November 18, 2009
By Gary Grimes
Please understand that this article is about more than safeguarding your money; it’s about saving you headache and heartache. It’s about giving you peace of mind.

Before I explain, please allow me to ask a few questions:

Have you given much thought about the money in your banking accounts lately? Do you know if it’s safe?
Have you thought about what might happen if your bank fails?
Did you know you could be left in the lurch for days, weeks, even months before you get your money back from the FDIC?
What happens if the FDIC can’t cover your funds?
How do you find a safe bank to protect your deposits right now?

I hope you’ve given these questions some serious thought.

I have to be honest: These questions were about the farthest things from my mind until about a year ago, when …

Say goodbye to the US dollar as the world’s reserve currency. Writing in the Washington Post, Nobel Prize-winning economist Joseph Stiglitz says America’s massive deficit means a new global reserve system is approaching.

The domino effect is straightforward: Higher deficits spark market concerns over future inflation; concerns of inflation contribute to a weaker dollar; and both come together to undermine the greenback’s role as a reliable store of value around the world. Right now, with so much unused capacity in the American economy and so much unemployment – likely to persist for at least another year or two – the more pressing worry is deflation (a general decrease in prices), not inflation. But as the economy eventually recovers, the possibility of inflation will loom, and with forward-looking markets, worries about the future often play out in the present. Anxieties about future inflation can lead to a weaker dollar today.

Of course, a new

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By Gary Grimes

The following article is adapted from market analysis by Elliott Wave International Chief Commodity Analyst Jeffrey Kennedy. Now through July 22, Jeffrey Kennedy’s daily, intermediate, and long-term forecasts for up to 18 markets are free via EWI’s FreeWeek. Learn more here.

Wave patterns are like beautiful women, classic cars and great art – you know them when you see them.

EWI analyst Jeffrey Kennedy drives this point home during his live Elliott wave trading tutorial. It’s my favorite of his tips for trading with Elliott waves.

“Trade the pattern not the count,” Jeffrey says.

If you don’t recognize a pattern at a glance, don’t trade it – plain and simple. After all, your wave count can be wrong; the pattern cannot.

Does that mean you must know the exact wave count at a glance, as well? No. Simply spotting a pattern …

Notes from theInvestment Underground

Tuesday, March 24, 2009Recoleta, Buenos Aires, Argentina

The 15-year depression is coming… Drink yourself to death! Martin Weiss’s deflationary outlook… A sucker’s rally with legs… Protecting your wealth from inflation… Jeff Clark: the S&P will go below 600… The truth behind China’s dollar holdings… Big government gets bigger… And more! 

*** “This is the big one,” says Republican Congressman Ron Paul, who yesterday said the depression will last 15 years. It makes a nice change from all the hooting and wailing about a bottom being in for stocks.

“The U.S. government just won’t allow the correction the economy needs,” says Paul, citing the mini-depression of 1921, which lasted just a year. This was because insolvent companies were allowed to fail. “No one remembers that one. They’ll remember this one, because it will last 15 years.”

Paul

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No, don’t get the wrong idea from the title.

Everywhere you turn these days, “capitalism” gets a bad rap.  “Free markets don’t work,” is the lesson supposedly learned from the Panic of ‘08.  “Chicago School Blues: Milton Friedman’s stronghold is under siege as economists blame free-market theories and lax market regulation for the global financial crisis,” reads the opening to an article in this month’s Bloomberg Markets.

And if Friedman’s legacy is looking rather mixed from the standpoint of conventional wisdom, I think it should be mixed likewise for those of us who still believe in “free-market theories” and “lax market regulation.”  Because the mess we’re in is, to some small degree, of Friedman’s making.

