Archive for November, 2014

New lawsuit says precious metals manipulation is even worse than you thought

From Bloomberg: 

Goldman Sachs Group Inc. (GS) and HSBC Holdings Plc (HSBA) were sued in New York over claims they conspired for eight years to manipulate prices for the precious metals platinum and palladium in what plaintiffs’ lawyers say is the first class-action lawsuit of its kind in the U.S.

Standard Bank Group Ltd. and a metals unit of BASF SE (BAS), the world’s largest chemical company, were also sued. The four companies used inside information about client purchases and sale orders to profit from price movements for the metals used in products ranging from jewelry to cars, according to a complaint filed yesterday in Manhattan federal court.

The lawsuit by Modern Settings LLC, a jeweler that buys precious metals and derivatives set on their prices, claims the companies “were privy to and shared confidential, non-public information about client purchase and sale orders that allowed them to glean information about the direction” of prices.

Similar lawsuits have been filed this year in Manhattan accusing banks of rigging the benchmark price for gold. Authorities around the world are examining the gold market for signs of wrongdoing.

Regulators tightened scrutiny of benchmarks after uncovering price-rigging in interbank-loan rates and currencies. Silver became the first precious metal to change its traditional procedure in August, and Intercontinental Exchange Inc. (ICE) will run the replacement for the 95-year-old London gold fixing. A new mechanism for platinum and palladium starts Dec. 1.

Catalytic Converters

Michael DuVally, a spokesman for Goldman Sachs, declined to comment on the lawsuit, as did HSBC spokeswoman Juanita Gutierrez in New York.

Standard Bank’s Johannesburg-based spokesman Ross Linstrom declined to comment today when contacted by e-mail. BASF’s London-based metals unit couldn’t be reached for comment.

The biggest uses of the metals are for jewelery and producing catalytic converters, which curb harmful emissions from vehicles, according to the complaint.

Carmakers’ use of platinum will climb 7.9 percent to a six-year high of 3.39 million ounces this year, and there will be “broad-based growth” next year, auto-catalysts producer Johnson Matthey Plc estimates.

Palladium auto usage will gain 4.9 percent this year to a record 7.3 million ounces. While demand will rise next year, it will likely be at a slower pace, the company predicted. Johnson Matthey makes about one-third of the world’s catalytic converters.

Conference Calls

According to the complaint, the four companies participated in twice-daily conference calls to set global price benchmarks for platinum and palladium, which also affected derivative products based on the precious metals.

“This unlawful behavior allowed defendants to reap substantial profits, while non-insiders, which include plaintiffs and members of the class, were injured,” lawyers for New York-based Modern Settings said in the filing.

Modern Settings needs a judge’s approval before it can represent other buyers of the metals.

The gross demand for platinum and palladium last year was more than 8 million ounces and more than 9.6 million ounces, respectively, according to the complaint.

The case is Modern Settings LLC v. BASF Metals Ltd., 14-cv-09391, U.S. District Court, Southern District of New York (Manhattan).

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Thursday, November 27th, 2014 Invest, News, Wealth Comments Off on New lawsuit says precious metals manipulation is even worse than you thought

Are you taking advantage of this free-market ‘stimulus package’?

From Dr. David Eifrig, MD, MBA, editor, Retirement Millionaire: 

In the past two months, U.S. consumers have saved $8.4 billion.

It’s all thanks to the 29% decline in crude oil since June. Cheaper oil means cheaper gasoline… and over $8 billion in gas savings for the consumer.

Remember, the $8.4 billion in savings is only counting prices at the pump.

Every tick lower in oil prices pumps billions into the pockets of consumers, small businesses, and large corporations.

The CEO of construction equipment maker Caterpillar has stated that if oil stays below $95, it will be “the kind of stimulus package that the Federal Reserve or Congress could never do.”

Nothing is more powerful to the global economy than the price of oil. And the massive move down has created equally extreme opportunities for investment.

Today, I’ll show you how my readers are also using lower oil prices to collect more safe income. Coupled with lower gasoline expenses, I like to think of this opportunity as a sort of free-market “stimulus package.”

But first let’s take a look at where oil is headed from here…

Oil, like all commodities, follows a distinct and obvious cycle. Here’s how it works…

When prices are low, there’s little reason to explore new areas or invest in new technologies. Producers will run through the current wells and produce what is profitable. At a certain point, though, the current wells start to wind down and prices begin to climb… leading producers to start investing in new discoveries or new technologies.

