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In This Issue:
I Told You So
Excedrin Headache
80 Unreal NumbersAusterity
Golden Times Ahead
Standard Stupidity
Current Investment Guideline


If you have questions or comments about any writing, please submit your question to: questions@interanalyst.us
: JANUARY 2014



The developers of bitcoin are trying to show that money can be successfully privatized. They will fail, because
money that is not issued by governments is always doomed to failure. Money is inevitably a tool of the state.
This was the first sentence in last months issue of InsidersPower which came out on November 30, 2013.
Within 2 days Bitcoins plummeted and just closed 40% below the November 2013 high.
No, we are not the reason it plummeted, we do not have the subscription numbers in the millions that it
would take to make the move.
However, looking at the chart, you would think we did:








HIGH
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Copyright 2013 InterAnalyst, LLC 3

Overshadowed by the bungled debut of Obamacare and congressional gridlock, most Americans in a new poll
dubbed 2013 a bad year that will be quickly forgotten. For more than four-in-10, the perils of 2013 hit home
hard.
Most Americans won't remember 2013 fondly, but people are happier about this year than they were last
year or in the aftermath of the financial crisis.
Put simply, most Americans are
happy to see 2013 go. In the
latest Economist/YouGov Poll, more
than two-thirds view the year as
one that was bad for the world;
more than four in ten say it was a
bad year for their family.
In fact, 60% of Americans plan to
stay up until midnight to watch the
old year end although this is more
likely to be a young persons
plan. 77% of adults under 30, but
just a third of senior citizens, will be
awake to make sure 2013 finally goes into history.
The public sees the world and many also see themselves personally as having not just had a tough 2013,
but having had a hard time for the
last few years. At the end of 2012,
69% said it had been a bad year for
the world. If there is any
consolation, the public has seen
some progress: when they assessed
2009, the first year of President
Obamas first term, their opinion
was worse. More than eight in ten
say that 2009 had been a bad year
for the world.
Global assessments are often
political in nature. And this is case
here. Although all groups are more negative than positive when assessing the state of the world, Republicans
are especially negative. Only 13% of Republicans say 2013 has been a good year for the world.
There are almost no issues where a majority of Americans have seen improvement. Only a quarter say health
care coverage is better today than it was a year ago; more than half say it has gotten worse, reflecting the
continued poor assessments given to the Administrations health care reform (in this
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Copyright 2013 InterAnalyst, LLC 4

weeks Economist/YouGov poll, for example, a majority continues to call it a failure, and nearly half think it
should be repealed).
However, even though the continued withdrawal of U.S. troops from Afghanistan has not translated into a
positive assessment of American involvement there, things do look better than they did four years
ago. Although 31% describe the
situation in Afghanistan as worse
today than it was a year ago, 60%
viewed things as getting worse there
at the end of 2009.
When it comes how 2013 impacted
American families, the year looks
better, although its hard to describe
things as especially good. The slow
economic improvement and the
incrementally dropping
unemployment rate havent
registered with everyone. A majority does admit that last year was a good one for their families although
fewer than one in ten would say it was a very good year. Opinions a year ago looked about the same. But at
the end of 2009, a majority of Americans thought their families had a bad year. For one in five in 2009, it had
been very bad.
Young adults are the most positive about 2013 for themselves and for the world. Nearly three in four of
those under 30 think this has been a good year for their families; almost half say it has been a good year for
the world. And income matters a lot when judging a familys success: barely half with incomes under
$40,000 a year say this has been a good year for their families, compared with 72% of those with incomes
over $100,000 a year.
This slow, incremental and almost imperceptible economic improvement is clear when one looks at how
Americans rate their familys financial situation compared to a year ago: 33% say they are worse off than
they were a year ago; only half as many, 16% say their family is better off financially today. But that is still an
improvement from four years ago. Then,
four times as many (47%) said things had
gotten worse for their family in 2009 as
said the familys finances had improved
(12%).
Americans now have had multiple years
viewing government leaders, and not just
those in the current Administration,
negatively. George W. Bushs approval
rating in Gallup polls dropped below 50%
less than a year after he began his
second term, and continued a decline
through the rest of his presidency. In Economist/YouGov Polls, President Obamas disapproval rating has
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Copyright 2013 InterAnalyst, LLC 5

