Bear Tracks February, 2005

As the editor of the Silver Bear Cafe, I spend most of my time researching current events. I explore the
markets, the war, precious metals, the Federal Reserve and energy. In this weekly column I will attempt to
condense the week’s events and examine how the news might affect your pocketbook. JSB

                                       Bear Tracks
                                      February, 2005
As the editor of the Silver Bear Cafe, I spend most of my time researching current events.
I explore the markets, the war, precious metals, the Federal Reserve and energy. In this
weekly column I will attempt to condense the week’s events and examine how the news
might affect your pocketbook. JSB

On the war front

Wars and/or geopolitical tensions are about to increase substantially. With
all the saber rattling going on, something’s got to give. Jordan vs. Syria,
Israel vs. Palestinians, Osama Bin Laden vs. Saudi Arabia, Russia vs. all
the former members of the USSR, U.S. vs. Iraq and Iran and North Korea
and Afghanistan and Argentina. The world is not currently a happy place
and the reason is heroin and cocain, ( more specifically those who are
fighting over the distribution rights), oil, natural gas, fresh water, cement,
steel, copper, uranium, palladium, timber, silver, (or lack of any of the
afore mentioned commodities), and 1,126,325,000 pissed off Muslims. The
present administration has mustered “Plan A”: Blast them into submission.
We have no “Plan B”. Get ready for a draft.

                                                                                                    page 1

North Korea said it would “bolster its nuclear weapons arsenal,” in
response to what it said were U.S. efforts to topple its government. It was
Pyongyang’s first public admission that it had nuclear weapons. North
Korea also said it would drop out of talks with the United States, South
Korea, Russia, China and Japan.

Korea’s leader, Kim Jong Il is a certifiable lunatic. It seems that lunacy is
going around these days. North Korea is equipped to land nuclear tipped
intercontinental ballistic missiles on California. To my way of thinking, that
is not a good thing. Our new secretary of State, Condoleeza Rice, has
already come out and admonished both Iran and North Korea for their
respective nuclear programs, and started what my Grand Daddy use to call
“a pissin match”.

What I don’t understand is where our administration is going to come up
with the software, (hundreds of thousands of troops), and hardware, (the
tanks, humvees, artillery, and ordinance), to fight another war. Our troops
are already complaining about the lack of body armour, communications
equipment, and reinforced plating on their jeeps and tanks. Starting up
another conflict can only stretch our resources thinner.

Keep your ears open for plans to reinstate the draft and conscript anyone,
(women included), between the ages of 18 and 45.

Last week, in a speech delivered to congress, Hon. Ron Paul of Texas
began like this;

“America’s policy of foreign intervention, while still debated in the early
20th century, is today accepted as conventional wisdom by both political
parties. But what if the overall policy is a colossal mistake, a major error
in judgment? Not just bad judgment regarding when and where to impose
ourselves, but the entire premise that we have a moral right to meddle in
the affairs of others?”

I have long felt that our foreign policy makers are responding to
administration members, of a collectivist mind set, who are attempting to
further the New World Order. Last week, Sen. Richard Lugar, R-Ind., asked
                                                                       page 2

Condoleezza Rice, during her confirmation hearings, about the Law of the
Sea Treaty, (LOST). Her response was that President George W. Bush
“certainly would like to see it passed as soon as possible.” Assuming she
wasn’t just making it up, Dubya can no longer claim the mantle of Ronald
Reagan’s conservative legacy.

 LOST was designed to put the Earth’s oceans under the control of the
UN. The treaty would regulate deep-sea mining, maritime transit, fishing,
pollution and oceanic research. It would establish the International Seabed
Authority (ISA), which would act as a de facto world court. The ISA would
be the first and final judge of deep-sea disputes. It would get into the
mining business itself with forced subsidies from private companies. With
its cut of profits, royalties and fees, the ISA would also be a redistribute-
the-wealth mechanism for “deserving” developing countries. Hooey! It is
an undeniable attempt to “claim possession” of all resources under all the
oceans of the world.

Ronald Regan, the last conservative President, saw this proposed
treaty for what it was and not only repudiated it, but fired the U.S. State
Department staff that had negotiated it.

