Monday, October 18, 2010

Totalinvestor Special Situation: Greenland Minerals up 2,000% ???

Can a 60 cent stock go to $10?
Meyer's Special Report makes the case for Greenland Minerals in this video that was just sent out to subscribers.

click here to watch

The company has deposits of rare earth minerals and uranium in Greenland worth over $2 billion.


M2 Update: 14th Consecutive Weekly Increase Even As Main Street Accelerates Cash Withdrawal From Banks

The only thing mirroring the relentless outflow from stocks these days (now in their 23rd week) is the increase in the M2 money supply: the week ending October 4th was the 14th consecutive weekly increase in the broadest money aggregate compiled by the Fed which hit $8,752.4 billion, an increase of $20 billion from the $8,732.8 billion the week before. Curiously, the Fed decided to massively revise all previous numbers (as if the amount of money that goes in and out of a bank, and should be recorded electronically the second it happens is subject to change). Yet the strangest number to come out of the huge revision had to do with with the flow of money in and out of Small Denomination (under $100,000) time deposits, or in other words the place where the bulk of Main Street America parks their money for some pursuit of nominal yield. The kicker - since the beginning of the year there has not been one weekly inflow into small denomination time deposits! (go ahead and check it) It appears either the less than richest Americans need to constantly pull money out of the bank, as they give up yield (and in a Zero Interest Rate environment there is no yield to be given up) in order to pay their bills, or simply have decided to no longer keep their money with the big (and small) banks (as this includes both commercial banks and thrifts). Could the "starve the banks: campaign be working? If Americans succeed in pulling enough money from their banks via deposit redemption, coupled with the stock trading boycott, it will be the end of Wall Street post haste. (more)

Currency Debate Intensifies: Paper Vs. Gold

A most fundamental and crucial debate is now in full swing.

The two main protagonists are the Goldbugs and the Interest-Free Money community. The battle was ignited by Gary North who attacked Ellen Brown, calling her a 'Greenbacker'. Brown and North agree that Fractional Reserve Banking needs to go, but Brown wants the Government to print debt free (and therefore interest free) money.

To North this is incomprehensible, because he thinks paper money is paper money. It is not though. Interest bearing debt to a bank is a very different beast indeed than is debt free, interest free money printed by the Government. However, North, as do other Goldbugs, fear Government will always print too much money to cover their expenditures and Big Government programs. The question is: will Gold stop these inflation by Government? History suggests it won't."

Here's Ellen Brown's retort. Here's a high class framing of the debate by Eric Blair which was widely posted.

The Goldbugs and the Interest-Free Money people have been living in peaceful coexistence for many years. They have a common enemy: paper based fractional reserve banking. But now that the chances of the FED collapsing are becoming more real, the question what to do next arises.

Most people awakening to the Fractional Reserve hoax simply assume that the problem can be solved by Gold-based currency. After all: Gold cannot be printed. (more)

John Williams Warns Of "Severe And Violent Sell-Off In Stocks"

John Williams utters his most ruthless words of condemnation not only toward the Fed, but to everyone who is stupid enough to be chasing returns in the face of what is a hyperinflationary collapse.

Euphoric Inflation Insanity. Buying U.S. stocks because the Fed says it will proactively debase the U.S. dollar is like sitting on the beach in order to get a great view of an incoming tsunami. Any pleasure so derived should be short-lived, when the terror of underlying reality quickly takes hold.

If one were to view movement in the price of gold as a surrogate for anticipated inflation, for example, the issues begin to come into focus. Consider that last night's (October 14th) respective S&P 500, Dow Jones Industrial Average and NASDAQ Composite closing levels were up by 7.5%, 10.8%, 12.1% from a year ago, but the price of gold was up by 29.6% in the same period. Relative to gold, which tends to hold its purchasing power over time -- albeit sometimes in an anticipatory manner -- the S&P 500, Dow Jones Industrial Average and NASDAQ Composite have declined respectively by 22.1%, 18.8% and 17.5% year-to-year. This is against the prospective inflation environment being discounted by the gold market.