been higher than his approval rating for
most of his presidency: only for his first
year in office and for a time around his re-
election in 2012 has that not been the
case.
One year ago, just over a month after
Barack Obama was re-elected, approval
outweighed disapproval, though
narrowly. 49% approved, 43%
disapproved. Today, 42% approve, 55% do
not. That actually represents a small
improvement from assessments in late
October and November, after the partial
government shutdown and the troubled
rollout of the Obamacare website.
Evaluation of the website has improved, though it still negative: at the end of last month, 62% of those who
had visited the website described their experience negatively. In this weeks poll, the percentage rating their
experience negatively has dropped nine points. Of course, most site visitors are still evaluating their
experiences in October and
November before the site was
revamped.
As for Congress, which finally
passed a budget last week, 61%
still say it has accomplished less
than a Congress usually does in a
year. But there has been an ever-
so-small numerical improvement
in how the public looks at
Congress. Perhaps its the holiday
spirit, but 12% now approve of the
way Congress is handling its job,
double the 6% that did so a week
ago.
Full results can be found here.
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During 2013, America continued to steadily march down a self-destructive path toward oblivion. As a society,
our debt levels are completely and totally out of control. Our financial system has been transformed into the
largest casino on the entire planet and our big banks are behaving even more recklessly than they did just
before the last financial crisis. We continue to see thousands of businesses and millions of jobs get shipped
out of the United States, and the middle class is being absolutely eviscerated. Due to the lack of decent jobs,
poverty is absolutely exploding.
Government dependence is at an all-time high and crime is rising. Evidence of social and moral decay is
seemingly everywhere, and our government appears to be going insane. If we are going to have any hope of
solving these problems, the American people need to take a long, hard look in the mirror and finally admit
how bad things have actually become. If we all just blindly have faith that "everything is going to be okay",
the consequences of decades of incredibly foolish decisions are going to absolutely blindside us and we will
be absolutely devastated by the great crisis that is rapidly approaching. The United States is in a massive
amount of trouble, and it is time that we all started facing the truth.
The following are 83 numbers from 2013 that are almost too crazy to believe:
1. Most people that hear this statistic do not believe that it is actually true, but right now an all-time
record 102 million working age Americans do not have a job. That number has risen by about 27
million since the year 2000.
2. Because of the lack of jobs, poverty is spreading like wildfire in the United States. According to the
most recent numbers from the U.S. Census Bureau, an all-time record 49.2 percent of all Americans
are receiving benefits from at least one government program each month.
3. As society breaks down, the government feels a greater need than ever before to watch, monitor
and track the population. For example, every single day the NSA intercepts and permanently stores
close to 2 billion emails and phone calls in addition to a whole host of other data.
4. The Bank for International Settlements says that total public and private debt levels around the
globe are now 30 percent higher than they were back during the financial crisis of 2008.
5. According to a recent World Bank report, private domestic debt in China has grown from 9 trillion
dollars in 2008 to 23 trillion dollars today.
6. In 1985, there were more than 18,000 banks in the United States. Today, there are only 6,891 left.
7. The U.S. banking system has 14.4 trillion dollars in total assets. The six largest banks now account
for 67 percent of those assets and all of the other banks account for only 33 percent of those assets.
8. JPMorgan Chase is roughly the size of the entire British economy.
9. The five largest banks now account for 42 percent of all loans in the United States.
10. Right now, four of the "too big to fail" banks each have total exposure to derivatives that is well in
excess of 40 trillion dollars.
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11. The total exposure that Goldman Sachs has to derivatives contracts is more than 381 times
greater than their total assets.
12. According to the Bank for International Settlements, the global financial system has a total of 441
trillion dollars worth of exposure to interest rate derivatives.
13. Through the end of November, approximately 365,000 Americans had signed up for Obamacare but
approximately 4 million Americans had already lost their current health insurance policies because of
Obamacare.
14. It is being projected that up to 100 million more Americans could have their health insurance policies
canceled by the time Obamacare is fully rolled out.
15. At this point, 82.4 million Americans live in a home where at least one person is enrolled in the
Medicaid program.
16. It is has been estimated that Obamacare will add 21 million more Americans to the Medicaid rolls.
17. It is being projected that health insurance premiums for healthy 30-year-old men will rise by an
average of 260 percent under Obamacare.
18. One couple down in Texas received a letter from their health insurance company that informed them
that they were being hit with a 539 percent rate increase because of Obamacare.
19. Back in 1999, 64.1 percent of all Americans were covered by employment-based health
insurance. Today, only 54.9 percent of all Americans are covered by employment-based health
insurance.
20. The U.S. government has spent an astounding 3.7 trillion dollars on welfare programs over the past
five years.
21. Incredibly, 74 percent of all the wealth in the United States is owned by the wealthiest 10 percent of
all Americans.
22. According to Consumer Reports, the number of children in the United States taking antipsychotic
drugs has nearly tripled over the past 15 years.
23. The marriage rate in the United States has fallen to an all-time low. Right now it is sitting at a yearly
rate of just 6.8 marriages per 1000 people.
24. According to a shocking new study, the average American that turned 65 this year will
receive $327,500 more in federal benefits than they paid in taxes over the course of their lifetimes.
25. In just one week in December, a combined total of more than 2000 new cold temperature and
snowfall records were set in the United States.
26. According to the U.S. Census Bureau, median household income in the United States has fallen for
five years in a row.
27. The rate of homeownership in the United States has fallen for eight years in a row.
28. Only 47 percent of all adults in America have a full-time job at this point.
29. The unemployment rate in the eurozone recently hit a new all-time high of 12.2 percent.
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30. If you assume that the labor force participation rate in the U.S. is at the long-term average, the
unemployment rate in the United States would actually be 11.5 percent instead of 7 percent.
