Why You Should Avoid These Four Blue Chip Stocks

By Justin Spittler

Tech stocks are shattering records. You’ve probably noticed that Donald Trump has had a huge impact on global financial markets. Since Election Day, bonds have tanked. The U.S. dollar has spiked to a 15 year high. And U.S. stocks have broken out to record highs.

Lately, however, the “Trump Rally” has lost some steam. The S&P 500, for example, is trading almost exactly where it was four weeks ago. Technology stocks are still on a roll, though. The Nasdaq Composite Index, which tracks major U.S. tech stocks, is off to its best start in over a decade. MarketWatch reported yesterday:

The Nasdaq Composite has gained 2.76% in its first five trading days of 2017, marking the gauge’s best start to a year since 2006, when it jumped 5.14%.

Yesterday, the Nasdaq jumped another 0.4% to a new record high.

The Nasdaq is now the year’s top performing major U.S. index…
FANG stocks are a big reason why. FANG is a popular investing acronym. It stands for Facebook (FB), Amazon (AMZN), Netflix (NFLX), and Google (GOOG), which now goes by Alphabet. In 2015, FANG stocks were market darlings. Netflix was that year’s top performing stock in the S&P 500. It surged 134%. Amazon, the year’s second best performing stock, gained 118%. Google and Facebook also had great years. They gained 46% and 34%, respectively.

Last year, FANG stocks did just OK…
They climbed 7.8% on average. That’s less than the 9.5% gain by the S&P 500. Trump’s upset victory was a big reason why FANG stocks underperformed the market.

Netflix dropped 5.90% in the three weeks after Election Day…
Amazon and Facebook both dropped 4.7% over the same period. Google fell 4.1%. Like many post election moves, these caught many investors by surprise. But the pullback in FANG stocks actually makes a lot of sense.

Investor’s Business Daily wrote a week after the election:

The big techs had all fallen since the surprise election of Donald Trump as the next president. Trump has championed coal, U.S. manufacturing, a get-tough policy on immigration and other issues that don't favor Silicon Valley, a region that heavily favored his opponent, Hillary Clinton. Trump also has specifically criticized Apple and FANG company Amazon.com (AMZN).

In other words, Trump’s policies should favor other sectors more than technology companies. That’s why investors moved money outside of FANG stocks when Trump won. Investor’s Business Daily added:

"Megacap tech stocks where hedge fund clients were broadly overweight appear to have been viewed as 'safe' and are being used as a source of funds for the rotation into financials, health care and industrials, where investors were not positioned," Morgan Stanley said in a research note Monday.

Of course, the election was more than two months ago. The market has had plenty of time to adjust to the strange new world we find ourselves in.

FANG stocks are rallying again…
So far, they’ve gained 6% on average this year. That’s four times better than the 1.5% gain by the S&P 500. Strong performances by these stocks have helped lift the Nasdaq, which is weighted by market capitalization. This means big companies, like the FANG stocks, impact it more than small companies.

Many mainstream investors are now itching to get back into tech stocks…
After all, most investors like to buy stocks that are rising. It’s much harder for people to buy something that’s falling or down big. Plus, all four companies are household names. They seem like “no brainer” investments.
But you have to understand something about FANG stocks. They’re all very expensive according to popular valuation metrics.

Netflix, for instance, has a price to earnings (P/E) ratio of 350. This means investors are paying $350 for every dollar of earnings Netflix generates. That’s off the charts. The S&P 500, for comparison, currently has a P/E ratio of 26. This means Netflix’s stock is almost 13 times more expensive than your average large U.S. stock.

The other FANG stocks aren’t cheap, either…
Amazon trades at 182 times earnings. Facebook has a P/E ratio of 60. And Google has a P/E ratio of 29.
Now, we understand that these are some of the most dominant companies on the planet. Their shares deserve to trade at a premium. But that doesn’t mean you should buy them. After all, the U.S. stock market has been rising for nearly eight years. This makes the current bull market the second longest in U.S. history.

If the market changes course, expensive stocks like FANG could fall hard and fast…
Even if the market keeps rising, these stocks won’t likely generate huge gains. Again, that’s because they’re incredibly expensive. If you really want to make life-changing gains in tech stocks, you have to invest in companies before they’re household names. In other words, you want to look for the next Google or Facebook.

Chris Wood, our chief technology expert, knows how to find great tech stocks…
And, just as important, he knows when to invest in them. You see, Chris has a proprietary system that tells him when to buy stocks and when to sell them. According to Chris, the key time to buy is when a tech stock is in one of two “Sweet Spots.” If you do this right, you can make huge profits without risking much money.

Over the past year, Chris used this unique method to generate gains of 89%, 51%, 34%, and 33% for his subscribers. Most investors would kill for those kinds of returns. But Chris thinks his readers will reap even bigger gains this year. That’s because several stocks in the Extraordinary Technology portfolio are in their Sweet Spots right now. In other words, they’re sitting on the launchpad.

You can learn about Chris’ top moneymaking opportunity for 2017 by watching this new presentation. As you’ll see, he’s hoping to cash in big on a promising technology that could eventually put the global oil industry out of business. Investors who ignore this technology will likely suffer huge loses. But, if you act soon, you could easily make 100% or more over the next two or three years.

To see why, watch this FREE video.

The article Why You Should Avoid These Four Blue-Chip Stocks was originally published at caseyresearch.com.

Mike Seery's Weekly Futures Recap - Crude Oil, Gold, Dollar, Coffee and Sugar

It's been a crazy end to the week of January 9th through January 13th with the recent wild ride up we had in crude oil going through a calming period you might say it is time for a heads up from our trading partner Michael Seery. We've asked him to give our readers a recap of the this weeks futures markets and give us some insight on where he sees these markets headed. Mike has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.

Crude oil futures in the March contract settled last Friday at 54.87 a barrel while currently trading at 53.24 down about $1.50 for the trading week as I'm sitting on the sidelines looking at a possible short position as prices are right near a 4 week low. The chart structure will start to improve later next week therefore lowering monetary risk as we enter the long holiday Martin Luther King weekend as trading does not continue until Tuesday as prices are now trading below their 20 day but still above their 100 day moving average telling you that the short term trend is mixed so avoid this commodity at present. Oil prices have rallied significantly over the last several months due to the fact that OPEC has cut production and are certainly trying to prop up prices. However I'm a technical trader, and when the risk/reward becomes in your favor I will take that trade, but at this point in time, your going to have to wait until next week before pulling the trigger. Major support is around Tuesday's low of 51.59 as that would also be the 4 week low as that would be the entry point so keep a close eye on this market as the trends are starting to come back in many commodity sectors.
Trend: Mixed
Chart Structure: Improving

