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 and energy. 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

What can be said about the current state of the American stock market? All numbers coming from the government are false and misleading. The economy is in a shambles. If and when the Federal Reserve ceases its bolstering of the markets with money out of thin air, those markets will collapse. I predict that the collapse will be sudden, leaving most investors hanging out to dry. Depending on a criminal cartel to insure your future is moronic.

From Gorden T Long:

It is incredulous that we can just accept, without challenging, the statistical hyperbole of Hedonics, Substitution, Imputation and Proportional Distribution, justifying inflation numbers that don't even pass the common sense of an unemployed high school dropout. I don't mean to disparage the high school dropout, but I do point the figure at the 'six figure' analysts who accept this tripe as gospel, and from whose analysis fiduciary investment decisions are made with the unsuspecting public's hard earned savings.

This problem has been going on long enough that flawed data has resulted in broad based asset mispricing and malinvestment. Data points have become so distorted, as to be delusional, and have left the markets dysfunctional. How else do you explain $2 trillion excess investor savings over loans now sitting at US banks? How else do you explain Capital Investment (CAPEX) falling faster than Felix Baumgartner from 128,100 feet?

On the Economic War Front

Just much more of the same. The alternative fringe media is rife with rumors that, due to an economic calamity that will affect almost every member of middle class America, the government will, this year, declare marshall law, to insure homeland security, of course.

From Douglas French:

The high priests of the civic religion are very worried that people no longer seem to trust government. The law stands discredited. Once-hallowed institutions are under fire and losing status. People are openly loathing public officials. Movies, television, and best-selling books urge revolt. Most people don't bother to vote.

And these priests wonder why.

Here's an example of why. As the year opened, the House, Senate, and president all collaborated to enact the largest tax increase in human history — under the cover of night on the first day of the year, on the 100-year anniversary of the income tax. They did it in the name of saving us from some mythical beast called the "fiscal cliff."

It's going to take an extra $20-40 or more out of your paycheck per week. If your son or daughter or a thief did that without your permission, you would be mighty upset. But this is what our elected leaders are doing to us, and we have no choice about it.

Precious Metals

As most of you are aware, the popularity of buying and holding precious metals is on the rise. All investment bubbles (financial manias) unfold in several stages, an observation which is backed up by 500 years of economic history. The precious metals mania is being prompted by an abuse of power being uncontitutionally wielded by the Federal Reserve. Watering down our money is treasonous and is punishable by death.

From Jeff Nielson:

Currency dilution is neither a theory, nor is it some obscure concept which can only be grasped by those with training in economics. Rather, it is the obvious and inevitable result of a simple relationship of arithmetic.

Incredibly, while nearly all but the most novice of investors understand the concept of "dilution" when it applies to the printing of shares by our corporations, virtually none of those same investors comprehend the dilution of our (fiat) currencies – despite the fact that currency-dilution is precisely analagous to share-dilution in virtually every respect.

If a corporation prints excessive quantities of its own shares, the share price will plummet. If the corrupt (private) bankers holding monopolies to all of our sovereign(?) printing presses print these fiat currencies in excessive quantities, they must plummet in value (i.e. purchasing power). This is "inflation."

As we saw with the hyperinflation of Weimar Germany, it is possible to delay the effects of even the most extreme/insane excesses of money-printing. However, it is never possible to prevent such monetary depravity from totally destroying the value of one's own paper.

How much is "too much" when it comes to money-printing? Under ordinary (i.e. sane) circumstances that can be a difficult answer to determine. Unfortunately current parameters are "extraordinary" in every respect – and not for the better.

Current Western money-printing grossly exceeds any other time in any modern, major Western economy, with the exception of Weimar Germany. Worse still, it continues to ramp-up at an exponential rate. And even worse, we have these rapacious banksters now openly using words like "unlimited" (Europe) and "open-ended" (the U.S.) to describe their suicidal money-printing.

If a company prints a lot of shares you should probably sell it. If a company prints up more shares than it (or any other company) has ever printed, in all of History; then you should dump all that soon-to-be-worthless paper as quickly as is practical.

As our purest (and untaintable) monetary assets, gold and silver don't merely provide probable protection from this predatory inflation; as hard monetary assets they offer complete immunity to this paper debauchery. We don't "think" that precious metals will rise in value as the banksters destroy their own fiat currencies (yet again). We know they must.

