All things which I am about to write should be taken as one man’s opinion.  None of it should be construed as financial advice.  All economic decisions should be bathed in prayer and undertaken with wise counsel.

Long-time readers will know that I had been calling for sub $800/oz. gold, sub $10/oz. silver, sub $30/barrel oil, and a dropping equities market.

We now have $1,100/oz. gold, $17/oz. silver, $75/barrel oil, and a Dow of 10,300.

Am I ready to raise the white flag and cede that my economic theory is wrong?  Not by a long shot.  Basically, I didn’t give enough “creative” credit to the financial industry that would sell their own mother up the river.  They have been doing an absolutely masterful job of manipulating the markets so that they operate on the very edge of a substantial breakdown.  Any of you that have followed the target numbers that I post with each update can see how this has been occurring over time.

We also have a Federal government where a great majority of the elected officials show no fear of the one true God.  Their votes are cast based on their “wisdom”, instead of the wisdom of the One who created them.  The Republicans are busy supporting the bankers, while the Democrats are pushing for their “utopian” Marxist government.  Both of these groups combine to cause the servitude and enslavement of our future labor, and the future labor of our progeny.  Servitude refers to the future labor that will be required of us to pay for the current Constitutionally supported government expenditures.  Enslavement is the future labor required to pay for current government spending that is unconstitutional.

The international bankers still have the credit markets frozen solid.  Not just in the United States, but in every developed nation in the world that operates through a central bank.  Many countries are on the brink of economic collapse, such as Ireland, Greece, Japan, and Spain.  The European Union is facing a very real possibility of dissolution as countries begin to balk at bailing out other countries.

Our nation is in a deflationary spiral – that is being artificially propped up by massive Federal government spending.  The equities markets gains since last March, 2008 have been the direct result of leveraged manipulation during the “after hours” market trading.

Our government is a debt addict.

What if a drunk, homeless wino approached you on the street and offered to give you money towards the purchase of a new car, or a house?  You’d probably begin to walk faster in order to put distance between you and his putrid, reeking appearance.  You would know instantly that he didn’t have a penny to his name, and he most likely lived off what others gave to him.

Our Federal government is the wino.  They don’t have any money.  None.  Instead, they have a REALLY BIG credit limit on their “Sweat of the Taxpayer’s Brow” credit card.  They even get to raise the credit limit at their convenience.

As long as the government can continue to issue unlimited debt then this game can continue being played.  As long as American citizens continue to entertain themselves with movies, sporting events, and a host of other diversions then this game will be unstoppable.  As long as “informed” people keep wasting their energy on the “battle between the slaves” in the form of Republicans vs. Democrats, instead of focusing on the true enemies of the Federal government and the international bankers, then this game will proceed unabated.

How do you keep slaves from fighting against you?  Answer: you  train them to fight each other.

Here’s what’s about to happen, in my opinion.  The US Senate will seat Massachusetts Senator Scott Brown.  The Senate will then seek to pass a series of amendments to the Senate Health Care bill that will make it more palatable to a needed number of House Representatives.  This will be done in the Senate via a process known as “reconciliation” – meaning there will be no opportunity of a filibuster, and there will only be 50 votes needed for passage of amendments.

We will then see the US Senate bill voted on directly by the US House of Representatives, instead of calling a conference committee.  This bill will be passed and sent to Barack Obama – who will then sign it into law.

Here’s one more thing for everyone to be aware of.  There was a period of time during this economic mess when money market accounts held at brokerages were insured by the FDIC.  This is no longer the case.  In addition, the Securities and Exchange Commission (SEC) just passed rule 22e–3(a) on a 4 – 1 vote.  This rule allows money market funds the ability to suspend redemptions.  In English, this is saying that investment accounts in money market funds could be unavailable for a period of time in an economic upheaval.

Part of this ruling may be an effort for the Federal government to drive more investors towards the purchase of US Treasury securities, which the government will be needing to sell a ton of.  Now is the time for everyone to really consider what their investment options are, and what kind of liquidity you actually may have with regards to your money – instead of what you think you might have.

My opinion?  Cold, hard, physical cash – with a 10% hedge of physical gold – kept in a safe, fire-proof location, or locations.


_______________________________________________________

Watch for these indexes to drop:

Chinese Shanghai Composite Index: 2,986.61 (change of 8.58% from July 20, 2009 base value of 3,266.92)
Shenzhen Stock Exchange Component Stock Index (SSE): 12,046.78 (change of 9.97% from July 20, 2009 base value of 13,381.22)
________________________________________________________

Here are today’s numbers for the economic indicator:

1) Gold = $1,087.20
2) Silver = $16.59
3) Dollar Index = 78.73
4) Oil = $73.65
5) S&P 500 Index = 1,097.50
6) 3-month Treasury Bill yield = 0.07
7) 3-month OIS = 0.15

HEI = 31.97

(A value of under 100 indicates deflation, while over 100 indicates inflation – as referenced to Sept. 12, 2008…the day before Lehman Brothers collapsed)



__________________________________________________________

Here are the numbers for the day:

Dollar Index adjusted indexes:
Dow = (10,236.16) x (0.7873) = 8,058.93
S&P 500 = (1,097.50) x (0.7873) = 864.06
Nasdaq = (2,221.41) x (0.7873) = 1,748.92

3-month Treasury: 0.07

2-year Treasury: 0.90

10-year Treasury: 3.64

30-year Treasury: 4.56

2-yr vs. 10-yr Spread (Target > 273): 274 basis points – (Danger Zone)

2-yr vs. 30-yr Spread (Target > 369): 356 basis points – (Danger Zone)

3-month LIBOR: 0.25

3-month EURIBOR: 0.66

3-month OIS: 0.15

TED Spread: 18 basis points

LIBOR/OIS Spread: 10 basis points

Dollar Index: 78.73

Volatility Index: 23.18

JPY-EUR Exchange Rate (Target < 115): 126.2219

JPY-GBP Exchange Rate (Target < 145): 145.5237

JPY-USD Exchange Rate (Target < 90): 90.01

USD-EUR Exchange Rate (Target < 1.25): 1.4023

USD-CNY Exchange Rate (Target > 7.0): 6.8268

Warmly,

Brad

Comments or questions?  brhamill@hamill.com

If you are not currently on the Economic Update email list you can email me at: economics@datatogo.com to be added.
There is no cost or obligation.