As the editor of the Silver Bear Cafe, I spend most of my time researching current events. I explore the markets, the economic war that is being waged on the middle class, precious metals, the Federal Reserve, energy, and how to go about surviving financially. In this weekly column I will attempt to condense the week's events and examine how the news might affect your pocketbook. JSB

Financial Markets

This past Wednesday, the Federal Open Market Committee, which is neither Federal nor open, met and announced that it would reduce its purchases of USTBonds and mortgage backed securities by $10 billion per month. The markets, seemingly, rejoiced. As recently as September, the Fed hinted that it might "taper" and the markets crashed. What might have caused the different reactions?

I don't believe there was a different reaction. The same investors, be it individual or institutional, reacted the same way, for the same reasons, as before. But this time, the FOMC was ready with gobs of "fresh of the presses" money which they used to counteract the sell off, through the clandestine purchase of billions of dollars worth of stocks and the massive suppression of precious metals.

The "taper talk" is just another scam. It would have required far more than $10 billion to stave off the sellers momentum. There has never been an inkling of truth that was sourced by anyone associated with the Fed.

We have been hearing a lot lately about Bitcoins. To me it is completely understandable that the citizens of the world, at least those without criminal intentions, would seek some form of a store of value that couldn't be corrupted by "the usual suspects". The Fed, along with their criminal minions (the government and the bullion banks) have obviously gained, at least temporarily, control over the price of paper gold and silver. The fact that any miners are willing to part with the fruits of their labors for such suppressed prices is somewhat baffling, however. I would expect that, if they were still feeding the market, they would soon stop. In the precious metals markets, I see supply decreasing and demand continuing to explode.

The extent of the distortions that the criminal tendencies of the Federal Reserve have on all markets is astounding. The fact that there has yet to be an overt eruption, apparent to even the most brain dead, is equally astounding. On the bright side, if you are prepared, the coming weeks and months should provide some fascinating theater.

From Cliff Droke (click for the entire piece):

One of the questions investors have been asking lately concerns the outlook for the U.S. dollar index. Investors are understandably concerned by the dollar's weakness and worry that perhaps that any notable increase in inflation could lead to further erosion in the dollar's value.

In a weak dollar environment, investors actively search for alternatives to cash which provide growth and relative protection from dollar weakness. Until 2011 the investment safe havens of choice were gold and silver; prior to that it was real estate. The new alternative investment versus the dollar is growing in popularity and becoming more widely accepted as a legitimate financial vehicle. I'm referring to Bitcoins, the open-source, peer-to-peer payment network and digital currency.

Bitcoins made news recent when the People's Bank of China announced that it was prohibiting Chinese financial banks from accepting Bitcoins as legal tender currency. The announcement caused a 20 percent drop in the value of Bitcoins, though the value later rebounded. Bitcoins have been one of the big financial success stories of the year, and the continued increase in the coin's value has prompted speculation that a "Bitcoin bubble" has developed.

Randall Forsyth, writing in a recent Barron's column, nailed it down when he wrote: "Clearly, [Bitcoin] is a speculative vehicle for the masses." Another Barron's writer, Michael Kahn, likened Bitcoin's bull market to the tulip mania of 1637. "The dangers of buying into a bubble," he wrote, "are the same as attempting to sell it short. It could double from here, just as easily as it could fall by half."

Others believe that Bitcoin's success and soaring value represent a repudiation of the weak U.S. dollar. It's no coincidence that Bitcoin's popularity has greatly increased in the wake of the gold bear market; Bitcoins have apparently supplanted the yellow metal as a safe haven du jour among libertarians and others worried about a potential dollar collapse.

On the Economic War Front

The government has become our enemy. There have been enemies in our midst since time immemorial. They are parasites that are (perhaps genetically) predisposed to eat out our essence. But never before, at least in America, have these bottom feeders become so prevalent in government.

Consequently, it is not simply members of the federal government that have capitulated to the siren song of corruption. It is a pandemic condition which is apparent in all aspects of the economy.

"The Dark Side" has successfully placed their agents in positions of influence, ranging from school board members to U. S. presidents, newspaper publishers, columnists, church ministers, university presidents, professors, textbook writers, labor union leaders, filmmakers, radio and television commentators and many others.

My generation (a mindless group of sheeple baby boomers) have, along with Diebold voting machines, been responsible for electing the miscreants that have been calling the shots from on high for the last 40 years. I truly wish that the notion that the left/right contrived distraction warrants any serious consideration be dismissed, and the up/down collectivists vs. lovers of liberty be acknowledged as the gist of the dichotomy. Until we come together and agree on the cause of the problem, we have little hope of forwarding a solution. A criminal government, bought and paid for by criminal banksters is the problem.