All bubbles are also powered by two distinct emotional states, fear and greed. Each bubble is obviously different, but there are always similarities. Many readers of "the Bear" have already participated in the first two phases of the present PM Bubble. When the general public finally wakes up to the criminal scam being perpetrated by the Fed, it will initiate the mania phase. I believe that this event will take place this year. For the purpose of discussing the Precious Metals arena, simplistically, four phases can be identified:

1. Stealth. This phase, in the current precious metals class, started in 2002, when I started "the Bear" and silver was $3.50 an ounce. Those who understood the new fundamentals realized an emerging opportunity for substantial future appreciation. So the "smart money" got invested in this asset class, often quietly and cautiously. This category of investor tends to have better access to information and a higher capacity to understand the wider economic context that would trigger asset inflation. Prices gradually increased, but went, pretty much, unnoticed by the general population. Larger and larger positions are established as the smart money started to better understand that the fundamentals were well grounded and that precious metals were likely to experience significant future valuations. The stealth phase ended in 2007.
   
   
2. Awareness. As many investors started to notice the momentum, they brought additional money in and pushed prices higher. However, because of the prevalence of naked short sellers, a "Bear Trap" was sprung and an almost year long correction ensued. This lasted until 2008. There was an attempt to define this period as a short-lived sell off phase taking place as a few investors cash in their first profits. I believe it was criminally motivated. Today we are three quarters through the awareness phase. The smart money is continuing to take this opportunity to reinforce its existing positions. As a member of our inner circle,we will help you become educated in the nuances of the markets and become part of the "smart money". In the last stage of this phase the media will start to notice with positive reports about how this new boom is benefiting the economy by "creating" wealth.
   
   
3. Mania. Everyone will notice that prices are going up and the public will jump in for this "investment opportunity of a lifetime". The expectations about future appreciation will become a "no brainer" and a linear inference mentality will set in; future prices will be thought of as an extrapolation of past price appreciation, which, of course, goes against any conventional wisdom. This phase, however, will not be about logic, but about psychology, the psychology of greed. Floods of money come in, creating even greater expectations and pushing prices to stratospheric levels. The higher the price, the more investments pour in. Fairly unnoticed from the general public caught in this new frenzy, the smart money as well as many institutional investors are quietly pulling out and selling their assets. At this point, you too will need to prepare to deploy your "exit strategy". The market continue to become more exuberant as "paper fortunes" are made from regular "investors" and greed really sets in. Everyone tries to jump in and new entrants have absolutely no understanding of the market, its dynamic and fundamentals. Prices are simply bid up with all financial means possible, particularly leverage and debt. If the bubble is linked with lax sources of credit, then it will endure far longer than many observers would expect, therefore discrediting many rational assessments that the situation is unsustainable. The mania stage could last for years. At some point statements will be made about entirely new fundamentals implying that a "permanent high plateau" has been reached to justify future price increases; the bubble will be about to collapse. Obviously, you will have known prior to the collapse and will have liquidated your holdings.
   
   
4. Blow-off. A moment of epiphany (a trigger) arrives and everyone roughly at the same time realize that the situation has changed. Confidence and expectations encounter a paradigm shift, not without a phase of denial where many try to reassure the public that this is just a temporary setback. Some are fooled, but not for long. Many try to unload their assets, but takers are few; everyone is expecting further price declines. The house of cards collapses under its own weight and late comers (commonly the general public) are left holding depreciating assets while the smart money has pulled out a long time ago. Prices plummet at a rate much faster than the one that inflated the bubble. Many over-leveraged asset owners go bankrupt, triggering additional waves of sales. There is even the possibility that the valuation decline overshoots the long term mean, providing a significant buying opportunity. However, the general public at this point considers this sector as "the worst possible investment one can make". This is the time when the smart money starts re-acquiring assets at low prices.

Energy

Iran's nuclear chief Ali Akbar Salehi says his country has produced five kilograms of 20 percent enriched uranium, a move in open defiance of the U.N. demands to halt the controversial program.

Iran says it needs the material for a medical research reactor, and the level of enrichment is far below the more than 90 percent pure uranium needed to build a nuclear weapon. But U.S. officials have expressed concern the process could be a step toward greater enrichment.The U.S. and its allies accuse Iran of seeking to build a nuclear weapon, a claim Iran denies.

