New signs suggest a major bear market has begun

From Gold Scents:
The recent market action has me wondering if the next leg down in the cyclical bear market has begun.

I always expected that we would see a very convincing rally out of the October yearly cycle low. I thought it even possible that we would test the 200-day moving average. Most bear markets do rally out of the initial leg down and test the 200-day moving average. 

Recently, the S&P made two attempts to close and hold above the 200-day moving average. They both failed. That was a loudly ringing warning bell...

Read full article...

Don't Sweat the Correction in Gold

By Jeff Clark of Casey Research, editor, BIG GOLD

Saturday, November 19, 2011 I've told concerned investors that when the gold price falls, they should "come back in three months" and see if they're still worried. The idea is that the daily and monthly gyrations are nothing to fret over, that the price will recover and, in time, fetch new highs. That advice has worked every time gold underwent any significant correction (except in late 2008, when one had to take a longer view than three months). Here's proof… I've traded e-mails regularly with Brent Johnson ever since meeting him at an investor event I spoke at a couple years ago. He's the managing director of Baker Avenue Asset Management, a wealth management firm with over $700 million in assets. He forwarded some charts he'd prepared for his clients that put gold's September decline into perspective… They're a good visualization of my standing advice to worriers. The following charts document corrections in the gold price of 8% or more – first measured with daily prices, then monthly, quarterly, and annually. See if this doesn't put things into perspective.   While the gold price has had plenty of big corrections since late 2001, they're not so concerning when viewed beyond a day-to-day basis. In fact, if one resists checking the gold price except once a quarter, one might wonder what all the fuss with price declines is about. You'll also notice that the September decline, when measured monthly, was our second-biggest in the current bull market (and third when calculated daily). This suggests to me that unless we have another 2008-style meltdown in all markets, the low for this correction is in. That's not to say the price couldn't fall from current levels, of course, nor that the market couldn't get more volatile. It's simply a reminder that when viewed on any long-term basis, corrections are nothing but one step down before the next two steps up. It tells us to keep the big picture in mind. It also implies that pullbacks represent buying opportunities. It demonstrates that one could buy any 8% drop with a high degree of confidence. Keep that in mind the next time gold pulls back. Until the fundamental factors driving gold shift dramatically – something that would require most of them to completely reverse direction – I suggest deleting any worries about price fluctuations from your psyche. And if you're still a tad uneasy about today's gold price, well, let's talk next February. Good investing, Jeff Clark, Casey Research

Top 10 Tips to Find Your Unclaimed Cash

Find Out the Simple Searches You Can Do to Cash In

By Elisabeth Leamy | Good Morning America – Tue, Nov 8, 2011 5:19 PM EST

The 50 states and the District of Columbia are currently holding at least $32 billion in unclaimed funds, just waiting to be reunited with the rightful owners.

"Good Morning America" has helped thousands of people find money held for them by the states.

There are simple searches you can do in ten minutes or less. Plus we've uncovered more unusual sources of unclaimed cash that few people know about.

"GMA" is here to help with the top 10 tips you can use today to find your unclaimed cash!

1. Miscellaneous Money

If you are searching for things such as forgotten apartment security deposits, uncashed overtime checks, lost insurance refunds or abandoned safe deposit boxes, your first stop is the states. The National Association of Unclaimed Property Administrators (NAUPA) has set up a free website atwww.unclaimed.org that will link you to the appropriate department in your state that holds the funds. (IMPORTANT: this is a .ORG website, NOT a .com. If you mistakenly type in .com, you will be taken to a pay site. It is never necessary to pay a fee or a finder to help you find unclaimed money.)

2. Missing Money

If you would like to search several states at once, you can do so at another free, though commercially run site called www.missingmoney.com. When you first search, you are prompted to enter your home state. Be sure to search again and this time choose "all states and provinces" on the drop down menu. One last thing: it's not actually ALL states. On the site's home page you can view a map of which states are and are not included. If you have lived in states that do not participate in this site, be sure to go back to Unclaimed.org and search those sites individually.