31. In November 2000, 64.3 percent of all working age Americans had a job. When Barack Obama first
entered the White House, 60.6 percent of all working age Americans had a job. Today, only 58.6
percent of all working age Americans have a job.
32. There are 1,148,000 fewer Americans working today than there was in November 2006. Meanwhile,
our population has grown by more than 16 million people during that time frame.
33. Only 19 percent of all Americans believe that the job market is better than it was a year ago.
34. Just 14 percent of all Americans believe that the stock market will rise next year.
35. According to CNBC, Pinterest is currently valued at more than 3 billion dollars even though it has
never earned a profit.
36. Twitter is a seven-year-old company that has never made a profit. It actually lost 64.6 million
dollars last quarter. But according to the financial markets it is currently worth about 22 billion
dollars.
37. Right now, Facebook is trading at a valuation that is equivalent to approximately 100 years of
earnings, and it is currently supposedly worth about 115 billion dollars.
38. Total consumer credit has risen by a whopping 22 percent over the past three years.
39. Student loans are up by an astounding 61 percent over the past three years.
40. At this moment, there are 6 million Americans in the 16 to 24-year-old age group that are neither in
school or working.
41. The "inactivity rate" for men in their prime working years (25 to 54) has just hit a brand new all-time
record high.
42. It is hard to believe, but in America today one out of every ten jobs is now filled by a temp agency.
43. Middle-wage jobs accounted for 60 percent of the jobs lost during the last recession, but they have
accounted for only 22 percent of the jobs created since then.
44. According to the Social Security Administration, 40 percent of all U.S. workers make less than
$20,000 a year.
45. Approximately one out of every four part-time workers in America is living below the poverty line.
46. After accounting for inflation, 40 percent of all U.S. workers are making less than what a full-time
minimum wage worker made back in 1968.
47. When Barack Obama took office, the average duration of unemployment in this country was 19.8
weeks. Today, it is 37.2 weeks.
48. Investors pulled an astounding 72 billion dollars out of bond mutual funds in 2013. It was the worst
year for bond funds ever.
49. Small business is rapidly dying in America. At this point, only about 7 percent of all non-farm
workers in the United States are self-employed. That is an all-time record low.
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50. The six heirs of Wal-Mart founder Sam Walton have as much wealth as the bottom one-third of all
Americans combined.
51. Once January 1st hits, it will officially be illegal to manufacture or import traditional incandescent
light bulbs in the United States. It is being projected that millions of Americans will attempt to stock
up on the old light bulbs before they are totally gone from store shelves.
52. The Japanese government has estimated that approximately 300 tons of highly radioactive water is
being released into the Pacific Ocean from the destroyed Fukushima nuclear facility every single day.
53. Back in 1967, the U.S. military had more than 31,000 strategic nuclear warheads. That number is
already being cut down to 1,550, and now Barack Obama wants to reduce it to only about 1,000.
54. As you read this, 60 percent of all children in Detroit are living in poverty and there are
approximately 78,000 abandoned homes in the city.
55. Wal-Mart recently opened up two new stores in Washington D.C., and more than 23,000
people applied for just 600 positions. That means that only about 2.6 percent of the applicants were
ultimately hired. In comparison, Harvard offers admission to 6.1 percent of their applicants.
56. At this point, almost half of all public school students in America come from low income homes.
57. Tragically, there are 1.2 million students that attend public schools in the United States that are
homeless. That number has risen by 72 percent since the start of the last recession.
58. According to a Gallup poll that was recently released, 20.0 percent of all Americans did not have
enough money to buy food that they or their families needed at some point over the past year. That
is just under the all-time record of 20.4 percent that was set back in November 2008.
59. The number of Americans on food stamps has grown from 17 million in the year 2000 to more
than 47 million today.
60. Right now, one out of every five households in the United States is on food stamps.
61. The U.S. economy loses approximately 9,000 jobs for every 1 billion dollars of goods that are
imported from overseas.
62. Back in 1950, more than 80 percent of all men in the United States had jobs. Today, less than 65
percent of all men in the United States have jobs.
63. China exports 4 billion pounds of food to the United States every year.
64. Overall, the United States has run a trade deficit of more than 8 trillion dollars with the rest of the
world since 1975.
65. The number of Americans on Social Security Disability now exceeds the entire population of Greece,
and the number of Americans on food stamps now exceeds the entire population of Spain.
66. It is being projected that the number of Americans on Social Security will rise from 57 million today
to more than 100 million in 25 years.
67. Back in 1970, the total amount of debt in the United States (government debt + business debt +
consumer debt, etc.) was less than 2 trillion dollars. Today it is over 56 trillion dollars.
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68. Back on September 30th, 2012 our national debt was sitting at a total of 16.1 trillion dollars. Today,
it is up to 17.2 trillion dollars.
69. The U.S. government "rolled over" more than 7.5 trillion dollars of existing debt in fiscal 2013.
70. If the U.S. national debt was reduced to a stack of one dollar bills it would circle the earth at the
equator 45 times.
71. When Barack Obama was first elected, the U.S. debt to GDP ratio was under 70 percent. Today, it is
up to 101 percent.
72. The U.S. national debt is on pace to more than double during the eight years of the Obama
administration. In other words, under Barack Obama the U.S. government will accumulate more
debt than it did under all of the other presidents in U.S. history combined.
73. At this point, the U.S. already has more government debt per capita than Greece, Portugal, Italy,
Ireland or Spain.
74. Japan now has a debt to GDP ratio of more than 211 percent.
75. As of December 5th, 83 volcanic eruptions had been recorded around the planet so far this
year. That is a new all-time record high.
76. 53 percent of all Americans do not have a 3 day supply of nonperishable food and water in their
homes.
77. Violent crime in the United States was up 15 percent last year.
78. According to a very surprising survey that was recently conducted, 68 percent of all Americans
believe that the country is currently on the wrong track.
79. Back in 1972, 46 percent of all Americans believed that "most people can be trusted". Today, only 32
percent of all Americans believe that "most people can be trusted".
80. According to a recent Pew Research survey, only 19 percent of all Americans trust the
government. Back in 1958, 73 percent of all Americans trusted the government.