Gold futures in the April contract settled last Friday in New York at 1,176 an ounce while currently trading at 1,196 up $20 for the trading week continuing its bullish momentum right at a 7 week high. I have been sitting on the sidelines in this market looking at entering into a bullish position as I do think the precious metal sector has bottomed, however, the chart structure needs to improve as the 10 day low stands at 1,149 which is too far away, in my opinion, risking too much money so be patient as we could be in a bullish position in several of the precious metals later next week. Gold prices are still trading above their 20 day but below their 100 day moving average telling you that the shorter term trend is mixed as the U.S dollar is also near a 4 week low as gold prices have been hit over the last year as all the interest remains in the S&P 500 which is right near another all time high. Trading is all about risk/reward & its not in your favor at the present time, but could be later next week or on a significant price decline as I'm looking at buying this market around the 1,180 level which could happen on any given day so be nimble and quick as trading does not resume until Tuesday afternoon because of the holiday weekend in the United States.
Trend: Higher
Chart Structure: Poor - Improving

The U.S dollar in the March contract is trading lower for the 2nd consecutive session at 101.20 hitting a 4 week low as prices may have topped out on January 3rd at 103.81 as I'm looking at entering into a possible short position, however the monetary risk is too high at the present time as the 10 day high stands at 103.81 risking around $2,600 per contract plus slippage and commission which is too high for this commodity which generally is a lower volatility market. The U.S dollar is trading below its 20 day but still above its 100 day moving average which stands at 99.52 as the rally in the bond market has stalled out as the yield on the 10 year note is around 2.39% as we wait for the Trump administration to take place next week as that certainly will add some clarity to a lot of situations as volatility certainly will increase in my opinion. The chart structure will improve next week so keep a close eye on this market & look to sell on some type of relief rally. Trend: Lower - Mixed
Chart Structure: Poor

Coffee futures in the March contract settled last Friday in New York at 144.20 a pound while currently trading at 148.75 hitting a 6 week high as I'm currently sitting on the sidelines waiting for the chart structure to improve therefore lowering monetary risk as I am bullish coffee as I do think prices are headed higher. Dry weather conditions in the country of Brazil is starting to concern investors pushing up prices here over the last several weeks coupled with the fact of very strong demand despite estimates of nearly 55 billion bags being produced, however the tide has turned in the coffee market, so you want to play this to the upside in my opinion. Coffee prices are trading above their 20 & 100 day moving averages telling you that the trend is higher as the commodity markets, in general, are starting to perk up in early 2017 as I do think the giant bearish trends are over with. The chart structure is terrible at present as the 10 day low is way too far away so I will have to be patient as 3/5 days have to come off the calendar therefore improving monetary risk, but I'm certainly not recommending any type of short position.
Trend: Higher
Chart Structure: Poor

Sugar futures in the March contract settled last Friday in New York at 20.75 a pound while currently trading at 20.82 in a relatively nonvolatile trading week still digesting the sharp rally that we experienced over the last 4 weeks. Sugar prices are trading above their 20 and 100 day moving average telling you that the short term trend is higher as I'm currently sitting on the sidelines, but could be involved in a bullish position next week as the chart structure will turn outstanding therefore lowering monetary risk which then meets my criteria. The commodity markets, in general, look bullish almost across the board as dry weather conditions in Brazil are pushing prices up in coffee and sugar in recent weeks coupled with the fact that the U.S dollar has also hit a 4 week low helping support prices. I trade the sugar market quite often actually & had a short position last month before getting stopped out right around Christmas as this commodity is very trendy and now the trend, in my opinion, is to the upside.
Trend: Higher
Chart Structure: Excellent

Get additional commodity calls from Mike Seery on Cocoa, Soybean, Corn and more....Just Click Here

Why Gold Could Soar Another 353%

By Justin Spittler

Gold is on the rise again. It’s climbed for two straight weeks, and it’s now up nearly 5% since December 15. Many precious metals investors couldn’t be happier about this. You see, gold stormed out of the gate last year. It had its strongest first quarter since 1986. By the end of June, it had risen 25%. Things were looking up. Then, the market changed course. Gold plunged 18% in just four months. Last month, it hit its lowest level since last February.

• The sharp pullback spooked precious metals investors….
But regular Dispatch readers knew that gold would rebound. After such an explosive start to 2016, it was only natural for gold to “take a breather.” We urged you to not lose sight of the big picture. As we often remind you, gold’s a safe-haven asset. Investors buy it when they’re worried about the economy, financial system, or politics. And right now, investors have plenty of reasons to be worried, even if some are still enjoying the “Trump Honeymoon” phase.

• Louis James thinks gold will keep rising….
Louis is our chief resource expert. He is the editor of International Speculator and Casey Resource Investor, our advisories dedicated to resource stocks with big upside. According to Louis, gold has struggled recently because investors expect interest rates to rise. They have good reason to think this, too. After all, the Federal Reserve just raised its key interest rate… but for only the second time since 2006. It also said that it plans to lift rates three more times this year. Conventional wisdom tells us that this is bad for gold. Since gold doesn’t pay interest like a bond, most investors don’t want to own it when rates are rising or are likely to rise.

• According to Louis, the market has already “priced in” higher interest rates….
This means gold shouldn’t fall if the Fed sticks to its plan and raises rates three more times this year. Of course, that’s a big “if.” Heading into last year, the Fed said it wanted to raise rates four times. But it only raised rates once last year, and it waited until the eleventh hour to pull the trigger. We wouldn’t be surprised if the Fed sits on its hands again. If that happens, investors will know something is very wrong with the economy. Many folks will start buying gold hand over fist.

• But that’s not the only reason Louis is bullish on gold.…
Last week, he gave his subscribers several reasons why gold should keep rising:

➢ Rumors of new gold curbs in India have not panned out.
➢ Fear of the fall of New Rome [the EU] is driving Europeans into [U.S.] dollars and gold.
➢ The escalation of the “other” Cold War with China increases uncertainty in global markets.
➢ Even Trump’s best ideas (cuts in taxes and regulations) will cause disruptions that will have to work through the economy before things can improve.

• Gold is incredibly cheap, too.…
Louis explains:

Gold needs to rise another US$900 or so to hit a new inflation-adjusted high. Given the trillions and trillions of new dollars, euros, yen, yuan, and so forth printed over the last 45 years, it should do much more than that.

Right now, gold is trading for about $1,180. In other words, it would have to climb about 75% to reach its previous inflation-adjusted high.
But Louis thinks gold could race well past that in the coming years:

Many analysts see the current market as analogous to the great gold bull of the 1970s, only bigger and longer. Adjusted for inflation, gold rose about 353% from its mid-1970s trough to its 1980 peak. If that pattern repeats itself, gold would have to rise from its December 2015 low to just above US$5,200 per ounce by October 2022.

If gold does anything close to what it did during the ’70s, precious metals investors could see explosive gains in the very near future. Just take a look at the chart below.

• Louis is so convinced that gold’s headed higher, he just made a giant bet on it…

He wrote last week:

I’m so sure, I put my money where my mouth is last week. As advised last month, I entered the market during the peak of Tax Loss Season. I’m not allowed to buy the same stocks I recommend (to avoid possible conflicts of interest), so I bought ETFs instead. In fact, I put about twice as much of my own cash into these proxies for gold stocks than I ever put into gold stocks before.