3. Unclaimed Savings Bonds

It's easy for savings bonds to go unclaimed because they take 30 to 40 years to mature. That's why the Treasury Department has set up a simple search website, available HERE, where you can find forgotten bonds by typing in your social security number. Certain bonds are not listed online and require a hand search. You can read about them at the same Treasury link.

4. Federal Tax Refunds

Everybody looks forward to getting an income tax refund check, but if yours didn't arrive, what do you do? The IRS now provides a "Where's my Refund?" feature on its website. You can look up your missing check by entering the amount you are owed, plus your social security number.

5. Lost Life Insurance Policies

The proceeds of lost life insurance policies may turn up in your state search. If not, and you suspect you are the beneficiary of a loved one's lost life insurance policy, you can hire a company called MIB Solutions to search for you. MIB is a private company that houses life insurance application information for much of the industry. It costs $75 to search. Go to www.policylocator.com for more information.

6. Failed Accounts In a Bank If you didn't collect your money when your bank went under, chances are your account was insured by the Federal Deposit Insurance Corporation (FDIC). The good news, in that case, is that the FDIC is holding your money, and you can find it HERE.

7. Failed Accounts In a Credit Union

If your money was in a credit union as it failed, visit the National Credit Union Administration (NCUA) HERE to track down your money.

8. Misplaced Pensions

If your company still exists, or has been bought out, you need to approach the company directly. If you are owed a pension from a company that went under, there is a federal agency, the Pension Benefit Guaranty Corporation (PBGC), that safeguards private pensions. You can track down your pension HERE on the PBGC website.

9. Retirement Money

The Employee Benefits Security Administration (EBSA), is the federal agency charged with making sure retirement money is reunited with its rightful owners. The EBSA sometimes even sues to seize retirement money. You can utilize the agency's services by clicking HERE.

10. Lost 401(k)s

Sometimes when people leave a job, they leave behind a 401(k) as well. If the company goes out of business, that only compounds the confusion. Fortunately, companies that administer 401(k) plans have teamed up to create a search engine you can use to track down your 401(k).

Money: How to Get It and Keep It

By Doug Casey, Casey Research

Even if you are already wealthy, some thought on this topic is worthwhile. What would you do if some act of God or of government, a catastrophic lawsuit or a really serious misjudgment took you back to Square One? One thing about a real depression is that everybody loses. As Richard Russell has quipped, the winners are those who lose the least. And as far as I’m concerned, the Greater Depression is looming, not just another cyclical downturn. You may find that, although you’re far ahead of your neighbors (you own precious metals, you’ve diversified internationally and you don’t believe much of what you hear from official sources), you’re still not as prepared as you’d like.

I think a good plan would be to approach the problem in four steps: Liquidate, Consolidate, Create and Speculate.

Step 1: Liquidate

Chances are high that you have too much “stuff.” Your garage, basement and attic are so full of possessions that you may be renting a storage unit for the overflow. That stuff is costing you money in storage cost, in depreciation and in the weight of psychological baggage. It’s limiting your options; it’s weighing you down. Get rid of it.

Right now it has a market value. Perhaps to a friend you can call. Or to a neighbor who might buy it if you have a yard sale. Or to some of the millions of people on eBay. A year from now, when we’re out of the eye of the financial hurricane and back into the storm, it will likely have much less value. But right now there’s a market. Even if most people are no longer wearing those “He who dies with the most toys, wins” T-shirts that were popular at the height of the boom, there are still buyers. But the general standard of living is dropping, and mass psychology is changing. In a year or two, you may find there aren’t any bids and the psychology of the country has changed radically. People will be desperate for cash, and they’ll all be cleaning out their storage units (partly because they can’t afford the rent on them).

Liquidate whatever you don’t actually need – clothes, furniture, tools, cars, bikes, collections, electronics, properties, you-name-it. You’ll be able to re-buy something like it, or better, cheaper. Just as important, you’ll feel light and mobile. Unburdened by a bunch of possessions that own you and weigh you down. It will definitely improve your psychology, which is critical to the next stage. And the cash it generates will be helpful for the rest of the plan.

