1855 Trawood Ste 204 ● El Paso, Texas 79935

915-595-2751 mbj@whc.net

Newsletter October 2012

October 2012

In Touch Financial

William Lenderman III

Financial Mentor

Phone: 915-595-2751  Fax: 915-590-2157

Email: wl3@whc.net

Website: keepingintouchfinancial.com

“Experiencing Success One Good Idea at a Time”


Several days ago, I finished an excellent book entitled “The Little Book of the Shrinking Dollar”. It was written by one of the best analysts of whom I am aware. When I finished the book, a thought struck me like a thunderclap.

I am sure you are aware that I spend at least three hours per day, seven days per week, reading and studying. I subscribe to many services which provide information about financial facts, economic developments, government actions, trends in the economy, demographics, timing, opportunities in countries which are apparently prospering, and special situations like new inventions in medicine and electronics.

I have looked at the actual record of one of the better advisory services. Part of its newsletter is dedicated to advising conservative investors. All but one of the current investments were suggested in 2011 and are still outstanding. All are losers except one. The losers lost 1.42% and 27.62%. The only winner is gold bullion which has increased in value by 485.25% since it was recommended in the year 1999. The investments recommended for aggressive investors are meant to take advantage of the current turmoil and were suggested in 2011. They have lost 25.34% and 97.69%. The investments for aggressive investors suggested in 2012 are down 3.85%, 8.87%, and 8%. You may wonder how much you would be willing to pay for this kind of advice.


By God’s providence, I was able to warn my clients to abandon the stock market in March of 2000. From that point to now, the stock and bond markets have been gambling casinos. In these last 13 years, I have not met a single person who has as much money in his account as he had invested thirteen years ago. Surely there are people who have made money. They must be scarcer than hen’s teeth.

My suggestions have been simple. As a fundamental first step, I have been trying to help people accumulate cash, under their own control, as quickly as possible, recognizing the need for cash during this deflationary phase of the depression. You would be wise to continue filling your “Bank on Yourself” accounts as quickly as possible so that you have both emergency funds and the money necessary to take advantage of opportunities as they appear. The “Bank on Yourself account” is the safest place I have found to store money under the current conditions. It allows you to keep your money safe and receive a decent interest while keeping the money fully available and under your control. This foundational step lays the groundwork for both present and future financial success.

Looking at “Bank on Yourself” as an alternative to standard banks in terms of the functions it can perform, I would encourage you to go to our blog at keepingintouchfinancial.com and click on the section labeled “Bank on Yourself”.


In September of 2001, I recommended that my clients choose one of two ways to save any money which was currently available for investing. The first was to use any excess funds to accumulate silver in the form of Silver Eagles. This is not investing. It is pure savings using real money, not fiat currency. Each Silver Eagle contains exactly one ounce of pure silver. Even though each coin carries a premium, Silver Eagles are easily recognizable, and easily bought, sold, or traded without having to do any fancy calculations.  At the time I made this recommendation, silver was selling for $4.12 an ounce. Currently, we have enjoyed an annually compounded 21% per year increase over exactly 11 years based on our savings in Silver Eagles. As I am dictating this newsletter the current price of silver is over $34.00/ ounce. The Silver Eagles are currently over $37.00 each. The current return for this year, as of the first of January 2012, is approximately 24%.

Last August 2011, I sent a newsletter explaining the likelihood that silver and gold could drop in price. The drop in the price of both of these metals began that very same month. Even though the prices are currently recovering from that drop, there is a very strong possibility that silver and gold could still go down significantly for a time. That gives us some strategies to consider. We could keep our silver as a long term holding. Over the long term, the price will inevitably go up. Another choice would be hold on to the silver and use some investment strategies which are likely to gain a profit during conditions that could push the price of silver and gold down temporarily.


The Gambling Casino

Some people still believe they can store money in a brokerage account with the hope that they will be able to find profitable investments. Please be aware that a number of these brokerage outfits have recently experienced financial difficulties. In response, some have violated the trust of their customers by stealing their cash deposits. The most extreme example is John Corzine’s commodity brokerage outfit, MF Global. He and his colleagues managed to steal 1.6 billion dollars from the cash accounts belonging to their investors.  When Congress asked him what happened to the money, he just shrugged his shoulders and said, “I have no idea.” Any normal person would have been thrown in jail for stealing only $1,000.00. It is clear that he and others like him are far above the law and will never be brought to justice. This means the stolen money will never be recovered by the victims.


It is heartbreaking to me to see how many people are putting their hard earned money into government programs like IRA’s and 401k’s. Beside the fact that the money is tied up for their entire working lives, the choices are limited so that the potential for gain is small. These accounts face significant dangers. The first is the obvious likelihood of another major crash, first in stocks, then in bonds. People could possibly experience a 40% to 80% loss if such a thing should occur.  The second risk is the built-in increase in the tax rate which is scheduled to take place January the 1st, 2013. When people try to access their money, they are going to find a great deal of it belongs to the government. The third risk is the risk of confiscation. It is hard to believe that our government would purposely steal the money from qualified accounts, but the probability of such a thing happening is mounting.

