FIRST A  NOTE.  THERE WILL BE NO NEWSLETTER ON WEDNESDAY NIGHT. I AM TRAVELING WEDNESDAY, SO WE’LL RESUME ON NEXT WEEKEND.

If you settle into your couch on any particular evening and scroll through your 500 digital channels, you’ll see the same things we saw a year ago, or two or three. American Idol is still drawing millions of viewers, sports arenas are still full to the brim, ridiculously dumbed down comedy shows abound, and commercials still tell us how we can best keep up with the Jones’s. If that was your only source of information, you’d simply have to guess that all is as it should be, and your most pressing problem is that you are eating the wrong burger, or carrying the wrong purse.

Indulge me here for a moment if you would. What if…just what if things aren’t as rosy as TV suggests? What if “this time it’s different?” What if the conspiracy nuts, the doom and gloomers and everyone else calling for the next grand depression is right? What if the global sovereign debt problems balloon and take down more nations?What if the next “Lehmans” hits and it ripples out and banks are crippled? What if Citi’s little email telling people they have the right to deny you access to your money in their bank for 7 full days is foreknowledge that something wicked this way comes?  What if we are indeed rushing head long into the Second Great Depression? What the hell do you do about it?

There are only a few things that are set in concrete folks. You know them by heart. Death for instance comes to mind. Taxes comes to mind. Politicians that lie comes to mind. But I think you can expound on that a little. The “market” will always exist. Gold will always exist. Silver will always exist. We can go about arguing the nuances of all that, but let’s just take it on face value for a bit.

We know Gold has been important for over 6000 years. We know that the most popular book on earth, the “Bible” mentions it hundreds of times. We know that Silver has been important for even longer than gold. This is simply because it’s always been easier to find, and once found, it was discovered that it had properties that were quite admirable. Now what about my statement “the market” will always exist? Isn’t that a man made edifice that could easily disappear? No. Although throughout history all the man made currencies have indeed gone extinct, there was always some form of “market” that would pop up to facilitate trading of goods. From the old Roman “agora’s” to the maritime centers of Europe, a functioning marketplace has always existed. This will not change, even if we were to completely disintegrate.

So for today, let’s just allow our minds to wander to the dark side. Let us assume the global economy truly plunges into a deep dark depression. There are a million things that will make this one more severe than the last one. For instance back in the 30′s the bulk of our population did NOT live in cities. They lived in rural areas, and loose townships. When things got rough, the men in the family would put food on the table by hunting local game. Rabbit, squirrel, deer, duck, geese, coon, possum, you name it, a decent shot could put food on the table. People also tended to have more property back then. Instead of the incredibly cramped 50 X 100 lots that dominated the landscape after WWII, it was common for even lower income people to have half an acre or more. So, planting and canning some veggies and fruits was not only common, it was standard. Most people “just outside of town” had chickens. Then of course there was the issue of guns. Most people had one in the home. America was “free” during the 30′s, and it was perfectly acceptable to have a shotgun or long rifle on the wall, or even in the car.

Now we fast forward to today. The Bulk of our population now resides in Cities or Suburbs of cities. High rises replaced half acres. Condo’s, townhouses and row homes dominate our “housing”. Huge developments of vinyl clad monstrosities dominate the landscape, but interestingly they are parked an arms length apart. No  one has room for a garden, and God forbid you tried to have a couple chickens, the housing associations, and local land use zoning would put you in prison. Then of course there’s the issue of guns. The socialists ideal of disarming the American public has been going on for 60 years, and now it’s the rare household that has a decent gun, or a person in the family that knows how to use it properly.

Today’s society is wholly and completely at the mercy of the “system”. If your local grocery store was bare, what exactly would you eat? Do you have a way to put food on your table that does NOT include driving to some remote area to get it? THINK ABOUT THAT FOR A MOMENT FOLKS.  Let’s suppose things got really ugly for a couple months. Could you put something on your table if the stores were empty? Can you hunt rabbit or squirrel within walking distance? Do you have a functioning shotgun and know how to use it? Do you have a summer garden and can the excess? I’m guessing that for 95% of my readers all those answers are NO.