But the first Bush and Clinton administrations attempted to resurrect it and,
unbelievably, a revised agreement was signed, but never Senate-ratified,
in 1994. There it lay until last October, when Senator Richard Lugar (R-
Ind.) suddenly pushed for ratification. (At the Senate Foreign Relations
Committee’s hearing, where only treaty proponents were invited to testify.)
The New World Order White House recognizes LOST as one more nail
in the coffin of our national sovereignty and is openly trying to hasten its
ratification.

The basic notion that the sea, and by precedent, space, should be
managed by UN collectivist bureaucrats is lunacy.

Why is George Bush dedicated to upholding the ideals of the United
Nations? Could it be that all the Administration’s policies, and the policies
of the two Administrations that preceded it, be working against American
sovereignty? If this is true, then both the Democrats and Republicans are
                                                                        page 3

trying to guide us into the trap of globalism. It’s clear to me that our Country
is being guided by politicians who are working on an elitist agenda that
supercedes the U.S. Constitution.

We are losing. The administration is not even trying to win the war in Iraq
any longer. It’s a war that Bush started and a war that he seems incapable
of stopping. It is, and always has been, a lose / lose proposition. This war is
costing 5-10 billions dollars per month and the lives of about two American
soldiers per day. There have also been over 16,000 iraqi civilians killed as
a result of the U.S. military intervention.

Financial Markets

As the chart below shows, the Dow is at the same place it was a year ago.
Consequently, as a result of a 17% devaluation of the dollar during the
same period, the market is down 17% in inflation adjusted dollars. I think
we are about to see another downturn. Get out of the American equities
markets and put your money in commodity stocks not valued in dollars.
There are several strong issues listed below.

U.S. stock market has now produced a negative return for more than five
                                                                        page 4

years.

The chart below is of the index of applications for mortgage loans to
purchase housing, and this weekly data comes from the Mortgage Bankers
Association. A little over a year is covered by the line connected circles
which represents the weekly plot. Also included in the chart is a line which
represents the 25-week moving average of the data.

Applications have faltered thus far in 2005. The current plots are well
below the moving average suggesting some weakness in the demand for
loans to buy housing. Much of the demand for housing has been satisfied.
Despite what the housing bulls say, if people do not borrow money to buy
houses the price of houses will not rise. In fact, given that the average
price for a house has been radically inflated by the Fed’s reckless interest
manipulation, the likelihood that housing prices will fall is a real concern.

New home sales for the month of January fell 4%, seasonally-adjusted,
from last year’s total, while dropping 9% compared to December’s pace.
The sales slowdown caused the inventory of new homes to swell 17% from
last year, and
 2% above last month’s total. On a months-supply basis, therefore, this
                                                                       page 5

month’s reading stood at 5.2 months, compared to 3.5 months last year,
and to the five-year average of 4.1 months. This is the highest level of
inventory on a months-supply basis since June 1996. The absolute new
home inventory number surpassed its all-time historical high last month.

As a result, prices are slipping. The median price of a home fell 13.2% to
$199,400, the lowest level since December 2003. This was the first time
since 1991 that the median price declined by more than 3%.

I look for this trend to accelerate in the coming months. Armed with this
knowledge, home owners will be empowered to take preparatory action.
Speculators may have waited to long to make their exits. Better late than
never.

There is very little value to be found in American equities these days.
Based on my on-going research, the state of the American Stock Markets
has produced a very negative risk / reward factor. When one considers both
the technicals and the valuations, a radical pull back is eminent. There
are fundamental reasons coalescing that should elevate concerns about the
equity market. Declining real growth, accelerating inflation, rising interest
rates and peaking corporate profits are all on the list. The manipulation and
interference from the Federal Reserve has effectively neutered any hope
for a gentle landing. We have reached a state of “red alert’. Anyone that is
still vested in American equities is still paying attention to the hooey that is
coming out of CNBC. That’s OK. Only the informed survive.

I have been suggesting for a couple of years now that commodities, and
natural resources are the sectors to be vested in. I have also said a
lot about Canadian resources because the world will still need oil,
natural gas, coal, uranium, gold, silver, nickel, palladium, copper, timber,
and wheat, no matter what happens to the U.S. economy. Also Canadian
resource equities are not valued in dollars. But, to my way of thinking,
there’s a new kid on the block.

