Thursday, July 19, 2012

THE GANG

Right now we have slipped into a stalemate in the market for precious metals equity investors. The control of the market must be maintained by the boyz above or chaos follows quickly. As mentioned here on numerous previous occasions the headline price of gold must be contained to prevent a flashing warning light for the peeps. As long as the gold price remains stable then the value of the world's reserve currency will remain stable. The reserve currency status is critical to keeping the game going so make no mistake the price of gold is being watched very closely by everyone. Cliff Droke had an excellent post describing how investors are watching the machinations in gold and are waiting for the crowd to move.
http://news.goldseek.com/ClifDroke/1342703400.php

His cycle analysis AND precious metal analysis has been spot on. Can you use it to trade gold? I can't...but then maybe some of you can. On the other hand I do not want to ignore his view of the bigger picture on PMs and that is the longer term direction in them and that is UP! Many of you may look at some of the last few months in PMs with dismay but if you have then I wonder what part of a manipulated market you have not been able to accept. We're in trouble and this situation is reaching a major turning point. Unless we get a tremendously large injection of print money then we are going to enter into a crisis phase that's irreversible. THAT'S because we are losing CONfidence in virtually all aspects of our market and our political institutions. This must be contained or things will rapidly deteriorate....so more dramatic events ahead folks. In the meantime we are still in an accumulation phase in PM's and PM equities. Many of you may not have trading cash to take advantage of any further beatdowns and are just holding long. Unfortunately I am with that crowd but I am sleeping well. Why you may ask. As I told a banker bud of mine from Texas a few months ago....."Where in the hell WOULD I park my money in this mess outside of physical?" I have accounts that are hard to exit the market without penalties and I sleep very well knowing they aren't in USD or general equities......hope you do too. This is what Caesar Bryan from Gabelli which manages 31Billion had to say yesterday on KWN....   I find it astonishing that people want to invest in governments with a negative return, yet they appear to be fearful of investing in solid companies, with strong balance sheets, and dividend yields of 3%, 4% and sometimes 5%.  It appears to be somewhat of a dichotomy.  

Would you rather invest in the government of France, who’s Ten-Year bonds are yielding 2%, or top notch international companies such as Novartis, Roche, Diageo or Nestle? 

What does this reflect?  I think it reflects fear.  Investors just need to focus on real assets and this reflected by solid corporations, and of course the best real asset is gold.  Gold is in the summer doldrums right now, but I expect the next move in gold will be upwards.

I would recommend that investors use this quiet summer period to accumulate real assets, and as I said, the most important one is gold.  I would also add gold equities to that list.  They represent great value.  There have recently been three takeover attempts in small gold stocks.  The interesting thing is they were all-cash offers.  These takeover attempts were done at large premiums, but at a big discount off of the 52 week highs.”


Quick note on the drought. We are in trouble. This nation had better get rain and a lot of it this year. That's not for this years crop......its done for......its for next year. THAT IS THE BIGGER RISK! Some of you that read this blog can add more over the coming weeks and months on this matter and your comments are greatly valued from your knowledge and on the ground first-hand experience. Last night serious liquidation of cattle due to NO hay available began in earnest in this area. GL

BTW......take a look at this Droke chart.........Unbelievable!!!!......That's what you call power...


Indeed, gold is already technically “oversold” on a longer-term basis as we’ve discussed in recent commentaries.  The 10-month price oscillator for gold has registered its most sold out reading for gold in 10 years (see chart below).  While this is an important consideration for serious longer-term investors, it hasn’t done anything to attract the “hot money” crowd.



52 comments:

  1. hey all..

    talk to my Dad the other day....a update from the heart land.

    east Colorado and Oklahoma...it is bad...water wells have been sank to 2000 ft....in the past we have had over 3000 acres in winter wheat..on one farm...when you farm this scale it is hard to talk to most .all the beef has been sold off.....300 head is held back as a breading heard...1000's have been sold...alpha and hay is gone...many tracks of land are not planted or are dead....I am talking about SECTION.s OF LAND ....640 acres at a time....gone

    well that is the report from my family....the way I see it is that my family is hunkering down.

    paladin

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    1. thanks paladin......please check in a keep us updated........hoping for the best for your family and these farmers...if this goes down .....we all go down

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  2. Looks like there is trouble with rice production in India. Could Mother Nature be setting up a "Perfect Storm" situation for the planet??

    http://www.bloomberg.com/news/2012-07-19/weakest-monsoon-since-2009-to-shrink-india-rice-harvest.html

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  3. (Reuters) - Grain prices pushed to record highs on Thursday as scattered rains in U.S. Midwest did little to douse fears that the worst drought in half a century will not end soon or relieve worries around the world about higher food prices.

