[Money-matters] FW: [Money Matters Newsletter] Dow Breaks 12, 000 then falls. Egypt erupts in violence. Money Update January 22, 2011

Sat Jan 29 22:43:05 UTC 2011

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From: Money Management Radio [mailto:marc at moneymanagementradio.com] 
Sent: Saturday, January 29, 2011 2:41 PM
To: client 
Subject: [Money Matters Newsletter] Dow Breaks 12,000 then falls. Egypt
erupts in violence. Money Update January 22, 2011

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Money Matters Newsletter: Dow Breaks 12,000 then falls. Egypt erupts in
violence. Money Update January 22, 2011

Marc's Notes: 
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The stock market (DOW) touched 12,000 this week then backed off and headed
lower by almost 200 points. This could be caused by a few reasons. 

When the Dow made its all time high in the first part of 2000, it again just
barely broke a big thousand number (14,164) then turned lower for good.
These major numbers can be resistance levels and turning points and only in
hindsight will we know, but it is something to be aware of. 

We must realize the Dows recent low of 6547 in 2009 was literally
obliterated with this historic run to 12,000 in a little over 1.5 years.
This incredible run is one of kind, and way too fast in my opinion,
especially when you look at the fundamentals of the economy.

In previous runs, like in the 1974 blast off which took us into 2000, the
economy was humming, the consumer had little debt, we were making things and
selling things and life was good.  In 1945 the war had ended and the US
launched into a period of great growth and invention. Similar runs started
on great growth and sound fundamentals. 

This run however looks much like the 2001 recovery which was fostered only
by the FEDS lowering borrowing costs (interest rates) to ultra low rates,
allowing consumers to borrow money and create a new bubble in debt, which
manifested itself in the housing  bubble implosion. No new growth was
brought about in 2000, just a bad asset bubble that bankrupted millions and
almost cratered the entire banking system. 

Another historic fast rebound that was similar was the bounce from the 1929
stock crash. 
The Dow rebounded quickly and massively but much like our 2000 bounce which
was built on hype and hope and easy money, the 1929 rebound was also not
based on sound economics. It eventually reflected its bogus journey and the
DOW cratered for half a decade wiping out 80 % of market prices, a real
grind that cleaned house and devastated the stock market and most investors.

Much like today I fear. This rebound has no basis for it. The economy is
only breathing from the massive amount of deficit spending the Government is
doing (borrowing), and you can't borrow your way out of a problem CAUSED by
previous borrowing. As soon as the borrowing runs out, so does the so called
"recovery". 

Can they keep borrowing? 
Yes for a while and NO, not forever. So the end of the rope comes
eventually. We can kick the can down the road but we catch up to it
eventually. 

This is why I am so suspect of this so called "hyper rally" that has been
the fastest in recent history. It's based on nothing. There are no economic
fundamentals to support it. 

There are also technical distortions everywhere (that the average person
doesn't see) which are definitely NOT NORMAL. 

Also the money that brought us here is borrowed. 

All this is why I know this is nothing but an inflationary binge, and much
like the run after the dotcom crash, a new bubble is being formed. The
people betting and forming this bubble are bigger ( the banks),  the
government is just as asleep ( they are not addressing it), they are doing
the same thing they did before, ( borrowing to buy time and keeping interest
rates ultra low) and thereby insuring another crisis of even bigger
proportions next time (Each subsequent bubble is bigger).

The catalyst to set it all off again could be gradual slip like the housing
bubble popping was, or an unrelated event, like a Euro default, the Egyptian
issue now rising, or some other unrelated event. 

It only takes a scare to frighten the herd from a slow gallop to an all out
stampede. 

Note how Egypt's riots came out of nowhere. Coupled with the news Spain's
bonds are starting to fall, the market spooked on Thursday to end down
almost 200 in 2 days. 

I don't know whether this is the start of another rout. With market insiders
dumping stock (something I covered in the last few months) and other signs
of a market top, I've been expecting a rout but can't say for sure if this
is the start of it (nor can anyone else).

Nor does it matter. 

As long as you have taken the steps I have outlined it won't matter to you
or your finances. We will make minor adjustments as things unfold but for
the most part my plan is safe and fairly risk free no matter what happens. 

We have even made a ton of money in the midst of this with GOLD, SILVER,
FOREIGN CURRENCIES and SWISS ANNUITIES. Our dividend payers were slammed in
the crisis but remember we never had a lot of money in them to begin with.
The dividend payers have since rebounded in many cases and paying us each
and every period as they were supposed to.  

What I worry about is those of you who hold the same things you did before
the crisis. I worry about those that have made no changes, still hold stock,
still hold bonds, still listen to the same firms and advisors that were
blind sided the last time around. They haven't learned a thing. If anything
they have been lulled into thinking (wrongly) that the markets always come
back and there is no long term danger there.

Nothing could be further from the truth. 

The next crash could be breath taking (Even faster and farther then the
April Flash Crash).

The bond market could implode like no other time in history. The US dollar
could fall even faster.

Time will only tell when and what sets it off but one thing I know for sure.
Something wicked this way comes and it will start with rising interest
rates, bond defaults, a sovereign default in Europe, a US Treasury auction
failure or unrelated event.

Be prepared. All the material is on the audio discs of Money Matters and in
the past newsletters. 

Fortune comes to those who prepare.

Pledge Drive:
Over 21,000.00 was raised in the 2 hour Money Matters show and started with
a very generous pledge at the beginning of the show. (Thank you, you know
who you are).
Thanks so much for all your support. There will be no more consults thru
KVMR until probably the end of the year as indicated on the show. You can
email me direct with your questions however or email us here at
MoneyManagementRadio.com for an appointment with me. 

All the best to you and I will keep you informed no matter what happens.

Marc

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Blanchard and Company, Inc.
P.O. Box 61740
New Orleans, La 70161-1740
Direct toll free number: (888) 727-7537
Rick Baugnon

I have probably purchased the most ounces of gold and silver from Blanchard.
Not only do they sell regular coins and bars, they are the only contact on
this e-letter that also can provide you with graded coins and collectible
coins. Although I usually recommend only standard coins, I do own
collectibles as they may help against a confiscation scenario and we need to
be prepared for everything. Please call Rick Baugnon and tell them you are a
Money Matters Listener and he will give you special consideration and he
knows my preferences. Use his direct line above. Rick and I have discussed
Money Matters needs and he knows what to provide.

Monex Deposit David Feldberg x 2216
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1 (800) 949 4653 (GOLD) ext 2216 You may refer to Marc Cuniberti and Money
Matters and David will know what Marc recommends. 
Take delivery and store in a safe place. You may have 25 % of this amount in
silver and the remaining 75% in gold. I usually buy only generic 1 ounce
rounds or ounce bars, no collectibles. You may buy any 99 % pure gold or
silver assets but pay no more then a few percentage points over spot. Again,
buy NO Collectibles, No Margin account, No Commodity accounts. Take delivery
of standard coins only. 
I usually buy Gold Eagles, Buffalos, Kruggerands, Silver Maples. Gold Pandas
Generic Rounds. Peace Dollars or Morgans. 
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