The results are in... The GOP took the House and gained six seats in the Senate. Despite what you're reading today, nothing will change. People are saying taxes will decrease. We don't believe it. For taxes to be lowered, the government would have to pass a law. We don't think OBAMA! will sign a bill that changes the tax issue. The Dems still control the Senate. And we doubt OBAMA! will play nice with the Republicans. Both parties are going to start campaigning for the next presidential election. And both parties will blame the other for the country's current problems... And they'll be right.
Yesterday's elections did remind us of something important – Democracy is a farce. Most of the people who vote have no idea what they're doing... or even for whom they're voting. If you don't believe us, just look at what happened in California: Voters re-elected Jenny Oropeza to the California state senate. She's been dead for weeks. No matter. The people do what they think they're supposed to...
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But when you ask the voters what they want, you get a surprising answer: None of the above. In exit polls, more than half of voters expressed negative views about both parties. Less than half said they wanted the government to do more.
We'd like to put a third option on every ballet: None of the above. We believe "none of the above" would win lots of elections in America. And we think the country would be vastly improved by empty state houses and an empty Congress. Such a choice would certainly give the ruling class something to worry about...
What do these elections mean for the market? Nothing. The fact is, our government is just as bankrupt today as it was yesterday. Nothing the Republicans or Democrats can do about that. Businesses seem to think a Republican House means the health care bill and other antibusiness laws will be repealed. Such optimism makes us chuckle. When most of the costs of government are borne by about 20% of the population, you can always count on the majority to vote for more – more of everything. Why not? They don't have to pay for it.
That's why we're still happy to own gold and silver. People vote every day on the value of these metals. But they only get to vote in the same proportion as their vested interests. That's a real election.
We often sing Chris Weber's praises. He's supported himself by trading his personal portfolio for the past 40 years. Chris made a fortune in gold in the '70s, then took those profits and plowed them into Treasurys yielding 18%. Since then, he's compounded his wealth many times over. And he's maintained a strong focus on precious metals... nailing almost every up and down move in the sector.
We ran an excerpt from Chris' latest letter, The Weber Global Opportunities Report, in DailyWealth this morning. Chris has been waiting for a correction in silver, but now he doesn't think it's coming...
... this is bullish behavior the likes of which I don't think I even saw back in the last bull market of the 1970s.
But the feeling this time is different. Silver has only had one typical correction: from $23 to just under $10. But while the percentage correction was typical (over 50%), it was all over in just seven months. A huge and powerful bull then quickly returned silver to new highs.
One other thing has happened recently that I haven't seen mentioned. Silver has now clearly overtaken gold as the best-performing asset class since 2000. Gold has risen from $256 to $1,365. That is a rise of 433%. Silver has risen from $4.02 to $24.91. That is a rise of 520%.
I'm forced to advise people to simply buy or add without trying to time their purchases.
In general, this is what you should do in a bull market, but I had until now thought I was clever enough to attempt to time purchases a little. I no longer consider myself so clever. So my advice is to bite the bullet and accumulate at least some physical silver.
Chris' letter is one of the best on the market. I highly recommend you try it out. You can learn more about it here...
Another smart investor, George Soros, is also buying more metals. His hedge fund announced a 9.73% ownership stake (15.5 million shares) in Platinum Group Metals – a 933% increase in his position since the second quarter.
New highs: Denison Mines (DNN), Esperanza Resources (EPZ.V), Imperial Metals (III.TO), Keyera Facilities Income Trust (KEY.U-TO), Mag Silver (MVG), Silver Wheaton (SLW), Silvercorp (SVM), Coca-Cola (KO), Prestige Brands Holdings (PBH), DirecTV (DTV), Penn Virginia Resource Partners (PVR), iShares Silver Trust (SLV), Enterprise Products (EPD), Amerigas Partners (APU), Altria Group (MO).
In today's mailbag... more on public education. Plus, a reader debates former Fed Chairman Paul Volker on gold and paper money. Send your e-mail to feedback@stansberryresearch.com.
"It would be interesting to know how many home-schooled kids have been indoctrinated with creationism and other religious claptrap..." – Paid-up subscriber Martha Perkins
Porter comment: As opposed to "The State as God" claptrap in public schools? I dunno. Which causes more harm? Probably a toss-up.
At least at home the kids learn how to learn on their own. At least they've got a shot...
"Happened to have a chance today to talk to Paul Volcker at a 'dialog' in Singapore. I asked him if he ever went to Fort Knox when he was chairman of the Federal Reserve to see if the gold was there. He said no.
"He also said he thought there was little chance of going back on the gold standard because gold was 'too volatile' due to speculators.
"I also asked him in the public forum, noting that he was in the room at Camp David in 1971 when the U.S. decided to repudiate their redemption of U.S. dollars with gold, did he think the current batch of central bankers were capable of safely managing these fiat currencies (a feat never before accomplished in history). He replied there were dangers so central bankers would need to exercise 'discipline.' Right.
"I did manage to suggest to him privately that if the gold price was high enough there would be little speculation. His immediate response was that if central bankers could set a price, they could set a different price later. My response was very simple – of course there would be a need to return to the earlier status when the dollar was just a representative for a certain number of grains of gold. At that point he lost interest." – Paid-up subscriber Geoff Smith
Regards,
Porter Stansberry and Sean Goldsmith
Baltimore, Maryland and Denver, Colorado
November 3, 2010