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The Past Speaks: But is Anyone Listening? Free Market Capitalism: An Economy that Few Understand

We always look to a new year with a great deal of HOPE, but this year there is also a fair amount of trepidation. We, however, will stay with the optimistic approach and say that our overall profits in 2008, although substantial, can hopefully be repeated in 2009. Nevertheless, a realistic approach demands that we acknowledge what the main trends in the economy are and that they will, as previously forecast, likely be getting a lot worse before they can get better. Keeping in mind that each major asset class is in a trend unto itself, we must be vigilant not to let the preconceived notions of others obfuscate our thinking. No better example of what I am talking about was my insistence last year that oil and Gold are not related to each other and were poised to go their separate ways. It took courage to short oil at $140+ in the face of GS calling for $200 Oil in 2008 and $300 by 2010.. It took courage to hold onto your Gold as the stock market crumbled around us and as one Gold Bug after another lost their resolve. Those of you who kept the faith ended up in pretty good shape, even though at times it felt that we were the "last man standing."

It's a New Year now and instead of getting easier, it is going to become a lot more difficult. We will be hammered by terrible news with Growing Deficits, record unemployment, Bankruptcies, etc. reporting record poor numbers and bombarded with anti-Free Market, Bailouts and Socialist propaganda: But worst of all, a Recession that turns into a Depression. It will take even greater intestinal fortitude to withstand the urge to react and panic. Hopefully I have prepared you so that you all know by now that in order to stay ahead of the game, we must have the courage to stand alone. And stand alone you must because there is a tendency to want to shoot the messenger. The best way to help your friends is not by telling them how well you have been doing, but instead convince them to subscribe to Uncommon Common Sense. Try telling them that it uses the Ben Franklin method of stock market analysis (I don't know what that is but I would use if I knew what it was). Most of my strategies, but not all, worked wonderfully in 2008, bringing us some sizeable gains in one of the worst years for investors since the 1973-74 crash. But there is one thing that must be kept in mind above all others and that is that The Market and The Economy will at times go their separate ways. So do not be mesmerized by either the Bad News (besides by now you should realize that the news is not news at all, but is just manipulated history and cannot be relied upon to make good long term decisions) or the constant flow of Bullish Propaganda that will be coming out of Washington, the Media and Wall St. All the mega $ billion bailouts may, I repeat MAY fuel a short term rally, but it will not last, for the simple reason that they won't work as long as they continue to confuse "out of thin air" money and Capital. Increasing Socialistic Government Policies got us into this morass and only a return to FREE MARKET CAPITALISTISM will get us out. Any ensuing rallies should be used as an opportunity to build cash, payoff debt, buy GOLD and put out some shorts. Meanwhile, build your cash positions and wait for the right signals..

You have all been witness to the fact that while the chaos in the marketplace is indeed complicated, it's not beyond some degree of comprehension. Knowing that the near unanimous reaction of investors as well as the experts will be WRONG will make the situation easier for us to work with as long as we maintain our cool. You will recall that by the middle of November when all around us, people were loosing both their shirts and their heads, dumping everything that had a bid, we were busy covering our shorts, taking profits and looking for a tradable bottom. We looked to pick up the once in a lifetime bargains in the Junior Gold stocks that were being jettisoned with the baby's bathwater. When we then finally got our explosive, short covering 1500 point rally, once again we went against the Street as we took profits and warned against chasing 1000 point rallies, as all the latecomers scrambled to join the party just as it was about to end its run.

Although, in reality, you may still feel the need for the guidance of a few hand-picked experts, make sure that those experts have proven track records and demonstrated their mettle by being able to go against the grain and still reap profits in one of the most disastrous years on record. Do I catch every major trend? Not hardly. . But then we don't have to. We just need one maybe two and if we are lucky enough to find a third then we can do as well in 2009 as we did in 2008.