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The price of gold is down 28% in 2013 and is set to break the 12-year bull-run that took it from around $270
an ounce at the end of 2000 to a record high above $1,900 in September 2011.
Gold's $480 an ounce fall in 2013 is the worst performance since 1980, when the yellow metal hit $850 an
ounce, in inflation adjusted terms still the all-time high.
You could have avoided the entire decline had you followed our 2011 September gold exit signal. In fact, you
would have closed out a huge gain and avoided the last 2 year gold bear market entirely.
Now, here are nine ways 2013 changed the nature of the gold market and pulled it into bear territory:
A collective loss of confidence
Gold bugs used to be able to roll with the punches and absorb price shocks. This year they had no fight left
When gold fell off a cliff (or as many believe, was pushed off) in April, the last bit of upward momentum in
the price was lost. Market reaction was completely different after
September 2011s record price.
The pullback from the all-time high was as dramatic as the April
shocker, but that did not stop money from continuing to pour into
gold assets: gold fell almost $300 over three weeks from the
$1,900+ high, but over than same period more than 20 tons flowed
INTO granddaddy GLD alone and the buying didnt stop for another
15 months.
In 2013, golds Q2 $200 smack down over just two sessions, saw 80
tons flow OUT of GLD within 3 weeks and the selling hasnt stopped.
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Eurotrash talk, EM mayhem and a Cypriot riot
A country named after a metal sparks a meltdown
In 2012 stories about the single currency turning into eurotrash, the
breakup of the worlds largest economic bloc and the destruction of
what was left of the international financial system after Lehman
Brothers, kept markets entertained and the gold price humming.
In 2013, US political shambles and talk of a currency war between the
developed world and emerging markets briefly perked up
ears, but words like Spanic and Grexit were (thankfully)
banished from the lexicon completely as old Europe
faded from the headlines.
Except for one tiny island beloved by Russian oligarchs
and other tax avoiders; its puny central bank and its
miniscule gold reserves. Back in March Cyprus hinted
it would sell 10.36 tons of gold, worth $500m at the
time, to help fund its $13bn bailout.
Thats not enough ounces to keep the ETF trade busy for a morning, but the damage was done and the issue
that paralyzed the market for decades central bank sales was back on the table. That Cyprus just last
week announced it has no intention to sell any gold ended up being irrelevant.
Fed up
The days of the Fed and the gold price being joined at the hip are over
When the US Federal Reserve unleashed its quantitative easing program on an unsuspecting gold market in
December 2008 gold was hovering around $800. QE1 and August 2010's second round set off waves of
buying, that turned gold into a one-way for the next three years culminating in September 2011 record high.
By the end of that month gold was in danger of crashing through $1,600 down almost $300 in less than a
month but once again the Fed stepped in with 'Operation Twist' lifting gold (briefly) back above $1,800 by
November.
Just as the Feds easy money was losing its ability to boost anything about the US economy bar the stock
market, the Feds actions and pronouncements were having less and less of an effect on gold.
During the most dramatic price action in 32 years Aprils $200 drop over a Friday and Monday the Fed
was nowhere in sight.
And last weeks surprise/no-surprise taper announcement did move the gold price, but the action was
subdued, particularly considering the record number of short players present in the market. By the time the
dust settled gold was back in a happy trading range.

