the comment section, just remember that I called $150 oil a year before it happened and was branded a loon for it. On December 28th, 2007, when gold was $740 an ounce, I pounded the table in The Tycoon Report to get long gold, calling for $2,000 an ounce. We're not there yet, but in a complete dollar rout, we'll get there ... and very, very quickly.
Putting it All Together
The key to making money in these situations is being decisive and having a very clear set of rules to guide your entries and exits. Once you have a general idea of how the different scenarios can play out, then all you have to do is wait for them to unfold and pounce on the opportunity.
Some very clear-cut consequences are going to occur because of the Federal Reserve’s policies and the Federal government’s poor decision making. We must profit from the folly of these two institutions if we are to have any hope of surviving their combined incompetence.
It is not good enough to just sit on the sidelines as a "good" citizen, hoping that someone will suddenly recognize and reward us for being a good guy or good gal. It just won't happen. We have to make and take our own opportunities -- no one will give them to us.
P.S. -- As a final note, last week Adam asked me ...
Now, keep in mind that we are investors. In my personal and investing life I've found that I must fully embrace the world as it is before I can ever hope to profit from the opportunity that today's chaos may hold within it. What I have found is that the best way to remain optimistic is to maintain control over my personal destiny.
America will always be here, and as I said last week, we'll go through our booms and busts ... But right now isn't it better to prepare for the next bust so you can emerge better off than you would be?
I'd love to hear your thoughts. Click below. What horsemen are you most afraid of?
It may well be the most important investing exercise you ever complete. It was for me, and I'll tell you why.
Let's get started ...
Imagine you had your total net worth in a small leather sack ... and you were being hunted down by the Four Horsemen of the Apocalypse wielding steel bladed weapons of war, ready to tear you open from collar bone to groin.
You would do anything to defend yourself from such an onslaught. Imagine that your life and your financial future and your wife's/husband’s and children’s financial future were all at risk -- how far would you go to protect them and yourself?
While none of us have any plans to experience such terror, this nightmare of biblical proportions is already being visited upon millions of Americans in the form of what I call “the four horsemen of financial terror”.
Make no mistake: Just like during medieval times, when roving bands of marauders would come through villages and burn your crops, kill your cattle and steal your food, the same is happening today, albeit in a more polite and civil form.
The end result is the same -- feelings of total powerlessness, loss of peace of mind, injustice, and the potential destruction of all you hold dear.
This is the reality for millions of Americans, and could be your reality if you are not prepared. What I have learned in this life is to never say never. From the age of 18 to 28 I made millions, enjoyed a lifestyle that was the envy of all, and yet in just one year I had it all stripped away from me.
Financial devastation can be visited upon anyone at any time. Regardless of how smart or prepared you think you are, there is always more to learn.
The Key to Long Term Winning is to Forever Remain Teachable.
The minute I think I know it all, I am done for! It took me a few million in losses and a near death experience for me to get that lesson into my thick skull! No matter how much wealth you have or aspire to have, there will always be others out there trying to part you from it.
This is why it is so important that we educate ourselves constantly, and why I feel it is my duty to help prepare you for the trials ahead.
Let’s begin today with the problems, and then we’ll move on to the solutions.
There are four key events on the horizon -- four horsemen if you will -- that are getting ready to rip you apart from your money, from your home, from your retirement, and from your security ...
HORSEMAN #1: Fed Money Printing Devaluing the Dollar
Back on April 20th I asked the question, "is Ben Bernanke a Traitor to his Nation?" This question seemed to inflame my readers both pro and against the concept of Bernanke being a bad guy. But think it through before automatically rejecting this idea.
Bernanke either has to be complicit in the devaluing of the dollar, or he has to be an incompetent. There is no middle ground here, friends, it is one or the other. The ugly naked truth is that Bernanke is committed to killing the dollar.
Why Kill the Dollar?
This is a back door way of defaulting on your debt, and it’s exactly what happened in Germany after World War I, when the German central bankers started devaluing the Deutsche Mark in order to meet their war reparations debt.
Will we see post World War I German style inflation here in the States?
While unlikely, I can't say it is completely out of the question. If I had told you 10 years ago that Lehman Brothers, Bear Stearns and Merrill Lynch would be out of business, that GM would file for bankruptcy, and that AIG would essentially go belly up, you would have called me insane and would NEVER have read another word I wrote.
Think about that -- don't shoot the messenger, I have no axe to grind against Bernanke. I'm sure in his private life he is a very pleasant man ... this isn't personal. It is an unvarnished appraisal of the unspoken truth that lies behind Bernanke's actions.