When prices really get high, a full-on boom mentality takes over. Producers exploit every resource they can get their hands on.

Developing commodities takes time. These projects take months and years to really get cooking, and before you know it, there’s too much of the commodity around. Prices fall again and the cycle starts over.

Oil has seen the same thing many times over.

It was the extreme rise in oil prices to $140 that sped along the development of the U.S. oil-and-gas boom. If prices had stayed at $60, where they were in 2007, it’s less likely that companies would have considered researching horizontal drilling and hydraulic fracking technologies.

High prices seven years ago created today’s boom in oil production. Now, we’re seeing the effects of a glut.

Today’s falling oil prices stem partially from slowing demand. The U.S. economy is growing, but there’s trouble elsewhere. Europe and Japan are struggling with near-deflationary environments. According to the IMF, the euro area is expected to post growth of just 1.8% in 2015. Japan is expected to grow 0.8%.

Meanwhile one of the biggest energy consumers – China – is in danger of seeing annual growth drop to less than 7%. South America is struggling with debt and inflation problems.

But slowing demand isn’t the only culprit in oil’s decline – overall, the world economy is still expected to grow 3.8% in 2015. We also have to consider supply.

In my Retirement Millionaire newsletter, we pointed out on July 9 that oil prices were likely to fall from $106 a barrel.

We didn’t use a sophisticated model or insider contacts to figure that out. You could see it in production and inventories.

U.S. production has grown to 9 million barrels per day. That’s up from 4.5 million in 2008. And it’s just behind the 9.6 million barrels of the world leader, Saudi Arabia. You can see inventories rise as production increases.

Oil inventories are stores of oil sitting in tanks and other holding places, waiting to head to a refiner or other end market. There’s only so much storage capacity, and it costs money to use it. When inventories get high enough, prices have to drop to clear out all the excess.

In addition to inventory buildup in the U.S., we’ve seen growth in global inventories as well. Despite the turmoil in Russia and the Middle East, production from those areas has held up. Saudi Arabia has also been aggressively producing oil and cutting its price to U.S. buyers.

This extra supply in the short term has contributed to oil’s collapse. But the drop won’t last forever…

With the fall in oil prices, it won’t take long for the excess supply to clear out.

In the short term, we think oil’s move has run its course.

There’s another feature to the commodity cycle that helps us figure out where oil prices are going. It’s the fact that, over the long term, oil’s price can’t stay too far below the costs of production. If it does, producers stop producing, and prices rise.

In the Middle East, the cost of finding and lifting oil out of the ground runs just $16 per barrel. An offshore rig in the U.S. costs about $51 per barrel. Hydraulic fracking in the U.S. costs between $50 and $100 a barrel, and the International Energy Agency (IEA) says that about 96% of U.S. production could still run as long as oil stays above $80. Canadian oil sands can take $90 a barrel to produce.

We expect oil prices to balance out around $80 in the mid-to-long term. That price allows for deepwater and U.S. shale production to continue. If oil falls below $80, those production methods start to become questionable, and the supply of oil will drop sharply.

Since prices don’t just sit at a level that “makes sense,” we need to give the price some wiggle room. The natural price of oil should be between $60 and $90 a barrel for the next few years.

Oil fell to about $75 today, so we’re more on the cheap side of that range.

Every investor knows that buying cheap is better than buying expensive. Contrarian investors are wisely using this as an opportunity to pick up quality oil investments.

For example, my colleague Porter Stansberry sees oil going to $60 a barrel within the year. Even so, he recommends buying oil and gas stocks.

He recently wrote: “Investors will panic as crude oil prices fall. But I would buy on those dips… because we are still in the early stages of the most important economic trend of our lives.”

The rising production from skilled producers will more than offset the effect of lower prices.

That’s why today, I’m recommending my readers buy shares of big, diverse oil companies. These “major integrated oil companies,” as they call them in the business, don’t have just a few oil wells. And they don’t just produce oil and natural gas. They also refine, transport, and sell gasoline to drivers.

With oil prices down to less than $80 a barrel, these blue-chip businesses are available for a much cheaper price than usual. For instance, big oil firm ExxonMobil is available for less than 12 times earnings… and now yields nearly 3%. Regardless of where oil goes from here, that’s a great price for a world-dominating business.

Today, you can take advantage of low oil prices to collect more income from quality oil producers. Together with low gasoline expenses, think of it as your own personal stimulus plan, sponsored by the free market.