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Someone's using the h-word again
Hedging is safe, predictable and looks good on accounting paper. Whats not to love?
The vicious combination of central bank selling, lease
rates of 1% or less and producer hedging during much
of the Eighties and Nineties choked off any possibility
of a serious rise in the gold price which ended the last
in the mid-$200s. Major producers like Barrick Gold
and AngloGold spent billions buying out hedge books
and still made money on the deals as gold began its
12-year climb.
Now that the bull-run is over and the windfall profits
squandered on wildly overpriced takeovers and
fanciful projects, suitably chastened producers are
dusting off their hedge books. And are ready to spin
stories about the win-win benefits of the strategy.
Portfolio pushers and yield chasers
After a 12-year bull run in gold, the metals portion of your average investment portfolio had become too
outsized
A correction after gold's near 20-year bear market had
a certain inevitability to it, but so does a pause after a
dozen up years.
With confidence in the global financial system slowly
returning, 2013 became the year the smart money
decided to turn gold into just another asset class to
rotate into but mostly out of. While this rebalancing
act at times looked and felt more like a run on a bank
or a currency than a careful portfolio risk-adjustment,
it had to be done.
That gold unlike stocks, bonds and property, offers no
yield is not news to anyone and thanks to a 350%
appreciation since 2000, no-one cared. But this year portfolio managers judged the opportunity cost of
holding gold to be simply too high especially considering a full percentage point in real returns on risk free
investments became available as US inflation fell to 1.2% and the yield on 10-Year Treasurys approached 3%.
Paper beats rock
Indian brides and Chinese housewives maxing out on gold dont stand a chance against New York futures and
options traders
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Indias finance ministry did everything it could this
year to suppress Indians lust for gold. What seemed
like sensible measures to shore up the falling rupee
and correct balance of payments problems, in no time
succumbed to the laws of unintended consequences.
Higher import duties begat more smuggling, more
smuggling begat ludicrous premiums (only the father
of new bride would shell out $140/oz over London fix
and there are 10 million weddings a year in India),
ludicrous premiums begat a parallel trading market
and so on. In short nothing will quench Indias thirst
for physical for gold.
Likewise China. The cultural significance of gold in
China is routinely underestimated compared to their neighbors to the southwest, but on top of the social
uses, the Chinese aunts and housewives (at least according to common lore) who are buying up all the tons
the West is selling do so for very practical reasons.
Its the only real investment option available to households with stack of unconvertible Reniminbi who shun
the local stock market for obvious reasons (its an unregulated mess), can only buy so many apartments in so
many ghost towns and havent figured out the Macau round-tripping trick yet. While premiums in Shanghai
topped out at $37, even better for the demand picture is the ban on exports making Chinese the ultimate buy
and hold investors.
This scenario may be great for physical gold long term, but amounts to a slow day in the highly-leveraged
paper trade. Two years ago already the DAILY trade in gold futures and options was worth $240 billion, more
than on the S&P 500 or Dow Jones. 50 billion ounces changed ounces in 2011. This is where the pricing action
is in gold. In the time US sold gold go via London to smelters in Switzerland through customs in Hong Kong to
an apartment in Tianjin light years have passed in the world of high-frequency trading.
Not playing it safe anymore
The contrasting reaction in the gold market to turmoil in the Middle East today and 33 years ago is striking
and spells the end of golds status as a safe haven
In January 1980 the hostage drama in Iran and the Soviet
invasion of Afghanistan propelled gold 52% higher to $850 in
a matter of weeks. In inflation adjusted terms thats still the
all-time high for gold (roughly $2,400).
In 2013 Syria became the crucible of the Middle-East,
drawing in petrodollars and arms from all the major powers
in the region and pitting Russia and China against the US.
Not the threat of US military action or the continuing
spillover effects could meaningfully lift the gold price or oil
for that matter and flights to golds safe harbor proved small-scale and short-lived.
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Fundamentals are for fools
The situation on the ground and underground matters little
In any sane market fundamental short and long term
changes to the supply picture would play out in price
discovery. Not so gold, especially not in 2013 when
industry-wide strikes in South Africa, shutdowns in
