Odds ‘n Sods:

Desert T. sent this article from las Vegas: Hot seller’s market shifts into reverse — Upside-down sales picture won’t change soon

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The Army Aviator notes: “On Sunday, the US Dollar Index dropped -0.25 to 76.98. What a Sunday! Did you see the Euro go to 1.4498 [ to the US Dollar]? That’s darned near 1.45, huh?
What a day.” JWR Adds: The opening bell in the US market on Monday morning should be very interesting. It is also no surprise that the price of gold just spiked in Asia.

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Frequent contributor RBS recommended this piece from Ambrose Evans-Pritchard’s blog: The Sky has Already Fallen



Jim’s Quote of the Day:

“We all knew there was just one way to improve our odds for survival: train, train, train. Sometimes, if your training is properly intense it will kill you. More often — much, much more often — it will save your
life.” – Richard Marcinko, former US Navy SEAL Team Commander





Letter Re: Gold is Going Up, But is Now a Good Time to Buy?

Jim,
I am going to become a 10 Cent Challenge subscriber before the end of the month because the information provided in SurvivalBlog is invaluable and has forever changed my way of thinking!

I have been a reader for about a half year and have seen the topic of gold come up several times. Gold is apparently at a 28 year high and the desire to get invested from my personal standpoint is high but my question is do you see gold leveling out or continuing its upward trend? The other part of the equation is I am young father of four young children so my assets are extremely limited at this point in my life. That being said, I would ultimately like to “physically” acquire both gold and silver that I can keep on hand since I fear not being able to access it in a sudden SHTF scenario like a terrorist, NBC, etc. At the same time I need to balance this with buying other preparedness items that I have a long list of.

I already have a decent inventory of weapons but need more ammo than what I have on hand. I have about 1,500 pounds of various wheat, soy, rice, corn, and barley but most of that was nitrogen packed in 1999 putting me in position to need to rotate those supplies with a newer inventory. In addition, I have started a fairly detailed list of supplies that range from communications to medical.

All that being said, I kind of feel like I am about to sit down and eat an elephant and I really don’t know the best place to start. Thank you, – Dave in Florida

JWR Replies: First, let me state forthrightly that physical preparedness for your family should be paramount. Only after you have your beans, bullets, and Band-Aids squared away should you consider buying any precious metals. In my opinion, the precious metals are still in the intermediate phase of a bull market that will likely propel gold past $1,500 per ounce, and silver past $75 per ounce. Although you will not benefit to the same extent as someone that bought silver when it was between $4.13 and $5 and ounce, you have not “missed the boat”!

I’m often asked whether I prefer silver or gold for investing and barter purposes. I strongly prefer silver, for several reasons:

1.) Silver coins are ideal for barter. Gold is essentially too compact a form of wealth for practical barter. If you need to buy a few loaves of bread, silver dimes make a lot more sense than even the smallest denomination gold coin. Sure, you could divide a gold coin with cold chisel, but that would reduce its recognizability. I still recommend buying pre-1965 US circulated 90% silver dimes and quarters, with no numismatic value. (What the rare coin dealers derisively call “junk” silver.) These coins trade solely on their silver bullion value.

2.) Silver is far more likely to double in value than gold. Not only is silver in greater relative scarcity, at present (after decades of mine production deficits for that required for industrial use), but it also will benefit from what I call the “penny stock effect.” This is a purely psychological phenomenon, since silver still seems affordable, whereas gold is already out for reach for many investors. Psychologically it is “a long way” from $700 to $1,400 in order for gold to double, but it is conceivable that silver could double from $13 to $26 in just a few days. It is much like buying a “penny stock” (under $1 per share.) It doesn’t take major moves in a market to make penny stock double in value.

3,) Silver is less likely than gold to be confiscated by government decree, in the event of a monetary crisis. The logistics of accomplishing a gold confiscation (like the one that occurred in the US in 1933) would be complex. But since silver is roughly 55 times more bulky and weighty than gold, the sheer volume of silver in circulation would make a silver confiscation very difficult to accomplish

Regarding your bulk storage foods purchased in 1999: Some of them–most notably the wheat–are worth keeping. If you bought white rice, it is still most likely edible, although its nutritive value would be marginal. But the wheat should be just fine. It has a 30+ year storage life, even without nitrogen canning, which should extend its useful life even more.