His major academic contributions lay in the realm of monetary theory.  What distinguishes the “Chicago School” from other schools is its notion that the money supply can be constantly tweaked and fine-tuned by the authorities to achieve optimal

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Fears of deflation are overblown, says Ed Bugos. He refutes the use of the ‘velocity of money’ theory as a reason why prices are ‘destined’ to fall. While a bout of deflation is possible, we know that the Fed will do what it takes to re-inflate. And the real worry should be that it will probably succeed.

This from The Daily Reckoning:

The markets got off to a bad start Wednesday following the news that some members of the Federal Open Market Committee slipped the word “deflation” into the minutes of its last meeting, in December.

Thus, the media jumped all over the deflation theme. Although there was only one mention of “deflation” in the entire 6,000-plus word release, it prompted headlines like this one from MarketWatch: “FOMC Members Discussed Mounting Risks of Deflation, Depression at Mid-December Meeting.”

The stock markets crumbled. Most commodities fell. And even though the dollar fell,

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Last week’s gold rally has fizzled out. But Ed Bugos says we could be in line for very bullish move. Outside of Japan, countries are inflating rapidly, which is extremely bearish for paper currency. And the supply and demand fundamentals of physical gold remain bullish.

More from The Daily Reckoning:

The late November rally in gold prices wasn’t quite as spectacular as mid-September’s gain, but it was still impressive. There was good follow-through too, though the momentum softened as bulls knocked on resistance near $850.

The rally was a no-brainer. There is a strong line of support at $700, which was resistance during 2006 and the first half of 2007. Moreover, the market was, and is, oversold.

The catalyst was news that the U.S. government had to bail out Citigroup (NYSE:C), the world’s largest bank by revenues. The event has given way to new concerns about the economy, which weighed on

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PKey Newsbr•nbsp;The World Bank on Tuesday cut its growth forecast for China next year to 7.5 per cent, the slowest rate of expansion since 1990, and said the impact of the global financial crisis was likely to “intensify”. (FT)br•nbsp;[UK] Prime Minister Gordon Brown swept aside three decades of economic orthodoxy with tax increases on the rich and plans that will double Britain’s national debt./P PKey Reports Due (WSJ):br7:45a.m. ICSC Chain Store Sales Index For Nov 22: Previous: +0.3%. br8:30a.m. 3Q Preliminary GDP: Previous: -0.3%. br8:30a.m. 3Q Preliminary Corporate Profits: Previous: -0.4%. br8:55a.m. Redbook Retail Sales Index For Nov 22: Previous: -1.1%. br9:00a.m. Sep SP/Case Shiller Home Price Index: Previous: -17.7%. br10:00a.m. Nov Conference Board Consumer Confidence: Expected: 38.5. Previous: 38.0 br10:00a.m. Nov Richmond Fed Mfg Survey: Previous: -26. br10:30a.m. Nov Dallas Fed Mfg Production Index: Previous: -13.7. br5:00p.m. ABC/Wash Post Consumer Conf For Nov 22: Previous: -52. brnbsp;/P PQuotable brThe government is ...

Peter Schiff, president of Euro Pacific Capital Inc. and disciple of Austrian School economics, says “a major, major crisis is coming,” thanks to the government’s attempts to ‘fix’ the economy with giant bailouts.

In fact, Schiff, a well-known dollar bear, says the result of the government bailout packages and an Obama administration will be the total destruction of the dollar.

Watch it below.

Gold bug Ed Bugos is sure of a bright future for the precious metal. He says the only real obstacle to a gold bull run is full monetary (not asset) deflation. And the way the Fed is expanding credit, this seems like an unlikely scenario. Ed says this means a boom in gold mining is just around the corner.

More from Whiskey & Gunpowder:

There are only two things gold bulls should worry about from this point forward, now that the general commodity correction is out of the way and the froth has been worked out of the market: deflation in the strict sense of the term (monetary, not asset deflation) or a suddenly brightening economic outlook, both of which, in this writer’s opinion, would require a political austerity hardly imaginable these days.

As far as deflation goes, we saw that the Federal Reserve inflated its balance sheet by an astonishing U.S.$600

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