    Government forecasters did not rule out that the drought in the U.S. heartland could last past October, continuing what has been the hottest half-year on record.

    "There's a greater chance that there is no relief possible or in sight" for the U.S. Midwest, Dan Collins of the National Oceanic and Atmospheric Administration's Climate Prediction Center said on Thursday.

    More than half the United States was experiencing moderate drought or worse this week, according to the latest U.S. Drought Monitor report issued on Thursday.

    More than 70 percent of the Midwest Corn Belt was in some stage of drought in the week ended July 17, up from 63 percent a week earlier. It adds up to the worst drought conditions in the United States since at least 1956, climate experts said.

    "We don't have a reason for saying it's going to improve," Kelly Helm Smith of the National Drought Mitigation Center told a briefing on Thursday, adding that warmer conditions in the coming months might well exceed current levels.

    CROPS PLOWED UNDER

    That is bad news for farmers and consumers, with corn, soybeans and wheat in the United States -- the largest world exporter of those key crops -- baking in fields, losing yield potential daily or being plowed under for insurance claims.

    Corn for September delivery at the Chicago Board of Trade set a record high of $8.16-3/4 a bushel, while soybeans for August delivery also set a record high of $17.49. Wheat for September rose 4 percent at $9.35 and set a four-year high.

    The knock-on effect of such soaring prices was already being felt around the world, where drought has also hit other grain exporters who are starting to cancel previous sales and leave hungry countries in the Middle East and elsewhere scrambling.

    "A lot of buyers waited in the hope that rain in the U.S. and east Europe would cool prices," one grain exporter said. "But this is not happening and the U.S. drought is not over."

    The two big questions in the U.S. Corn Belt -- how low the harvest and how high the prices -- were still unanswered. But conditions were worsening as corn was failing to pollinate and soybeans, planted later, face their key growth stage in stress.

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  4. How about the shooting in the batman movie.......

    I blame it directly on video games..and of course the disturbed guy...

    life is closer to chaos than nirvana now...

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  5. yes chuck....its a complex causative issue but certainly desensitization through violent vids is a major factor......many people postulate the PTB use the violent vids for just that to develop future soldiers for their drones and war machines........who knows but I certainly don't dismiss this out of hand.....

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  6. anyone notice CMG...it is a consequence of the coming tidal wave of rising food commods......short these pigs

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  7. http://www.profitconfidential.com/gold-investments/gold-to-be-reclassified-in-the-u-s/

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  8. Scary out Chuck.

    Video games, violent sexual media, broken families, horrible schools.

    Now we are going to have a dust bowl too.
    Maybe another mideast war.
    Kids can't get jobs cause grandpa has it.

    Meanwhile the mary poppins market dances on.





    I feel so bad for all the peeps.

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    1. I wasn't jesting with my post yesterday! "Our" Country's Leadership and a percentage of our population are becoming unhinged! This is getting very scary. Throw that in with all the corruption in the TBTF's, the debt and the severe drought conditions....... We have the makings of one serious chit storm!

      btw: Paladin your one farm is two thirds the size of the Village I live in Holy Chit! I cant comprehend how all you Farmer's do what you do but God bless you folks for doing it!!!!!!

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  9. I like the way GS set up the drive by in CMG. Nobody had a chance. Well played squidy!

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    1. This is why I love options, would've been NICE to have the $330 puts today. Up a mere 18,000% :)

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  10. CMG... whatta pig! This has been a long time coming for that stock.

    Yeah there has been no replanting here anywhere like there usually is. Fields have been given up on. It's really horrible :( Any food preppers have tips or good websites to get a decent food and water plan and stash going? Everytime I've looked into it I've always gotten overwhelmed.

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  11. Hubz,

    I think you can keep it simple. Frijoles, rice keep a long time and taste good. Hot sauce, condiments too.