Truth is seldom pretty, or neat and tidy, but there are a million other sources that you can read if it’s only the "pretty" news that you are after. I trade my own money in the market every single day, and I cannot afford the luxury of a more socially refined view.
The motives of the men and women who run the world that we live in are far darker than you could ever imagine. Men and women of great power will always, always act in their own best interests, while cloaking it in your best interest. That, my friends, is exactly how we got hoodwinked into allowing the Federal Reserve to come into being back in 1913 ... but that's an article for another day.
HORSEMAN #2: Debt
In times gone by, the overlords would simply compel the peasants to work for nothing, providing only the land to live on. Their tools were fear, death, horrific punishment, and absolute authority.
Today, their primary weapon has changed. Today they bind us through the bonds of DEBT. Easy access to credit is both the carrot and the long sword held by the moneyed barons of today. While the overlords of ancient times are gone, they have been replaced by a hegemony of corporations.
The sadness of this, though, is that many of us are willing participants in this bondage.
We cannot continue to abdicate our good sense and sense of self worth just for the sake of a few pieces of silver. And that, my friends, is what cheap, easy to access credit is: The promise to pay tomorrow what I buy and consume today. It is an illusory dream that has ensnared millions within its narcotic grip.
What is the Exact Nature of This Hallucination?
The great fraud perpetrated upon the masses has been the trading of real personal wealth for the symbols of wealth. We have been confused into believing that the car we drive, or the watch we wear, or the clothes on our backs, equal wealth. Nothing could be further from the truth -- it is just another part of the great hallucinogenic cloud that has enveloped our country for more than 50 years.
Each day we trade our future financial security away for another hollow symbol of wealth. Real wealth can only come from living beneath your means, from consuming less than you earn, and investing the rest for a profitable return. Real wealth cannot be acquired by owning the right brand names!
In the pursuit of this hallucination, our country, both on a national and personal level, has seen its debt explode. At some point this debt overload will cause interest rates to skyrocket, as the world wakes up to the fact that America cannot pay its bills without first printing more greenbacks.
An immediate impact you will see in your life will be more of your paycheck and/or business income eaten up by taxes. Your social security, pension payments and medical benefits will all be cut. This is absolutely unavoidable, and if you are living beyond your means or you have extensive debt, you will be devoured by this series of events.
HORSEMAN #3: China Labor Costs Rising
For years now, the emerging markets, China chief among them, have been instrumental in keeping the costs of goods down all across the world.
It's a fair assessment to say that, because of China’s very low labor costs and non-existent pollution and labor laws, they have been effectively exporting deflation.
Prices for manufactured goods have been shockingly low for decades now. In fact, electronic goods have been rapidly dropping in price while rapidly improving in quality and features since the late 1970's. But all of that could be under assault as the average Chinese worker starts to demand a better standard of living.
The last time we saw this phenomenon at work was in the 1970's when Japan, which had been the low cost manufacturer to the world, went through a great social change. All of a sudden, Japan started to see dramatically higher labor and regulatory costs wreak havoc on their cost structures. Profit margins across the globe came under pressure, business ground to a halt, and stock prices got devastated.
HORSEMAN #4: Inflation
Whenever a nation spends more than it takes in, and then attempts to pay those debts by printing more money instead of embracing spending cuts, inflation always results.
And not mild inflation, but massive, retirement eating inflation is always the result of this policy of “print now, pay later”.
There are several reasons why this has not yet shown up as extensively as one would imagine that it would or should. The first is that global growth has been in the dumps for several years now, and this has helped put a lid on the price of everything.
The second reason is that the numbers at the government level are, for the lack of a better word, actively "massaged". Things like food and energy are not counted, as if they did not matter. But ask yourself this: Outside of your rent/house payment, aren't your two biggest bills food and energy?
In fact, we can already see the politicians sweating the inflation picture as they desperately try to manipulate oil prices down by "strategically" releasing 60 million barrels of oil. We've also seen attempts to massively manipulate other commodities lower in the futures market, as the CFTC (the body that governs the futures market) has acted very aggressively to pump up margin requirements to try and contain runaway commodity prices.
Over the last 10 years, commodity prices have skyrocketed while the value of the dollar has plummeted. And while this relationship of a weak dollar and strong commodity prices can invert from time to time, the bigger long term trend of a weak dollar and strong commodity prices will be with us for many years to come.
Pick Your Weapon Wisely
So how are we to combat these “four horsemen” that are threatening our financial well-being?
ETFs Are My Weapon of Choice.
I imagine myself in this medieval scenario all the time. Remember, I came to the US with literally $150 in my pockets ... my ENTIRE net worth.
