A Cup of Coffee

Before we discuss the whipsaw that allowed profit 4 of 5 days in our OEX trading, and before we discuss the disruptions of Middle East due to social networking, or the horrors that have hit Japan, let’s gain perspective about our government. This article helps explain how we utilize firearms illegally to gain footholds, and the mighty Greed that is rampant:

http://www.rollingstone.com/politics/news/the-stoner-arms-dealers-20110316?page=6

When we discuss world events we need clear perspectives on the environment.

We all know the GOP and PEE Party idiots who say “drill baby drill” and that there is no world catastrophe environmentally, and those of us with vision know these views to be funded by the oligarchs that make us want to believe nothing is wrong. So, an empirical fact:

A Cup Of Coffee

It takes 37 gallons of water to make a cup of coffee.

Many of our citizenry want to cut government spending and waste. Most of these poor folks have no idea what “little things we cut” (like education, or our new distaste that it is unions that have caused all the problems, so here’s an infrastructural question:

“Nearly 30% of nuclear plants in the U.S. fail to report equipment flaws that could pose safety risks, the NRC said.”

Of great interest: last week I challenged readers to provide me with an empirical fact. I must be making progress in my teachings of “most facts are false”, as I did not receive one comment on an empirical fact. I challenge you again to produce an empirical fact and let me share it with our readers.

“Floyd, 25% of Detroit is gone because of what unions did to raise the cost of the American car.

The real fact: American carmakers refused to trend to the future, kept making big, fat cars, invested poorly, have now taken most pension pools away, and only recently have begun making cars of quality.

I know that until 2009 the vast majority of American cars were just shit. I rented them every week, and would come home to my foreign cars and just shake my head. We just made shitty cars and did it to ourselves

Trader JS and I have been studying the true value of the USD, and the true price of Gold/Silver. The results are frightening:

This chart I found tonight confirms my Gold/Silver/Greenback theory. If you take the $50.00 dollar (face value) 1oz. gold Eagle in my formula and divide it by $7,500 you get a completely worthless Greenback. (.006)

Based on today’s Gold/Silver ratio, which is approx. 38, that would put silver at approx. $200 per oz. if gold were $7500. If you take the $1.00 (face value) 1oz silver Eagle and divide it by $200 you get a worthless Greenback again (.005)

That chart assumes we have the gold in Ft. Knox to back the dollar. Ron Paul has been trying unsuccessfully to get legislation passed to audit the gold, which has not been done since 1974, coincidently one year after we went off the gold standard. Paul thinks that we don’t have a fraction of what is claimed. Neither do I.

Money is a Construed Value Commodity

Japan and the deficit.

What will happen to all the talk of deficit and budget cuts when we as a country fund Japan, to whom we are the largest debtors with Treasuries. All of the talk, all of "Obama from Kenya, a socialist, or a Muslin", and the breaking of unions is all to rip apart government and stop the waste.

Pee partiers sleeping on their couches in the House and Senate, the reform of America.... hmmm, the devastation is overwhelming and our repayment of debt by giving them money, and this deficit will soon have to be Cheney's famous "deficits don't matter) have to be true. Cheney was right, if the economy grew and equities gained value. It's pure Keynesian thinking and to a large part it's become reality that will be, a perpetual house of cards

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Money must be understood. It is a “construed value” commodity, only

worth the value that we put on it.

Most Americans never understand this. All third world countries do.

The Gold/Silver/Greenback Ratio- A Floydian Point of View

The US Government is trying to tell us that the US Dollar("greenback") is only worth between .028 cents & .035 cents adjusted for true inflation. Take three instruments of US legal tender, 1) a one dollar bill.("greenback") 2) a 1oz. silver Eagle(face value $1.00) and 3) a 1oz. gold Eagle(face value $50).

All three are legal tender in the US. All are recognized, backed and printed or minted by the US government and backed by the US Federal Reserve for ONLY their face value.

If you want to buy a $1.00 "greenback" from the Fed, it will cost you $1.00 or 100 pennies.

If you want to buy a $1.00 1oz. silver Eagle from the Fed, it will cost you 35 "greenbacks".

If you want to buy a $50.00 1oz. gold Eagle from the Fed, it will cost you 1,400 "greenbacks".

$1.00 silver Eagle divided by 35 greenbacks = $.02857142

$50.00 gold Eagle divided by 1,400 greenbacks = $.0357142

It will tell you what your greenback is worth adjusted for TRUE inflation since we went off the gold standard in 1973.

OEX Options Won Again

WE won again. For the fourth year we were listed as one of the top 5 option advisory services READERS Choice Award for 2011.

We competed with thinkorswim.com, tradestation.com and optionetics.

Huge companies.

And little old OEX Options won again!

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Study the economic calendar for the week every day before market opening:

http://www.bloomberg.com/markets/economic-calendar/

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Today in our Blue Chip Alert we are recommending a great new stock issue, internationally based. Consider a full subscription at: www.bluechipoptions.com

“Money will always flow towards opportunity and there is an abundance of that in America. Our best days lie ahead”

Warren Buffet, commenting on his plans to make major capital investments in the U.S.