    Learn how to make frijoles de olla. In Mexico the saying is I have beans I have food. I could live on rice, beans and cheese burritos. You will not starve and could last a long time months if need be on this.

    Water. Wine, Booze not necessary in this order.

    Propane. You cook on the bbq.

    tis enough for starters.

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    1. WRONG......you can last YEARS.....hehehe....don't forget to have some freeze dried vegs and fruit....or some source of real vit C

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    2. I love bean's and rice...I make authentic refried beans...my wife loves them more than what you get in Mexico...I too could survive forever off that stuff...

      then again, I'm simple....most of the time I find it hard to find right side of brain...

      REI has good water filteration systems...I imagine Cabella also...I'm close enough to a lake in Golden gate park where I could walk there and back in 15 minutes after earthquake...of course if water is gone, I will have my glock while taking that journey..

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  12. yes hub ....keep it simple......go to your fav store......buy Treet....buy bulk canned beans etc...look at the exp dates......go to cosco or sams and buy the 25 year exp date freeze dried food buckets......very cheap.........or many web sites......its gonna get ugly......end of the world stuff I will not buy into.......

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    1. Hey Kli, on Sams I see this http://www.samsclub.com/sams/shop/product.jsp?productId=prod5900037&navAction= which seems to be way more servings than this http://www.thereadyproject.com/foodstorage/lindon-farms-food-storage/lindon-farms-entrees/lindon-farms-1080-bundle.html and is much cheaper. Only difference I see is the variety is much less. So would you recommend the Sams deal as it's higher quantity or am I overlooking something?

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    2. Actually this looks like it may be the best to get - http://www.samsclub.com/sams/shop/product.jsp?productId=prod5900034

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    3. the bucket I bought was 98bucks.......cant remember the ammount....but it was like the one above.....whats the price on that......

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  13. Hubz

    Try:

    http://www.foodinsurance.com/

    Takes the guess work out of it all but you pay a premium for the convince food is pretty good as well.........

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  14. http://www.provident-living-today.com/Bulk-Food-Storage.html

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  15. Thanks all! Ordered a fruit, vegetable, and general one month supply. Honestly if it were bad enough to where I went through that I don't know that having a year supply would do much good as there will probably be roving gangs breaking in to take it :)

    What about water filtration and portable fire? I have a spare propane canister but would like something else that's easy to start a fire with. Again I don't want to go overboard, just something cheap to do a basic good job but not a piece of junk either.

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    1. Water Filtration:

      http://www.katadyn.com/usen/katadyn-products/products/katadynshopconnect/katadyn-water-filters-endurance-series-products/katadyn-pocket-1/

      Not Cheap approx $350 but you don't want to fool with bad water........

      One other thought that has to come to mind as to how much to stock is "Where" you live and how vulnerable you are to any disruption to JIT delivery re: When Truck's Stop

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  16. I have three propane tanks..but I have a small camper too. The camper has a fridge that runs on propane. Enough to keep beer cold..or milk for the wife. Have three tanks in any event. You will never run out of propane at the wrong time. You could buy an RV fridge and keep it in the garage..I would not go thefar prolly. But I am glad I have one.

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    1. I need something to keep my beer cool in, very important ;)

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    2. of course if it gets real bad...Whiskey, Vodka or Tequila will give you added edge...:)

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  17. Do not forget to have some luxuries.....remember what you like to indulge yourself or others with......wine, whiskey etc.....remember some of these luxuries get better over time and will be great for barter as nancy has noted

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  18. Hubz, maybe store some gasoline and bottles.

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  19. I have not actually tried this yet, but I read that you can "cook" rice by simply putting it in water. Apparently it takes several hours, but the rice will absorb the water without boiling. Worth knowing if you have no power.

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  20. miners are compressed springs....