Smart money is flowing into Australia right now. Short term interest rates
are in excess of 5%, and the country is almost as resource rich as Canada.
The easiest way to invest in Australia is to simply go long on their stock
                                                                        page 6

market. The symbol is EWA.

For some specific picks, check out BHP Billiton (BHP) and Atlas Pacific
Ltd (APCFY)
The markets have been intentionally set up for a fall. As I have stated
many times before, they are rigged so that the central bankers of the world
can siphon off wealth at will. I believe that the DOW is about to tank. Its
been tanking for sometime, but because of the devaluation of the dollar, no
one seems to notice.

If your portfolio was worth $100,000 two years ago, and it’s now worth
$120,000, you may think that you are up 20%. Unfortunately, that $120,000
only has the buying power of $90,000 in inflation adjusted dollars. After you
additionally take away another 30% of the apparent $20,000 capital gain
for taxes, your buying power has been diminished by another $6300, so you
are down to $83,700.

But now it will begin overtly tanking instead of covertly tanking. I see
the blue-chip index at 6900 before the end of the year. The only way
Greenspan can stave off economic Armageddon is to raise rates
precipitously. This action will effectively choke off any growth and result in
stagflation. Meanwhile the presses will continue to run, and your equity will
continue to dissolve.

Unless you are a card carrying masochist, get out of service equities and
into commodity equities. Historically, at the beginning of a recession, the
breakfast commodities, (coffee, cocoa, sugar, wheat, oats, rice, etc.), do
well, along with unleaded gas, and soy bean oil. I will be putting together a
early recession portfolio during the next two weeks. It will be posted in the
private dinning room’s “Financial Survival” forum.

Precious Metals

The price of copper hit a new high last week when it reached prices
exceeding $3,200 a metric ton, the highest prices seen since March of
1989. Copper is now 1.3% higher in 2005, which is on top of a 37% gain in
2004.
                                                                       page 7

Gold Reserve Inc (GRZ) will proceed with the financing and construction of
the Brisas gold and copper mine in Venezuela, following a feasibility study.

The study assumes a large open pit mine containing proven and probable
reserves of approximately 9.2 million ounces of gold and 1.2 billion pounds
of copper.

The Spokane, Washington-based Gold Reserve said the project anticipates
processing ore at full production of 70,000 tonnes per day, and based on
a gold price of $400 per ounce, operating costs are estimated at $153 per
ounce of gold.

All that glitters is not gold.

The recent correction in the precious metals market has created a brief
and exceptional opportunity to pick up bullion and bullion mining shares at
bargain basement prices. The purchase of physical bullion should be made
for the long term, while speculation in mining equities will provide the most
leverage.

Members have emailed me with concerns over the recent declines in
the prices of both gold and silver. I remind them that the silver I bought
two years ago is up around $2 an ounce, (about 45%), and the gold is up
around $72, (about 22%.) Both investments have out performed the DOW
and the S&P 500.

Editors note: The following is an excerpt taken from the February 5th edition of Mining Web.
Although the projection simply re-enforces my predictions over the past two years I believe
a mainstream account of this bull market in metals exhibits a turning of the tide in public
sentiment.

JOHANNESBURG (Mineweb.com) -- Rises in real metal and commodity
prices have reversed their trend declines of the past 30 years, according to
a major 260-page report by Citigroup Smith Barney, a division of Citigroup
Global Markets.

                                                                                    page 8

For investors, the critical finding is that this trend reversal is likely to remain
in place for some years, underpinning metals and mining stocks, and thus
providing resources investors with the opportunity to “ride the super cycle.”

In the report, Citigroup Smith Barney hail a long-term metals and mining
super cycle that has already seen the broader resources group move to
the status of market leaders. It is a phenomenon not known for more than
an entire generation.

The theme is continuing this year: so far, bar resources, global stock
markets have gone nowhere. With global economic growth cooling this year
and the US tightening interest rates, stock markets have lost direction, but
a range of special circumstances apply to the resources sector.

For specialist investors at least, resources are seen as a sub-sector likely
to outperform in 2005 – both in relative and in absolute terms. Toronto-
based RBC Capital Markets recently stated that while earnings growth for
mining stocks is slowing, “we believe that sustained strong earnings will
drive out performance of mining shares relative to the overall equity market
in 2005.”