Indonesia and delayed projects all around the world
hardly registered with gold traders.
All evidence of mounting extraction costs, a dearth of
new discoveries, the drying up of money to develop
mines and the disappearance of skills to operate them
are now being ignored when gold prices are set.
Focusing only on one side of the supply-demand
equation is a bit like the sound of one hand clapping.
Which is what gold bugs were greeted with this year.
Doomsday postponed
They are coming for your guns and your gold, just not yet
Inflation expectations and/or reality and paper
currency debasement remain the most convincing
argument to buy gold.
But this year the United States did not become the
Weimar Republic, Japan does not resemble Zimbabwe,
the UK hasnt ditched the pound for bitcoins and ECB
euros still has enough value to bail out Mediterranean
Europe.
Despite the $9 trillion and counting monetary
expansion undertaken by central banks hyperinflation
is a distant prospect and CPI rates are in abeyance in
most developed and emerging economies and near
record lows in the US.
On top of that the correlation of the gold price to the rate of paper money printing broke down early this
year, long before taper became the word of the year.
To sum this up, Gold should continue its decent, however, it will likely bottom in 2014 and turn up on or
before the end of the second quarter of 2015.
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Day trading is a full-time job and many people produce more in fees than they earn. The real TRADING is
simply moving with the overall trend. You would be long primarily from a strategic position that may be held
for months or years. It is selling the high in gold in 2011 and flipping into stocks. Hold a position when it
declines long-term is dangerous. Long-term bear markets decline sometimes to one-third or half your life.
The Nikkei declined for 23 years. Gold for 19 years. That is way too long to hold on to something and pray for
a recovery.
As I have mentioned many times before, Buy and Hold is for the Birds! It simply does not work and has not
worked for any asset class.
The point is if you LEARN how the business cycle moves, you will be successful. Gold may bottom here in
2014 or it could invert and bottom in 2015. Look at the stocks. They have exploded since 2011. This is about
economic survival not just one market. If you see the world for what it is, you will move with the flows
rather than clinging to one thing to preserve your future. What if you are wrong? They you will try to blame
someone else for your unwillingness to the see the world for what it truly is a complex network of
interconnections.
If you open your minds eye and allow yourself to see the interconnections that are like a rain forest with
millions or species all interacting. If you remove just one, you will set off a chain reaction that will readjust
the entire complex system. That one species may have been the exclusive food source of another that now
dies out. The chain reaction becomes a tidal wave of complexity. The entire complex system can collapse to
varying degrees. Look at the koala bears in Australia. They only eat the leaves on one tree. Remove those
trees and you will kill the koala bears. Everything that happens is for a reason and has consequences. This is
the system upon which everything in the universe was constructed. It is the same design everywhere it is
fractal.
Waiting for your day to make real money focused in just one market will be disaster. Understanding that
when one market moves lower, it is being offset by anothers rise. This is a divine scheme how everything
works in harmony. Governments have been trying to manipulate it to control it. The big banks tried to
manipulate it to make money. It cannot be manipulated for everything in interconnected.
Lets now take a look at correlation and see how WELL DIVERSIFIED traditional advisers their portfolios.
First of all, Investopedia defines correlation this way . . .
In the world of finance, a statistical measure of how two securities move in relation to each
other. Correlations are used in advanced portfolio management. Correlation is computed
into what is known as the correlation coefficient, which ranges between -1 and +1. Perfect
positive correlation (a correlation co-efficient of +1) implies that as one security moves,
either up or down, the other security will move in lockstep, in the same direction.
Alternatively, perfect negative correlation means that if one security moves in either
direction the security that is perfectly negatively correlated will move in the opposite
direction. If the correlation is 0, the movements of the securities are said to have no
correlation; they are completely random.
That definition implies that if you are diversified properly you would not want your investments highly
correlated, rather, you would desire assets to move and much different times in the economic cycle.
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Copyright 2013 InterAnalyst, LLC 17