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  21. rut roh......Scandal At The IMF: Senior Economist Resigns, Says "Ashamed To Have Had Any Association With Fund At All"
    Submitted by Tyler Durden on 07/20/2012 14:58 -0400

    fixed Greece International Monetary Fund Reserve Currency


    The rats everywhere are now jumping furiously off the titanic, but few had taken the time to write a letter explaining in detail just how cracked and broken the hull really was. This has now changed, with the departure of Peter Doyle, formerly a division chief in the IMF’s European Department responsible for non-crisis countries and currently an adviser to the Fund. Not content with quietly slinking off the scandal ridden organization which has become the butt of all jokes in the international community, where humor about Lagarde's Louis Vuitton panhandling bag is as pervasive as punchlines about just how incompetent the organization is at actually doing its duty, Doyle has penned the following scathing letter which tears down every myth about the IMF: from its impartiality, to the selection process of its head, to its effectiveness. The letter also contains the following gem: "After twenty years of service, I am ashamed to have had any association with the Fund at all." Pretty much says it all. This is a scandal in the making, and one which may shake to the core the credibility of the IMF in the context of international organization.

    Full letter (pdf)

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    1. "After twenty years of service, I am ashamed to have had any association with the Fund at all."

      Gee-Wiz loo-key there, it only took him twenty years to find religion?

      Wonder what his retirement/severance package is........ D.Bag

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    2. Hi Kli and the group, Not much to input here. Just good thoughts on getting a supply of food. Hot today and it's going to unbearable for the next 6 days 100 to 110 here. That's not the heat index either. Soy beans are really starting to show the stress and corn is now firing from the lower stock up to the top. Kli I was wondering if you could do a chart
      analysis on the beans, corn and really the Soy Bean meal. How much higher can we go. What are some points that we could see are resistance areas in these huge market moves? I'm going to be going out on a drive across about a 200 mile area of corn belt this weekend in Nebraska and parts of Iowa going to be doing some pictures and videos. I would like to get them to you kli to post if you like. You can reach me at saveyourcoins@yahoo.com
      if you want these pictures.. Have a great weekend all
      Matt

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    3. send pics to kliguy38@yahoo.com and I will get them up matt

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  22. Matt, I for one would love to see on the ground reports. Stay cool matt.

    Sean

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  23. matt corn target on chart is 12.50

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  24. correction 11.25 if you use the bull flag monthly

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  25. beans weekly chart target is 18.50

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  26. Replies
    1. Thanks Kli, That's going to hurt demand at those prices.. Still no rain here yet. Corn has very little time left. Beans might hang in there another week.. Thanks again
      Matt

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  27. the target crop prices and dwindling supplies will definitely ignite food riots throughout the developing world

    finish off all food currently at home and start slowly building a 3-6 month supply of long dated food stores, secure secondary water supply sources (most important) you need at least 2 weeks of clean drinking water readily available. A 3 month supply of necessary medications and first aid supplies should be the ready. Wine and hard liqueur is good barter, beer goes bad too fast (alcohol will also go up in price as the food commodity surge with affect input prices especially on the low end).

    Avoid crowds, do any preparations before the masses panic, at that point just stay out of the way.

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    1. Yes red....once a "panic" buying event occurs......its over in just a few days.....then it becomes lines and rationing.......or worse.....anyway we don't require "worst case scenarios" .......we only require a "tipping point" and that can be relatively innocuous without a SHTF "end of the world" situation......so as the boy scouts say "be prepared" it doesn't hurt a thing.....other than your wife and friends may think you are a paranoid nut......oh well

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    2. Well not no more and I have to give a big thanks to Matt for his post! Printed it for the Mrs and with a little explanation that got her attention.

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    3. Well said Red, It's going to get bumpy. It's really shaping up to be the perfect storm of events world wide. It's hard now to know what to focus on. I just got my solar powered well done. Works great needs no battery's just the sun. Pumps about three gallons of water a minute with a noon sun over head. On thing we have had no lack of lately.. HA!
      Matt

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  28. VERY important....from LONDON TRADER KWN “As this scandal is brought to light, that the unallocated gold and silver are not there, and much of the allocated gold and silver is not at these banks either, and as you see these naked short positions unwound, the world will witness a massive price rise in in both gold and silver. The move in gold and silver, at that point, will literally frighten most people. They simply won’t understand what is happening.

    When someone goes to a bank and deposits money, if you look at the small print, you don’t actually own that money, you’ve simply loaned it to the bank. The banks will then turn right around and lend ten to one or whatever leverage they determine to use with your cash. Well, when there is a run on the banks, as there has been in Europe, the money is printed by governments and given to the customers to calm things down.

    The underlying problem here is that when the run on physical gold and silver begins, how will the banks print the gold and silver? It’s not possible. So something is brewing here. There’s no smoke without a fire. The reason this information is beginning to be discussed more openly is because of legal reasons. They need to be able to say, ‘We disclosed to people that the gold and silver wasn’t there.’