Louis also plans to buy more gold at the first chance he gets:

I think that 2016 was an overture for what’s ahead. I intend to profit from it. And I’m not worried about any fluctuations in the near term. If prices drop, I’ll hope to buy more. If prices rise, it’s off to the races.

• You, too, can make huge profits from rising gold prices.…
The key is to buy gold mining stocks. Gold miners are leveraged to the price of gold. This means gold doesn’t have to rise much for them to take off. During the 2000–2003 gold bull market, the average gold stock gained 602%. The best ones soared 1,000% or more. Of course, not every gold company is a winner. In fact, many gold stocks are total duds. That’s because gold mining is an incredibly difficult business. To protect your capital and make monster gains, you have to own the right gold stocks. Unfortunately, most folks have no clue what to look for in a gold stock.

That’s where we can help.…

You see, Louis is a true industry insider. He’s visited mining projects all around the world. He’s on a first name basis with many of the world’s top mining CEOs. And he understands the geology inside and out. Louis also has a proprietary system for finding the best gold stocks. Casey Research founder Doug Casey actually taught Louis this system… after he spent decades perfecting it.

You can learn more about Louis’ system by clicking here. As you’ll see, it’s delivered giant gains over and over again. Just don’t wait too long. Gold probably won’t stay cheap for much longer… meaning you’ll want to take action soon to have a shot at truly life changing gains. Click here to learn more.

Chart of the Day

Gold stocks are dirt cheap, too.

Today’s chart compares the NYSE Arca Gold BUGS Index (HUI), which tracks large gold stocks, with the price of gold. The lower the ratio, the cheaper gold stocks are relative to gold. According to this ratio, gold stocks are cheaper today than they ever were during the dot com bubble. They’re also cheaper than they ever were during the last housing bubble.

Keep in mind, stocks were trading near record highs during these periods. Most investors were extremely bullish. They owned too many mainstream stocks and not enough gold stocks. Right now, this key ratio is lower than it was during either period. This tells us that today could be one of the best times to buy gold stocks since the turn of the century.

If you would like to add gold stocks to your portfolio, we encourage you to sign up for International Speculator. As we said earlier, this is our publication dedicated to gold stocks with the most upside. 

Click here to begin your risk-free trial.

The article Why Gold Could Soar Another 353% was originally published at caseyresearch.com.

Five Easy Ways to Make Your Finances Less Fragile

By Justin Spittler

A few days ago, we sat down with E.B. Tucker, editor of The Casey Report, to talk shop. The conversation was so good, we just had to share it with you. In the following interview, E.B. talks about how he manages his own money. As you’ll see, he has a unique, yet intuitive approach to investing, especially when it comes to asset allocation. We hope you find this conversation as useful as we did. Also, make sure you read until the end to learn about one of E.B.’s top speculations.

---

Justin Spittler: I want to talk investment strategy. Could you tell us how you manage your own money?

E.B. Tucker: I like to break up my investments into buckets. I have about five of them. I have one for gold, one for permanent life insurance, one for real estate, and two for stocks. I don’t limit myself to a certain number of buckets. But I’ve had very good results looking at asset allocation this way.

J.S.: Can you tell us a little more about your “buckets”? Why do you break them up this way? What kind of assets go into each?

E.B.: First of all, the buckets change with life and market conditions. For example, I put most of my capital into a real estate bucket in 2009–2010. As you know, the U.S. housing market had just crashed. If you had the capital, you could buy some houses for next to nothing. And that’s exactly what I did.…

During that period, I bought six single-family homes. I bought one of them for just $10 per square foot. I spent another $10 per square foot fixing the place up, so I put about $20 per square foot all in. The guy before me paid $160 per square foot and ended up in foreclosure. He bought near the peak of the housing bubble. My timing was much better. Today, I’m not adding to my real estate bucket. There just aren’t that many great deals out there. This is key to how I invest. Rather than fight the market, I let it determine how I allocate my money.

J.S.: Can you tell us about some of your other buckets?

E.B.: Well, I have a bucket for gold. But I don’t view gold as an investment designed to make money. I see it as a key long term asset. When gold is cheap, I pour money into this asset. I don’t think about this bucket often. I just get the gold, vault it, and move on.

I also have a permanent life insurance bucket. This bucket is important because I have a few people that depend on me. If I die, they’re out of luck. So, I need to have life insurance. Specifically, I own a couple dividend-paying life insurance policies. A lot of people consider these terrible investments, but that’s because they don’t understand them.

You see, any extra money that I put in this bucket on top of the minimum annual premium grows 6% to 7% per year, tax free. If I don’t use the policy, over time I’ll have a fairly large amount of cash in that bucket that I spend, borrow from, or use to buy more life insurance. And, of course, if the worst does happen, my dependents receive a large death benefit. This money will help them get by in my absence.

J.S.: Interesting, it sounds like this bucket protects you and gives you flexibility.

E.B.: Exactly. The reason I invest this way is because it makes me less “fragile." Now, I still have plenty of exposure to rising asset prices in other buckets. But, if you’re smart about when and how much you add to each bucket, your “boring” buckets will eventually balance out your more speculative buckets. The result is a more stable financial situation without giving up the quest for profits. I like investing this way because I no longer worry about trying to maximize my profit on every trade or every time the market changes course.

J.S.: Let’s talk about your stock buckets next. I’m sure our readers would love to know what’s in your portfolio. 

E.B.: Sure. As I said earlier, I have two of them. One is for stocks I plan to hold for the long haul. I don’t trade these stocks often. I’m only a seller if something happens that changes the business landscape for one of the companies. I typically own between six and eight of these companies at any given time. One of my favorite long term holdings is a company that make crackers you buy at the gas station and pretzels that go well with beer. Last year, the company acquired a business that sells almonds and other nuts. It’s a great company. And it now pays me a decent yield of 3%, since I’ve owned the stock for a few years.

J.S.: What are some of your other long term stock holdings?

E.B.: I also have shares of one of the country’s best regional banks. And I own shares of one of America’s most iconic companies. This company is basically a drug dealer, peddling sugar and caffeine from small rented stores. You get the picture. Now, these aren’t the most exciting investments in the world but, over time, you see the value of owning rock solid American businesses.

You end up with companies that slowly capture market share from their competitors, invest money back into their businesses, and pay dividends. I don’t see how you can get hurt having this bucket represent 20% of your net worth. It’s also worth mentioning that I like to own these stocks in company sponsored dividend reinvestment plans.

Since these are long-term investments, I don’t want to log into a brokerage account and see them next to my trading positions every day. Holding them directly on the company’s books means all my dividends get reinvested into additional shares, usually at no cost. The final benefit is I don’t have to worry about my broker going bust. Holding shares directly registered with a company means there’s nobody standing between you and your investment.