Indeed, the resources bull market could remain intact for years. Broad
dollar-denominated metal and commodity prices have already experienced
a bull run of three years, in inverse correlation to the dollar’s bear market.
Citigroup Smith Barney say that the super cycle is driven by materials-
intensive growth in China, in turn driving higher production, and, of course,
costs.

 Copper futures, which have risen 4.5 percent in the last month as investors
flocked to sizzling commodity markets, traded in a narrow range below 16-
year highs on Tuesday, a day after rocketing to within a whisker of their
all-time best. Copper prices have surged 41 percent since the start of last
year.

Northgate Exploration Ltd. (NXG) is a gold and copper mining company
focused on operations and opportunities in the Americas. The Corporation’s
principal assets are the 300,000-ounce per year Kemess mine in     page 9

north-central British Columbia and the adjacent Kemess North deposit,
which contains a Proven and Probable Reserve of 4.1 million ounces of
gold.

PhelpsDodge (PD) is the world’s second-largest producer of copper and
the world’s largest publicly traded copper producer. The company is a
world leader in the production of molybdenum, the largest producer of
molybdenum-based chemicals and continuous-cast copper rod, and among
the leading producers of magnet wire and carbon black. The company’s two
divisions, Phelps Dodge Mining Co. and Phelps Dodge Industries, employ
more than 14,000 people worldwide.

Energy

Venezuelan President Hugo Chavez has been aggressively pursuing
trade agreements to sell crude and fuel oil to China. He is so motivated
to cement ties with Asian markets that he is offering petroleum at discount
prices to offset shipping costs and, in turn, make the deal more attractive.

Analysts say Mr. Chavez’s policies against the U.S., which buys half of all
the oil Venezuela sells, could cut into its oil income and hurt the country’s
ability to maintain production, which has fallen from about 3.1 million
barrels a day in 2002 to about 2.6 million barrels a day currently. Chavez
seems willing to allow production slowdowns which would result from
severing ties with U.S. markets.

“Sending oil to China might not be economically viable, but Chávez’s
motives are not always economic,” said a diplomat in Caracas.

Venezuela is also in talks with Panama suggesting they reverse the flow of
the peninsular pipeline to the Pacific Ocean. That would allow it to send oil
to Asia more cheaply.

Venezuela is the world’s fifth-largest oil exporter. Any sizable production
cutback will put upward pressures on global oil prices.

                                                                       page 10

Vaalco Energy Inc (EGY)

Vaalco Energy. Inc. is a Houston-based independent energy
company principally engaged in the acquisition, exploration, development,
and production of crude oil and natural gas.

Canadian Superior Energy Inc (SNG)

Canadian Superior is a Calgary based oil and gas exploration and
production company with operations in Western Canada, offshore Nova
Scotia and offshore Trinidad and Tobago. The Company is one of the
largest acreage holders offshore Nova Scotia, with 100% interest in
1,293,946 acres. See Canadian Superior’s web site at www.cansup.com
to review Canadian Superior’s “Offshore Nova Scotia Maps”, to review
information on the Company’s Western Canadian operations and for
information on Canadian Superior’s Trinidad Mayaro/Guayaguayare (M/G)
“Tradewinds” Offshore Project and the “Intrepid” Block 5 (c).

One should have a Canadian Oil Sands company in their portfolio.

CanWest Petroleum Corp (CWPC.OB)

CanWest Petroleum, an oil and gas exploration and development
company, has aggressively started up its Firebag East Oil Sands Project
in Alberta, Canada. The Firebag East Property is the largest land holding
in the Athabasca Oil Sands Region, spanning 1,400,000 acres in 60
townships (2,187 square miles). The Athabasca Oil Sands Region
contains the largest hydrocarbon resource in the world estimated at 1.5
trillion barrels of oil with 310 billion barrels of recoverable oil using today’s
technology. The Company announced it expects to begin its exploration
program on the Firebag East Property in late February 2005, which will
include drilling 20 wells.

                                                                           page 11

My preference in the large cap Canadian Oil Sands is the Canadian Oil
Sands Trust.

