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Analysis,
investment ideas and strategies to encourage dialogue about the global
economy involving gold and silver, energy and monetary
issues....
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Historic Reports
Larry
Myles Reports
The
economist must never be a specialist. In
dealing with any problem he must always
fix his glance upon the whole system.
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January,
2012
The Durability of the
Economic Crisis
… 2012 will be 2008
on Steroids
Over the last four years I continue to observe
what I consider an unforgivable offense; the
abandonment by many investors of their duty to
think.
Over these same four years I have endured
correspondence from some who questioned the
soundness of constantly promoting the
business of gold as
naïve and unsophisticated,
while openly mocking our
reality-based investment stratagem as
simplistic and one dimensional.
To my way of thinking this criticism
exhibits a state of mind that relies upon denial
and the fiscally fatal expectation that the
Keynesian system would somehow (magically) come
up with a final solution to challenge and defeat
the durability of the growing global economic
crisis. Too late they have discovered only snare
and delusion.
And while understanding that the last
few years have been challenging for many
investors, instances and examples abound
where individual investors have
prospered because they opted to not
surrender logic and common sense to the
box-thinking [sic] fiat-favouring
investment
professionals. One such anecdotal
example harkens back to the early and
tumultuous days of 2009, and to a
husband and wife investment team. After
correspondence with the lady of the
house regarding gold as a safe haven, I
will now admit I became lost in
admiration for her as she went in hard
and heavy and picked up physical gold at
$870.
Her more
sophisticated partner found it easy
to shun such a simplistic
strategy
and attempted to discover comfort and
gain by investing in Bank of America on
the dip, at $21.50 a share no less.
Guess who is doing the dishes!
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A Long Accumulating Store of Discontent and
Unrest
Entering into 2012,
it has become apparent our critics have
experienced the sharp pang of regretful surprise
and have run screaming into the night. Their
favorite oracles exposed as pompous failures.
Smug economists who had reigned supreme for
decades,
doling out small servings of drivel-and-pap as
if it were food from the gods!
Many of these same so-called economic
experts were recently spotted in
collision with each other in their zeal
to secure a seat on the 2012 Doomsday Express.
I do say our critics, because it would
arrogant in the extreme for me to lay a
proprietary claim to the business of
gold and reality-based investing.
As we have all come to realize, these
two highly successful investment
strategems came only after much
collaboration from my side of the
keyboard, and yours as well!
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The
arrogance of the minor league purveyors of
Keynesianism has been replaced by unadulterated
flat-faced
panic,
as in their almost pathological
crave
to be right;
they bolt blindly toward the media spotlight.
Offering hackneyed and predictable reasons why
their fiat and debt-backed world is imploding. If they even remotely think they are
playing to our crowd, they can save their reedy
efforts. Reason: We did not listen to their
inane ramblings in 2008 and we are certainly not
prepared to heed their ravings now.
Why? Their message is odious
as it is absurd. In spite of their
sophisticated, albeit
convoluted ramblings, we
opted for common sense safety that only the
logical and proven security of gold provides.
There is no hand wringing in my camp,
as we continue to move ahead with confidence in
our prosperity; and have little time to waste
debating the elusive Keynesian concept of
recovery; an arid dictum at best.
Reality-based investing: The
irrepressible and insistent principle
that allows the investor to create a
realistic investment environment
resulting in rational decisions
based on reason, hard fact and
solid market data.
The alternative of course is a belief in
faith-and-hope-based investing. Dare I
use the U.S. sub-prime mortgage debacle
as an obvious and negative example?
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I have a little more to say about gold, but
first, let us for just a moment, play the
tourist. Let us visit the Wall of Worry and the
World of Doom as seen through the eyes of your
average, and totally disillusioned Keynesian.
Trust me, the theatre is sublime. But remember, it
is only theatre. A mere phantom of the brain…and
for us, not real life.
Although Gold is The
Vigillant Reserve
...I worry about something more, something
worse, something unprecedented
The “something
more, worse and unprecedented…” that
concerns me is the
very real possibility of a
shooting war – the
cost of human life that will
ultimately
not be about real estate, oil
fields, or gold mines. It will be
centered upon ink and paper. The
Keynesians, blind leaders of the blind
may be reeling, but they certainly will
not go quietly into the night. They
control vast amounts of debt, paper and
ink. In their delusion this is enough,
and should somehow be regarded as
wealth?
If generational theft is of
little concern to a Keynesian, what
value is human life one can certainly
ask?
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Focusing on
both
Europe and America, the perversion of judgement
continues.
The common theme in both theaters? The lack of trust
festering in government and the banking sector,
exhibited in their combined inability to bail out
anyone, including themselves. Again,
it is important to realize that we are talking about
an unsustainable system; paper money
precariously perched upon a foundation of (failing)
faith by the people and on the alleged
value
being placed on of
out-of-control debt.