I believe that all this saber rattling will come to a head in the next few months, and the administration will allow the USA to become immersed in yet another super quagmire. This time, though, China and Russia will publicly announce their alligence to Iran in order to protect their investments. Before this happens, the price of oil could fall precipitously. After it happens the price will probaly go ballistic.

The Fed

I could go on for days about how evil the Federal Reserve is. Like my darling wife says: "Don't get him started." Instead I'll leave it, this week, to Mr. Schooner;

From Jonathon Schooner

The first misconception that most people have is that the Federal Reserve Bank is a branch of the US government. IT IS NOT. THE FEDERAL RESERVE BANK IS A PRIVATE COMPANY. Most people believe it is as American as the Constitution. THE FACT IS THE CONSTITUTION FORBIDS IT'S EXISTENCE. Article 1, Section 8 of the Constitution states that Congress shall have the power to create money and regulate the value thereof, NOT A BUNCH OF INTERNATIONAL BANKERS! Today the FED controls and profits by printing WORTHLESS PAPER, called money, through the Treasury, regulating its value, AND THE BIGGEST OUTRAGE OF ALL, COLLECTING INTEREST ON IT! (THE SO-CALLED NATIONAL DEBT). The FED began with approximately 300 people or banks that became owners, stockholders purchasing stock at $100 per share - the stock is not publicly traded) in the Federal Reserve Banking System. They make up an international banking cartel of wealth beyond comparison. The FED banking system collects billions of dollars in interest annually and distributes the profits to its shareholders. The Congress illegally gave the FED the right to print money through the Treasury at no interest to the FED.

The FED creates money from nothing, and loans it back to us through banks, and charges interest on our currency. The FED also buys Government debt with money printed on a printing press and charges U.S. taxpayers interest. Many Congressmen and Presidents say this is fraud. Who actually owns the Federal Reserve Central Banks? The ownership of the 12 Central banks, a very well kept secret, has been revealed: 1. Rothschild Bank of London 2. Warburg Bank of Hamburg 3. Rothschild Bank of Berlin 4. Lehman Brothers of New York 5. Lazard Brothers of Paris 6. Kuhn Loeb Bank of New York 7. Israel Moses Seif Banks of Italy 8. Goldman, Sachs of New York 9. Warburg Bank of Amsterdam 10. Chase Manhattan Bank of New York.

These bankers are connected to London Banking Houses which ultimately control the FED. When England lost the Revolutionary War with America where our forefathers were fighting their own government, they planned to control us by controlling our banking system, the printing of our money, and our debt. The individuals listed below owned banks which in turn owned shares in the FED. The banks listed below have significant control over the New York FED District, which controls the other 11 FED Districts. These banks also are partly foreign owned and control the New York FED District Bank: First National Bank of New York, James Stillman National City Bank, New York, Mary W. Harnman, National Bank of Commerce, New York, A.D. Jiullard Hanover, National Bank, New York, Jacob Schiff, Chase National Bank, New York, Thomas F. Ryan, Paul Warburg, William Rockefeller, Levi P. Morton, M.T. Pyne, George F. Baker, Percy Pyne, Mrs. G.F. St. George, J.W. Sterling, Katherine St. George, H.P. Davidson, J.P. Morgan (Equitable Life/Mutual Life), Edith Brevour, T. Baker.

How did it happen? After previous attempts to push the Federal Reserve Act through Congress, a group of bankers funded and staffed Woodrow Wilson's campaign for President. He had committed to sign this act. In 1913, a Senator, Nelson Aldrich, maternal grandfather to the Rockefellers, pushed the Federal Reserve Act through Congress just before Christmas when much of Congress was on vacation. When elected, Wilson passed the FED. Later, Wilson remorsefully replied, referring to the FED, "I have unwittingly ruined my country". Now the banks financially back sympathetic candidates. Not surprisingly, most of these candidates are elected.