Letter Re: Influenza Exercise Shows the Potential for Major Infrastructure Disruptions

Jim:
I thought you and your readers might be interested in this flu pandemic exercise recently carried out by financial services firms. An article in Computerworld describes the scenario: “If a pandemic strikes the U.S., it will kill about 1.7 million people, hospitalize 9 million, exhaust antiviral medications and reduce basic food supplies…”, and, “Among the other things that may happen in an actual pandemic are school closings, as well as blackouts or brownouts in major metro areas because of degraded service as a result of absenteeism. Internet service throughput could be reduced by 50% due to congestion, and Web browsing timeouts would become common. Airlines would cut schedules, and garbage would pile up on streets.”

The article’s fairly standard mainstream media flu pandemic coverage, the kind I’m sure we’ve all seen before. What makes this really interesting is that the scenario information used for the exercise has been posted online. It’s somewhat focused on the financial sector, but there’s a lot of good general information about what might happen when a major flu pandemic strikes. – Chris in Utah



Letter Re: Thoughts on Defensive Handguns

Dear JWR:
I have been reading SurvivalBlog for about a month and I really enjoy it a lot. One subject came to mind that I thought was worth discussing. That area is the [Colt Model] 1911. It is worth saying that I find the term combat tupperware incredibly amusing, as a Glock owner. I do not know what kind of high end custom 1911s people are talking about when they say it is necessary to spend $2,000 to get this platform to be functional. I bought a Springfield [Armory] Mil Spec .45 for about $535 and it works fine though it isn’t as pretty as an Ed Brown or Les Baer.

Some individuals speak about the guns being really unreliable. From my experience these claims are unfounded. The Springfield and Glock 22 have each jammed once, both were easily cleared, luckily on the range not in an emergency. I am sure the 1911 would not perform flawlessly on the Glock torture test but considering it served the US Army for both World Wars and countless smaller ones its reliability is solid enough for me.

The next point of contention that I have with criticism read on this site is about its single stack capacity and the weakness against multiple targets. I think it is worth remembering that in TEOTWAWKI and probably most of you will be carrying an assault rifle so the .45’s magazine capacity of 8+1 is not a big concern. The real niche of the handgun is before the time that I hope never comes! Since it is not convenient or socially/legally acceptable to carry an assault rifle in a 3 point sling to the grocery store or while driving a tractor we are left with a pistol for self protection the vast majority of the time.

The average gunfight is at very close range with a couple of shots fired. During gunfights where individuals (almost always police officers) run out of ammo and find themselves changing magazines rapidly under fire it was because they missed their target(s)! Not because their handguns did not have the needed stopping power or because there were a dozen attackers. Someone can have an extended 33 round magazine in a Glock 17 with four spares in their cargo pocket but if they are not able to accurately engage their target(s) they will probably not survive a gunfight. It is not particularly important what kind of gun you have, it is important that you can accurately engage targets. That is my 2 cents on that topic. – Ryan



Odds ‘n Sods:

Will the house-flipping contrapreneurs on both coasts of the US soon be in Deep Schumer? Reader Charley S. sent us this snippet from The Daily Reckoning: “Two million homes will go into foreclosure in the next two years, if home prices continue to slump, said a report released by Joint Economic Committee Chairman Senator Charles Schumer.”

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Jason flagged this one: US lacks enough labs to test for contamination if a ‘dirty bomb’ explodes in a major city

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A hat tip to SJC for sending this: Report: Oil production peaked in 2006, will halve by 2030, possibly leading to war

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Karen B. sent us a link to a price history chart for wheat.





Note from JWR:

Today we are pleased to present a guest editorial, from precious metals market analyst Oliver Velasquez:



The Game, by Oliver Velasquez

In the past 25 years interest rates have fallen from as high as 15% to as low as 1.25%. During this time our economy has gone through different cycles, everything from stagflation, recession, to historic bull markets, and real estate booms. Today, in my opinion, we are living one recession away from a massive depression which can be credited to the Federal Reserve’s monetary policy. Historically, it’s never been a good sign to have both gold prices and the stock market trade at such peak levels like we have today. During the past ten years we have gone through a huge stock market bubble, and today we’re in the midst of a housing bubble that has only just begun to burst. All of these shifts in our economy can be traced back to the Federal Reserve and their manipulation of interest rates.