There are still about 50 out of some 500 that have not yet renewed their subscription. As my way of saying thanks, I am extending your time to do so until the end of January 2009.To the rest of you and to anyone else who wants to come along for the ride, I say WELCOME ABOARD and HOLD ON TIGHT, it will be bumpy but it will also be exciting and hopefully rewarding. Just like when I was a kid, I loved to play king of the mountain and stand there alone at the top of the Hill.


Every Bear Market brings out its own set of FRAUDS, both big and huge Last time around we had our ENRONs, before that we had the Savings & Loans and so on and so forth ad infinitum. BUT the prime lesson that should have been learned but hasn't is that passing laws does NOT prevent Crime. It doesn't even change the nature of the crimes; there are only slight variations in the circumstances but it is always the same old song. "This time its different, we are in a new Goldilocks paradigm." When the money flows like water, "The DEAL" becomes the objective as everyone begins to believe that there are no longer any risks or consequences.

GOVERNMENT INTERFERENCE is the real source of the problem, especially since the leadership of both parties, Wall St, Wall St. lawyers and the regulators all come from the exact same pool of Ivy League "FRAT BUDDIES." One group of FOXES make the rules and another group of FOXES, all retreads from the first group, are hired to guard the chickens. What chance do the poor chickens have?


Putting aside our emotions, the technical as well as the sentiment indicators that I follow are showing signs that a multi-month rally is about to take place, probably triggered by the euphoria surrounding the OBAMA Inauguration. CAUTION: IT WILL NOT BE THE START OF A NEW BULL MARKET. It will only be the start of the Wave C of the Super Cycle WAVE B of the MAJOR BEAR MARKET that we are still in. This Wave C rally will be similar to the 1930 suck-in rally that even caught the most famous short seller of all time, Jessi Livermore. Just make sure if you are going to attempt to play this rally that you don't get caught (trapped) and miss the Biggest Bear Market of all time. This B wave consolidation could last as long as 3 to 4 months (but maybe not) until the first quarter earnings and economic numbers come out and REALITY begins to set in. If we are not already in Depression, we soon will be. Once the next phase of the Bear Market starts, Watch Out Below! The coming phase will be either WAVE C or what could only be WAVE III, of a 5 wave Bear Market instead of only a 3 wave ABC.either of which are devastating phases. As the tax revenues dry up and the deficits explode, the FED will create and pour more and more money into what they think is the problem, but which will really be like pouring gas onto a fire.

I KNOW THAT I MUST SOUND LIKE A BROKEN RECORD, but this time could be worse than the 30's. Don't forget that during the 30's, the US was the world's largest creditor and we owned 75% of the world's Gold. MY motto is simple:




My opinions have not changed in the slightest: In fact everything that is occurring has only served to reinforce them. We are in a WAVE 2 consolidation; building the foundation for a Wave 3 of III explosion to $1250 to $1550. REMEMBER that we are in a Long Term Bull Market for Gold, which still has another 8 to 12 years to run.

Analyzing Obama's as well as Pelozi's and Reid's stimulus proposals gives me an initial proposed 2009 Budget Deficit of $2 trillion. Add that to the 2008 $1 trillion and that increases our outstanding debt to $16 trillion. Their stimulus proposals will not work and they will probably panic and toss another $2 - 4 trillion, over the next 2 years, at the problem, raising the debt in the not too distant future to $ 20 trillion or 150% + of GDP. This will crash the Dollar down into the $40 level. What do you think will happen to Gold then? Even if I am wrong and the deficit only goes up another $1trillion, the dollar will still break down below $80 and Gold will still hit the minimum target of $1250 to $1550. You can play Silver or Platinum or ? Or you can play Seniors, Juniors or some combination of all of them. They may all work, but my personal favorite is Gold and I am continually buying Gold coins (less than $3,000 at any one time) and I don't really care about what the price or premium is. They are my insurance policy and I never fool around with my insurance. As a matter of fact, I hope that my gold coins end up being the poorest of my investments: After all, who wants to collect on his own life (financial) insurance?