P.S. In the latest issue of my Income Intelligence newsletter, I share my favorite income opportunity from the oil sector. My research shows that this business is well-suited for low oil prices… and it’s currently yielding well more than 5%. You can access this and all of my best income research with a risk-free trial to Income Intelligence. Get all the details right here.

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Thursday, November 27th, 2014 Invest, News, Wealth Comments Off on Are you taking advantage of this free-market ‘stimulus package’?

Feeling overwhelmed? Read this now…

From Shane Parrish at Farnam Street: 

Let your boat of life be light, packed with only what you need—a homely home and simple pleasures, one or two friends worth the name, someone to love and someone to love you, a cat, a dog, and a pipe or two, enough to eat and enough to wear, and a little more than enough to drink, for thirst is a dangerous thing.” ? Jerome Klapka Jerome

After realizing that she no longer wanted her life to be so complicated, Elaine St. James set out on a path to improve the quality of her life while decreasing the complexity. Simplify Your Life shares 100 of her tips to slow down and enjoy the things that really matter.

The first thing she did was “get rid of all the stuff we didn’t use anymore.”

Sounds tough right, how will you know what you need and what you don’t? As for what to do with things you want to get rid of but can’t bear to throw out…

Put them in a box with a label indicating a date two or three years from now—but don’t list the contents on the label. Store the box in the attic or the basement, or wherever is convenient. Once a year, examine the labels. When you come across a box whose date has passed, throw it out without opening it. Since you don’t know what’s inside, you’ll never miss it.

Another way to simplify your life is to (#55) Stop The Busy Work:

Busy work is the nonproductive time we spend sharpening pencils, cleaning out our desks, making unnecessary phone calls, getting another cup of coffee, organizing our schedule, drawing up reports, doing research, making more unnecessary phone calls—things we convince ourselves have to be done before we can get down to our real work.

Some busy work is unavoidable and necessary. What I’m talking about here is the avoidable kind. There are two reasons for busy work. One, we don’t want to do what we’re really supposed to be doing. Two, we don’t have anything that has to be done, but we want to look busy.

In this age of workaholism, busy work has been elevated to an art form. It is the phenomenon that in many cases makes it seem imperative that we spend ten to twelve hours a day in the office.

And consider (#23) Reduce Your Go-Go Entertainment and find meaning in the quiet moments.

If you began your simplification program out of the need or the desire to cut back on your spending, your entertainment expenses were probably among the first to be reduced. If you’re seeking simplicity as part of getting off the fast track, then reducing your need for outside entertainment will no doubt be high on your list. In either case, cutting back on your nightlife, and looking within yourself and to your family for entertainment, is a positive step toward simplification.

The financial rewards of avoiding such activities as movies, plays, theater, opera, concerts, cabaret, and nightclubs are obvious. The personal rewards may not be so apparent at first. After all, we’ve been compelled in recent years to go, to do, to be on the move, to experience all that money can buy. Oftentimes, in the process, the things we really like to do have been overlooked.

I was recently in a meeting with a dozen high-powered professional people. We started talking about our goals for our leisure time, and how seldom we allow ourselves to truly enjoy our own quiet moments. We each decided to make a list of the things we really liked to do.

The lists included things like: 

Watching a sunset. Watching a sunrise. Taking a walk on the beach or through a park or along a mountain trail. Having a chat with a friend. Browsing in a bookstore. Reading a good book. Puttering in the garden. Taking a nap. Spending quiet time with our spouse. Spending quiet time with our children. Listening to a favorite piece of music. Watching a favorite movie. Spending time with our pets. Sitting quietly in a favorite chair and doing nothing. 

We were surprised and delighted to see most of the things we listed required little or no money, no expensive equipment, and were available for anyone who wants to take advantage of them. For the most part, our favorite pleasures were the simple pleasures. 

Today we get lost. Lost in the noise. Lost in the relentless torrent of things to do. The information age has accelerated the pace.

This reminds me of something I came across recently. Pico Iyer writes in The Art of Stillness:

“We’ve lost our Sundays, our weekends, our nights off – our holy days, as some would have it; our bosses, junk mailers, our parents can find us wherever we are, at any time of day or night. More and more of us feel like emergency-room physicians, permanently on call, required to heal ourselves but unable to find the prescription for all the clutter on our desk.