Step 2: Consolidate

Take stock of your assets. After Step 1, that should be a lot easier, because you’ll have less junk but a lot more cash. You’ll already feel more in control and empowered. And definitely richer. But your main assets aren’t money or things. It’s the knowledge, skills and connections you possess. Take stock of them. What do you know? What can you do? Whom do you know? Make lists and think about these things, with an eye to maximizing their value.

If you’re light on knowledge, skills and connections, then do something about it – although if you’re reading this, you probably already live life in a way that builds all of those assets daily. But there’s always room for improvement. Think the Count of Monte Cristo. Or, if you’re not so classically oriented, think Sarah Connor after she met the Terminator.

Part of this process is to look at what you’re now doing. The chances are excellent there’s a better and more profitable allocation of your time. Even successful rock stars tend to reinvent themselves every few years. You don’t want to get stale. That leads to Step 3.

Step 3: Create

Remember, the essence of becoming wealthy is to produce more than you consume and save the difference. But it’s hard to maximize value working for somebody else. And when you’re given a job, it can be taken away for any number of reasons. There is cause and there is effect. You don’t want to be the effect of somebody else’s cause. You want to be the cause for everything in your life. That implies working for yourself. At least turn your present employer into a partner or an associate.

Perhaps go through the Yellow Pages (while they still exist), page by page, line by line, and see what you can provide as a service for the businesses advertising there. I promise you, they’re all looking for someone to come along, kiss their world and make it better. Think like an entrepreneur at all times. Remember that there is an infinite desire for goods and services on the part of the 6 billion other people on the planet. Find out how you can give them what they want, and the money will roll in.

I’ve said many times that I believe you could airdrop me naked and penniless into the heart of the Congo, and by the time I emerged, I’d not just have survived, I’d come out wealthy. And, believe me, I don’t think wealth is by any means the most important thing in life; it’s important but should be considered a convenience, not an imperative. Not that I’d want to be airdropped into the Congo at the moment; I’ve gotten a bit lazy, I have other interests, and you can’t be everywhere and do everything.

But now that I think about it, if I wanted to make a real fortune today from a small base, I might prefer Africa to any other continent. As an educated Westerner, you can quickly meet anyone, on an equal level, much more easily than you could at home. If you have a reason that makes any sense at all, you can be in the office of the president within a week. These countries are all plagued with incompetence and corruption, they need everything, and they’re full of untapped resources and talent. This all inures to the great advantage of a foreign entrepreneur.

Here’s an idea. For your next vacation, book a trip to Cameroon, Togo, Gabon, Zimbabwe or Angola. Go through the Yellow Pages in the capital and meet everybody who is anybody. The chances are good you’ll come up with several deals in the first week alone. If you can’t find the time, send your kid who’s just out of school and idiotically thinks he may want to misallocate time and money getting an MBA. This idea alone should be worth a million dollars. Or, as I would prefer to think of it, 700 ounces of gold.

But to an economist, money, like all goods, has “declining marginal utility.” In other words, the more of something you have, the less you need or want the next unit. Of course more is always better, but it’s unseemly, even degrading, to pursue anything beyond a certain point.

When I was in Toronto a couple months ago, I spoke with a Chinese friend who, I believe, is worth at least $250 million. As he waxed philosophic, he allowed that he didn’t feel he really needed more than 30 extra large to live exactly as he liked. I agreed, in that meals in the best restaurants, the finest clothes, cars and houses only cost so much. And it’s well within a conservative return on that capital, without ever even touching the principal. Is it worth it to get more? Perhaps not, unless your interests in the rest of life are entirely too narrow. The point of money is to allow you freedom, not make you crazy with getting more.

That doesn’t rule out speculation as an avocation, however. More – everything else being equal – is still better.