Look at the market cap correlation table here.
These ETF symbols represent a US large cap (VUG), US mid cap (VOT), US small cap (VBK), and International
funds (VEU & URTH).

The numbers directly below the S&P500 index (^GSPC) are better than 88% correlated.
What does this mean? Simple. When the overall stock market declines, so will your wealth no matter which
market cap fund you own. Or how well diversified traditional methods teach.
If all your market based assets go up and down at the same time, whats the benefit of that type of
diversification? There is no benefit, its a bunch of crap!
That is why the Oracle of Omaha said . . .



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Copyright 2013 InterAnalyst, LLC 18

The Current Season: WINTER
As this winter season unfolds between 2000 and 2030, here are some of the things you can expect:
Unemployment will move higher again, to
roughly 15% nationwide. It could go as
high as 25% when you include long-term
unemployed in the numbers.
Housing prices will fall an additional 15%,
despite the biggest stimulus plan in history
and the lowest mortgage rates in 40 years.
Personal bankruptcies and property
foreclosures will soar as much as 30%.
Consumers are simply saddled with too
much debt $42 trillion or $140,000 for
every man, woman and child in America
for there to be any other outcome. Falling
income will only make matters worse.
State and municipal governments will be
forced into default, especially at the city and country level. Their budgets are already in crisis and the
Federal Reserve is running out of money with which to cushion these institutions.
The Federal deficit will balloon from to as much as $5 trillion because of huge revenue shortages.
The global credit crisis will continue to spread around the globe like a contagious virus. Greece is
already down. Spain will be next and it will without a doubt come to the USA.
A second banking crisis will out, despite the lessons learned in 2008. Mortgage companies have
resumed offering low interest, no principal teaser loans. Investment banks have begun taking un-
necessary risks again. And this time, therell be no money for a bailout.
All of this will put the Dow and other indexes onto a volatile roller coaster ride that will end with the Dow
Jones losing as much as 80% by 2025.
To survive, you must implement the right strategy for this season.
So heres your guideline of what to do. . .

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Copyright 2013 InterAnalyst, LLC 19

The Chart below is a general guideline for each season.


75% - - 25% - - -
50% - 10% 25% - 15% -
80% 20% - - 20% - -
20% 10% - - - 30% 30%
ETFs ETFs ETFs ETFs ETFs ETFs ETFs ETFs

If your pension or retirement accounts do not have index funds, make a phone call and find out which funds
hold very similar assets to the indexes represented above.
I would not own gold, but if you must, then purchase it via a highly liquid ETF.
I would not own bonds yet, but if you must, then make them Treasury or very solid municipal bonds.
I would commence growing your Money Market account with any new contributions.
I would continue to own Investments until the Wealth Preserver finds Rule 2. Always use ETFs for your
diversification vehicles as they are extremely liquid and can be moved swiftly.
The table below represents how your stock market diversification should look during this season depending
on your personal risk profile; which can be determined here.


50% 30% 5% 5% 10%
40% 20% 15% 15% 10%
20% 20% 20% 20% 20%
ETFs ETFs ETFs ETFs ETFs ETFs
For the final leg of this shakedown change your portfolio allocations again.
Continue to stay very close to your Wealth Preserver and Wealth Maximizer subscriptions. It is likely
we will be in strong position to sell all equity positions in all sectors globally.
Convert it all back to T-bills or money markets.
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Copyright 2013 InterAnalyst, LLC 20

