HSL Junior ~
~
Jaws
from Harry
Schultz
Harry Schultz Letter snippet [HSL]
Posted Feb 14, 2008
HSL Only US$382 for a 1-yr subscription, an Absolute
Must Buy! [AMB] click
Big Picture: I have a mountain of pertinent "revelations"
to talk to U about - to describe the present global chaos - but
I think the best way to fingerprint the essence is this: Transparency
is now demanded in the biz world (not for the sake of
honesty or anything so moral - but rather for the sake
of biz self interest), and derivatives can't breathe
(or hide) in the rarified oxygen atmosphere of transparency.
Result: daily corporate
write-downs (mostly banks) (on a massive scale), daily
CEOs resigning, daily shrinking of earnings & projections,
daily increase in bankruptcies, & so on. This fosters
ever-greater lies by govts (for election reasons), & media
playing down the bad news due to pressure by big biz (advertisers),
& Wall St pressure (which saw bonuses shrink & now see
Wall Street job losses growing). CEOs see their stock options
dying, try to divert attention away from balance sheets. Amusing
to see financial TV daily drumbeat of "the worst
is probably over now; which sectors shall we buy at these bargain
prices?" & "Is gold overpriced now?" &
"The Fed is coming to rescue us" & other fairy
tales.
In truth, the worst is further
down the road, 1 to 2 years, I project. Derivatives are termites
that have eaten away at the foundation of the house of credit/cards,
which is now crumbling. There is a confluence of hailstone storms
hitting financial mkts on the head simultaneously: Recession,
credit crunch, house price mudslides, mortgage freezeups, US$
major downtrending, confidence index turndown, consumer buying
slipping sharply, a stock mkt bear mkt signal, inflation roaring
into action (both real & govt data) around the world, &
stagflation - among the worst fears of politicians
- now in place. Gold is a barometer that reflects
global fears & any absence of confidence in the fiat-monetary
system, augmented by concerns over increasing wars/terrorism/violence.
There's also growing public awareness that the elitists are pulling
our strings, & big brothering us, causing anger & frustration.
And more. Some say it's the
Perfect Storm, meaning conditions are ideal for
a force 5 monetary hurricane. They're right, & it appears
to be the worst financial storm in 60, perhaps 100 years. And
this time it's global (but not spread equally). Depression
will likely replace recession, as we warned 3yrs ago. In 12 months
from now, analysts will probably be quibbling over how bad the
depression might possibly be. Right now they've just about managed
to agree to soft-speak: "recession." No corp captive
analyst ever wants to be first to use those words; must hide
among their peers crowd - 'til the facts become overwhelming.
Somewhere ahead there'll be
a flutter of good news - good but irrelevant to the Big
Picture. Trumpets will blare, drums will roll. You'll then need
to decide whether a rise in GM earnings matters &
whether a 15% stk mkt rally changed anything. Only when all the
banks, lenders & major corps have cleared their derivatives
exposure & balance sheets are transparent, & banks lend
to each other freely, will we be safe to go back in the
water, free of Jaws.
Meantime, stick with HSL
guidelines: avoid time deposits, switch to 2-5 yr govt bonds
(non-US$), step up gold purchases (bullion & shares), exit
US$, buy a lot of Swiss francs (via SwFr govt bonds), avoid debt,
exit money-mkt funds, buy commodities &/or food stocks. See
new recommendations & open positions & model pf. [for subscribers] Stockpile more cash in hand.
Tidbits: [Editor's comment: Note how gentlemanly UH is
- avoiding the use of the word tit].
Every nation has jobs reports. Only in the US does govt drop
off certain early numbers & add new ones, thus distorting
the data. US jobless is 5% sez govt. In fact, it's 15% +/-. When
govt sez it's 15%, it'll really be 30%. EU reports honestly &
appears to have more jobless than US, when, in fact, they are
aprox same as US.
•••• Stock
buy-backs are over! Greedy CEOs now look bad, ran
down corp cash, via buybacks, now scramble to get cash.
BBs are a free-lunch mirage.
•••• Urge
U [to] avoid antibiotics unless condition very serious.
They make U less resistant thereafter. I am also anti-vaccine
in almost every respect. Build up your immune system with healthy
food & vitamin/mineral supplements.
•••• BBC
News reveals prescription drugs are more dangerous than street
drugs, ie, more deaths result from prescriptions.
Warren Buffett recommends bonds.
And non-US$ currencies. U R smarter than him?
•••• US
wholesale price inflation hit highest increase rate in
34 years, & consumer inflation rose at highest
rate in 2yrs. Inflation rising everywhere, but UK is keeping
interest rates steady & EU may raise them to
fight inflation, whereas Bernanke will cut int/rates to
fight recession. This difference is caused by history. EU has
lived thru hyper-inflation in 20's. US has lived thru hyper-deflation
in 30's. To each his own fear. Cutting rates will increase inflation.
•••• CNBC
headline: "Wheat prices raise stagflation fears." Raw
food prices are currently going thru the roof. The world is food-short!
Some advise stockpiling.
•••• Wachovia
Bank put it nicely: "Credit risk is everywhere."
I can't improve on that.
I planned to discuss US govt
gold confiscation today, but after spending hours discussing
it with 4 coin dealers, the conclusions are illusive. Nor do
they all agree, which is scary. But the US Patriot Act changed
the rules that prevailed since 1934. Now, "collections of
rare coins" (eg, matched sets) seems safest, though probably
less liquid. So, some common bullion coins are necessary
for barter/coax/trade in last resort. Keeping coins in US bank
boxes is unwise. Try Canada. All my dealers urged trading
UP your coins to rarer levels.
Will US confiscation happen?
Odds are against it, but there are some reasons why it could
happen. Would other nations follow the US? Not likely; they have
different circumstances/attitudes. Just as likely perhaps, the
US could buy gold (some CBs now doing so) & use it to support
the US$, in some fashion. I'll return to the subject when I get
a better fix on it. Readers in the rest of world should buy gold
coins of the country where they live, not US coins. In the US,
buy legally rare coins certified by: CAC/PCGS/NGC. US coin dealer,
Hslm EdLee will answer questions on new PatriotAct coin rules
& definitions via edlee2001@aol.com.
No charge, no pitch.
Thanks to new lifetime subscribers;
more about them in next HSL. Also, nextime: the longterm
future of the US$ explained. The neo-cons are attacking candidate
Ron Paul with invalid accusations & insinuations. They weren't
worried about his demand for return to the Constitution until
he polled 10% of the Iowa vote. But Ron himself says his message
is what matters, not himself. His message involves shrinking
govt & overseas bases, & abolishing the income tax &
the Fed, & bringing the troops home. Neo-cons can't stand
the heat so they want him out of the kitchen.
Meantime, make sure that gold
is the biggest part of your total investment nest. If
so, U'll have a happy 2008, as I'm sure we'll see $1,100 within
a few months, & maybe much higher.
 Keep a cool head & a warm heart.
Smile a lot & help others & love your friends & family.
God bless.
Uncle Harry 
© Copyright
1964-2008 F.E.R.C.
email: info@hsletter.com
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