“Americans are not paying off debt so much as banks are forgiving it; banks do so as they know their lies have been exposed. Much of our debt will be paid off by the banks, now caught in their own money laundering game.”

Warren Buffet

“The liberals in this country have bankrupted us and we are headed to economic calamity”

Rush Limbaugh, the idiot half of Amerika actually believe

And I must climb on the soapbox. Obviously our youthful country, many citizens who have never even left the state they live in, are again being influenced, just as the stock market by:

1. False facts. “82% of the deficit has occurred since Obama took office”, from Murdoch’s Fox News. The fact is the reverse; 18% of the deficit has occurred since Obama took office.

2. Irrational thinking: There is no doubt that America will rise to the effort to provide monetary and humanitarian aid to our largest ally, Japan. Not a thought will be mentioned of the billions that will be added to our deficit.

3. At the same time we will take away union bargaining rights in many states, cut public services, not fix our infrastructure. None of it will work and our core services will suffer. The deficit we’ve created will continue to blossom:

a. Libertarians will say free enterprise will solve this. Business owners such as myself argue there is no such thing as free enterprise.

b. Republicans, led by Rove and Limbaugh and the like, will infiltrate us with TV newsbytes blaming liberals for raising the deficit.

c. Sarah Palin, with an IQ of 98, but great looking legs and new tits, has a 20% chance of becoming our next President.

d. The “liberal free press” is secretly (obviously as no one seems to know it) owned by archconservatives R. Murdoch and a conglomeration of right-wingers, neocons that have created Comcast. There really is no “liberal newspaper or TV", except for a few low circulation or high brow intellectual magazines. There is no liberal free press. We have falsified our own facts.

4. In the coming days the market will be tougher to navigate. It will make the decision whether to break apart of this consolidation, or break down and get a good correction. If a good correction occurs the talking heads will begin babbling “economic breakdown”, “ false economy bolstered hopes”, and these are the same people that over the last few months bolstered the market up. Thusly, they are not incorrect perhaps in their statements, but they are liars.

5. Only when we see there is “no black and white” and that “white does not always have to win” will we begin as people to understand our souls, and what we have done to our earth and ourselves.

The 120-Year Cycle

"To me, the "tape: is the final arbiter of any investment decision. I have a cardinal rule. Never fight the tape"-Martin Zweig

1990 was a very volatile year, with wide price swings. 1990 + a Fibonacci 21 years = 2011. This Fibonacci time count, as well as the peak of the 6-year cycle that is due soon, suggest that 2011 will be a volatile year. The political upheaval in the Middle East has been blamed as a fundamental reason for the volatility in oil, gold, and stocks. Is it oil or just Fibonacci time counts and natural cycles? Subscribers who remember my discussion of the 120-year cycle in past letters should not be too surprised at the events in both the Middle East and in state capitol buildings around the country. As you may recall, the 120-year cycle is both a revolution cycle and a depression and renewal cycle. When the cycle turned in the late 1700's, it created both an economic depression and the American and French Revolutions. Most people are unaware that the economic depression of the early 1780's almost destroyed the new American Republic. And what of France? It was an economic depression that resulted in the overthrow of King Louis XVI and Queen Marie Antoinette.

One hundred and twenty years later, an economic depression nearly bankrupted the United States Treasury in 1896. The stock market crash of 1893-94 resulted in a depression that caused riots in the major American cities. And both Cuba and the Philippines revolted against Spanish colonialism, culminating in the Spanish-American War of 1898. Today, we are seeing tremendous political upheaval in the Middle East. Amazingly, the American media is not telling people that the Middle East upheaval is primarily a result of poor economic conditions. Central bank easy-money policies have caused rampant food inflation in third-world countries. In addition, jobs are scarce and rents are exorbitant.

Now, in the early 21st century, we are not immune to the cycles of the universe. The 120-year cycle is alive and well -- and it is beginning to exert enormous pressure on political and economic conditions. What we are witnessing in the Middle East -- and around the United States -- is only the beginning of historic melodrama that will outlive us all in the pages of history.

"Whatever method you use to pick stocks...your ultimate success or failure will depend on your ability to ignore the worries of the world long enough to allow your investments to succeed. It isn't the head but the stomach that determines the fate of the stock picker"-Peter Lynch

The facts are unimportant. It’s what they are perceived to be that determines the course of events.

Most empirical facts cannot even be proven.

This is the Floydian Rule: A rock is not hard.

Higher Growth Could Mean Our Debt Worries are for Nothing by Stephen Gandel

http://www.time.com/time/magazine/article/0,9171,2055183,00.html

Gold and Silver:

1. We believe Gold is ready for a breakdown, short term, and remains near or at its high. We are completely out of Gold for the short term.

2. Silver hit our high of 34.50. If it closes below 33.50 we see silver also breaking down, for the short term

Our traders exited Gold at 1386 to 14.10, and should have exited Silver at 34.50. Our Silver long term leap was sold for up to 65% profits, two week hold

We will not, and have not gone short in the market. Any breakdown, and one could occur this week, we believe to be short term, and if the market hits 11,740 in downturn we would ADD to any existing long-term core position

Oil we believe could top at 107, perhaps this week.

Historically our recent upside has lasted over 205 days, one of the longest on record.