“It was access to information and movement that seemed our greatest luxury,” Iyer writes, “nowadays it’s often freedom from information, the chance to sit still, that feels like the ultimate prize. Stillness is not just an indulgence for those with enough resources – it’s a necessity for anyone who wishes to gather less visible resources.

“Going nowhere … isn’t about turning your back on the world; it’s about stepping away now and then so that you can see the world more clearly and love it more deeply.”

Simplify Your Life is a compilation of the steps taken by one household to simplify their life.

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Why only 34% of Americans trust their doctor

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Wednesday, November 26th, 2014 Invest, News, Wealth Comments Off on Feeling overwhelmed? Read this now…

Eye-opening study: If you support this, you should be ashamed

From Mike “Mish” Shedlock at Global Economic Trend Analysis:

The U.S. calls it a war on terror. In reality it’s a war of terror.

For every innocent person killed, hundreds of friends and family members hold it against the U.S.

The Guardian reports 41 Men Targeted but 1,147 People Killed in U.S. Drone Strikes.

New analysis of data conducted by human rights group Reprieve shared with the Guardian, raises questions about accuracy of intelligence guiding ‘precise’ strikes.

The drones came for Ayman Zawahiri on 13 January 2006, hovering over a village in Pakistan called Damadola. Ten months later, they came again for the man who would become al-Qaida’s leader, this time in Bajaur.

Eight years later, Zawahiri is still alive. Seventy-six children and 29 adults, according to reports after the two strikes, are not.

However many Americans know who Zawahiri is, far fewer are familiar with Qari Hussain. Drones first came for Hussain years before, on 29 January 2008. Then they came on 23 June 2009, 15 January 2010, 2 October 2010 and 7 October 2010. Finally, on 15 October 2010, Hellfire missiles fired from a Predator or Reaper drone killed Hussain, the Pakistani Taliban later confirmed. For the death of a man whom practically no American can name, the U.S. killed 128 people, 13 of them children, none of whom it meant to harm.

The human-rights group Reprieve, indicates that even when operators target specific individuals – the most focused effort of what Barack Obama calls “targeted killing” – they kill vastly more people than their targets, often needing to strike multiple times. Attempts to kill 41 men resulted in the deaths of an estimated 1,147 people, as of 24 November. 

Some 24 men specifically targeted in Pakistan resulted in the death of 874 people. All were reported in the press as “killed” on multiple occasions, meaning that numerous strikes were aimed at each of them. The vast majority of those strikes were unsuccessful. An estimated 142 children were killed in the course of pursuing those 24 men, only six of whom died in the course of drone strikes that killed their intended targets.

There is nothing precise about intelligence that results in the deaths of 28 unknown people, including women and children, for every ‘bad guy’ the U.S. goes after,” said Reprieve’s Jennifer Gibson, who spearheaded the group’s study. 

In Yemen, 17 named men were targeted multiple times. Strikes on them killed 273 people, at least seven of them children. At least four of the targets are still alive.

Available data for the 41 men targeted for drone strikes across both countries indicate that each of them was reported killed multiple times.

An analytically conservative Council on Foreign Relations tally assesses that 500 drone strikes outside of Iraq and Afghanistan have killed 3,674 people.

“We don’t just fire a drone at somebody and think they’re a terrorist,” the secretary of state, John Kerry, said at a BBC forum in 2013. 

“President Obama needs to be straight with the American people about the human cost of this programme. If even his government doesn’t know who is filling the body bags every time a strike goes wrong, his claims that this is a precise programme look like nonsense, and the risk that it is in fact making us less safe looks all too real,” Gibson said.

Why Did You Kill My Family? 


Does U.S. Drone Policy Make Any Sense?

We have not killed the 41 we are after, but we have made thousands, if not tens-of-thousands, of new enemies in the process.

Does this make any sense?

You know the unfortunate answer…

For those who want perpetual war, the policy is a blazing success.

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Wednesday, November 26th, 2014 Invest, News, Wealth Comments Off on Eye-opening study: If you support this, you should be ashamed

Porter Stansberry: How the current market madness will end

From Porter Stansberry in The Stansberry Digest: 

In today’s Digest… I’ve been thinking about how the current madness will end.

Perhaps more than just about any other research firm in the world, we’ve long warned that there will be serious consequences for the decisions we’ve been making lately.