Then keeping a close eye on Wealth Maximizer, we will help guide you to selectively buy back into
leading sectors like health care, financials, and technology.
Absolutely stay away from East Asia ETFs (China, Japan, and South Korea). These markets will correct
into the early to mid-2020s.
The value of seeing the economic cycles ahead extends beyond your investment plans. You can also use this
knowledge to better position yourself financially for each season. We will alert paid subscribers when the
time is right to get into these markets.
Lower returns and higher risks will characterize this shakeout winter season. It will also reduce the cost of
living and the future costs of real estate and assets.
Do not take any chances.
Do not gamble.
Do not leverage.
If you have the money, pay off your highest interest debt first.
If you have the money, pay off your cars and mortgage.
Save and become more conservative.
Heres what to do with real estate . . .
If you want to retire and buy a house in Southern Florida, the Caribbean, Arizona, Idaho, Vermont or
British Columbia, wait until 2015 at least.
If youre financing a home between 2011 and 2015, lock in at a low 30-year fixed rate. Look to benefit
from falling short-term rates in the final slowdown from around mid-2017 into 2023.
Heres what to do with cars . . .
If you want to buy a car this year, dont. Rather lease it for the next two years. Buying now will only
result in significant depreciation. Instead, let the bank take the risk of falling car prices!
The best time to buy a car is in mid-2014. The economy will be weakest then and youll get a low
interest rate.
Heres how to maximize your retirement income and the assets you pass on to your children . . .
Maximize your 401K and matching contributions because surviving this winter shakeout is about
accumulation.
Buy variable annuities and variable universal life policies. These are important tools for deferring
taxes during your earning years, minimizing taxes during your retirement years, passing down as-
sets to your children and offering some protection against downside risk. You will use the Wealth
Preserver signals within both variable policies.
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Copyright 2013 InterAnalyst, LLC 21

Implement strategies to defer earned and unearned income, use Roth IRAs where possible, skew
investments toward tax-free items such as municipal bonds and minimize your real estate footprint
to avoid property tax.
As a starting point, use the guidelines we have given you to position your investment portfolio and financial
affairs to sail smoothly through whats ahead.
During the decade ahead, timing will become increasingly important to your success. Thats why you MUST
follow our monthly Wealth Preserver and our weekly Wealth Maximizer. In addition, you should read the
InsidersPower newsletter in detail. Thats where well tell you whats coming next, and what to do about it.
You will also learn how to adjust your financial plans and investment portfolio for maximum benefits and
minimum pain.
In short . . . keep reading this newsletter and we will keep you up to date.
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Copyright 2013 InterAnalyst, LLC 22



In 1986, Livio S. Nespoli wrote is first Investment Book called Invest with
History. In it, he revealed how an investor could use historical precedent
along with social mood and demographic trends to accurately predict the
direction of the markets, sometimes decades in advance.
Since then, Livio had delivered countless seminars to thousands of
professional and amateur investors teaching them how to accurately
identify booms and busts well ahead of the mainstream. He gained
international national attention for his warning investors of the 2000 peak
and 2008 stock market collapse months before they happened. But this was not the first time he was on the
money with his big picture forecast.
For example, in February of 2000 Livio accurately forecast the stock market collapse and the multi-decade
economic collapse that would begin. In other words, his proprietary indicators, which are now available to all
investors, accurately predicted the major economic and stock market events that could have made you
substantially richer over the past 18 years.
How does he do it? Well, while most economists focus on short-term trends, policy changes, technical
indicators, elections, things that are volatile, unstable and can change from day-to-day. Livio has always
focused on long-term trends and cycles, not the day trader mentality. Demographics. Business cycles.
Socionomic patterns. Things that have demonstrated themselves over hundreds and even thousands of years
to be consistent, predictable and measurable.
In addition, through over 80 years of research he has found that most of the largest financiers have known of
these proven and predictable Socionomic patterns. He has provided devastatingly accurate market entry and
exit points by helping you follow those historically proven cycles.
He studies the past to forecast the future, an approach that enables subscribers to position themselves with
an incredible degree of accuracy. Then he makes minor tweaks and adjustments in response to intermediate
term events that occur along the way.
And thats what he brings to you on his InterAnalyst subscriptions so youll know whats coming next, where
the immediate opportunities are, and where to park your money for the longer term.
As an InterAnalyst subscriber, you will know, for example, when its time to start profiting from the rise of
specific economies and exactly what investments will hand you the fastest profits.
Youll learn when commodities will likely reach their peak in their cycle and how to ride the gains. Youll also
learn when theyll turn down and what investments to make to profit from any moves down.
And youll learn when the property market will turn up again. Youll learn when, money markets and bonds
would be a better investment than equity allocations and when not. Youll be ahead of the markets on every
boom and bust and access the tools you can use to prepare yourself to profusion.
: JANUARY 2014