The rats are leaving the ship!
I get a lot of things forwarded to me by clients and friends, and I, in turn do the same to them. I thank Jeff L for a story from the (London) Times of July 9th, whose headline is, "Share Selling By US Directors Reaches Record." (A lot of times, the US media ignore stories that are deleterious to their home subscribers)
When ships sink, the rats leave. They realize it is either take a chance on swimming, or surely drown. Their little pea brains tell them that. Are US executives, CEO's, and "insiders," acting like the rats, who leave when they know the jig is up? I don't write about stocks, because I have had no faith in them for several years. I write about the folly of such, the absurdity of paper "money," and saving in it, but the story may be indicative of just how far down the stock market has yet to go.
I laugh at the attempted quashing of so called "insider trading," because stopping that would be as impossible as trying to bicycle to the moon. Anyone who has any information about a corporation, known to few, be they employees, or even someone who adds two and two to get four, can be considered an "insider." I have known for a long time that platinum was being withheld by the Russians, who have a lot of it. PT (platinum) had to go down eventually, when the Ruskies needed an infusion of capital. As I write this, Platinum is $502, down from $625, and possibly headed further south, to its former level of the $450 area. I don't KNOW this, but if anyone gleaned from the news that Russia was withholding, had a huge supply, was broke, and would eventually need to sell, they could have been an "insider," couldn't they? If a new source of widgetarium is discovered, those who know about it first, will be "insiders" in the widgetarium market, and can make a lot of profit. For that matter, no matter how large or small the corporation, its stock prices can be manipulated by the management, or large shareholders. Simply by dumping large amounts of it, or buying large amounts of it, to either make the stock go down or up, and they can take advantage of their manipulation. The exact same thing is happening in precious metals, with central banks and governments doing the manipulating. The only stock buyers that are not "insiders," are the know nothings, who have no connections or knowledge, and follow the crowd, as I said previously, getting on the trolley as it nears the end of the line. The trolley must turn and return to its origin, turn around again and follow the same path over and over again. Doesn't the stock market's record over the last hundred years act like it is almost on a track, just like a trolley car?
(As an aside, in large cities, when the geniuses bussed the trolley lines, ridership always declined. The busses rode not nearly as smoothly, made more noise, and the unconscious assurance of rails made riders feel safer, knowing a driver couldn't go where he wanted, and they would have to return to where they started.)
Here are a few quotes from the London story: "Share selling by directors of US companies has reached record levels…Selling directors now exceed buyers by a ratio of five to one…directors are seeing no improvement in order books, and they are dumping their own shares even though the share prices are already low…1800 directors and insiders were sellers in the past week"
These "directors" that are unloading, even though they may have already lost a bundle, are not stupid. They are the "insiders." They know the orders aren't coming, some expenses are constant, employees have been laid off, advertising cut, (advertising revenues are way off in all media) and like rats, they had better get off the boat before it sinks. A lot of corporate "boats" have already sunk. If the reader has stocks, doesn't the above indicate that it might be a bit provident to get out before they go down even more? No, I don't know this will happen. If I knew what was going to happen tomorrow, I would be a billionaire! No one knows what will come tomorrow. Maybe the eventual huge earthquake will take out the Long Valley, near Mammoth, in California, where they have dozens of small earthquakes every week. Maybe a terrorist will smuggle in a suitcase atom bomb and blow up something. Maybe the stock market will shoot up like a rocket. Maybe, maybe, maybe, but no one knows. We just make decisions on the best information we can get.
In the 50's, an average working man, making $65 a week, could support a family, purchase a home and new car. Today? You must be kidding! We now have a lower standard of living than our parents did 50 years ago. There is no other way to look at it. If there is, please inform me of it at email@example.com. Wages have not gone up nearly as fast or far, as have prices, in funny money.
"Oh, but the dollar is sound, why it is like Atlas, who held up the world. Every world commodity is traded in dollars, and even some other nations have based their currencies in dollars. I am secure in dollars." If you believe that, you are a fool. The dollar has lost about 70%, or more, of it's purchasing power in the last 50 years.
Paper "money" can radically devalue in quick order. In America, it has occurred pretty rapidly, but the Turkish lira is now 1,500,000 to the dollar, and the Indonesian rupiah is 11,300 to the dollar, an 800% drop. Those millions and millions of thrifty Turks and Indonesians lost their you know whats, because those savings accounts that were to be used for a rainy day, or retirement, are now down the tubes. Those who hide their paper money under mattresses to avoid detection, or to avoid taxes, seem to be clever, but they aren't. If they had taken their loot and converted it into TANGIBLES, no matter what tangible, they would be better off. While I am a precious metals dealer, and love what I do, there are lots of tangibles besides gold and silver. Admittedly gold and silver are historic wealth, compact, fungible, desirable, and universally accepted, but there are still other tangibles to buy with those greenbacks.
Things one needs, and which won't spoil, might be a good way to convert some greenbacks into tangibles before you buy your gold and silver. Buy an extra fuel oil tank, if you burn fuel oil to heat. Get enough storage to last you the entire winter, and fill up in summer, when prices are low. The same with propane if you use it, or firewood if that is used at your home. Avoid anything new, because quality used furniture and cars with no blemishes are to be found everywhere, and at prices maybe half of what they would cost new. Do you have a freezer? If so, it may be economically smart to buy a half a beef, or a quarter beef, which will save you big bucks.
Unfortunately, our Constitution said that the STATES couldn't issue any money but gold and silver, and it said nothing about the fed. The House, Senate, Supreme Court, and President have years ago virtually destroyed the Constitution.
Since we seem to be ruled, not be a Constitution, but by the whims of bureaucrats, the Federal Reserve, Congress, and the nine black robed legislators in the Supreme Court, we must protect ourselves from the ravages of those bandits, and the inflation and economic hardships they have thrust upon us. We do this by being smart. Read Atlas Shrugged, PLEASE. It may be the most informative novel you have ever read. Read my book, CONSEQUENCES. I'll send it to you free by e-mail. For god's sake, stop saving in dollars or any other currency. They will all end up in a heap, because they are just like sheep. When one sheep jumps, the rest all follow, in lock step, even if there nothing to jump over. I once saw a herd of sheep end up at the bottom of a cliff, following one that had foolishly jumped. If you think dollar is like Atlas and holds up the world, what do you think gold and silver are? They have been used as true money for thousands of years; long before the dollar was a gleam in Alexander Hamilton's eyes. The age and durability of the dollar is a zero, compared to gold and silver. The manipulated prices of these metals are rotten to the core, and we all hope that GATA's suit bears fruit. It just gives us more time to get out of currencies and into other things. Above all, protect yourself!
July 25, 2001
Don Stott has been a precious metals broker since 1977, has written five books, hundreds of columns, and his web site is www.coloradogold.com
Also by Don Stott