[Money-matters] Money Update Oct 4th 2008

Sun Oct 5 15:46:37 UTC 2008

_/*Marc's Notes:*/_
Despite the bail out passing, the market closed down Friday. Our last 
email said the market might open up Friday UP and then gradually fall, 
which is exactly what it did. That, from my point of view, is a very bad 
sign.
As indicated in the last Money Update, I encouraged you to hedge your 
stocks with contrary funds by Fridays close.
There is a very good chance this next week will /_be the crash week _/we 
have been warning about. I hope I am wrong. There is no good news on the 
market or the economy except the bail out. (/_* I *_/don't think that is 
good news however, but investors might).
Monday will be a KEY day to indicate general investor sentiment. My gut 
feeling is DOWN   DOWN  DOWN. The FEDS will be in there buying the
heck out of the market as they see the same charts I do. Expect an 
"ANNOUNCEMENT" Sunday night or Monday EARLY to stop the freight train 
called "THE LEMMINGS ARE PANICKING".  Monday will be critical. I will be 
very surprised if it is mundane.
We are in historic times. The credit expansion since the elimination of 
the gold standard in 1971 is now collapsing.  It took 37 years. A blip 
in the grand scheme of things. The FEDS will try everything and anything 
to stem the culmination, but it cannot be stopped. The grand paper money 
experiment THEY think is a "new' paradigm is nothing but an age old 
experiment tried countless times before, over and over by governments of 
the world. The result has been the same. Like putting matches on a can 
of gasoline. The result is always the same. That they think they can 
bypass natural economic law is senseless and futile.
Unfortunately for most Americans, while the bank fat cats will survive, 
as well as their Washington and Wall Street friends, most folks will be 
wiped out, or worse.
YOU do not have to be one of them. Protect yourself NOW. Feel fortunate 
you have tuned in to our show. Most people in the US dont have the means 
to hear what we have to say. So be it. You do. And thank God ( literally 
) for that.

Here are our problems and challenges in a nutshell:

1) The US government is bailing out (they think) banks to stop an all 
out financial collapse. They will not succeed as they are trying to fix 
"past" problems of excessive debt and leverage. The bets have already 
gone bad and it is in the trillions. They dont have THAT much money. 
They THINK the solution is to get the banks LENDING again. This is 
exactly what is NOT needed. Lending is what got us INTO this mess. The 
solution is now PAYING it all back by now foregoing spending which = 
recession/depression.  Whats called a K WINTER in economic terms. ( 
Think seasons, winter is the bad one). They also keep saying the want to 
avoid a recession. Thats like living in the forest and saying you never 
want a forest fire. Fires clear out the rotten, and make way for a clean 
slate with new growth. Markets work the same way.  Managing forests 
require prescribed burns for clearing out the dead wood. Recessions do 
the same. The longer you prevent them however, the more intense and 
destructible it is when it eventually occurs.
2) Whether or not  they succeed is not a necessary piece of information 
to make a plan to protect ourselves.
Some of those reading this think "THEY" (the FEDS) will work it out and 
the market will recover because "it always does".
So be it. I wont argue with those sticking their heads in the sand. They 
are also the ones that said Merrill Lynch, or Wachovia, or Washington 
Mutual, or Countrywide, or Lehman Brothers, or Bear Sterns would never 
go under. Now they accept this as fact. Only fools ignore the obvious.
3) We must prepare OUR assets to survive no matter what the FEDS  do. 
Most people will think this will "work itself out". I am telling you 
now, either believe the signs your seeing and protect yourself, or have 
an astonished look on your face when you lose half to three quarters of 
your net worth in the next 12 months. If you can stomach that kind of 
loss, more power to you. I WONT be one of them and you dont have to be 
either.
4) No one can say for sure (me included) what will happen next. If 
someone tells you they know for sure, do not believe them. NO ONE can 
say for sure what is next. One thing I do know. Those of you reading 
this and think you can " hold for the long term" and be ok, you are in 
for a nasty surprise. DONT SAY YOU WEREN'T WARNED!.
5) Since all we do know is that the FEDS will keep creating money, we 
can look back in history to see what has preserved peoples wealth in the 
past under money printing governments. This experiment has been tried 
before countless time, so we know the outcome.
6) We CAN look at the signs intelligently and draw the most logical 
conclusions from those signs, and arrive at the best plan with the best 
hope for asset preservation, given the limitations presented to us. 
History guides us.
7) _The signs are: _
 Trillions in leverage bad debt, frozen credit markets, an exploding US 
Government debt, a US govt. hell bent on printing as much money as it takes.
A Congress bought and sold by the highest paying Lobbyist.  Two 
presidential Candidates that are ALL THE SAME in their socialistic, 
pandering views, thinking the govt. can solve our problems. ( They cant- 
trust me on this one). A public that looks to THEM to "save" us, when in 
truth they will end up taking everything you have, or close to it. A 
crashing housing market. ( the largest in history). An economy which 
relies on consumers ( US) to generate 70 % of it income, while consumers 
(US) are tapped out, borrowed out, up to our eyeballs in debt and no 
longer able to afford to support ourselves, let alone by a new SUV. 
(Which is why auto sales are CRASHING beyond belief).
Add to this a crushing debt held by the GOVT and Joe Sixpack, and there 
is no hope of ever paying it back. You arrive at the conclusion you 
either protect yourself with uncommon means or get in line with everyone 
else as you lose everything or most of it in a crashing economy.
Cant happen you say?  LOOK AROUND YOU. Your economy is CRASHING. Your 
banking system is GOING BANKRUPT. And you think the Government can still 
save you?  HOW MANY MORE SIGNS DO YOU NEED MY FRIEND?  Wake up and smell 
the toast or be prepared to get burned BIG TIME.
8) You can decide to take the steps to insure you and YOUR LOVED ONES to 
at least have SOMETHING  left right now, or lose the opportunity. IT IS 
NOT THAT DIFFICULT!   Or you can trust in those that led us here, and 
reap what you have sowed. We are at a critical junction here.  Either 
move or be run over, the choice is yours.
9) I cannot guarantee any result, nor can anyone else, but together we 
can arrive at a diversified and intelligent plan based on what WE DO 
KNOW and looking back at what other people have done in similar situations.
10)  And what is the one thing we DO KNOW? They will PRINT more money. 
And knowing that is enough to make a plan.