J.S.: That leaves us with your speculation bucket. Can you tell us a little bit about this one?

E.B.: Ah, my favorite. I’ve done fairly well speculating. The key here is separating good speculations from bad ones. As a professional investor, a lot of opportunities come across my desk. Most of them aren’t worth my time. You have to pass on a lot of bad speculations before you find a great one.

J.S.: Can you tell us about one of your better speculations?

E.B.: At a lunch meeting with my banker in 2009, he told me about a company in town that invented a hurricane simulation machine. They placed a few in malls, shopping centers, arcades, and museums and charged $2 per customer. The test machines took in $4,000 to $5,000 per month. The company built each machine for around $12,000. The company had trouble getting a bank to lend it money. It was right after the financial crisis, after all.

I met with the company, saw the machine, and looked at their business plan. A few other investors and I funded the company. We bought preferred shares that paid a 20% dividend. We also received a portion of the company’s profits for the first two years, which boosted our initial returns. Seven and a half years later, I’m still collecting monthly checks from the company. I’ve more than doubled my money, and I could sell the shares anytime I want.

J.S.: Have you done any other speculations like this recently?

E.B.: Yes. Before I got into this business, I ran a gold fund for a few years. My former business partner from that fund just took his gold streaming and royalty company public. Our company policy does not allow me to share the name of the stock, since I own shares. I’m involved in that deal to the tune of about 1% of the company. I think there’s a realistic shot that I’ll make 5–10 times my money.

J.S.: Most people would kill to make that much on a single investment. Why are you so optimistic?

E.B.: I think it’s a good time to speculate on small gold and silver stocks. I especially like royalty and streaming companies like this one. They avoid the tremendous financial burdens that mining companies face.
I also look for companies that have a winning strategy but that are overlooked by the market. If these companies execute, my odds of success go up.

But you need to have cash on hand, or what some people call dry powder, to take advantage of these opportunities. That’s because great deals usually require quick action. When one of my speculations is a winner, I’ll take profits and put them into other buckets, depending on what looks good at the time. I almost never leave the entire profit in the bucket it came from.

J.S.: Got it. So, do you like to keep a certain percentage in each bucket at any given time? What rules, if any, do you follow?

E.B.: I don’t really follow a set of rules when it comes to asset allocation. That makes it hard to take advantage of huge opportunities when they appear. For example, I wouldn’t have invested in the Florida rental real estate market in 2009 and 2010 if I stuck to strict rules. When in doubt, you can divide new money equally between buckets. You can also sit on cash and wait for buying opportunities to present themselves.

J.S.: What kind of investments do you focus on in The Casey Report?

E.B.: That’s your most valuable question so far. In The Casey Report, we fill the long-term stock and speculative stock buckets. We try to predict what the investing world will be like one to two years down the road. We then buy stocks that will benefit most as the world changes. In stock investing, that’s the sweet spot where you find the most value in the shortest period of time.

Our goal is to beat the S&P 500 every year. We want our readers to have enough success to irritate their wealth manager. Hopefully, they can use that success and the lessons learned in The Casey Report to beat the market in their asset buckets.

J.S.: Thank you for your time, E.B.

E.B.: You’re welcome.

---

In August, E.B. told his readers to buy a small North American mining company. At the time, few investors knew about the company. Its stock traded for less than $1. But E.B. said the stock wouldn’t fly under the radar for much longer…and he was exactly right.

In just four months, this stock has soared 115%. Normally, we wouldn’t encourage you to buy a stock after an explosive run like this. But E.B. recently went on record and said, “the stock doubled, it will double again.” To see why, watch this brand-new presentation. It talks about an event that E.B. says will take place exactly one month from today. If the event goes as expected, this stock should skyrocket again.

You can learn more about this event, including how to take advantage of it, by watching this FREE video.

The article Five Easy Ways to Make Your Finances Less Fragile was originally published at caseyresearch.com.

How to Use the New Market Manipulation to Your Advantage

It's time for another one of Don Kaufman's wildly popular webinars. Don’t miss this live online seminar, How to Use the New Market Manipulation to Your Advantage, with Don Kaufman this Tuesday December 6th. at 8:00 PM New York, 7:00 PM Central or 5:00 PM Pacific.

During this free webinar you will learn:

• How scarcely used recent additions in market structure have forever changed how we view price movement and volatility.
• What weekly strategy you can use to take minimal risk and produce astonishing returns surrounding predictable or manipulated movements in any stock, ETF, or index.
• The one product that has become statistically significant in determining the next market move so whether you're a long term investor, swing trader, or intra-day trader you can get tuned into what's driving today's marketplace.
• How you can use market efficiency to your advantage in all aspects of your investments, retirement accounts, stock and options trading accounts, futures trading and more.
• How you can trade up to several times per week without having to continually monitor your positions, "set it and forget it" with this low risk high reward trade.

      Don's Webinars have an attendance limit that we always hit. This one will be no exception.

      Visit Here to Register Now!

      See you Tuesday night!
      Ray C. Parrish
      aka the Crude Oil Trader

Mike Seery's Weekly Futures Recap - Crude Oil, Natural Gas, Gold, Silver, Coffee and Sugar

It's been a crazy end to the week of November 28th through December 2nd with the wild ride up we had in crude oil and that means it is time for a heads up from our trading partner Michael Seery. We've asked him to give our readers a recap of the this weeks futures markets and give us some insight on where he sees these markets headed. Mike has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.

Crude oil futures in the January contract settled last Friday in New York at 46.06 a barrel while currently trading at 50.55 up about $4.50 for the trading week all due to the fact of OPEC cutting 4.5% of production sending prices in Wednesdays and Thursdays trade sharply higher now hitting a 5 week high. Prices bottomed out around November 14th at 42.74 & now has rallied about $8 as this market remains extremely choppy and has gone nowhere over the last 6 months as I am currently sitting on the sidelines as the chart structure is poor therefore the monetary risk is too high to enter in my opinion. The energy sector has caught fire including natural gas as winter is now upon us which is the high demand for heating oil as well, however I still think this market remains choppy for the rest of 2016 as a strong U.S dollar could limit prices to the upside in my opinion so look at other markets that are beginning to trend with less risk. Crude oil is now trading above its 20 and 100 day moving average with major resistance around the $52 level which was hit in the month of October on a couple of different occasions and if that level is broken you have to think that the bullish trend would continue, but at present I'm recommending no position. 
Trend: Higher 
Chart Structure: Poor