As you all know, I initially believed that 2009 would favor investment in oversold Junior explorers and emerging producers due to stable and rising metal prices and moderating operating expenses. Since exploration companies declined to below 2001 levels, I saw these as having the greatest upside potential, especially since we were in the period of tax loss selling. Developers may enjoy the greatest appreciation from stable or increasing precious metal prices, moderating operating and development costs, and the increased profitability of the major producers and their ability and willingness to do deals.

HAS THE TIME ARRIVED TO BUY JUNIORS? Are the factors now more favorable for junior precious metals equities? Not really. As far as I am concerned, they have all been favorable for the last 7 years. For me it has always been a matter of timing and I leave the detailed technical factors of both production to others who can do all that kind of analysis better than me, especially on an individual mine basis.


It has been my experience that the best way to make BIG Money is to buy GOLD and the best seniors who have most of their assets in the least politically sensitive areas. WHY? Because you know that Gold will always be there and sometime in the near future it will be worth more than you paid. It gives you the confidence to invest Big money, especially during times like these. If you want to leverage your positions, you can by buying the Double Golds like DGP . When it's time for a correction, you can then sell options against your positions. BUT do NOT sell your core positions or let them get called away (if you are in danger of being called away, call me.) When the options expire worthless, use the money to buy more Gold, (Subscribe to UNCOMMON COMMON SENSE and follow instructions) if you do that you will end up making more money in the long run. Even if you catch a homerun or two, due to the fact that you must by definition diversify when speculating, you will not have all that much money invested in the homeruns and too much money in total invested in losers. Why? I don't know why - it seems to be an unwritten Law of Nature or of God. If you insist on playing with Juniors, subscribe to someone like Doug Casey. He has a large organization and does a much better job than I can at research since I have not gone out into the field for 20 years now. I wish I was young and strong enough to do it, but I am not and never will be again. People like Casey and his crew do their own first hand research. By using my analysis on Gold, the economy and stock markets combined with Casey's first hand research, you should stand in good stead. If you can't afford two subscriptions, you have no business dabbling in the market. Go back to night school and improve your earning power and buy life insurance to protect your family.


We are currently in the midst of the Wave 2 consolidation phase that I was looking for in my last letter. I am seeking a probable low in the area of $ 775 to $825 in Gold and $235 - $245 in the HUI. NOTE: We are on a long term buy signal from deeply oversold levels suggesting a large multi-month Wave 3 up serge once the consolidation is complete and as the sentiment once again turns bearish.

BOTTOM LINE: The Government and the FED will continue to throw money at the on rushing Depression, but it won't work. Like the alcoholic reaching for another drink first thing in the morning, they don't know what else to do and certainly can't admit that they have been wrong all along. Especially when the Nobel prize winning Economist tells them that they should be printing and spending more than they already are. We are now in a period of Deflation to be followed by HYPERINFLATION and it will take a new Administration in 2013 to hopefully recognize that a major change in policy back to FREE MARKETS CAPITALISM is necessary to get us out of a Depression that will last 20 years if we continue on in our march towards more Government controled Socialism. In the meantime, what do you think Financial Panic combined with worldwide monetary hyperinflation will do to the price of GOLD?



Aubie Baltin has spent his career identifying major trends in the markets - and helping others to profit handsomely from them. He identifies the trends that are happening today; trends that most analysts and investors notice only after they have already been well established and the majority of the easy profits have been made. In his newsletter, "UNCOMMON COMMON SENSE", Aubie has the unique ability to uncover changes to the major trends before they even begin and then presents a goldmine of specific, actionable information that will help you profit even during the worst of times. Make Aubie work for you, by subscribing to UNCOMMON COMMON SENSE at the still low, discounted Holiday Rate.


I am EXTENDING the Holiday Special until Jan. 15 for subscribers only: A two year subscription extension is only $339. The one year subscription is still a reasonable $199 at which time prices will increase to $269.00 and $469: Don't forget to extend your subscription now before the January price increase.


Aubie Baltin CFA, CTA, CFP, PhD.
2078 Bonisle Circle
Palm Beach Gardens FL. 33418
[email protected]

Small amounts of natural gold were found in Spanish caves used by the Paleolithic Man about 40,000 B.C.
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