IMF cuts European
Influence
Research for Online Investors

by John Dalt

10/1/10

As a father of four angels (daughters) we never had too many worries.  But, as parents, we always watched for events ‘off the radar.’ This was our early warning system.  Watching the power brokers in Washington is a full time job, we wondered what shenanigans are they up to ‘off radar?’  We didn’t have to look too far.

Watch the International Monetary Fund (IMF).  Bloomberg has a story today that the European Union (EU) is ready to give up two seats on the IMF executive board, at the urging of the United States.

The EU presently holds nine seats on the 24 member board, and traditionally appoints the Chairman.  Why would the U.S. push the European Union to reduce their representation on the executive board in order for China and other “developing” countries to gain more control?

Sometimes we wonder whose side our government is on.  The U.S. holds ultimate veto power over any decision of the IMF.  Voting rights are allocated based on the amount of money contributed to the fund.  The U.S. has contributed 16.74% of the IMF funds.  Approval of any proposal before the Board of Governors requires an 85% ‘Yea’ vote.  We wonder how long this will hold.

We don’t see what good can come of reducing European representation on the board.  We wrote about the IMF on May 4, 2009 in SDR’s Signal the End of the Dollar.

The International Monetary Fund is going to issue bonds, in Special Drawing Rights (SDR)’s. This is the beginning of the end of the U.S. dollar as the world’s Reserve Currency. We are such suckers. The IMF has always operated on funds provided by member nations. Since the U.S. provided over 16% of the funds and approval of any important decisions required 85% of the votes, we held a veto over the IMF agenda.

The U.S. is broke; China and Russia want to replace the dollar as the reserve currency used in World Commerce. Answer: IMF issues bonds, China buys bonds in SDR’s rather than dollars, directly offsetting purchases of U.S. Treasuries. China has also executed currency swaps with other countries, thus avoiding using dollars for trade. They are slowly enacting their stated goal of removing the dollar as the world’s Reserve Currency.

Eventually, this will take away our government’s ability to print money with impunity. Welcome to the third world.  The IMF has a press release on their sight, notice Boutros-Ghali in the picture.  He the son of Boutros-Boutros-(By) Ghali, the head of the U.N. in the 90's.  What a mess, you get rid of one and they have spawn.

Rahm Emmanuel left the White House today.  He is moving to Chicago to run for mayor.  Never mind he is not a resident.  Those rules are for the "little people."  Beware Chicago, this is your chance to break away from corruption.

Osama Bin Laden has aligned himself with Al Gore.  His latest taped message says “Climate change is affecting our (Islamic) nation and is causing great catastrophes throughout the Islamic world.”  There you have it; even cave men should be concerned about climate change.  We wonder if Al Qaeda will go after China for burning coal.

Today's chart presents the median single-family home price divided by the price of one ounce of gold. This results in the home/gold ratio.  It currently takes 144 ounces of gold to buy the median single-family home. This is considerably less that the 601 ounces it took back in 2001. When priced in gold, the median single-family home is down 76% from its 2001 peak (to a level last seen in January 1983) and remains well within the confines of its six-year accelerated downtrend.

It looks like it could go lower.  Will it be because of lower home prices or higher gold prices?

To the mailbag:
Your trading results (Long-Term Portfolio) seem realistic; however has any independent company evaluated your results such as Hulbert's Financial Digest.  Do you offer a trail period?— subscriber D.B.

John’s reply:  Thanks for asking.  No, I do not have audits by Hulbert's.  I publish our results monthly on the "Model Portfolio" page, and save them quarterly.  You can go back to Dec. 2008 when we started this practice.  No, I do not offer a trial period...on a $99 service?  I do offer money back for first 60 days, then pro-rated refund.

We are the only newsletter I am aware of that publishes results monthly.  We also list any stocks sold on the past results page the same day we sell them.  There are no lies or misleading statements.  Our present subscribers would not tolerate that!  And neither would I.  You can join, and do your friends a favor...tell them about us.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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