Natural gas futures in the January contract settled last Friday in New York at 3.20 while currently trading at 3.46 up significantly for the trading week hitting a 5 week high. At the current time, I'm sitting on the sidelines as I wrote about this market 2 weeks ago as I was looking to get into a bullish position. However, the chart structure did not meet my criteria as the monetary risk was too high at the time. Natural gas prices are trading above their 20 and 100 day moving average telling you that the short term trend is higher as prices look to retest the contract high which was hit on October 18th at 3.67 as we enter the extremely volatile winter season which can cause tremendous price spikes due to very cold weather in the Midwestern part of the United States. Natural gas has been on a wild roller coaster bottoming out on November 9th at 2.72 as I'm looking for a consolidation before entering as the entire energy sector has caught fire over the last several weeks. There is a price gap between 3.22/3.25 and that makes me nervous if you have a bullish position as I do think that gap will be closed within the next week so let's keep a close eye on that price level. 
Trend: Higher 
Chart Structure: Poor

Gold futures in the February contract settled last Friday in New York at 1,181 an ounce while now trading at 1,175 hitting a fresh 8 month low as prices continue to move southward on a weekly basis as I am kicking myself as I am not short, however, I have not been picking a bottom either. At present, I'm telling investors to avoid this market, but certainly, do not be buying this commodity as I do believe lower prices are ahead as I'm still very bullish the U.S dollar and the stock market as a whole since both of those are negative towards gold prices. The 10 year note today broke 2.40% which is the highest yield since January and I do believe interest rates are going higher which is not another negative influence towards gold prices. Gold futures continue to move lower despite the fact that crude oil is about $6 in the last 2 trading sessions which generally is very bullish most inflationary commodities, however, that shows you how weak gold is at present as demand is lacking. 
Trend: Lower 
Chart Structure: Poor

Silver futures in the March contract settled last Friday in New York at 16.55 an ounce while currently trading at 16.53 basically unchanged with the week trading in a very nonvolatile manner as prices are stuck in a two week consolidation after hitting a 5 month low. Silver prices are trading below their 20 and 100 day moving average telling you that the short term trend is lower as I'm currently sitting on the sidelines waiting for another trend to occur which could develop in the next couple of weeks as the chart structure is improving on a daily basis, therefore, lowering monetary risk. Gold prices have been falling rather dramatically ever since the Trump election as that has put severe pressure on silver prices ,however if we are going to expand the economy & do huge infrastructure stimulus I would think that silver prices look cheap as copper prices are still right near recent highs and sharply higher from their 2016 lows. Trading is all about risk/reward and at present I just don't see a trade in this commodity as trading to trade is a very dangerous over the course of time as you must be patient and wait for probabilities to improve in your favor. 
Trend: Lower - Mixed 
Chart Structure: Improving

Coffee futures in the March contract settled last Friday in New York at 155.0 a pound while currently trading at 145.60 down about 900 points from trading week with prices not seen since mid August as prices topped out last month around the 1.80 level, but at the current time I'm sitting on the sidelines as the chart structure has been poor in this market for months. Coffee prices are trading below their 20 and 100 day moving average for the 1st time in months & that tells you that the short term trend is lower with the next major level of support around the 140 level as I do believe coffee prices are getting cheap. A strong U.S dollar is certainly keeping a lid on many agricultural products including coffee, but my only short position in the soft commodities is a short sugar position which also continues to move lower. However, the volatility will be to the upside in coffee as were starting to enter the very volatile and critical winter growing season in the country of Brazil. Many of the commodity markets have been very choppy over the last several months, and that's why I only have 1 trade recommendation as I'm waiting for better chart structure to develop across many different sectors as that might take some time. 
Trend: Lower 
Chart Structure: Poor

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Two Days with Real and Wannabee Elite

By Doug Casey

Recently I made a few comments about the world’s self-identified “elite”, and also about the migrants that are plaguing Europe. Happily, I was able to do some one stop shopping on both of these topics when I was in New York to attend a very elitist and Globalist conference. I’m not going to name it because its organizers/sponsors are business partners of mine. 

And since they spent multi millions putting it together, and I pretty much despised their invitees, I’m not about to identify it exactly. Just let me say that the conclave has aspirations to become another Council on Foreign Relations, Bilderberg, Bohemian Grove, Atlantic Council, or Davos. Same kind of people, same ideas. Uniformly bad ideas. But ideas that the public has been brainwashed into thinking are good.

A lot of people are afraid these groups control the world, or at least governments. They don’t. They’re social gatherings for high level government employees and NGO types who like to network, and feel relevant. And lots of their minions, who enjoy the rich food, pretending they’re big shots too, while listening to pontifications by actual big shots. They hope they can cozy up to them, close enough to ride a richer gravy train.

The avowed purpose of this conclave was to “build the public private partnership”—the exact definition of fascism. So there were also lots of big league corporate types who want to “make a difference”, and rich guys who want to be known for something besides having money.

Warren Buffett

The program opened with Warren Buffett’s talk about how he didn’t need $50 billion, didn’t believe anybody else did either, and why he was a “philanthropist” who would give it all away. The avuncular Buffett is an investment genius; I enjoyed and agreed with everything he said on investing. But, like his friend Bill Gates, he’s also an autistic idiot savant. That’s someone who is a genius at one thing, and a fool at most everything else.

Most people assume that if you know about investing, you must also know about economics, which is a related discipline. But that’s completely untrue. It’s analogous to thinking that someone who knows how to drive a car also knows how one works. Economics is the study of how men go about producing and consuming; investing is the practice of allocating capital for maximum returns. Buffett’s grasp of economics is shallow, conventional, and unrelated to his success as an investor.

Furthermore, if Buffett was really a philanthropist he wouldn’t dissipate his $50 billion on poor people in Third World countries (which is where I suspect most of what’s left after administrative expenses will go). That will assuage some liberal guilt, but will vanish without a trace like water poured into the Sahara.
And actually just make the root problem worse in many ways. If he really wants to help his fellow man, he would continue compounding capital at 20%, forever. Capital makes the world wealthy; consuming or frittering away capital makes the world poor. But enough on Buffett. He only exasperated me for about 40 minutes out of two full days.

George Soros

Much worse was George Soros. He spent his time not just passively endorsing (like Buffett), but actively promoting disastrous policies. In essence, these were his major points. 

1) Brexit should be overturned, regardless of the vote. 
2) The EU should spend at least $200 billion a year (in addition to what individual countries spend) both to make migrants welcome, and to install a Marshall Plan for Africa. 
3) All of Europe should import migrants at least proportionally to the 1mm entering Germany. He recognized that the migrants represent an “existential crisis” for Europe, but believes the solution is to accommodate them. 
4) The EU should actively arm against Russia. 
5) The EU in Brussels should be granted the right to tax.

As I listened to him I felt I’d been transported to Bizzarro World, or perhaps some magic land from Gulliver’s Travels, where everything is upside down, wrong is right, and black is white. Just as much of Soros’ presentation was on migration, so was much of the rest of the conference. It’s very much on the minds of the “elite”.

His new Marshall Plan would consist of Europe and the US sending trillions to African governments to develop the Continent. Strange, really. Africa has received about a trillion of foreign aid over the last 50 years; that capital has either been wasted on uneconomic boondoggles, or shipped off to the bank accounts of the ruling class. Soros is far from naïve; he’s got to know this. 

