Category: Economics & Investing

Protecting Yourself From Coming Stock Market Declines

Last week, after Citigroup reported a net loss of nearly $10 billion for the quarter, the New York Stock Exchange had its biggest percentage drop for a January in 17 years. Between Monday and Friday, the DJIA dropped more than 670 points. The S&P and NASDAQ posted similar losses. This doesn’t look good. There is an old saying on Wall Street: “As goes January, so goes the rest of the year.” (And this has been borne out statistically.) My friend The Chartist Gnome is recommending that his clients get out of nearly all of their stocks–with just a few exceptions …


Letter Re: An Approaching Tsunami for Hedge Fund and Muni Bond Insurers

Dear Mr. Rawles, Would you buy stock in Allstate Insurance or Farmer’s Insurance if you knew a tsunami was going to hit the entire East Coast? If you had foreknowledge of such a catastrophe, you certainly wouldn’t put your money into insurance companies, because no insurance company could cover an event that huge. I believe that something analogous is what is now happening in the financial markets. Savvy investors are getting out of financial insurance companies that may be asked to cover huge losses projected to occur this year. These Wall Street companies insure pension funds, CDOs, hedge funds, and …


Letter Re: Potential for Gold Confiscation in the U.S.?

Hi Jim. I’m pretty sure you know this but I thought i would pass it along anyway. I just went through this trying to explain some of the history of 1933 to a friend. Presidential Executive Order 6102 (From: President of the United States Franklin Delano Roosevelt to the United States Congress, 5 April, 1933) And yes, you are very correct that most of this is coming from coin dealers trying to sell overpriced stuff. Here is an explanation. Here ia quote from Congressman Dr. Ron Paul on gold confiscation: “If it gets bad enough, they’ll declare a national economic …


Letter Re: Potential for Gold Confiscation in the U.S.?

Hi Jim, I’d very much like your opinion on this matter. I’ve been investing in gold and silver bullion for a couple years now. One source from which I made one of my purchases stated that he believed that gold and silver are going to be confiscated from citizens by our government when the economy implodes and that the confiscation will take place soon after an announcement is made without warning, that the face value of the gold will be reset to $42.00, which will be the sum that’s reimbursed upon confiscation. He argued that investing in pre-1933 collectable silver …


Letter Re: The Value of a Dollar as Currency Unit

Howdy Jim, Regarding the quotation by Dr. Walter E. Williams wherein he writes about “dollars as being ‘certificates of performance’” it reminds me of discussions years ago of the nature of money. Perhaps it may be condensed down to something such as, “Money is a measure of life energy.” Whether it is fiat paper currency, or silver or gold coinage currency, or electron-charged cyberspace currency, what it measures and thereby accounts for is life energy. As an example consider the different measures of value we accord to an ounce bar of pure silver and an ounce coin of the the …


Feedback on the “Maxed Out” Consumer Credit Documentary

Sir, Today I went through some of the links on SurvivalBlog that I might have otherwise passed over, for whatever reason. I came across the Google Video link: Maxed Out. Normally I would not have taken the time to watch an hour-and-a-half video on the computer, but I was curious just because you would take the time to post it up on your site. I knew that credit cards would one day become a problem, but even in my wildest dreams I never could have imagined anything even close to what is contained in that video. For those of you …


The Countrywide Bailout and the Macroeconomic Picture

As I mentioned a few days ago, Bank of America (BofA) is buying out troubled Countrywide Financial (a home mortgage lender) for more than $4 Billion, and taxpayers are going to help them finance the buyout. This is good news for Countrywide (whose CEO is being given a ludicrous $110 million going away present), but bad news for the economy as a whole, and for taxpayers. I should mention that it has been rumored that BofA felt obliged to acquire Countrywide, because the two firms had some large derivatives contracts, and if Countrywide had folded, BofA would have to write-off …


Understanding Labor, Wealth, and Real Money

Our generation in the First World is presently living in a time of unprecedented wealth, luxury, and leisure. Technology has allowed huge advances in transportation, health care, and commerce. But much of the “wealth” that has been created is transitory. Real Wealth In essence, the only real wealth in the world is extractive. Extractive wealth come from mining, oil drilling, timber cutting, farming, ranching, or fishing. Manufacturing, while important, is essentially re-arranging what was originally extracted. And all other “wealth creation” in the so-called service economy is even more abstract–it is merely shuffling around bits of paper or electronic digits …


Letter Re: Strategies for Saving a House in a Foreclosure Situation?