ETFs were the sword I used to keep the horsemen of the 1990's and 2000's at bay. ETFs were critical to my financial recovery after going broke in 1998. From 2000 to the market lows of 2003 I used sector ETFs to make a killing on the short side.
From late 2003 to 2005 I used equity ETFs to ride the move back up, and then in 2005 I made the switch into energy and commodity ETFs. The profits from those levels were staggering. Market timing, matched with sector and commodity ETFs, were the tools I used to rebuild my wealth.
Don't let anybody tell you that you cannot time the market. I've worked with thousands of people over the years, teaching then exactly how to do just that. If market timing didn't exist as a viable strategy, it would be the death of professional trading firms.
(And don’t get confused here, either -- I’m not saying that PERFECT market timing is possible. Michael Jordan wasn’t a perfect basketball player, but he sure was successful, wasn’t he?)
Wall Street has spent billions to get you to believe that market timing is not worth pursuing. This has been done in pursuit of their own interests rather than your own interests.
You see, most firms cannot beat the averages, because brokers and financial advisors (not all, but many) are salesmen first and advisors second. That’s why literally hundreds of stockbrokers have taken my training courses. Their firms just never took the time to train them because, when you become a broker, all of your training is geared around selling stocks, NOT SELECTING STOCKS!
This is why Wall Street has spent so much money trying to convince you that you cannot time the market. They make more money when they train their guys on how to be better salesmen rather than better advisors. Again, I know this is an ugly looking truth, but it is the truth, and when it comes to the stock market you must have no illusions about how things actually are.
How to Protect Yourself with these ETFs
ETFs are the only instrument that make it simple for the individual investor to profit ... ESPECIALLY in commodities.
Last week I mentioned some of my key ETFs to trade these waves, including: GLD (gold ETF), SLV (silver ETF), CORN (corn ETF), SLX (Steel ETF), OIH (Oil Service ETF), FXA (Australian Dollar ETF), FXE (Euro ETF), JJC (Copper ETF), DBO (Oil ETF), and USO (Oil ETF).
Precious Metals
Today I'd like to talk about SLV, which has been on my radar for some time.
Silver is a metal that we have successfully traded numerous times over the last year in my private mentoring program. I first recommended it at $17 in a special report I authored last year. We then traded it several times from the mid $20's to the mid $30's. Our last successful trade in Silver was right before it peaked, when we got long in March of this year at $35, and then got out in the mid $40's in late April.
Keep your eye on Silver -- if it can hold $32 it should trade higher. If it falls off to $31, I'd take a step back, because it will probably settle lower in the mid to high $20's.
Right now, the US Dollar is catching a safe haven bid, and this is pressuring both gold and silver. But as the downtrend in dollar reasserts itself, silver will re-emerge as a preeminent wealth creation vehicle.
In a scenario where the dollar collapses, it is conceivable that silver could trade to $150 per ounce. Before you flame me in the comment section, just remember that I called $150 oil a year before it happened and was branded a loon for it. On December 28th, 2007, when gold was $740 an ounce, I pounded the table in The Tycoon Report to get long gold, calling for $2,000 an ounce. We're not there yet, but in a complete dollar rout, we'll get there ... and very, very quickly.
Putting it All Together
The key to making money in these situations is being decisive and having a very clear set of rules to guide your entries and exits. Once you have a general idea of how the different scenarios can play out, then all you have to do is wait for them to unfold and pounce on the opportunity.
Some very clear-cut consequences are going to occur because of the Federal Reserve’s policies and the Federal government’s poor decision making. We must profit from the folly of these two institutions if we are to have any hope of surviving their combined incompetence.
It is not good enough to just sit on the sidelines as a "good" citizen, hoping that someone will suddenly recognize and reward us for being a good guy or good gal. It just won't happen. We have to make and take our own opportunities -- no one will give them to us.
P.S. -- As a final note, last week Adam asked me ...
Teeka, you're correct, of course, but please give us some
optimism. Being stuck with the cabal's money system that won't
change in our lifetimes is gloomy. Might the system fail from its
own shortcomings and thus give us the opportunity to return to a
sound money system?
Now, keep in mind that we are investors. In my personal and investing life I've found that I must fully embrace the world as it is before I can ever hope to profit from the opportunity that today's chaos may hold within it. What I have found is that the best way to remain optimistic is to maintain control over my personal destiny.
America will always be here, and as I said last week, we'll go through our booms and busts ... But right now isn't it better to prepare for the next bust so you can emerge better off than you would be?
I'd love to hear your thoughts. Click below. What horsemen are you most afraid of?
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