I wonder what he actually hopes to accomplish, and why? After all, he’s 84 years old, and doesn’t need any more money. Well, it’s hard to be sure how some people’s minds are wired. And, as The Phantom once asked, “Who knows what evil lurks in the hearts of men?”

Incidentally—completely contrary to conventional wisdom—I consider the much lauded Marshall Plan to have been an unnecessary and destructive boondoggle. But this isn’t the moment to explain why that’s true.
As I said above, the Summit was centered on migration. I’ve recently commented on the subject, and will reiterate a few points below before returning to the views of the Globalists and self-identified Elite.

A Word on Migration

Let me start by saying I’m all for immigration and completely open borders to enable opportunity seekers from anyplace to move anyplace else. With two big, critically important, caveats..... 

1) there can be no welfare or free government services, so everyone has to pay his own way, and no freeloaders are attracted 
2) all property is privately owned, to minimize the possibility of squatter camps full of beggars.

In the absence of welfare benefits, immigrants are usually the best of people because you get mobile, aggressive, and opportunity seeking people that want to leave stagnant and repressive cultures for vibrant and liberal ones. That was the case with the millions of immigrants who came to the US in the late 19th and early 20th centuries. And they had zero in the way of state support.

But what is going on in Europe today is entirely different. The migrants coming to Europe aren’t being attracted by opportunity in the new land so much as the welfare benefits and the soft life. Western Europe is a massive welfare state that providing free food, housing, medical care, schooling, and living expenses to all comers. Benefits like these will naturally draw in poor people from poor countries. For the most part they’ll be unskilled, poorly educated, and many will have a bad attitude. The question arises why—since they’re almost all Muslims—they aren’t being welcomed by Saudi Arabia, the UAE, Qatar, or Brunei, which are wealthy Muslim countries.

What we’re talking about here is the migration of millions of people of different language, different race, different religion, different culture, and different mode of living. If you’re an alien and you’re 1 out of 10,000, or 1000, or even 100, you’re a curiosity, an interesting outsider. And you’d have to integrate in the new society. But an influx of millions of migrants can only destroy the old culture. And guarantee antagonism—especially when the locals are forced to pay for it. In many ways, what’s happening now isn’t just comparable to what happened 2,000 years ago with the migration of the Germanic barbarians into the Roman Empire. It’s potentially much more serious.

Although most of the migration will be out of Africa, it’s supposed to be official Chinese policy to migrate about 300 million Chinese into Africa in the years to come. They’re employed in building roads, mines, railroads and other infrastructure. The Africans like the goodies, but don’t like the Chinese. It has the makings of a race war a generation or so in the future. 

The problem won’t only be tens or hundreds of millions of Africans migrating to Europe, but tens or hundreds of millions of Chinese migrating to Africa. The EU is a huge aggravating factor with the migrant situation. Brussels is full of globalists and doctrinaire socialists who not only promote bad policies, but make the whole continent pay for the mistakes of its most misguided members.

The migrants, who are manifestly unwelcome in Hungary, Poland, and other Eastern European countries, will prove another big impetus for the breakup of the EU. Millions of Africans will want to emigrate, especially to the homelands of their ex-colonial masters in Europe. The colonizers are now themselves being colonized. Fair enough, I suppose; a case of the sins of the father truly devolving upon the sons.

If I was an African from south of the Sahara, I’d absolutely try to get to Italy or Greece or France or Spain or on my way to Northern Europe to cash in on the largesse of these stupid Europeans. I’m a fan of what’s left of Western Civilization. I hate to see it washed away. But that’s what will happen if the floodgate is opened.

Unless the Europeans get in front of this situation, it’s not just some refugees from the Near East they’ll have to deal with. Especially with the economic chaos of The Greater Depression, it’s going to be many millions from Africa, and then perhaps millions more from Central Asia, and even India and Bangladesh. The world is becoming a very small place. What happens when scores of thousands of migrants set up a squatter camp someplace—with no food, shelter, or sanitary facilities? What will happen when there are scores or hundreds of squatter camps? Unlike the Goths and the Vandals, who became the new aristocracy, the chances of the Africans integrating is essentially zero. 

The situation is likely to be most stressful…..

Some will say “But you have to be charitable, you can’t just let them starve because they’ve had some bad luck”. To that I’d say an individual, or a family, can have some bad luck. But the places these people come from have had “bad luck” for centuries. Their bad luck is the consequence of their political, economic, and social systems. Their cultures—let me note the elephant in the room—are backward, degraded, and unproductive. It makes no sense, it’s idiotic, to import—at huge expense—masses of people that have a culture of “bad luck”.

On just one day recently, the Italian Coast Guard rescued 10,000 Africans off the Libyan coast—almost all men from Guinea, Gambia, Nigeria, and neighboring countries—and transported them to Italy. It’s hard to see them ever going back home. But it’s certain they’ll encourage they’re friends and families to join them.
The situation can only get worse. Why? In 1950, the 250 million Africans were only 9% of the world’s population; it’s 27% now, but there will be 4 billion, for 40%, in 2100. 

Making that observation is highly politically incorrect, and presumably racist. I’ll have more to say on racism in the future. But the fact is that Africa has always been an economic basket case; if Vasco Da Gama had thrown out a wheel when he was rounding the Cape, he would also have had to throw out an instruction book on how to use it. But nobody could have read it.

Be that as it may. But Europeans made things worse when they conquered the continent and divided it up into political entities that made zero sense from a cultural, linguistic, religious or tribal viewpoint. That guaranteed chaos for the indefinite future. That’s why it’s always a mad scramble to get control of the government in these countries, in order to loot the treasury, entrench ones cronies, and punish ones enemies. Until there’s a bloody revolution, and the shoe goes on another foot.

Here’s the takeaway. The population of Africa is going up by several billion people in the years to come. The net wealth of the continent is going nowhere. The locals will want to move wholesale to Europe, where the living is easy. And where the politically correct Cultural Marxists are anxious to destroy their own civilization.
Meanwhile, there are hundreds of think tanks in the U.S. alone, most located within the Washington Beltway who believe that these people should be encouraged to migrate, or imported en masse. They’re populated by partisan academics, ex-politicos, retired generals and others circulating through the revolving doors of the military/industrial/political/academic complex.

They’re really just propaganda outlets, funded by foundations, and donors who want to give an intellectual patina to their views and, to use a popular phrase, “make a difference”.

Think tanks, and their cousins, the lobbyists and the NGOs, are mostly what I like to call Running Dogs, who act as a support system for the Top Dogs in the Deep State. Their product is “policy recommendations,” which influence how much tax you have to pay and how many new regulations you have to obey. Think tanks are populated almost exclusively by people who are, simultaneously, both “useful idiots” and “useless mouths.” They’re no friends of the common man.