What about power? Water? Do you have a well and a generator you could rely on for water if the township supply went down for a month? You don’t if you live in a city, burb, townhouse, condo, or development. How long could you really survive without power? You’ve all seen the hurricane footage where power might go down for a few weeks. Could you deal with that?  What about social unrest? What kind of preparations have you made to deal with roving gangs of thugs looking to take YOUR food, YOUR resources? Have you attended a self defense course? Have you taken a concealed handgun course? Is Your home properly secure?

A lot of you are probably skimming through this and smirking that this sort of thing could never happen here. That my friends is the ultimate in Hubris. You have had the blessing of never living through a WWII. You have never had bombs dropped on your town every day for months like London did. You have never had two massive armies lobbing artillery on your turf. But most of Europe has. They have lived through it twice and they know the utter destruction, the poverty, the death and pain. They don’t want any more of it. Here in the states we have lived so high on the hog via deficit spending that we’ve not really ever had to deal with a “tough time” in over 80 years. Most of you don’t have a clue what it’s like to be hungry.

I’m here to tell you that America is not some golden city built on a hill. It’s simply another country in a long list of countries that have formed  over the past 5000 years. Every great empire has eventually folded up, and 99% of the time it’s been because of financial troubles. The average empire lasts approximately 200 -300 years. Our clock is ticking.  So, what do you do if something wicked this way came?

Since it’s not likely you’re going to move to a plot of land in Kentucky and grow some food and learn how to hunt and carry a weapon properly, then what can you do for yourself if any (or all) of this came true? Well then you’re going to need “money” to get the things you’d need. Now if the “dollars” we carry in our pockets were worthless because of devaluation and inflation, paper money wouldn’t be worth much more than an ignition device to light your fireplace. You’d need “real” money, something you can swap for goods. Do you have any “real money?”  I’m not talking about the garbage “electronic digits” that your bank statement says is there. I’m not talking about “Federal notes” that we use as cash. What do you have to trade, that someone would give you food for?

Through out history there has been very few things that have gotten people through the dark periods. Diamonds have done it. Gold has done it. Silver has done it.  I’d call that “very few”. Do you have any of these things? If not you might want to consider what I’m about to say.

I’d love to believe that none of this could happen, I really do. But I’m not stupid. If it’s happened in the past it “could” happen again. There’s no question we’re going to enter a depression. There’s no question that the bulk of our society cannot survive on their own, they need the “system” to survive. When the system breaks down, there’s also no question that violence, robberies etc will soar. I think it’s a wise person that takes a few moments to ponder just what they’d do.

For the past ten years I’ve been screaming to you all that gold was going higher. In 2001 we said it would hit 1000 dollar an ounce “inside of ten years”. It happened. Now that’s great because we get to look smart, and not only have we preserved our wealth, we’ve actually “made money”. But at this price, gold is not the panacea it might seem. Now don’t take that wrong folks. Frankly I think golds still got a long way to go. But now we have to consider the dark side. If you don’t exchange your gold’s value for something more useful as “money” we could have an issue. Let me explain.

Let your mind wander for a moment. The dollar crashes, and we are in full blown depression. The Fed does all it can, Uncle sam does all it can, but we’re in a horrid mess. Now, lets also suppose that gold went to 4000 dollars an ounce. That would mean that just one silly krugerrand would be worth 4000 dollars. Do you want to buy bread and milk with a krugerrand? Sure you could cut it in half, or quarters, but you’re still looking at something worth a thousand dollars. That’s a lot to pay for milk for your baby. So is it silly to think that maybe you should take some of your dollars, and even some of your gold, and buy small silver coins? I don’t think it’s silly at all.

You can still buy “bags” of pre 1964 dimes, quarters and half dollars that are made of silver. You can still buy one ounce silver “rounds” for about 18 bucks. If all hell was to break loose, I’d sure rather trade someone two one ounce silver rounds for some meat and veggies, than an ounce of gold. Even if silver ran to 50 dollars an ounce, it’s still better than using gold. So the first reason I believe owning silver makes sense is that it is much more easily used as “money” if indeed something catastrophic happened. The next reason of course is because it’s so darned cheap right now. I have every reason to believe that the decades of silver manipulation is slowly coming to an and, and this latest dip in silver might be the ultimate “bottom” we see for many many years.