In order to understand the Fed game we must first understand how the Fed works. Let’s look for example at our current mess. Housing boomed over the past six years as the Fed lowered rates to historic lows, more real estate was purchased as mortgage rates fell. This created a soaring number of new homeowners, as well as drove up home prices across the nation, creating an unrealistic economy that is now entering the stage of foreclosures and declining prices in many markets across the country. Although home ownership maybe at a record high, this is starting to change. Unfortunately, too many of these homeowners in the US have become in reality lessees. As long as a person has income, he can use debt to live very well. But as soon as things change and get tight like today, many opt to letting their assets go instead of paying them off. Many of these new homeowners aren’t able to pay the monthly payment and suddenly they’re out of a house. Any equity is transient, and if the house is foreclosed, they will most likely lose that too. But that doesn’t matter because so many are using their home as an ATM anyway, and there is a big problem with that. Massive debt is created throughout our economy and any assets left are sold in a declining market. This is exactly where we are today because of the Fed’s monetary policy. So, how can the average investor then protect their assets from such a tragic game?

There are a couple of ways one may hedge against a weakening dollar and the current housing crisis we’re facing. This would be to diversify your portfolio with gold and maybe hedge real estate through the use of the new CME housing futures. Believe it or not, there is a market for housing futures as many are turning to ways to hedge against the declining housing market. Through housing futures, one can actually shift the risk from an individual homeowner with a huge mortgage, to a speculator trying to cash in. If there is a housing bubble and it does burst, housing futures and investing in gold may be able to provide a cushion of support to the savvy investor. This is why I’m writing this article to give the average investor more arsenals in their investment strategies. The Fed for too long has been following a consistent policy of flooding the economy with easy money, leading to an artificial boom followed by a recession or depression when that bubble does burst. Just as it provides an infusion of liquidity into the economy by cutting rates, the Federal Reserve has become the chief instrument in contracting the nation’s money supply by increasing interest rates. This type of manipulation has created abrupt fluctuations in our economy that date way back to the great depression of 1929, to the recession of the 1970s, Black Monday in 1987, the stock market bubble of the late 1990s, to recent inflationary policies that have crippled the dollars purchasing power. Today rates are at a low as the Federal Reserve Bank, headed by Chairman Ben Bernanke, have shifted from focusing on inflation as its main concern to tackling the credit crisis facing the economy due to the bubble in the housing market. Certainly there is a relationship that is easy to comprehend. Those affected by the credit crunch are being thrown a line as rates are falling. Stocks, on the other hand, are closing at record highs as they are picking up more investment capital because of the rate cut. The monetary policy has gone from consistent rate hikes to an abrupt rate cut on Sept 18 of 50 basis points. This monetary policy has hurt the dollar tremendously and has given way to commodities such as gold to rally. So, if you’re wondering what economic sector will mostly benefit from all this, I believe it has to be commodities, especially gold. Historically, in these cycles precious metals have exploded. In fact, gold rose from a low of $35 to over $850 an ounce in the last commodities boom back in the 1970s. History seems to be repeating itself as gold prices are soaring. The precious metal is up 20% just this year. Even at today’s levels, I believe there is still enormous opportunity as gold is still undervalued and is one of the cheapest assets you can buy.

It’s only common sense. At some point in the future, I believe interest rates will be moving up from today’s artificially low levels. When the economy does start to recover, the Fed has to raise rates to slow the flood of cheap money and the inflation they have created. But, even without raising rates in the short term, world tensions, the global energy crisis, and a weak economy have already pushed gold higher. There is also increasing continued demand for gold worldwide, coming from China, India, and Russia, as they have all been raking in profits from the rise in the price of precious metals. As the commodity bull-market gathers more steam, gold will undoubtedly continue to shine.