But credit bubbles feel so good as they’re being blown up that it’s easy to forget what’s really happening behind the curtains to create the faux prosperity we’ve been enjoying for the last few years. So this week, here’s a gentle reminder about what’s really behind the soaring stock market and our growing economy…

The world’s three major central banks (U.S., Europe, and Japan) have embarked on a massive financial experiment. They have created a gigantic amount of money out of thin air and used it to purchase mind-boggling quantities of government debt.

In the U.S., our central bank now owns a pile of bonds equal to 20% of U.S. gross domestic product (GDP). Japan’s central bank’s pile of debt is equal to 40% of its GDP. At its peak, Europe’s central bank owned bonds worth nearly $4 trillion, or more than 25% of its GDP.

The effect of this buying in the world’s markets is difficult to overstate. It is not only the sheer enormity of these purchases… it is also the way the bankers have deliberately structured their purchases to warp the yield curve.

Consider the U.S. 10-year Treasury bond, for example. There is no more important financial benchmark in the world. It is hardly an exaggeration to claim that everything tradable in the world is priced off U.S. sovereign 10-year bonds. This is the globe’s benchmark cost of risk-free capital. It is from this price that all other forms of capital are priced.

Currently, there is about $150 billion worth of 10- to 15-year bonds outstanding. Out of the total $150 billion in circulation, the U.S. central bank owns more than half. Likewise, at the “long” end of the curve, the Fed owns nearly half of all Treasury bonds dated 20 years and beyond.

By lowering long-term bond yields, the Fed has artificially reduced the cost of capital by an unbelievable amount. And by making it much cheaper to borrow, the Fed has enabled virtually all borrowers to gain access to the bond markets. That’s clear by looking at the record-high issuance and record-low nominal yields in the high-yield (or “junk”) bond markets.

In June, with benchmark high-yield rates in the U.S. at a staggering 4.77%, low-quality corporate borrowers added $30 billion in debt to their balance sheets – an all-time single-month record.

And it’s also clear by looking at the colossal bubble that has formed in emerging-market debt. A brilliant New York hedge-fund manager pointed out that between 2009 and 2012, nearly $400 billion flowed into emerging-market credit markets – about four times more than average rates over the previous 10 years.

Here are a few simple questions: How can you have capitalism when the cost of capital is essentially zero? How can you have capitalism where there’s no bankruptcy? How does capitalism work when there are no risks or downside?

It doesn’t, of course. We should see vast misallocations of capital and a tremendous surge in speculation. To see both of those trends in action, just consider the amount of casino construction around the world over the past five years. This is the way credit bubbles work. But it won’t go on for long…

Economists who claim to know how all of this will end are lying. Nobody knows how (or when) it will end. Not even former Fed Chairman Alan Greenspan. I asked him these specific questions when I saw him last month at a conference in New Orleans. What he told me was frightening: He said that the central banks have no idea what they’re doing and that they will not be able to control the inflation that will inevitably result from this massive experiment.

Another guy who knows a little bit about investing has big concerns about what’s going on with banks. Investing legend Warren Buffett says currency-based investments (such as government bonds) should come with a warning label…

Most of these currency-based investments are thought of as ‘safe.’ In truth, they are among the most dangerous of assets… their risk is huge.

‘In God We Trust’ may be imprinted on our currency, but the hand that activates our government’s printing press has been all too human. High interest rates, of course, can compensate purchasers for the inflation risk they face with currency-based investments – and indeed, rates in the early 1980s did that job nicely. Current rates, however, do not come close to offsetting the purchasing-power risk that investors assume. Right now, bonds should come with a warning label.

So what should you do? First and foremost, realize that we are in the late innings of an enormous global bubble. The banks have propped it up with a printing press. But it can’t go on forever. All around the world, credit structures are in place that can only function as long as the central bank buying continues.

The United Kingdom, for example, owes foreign creditors $10 trillion… more than 400% of its GDP. Spain owes foreign creditors $2.3 trillion – 167% of its GDP. Italy owes foreign creditors $2.6 trillion – more than 100% of its GDP.

Central banks have proven adept at keeping these ridiculous credit structures in place. But there is a cost. And sooner or later, something will break… because capitalism doesn’t work when there’s no cost of capital.

Here’s what I think will break first: the emerging-market credit structure. Few economists know about the “Triffin dilemma” (named after economist Robert Triffin), which boils down to this fact: Global liquidity is determined by the current account of whatever country’s currency is used as the world reserve currency.