From Fred Reed (click for the entire piece):

I am seated in front of the Optiplex, drinking Padre Kino red and garnering insight. The garnering is tough these days. Still, to this end nothing is so effective as cheap Mexican wine at thirty-nine cents a trainload. My stepdaughter says "Google, lo sabe todo," Google knows everything. Ah, but Padre Kino, the Great Purple Father, understandeth everything.

All right, the news. I should know better than to read it, but I don't. First I encounter a sententious suit-and-tie federal civil-serpent from NSA saying the Edward Snowden has endangered the national security of the United States, eeeek. At this, I shuddered and began mentally designing a bomb shelter.

But then I wondered how, precisely, are Americans now endangered? Is there a massed invasion fleet of Arab swordsmen poised to devastate North Carolina, and we need to read their tactical codes? I pictured Winston-Salem savaged by scimitar-wielding, hashish-smoking maniacs on weird double-humped camels. These be parlous times, methought.

Or are Yemeni nuclear forces readying a first strike? Maybe this was the problem. As delivery systems they could use FedEx and UPS.

Or maybe Snowden just embarrassed the children in the tree-house at Fort Meade, where everybody has a Captain America secret decoder ring.

"Ou sont les Neigeden d'antan?" I thought poetically if not altogether coherently. Coherence is overrated anyway.

Next, I see that some wet-lipped psychopath piloting a drone has killed fifteen people at a Yemeni wedding. Drones seem to hit a lot of weddings. These massacres, I suppose, are the result of letting little boys play Grand Theft Auto. I pictured an Air Force of trigger-happy eleven-year-olds in arrested development. However, I concede that targeting weddings does make military sense: I have been to many weddings, and they all looked like Al Quaeda convoys. It's just how weddings are.

Precious Metals

Those that are not paying attention or are lending far too much credence to mainstream explanations concerning the state of the gold and silver markets, just think that they (the metals) are losing value. I do not know anyone, amongst those warm bodies that I meet and greet every few days, that understands what could motivate anyone to manipulate the precious metal's markets. Very few, if any of those persons, personally possess any bullion, so the state of the market doesn't really concern them. Or does it?

It continues to become more and more apparent, to me at least, that all the main topics we broach on "the Bear" are interwoven and interrelated. Precious metals are every bit as foundationally important to an understanding of the economy as is the price and availability of oil. Those two subjects are joined at the hip with the Federal Reserve and interest rates. In the economic war that is being waged against us, being aware of how all these topics interact is absolutely necessary in insuring one's financial survival.

On the downside, out of all the people that I have an ongoing relationship with, those who are not involved with me on a professional level, all remain, pretty much, clueless. On the bright side, however, those folks have not spent a minute worrying about how a catastrophic implosion might be in the offing. I mention it from time to time, but since it hasn't happened yet, at least to the degree that they would notice, they think of me as Chicken Little. At that point I think to myself, "better to be ten years too early than on minute too late".

From Michael Noonan (click for the entire piece):

JP Morgan's Blythe Masters... the Lizard Queen

No one can question the fact that the demand for silver has grown exponentially in the past few years, record sales for American Eagle coins being one small example, record buying in India, another larger example. Demand has never been greater. Supply, on the other hand, keeps diminishing.

Global mining production is at its lowest in the past decade. The annual Consumption/ Production ratio is indicative of acute deficits. Whenever there is a situation where demand rises sharply, while supply commensurately declines, it is a recipe for higher prices, and usually, much higher prices. This is true, unless one is talking about the silver market. Under the conditions of record rising demand and considerably less supply, the price of silver is at its lowest levels in the past three years.

With talk of silver going anywhere from $150 to $500 higher, it currently struggles to hold $20, why is this so?

The answer is not to be found in the myriad supply and demand figures, no matter how cogently presented: as absolute numbers, or dramatically presented graphs, and with so many comparisons to other times/situations. Facts and figures do not lie. Politicians and bankers do.

Energy

Gaining an understanding the world today is more attainable than it has ever been, due to the technological advances in the delivery of information (the internet). Puzzles are sometimes daunting, but can be made impossible by the elimination of some of the pieces. For so long, trying to piece together any semblance of understanding of why the world is the way it is, has been, understandably, a seemingly unattainable quest. That is because so many of the puzzle pieces have been intentionally kept from public view. It has been like playing solitaire with fifty-one cards.

But, by stepping back, we can now begin to see the big picture. By acknowledging the relationships between economics and power, and the intractable contribution energy plays in the acquisition and maintenance of that power, we are able to see through the veil of lies that has been presented as causes of disputes.

The hotbed, which is the middle east, provides so many potential threats to the well being of the majority of the human inhabitants of the earth, that a precise understanding of the underlying causes and effects of the age old, yet continuing, disputes is paramount to one's ongoing financial survival.