If you would like a free brochure explaining Housing Futures from the Chicago Mercantile Exchange and more information on the strategies we’re using to protect against a market downturn, please request the information here or contact me directly at oliver@wisdomfinancialinc.com Phone: 1-888-397-9184.
Oliver Velasquez, Metals Market Strategist, Wisdom Financial Inc.
Disclaimer: Futures and options trading can involve substantial risk. Past Performance is not indicative of future results.



Letter Re: Phases of the Moon and Deer Hunting

James,
Ungulates (cattle, deer, antelopes, camels, deer, goats, pigs, sheep, as so forth) daily routines are keyed to the moon. People’s routines are keyed to the Sun. The moon cycles each 28 days, the sun in 30 or so days.

Each day, the sun is always somewhere near high noon, i.e. 50% past sun-up, at 12:00 sun time (duh). However, the moon can be at ‘high noon’ in moon time at any given hour, i.e. at 9:00 a.m./3:00 p.m., etc.—because the moon has a shorter cycle.

Recent satellite telemetry studies on collared white tail does and bucks across North America established hard scientific proof of deer movement. Each morning, deer will move from low ground to the highest grounds and hide during daylight in the highest and densest locations. Each night fall, the deer will move to the lowest and most open areas. That is an established scientific fact, as gleaned from the telemetry studies. The scientists surmise the basis for such movements is that deer see exceptionally well at night, i.e. they enjoy a visual edge over the predators on the dark nights. However, during day time hours, both predator and prey see equally well; therefore, deer hide in the dense stuff in daylight. Additionally, deer have a keen sense of smell and because warm air rises, at day break deer go high and hide, thus accomplishing concealment and the ability to sniff out on the rising thermals any potential predatory threats.

Now, because deer are ungulates, i.e. cud chewers, they must chew their cud ‘X’ number of hours a day or they die. Most of this is done while bedded down (not sleeping though). They cannot chew their cud while in transit though. The telemetry studies confirmed that for 18 hours a day, deer are bedded down, i.e. the net sum of the time the deer are either up high on the ridges during daylight or in the open flats down low at night.

The telemetry studies established also that the deer ‘feed’ actively, i.e. their breakfast time/dinner time/ lunch time, when the mood is directly over head (i.e. when it is high noon in moon time) or when the moon is directly underfoot, (i.e. midnight in moon time).

This ‘active feed time’ is only about two hours each day, i.e. they fill their bellies twice daily and chew their cud the rest of the time, allowing of course the time it takes them to move to and from feeding areas and the time they actually ‘sleep’. Unlike people though, deer snooze about 3-4 hours, chew their cud at regular intervals when awake, take time to travel at daylight to higher ground, and take time to travel to lower ground at dark—-depending on the ‘moon-time’, the deer will ‘actively feed’ along their given travel routes.

Interestingly, and keeping the theory and scientific fact in mind, with a ‘full moon’, deer move less at daylight and stay in dense cover, especially when it is at night or the early a.m. hours. So to all who hunt with gun/camera, knowing the forces of nature that dictate animal travel patterns, one can surmise when and where animals, both predator and prey, can be found. Yes, predators’ travel patterns can be determined by tracking ‘their’ dinner plates as they move around the landscape!

There is an excellent book that goes through all of the above, titled Moon Struck; Hunting Strategies That Revolve Around the Moon, by Jim Murray. BassProShops sells this book. Tell your hunting buddies about this and they will thank you beyond words! It is the ultimate resource for tracking the moon phases for the very short interval of deer season. Thanks! – Matt B.



Odds ‘n Sods:

Eric Fry from The Rude Awakening penned this about Citigroup’s recent SIV accounting shenanigans: SIV Positive.

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Hawaiian K. and The Army Aviator both recommended an alarming piece of commentary on silver storage from Ted Butler: Money for Nothing. My favorite quote from the article: “I found it appalling that Morgan Stanley would claim to store silver that didn’t exist and even have the chutzpah to charge for the storage.” As I’ve often written: there is no safe and sure substitute for in-home storage of precious metals . Any other method–be it shares, or certificates, or “bonded storage”, bank safe deposit boxes, or anyone else–relies on trusting in the honesty and integrity of men and the constance of constitutionally-sound government. And living in these days, we all know about both. Sadly, we live in a wicked, fallen, sinful world.