The western
governments are paralyzed and unable to bail out
their economies. Banks are underwater and
under-capitalized, being bailed out by governments
printing money,
but not before being maligning the banks for taking
undue risks in the past and how they must (magically)
create more capital. The result can only be to expect bank failures and
nationalization.
At the same time, banks are jabbing the governments,
accusing them of out-of-control spending and
questionable policy decisions. At the end of the
sordid squabble, a patchwork of compromise allowing
governments to raise taxes, while at the same time
resisting meaningful spending cuts. This translates
into yet more debt and a loss of production as
business wisely pulls back as they fully
realize that no responsible government would raise
taxes during an economic downturn. The banks in
their zeal to amplify capital, choke off lending.
Checkmate!
Turning toward a
Europe-specific observation, the theatre evolves
into a monstrous travesty
In Europe,
the mercenary marriage between the EU meatheadians and
the banking system turns into a hideous absurdity.
Note: The European Union finally comes to a decision
after two years of dithering. Collectively,
the countries within the EU give billions of
euro-dollars to the IMF. They in turn give that
money to the ECB, who in turn pass the money to the
European banks in the very same countries that gave
the money to the IMF in the first place. Seriously!
One more note on this pathetic parody of a back
alley shell game; if the banks do what they are
expected and soak up the sovereign debt of the
European countries, how does that help the situation
over the long term?
And if the banks do not loan out the money to
the people and businesses of Europe, does that not
lead to a forced decline and austerity, a lack of growth and a steeper
recession? If that is the case, would this not
result in more angst and a negative display of
emotion in the streets of Europe?
A Furtive
Denial of Knowledge and Direction
What continues to absolutely amaze me
and makes gold ownership inevitable to prosperity is
that after two years of open crisis the EU has not
quite come to terms with a basic tenet. Namely, it
is impossible to have a functioning system in a
Europe that although it enjoys a common monetary
policy, it does not enjoy a common fiscal policy.
On the way to the complete and unavoidable break-up
of the European Union,
we could and should see the bloated and unworthy
euro-dollar reach temporary parity with its
U.S. counterpart.
Out of the corner of my eye, I am watching the
shenanigans in Hungary,
as that nation appears ready to thumb the weak and
unorganized EU. The sharp stick of Hungarian
nationalism appears ready to deliver that poke in
the eye to the inevitably dissolving EU. Peeking
over the heads of the vexing Hungarians, I note the
situation in Russia looks unsettled, and one more
wobbly country is not what the world needs right
now. Albeit that weakest of the BRIC’s remains years
behind in becoming a respectable member of the
paper-and-debt community. Maybe that is not a bad
thing. Time will tell as the one thing Russia is
fond of – its gold reserves.
Back in the
“USSA”
…a ghastly mixture of defiance and conceit
All of the recent nattering about recovery in
America puts my teeth on edge. After printing and
squandering trillions of dollars one could be
expected to be having a current discussion on
inflation. Apparently,
the constant jigging of how to calculate inflation
has set that discussion aside…for now.
What cannot be swept under the carpet is the
mushroom cloud of deficit spending. America will
soon suffer the fall-out and the 'glow in the dark'
scenario should become evident right smack dab in
this election year. Trillions squandered and all we
have is a
debate on whether or not America is on the road
to recovery.
I have some hard facts that will dispute that there
is a recovery at all, but like a tornado approaching
the homestead, a discussion of who is responsible
for a broken tea-cup in the kitchen might lose
traction real fast. The storm of course is the
global recession that is heading our way,
and how America has used up all of its bullets,
being unable to spend its way out of the downturn.
But it will
not be for lack of trying so another reason to own
gold. And once the bubble bursts and America the
Indebted transforms from Cinderella into Witch Hazel
right in front of our eyes, followed by the smelting
of the US dollar into slag,
it will get real interesting as to what we will be
using for currency.
But I am getting ahead of myself. Let us look at
what the paper clowns are hanging their hats on
right now: The most robust spending by America’s
consumers since the dark days of 2008!
Never mind that spending was a case of stores
marking their prices down up to 75% of list. And why
does that not work? One only needs to look no
further than Sears, where sales of advertised
specials went through the roof but alas, not enough
profit
to save 120 stores from closing!
What is hidden from full view are the recent numbers
suggesting that consumer incomes have risen less
than forecast. So where did this outpouring of
holiday spending originate? Savings, that’s where.
Another stat that is unsettling; household savings
in America has dropped from 7.1% to 3.5%. In other
words,
the gluttony of spending that has everyone in
Washington breaking out the cheap wine is
unsustainable! I would expect the American
consumer to drastically cut spending very early on
in 2012 as they stare with incomprehension at their
credit card bills.