Sir, I just read your piece on foreclosures. People who are about to get behind on their payments should contact their lender. Banks do not want the properties, they want the cash. Some lenders are willing to negotiate a modification of the loan terms rather than accept the expense of a foreclosure and resale (usually at a loss) of the property. Selling the house before the foreclosure process begins is better than waiting because the cost of the foreclosure will be added to the amount they have to repay the bank. If a person knows they’re going to get behind …


Two Letters Re: Small Town Newcomers and Home Development Covenants

Jim: In my opinion Violas’s comments are balderdash! That’s my reaction to all the ranting over “restrictive covenants”. I wouldn’t buy a piece of property in any sort of subdivision that didn’t have such rules. Let me share the experience that convinced me: About five years ago, I bought a piece of investment property in a small, rural Wyoming subdivision. Lot sizes were 3 to 10 acres and covenants were attached. Those covenants were common sense in nature. hey boiled down to simply treating your neighbor as you would be treated. Problem was, the covenants weren’t enforced. “Nobody’s gonna tell …


Letter Re: Strategies for Saving a House in a Foreclosure Situation?

Hi Jim, Are there any strategies, (i.e.- negotiations, dickering, etc…) that you can recommend for a after a TSHTF situation in which the government has raised taxes so much that you are hinging on hanging on to your retreat? Any examples that worked back in the 1930s? I know you can relate due to your family’s history that you have spoken of. What could we do as a plan to save our properties? Who can we expect to knock on the door, (i.e.- what entities)? Do you think there will be more motivation to seize productive ground? Do you think …


Letter Re: The Precious Metals Bull Charges Onward

Jim- You noted gold reaching an all-time high on Wednesday the 2nd of January. But this writer says: “I’m not really sure how all the ‘Gold at 27-year high’ headlines came to be, but my own calculations tell me that gold would have to break at least $2,400 an ounce [adjusted for inflation] to break its supposed 27-year high.” If that argument is accurate, perhaps it is not yet time to think about getting out of gold 20% at a time just yet. – Robert B. JWR Replies: The “adjusted for inflation” calculations on the real value of gold are …


Sources for Free Survival and Preparedness Information on the Internet, by K.L. in Alaska

Recent comments in SurvivalBlog provided excellent advice on using the public library. You can gain lots of knowledge with no expense, then purchase only those books you want to keep on hand for personal reference. Also, many colleges and universities loan to local residents, so you can use them too, even if you aren’t a student. If your local libraries participate, a great resource is Worldcat. It lets you search for books from home, then go check them out, or get them through interlibrary loan. What will happen to the Internet when the SHTF? There’s no guarantee it will survive. …


The Precious Metals Bull Charges Onward

Instability in Pakistan, $100 per barrel crude oil, declining US manufacturing, and shaky Asian markets have all worked together to push the US dollar down, and precious metals upward. You may have noticed that the intra-day spot price of gold set an all time high on Wednesday, spiking briefly to $861 per ounce. Meanwhile, spot silver spiked to $15.27 per ounce. Although there may be some profit-taking in the next few weeks, I stand by my assertion that the precious metals are in a primary bull market that will carry on for several more years. Amid all this good news …


Letter Re: Peter Schiff’s Commentary–“Not Your Father’s Deflation”

Greetings! Here’s some more ‘great’ news [from Peter Schiff, by way of Kitco.com] for the coming economic crash. Thanks to ‘fiat currency,’ this [nascent] economic disaster won’t be nearly as “mild” as the Great Depression, because consumer prices will rise, and, our worthless money will de value at the same time! At least in the 30’s, the gold standard that backed the US dollar, made it hold value – even if there were fewer in circulation. Ditto silver & gold coins, that were still worth something (I found your blog late, and got started late, but I’m buying junk silver …