    Yes, this will include a scandal at the LBMA in those unallocated accounts. The paper leverage in the LBMA system is off the charts. Investors believe their gold and silver is sitting in those unallocated accounts, and they will be in shock when they find out it isn’t there.

    We are talking here about a run on the bullion bank. As this unfolds there will be a failure. These people will only receive the fixed price before trading is halted. This will not be called a default. Then there will be a massive gap in the price of gold and silver. But the bullion banks will not be allowed to go bankrupt during this process. There is a ring of counterparties here. If one of them fails, the whole system can fail. So they will not be allowed to fail.”

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  29. The London Trader also stated: “I would also add that demand for gold from China is unceasing. The Chinese not only want to diversify out of dollars, but now they also want to diversify out of the euro as well. They are trying to do this in size. They want out of those currencies, and what they are doing is exchanging them at the fixes in London for gold, and this will surprise some people, but we are beginning to see it in silver as well.

    Gold is the primary focus, but very recently, and on every dip, we are seeing significant purchases of silver in size. So yes, demand from China, it’s unceasing. They want out of these debasing currencies. I would add that they are buying anything that’s tangible, land, timber, mines, art, etc..

    It is absolute nonsense when people speculate the Chinese may stop buying gold and silver. When you see 315 tons of gold was purchased by China in the first five months of the year, that’s just the tip of the iceberg. That 315 ton figure that was recently reported is patently false. That’s just what they can’t hide. The actual amount of gold China has accumulated is many times that 315 ton figure.

    The buying is relentless. It’s every single fix, every single day. The Chinese are eventually planning to have gold back their new currency, which is going to replace the dollar as the reserve currency.”

    The London Trader also added: “It’s not just Chinese demand impacting the physical markets. It’s the Middle-Eastern countries and Russia and so on. Investment demand for silver is also picking up at these levels. Demand is coming from the Middle-East, and India has also become a bigger buyer of silver.

    I would also add that you see a great deal of negative press regarding gold. Many are saying, ‘Look at 2008, they are going to sell gold along with everything else and it’s going to crash.’ What people don’t understand is gold is on its way back into the financial system.

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  30. I would also add that you see a great deal of negative press regarding gold. Many are saying, ‘Look at 2008, they are going to sell gold along with everything else and it’s going to crash.’ What people don’t understand is gold is on its way back into the financial system.

    We had the recent proposal to have gold categorized as a Tier-1 asset. This moves the risk weighting from 50% to 0%. Most people have not grasped the full significance of this proposal. This will change the entire mechanics of the gold market when there is a time of stress, such as the one we witnessed in 2008.

    This is one of the major reasons why those calling for a collapse in gold are going to be proven wrong. Yes, in 2008/2009 we did see a significant correction in the price of gold, and that was a result of the liquidity drying up. But in 2008, because gold was not considered a Tier-1 asset, it forced the banks to sell their only remaining liquid asset in order to raise cash. This was done to meet margin requirements.

    There was so much gold hitting the bid all at once that it was like a huge bottleneck. This instigated a $200, waterfall-type decline, that amounted to a roughly 20% correction in gold in just 30 days. This took place against tremendous fundamentals for gold. In fact, the fundamentals for gold were so strong, that when gold bottomed in 2009, it only took just over 30 days for gold to break back above the level where the waterfall decline first began.

    The difference this time around is that gold may be considered a Tier-1 asset, and what that means is that it will be equal to cash or Treasuries. So there will be no need for banks to liquidate gold in order to meet margin requirements. You may, instead, see fresh new money entering the gold market. It’s going to provide a bid where there was no bid in 2008.”

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  31. Would a credit union be any better/safer than a bank? I have a substantial amt. of $ there. And I had NO IDEA they had driven CMG up to $440!!! Can't imagine on what basis. I'd never own a pos like that. I find watching golf peaceful, lol. We're having floods here, not sure about the farmland in NC/SC..will try to get some first hand info and post it. Thank goodness for this blog! God bless.

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    1. as red has said ......all paper is at risk nancy.......IF the SHTF......real things must be kept in hand to mitigate the damage....diversify paper and keep large ammt of cash on hand.....

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