_/*The Plan:*/_

Diversification is the key. This is NOT owning a basket of mutual funds. 
Doing this means you are betting ONE WAY, in ONE MARKET, in ONE 
CURRENCY, in PAPER ASSETS ONLY. This,  in a simple terms, is NOT 
DIVERSIFIED.
To be truly diversified, you must be in multiple currencies,  in other 
then "paper" assets,  in "contrary" funds, in multiple markets and in 
assets which HISTORY tells us survive paper currency devaluation, which 
is what is headed our way as we speak.
To be truly diversified you should consider a mix of:

1) US STOCKS , but right now mostly "CONTRARY " stocks that GO UP when 
markets GO DOWN. In the coming collapse, you will MAKE MONEY and 
increase your wealth.
2) Any money in stocks LONG ( hoping they go up) should yield dividends 
north of 10 %. These should also be mostly foreign and commodity based. 
These will probably do better then US stocks at this point in time.
3) Foreign currencies using funds or ETF's
4) Swiss annuities- enables you to park money out of the reach of US 
authorities and it private
5) Physical gold and silver in your possession  ( BANK SAFE BOX for most 
holdings due to robbery threat). I would increase this particular 
holding at this juncture. Things are getting ugly quickly.
6) Gold and silver funds- some pay dividends as well.
7) Most of your funds in cash and in FDIC insured accounts, T BILLS, T 
BILL FUND      Short term ( only ) US GOVT DEBT instruments   ( cash 
will be king).  Right now, preserving what you have is most important.
8) Commodity fund such as DBC or DBA
9) Interest rate funds that goes UP as interest rates GO UP such as 
RRPIX. They may move down as the FEDS cut rates, but hedge against an 
eventual dollar fall.
10) Advanced traders can SHORT the market with puts. options and etf 
funds. I prefer ULTRA short funds at this juncture for higher profits. 
These also protect my LONG dividend paying stocks when they fall.

Those not diversified as above may suffer massive losses in the days and 
weeks to come. Again, don't say your weren't warned.

_/*Markets:*/_
Alert level is RED. A major crash is now possible. The FEDS will try 
another ANNOUNCEMENT, perhaps in coordination with other central banks 
and governments of the world. Expect a possible major interest rate cut, 
maybe worldwide, today or Monday. Monday futures are not up and running 
as of this writing but my my guess is a major slide is in the making.  
Mom and Pop investors are liquidating now. This is unstoppable. 1 in 50 
are selling. When 1 in 10 or more start to sell, you can expect a wipe 
out, the likes of you have never seen. The chance is now 50/ 50 in my view.
The US dollar will remain firm for now as investors are fleeing to the 
perceived safety of US debt ( as we are). This means foreign currencies 
and gold may continue to slide. This losses may be offset with your T 
bill funds in our DREAM PORTFOLIO so no need to worry there.
EVENTUALLY, the US dollar will start to sell off. This will mark stage 2 
of the crisis and will be even more painful. When the US dollar starts 
to accelerate downward, gold and our interest rate funds may soar. This 
will mean more profits for you. Until then, gold and oil may continue to 
gyrate, but I dont expect a major downturn in gold ( below 500/oz) 
except under extreme deflation which I expect the FEDS to try and 
prevent thru massive money printing and injections.
The market _/* may*/_  initiate a slow erosion instead of a crash, 
leading to painful declines, causing a "death by a thousand cuts" 
instead of an October wipeout. Either way, pain is headed toward you, 
Mr. average investor.
Think I am being all doom and gloom? Sorry. I didn't make the crises, 
I'm just the weatherman telling you a storm is coming. Don't blame me. 
If anything, I am suggesting ways you can profit or maintain your 
purchasing power while everyone else losses theirs. And that news aint 
so bad.
Monday ( tomorrow) is critical. The rest of the week is as well. Expect 
major volatility. This could be our "crash" week. We will see.
Keep tuned to Prudentbear.com. They will be the first to cover the 
"ANNOUNCEMENT" today or tomorrow, the one I forecast is coming within 36 
hours from now. Lets see if I get it right again. ;-)

_/*Upcoming Show
*/_Call ins all hour.  Also recent market action ( there will be a lot).
Get your questions ready.
Thursday at noon.

All the best and God bless all of you,
MARC

This article is strictly for informational purposes only. It is not a 
solicitation or suggestion to make any exchangeor buy/ sell any precious 
metal products, commodities, securities, stocks, warrants, options or 
other financial instruments. Marc Cuniberti, author of this article, 
does not accept culpability for losses and/ or damages arising from the 
use of this publication or any information contained herein. Investing 
involves risk. You can lose money. Please order up the prospectus on any 
and all securities you may be  planning to buy and do your own research 
before investing. Mr. Cuniberti may or may not hold the securities listed.

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