And while the fiat pushers point proudly to the
Consumer Confidence Index (CCI) telling us that
Americans are more confident for the future of the
nation; let us take a closer look at what they are
really talking about. Right now the index stands at
64 and that is up a few points over the last few
months. For the record, the CCI began in 1967 and
was
benchmarked in 1985 at 100. They picked that
year because it was neither a peak nor a
trough. It was merely…average.
Have we become so myopic that the number 64 is one
that should cause the regime in Washington to
celebrate? Or is this the way the wishy-washy
leaders look at things; subpar and tepid, middle of
the road numbers are
good enough
for a country used to being number one on the
planet? If so, high time to change leaders!
On The Subject of Gold
….a civilized agent of conspicuous value
I was pleasantly surprised by how gold is
finally enjoying a share of serious coverage by the
mainstream media. Bloomberg: Rewind hosted by Matt
Miller is currently my favorite “paper is king”
show. I was especially pleased that over the holiday
week one of the guest analysts, not really an
advocate of the yellow metal, stated that gold
reaching the $2,000 plateau was an easy forecast to
make. The implication of course…gold will go much
higher.
For what it is worth, gold should be the bedrock of
our investment strategy. It is of no real importance
when gold goes through $2,000 an ounce or how high
gold will climb. Gold as a solid asset class is no
longer in dispute. And for that we can thank the
Keynesians for mucking things up so badly. We can
continue to count on their predictability as it applies to
recession, depression or even a sustained and
stubborn downturn. Since the days of Charles Alfred
Conant we can see evidence of their knee-jerk reaction
to a weak economy, print money!
The Keynesians enjoy an almost unwholesome
fetish for the
printed note would not hesitate for a moment…in fact
would cheerfully print a country into years of
hyperinflationary poverty, rather than allow a year
of deflation and recession. Critics of the yellow
metal, claim that gold ownership invites volatility
and financial uncertainty. Rubbish! Gold is money
and is the only money that has never gone to zero.
Owning reams, or even a small wallet full of paper
money during these troubled times is volatile and
dangerous. Ask the people of Zimbabwe.
Heading into 2012, you must prepare to be consumed
by the demon of activity; but only after you
pause to
think
about your investments. I am not concerned in
the slightest with my long term readers. For the
most part, regular folks from all walks of life;
people who took the time to
think
about what was happening in the world of fiat
currency, found that world lacking and turned
instead to the most conservative and safest of all
investments – gold.
I remain confident that we will continue to prosper
in 2012 thanks in no small part to gold ownership
and pinpoint investments in the junior gold and
energy markets.
Fiat currency, specifically the U.S. dollar, is in
bubble territory. Gold is nowhere near a bubble;
impossible to my way of thinking when you consider
that less than 1% of gold is held by the major
institutions.
A
Many Sided and Far Reaching Enthusiasm
…expanding upon the settled conviction of success
What began in late 2007 with 65 diverse
readers has blossomed into a network that is now
over 7,500 strong. I did not come up with the
business of
gold or
reality-based investing, we did. I cannot
possibly come up with all of the information
necessary to compile a monthly report; that
information originates from you – anecdotal
evidence and observation from people in Canada, USA,
Europe, Asia and three brave readers out of Persia.
Where we go from here will be up to you. I will do
my part and continue to recommend opportunities in
the junior gold and energy sectors. Hopefully you
will continue to contribute your ideas and
observations. With everyone pulling together we can
rock 2012 into our best year ever.
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There are approximately $200
trillion in total global financial
assets that are even now, in the
process of turning their attention
toward the $1.5 trillion in
market-available gold. If even a
fraction of this attention is
manifested, the price of gold will
go parabolic. Do the math!
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Larry Myles
Larry Myles Reports
604-408-7600
1-877-405-7600
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Larry Myles is neither a geologist
nor a financial analyst. I do not purport to offer
personal investment advice nor recommendations.
While all statements of fact are derived from
reliable sources, and are believed to be accurate, I
make no warrant that they are so. You must do your
own research and check statements of fact for
yourself. My opinions are precisely that, my
opinions. I do not accept any responsibility for any
gains or losses you may experience resulting from
actions taken based on my opinions. If not otherwise
qualified, you should consult with your own personal
financial advisor before engaging in any investment
activities. Larry Myles Reports does not provide
individual investment advice, act as an investment
advisor, or individually advocate the purchase or
sale of any security or investment. Larry Myles may
actively trade in the investments discussed in this
publication. Larry Myles may have a substantial
position in the securities recommended and may
increase or decrease such positions without notice.
I do not know your personal financial
circumstances. I am not your personal financial
advisor. You must do your own due diligence. By
entering this web site, or reading LMR reports, you
acknowledge and accept the foregoing.
larry@larrymylesreports.com
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