The migration policies they’re promoting are creating minor chaos now. With world-class chaos in the wings.
Let me repeat, and re-emphasize, what I said earlier. The free-market solution to the migrant situation is quite simple. If all the property of a country is privately owned, anyone can come and stay as long as he can pay for his accommodations. When even the streets and parks are privately owned, trespassers, beggars, squatters, migrants, vagrants and the like have a problem. A country with 100% private property, and zero welfare, would only attract people who like those conditions. And they’d undoubtedly be welcome as individuals. But “migration” would be impossible.

This is how the migration problem could be solved. You don’t need the government. You don’t need the army. You don’t need visas or quotas. You don’t need laws. You don’t need treaties to solve the migration problem. All you need is privately owned property and the lack of welfare benefits. Instead, think tanks will come up with some cockamamie political solution. But the good news is that it will speed up the disintegration of the EU.

My prediction that the Continent will one day just be a giant petting zoo for the Chinese is intact—assuming the current wave of migrants approve. There will also be an exodus of capital and people from Europe to parts of Latin America, plus to the U.S., Canada, Australia, and New Zealand. This is, obviously, bad for Europe and good for the recipient countries, since these emigrants will be educated and affluent.
But, having said that, let me take you back to the conference where migration was a major topic of discussion by the elite.

Back to the Conference

Those are my thoughts on the topic of migration. Here’s what other attendees thought....

I spent a couple of hours listening to a panel entitled “Corruption in Latin America”. A bunch of ex-Presidents commiserated on how awful corruption is, and how new laws ought to be passed to stamp it out once and for all. They were all skilled, even enthusiastic, bullshit artists, who knew how to blather meaninglessly, saying nothing. They all agreed that illegal drugs were a major cause for corruption, but nobody thought to mention that maybe the problem wasn’t the drugs, but the fact they were illegal.
None of these people understood the actual causes and the nature of corruption. Which is ironic, since most of them were quite wealthy—something that’s hard to do on a Third World politician’s salary.

One especially naive panelist, representing the US State Department, said “many see the private sector as part of the problem”. What, one might ask, actually causes the problem?

The short answer was supplied by Tacitus 1900 years ago. He said “The more numerous the laws, the more corrupt the State”. That’s because the laws invariably have economic consequences, benefiting one group at the expense of another. The most practical way to obviate them is by paying off an official.

Naturally, nobody even broached the subject that laws themselves cause corruption. And corruption is actually not only necessary, but is encouraged, whenever economic laws are passed. Plan your life around corruption remaining endemic, no matter how much self-righteous apparatchiks blather on about it at conferences.

General David Petraeus

I listened to David Petraeus offer solutions to the world’s problems. They were what you might expect from an ex-general and CIA director. To David it’s all about using force and money “intelligently”. It never seemed to cross his mind that adventures like those in Iraq and Afghanistan ($6 trillion and counting, to accomplish absolutely nothing) might actually bankrupt the US. Or that he was intimately involved in the ongoing disaster.

My takeaway is that, after David collects say $20 million in the “private sector”, we’ll see him resurface as a candidate for the US Presidency. He’s smooth, polished, and confident. I was somewhat surprised that some general wasn’t tapped this election for a VP slot, since the military is the US Government’s most trusted branch by far. Rest assured there will be a general running in 2020.

Donald Rumsfeld also held the stage for 40 minutes. He was affable, likable, and entertaining, as are many sociopaths. Not even the faintest acknowledgement passed his lips about how the current migrant disaster was rooted in his unprovoked attacks on backward countries on the other side of the world. But why should he care? He’s already collected his $20 million in the “private sector” after many years of “service”.

The Migration Round Table

Another highlight was listening to a Round table on “The Public/ Private Partnership on Migration”. It might as well have been a meeting of the Soviet politburo, where everyone implicitly accepted the same totally flawed principles, speaking seriously and sincerely to each other about how they plan to change the world. These people were mainly interested in reinforcing each others views, like a conversation on NPR.

How to solve the refugee/migrant situation? No solutions were proposed by any of the 40 high government officials and think tank big shots. Everybody’s attention focused on two things: how awful the situation is, and how they can feed, clothe, and house the masses. I was amused at the sight of parasites talking to parasites about parasites.

References were made to “broader economic integration”, a nebulous phrase that can mean almost anything, and no references at all to freer markets. There were continual references to a “partnership” between the public and private sectors. It made me feel I was among aliens. How can there be a partnership between producers, and those who not only steal 50% of the production, but then want to direct where the remainder goes. These people all seemed to believe that if you earned money, you didn’t deserve to keep it. But if you needed money, you were entitled to it.

There was a discussion about how the crisis that started in 2007 has set back the progress of Africa. But zero discussion of what caused the crisis. Or what would happen when it stated up again (which is happening right now). The only discussion of how to create prosperity was about Special Economic Zones—areas insulated from the taxes and regulations affecting the rest of the country. Needless to say no one thought to ask why an entire country couldn’t become an SEZ.

A question occurred to me about the several hundred thousand refugees/migrants that still might be imported to the US—although it's much less likely with Trump as the President: Exactly who will pay for them, and how much will the pleasure of their company cost? These people have nothing but the rags on their backs. 

Will they be ferried to the US on commercial airliners? When they land, how will they be clothed? They’ll need to be fed for an indefinite period. And housed. And entertained. Mosques must be found, or founded, so they can worship. Very few have any marketable skills, and very few even speak English. Most of them could just stay on welfare for the rest of their lives.

It seems completely insane. But it’s clearly the “Globalist agenda”, endorsed by all these people. Of course there’s some perverse justice at work if the US winds up having to import a few million Muslim refuges. The Muslim world was, at least, stable before Bush and Obama went on a wild “regime change” adventure. Now chaos reigns in Iraq, Afghanistan, Syria, and Libya.

One justification put forward for migration to Europe was that its population was dropping, and it would need people, if only to take care of the oldsters. For what it’s worth, we’ll have robots doing that within a decade.

Conclusion?

You’re perhaps wondering how any sensible person could sit there and listen to such blather and nonsense for two days without reacting. Of course I wanted to debunk about 95% of what I heard. But the Summit was structured so that Guests didn’t have a forum from which to challenge the Nomenklatura and their Apparatchiks. So I sat there, observing an alien species in a sort of formalized mating ritual. No opportunity presented itself to shock these copulating dogs with a bucket of cold water. Certainly not from a seat in the Peanut Gallery.

Are conferences like this one, and its lookalikes, a waste of time? Completely. And keep that in mind before you make a contribution to a charity or an NGO. Could it have been worthwhile? Yes. If it had addressed the questions I posed above. But, even then, the answers would have been worthless, given the attendees.

I think migration is going to be one of the biggest problems in the next generation. It’s a sure thing that not just millions, but tens of millions of “feet people” and “boat people” are going to try to overrun Europe. If they’re accepted and resettled it will destroy what’s left of Western Civilization. If they’re repelled, it could result in millions of deaths, and be quite a scandal. I don’t know how this will sort out. But it’s going to be a big deal. And ugly.