We have been mislead by the powers-that-be when provided causes for almost all of the Middle Eastern disputes. From Egypt to Libya, from Iran to Syria we have been provided, as an explanation, propaganda and lies. It has had nothing to do with humanitarian concerns, but rather for the basest of reasons, money and power. The American government has been punked by big oil and big banks, and our present administration has adopted the stance of a junk yard dog. It has become degraded to the point of supplying mindless muscle for the slime balls. There are slime balls calling the shots. Their motives are simple. Wealth and power. Their means are a bit less apparent, but are so slimy that they are hard to believe, but do exemplify abhorrent behavior.

We are just about to fall from grace concerning our relationship with Saudi Arabia. The falling out will be as a result of the desperation that the Saudi Royal family is feeling from the growing fear of an insurrection of their citizens. This situation is worthy of a lengthy article which I will put on my list, but you can be sure, few understand the reality of the condition. Oh, what a tangled web they weave...

From Matt Insley (click for the entire piece):

"If you thought the Middle East was a powder keg before, just wait till you see what could be on tap for 2013" I wrote to you a year ago.

Today I want to give you an update on the whole story – as you can deduce if you've been paying attention to your DRH missives, I'm not very bullish on oil prices. What, with the massive amounts of oil production we're seeing come from North America.

But, as an investor it's always important to keep an eye on "fat tail" events – these are the unlikely outcomes that could lead to huge profits. Without further ado, let's take a look at the scenario that "could" lead to $150 oil…

"It's time to head down the wormhole" I told you last year. The story begins in Saudi Arabia.

Saudi, according to the U.S. Energy Information Administration (EIA), holds nearly "one-fifth of the world's proven oil reserves" and currently sits at the head of the list for oil producing and exporting nations.

As it stands, Saudi is the "friendliest" and most stable of the oil producing nations in the Middle East. With that said, it's safe to assume as Saudi goes, so follows the rest of the region.

Lately, Saudi's position as top dog in oil production has come under some scrutiny. You've likely seen the reports from the International Energy Agency, Goldman Sachs and more, that predict the U.S. will out-produce Saudi Arabia (this could happen within the next year or two.)

Regardless of how quick that forecast pans out, the Saudis and OPEC are starting to feel the heat from increased U.S. production. After all, with more oil coming out of the ground here in the U.S. the demand for Saudi oil heads lower.

Indeed, from the peak in 2003, the U.S. now imports well below half of what it used to from the Saudis. (Note: that's a lot of dollars NOT heading to the Middle East.)

This trend is immediately affecting Saudi and OPEC's ability to manipulate prices, too. With less demand for their crude, it's hard to jack prices artificially higher. This "added" premium, as you'll see is vitally important to the Saudis.

Hold that thought.

The Fed

Each week, I find myself bending my brain to come up with something new and illuminating to say about the main problem with everything, and the cause of all the ills that plague the populations of an ever growing number of countries, throughout the world. The problem I continue to speak of is the parasitic, devil spawned abomination which is the Federal Reserve.

Central banking is the vehicle through which the most heinous rip off ever conceived in the history of the world has been perpetrated. The U.S. Federal Reserve is the most successful of all central banks in history. Since 1971 it's unfettered issuance of money has continued to debase our currency and as a result adulterated our living standard at an ever increasing rate. The Federal Reserve is a scourge that is wholely owned by "the Darkside" and their agents.

These agents control the information available to our people. They manipulate public opinion, elect whomever they want locally and nationally, and never expose the crooked money system. They promote school bonds, expensive and detrimental farm programs, "urban renewal," foreign aid, and many other schemes which place the people more deeply in debt to the bankers. Thoughtful citizens wonder why billions are spent on one program and billions on another which may duplicate it or even nullify it, such as paying some farmers not to raise crops, while at the same time building dams or canals to irrigate more farm land. Crazy or stupid?

Neither. The goal is more debt. Thousands of government-sponsored methods of wasting money go on continually. Most make no sense, but they are never exposed for what they really are: siphons sucking our Nation's economic lifeblood.

Know thine enemy.

From Ron Paul (click for the entire piece):

A week from now, the Federal Reserve System will celebrate the 100th anniversary of its founding. Resulting from secret negotiations between bankers and politicians at Jekyll Island, the Fed's creation established a banking cartel and a board of government overseers that has grown ever stronger through the years. One would think this anniversary would elicit some sort of public recognition of the Fed's growth from a quasi-agent of the Treasury Department intended to provide an elastic currency, to a de facto independent institution that has taken complete control of the economy through its central monetary planning. But just like the Fed's creation, its 100th anniversary may come and go with only a few passing mentions.