Step 4: Speculate

You’ve got money. Now you have to keep it and make it grow, because staying in the same place amounts to going backwards. That’s partially because the world at large will continue getting wealthier, even as the dollars you own lose value.

In the past, I’ve discussed why a lot of old rules for success are actually going to prove counterproductive over the next few years. Saving with dollars will be foolish as they dry up and blow away. Investing according to classic rules will be very tricky in a radically changing economy. Most people will try to outrun inflation by trading or gambling. The markets, which are the natural friend of productive people, will perversely prove very destructive to them in the years to come. You’ll know when the final bottom in the stock market has come: The average guy won’t want to hear about the stock market, if he even remembers it exists. And if he does, he’ll want it abolished.

Instead of becoming a victim of inflation and other politically caused distortions in the marketplace, you can profit from these things. Rational speculation is the optimum approach.

What to Do If You’re Already Wealthy?

Perhaps, however, you’ve already covered all the financial bases to your satisfaction. Quo vadis? I have several thoughts on the meaning of wealth. You may find some of them of value as prices of everything fluctuate radically in the years ahead.

First, recognize that wealth is a high moral good. Don’t feel guilty about having it or about wanting more.

If you’ve already accumulated and deployed enough capital to allow you to jump off the golden treadmill, congratulations: chances are high that you are an exceptional human being. I say that because the moral value of being wealthy is underrated. I don’t mean that in a Calvinistic way, in that Calvin believed Yahweh rewarded the righteous by making them rich. But I do believe that productive people – people who work hard to provide goods and services for others – definitely tend to be wealthier than unproductive people. They deserve to be. And since we don’t live in a malevolent universe, people generally get what they deserve. So, yes, wealth is definitely one indicator of moral excellence.

Sure, some wealthy people got that way by lying, cheating and stealing. But they’re exceptions. It’s much easier to become wealthy if (in addition to having virtues like diligence, competence and judgment) you are known to be truthful and honest. Those who automatically think ill of the rich are, at best, paranoid fools. Put it this way: Rich people may lack some virtues, but they definitely have at least a few that made them rich. Poor people, on the other hand, will certainly lack some virtues, and they’ll definitely have some vices that kept them poor.

I’m a fan of some aspects of Gurdjieff, the late 19th  to mid 20th century Russian mystic, who was also a merchant adventurer at some points in his colorful life. He said that anyone who successfully employed at least 20 other people must be considered at least partially enlightened and a type of guru. That viewpoint always resonated with me. Self-made wealthy people may not be saints or mystics or intellectuals or even especially thoughtful or moral. But they’ve proven they’re better than the average bear in at least one important way: they can create and conserve wealth. And they’ve thereby eased everyone’s path to further accomplishments. 

Second, figure out your purpose in having money.

Sure, money makes life easier. And it’s nice how it enables you to assist people you like with material things. But I strongly suggest that you not take too short a view on this matter. Accelerating advances in medical science are not only lengthening human life expectancy, but new developments now in the works have the potential to vastly improve your capability and health as well.

Is it possible to live to age 200, with all the wealth, knowledge and wisdom that implies, while maintaining the body of a 30-year-old? Not yet. But the prospect is on the horizon. It will, however, be available only to those who can afford it. Ray Kurzweil makes a case that the Singularity is near, and I buy his reasoning. It would be tragic indeed if anyone frittered away his wealth, thinking he wouldn’t live very long, and then succumbed to a self-fulfilling prophecy, not because of medical difficulties, but because of financial difficulties.

Third, don’t give your money to charity.

Entirely apart from showing a lack of both imagination and foresight, it’s a complete waste of good money, pure and simple. Contrary to popular opinion, it rarely does any good; it often does great harm. The whole concept of charitable giving is corrupt and desperately in need of a complete rethinking.

Fourth, if you do care about posterity (who knows, you might be reincarnated…), and on the chance you don’t make it to the Singularity, carefully consider how to dispose of your estate.