What should you do? Own plenty of gold and silver, and make sure that you have one or more residences that are out of harm’s way.

Editor’s Note: If you haven't seen it yet, Doug Casey has just released his latest and most controversial prediction yet. It involves a shocking currency ban (not gold) that may soon take effect under the Trump presidency. 

Already, Fed members have met in private to discuss this matter. And the savings of millions could be devalued if this goes into effect. 

To watch the video and discover the 4 steps Doug is taking to prepare, click here.

The article Doug Casey’s Two Days with the Real and Wannabee Elite was originally published at caseyresearch.com.

A Chicken in Every Pot

By Jeff Thomas

That’s a pretty powerful statement. Is it historically supportable? Let’s visit a current example – Venezuela – to examine the overall process of collectivism, then look at a few other historical cases and see what we can learn.  Collectivism will always eventually destroy the economy of any nation, no matter how great it may be.

Venezuela – 17 Years of Collectivism
In 1980, Venezuela was deemed to be the fourteenth most economically free country in the world. Today, it’s a veritable train wreck, having failed in every conceivable way. How did this happen? Was it just bad luck? No, quite the contrary.

Venezuela’s prosperity was fueled primarily by the export of oil. The downward spiral began in the 1980s as a result of a drop in the world oil price. Until that time, there had been strong public support for the free market, but diminished oil receipts resulted in a decline in living standards for most all Venezuelans, which left them open to claims by collectivist political candidates that the whole problem was the free market. In 1999, they elected Hugo Chávez, who promised to solve the problem through collectivism – the promise of a chicken in every pot.

Mister Chávez began to take from the “haves” and provide largesse for the “have-nots.” Not surprisingly, he was highly praised by the have-nots. So, he went further. He nationalized many of Venezuela’s industries. Industry became less and less profitable, so less and less money flowed through the system each year. Eventually, the revenue to the government was insufficient to pay for the promised largesse. The leader then died and the new leader, Nicolás Maduro, inherited a zombie economy. In desperation, he introduced capital controls and increased nationalization and regulations, hoping to squeeze as much as possible from the economy before it went off the cliff. The result was a fully dysfunctional economy, replete with massive job losses, increasing shortages, and, finally, starvation.

Again, having once been number fourteen on the list of economically free countries, Venezuela is now at the very bottom – at number 152 – as a direct result of collectivism. As Margaret Thatcher once said, “The trouble with socialism is that, eventually, you run out of other people’s money.” Quite so. It does take a while, however. A newly collectivist state at first appears to be solving problems. What it’s really doing is feeding off of past profits. It gobbles up the economy’s store of nuts, but when these nuts are gone, that’s it – there’s no more, and the economy collapses. People starve.

Venezuela now has increasing shortages of food, hyperinflation has set in, the government is totally corrupt, the government is running out of funds for entitlements, and government healthcare is overburdened and failing. Like Cuba in the 1980s, there are no longer any dogs or cats on the streets of Caracas, and for the same reason as in Cuba – they’re being eaten by those with no other source of protein.

USSR – 74 Years
Vladimir Lenin introduced collectivism to Russia in 1917. He was able to do so because a revolution had just been completed by the people of Russia as a result of their dissatisfaction with a decline in the standard of living of most Russians. For decades thereafter, capitalism existed within the primarily communist system, but eventually, the parasite sucked the host dry. The USSR collapsed in 1991 for the same reason Venezuela is collapsing today.

China – 29 Years
Mao Tse-tung took over China in 1949 with a collectivist regime. But the 10,000-year rule he promised fell a bit short. It ended in 1978 in an economic dead-end. It followed the same path as the USSR, but the process was quicker.

Cuba – 57+ Years
Cuba lasted a bit longer. In the 1950s Cubans had become dissatisfied, due to the decline in the standard of living for the majority of Cubans, and were ripe targets for collectivist promises. They welcomed Fidel Castro in 1959. Cuba limped along for decades, but in recent years, the coffers of the state have dried up and the only hope to keep paying the salaries to government leaders lies in the grassroots cuentapropista movement – a rebirth of the free market. Collectivism in Cuba is nearing its end.

In each of the above countries, the pattern has been roughly the same.

• A formerly prosperous country experiences a period in which the standard of living for the majority of citizens drops significantly.
  
• The voters react by electing a new leader who promises a chicken in every pot (in essence, collectivism, although it is not always called that at the time of the election).
  
• The new leader begins to rob the producers of wealth to provide largesse for those with less. This has a direct positive benefit for those with less, resulting in an increase in voters supporting collectivist promises over a period of years.
  
• Over time, the free market experiences a permanent loss of wealth, resulting in diminished largesse for those who are now dependent upon it.
  
• The government imposes increasing capital controls and other regulations, which deteriorate the free market more severely, causing inflation, shortages of goods, loss of jobs, and eventually starvation and systemic collapse.
  
• The voters choose a new leader who promises fiscal responsibility.
  
• With a return to a freer market, prosperity slowly reappears.
  

The pattern is a predictable one because it’s based on human nature. An economic downturn occurs. The voters become suckers for false promises. The new collectivist government appears successful at first, because it’s feeding off the remains of the free market. But, eventually, it destroys the free market and collectivism crashes and burns.

So what does the above review tell us? Has the world learned its lesson? Not at all. What we can surmise from the above is that, whenever the standard of living for the majority of citizens drops significantly in a jurisdiction, the voters will be ripe for empty promises. In every such case, collectivism will appear to be the best solution.

Collectivism is by its very nature a parasitical system that creates nothing. It therefore will always eventually destroy the economy of any nation where it’s implemented, no matter how great that nation may be. The only uncertainty is the number of years required for destruction.

Today we’re witnessing the collapse of the primary jurisdictions of the former “free” world. They’re operating on a quasi-capitalist system that has been eroded by repeated injections of collectivism (primarily socialism and fascism). Increasingly, voters in each of these jurisdictions are becoming convinced that the promises made by collectivist candidates “just make sense.” As the system continues to spiral downward, as it inevitably will, the scales are likely to tip, not in the direction of a return to the free market, but in the direction of full-on collectivism.

Editor’s Note: Socialism often leads to economic and societal collapse, hyperinflation, shortages, and shrinking personal freedom. This has happened most recently in Venezuela.

The truth is, it can happen anywhere. The U.S. is not immune. In fact, it’s extremely vulnerable.
Increasing socialism, bad financial decisions, and massive debt levels will cause another financial crisis sooner rather than later.

We believe the coming crash is going to be much worse, much longer, and very different than what we saw in 2008 and 2009. Unfortunately, most people have no idea what really happens when an economy collapses, let alone how to prepare….

That’s exactly why Doug Casey and his team just released an urgent video.

It also reveals how financial shock far greater than 2008 could strike America by the end of the year. And how it could either wipe out a big part of your savings... or be the fortune-building opportunity of a lifetime.

Click here to watch now

The article A Chicken in Every Pot was originally published at caseyresearch.com.