While stock prices do tend to rise in an inflationary environment -- where revenues and profits are inflated -- rising stock prices do not always stay ahead of inflation. On a constant-dollar or real, inflation-adjusted basis, stocks go through bull and bear markets, just as they do otherwise. If prices do not stay ahead of inflation, investors lose value in terms of the purchasing power of their assets. The equity markets may rally in the upcoming inflation, but the systemic implications and current gold behavior suggest that the circumstance will not give investors a positive real return, as discussed in the Hyperinflation Special Report. (more)

Technically Precious with Merv

FREE weekly precious metals investment newsletter, click here

Foreclosure Freeze Could Drag Down Property Values, Housing Chief Warns

Housing Secretary Shaun Donovan said Sunday that a national freeze on foreclosures would "do far more harm than good," pushing back against those calling for a blanket moratorium following claims that lenders may have used faulty paperwork to evict homeowners.

Donovan called the alleged corner-cutting "shameful" in a column published Sunday, days after attorneys general in all 50 states opened probes into the matter. He backed banks that have imposed "voluntary moratoria" but stopped short of supporting a broader ban.

"A national, blanket moratorium on all foreclosure sales would do far more harm than good -- hurting homeowners and homebuyers alike at a time when foreclosed homes make up 25 percent of home sales," Donovan wrote in his Huffington Post column.

Donovan explained that a blanket freeze could block first-time homebuyers from entering the market while ensuring that foreclosed homes stay vacant and drag down home prices in surrounding neighborhoods.

"Right now, families who have watched their home values decline over the last few years want nothing more than homebuyers ... to buy the vacant homes in their neighborhoods," he wrote. (more)

Will the New Debt Commission Back a VAT?

The new bipartisan federal debt commission is set to report on how the US should cut its deficit December 1, as Congress recesses without a budget for the fifth time in seven years after enacting massive deficit spending, and the Bush tax cuts are now subject to horse trading in a lame duck session.

That means the federal debt commission’s findings could reshape government tax and spending policy in a dramatic fashion.

And some fear they smell a VAT, akin to a new national sales tax.

But a value-added tax is not tax reform, as it would most likely not replace, but get layered on top of, the US’s tangled barbed wire of a tax system.

A VAT is a symptom, not a cure, for fiscal incontinence.

Often installed with great fanfare as being debt busters in Europe, a VAT didn’t cure Europe’s debt problems—spending and debt only continued to grow under VATs there.

And so did Europe’s VATs, which started at 5% in the ‘60s and early ‘70s, and now average 18%. (more)

The housing crisis in 1933, and today The real-estate market is suffering now, but it was worse then

(MarketWatch) — Question: I know that the New Deal created the Home Owners’ Loan Corp. I have been eager to read an article by someone who has looked at the way that mortgage crisis was handled ... and compared it to government efforts in our present crisis. If you are familiar with anything written on this subject I would appreciate your informing me where to find it. If you are not aware of anything, I might suggest that you would be an excellent person to explore it. —M.N.

Answer: Actually, you’re in luck. I do know of one such study; it was done a few years ago by Alex Pollock, a resident fellow at the American Enterprise Institute in Washington and the former president of the Federal Home Loan Bank of Chicago.

Pollock looked back to 1933, when Congress created the Home Owners’ Loan Corp. as a temporary fix “to relieve the mortgage strain and then liquidate.”

While the current mortgage meltdown and resulting — or corresponding, depending on your point of view — housing bust has been described as the worst since the Great Depression, it is nothing when compared to what happened in ‘33, when a financial and economic collapse occurred that is all but impossible to imagine today.

Back then, about half of all mortgage debt was in default. Unemployment reached 25%, thousands of banks and savings and loans had failed and annual mortgage lending had fallen by some 80%. New residential construction had dropped by 80% as well. (more)

Why Pharmathene Could Go From $2 to $20

In the biotech sector I try to find stocks that have minimal downside but potential for 10x returns. Back in July, 2007, for instance, I took a lot of heat writing bullishly about DNDN on More recently, I wrote this article for the Wall St Journal on June 30 about Pharmathene (PIP) when it was at 1.56. I listed three catalysts then and suggested that the stock should minimally be catapulted in the $7-10 range. I wanted to give an update on what's gone on since then and why I think the stock could eventually be even double what I initially thought.
First off, the stock is now at $2 after a competitive company, SIGA, three days ago received a contract from the government that could be worth conceivably up to $2.8bb for its smallpox antiviral product.