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In the “There’s No Need for Panic” Department: The Federal Reserve has posted some Foreclosure Resources for Consumers. OBTW, I shoulsd mention: how did they qualify for a “.gov” domain name? The Federal Reserve is a private banking cartel, not a government agency. They are no more “Federal” than either Federal Express or Federal Cartridge Company. If you look in your phone book, you’ll see that the Federal Reserve is correctly listed in the “F” alphabetical section of the White Pages, not in the US Government Agencies section.

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Chester suggested this AP story: Much of U.S. Could See a Water Shortage





Notes from JWR:

A reminder that the special “six pack sale” for autographed copies of the latest 33 chapter edition of my novel “Patriots: Surviving the Coming Collapse” will end in just five days. The sale price of a box of six books is still just $90, postage paid. (Normally they are $24 per copy, but during this sale you get six autographed copies for $90, mailed in a Priority Mail Flat Rate box, sent to anywhere in the United States, including APO/FPO addresses.) This sale ends on October 31st. This is your chance to buy some extra copies for Christmas presents. Note that immediate deliveries are limited to supplies on hand. I presently have just a few six packs left on hand. Once those have been expended, there will be a delay for re-stocking until mid-November, when the last of the October six pack orders will be shipped. Orders will be shipped in the sequence that payments are received. Do not order from me unless you are willing to wait until the third week of November for your six pack of books to arrive! (If you are in a hurry, you can order from Fred’s M14 Stocks.)

That reminds me: I owe special thanks to Fred’s M14 Stocks. They recently bought 1,000 autographed copies of my novel “Patriots: Surviving the Coming Collapse” for resale. (This was the single largest order for autographed copies that I’ve ever received. My hand is still sore from autographing!) Take the time to visit their web site. In addition to the world’s best selection of M14 rifle stocks, they carry M14 and M1 Garand parts, AQT type targets, bandoleers and repack kits with stripper clips (many different types), shooting jackets, and a great assortment of books. Fred’s M14 Stocks is also a major supporter of The Appleseed Project.



Letter Re: Advice on Private Party Gun Purchases

Mr. Rawles:

We have a few guns that were passed down from my father, father-in-law, and grandparents. But after reading SurvivalBlog, I’ve determined that its wise to buying a few more, ahem, “capable” defensive guns. (Like an M1A and a scoped Remington 700 Sendero or maybe a Remington 700 PSS .308.) I would rather not buy them from a [Federally licensed] dealer, so I can avoid that whole paperwork trail. My difficulty here is that I live out in cow country where guns shows are infrequent. And the few we do have, have a poor assortment of guns to choose from. What do you suggest ? Thank You Sir, – Ray, Somewhere in Wyoming

JWR Replies: I recommend that you make all of your gun purchases from private parties, through GunBroker.com (on-line auctions) or GunsAmerica.com (fixed price sales–usually more expensive). Both of these web sites have search features that allow you to search for private party sellers, by State. Search only for sellers from your own state. That way, you won’t run afoul of the Federal law that prohibits the transfer of a modern (post-1898) gun across state lines, except through a FFL dealer. It might also be worth your time to drive long distances to some of the larger gun shows in your state. There, you should of course buy only from private parties.

Another option that you should pursue is buying cartridge guns from the 1890s. Under the Federal, law, any gun or receiver/frame that was made in or before 1898 is not considered a “firearm”. Rather, it is classed as a Federally exempt antique, regardless of the cartridge chambering. These guns can be purchased privately across state lines without any paperwork. There are quite a few models such as the Finnish M39 Mosin Nagant and the Mauser Model 1893, 1894 and 1895 that are available with receivers from the antique years, yet are available in modern, smokeless cartridge chamberings. Two antique gun dealers that I recommend are: The Pre-1899 Specialist (one of our loyal advertisers) and Empire Arms. If you end up buying a Mauser and plan to have it rebuilt as a .308 sporting or counter-sniper rifle, I recommend Scott Molnar of Valier, Montana, who does business under the name “Coyote Commander.” Phone: (406) 279-3797.