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The Perfect Storm

Written: 07/10//08 Other Newsletters: :07/01/08 07/23/08 08/04/08 08/06/08 08/31/08 09/01/08 09/04/08 09/05/08

Did you ever see the movie with George Clooney? It was a story about new England Fisherman, desperate to make the final catch, who find themselves in an unusual set of weather conditions. The movie was aptly named, “The Perfect Storm.” I could really relate to the movie, I fished those exact waters back in the early 60’s. Even then, fisherman began going further out because local waters were over-fished. Again that was back in the 1960’s.

The perfect storm for financials is similar. It’s not so much that the pacific salmon have just about disappeared. So have the honey bees. I’ve also kept honey bees most of my adult life. No more. They have also disappeared because of CCD. CCD is an abbreviation for colony collapse disorder. “So, what?” Someone might say. We the big ‘so what’ is less fruit, vegetables, and grain. Why? Plants require pollination in order to flower and fruit. Unless you want to walk around with a feather touching trillions upon trillions of clover blossoms, you can expect in the future, cattle to go the way of fish. You see, it’s a perfect storm.

Toss in a few little things like millions of acres of the world’s most productive farmland in the Midwest being drowned and the cost of oil-based chemical fertilizer going to the moon – oh, and the cost of diesel fuel for that factor…It brings to mind the Matlthusian Theory. Robert Malthus way back in 1800 believed that hunger and poverty were unavoidable since population increases by geomathical ratio and the means of subsistence by arithmetical ratio. What this means in simple terms is only so much food per acre can be produced to feed x amount of people. There must be then a lesser number of people or a greater production yield per acre. If there are a greater number of people there is a faster uptake and development of once farmable land. Thus = less food producing acres.

The only way to get greater food production…well, I just forgot about the decline in honeybees, get your feathers out – is to grow organically. Sadly, soil that has been mined instead of farmed unfortunately requires chemical fertilizers and pest chemicals to get any production at all. Never mind that the food really isn’t worth bringing home (if you have the money to pay for it at inflated prices). The afore mentioned chemicals require petroleum, which brings me back to the perfect storm.

Any increase in the oil price, which production today is running at capacity with world demand increasing at 2.4% per year and rising, makes farming almost impossible for family farmers. Not to mention the automotive industry. GM is trading at a 54 year low, the old saying which was quite prophetic was “what’s good for the country was good for General Motors and vice versa.” Oops!
The main ingredient of the perfect storm, oddly goes back to the tragic mistake of the government in 1975 of cutting the ties between the dollar and gold. The US dollar continues to circle to bowl. Just since 2002 it now buys less than 1/3 against all the other currencies of the world. That’s why the Dow had its worst close in June – since the Great Depression. As the clouds darken the perfect storm nears.

What should you do now?

Personally, instead of my focus on increasing wealth, I’m more focused on preserving wealth. How? Gold and silver mainly. That’s why after being in the minting business and observing the trends of the last 15 years, gold has never been such a bargain. While gold doesn’t pay you dividends or income or stock appreciation (your stocks and IRAs and pension plans are, aren’t they?) gold is solid, indestructible, un-inflatable and always priced in relationship to any world currency.

So, no matter how far the dollar falls, you can never lose a penny. And if miracle of all miracles occurs and the dollar revives itself, and prices fall and your fill up is at a dollar a gallon, and we pay

off the national debt and there is peace on earth and goodwill to all, and no babies cry in public, and global warming is conquered, gold price drops because your dollars buy more and inflation is gone forever – then you still haven’t lost a penny…”Dream on, Alice.”

Buy gold and silver today! You can’t afford to wait! The perfect storm is on the horizon. -Peter

Written: 07/10//08 Other Newsletters: :07/01/08 07/23/08 08/04/08 08/06/08 08/31/08 09/04/08 09/05/08

Tony: invest@goldenlionmint.com

Or Call: 828-350-1454