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Weekend Edition

The Best of The S&A Digest
Saturday, November 24, 2007

How will the government save the value of the dollar? We're afraid we know how...
 
The Washington Post reported that last week, the federales raided the offices of NORFED, a group of libertarians who had begun to mint and sell "liberty dollars," which are nothing more threatening than gold and silver coins.
 
Why take down a coin dealer? Well, NORFED stands for "National Organization for the Repeal of the Federal Reserve Act and Internal Revenue Code." These guys were trying to launch a private, gold-backed currency, which the federales contend is counterfeiting. Imagine the irony of selling gold coins and being arrested for selling "counterfeit" money!?
 
Oh... one more thing... the latest versions of NORFED silver coins feature a likeness of Ron Paul – the presidential candidate who has promised to do away with the Fed and the IRS. The coins are now fetching $300 on eBay. Apparently, a "counterfeit" silver liberty dollar is worth a lot more than a "real" dollar.
 
While the federales are busy protecting you and me from evil coin dealers... how will they handle the real threat to their paper currency? "They get our oil and give us a worthless piece of paper," says Iranian President Mahmoud Ahmadinejad at the recent OPEC meeting. OPEC announced it would begin to study how to move away from pricing oil in dollars. If OPEC drops the dollar... look out below. The game will be up, and the dollar, as the world's reserve currency, will be destroyed.
 
PSIA pick Intel (INTC) will increase its dividend 13% to 12.75 cents a share. The increase will start in the first quarter of 2008. 
 
While Intel's working to give its money away, competitor Advanced Micro Devices (AMD) is scrounging for capital. The world's second-largest semiconductor manufacturer sold an 8.1% stake in newly issued shares to Mubadala Development, an Abu Dhabi sovereign wealth fund. AMD will use the cash for general corporate purposes.
 
Detroit is now the country's most dangerous city, according to private research firm CQ Press. The streets are crime-ridden, the auto industry is in the hole, and you can't give the real estate away. Who would ever think of investing in this place? Tom Dyson.
 
Earlier in the year, 12% Letter editor Dyson traveled to the depressed city to scope out the real estate and local businesses. To read about Dyson's discoveries, click here... and here... and here.
 
We don't spend a lot of time writing about commodities in The Digest. Since they're priced in dollars, they've been going up. What more did you need to know?
 
But, with the implosion of the U.S. banking system getting worse and worse each day, it seems that the rapid escalation of credit and money might be coming to an end. What would that do to rates of inflation? What would that do to global demand? What would that do for U.S. GDP growth? Dr. Copper, who knows more about the global economy than most commodities, seems to have an answer. Copper prices broke down technically on Monday, trading decisively below their previous support level.
 
From a reader: I own GMAC bonds and started to panic [when I read your essay]. We who are not as tuned into the corporate world and have other lives to live didn't get the 'inside joke.'
 
You should be concerned. A bankruptcy filing, which I believe is inevitable, will reduce the price of your bonds and will probably interrupt the payment of your annual coupon. What you're really holding now is future equity in the post-bankruptcy GM. What's that worth? I don't know yet... but I'd guess it's a lot less than par.
 
Talk about a signing bonus... John Thain, the soon-to-be Merrill Lynch CEO, will receive $15 million for showing up to work on December 1. His first-year package, which includes 1.8 million stock options and 500,000 free shares, is estimated to be worth $64 million – not including the bonus. Merrill Lynch's shareholders are the biggest bunch of bagholders on Wall Street.
 
Plummeting financials have presented a buying opportunity... for insiders. Wachovia CEO Ken Thompson bought 100,000 shares of the bank this week, and two other insiders picked up an additional 150,000. American Express insiders bought 30,000 this month and 63,000 in August. These guys know their businesses better than anyone else, and their buying signals a bottom.
 
Inside Strategist editor Graham Summers noticed the insider buying in financials early on and has made some recommendations to profit from the trend. His latest recommendation came out on Wednesday. To read more from Graham, click here...
 
Regards,
 
Porter Stansberry




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