Like many other horrible and unconstitutional pieces of legislation, the bill which created the Fed, the Federal Reserve Act, was passed under great pressure on December 23, 1913, in the waning moments before Congress recessed for Christmas with many Members already absent from those final votes. This underhanded method of pressuring Congress with such a deadline to pass the Federal Reserve Act would provide a foreshadowing of the Fed's insidious effects on the US economy—with actions performed without transparency.

Ostensibly formed with the goal of preventing financial crises such as the Panic of 1907, the Fed has become increasingly powerful over the years. Rather than preventing financial crises, however, the Fed has constantly caused new ones. Barely a few years after its inception, the Fed's inflationary monetary policy to help fund World War I led to the Depression of 1920. After the economy bounced back from that episode, a further injection of easy money and credit by the Fed led to the Roaring Twenties and to the Great Depression, the worst economic crisis in American history.

Financial Survival

Most of which we think we know is wrong. That is because most of what we were taught in school was carefully revised in an attempt to control public opinion. Most of what you learned from your parents was wrong, because most of what your parents were taught was wrong. And their parents, and their parents...

All of the mainstream news is the product of a misinformation campaign that has been going on for several generations. Only recently, through the internet reformation, have we been provided an alternative to the tripe and propaganda that has been substituted for the truth for many years.

In 1928, the American Historical Association was granted $400,000 by the Carnegie Endowment to write a seven volume study on the direction the nation was to take. The thrust of these books was that "the future of this country belongs to collectivism and humanism.", The AHA has since then, determined what history books will be used in all public schools. If your school district receives any Federal funds, then they are mandated, by Congress, to teach history from these revisionist volumes. The Carnegie Foundation (in collusion with the Ford Foundation and the Rockefeller Foundation) has been rewriting history for the last eighty-five years. Their goal was to create a passive, dumbed down society that would not oppose their vision for the future. Pretty much everything you think you know is made up.

From JR Niquist (click for the entire piece):

In a book titled Theory and History, Ludwig von Mises wrote, "Because history is not a useless pastime but a study of the utmost practical importance, people have been eager to falsify historical evidence and to misrepresent the course of events." In recent history, the champions of regulation and state control of the economy would endeavor to depict the financial events of 2007-2008 as a failure of regulation. At least one historian is worried that we might have "learned" the wrong lessons if we suppose any such thing.

Historian Niall Ferguson of Harvard University says that insufficient regulation may not be at the heart of the financial crisis. Ferguson calls into question Princeton economist Paul Krugman's assertion that Reagan era deregulation of financial institutions triggered the crisis. "For one thing," wrote Ferguson in The Great Degeneration, "it is hard to think of a major event in the US crisis — beginning with the failures of Bear Stearns and Lehman Brothers — that could not equally well have happened with Glass-Steagall still in force."

History teaches that rule of law plus economic freedom makes for prosperity, yet we are supposed to believe that restricting freedom — or eliminating vital aspects of freedom — will somehow prevent financial ills. According to Ferguson, "there is something especially implausible about the story that regulated financial markets were responsible for rapid growth, while deregulation caused crisis." The fact that heavily regulated markets in the past have created less wealth than free markets under the rule of law must surely count for something. Furthermore, there is no progress without risk, no advances without partial setbacks. And what does the history of capitalism show if not the fact that the advances have far outweighed the setbacks. And if freedom means progress then we must accept the consequences of that progress instead of introducing regulations that will, in the end, choke off progress altogether.

 

You must first realize that there are, present in our lives, enemies. You must then know who those enemies are and act accordingly.

Eliminate as much debt as possible, especially “variable rate” debt, such as credit cards and lines of credit. Interest rates will be rising, so the elimination of debt offers a “real return” of escaping rising rates by creditors.

Get some control over some fresh water.

If you are depending exclusively on Social Security, stop.

Follow the course opposite to custom and you will almost always do well...

Its not what you don't know that will screw you up, it's what you are absolutely sure of that is absolutely wrong. The spin you hear from the mainstream media is intended to mislead you. Open your eyes and face the future. If you leave your head in the sand and ignore it, you are only leaving your butt exposed for the world to kick. This all may sound like gloom and doom, but when you get a handle on what is going to happen, you will have a future filled with opportunity. Fortune favors the Informed.

More next week...

May the Great Spirit be with you always,

Johnny Silver Bear
Chief cook and bottle washer, The Silver Bear Cafe

Disclaimer

All statements and expressions are the sole opinions of the editor and are subject to change without notice. A profile, description, or other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any securities mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein. The staff of Silver Bear Cafe are not registered investment advisors and do not purport to offer personalized investment related advice. The publisher, editor, staff, or anyone associated with, or associated to the Silver Bear Cafe may own securities mentioned in this newsletter and may buy or sell securities without notice.