This potentially $2.8bb contract for SIGA is very significant for PIP, which is engaged in a lawsuit with SIGA that could be worth billions to PIP. SIGA produces the smallpox antiviral ST-246, which was just awarded the government contract. SIGA and PIP were at one point, back in 2006, planning on merging. As part of the merger agreement, it was determined that if the merger did not go through that PIP would be able to exclusively license development and marketing rights for ST-246. The merger did not go through, BUT PIP never got the license agreement. Hence, PIP sued SIGA. In my original article I asserted that this was a catalyst for PIP to go higher but it was hard to quantify that catalyst since we didn't know what sorts of revenues ST-246 could generate. (more)


Art Cashin Explains Why The Stock Market Is Broken, Shares More Perspectives On Hyperinflation

In today's interview with King World News, Art Cashin confirms that through its endless meddling, intervention and manipulation over the past two years, the Fed has essentially broken the market: "You used to have markets that were not particularly correlated. The asset classes now seem to be so heavily dominated and in inverse relationship to the dollar, and in direct relationship to the euro... It's frustrating having honed my skills over 50 years to be able to interpret news, and look at a piece of economic data, and try and outwit the rest of the world by figuring out how it would work, and now all you have to do is look and see how the dollar is reacting and know how everything else works. And that huge correlation is not good for people because if everything is correlated in a basket like that, it is very difficult for people to hedge and protect themselves, and therefore when assets move they tend to move altogether." In other words, step aside Value Investor Congress - meet Lack of Value Dollar Correlation Congress. But readers have known that for over three months. Just as they know that lately the biggest concern on Cashin's mind is hyperinflation "the difficulty is while you can get what appears to be nominal benefit out of [hyperinflation], when you try to convert to a hard asset, or even use it to try to buy a needed good, and the perfect example is Zimbabwe. If you were from out of space, and just could get the records of the Zimbabwe stock market you would say, "wow, they are having a pretty good time down there." But they are going up because the assets they hold are going higher and higher in a debased currency." And Cashin on his hyperinflationaty musings from earlier in the week: "My hope is that we don't get anything like that - hyperinflation would be destructive to civilization... But you are right, not only Zero Hedge, I think that was the most emailed comment that day all over the country." He may well be right. And he is certainly right about the Shazam moment: "Money only gets velocity when you lend it or spend it. The difficulty with studying things like the Weimar republic, is that the money supply growing drastically the initial reaction was small. There was very little doing, and it went slowly, until it went suddenly, and when it went suddenly, it went parabolic." (more)

US Economic Calendar For the week

DateTime (ET)StatisticForActualBriefing ForecastMarket ExpectsPriorRevised From
Oct 189:00 AMNet Long-Term TIC FlowsAug-NANA$61.2B-
Oct 189:15 AMIndustrial ProductionSep-0.1%0.2%0.2%-
Oct 189:15 AMCapacity UtilizationSep-74.7%74.8%74.7%-
Oct 1810:00 AMNAHB Housing Market IndexOct-131313-
Oct 198:30 AMHousing StartsSep-550K575K598K-
Oct 198:30 AMBuilding PermitsSep-550K565K569K-
Oct 207:00 AMMBA Mortgage Applications10/15-NANA14.6%-
Oct 2010:30 AMCrude Inventories10/16-NANA-0.416M-
Oct 202:00 PMFed's Beige BookOct-----
Oct 218:30 AMInitial Claims10/16-450K455K462K-
Oct 218:30 AMContinuing Claims10/09-4450K4400K4399K-
Oct 2110:00 AMLeading IndicatorsSep-0.3%0.3%0.3%-
Oct 2110:00 AMPhiladelphia FedOct-1.51.4-0.7-