Canadian Oil Sands Trust (COSWF.PK)

Canadian Oil Sands Trust puts its trust in the oil that is in the sands in
Alberta being exploited by Syncrude Canada, a partnership whose oil
sands holdings account for about 13% of Canada’s total oil production.
Formerly known as Athabasca Oil Sands Trust, the investment trust held
23% of Syncrude in 2002, and in 2003 acquired EnCana’s 13% stake in the
oil sands project. The acquisition, in addition to making the company the
largest shareholder in Syncrude (in which Imperial Oil and Petro-Canada
also hold significant minority stakes) boosted Canadian Oil Sands’ share of
Syncrude’s oil production to 74,000 barrels a day.

Transglobe Energy Corp (TGA)

 Very well managed, drilling & pumping, a number of good properties in
areas known to have significant fields. A long term hold.

CanArgo Energy Corporation (CNR)

Very speculative. Good (not great) management, but one that is that’s
politically very well connected in the country of Georgia. Re-drilling
and testing old oil fields once pumped by the USSR with old antiquated
equipment. There’s oil there, just depends on how much they can remove
with their newer technology. Biggest potential lies in new untapped field:
Manavi. Oil there, not sure on how much, could quite possibly be an
elephant field.

One should also have exposure to coal, natural gas and uranium to round
out your energy portfolio.

Major coal: Peabody Energy Corp (BTU)
Minor coal: Hillsborough Resources Ltd (HLB.TO)
Major Gas: Devon Energy Corp (DVN)
Minor gas: Aspen Exploration Corp (ASPN.OB)
                                                                     page 12

also like Fieldpoint Petroleum Co (FPPC.OB)
Major uranium: Cameco Corp (CCJ)
Minor uranium: International Uranium Corporation (IUC.TO)

Check out this commodity-based mutual fund. PCRAX doesn’t offer the
leverage and outsized returns of genuine commodity funds, but they don’t
tend to suffer the gut-busting drawdowns either.
U.S. oil imports are at record levels and the U.S. uses more oil than
Germany, Russia, China, Japan and India combined.

Check out Suncor Energy Inc (SU). They are a Canadian energy company
with over 300 billion barrels of proven reserves.

The Fed

The Fed has now raised short-term interest rates six times, and says that
the rate still must move higher to be consistent with their policy of neutrality.
The three-steps-and-stumble rule, promulgated by the late Edson Gould,
states that whenever the rate is raised three consecutive times, the market
goes down. This rule has been highly accurate for the last 75 years, and
with good reason—and it has proved to just as be valid when interest rates
were low as when they were high. The key is direction rather than absolute
levels. These tightening periods usually lead to economic recessions
as well since the Fed doesn’t stop tightening until something negative
happens. The Bear is about to start eating...

“Mr. Chairman, we have in this Country one of the most corrupt institutions
the world has ever known. I refer to the Federal Reserve Board and the
Federal Reserve Banks, hereinafter called the Fed. The Fed has cheated
the Government of these United States and the people of the United
States out of enough money to pay the Nation’s debt. The depredations
and iniquities of the Fed has cost enough money to pay the National debt
several times over.

“This evil institution has impoverished and ruined the people of these
United States, has bankrupted itself, and has practically bankrupted our
Government. It has done this through the defects of the law under which it
operates, through the mal administration of that law by the Fed and page 13

through the corrupt practices of the moneyed vultures who control it.

“Some people who think that the Federal Reserve Banks United States
Government institutions. They are private monopolies which prey upon
the people of these United States for the benefit of themselves and their
foreign customers; foreign and domestic speculators and swindlers; and
rich and predatory money lender. In that dark crew of
financial pirates there are those who would cut a man’s throat to get a
dollar out of his pocket; there are those who send money into states
to buy votes to control our legislatures; there are those who maintain
International propaganda for the purpose of deceiving us into granting of
new concessions which will permit them to cover up their past misdeeds
and set again in motion their gigantic train of crime.

“These twelve private credit monopolies were deceitfully and disloyally
foisted upon this Country by the bankers who came here from Europe and
repaid us our hospitality by undermining our American institutions. Those
bankers took money out of this Country to finance Japan in a war against
Russia. They created a reign of terror in Russia with our money in order to
help that war along. They instigated the separate peace between Germany
and Russia, and thus drove a wedge between the allies in World War. They
financed Trotsky’s passage from New York to Russia so that he might assist
in the destruction of the Russian Empire. They fomented and instigated
the Russian Revolution, and placed a large fund of American dollars at
Trotsky’s disposal in one of their branch banks in Sweden so that through
him Russian homes might be thoroughly broken up and Russian children
flung far and wide from their natural protectors. They have since begun
breaking up of American homes and the dispersal of American children.

