The following comes from a man I know and respect greatly. He has great wisdom about the financial markets, although I don't agree with everything he says nor have I taken all of the steps he lays out to protect yourself. With that said, I only provide it FWIW:http://www.jsmineset.com/ARhome.asp?VAf ... _ARID=6440
Posted On: Tuesday, July 15, 2008, 4:05:00 PM EST
It Has Hit The Fan
Author: Jim Sinclair
The financial system is broken and all that can be done by the US Federal Reserve and the US Treasury is monetize all major financial entities.
The reason that all this has happened is the $1.114 QUADRILLION dollar mountain of crap paper made of unfunded, unlisted, unregulated and non-transparent financial specific performance contracts called OTC derivatives.
Those that create and peddle OTC derivatives are guilty of financial murder one.
I cannot imagine you reading the information above and failing to protect yourself, but knowing mankind, I doubt many did.
1. You should hold no dollars except what is required to pay bills for six months. You know now that FDIC is grossly under-financed compared to potential claims. Get all your money out of financial entities now before you have to stand in line to get it. Screw interest rates. Keep six months of cash in your safety deposit box, invest the balance in short term treasuries of other currencies.
2. You should put a minimum 1/3 of your LIQUID net worth in gold and gold equivalents.
3. You surely know by now that SIPC is grossly under-financed when it comes to covering potential claims. The secondary insurance held by brokers is written to them for you, but not for you.
There are three ways you can protect your securities:
1. Have your shares delivered to you as paper shares registered in your name.
2. Have your shares put in direct registration as a book entry at the transfer agent of the company you are invested in.
3. After consulting a tax counsel and receiving their blessing, order your retirement 401K, Roth and other like investments transferred into the name of your Trust Company, for the benefit of you.
Failing to do this because your broker disagrees or makes a fuss is you becoming complacent.
The basic thesis is please distance yourself and your assets from financial agents.
Monty Guild wrote the following excerpt in early April of this year:
"REMINDER--HAVE YOU CHECKED THE SAFETY OF YOUR CUSTODIAN? HAVE YOU CAREFULLY READ THE LANGUAGE OF YOUR CUSTODIAN'S AGREEMENT WHICH GOVERNS THE DISPOSITION OF YOUR ASSETS IN THE CASE OF SERIOUS FINANCIAL PROBLEMS IN THE WORLD ECONOMY, OR WITH THE CUSTODIAN ITSELF?
In our opinion, all investors and all recipients of pension plans or holders of IRAs should check the financial stability of the custodians of the assets that they own. Equally important, is the legal wording of your relationship with your custodian. Have your attorney look over the wording and make sure that the custodian is segregating your assets and will audit your assets annually to make sure that they are segregated from other clients and from the assets of the firm itself.
We have spent money on attorneys who review the legal language in our custodial agreements as we believe that it is essential knowledge. We are money managers, not attorneys. Please have an attorney look over the legal language of your relationship with your custodian...what you find may surprise you."
That which remains in any bank or trustee financial agency should be in true custodial form. Assuming you have your tax counsel bless the above actions with regards to your 401K, Roth, and other similar investments, the end result will be the trustee acting as a true custodial-ship.
You must own gold and gold equivalents. Gold is headed to a minimum of $1650, a number that now looks quite low.
Gold is a currency. Do not forget that.
The US Budget Deficit is going ballistic. The US dollar will trade at .5200. The Euro will trade at $2. The collapse of banks is far from over. Default derivatives will fail to function when called upon to function in any significant amount. Many major companies will fade away due to hidden OTC derivatives.
Pakistan will take crude up $100 from the point it is trading at now when the event occurs.
Monetization of all primary dealers of US Treasuries and all major manufacturers of OTC derivatives will be bailed out.
If you delay or do not act by doing the above simple and easy steps you will be financial finished. Mark my words. Those of you out there who freeze up make yourself targets.
Monty Guild’s commentary on Bernanke’s testimony before the senate banking committee:
Chairman Barnacle made it clear today that he will do nothing but increase the liquidity in the system. He will not raise interest rates and he will make the loan window available to all important institutions that need it. He is saying, in our opinion, that he recognizes the system is deeply damaged and in danger of total collapse. Later on TV a former Fed bank president confirmed his approach.
To us this means more liquidity will be pumped into the system. The future will see more inflation, more demand for currencies other than the dollar, more demand for gold and a continued weak US banking system .To protect oneself is, as Jim has constantly pointed out, the major responsibility of CIGAs. We believe the solution is to own gold, foreign currencies, food related investments and to have your assets in a secure institution which will not commingle your funds with theirs in case of their solvency problems.