But there’s one more thing that makes silver much more compelling than Gold right now. The only reason gold is “up” and going higher is because it is perceived as true money, and a way to guard against our currencies going worthless. But if indeed I was wrong, and the Fed figures all this out and we don’t have any economic implosions, no depression, gold will indeed “come down”. Why? Other than being money and used in jewelry, it doesn’t have a tremendous amount of industrial uses. yes they plate some electrical connections with it, but overall, its  industrial use is very small.

Silver on the other hand is used in everything. From medical, to 3 D movie screens, to electrical components, to cell phone towers, to you name it. In other words, even if no doom and gloom takes place, and people don’t have to revert to using it as “money”, it will still be in demand as an industrial metal. Virtually every day we see more and more and more uses for the stuff, and demand rises every year. if we can get them to stop the insane manipulations at the Comex, and silver was finally allowed to trade based on it’s true worth/value versus getting stomped on via huge short positions at major institutions, silver would be higher than it is anyway.

Are you seeing the message here? If the world melts down, which is probable, silver will go higher and it will make for wonderful “money”. If the world doesn’t melt down and they pull out of this the ever increasing demand for the stuff will keep it relatively stable if not gaining in value. So from up here in the cheap seats, Silver is a win/win situation.

So what about my comment that the “market” will always be there? It will. Even if we’re mired in a depression, the market will still function. With that in mind, one of the best things you can do is try and milk it for all you can get, and then take those proceeds and turn them into silver/gold. I am also NOT against owning gold and silver mining shares, although depending on the rate of inflation, the dollars you make from those going higher, might lose value virtually every day. I’ve been taking market gains and turning them into gold coin and recently silver coin/bullion for years. I think that’s a perfectly sane plan for the future too.

Look friends, I’d love to believe that nothing bad could happen here. I’d love to think we can escape any real nasty pain. But we all know the debts are un payable, we all know the good jobs are gone, we all know inflation is roaring, we all know that one by one the worlds sovereign debts are imploding. As much as I do think that America will emerge from all this stronger than it has been in the last ten years, I also believe that we have to “bottom out” and reset everything before that happens. That reset is the variable and I think it’s going to be a nasty one. If you buy silver coin, I tend to think you come out of it smelling like a rose either way. It’s what I’m doing, and will continue to do. Think about it.

Now onto the market:

Because of absolutely horrid economic reports, the market struggled a lot this week. Monday was red, Tuesday was red then Wednesday we got our famed reversal higher only to see Thursday end red. What’s all the problem? Well the problem is that the economy is a sham. The initial jobless claims ROSE to 497K. New home sales hit the lowest number ever registered. Greece and half of the European Continent is awash in debt. Our treasury sales are acting bizarre. Add it all up and even Uncle Sams best manipulations can be over run by a lot of ordinary folks looking for exits.

Doesn’t anyone find it odd that on Wednesday, somewhere north of 30 billion dollars went into Treasuries that have virtually no return? I’m not talking about a low interest rate, I’m talking 0.005%. That’s what the indirect bidders were happy to take. So, for a month, there’s a whole lot of folks more interested in just getting their money back, than making anything on it. Isn’t that odd? I think so. Then of course we had that “mistake” by CitiCorp when they released an email to clients telling them that Citi has the right to refuse to give you your money for 7 days if they don’t want to. Yes you heard that right, they reserve the right to deny your access to your money for 7 days if they “warrant” it as necessary.

In any event, we coasted into a flat Friday, which of course leaves the almighty question, What happens now? Well there’s the big problem. Next Friday is the all important “jobs” report. Yes indeed, each first Friday of the month brings the non farm payroll report and this is the puppy that everyone looks at for direction about the economy. If that report is poor, the chances of a move higher are really getting slim. But  if they’ve doctored it, and tarted it up like a cheap date, well, we could finally get the last leg of our bounce and possibly threaten the recent highs.

Since Monday is the first trading day of the new month, and new months usually bring some new money, you can almost buy into the idea that we’ll have an up day on Monday and possibly into Tuesday. But even if we do, Wed, could bring us some slack as they hunker down to await Friday’s report.  I personally will be “leaning long” if I can for the front part of the week, then lightening up for the second part.

Have a great weekend Folks we’ll see you all Next week. There will be NO newsletter on Wednesday night as I’ll be traveling.

PS..  If you’d like to see the exact stocks/options/metals and 401K moves we will be looking at for this week, please consider becoming a member of the “insiders club” located here: Click Here