“Mr. Chairman, there should be no partisanship in matters concerning
banking and currency affairs in this Country, and I do not speak with any.

“In 1912 the National Monetary Association, under the chairmanship of the
late Senator Nelson W. Aldrich, made a report and presented a vicious bill
called the National Reserve Association bill. This bill is usually spoken of
as the Aldrich bill. Senator Aldrich did not write the Aldrich bill. He was the
tool, if not the accomplice, of the European bankers who for nearly twenty
                                                                        page 14

years had been scheming to set up a central bank in this Country and who
in 1912 has spent and were continuing to spend vast sums of money to
accomplish their purpose.

“We were opposed to the Aldrich plan for a central bank. The men who rule
the Democratic Party then promised the people that if they were returned
to power there would be no central bank established here while they held
the reigns of government. Thirteen months later that promise was broken,
and the Wilson administration, under the tutelage of those sinister Wall
Street figures who stood behind Colonel House, established here in our
free Country the worm-eaten monarchical institution of the “King’s Bank” to
control us from the top downward, and from the cradle to the grave.

“ The Federal Reserve Bank destroyed our old and characteristic way of
doing business. It discriminated against our 1-name commercial paper, the
finest in the world, and it set up the antiquated 2-name paper, which is the
present curse of this Country and which wrecked every country which has
ever given it scope; it fastened down upon the Country the very tyranny
from which the framers of the Constitution sough to save us.

Congressman, Louis T. McFadden - Remarks in Congress, 1934

It would seem that “Bubbles” Greenspan has finally owned up to the
central role he has played in irreparably screwing up the world’s economy.
His confession came in the form of a speech entitled, “Current Account”,
that was given in London at the Advancing Enterprise 2005 Conference on
the night before the February 5th G-7 meeting.

Bubbles’s admission came when he finally admitted connection between
the excesses of America’s property market and its gaping current account
deficit.
“…the growth of home mortgage debt has been the major contributor to
the decline in the personal saving rate in the United States from almost 6
percent in 1993 to its current level of 1 percent. The rapid growth in home
mortgage debt over the past five years has been driven largely by equity
extraction. Approximately half of equity extraction shows up in additional
household expenditures, reducing savings commensurately and thereby
                                                                     page 15

presumably contributing to the current account deficit.”

In other words, he concedes that a debt-induced consumption boom has
led to a massive current account deficit.

Greenspan targeted the American Consumer as a replacement for the
American Producer as the chief contributor to the U.S. economy. To insure
the American Consumer would be, at least temporarily, capable of such a
task, “Bubbles” lowered short-term interest rates to their lowest level since
1958. He is now saying that it’s time to “take away the punch bowl”, and by
doing so, allow the real estate bubble to burst. Housing prices are about to
fall.

The old saying is buy low, sell high. The time for the latter has finally
arrived.

Financial Survival

First of all, take a deep breath. Nothings going to happen right away. There
is plenty of time to secure your future if you are willing to get started now.
 Start thinking in terms of how society is going to react when they finally
wake up. There will be opportunities abounding for the clever, forward
thinking patriot.

First get your financial house in order. Get out of debt. Figure out ways to
conserve. Take up gardening. Sell everything you don’t need, and invest
the money in commodity and natural resource stocks.

Health-care costs are rising 300% faster than wages. Explaining away
the impact upon the “Real Economy’s” participants is quickly becoming
far less palatable to America’s Working Class. I use that term very loosely
to include all Americans not feeding at the top tier of first abuser privilege
granted to those with immediate access to Chairman Greenspan’s “Liquidity
Trough.”

Politicians and diapers have one thing in common. They should both be
changed regularly, and for the same reason.
                                                                        page 16

It is time to look seriously into precious metals. Most of my readers are
already vested but if you are one of those that is not, buy some bullion.
Then buy some mining issues. Check out the large portfolio we have listed
in the private dining room.