Today, that’s the U.S. dollar. For more than 40 years, the U.S. has recorded large (and growing) current account deficits with the rest of the world. This flooded the world with dollars, typically held in the form of U.S. Treasury bonds. These bonds are the heart of the world’s banking systems, making up more than 60% of all reserves.

Now, thanks mostly to the surge in domestic oil production, the U.S. current account deficit has slid from more than 6% of GDP down to around 2%. At the same time, the Fed has been buying back tons of U.S. Treasury bonds. The unintended consequence of these combined actions is a huge decrease in global liquidity.

Sooner or later, this is going to cause a big problem for countries like Turkey and Brazil, who owe foreign creditors dollar-denominated debts.

Turkey owes foreign investors $386 billion – roughly half of its GDP. About $160 billion of these debts come due over the next 12 months. And unlike the U.S. or Japan or Europe, Turkey can’t simply print away these obligations.

So will the big central banks begin buying emerging-market bonds, too? Anything is possible… But I don’t expect Turkey to do that. These defaults, which will definitely happen, will cause big problems in terms of political stability, currency values, and will inflict damage on banking systems across the world.

Keep an eye on the WisdomTree Emerging Markets Debt Fund (ELD). For the last five years, ELD has mostly kept pace with the U.S. Treasury Bond Fund (TLT).

But during periods of stress – like late 2011 – TLT rallies while ELD declines. Since June, these two critical measures of the world’s credit markets have sharply diverged. I believe that’s a sign of things to come. I believe we’re in the early stages of the “end game” where the giant paper charade of the last five years unravels…

Regardless of if I’m right or wrong, you should, at the very least, heed this warning. All that glitters is not gold. It always pays to be cautious when other investors get greedy.

And there is an abundance of signs of greed all around the market… from electric-car maker Tesla’s share price to the nominal yield on junk bonds. Make sure you don’t get swept up in the euphoria. Remember how fragile the world’s banking system is… And make sure to buy a little physical gold this year.

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Wednesday, November 26th, 2014 Invest, News, Wealth Comments Off on Porter Stansberry: How the current market madness will end

If you take expensive prescription drugs, you need to see this

From Bloomberg: 

Steve Miller is waging war on high-priced medicine, guiding decisions to ban drugs from the health plans of millions of Americans and sending companies reeling in a $270 billion market.

He and his colleagues at Express Scripts Holding Co. (ESRX) say they are just getting started.

Miller is chief medical officer for the company, which oversees prescription benefits for health plans and employers covering 85 million patients. Unless more is done about a wave of new and expensive drugs, some priced at as much as $50,000 a month, Miller says that health plans are going to be swamped as costs double to half a trillion dollars as soon as 2020.

Employers with health plans “are just terrified,” said Miller, after showing a visitor a giant prescription-filling room packed with robots stuffing pills in bottles. In a few years, “you could be in the business of running your company to pay your pharmacy bill.”

Express Scripts deploys powerful cost-control weapons: refusing outright to pay for dozens of drugs, and setting hurdles for patients to access the most expensive medications.

The St. Louis-based company is excluding 66 brand-name drugs in 2015 from its main formulary, or list of covered drugs, up from 48 in 2014, when it started exclusions. Each year’s list bans the popular rheumatoid arthritis drug Simponi, a $3,000-a-month injectable medicine from Johnson & Johnson (JNJ).

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Pushing Back

Other prescription-benefits managers are using similar tactics. CVS Health Corp.’s (CVS) unit that competes with Express Scripts will keep 95 drugs off of its main formulary in 2015, including Rebif, an injection for multiple sclerosis priced at more than $5,000 for a four-week supply. CVS exclusions numbered about 70 in 2014.

From 2012 through 2015, CVS expects “rigorous” formulary management will save more than $3.5 billion for clients, according to Christine Cramer, a company spokeswoman.

Government programs are also pushing back. The Illinois Medicaid program said in July that hepatitis C patients would have to meet 25 criteria to qualify for Gilead Sciences Inc.’s (GILD) Sovaldi, which costs $84,000 for a 12-week regimen.

Among 42 state Medicaid plans, 27 pay for Sovaldi only for people with severe liver damage, and others also impose coverage limitations for patients with recent substance-abuse problems, according to data from Malinda Ellwood at Harvard University’s Center for Health Law and Policy Innovation.

Glaxo Hit

If they keep raising prices, drug companies “face an increasingly ugly backlash from plan sponsors,” Express Scripts’ Miller said. The company only excludes drugs when there are clinical equivalents available, according to Miller, who said the removals have prompted few complaints.