Confiscating IRA’s, 401k’s and 403b’s would not be a new precedent.Argentinaconfiscated its private pension plans in 2008.FranceandIrelanddid the same thing in 2010.Portugalconfiscated private pension plans in 2011. Our own federal government has been considering the same idea for at least seven years as far as I can tell.

I would certainly suggest you strongly warn anyone who continues to fund these kinds of plans of the dangers which exist. The money already committed in a 401k is locked up unless an individual retires, quits or is fired.  IRA’s can be liquated. Income tax and a penalty will be due. I can’t conceive of a reason why people would continue to throw more money into such accounts with these identifiable dangers.


   Corrupt Banking System

 The following information was researched by R.E. Sutherland, M.Ed./sciences

Freelance Investigative Science Reporter since 1996

Posted by EU Times on Aug 31st, 2012

Many people believe that banks hold the promise of keeping their money safe, despite the fact that the whole banking industry is shaking. The reason for such confidence is largely the guarantees promised by the Federal Deposit Insurance Corporation (FDIC). This is a questionable government promise to protect interest bearing funds up to $250,000.00 per account and to guarantee non-interest bearing accounts without limit. I have read the document that established the FDIC. The document has nothing to do with protecting your money. It has everything to do with protecting the bank’s money. If your bank failed, nothing you could tell the FDIC would qualify you to receive a single penny of reimbursement. If the bank should deny that you have a deposit, you have no insurance. In addition, the document itself clearly states that the FDIC reserves the right to withhold payment up to 30 years before making good any losses occurred in a bank failure. You might ask, “What value would it be to receive your money thirty years from now if your bank should fail?”

On August 9, 2012, the 7th circuit court of appeals effectively ruled, that if a bank steals your money, invests it badly, or gambles and loses it, the problem is yours, not the banks! Let me give you a few real examples of the risks depositors currently, face as a result.

 In Texas, Pamela Cobb, manager of Bank of America, stole an estimated $2,000,000.00 from customer funds for personal use. Bank of America has, so far, stonewalled the depositors who were robbed. Other customers had their private possessions stolen from their safety deposit boxes at Bank of America. The safety deposit boxes were drilled open, and their contents were shipped to the Bank of America corporate holding center in South Carolina. The safe deposit box customers have been stonewalled.

Citibank stole more than $14,000,000.00 from customers nationally through a process called “account sleeping.” These thefts were accomplished by charging duplicate fees and by other devious means.

An anonymous employee at Chase Bank opened an account under a customer name. He also established a personal debit card in that client’s name. He withdrew approximately $300.00 per day using this debit card through this fraudulent account. The victim was chosen because he was suffering from Alzheimer’s disease. Bank of America has been stonewalling the family. Family members have sought legal action, but with no results as of yet.


Many individuals express the strong desire to protect themselves against inflation. There is no question —–a period of inflation will come sometime in the future. The likelihood is this inflation is not likely to present itself through any significant increase in prices for the next few years. The reason is simple. Americais still in the greatest deflationary depression in its entire existence. Other countries are following us into this depression. During this phase, fiat currency should become more and more valuable regarding what it can buy. I know this idea may appear counter-intuitive. Current trends support what I am saying.

Since cash is the most important thing a person can have during this deflationary phase of the depression, it is wise to accumulate as much as possible. Through my daily studies, I hope to be able to warn you in advance when we begin to see mounting evidence that we are moving into the inflationary phase of this great depression. That would be the ideal time to shift more heavily into real money that should do well during the inflationary phase.

It is true that the Federal Reserve is now creating at least 40 billion dollars per month based on the newly announced QE3. The likelihood is that they are producing, even more, money than this but in secret. None the less, we have not yet experienced price inflation because more money is being lost on a daily basis than the Fed currently chooses to create given the danger of triggering a panicked flight from the dollar. An enormous amount of money is being lost in real estate, stocks, bonds, and jobs and in businesses worldwide. As long as the net amount of money in the economy decreases as a result of these losses and as long as the banks continue to hold their reserves rather than lend, we should continue in this present deflationary phase.


I have talked to a number of qualified people concerning a form of investment called electronically traded funds (ETF). These funds are meant to offset investor risk if used wisely. There is a useful EFT, which is identified by the letters FAZ.  This fund is designed so that when bank stocks go down, FAZ goes up approximately three times as fast. When bank stocks go up, the value of FAZ drops three times as fast. A very small amount of money placed in this account could provide “financial insurance” to protect us against possible massive bank failures.

Make no mistake; the current banking system is in much worse shape than it was in 2008 when we experienced the last crisis. At the present price of FAZ, which is approximately $16.00 per share, a small insurance position could produce as much as several hundred times the money committed to protecting our assets from loss should another general bank collapse occur.  If a banking crisis doesn’t happen, this “one-time premium”, would be a small cost even if the money were entirely lost. The one time cost of this strategy doesn’t compare to what we all pay for auto and homeowners insurance each and every year.

Please contact me if you have any questions about any subject or idea I have shared and how it might apply to your personal situation.

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