Economists don’t have a standard definition for the “middle class.” But the

percentage of households having a pretax income of between $25,000 and
$75,000 - a group occupying roughly the middle half of Census income
tables - has declined by 2.2 percentage points since President Bush took
office, after adjusting for inflation.

In the same 2000-2003 period, those making less than $25,000 grew by
2.5 percentage points to 30 percent of households. Those making more
than $75,000 declined by 1 percent to 25.4 percent of all households.
These numbers were crunched by FactCheck.org, a project of the
University of Pennsylvania’s Annenberg Public Policy Center to examine
campaign statements for accuracy.
 The middle class is under attack. Prepare yourselves.

Have you ever heard of hyperinflation? In January 1919, one ounce of
silver cost 12 German marks. Four short years later, on November 7, the
day that Hitler jumped on a table in a beer hall in Munich and shouted “The
revolution has begun,” the same ounce of silver cost a whopping 543 billion
marks!
 Think it can’t happen here?

Get out of general equities and into commodities, like energy and precious
metals.

What else can you do?

First of all, wake up! Either you support freedom with laissez-faire
capitalism,
 an economic doctrine that opposes governmental regulation of or
interference in commerce beyond the minimum necessary for a free-
enterprise system to operate according to its own economic laws, or you
                                                                     page 17

support a statist/collectivist ideology that believes in taking the production
of a person and placing it out of their control. Your choice is regain your
freedoms or or suffer encroaching slavery.

There is a huge difference between the ideologies that support liberty
and democracy. The ideology of Liberty suggests and implies that people
should choose to be benevolent and productive, as part of God’s moral
code. That society will create for itself non-governmental organizations to
deal with social needs, that government is established by society to sustain
and defend the unalienable (God given) rights of the individual, and limited
only to this function. Political power was to remain within the individual and
his society.

Then why do so many of our politicians and teachers keep trying to
shove this concept of democracy down our throats, as if freedom naturally
followed? Maybe it’s because majority rule sounds legitimate and moral
on its face. Consequently, the majority of Americans have shown their
willingness to give up their liberties in exchange for a handout.

As long as foreigners continue to accept our dollars in exchange for their
finished goods and let them pile up in their central banks as “reserves”
then we will be able to maintain some semblance of our “American way
of life.” But on the day that the foreigners decide they have enough dollar
reserves and start to spend our IOU’s, life in America will be unalterably
changed for the worse.

Trade your dollars for precious metals while your dollars are still worth
something. When all those dollars finally do come home flooding the US
economy they will certainly be worth less. If we are ever to become a
powerhouse economy again we must PRESERVE and accrue capital to
reinvest at the right time in the future. No matter how little or how great your
income, save something every month and live below your means.

Understand what is happening and “Spread the Word”.
 Higher oil prices should stimulate people to add insulation to their
houses...or to buy a more energy-efficient automobile. It may also cause
a lot of folks to become desperados. You might consider getting into the
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burglar bar business.

We are entering a period of civilization where the keyword is sustainability,
not growth.

Don’t spend two dollars to dry clean a shirt. Donate it to the Salvation Army
instead. They’ll clean it and put it on a hanger. Next morning buy it back for
seventy-five cents.

Very soon, a lot of people will be glad they held gold and silver.

Stay tuned for more portfolio recommendations in the Silver Bear Cafe’s
“Private Dining Room”

Its not what you don’t know that will screw you up, it’s what you know that
is wrong. The spin you hear from the mainstream media is intended to
mislead you. Open your eyes and face the future. If you leave your head in
the sand and ignore it, you are only leaving your butt exposed for the world
to kick. This all may sound like gloom and doom, but when
you get a handle on what is going to happen, you will have a
future filled with opportunity. Fortune favors the Informed.

More next week...

May the Great Spirit be with you always,

Johnny Silver Bear
Chief cook and bottle washer, The Silver Bear Cafe
Disclaimer

All statements and expressions are the sole opinions of the editor and are subject to change without notice. A profile,
description, or other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any
securities mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent
or guarantee the accuracy thereof, nor the statements made herein. The staff of Silver Bear Cafe are not registered
investment advisors and do not purport to offer personalized investment related advice. The publisher, editor, staff, or
anyone associated with, or associated to the Silver Bear Cafe may own securities mentioned in this newsletter and may
buy or sell securities without notice.                                                                             page 19