Some drug makers are hit hard by such moves. In January, Express Scripts removed GlaxoSmithKline Plc’s (GSK) asthma drug Advair from its main formulary, or coverage list — the first time it barred a drug so widely used. Glaxo, based in the the U.K., was demanding a “significantly higher price” for Advair, which is no better than competing drugs, said David Whitrap, an Express Scripts spokesman. The inhalant costs $373.18 per month for the highest dose.

The combined market share for Advair and a second Glaxo inhaler fell 8.5 percentage points between December 2013 and October 2014, while competing brands gained, according to data from Bloomberg Intelligence. Glaxo shares fell 8.8 percent this year through Nov. 24, as European drug stocks broadly rose.


Glaxo and other drug makers are facing more price pressure, competition and benefit plans limiting patient choice, Jenni Ligday, a company spokeswoman, said in an e-mail.

Formulary access to Advair is improving and ”will strengthen considerably in 2015,” she said. Advair will go back on the formulary in 2015 because Glaxo offered a better price, Express Scripts said.

Three drug-compounding companies alleged in a lawsuit this month that Express Scripts is denying insurance claims for their customized medicines in decisions that lack scientific backing, threatening to put them out of business. Express Scripts declined to comment on the suit. Its website says that clients’ costs for compound drugs had grown sixfold to $171 million a quarter over two years, driven by “exorbitantly overpriced” ingredients.

Meanwhile, at least a quarter of hepatitis C patients with prescriptions for Harvoni, a combination pill from Gilead that includes Sovaldi, “are facing delays or a bottleneck in insurer authorization for pharmacies to fill their prescription,” according to a Nov. 13 report from Wells Fargo & Co. analyst Brian Abrahams.

Advance Approvals

Express Scripts’ goal is to use its clout to shift market share to drug companies willing to give it better discounts, said Miller, age 57, a kidney doctor who was chief medical officer for Barnes-Jewish Hospital in St. Louis before he joined the company in 2005.

Drug companies that “think they can charge whatever they want” in competitive categories “run the risk of being excluded,” said Glen Stettin, 50, Miller’s colleague responsible for clinical products, including formularies.

Miller and Stettin, the two top doctors at the company, were “intimately involved” with the decision to start the drug exclusions in 2014, Whitrap said. Express Scripts’ main formulary covers 25 million people and is mostly used by employers and union-sponsored health plans. Other clients, including insurer WellPoint Inc. (WLP), make their own formularies.

Dear Patient

Ninety percent of commercial health plans required prescriptions for some specialty drugs — usually high-cost medicine for complex or life-threatening conditions — to be pre-approved by insurers in 2013, up from 82 percent in 2011, according to the Pharmacy Benefit Management Institute, a research group in Plano, Texas. And 74 percent sometimes required patients to try cheaper drugs before more expensive ones, up from 60 percent in 2011, the report said.

Doctors say the process results in treatment delays when paperwork gets snagged, appeals need to be filed, or patients are daunted by the barriers and give up.

Denise Marksberry, 47, of Ruther Glen, Virginia, said she couldn’t find a drug that controlled the symptoms of her rheumatoid arthritis until 2012, when she started taking Johnson & Johnson’s Simponi.

In late 2013, she said a letter from her insurer suggested it wouldn’t pay for the drug in 2014, and that she had to switch to one of two alternatives. Operators for her insurer confirmed her understanding in two long phone calls, she said.

Off Medication

“They said they wouldn’t cover it,” she said. Figuring an official application to stay on Simponi stood little chance, her doctor switched her to one of the other drugs.

After switching, she said she lost 10 pounds because she was queasy and had headaches after each weekly injection. She recently stopped therapy in hopes of getting back on Simponi next year.

Blue Cross Blue Shield Association, the umbrella group for Marksberry’s insurance plan, said in an e-mailed statement that she is covered for Simponi but her doctor didn’t return a required authorization form. It said the letter to Marksberry informed her about a new requirement that her doctor gain authorization for her to stay on the drug. The 2-page authorization form has 17 questions.

“There is never a period of time where I don’t have some patient that is without medication” because of delays in getting insurance approval, said Peter Snyder, an endocrinologist at the University of Pennsylvania, who treats life-threatening pituitary disorders.

Prepared Scripts

He said denials are issued by “low-level employees who are reading from prepared scripts” while his staff tracks down higher-ups to reverse the decision.

