Saturday, February 19, 2011

Heads Up for Platinum & Gold Investors - South Africa becoming a failed state

From AfricanCrisis:
Date Posted: Friday 18-Feb-2011

I heard from a friend of mine that recently in parliament or wherever, a staggering figure came to light. It had to do with the collapsing infrastructure of this country – the electricity, etc.

Apparently some officials now say that to fix the basic infrastructure of this country (e.g. electricity, roads, etc) but excluding things like hospitals, etc – will cost… wait for it… a staggering R1 trillion! That is the annual Govt budget of South Africa for 2 years.

You have to ask yourself how it was that prior to the ANC, the annual Govt budget worked pretty well and was able to not only maintain but to enhance all the country’s infrastructure. Under ANC rule of 17 years, while zapping business and private tax payers with levels of taxation unheard of in this country’s history, the ANC still manages to destroy the infrastructure. The ANC’s annual Govt revenues are more than twice what the white Apartheid Govt of this country had. Yet, they built this country’s infrastructure from NOTHING. That is really hard to do – to build from scratch. All the ANC had to do was to maintain the infrastructure like roads, railways, electricity, water, etc. That is normally much cheaper to do. But the ANC actually could not even do that and stuffed it up COMPLETELY.

Now, 17 years later, that infrastructure is so damaged that we literally won’t be able to spend enough money to ever catch up on it. Where will SA get R1 trillion now when the current Govt budget is already being used up? The answer can only be that we will never be able to play catch up. Its that simple.

CME Lifts Gold, Silver Margins by 50%

From Gold Alert:

CME Group announced yet another series of margin requirement increases for gold and silver futures contracts.

Effective after the close of business today, initial and maintenance margin requirements on gold and silver will increase 50%, according to CME Group. CME is the owner and operator of the New York Mercantile Exchange and Commodity Exchange (COMEX), on which precious metals futures contracts are traded.

Today’s announcement follows several margin increases over the past year, as the exchange seeks to limit speculation as precious metals continue to surge higher.

While these decisions have often led to short-time sell-offs in gold and silver, history has shown that these measures have little to no effect over the longer-term.

If the CME and federal policymakers are trying to suppress the price of gold and silver, as many have suggested, they would be much better served urging Federal Reserve Chairman Ben Bernanke to end his reckless quantitative easing programs instead.

Protests continue in Bahrain

Protests come to the USA

Gerald Celente: Protests are ok outside of the West

$200 gold price rise this year would be normal – Frank Holmes

Frank Holmes US Global Investors CEO talks to Geoff Candy of Mineweb........listen here

Bill Fleckenstein - Bonds and $ as certificates of theft

Bill Fleckenstein talks to Eric King of King World News about money printing, bonds, bubbles and risks for 2011.....listen here

Martin Armstrong: Sovereign Debt Crisis - Dancing With Death

Martin Armstrong's latest here

Bahrain protests continue

From: AlJazeeraEnglish | February 18, 2011
Bahraini troops shot at protesters near Pearl Roundabout and wounded many, a doctor of Salmaniya hospital said, a day after police forcibly cleared a protest camp from the traffic circle in Manama.

"Crazy" Gold Investment Strategy

By Kevin McElroy:

It only happens about twice in the average lifetime, but it’s the single most powerful stock investment strategy I’ve ever discovered.

In the past 80 years, it only occurred twice, but if you had simply bought and sold stocks according to this strategy, you would have turned a $1,000 initial investment into over $21 million with just seven transactions.

You would have missed the biggest run-ups in the stock market, but you would have also missed all of the biggest draw-downs.

The best part is that it’s an incredibly simple strategy to follow. It requires no special math skills and it can be used by anyone with even a discount brokerage account. A small initial stake is not a hindrance either. The two most important components (as with any long-term investment) are time and patience.

I’m currently following this investment strategy in my personal investment account. Sure, I have other investments outside of this strategy in the form of a 401(k), a smattering of individual stock holdings and some broad mutual funds, but I’m putting no small part of my portfolio into this strategy.

I hesitate to tell you this strategy, because if you take it seriously, you’ll probably think to yourself “Why would I ever read Kevin again?”

But the other thing about this strategy is that it’s so simple, so mind-numbingly straightforward, that I’m guessing most people will dismiss it entirely for a variety of very well thought-out reasons.

Okay, enough disclaimers, here’s my strategy.

It’s based entirely on the Dow/Gold ratio.

In short, when the Dow/Gold ratio is at parity, that is, when one ounce of gold is equal to the Dow index number, I’m buying the Dow.

When the ratio hits 25 or higher, I’m selling stocks and buying gold.

I’ll only sell my gold and buy stocks when the ratio gets back down near parity.

So how does that stone-simple strategy turn $1,000 into over $21 million?

It’s pretty simple: $1,000 into the stock market in 1932 turned into $20,000 in 1966 as the Dow moved from 50 up to nearly 1000. That $20,000 put into gold turned into over $450,000 in 1980 as gold went from $35 an ounce to $800.

Again, the Dow/Gold ratio was near parity in 1980, so we’re buying the Dow.

Over the next 20 years, the Dow went from about 800 to 8,000 - which turns our $450,000 stake into $4.5 million.

But we’re not done.

We did miss out on the Dow’s run-up from 8,000 to nearly 12,000 in late 1999/early 2000. But instead, we bought gold at $300 an ounce in 1998. Today, we’d be sitting on about $21 million worth of gold.

And so now, we just have to wait for the Dow/Gold ratio to get back close to parity in order to get into stocks.

The downsides to this strategy are pretty obvious - namely, it could take 50 years or longer for the Dow to get back to parity with gold. Right now, we’re only 31 years into the cycle, so if 50 years is the “normal” Dow/Gold cycle, then we have 19 years left to wait.

But that’s why you have other investments.

If you do follow this strategy, just keep an eye on the price of gold and the Dow index, and you’ll be prepared. Also, you need to be invested in gold now, obviously.

Disclosure: Long gold and silver

Kevin McElroy is a top rated commodity researcher and analyst specialist at Wyatt Investment Research, with a targeted focus on short and long term investment opportunities. He has worked in the investment publishing field for over three years alongside some of the world's leading commodity traders and analysts. He takes the complex futures and options trading strategies from the floors of the Nymex and the CBOT, uniquely combines them with economic trends and positions his recommendations in a way that any investor, from a straight long-term buy and hold investor to a sophisticated day trader can easily understand, implement, and profit.

Kevin constantly finds unique ways to profit from the ... "real stuff" like oil, gold, iron, corn - the energy, money, goods and food that the world constantly needs more of.

Kevin is the daily editor of Resource Prospector and a contributor to Energy World Profits and Global Commodity Investing.

US silver rises above $32/oz for first time since 1980

NEW YORK Feb 18 (Reuters) - U.S. silver futures climbed above $32 an ounce on Friday for the first time since 1980 as economic optimism stoked strong physical demand for the white metal, traders said. U.S. March silver futures SIH1 were up 46 cents, or 1.5 percent, at $32.03 an ounce by 10:16 a.m. EST (1516 GMT) on the COMEX division of the NYMEX after peaking at a 31-year high of $32.11

Inside Story - Spotlight Libya

From: AlJazeeraEnglish February 18, 2011

Following events in Tunisia and Egypt, dissent is spreading across the Arab world and now it is the turn of Libya. Thursday was billed as a day of rage as protesters gathered to demand the ousting of Africa's longest-serving leader, Muammar Gaddafi. On this episode of Inside Story, we ask if the Libyan protests will achieve the same end as those elsewhere.

JP Morgan makes a market in hunger