For one thing, there’s no reason to automatically leave anything to your children – unless they deserve it. The notion that someone should inherit just because he shares your genes is flawed and thoughtless. The example of Marcus Aurelius leaving the Roman Empire to his worthless son, Commodus, should be instructive. Wealth should be left to someone who is most capable of increasing it – at least if you want to benefit humanity in general. And, yes, I’m quite aware that humanity in general may deserve absolutely nothing.

At a minimum, consider that memes are far more important than genes. It’s wiser, therefore, to leave your wealth only to individuals (related to you or not) who will carry forth values you hold dear and are worthy of the wealth. If nothing else, make sure you disinherit the government.

Also consider that dividing wealth dissipates it and generally makes it less useful. If you have a million dollars, you could leave a thousand dollars to each of a thousand people. But apart from the fact that it’s unlikely anyone knows a thousand worthy people, that much money is only enough for a modest vacation or a few baubles. The larger the pool of capital, the more ways it can be used, the more creative power it has, and the more likely it will be conserved and used creatively. I favor the Roman system, in which one could adopt children of any age – but always after you could see what their character was. You might want to do that if your own kids don’t make the grade.

The Bottom Line

If you want serious money, you have to get serious about money. You need to understand these fundamentals and never forget them. Don’t let all the garbage reported in the financial media you read, see or hear confuse you about what money really is. Don’t consume more than you make: save! Don’t spend: invest!

I've Found the Market's Newest Timing Indicator

By Jeff Clark

Tuesday, November 8, 2011

Move over Goldman Sachs. There's a new canary in the coal mine.

Ever since Bank of America gobbled up Merrill Lynch (or was forced by the Feds to stomach it), I've been searching for a new leading indicator for the short-term direction of the stock market. For nearly 20 years, I used shares of Merrill Lynch as the proverbial canary in the coal mine.

Merrill was a wonderful market timing indicator. If the market was going to rally, shares of Merrill Lynch rallied first. If stocks were due for a drop, Merrill would signal it ahead of time. I often wrote about Merrill's canary-like attributes (here, here, and here). And I mournedthe day the shares stopped trading in September 2008.

Ever since then, I've been in search of a new canary. At first, the banking index fund (BKX) looked like a good candidate. But I found it moved with the market, rather than ahead of it.

Then I started using Goldman Sachs (GS). That worked OK for a while… But Goldman is not a true canary. It's a blood-sucking vampire squid, as Rolling Stone's Matt Taibbi once famously called it. And its performance as a leading timing indicator has been disappointing.

So I kept searching for a new canary… And I finally found it.

ExxonMobil (XOM) – the oil industry behemoth – is a leading market-timing indicator, and the market's new canary.

I've been following the minute-to-minute action in XOM shares for several months. The action is remarkably similar to the way shares of Merrill Lynch used to trade. If the market is rallying and shares of XOM start to pull back, sure enough, the stock market pulls back moments later. If stocks are falling and XOM begins to bounce, the market bounces, too.

So if you want to profit off the short-term direction in stock prices, pay attention to the action in XOM. It'll give you an early clue as to where things are headed.

I don't know exactly why it works this way. Likewise, I never exactly understood why Merrill worked so well as a leading timing indicator. But you don't have to know why something works to profit off it.

Merrill Lynch was a profitable canary for more than 20 years. I'm looking forward to a long, prosperous relationship with ExxonMobil.

Best regards and good trading,

Jeff Clark

Today's entertainment: Triumph visits Occupy Wall Street

From The Reformed Broker:

"You better hurry back from lunch so that you can collect your hurry back from lunch bonus."
- Triumph the Insult Dog to Wall Streeter
In case you missed this yesterday... here is the funniest video I've seen in months - Triumph the Insult Dog down at Occupy Wall Street...
Watch the video here...
More entertainment:
Today's entertainment: CEO explains why layoffs are absolutely necessary
Today's entertainment: Obama earns money for the U.S. by appearing in a Japanese TV commercial
Drunken Ben Bernanke tells everyone at neighborhood bar how [expletive] the U.S. economy really is
View the original article here