The bankers employ members of the Congress on weekends (nickname T&T club -out Thursday...in Tuesday with lucrative salaries. Additionally, the FED started buying up the media in the 1930's and now owns or significantly influences most of it. Presidents Lincoln, Jackson, and Kennedy tried to stop this family of bankers by printing U.S. dollars without charging the taxpayers interest. Today, if the government runs a deficit, the FED prints dollars through the U.S. Treasury, buys the debt, and the dollars are circulated into the economy. In 1992, taxpayers paid the FED banking system $286 billion in interest on debt the FED purchased by printing money virtually cost free. Forty percent of our personal federal income taxes goes to pay this interest. The FED's books are not open to the public. Congress has yet to audit it. Congressman Wright Patman was Chairman of the House of Representatives Committee on Banking and Currency for 40 years. For 20 of those years, he introduced legislation to repeal the Federal Reserve Banking Act of 1913. Congressman Henry Gonzales, Chairman of a banking committee, introduced legislation to repeal the Federal Reserve Banking Act of 1913 almost every year. It's always defeated, the media remains silent, and the public never learns the truth. The same bankers who own the FED control the media and give huge political contributions to sympathetic members of Congress.

THE FED FEARS THE POPULATION WILL BECOME AWARE OF THIS FRAUD AND DEMAND CHANGE. We, the People, are at fault for being passive and allowing this to continue. THE FEDERAL RESERVE BOARD, A GOVERNMENT BOARD, HAS CHEATED THE GOVERNMENT OF THE UNITED STATES AND THE PEOPLE OF THE UNITED STATES OUT OF ENOUGH MONEY TO PAY THE NATIONAL DEBT SEVERAL TIMES OVER. The depredations and the iniquities of the Federal Reserve Board and the Federal Reserve banks acting together have cost this country dearly.

They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; the rich and predatory money lenders. This is an era of economic misery and for the reasons that caused that misery, the Federal Reserve Board and the Federal Reserve banks are fully liable. Half a million dollars was spent on one part of propaganda organized by those same European bankers for the purpose of misleading public opinion in regard to the Federal Reserve Bank.

Financial Survival

Since going quasi private, "the Bear" has moved the Financial Survival section into the private dining room. We intend to focus on strategies to protect your financial stability as well as alert you to the ulterior motives of those that would be kings.

One of the themes we intend to focus more on is preparedness. Being prepared is as American as Motherhood and Apple Pie. And yet the folks from DHS would have you believe that preppers are domestic terrorists. That brings to mind Hurricane Sandy. That colossal storm was forecast for almost a month. Ninety-nine percent of all residents on the east coast were totally unprepared. FEMA was unprepared. State and local officials were unprepared. There are still folks without power. How dumb is that? Being prepared for what we think is going to happen will be paramount to your future well being.

From Michael Snyder

If you and your family store up lots of food, will you be identified as “potential terrorists” by law enforcement authorities?  That sounds like an insane question, but sadly it has gotten to the point where “preparing for the worst” has become a “suspicious activity”.  Today, there are millions of preppers all across the United States, and the vast majority of them just want to be left alone and do not want the government to interfere in their lives.  Storing up food is a completely peaceful activity, and preppers are generally some of the most patriotic and law-abiding people that you could ever hope to meet.  Unfortunately, prepping has become associated with “extremism” by many in the government, and lately we have seen some very disturbing signs that authorities are actively seeking to gather information on preppers.  So are preppers now considered to be potential terrorists?  Well, read the evidence posted in the rest of this article and decide for yourself.

The other day, U.S. Senator Rand Paul gave a speech on the floor of the U.S. Senate during which he suggested that having “more than seven days of food” in your house could potentially get you branded as a “potential terrorist” by the federal government.  The following is an excerpt from that speech….

Know good and well that some day there could be a government in power that is shipping its citizens off for disagreements. There are laws on the books now that characterize who might be a terrorist.

Someone missing fingers on their hands is a suspect according to the Department of Justice. Someone who has guns, someone who has ammunition that is weatherproofed, someone who has more than seven days of food in their house can be considered a potential terrorist.

If you are suspected by these activities do you want the government to have the ability to send you to Guantanamo Bay for indefinite detention?

You can see video of this speech right here.  It is incredibly chilling to hear a defender of liberty such as Rand Paul warn of such things.

But just because a politician says something that does not always mean that it is true.

I don’t know about you, but I don’t want anyone coming to my door to “assess” how “prepared” I am.

This is all very, very disturbing.

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 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 know that is 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.