FBO’s Big Picture:  The End of the Tunnel?

First Quarter 2012

“You must be your own clearinghouse and central bank.” – Jim Sinclair, 2011

Light is being detected by an increasing number of our information sources, coming from the end of the dark tunnel that has been our habitat for the past several years. The source of that light is not, however, from anything that has been or will be done by our government – but rather, in spite of it.

“White light” ahead promises a better world, produced as a direct result of actions being taken by individuals. In addition to ‘tea parties,’ ‘occupy’ and ‘arab spring,’ there are an increasing number of freedom–loving and humanitarian groups that are expanding and positively influencing activities in America and around the world. Also encouraging is the fact that establishment-confronting Ron Paul is attracting 20% of the primary vote, even though he is given no chance to win the presidential election.

An exceptional movie has just been released. "Thrive" considers the reality of extra-terrestrial visitation, unlimited free energy and a vast global conspiracy. You can buy the DVD at www.thrivemovement.com for $20 or watch it online for five dollars.

“Thrive” also provides practical suggestions for individuals who want to help change our world from one dominated by dark energy to a kinder, gentler environment. We can, for example, stop supporting large New York money center banks and “starve the beast” – by moving our savings and investments to local community banks and credit unions.  The Thrive website has many other practical ideas, as do a number of other sites, including www.solari.com. Other concepts include self-organized collectives, barter, organic non-GMO farming, campaign finance reform and renewable & “free” energy.

Our elected government appears to be taking actions that are directly opposed to the interests of the American people, NDAA being the most recent example. Why is this?  Although some missteps can be traced to ignorance or neglect, the majority of actions being implemented are, in my opinion, deliberate. US government apparatus is breaking down, not repairing, our economy.

Making our way through the rest of the tunnel is not going to be easy, for directly blocking us is a very powerful group of individuals: an international banking cartel.  Known as the "illuminati" and by other names, this group already owns or controls a majority of the world's assets and wealth. Their immense wealth and power is not enough for them; they want it all. How can they be overcome?  By the individual and collective actions of enough freedom-seeking individuals. I’ve prepared a separate position paper titled "Would-be Rulers of the World" with additional information on this group of people.

We are likely to be confronted with martial law at home and another war (possibly nuclear) abroad.  In addition it is clear that the ‘powers-that-be’ are also concerned about a possible geophysical event; they continue furiously building underground bunkers around the globe. Such an event would be part of the adjustments Earth is making as it approaches the galactic plane (passing through it in December of 2012).

Half Past Human is a “fringe" forecaster to which we pay some attention. HPH is calling for a major disruption to humanity, starting in mid-March. This event has been in their forecast for several years and if it comes to pass, serious disturbances to the global financial system could result. One likely byproduct is destruction of the values of a good portion of the world’s $1000 trillion pile of derivatives.

Any one of a number of current so-called ‘black swans’ could quickly destabilize capital markets. Attempts to overcome global debt problems by adding more debt has been as effective as pouring kerosene on a fire, attempting to extinguish it. Europe has been unable to right itself for more than two weeks at a time. The US has its own difficulties: unemployment and housing are bottom-bouncing, not improving in any substantial way. Japan is still burdened with costs associated with Fukushima. The Chinese economy may be heading into a serious recession. And then there is Iran and the Middle East.

In summary, we appear to be enmeshed in a new normal of shocking developments and volatile markets. But the bright side is that after a few more exciting years, we may be able to settle back into a world that’s even better than the one we left in 2007.

Overall markets. Directly ahead, we anticipate one or both of the following scenarios:

• If/when the US economy relapses, markets will drop. The dollar will rise, as should bond values. Silver is likely to fall with commodities and gold will be tugged – down with markets and to reflect an increasing dollar, but up as a safe-haven/store-of-value.

• At some point (possibly by March) we’ll see new digital US currency creation ("QE"). It will push bonds and the dollar down, but all other ‘boats’ will move higher – in anticipation of rising prices. Real assets will rise more than financial assets. The intensity of insider buying should provide a clue to new money entering the markets.

Fixed income. Short-term fixed income returns remain miniscule, with a 15-month commitment required to get a 0.5% CD yield (at TD Ameritrade) and Treasury bills and money market accounts yielding essentially nothing. In an economy that could experience sizable inflation, we cannot recommend keeping cash in anything other than FDIC or federal government-guaranteed money market funds.

Investors deserting the euro flooded into US Treasury securities last year, treating them as the world's safest asset (despite S&P's downgrade of America's debt to AA). As we enter a new year, 30 year treasury bonds are priced to yield less than 3% annually, while the 10 year T-bond yield is below 2%. PIMCO bond guru Bill Gross’ 2011 bet against Treasuries cost him dearly, but instead of retreating Gross reportedly "doubled down" on his bet, joining other financial luminaries who expect rising interest rates and plummeting bond values. Municipal bond defaults have slowed to a trickle but should make it back into the obituaries in 2012.

We're staying clear of bonds and have cut back our exposure to foreign currencies in light of the dollar's renewed strength.

Stock markets completed an uneventful year which saw the S&P finish exactly where it started. US markets are stumbling along, with volume indicating that what we're seeing is simply churning. Lowry’s statistics are registering a maximum excess of Selling Pressure over Buying Power. Corporate insiders continue their year-long massive selling of company stock. Internal market indicators are not favorable. Richard Russell commented that "deteriorating internals in the face of improving newspaper headlines give us the worst of all markets. I cannot warn subscribers strongly enough that they face hard times in both the market and the economy during the months ahead.  The operative words now are ‘extreme caution.’”

We continue holding small positions in gold stocks and water and plan to add to them when we are convinced that a sustainable general market recovery is at hand. That will most likely be the resumption of some form of money printing by the Fed.

Real assets. Gold and silver rode rollercoasters last year. After rising 70% from the 2008-09 period, silver declined 46%; gold dropped only 20%, after a 96% advance. Gold finished the year up 10%, silver down 10% and gold stocks down 25%. Technical gold guru Alf Field has predicted a probable rise to $4500, after the ongoing consolidation is completed.

Massive buying by institutions and individuals of physical gold is taking place around the world. China, which set an all-time gold importing record last year, plans an early-2012 launch of its Pan Asian Gold Exchange. Russia, India and other sovereign nations are also slowly accumulating gold, buying on dips. This development puts a reliable floor under the gold price. A number of analysts are predicting that the physical market will eventually overwhelm the US paper-trading markets and render them meaningless.

100 times more silver is being traded than is available for delivery. Trouble in and around Iran is bullish for gold; wars are expensive to wage and usually inflationary.

Rather than attempting to trade in and out of precious metals, we’re content with rebalancing positions when RSI exceeds 80, or 40 on the downside. We’re still expecting gold to reach a price equal to that of one share of the Dow Jones Industrial Average, before this bull market is over.

Wayne Peterson, Family Business Office, This e-mail address is being protected from spambots. You need JavaScript enabled to view it