“It used to be the most important time was the time you spent actually speaking to the patient. Now it is the paperwork” to get drug approvals, said William Harvey, a rheumatologist at Tufts Medical Center. “The methodology is they hope you will get so tired that you will just give up.”

A quarter of his patients who need expensive biologic drugs face treatment delays because of the bureaucracy, he said.

Rising costs have come as a jolt after a period of moderation brought about by new low-priced generics in the market. Federal data show annual cost increases averaging less than 2 percent for the four years through 2013, when $272 billion was spent on prescription drugs.

While drugs at upwards of $100,000 a year have been around for years, the conditions they treated were usually limited to rare disorders, including enzyme deficiencies and unusual cancers. Now such prices are spreading to more diseases, and are especially prominent for cancer.

Costly Cancers

Sixteen of the 33 cancer drugs introduced since 2010 cost $10,000 a month or more and all were at least $5,000 a month, according to data compiled by Memorial Sloan Kettering Cancer Center, in New York. Only four of 44 cancer drugs introduced in the 1990s cost more than $5,000 monthly.

Sovaldi, which could be beneficial to 2.7 million Americans with hepatitis C, racked up $8.55 billion in sales in the first nine months of this year.

“Never before has a drug been priced so high to treat such a large population,” Miller said.

In addition to hepatitis C, payers are closely monitoring a new class of injected cholesterol drugs in late-stage testing at companies including Sanofi (SNY) and Amgen Inc. (AMGN)

Miller said the drugs could reach tens of billions in annual sales based on a price of $10,000 a year, which is comparable to other drugs engineered the same way, and a potential market of 10 million heart patients.

Futile Calls

Initially, Express Scripts didn’t restrict use of Sovaldi, other than verifying that patient had the disease and were being treated by appropriate specialists. Instead, it had its pharmacists call doctors’ offices and ask whether they would be willing to postpone treating patients with earlier-stage disease until cheaper, more convenient regimens came out. The calls didn’t have much impact, Miller said.

Some Illinois doctors say the state’s Medicaid restrictions on Sovaldi, including limiting it to sicker hepatitis patients, aren’t based on medical evidence.

“It is a bellwether moment in American medicine, where we have a disease that is known to cause significant morbidity and mortality that we basically are not treating because of cost,” said Steven Flamm, chief of the liver-transplant program at Northwestern University Feinberg School of Medicine.

Gilead’s Harvoni, a pill that combines Sovaldi with a second drug, reduces treatment time from Sovaldi’s 12 weeks to eight weeks for some patients. Harvoni, approved by the U.S. in October, is priced at $63,000 for the shorter regimen.

Harvoni’s cost to the health-care system “is significantly less” than other treatments, Gregg Alton, an executive vice president at Gilead, said in an e-mailed statement.

Although it’s understandable that doctors want unfettered access to drugs for patients, Miller said sometimes decisions aren’t based on the medical evidence or are influenced by pharmaceutical sales representatives.

Express Scripts “acts as a countermeasure” to this marketing, Miller said. “We can take billions out of the system by doing it.”

Wednesday, November 26th, 2014 Invest, News, Wealth Comments Off on If you take expensive prescription drugs, you need to see this

Warning: These income investors could be wiped out

From Amber Lee Mason, editor, DailyWealth Trader: 

I’m worried our readers are going to get hurt…

I was recently in the Dominican Republic, at Stansberry Research’s 12th annual Alliance Conference. We talked ideas with legendary trader Jim Rogers, currency expert Jim Rickards, bond expert Marty Fridson, and several of my Stansberry colleagues. They all shared great ideas.

But there’s one idea you NEED to hear today…

It comes from my publisher Porter Stansberry, who is deeply concerned that some of our readers are setting themselves up for major problems down the road.

Today, I’ll show you why he’s worried… and why I am, too.

During a panel discussion at the conference, the topic of selling options came up…

As longtime readers know, when you sell puts, you collect an upfront cash payment and agree to buy shares of the stock at a lower price. When you sell covered calls, you collect an upfront cash payment and agree to sell shares of stock you own at a higher price.

As Porter noted, when you make these trades, you’re signing up for only PART of the upside on the stock… but you’re exposed to ALL of the downside.

“Low upside, high downside” is not an ideal trading setup. In my DailyWealth Trader service, I prefer to “cut our losers and let our winners ride.” I want our risk to be small and our potential rewards to be as large as possible.

So why in the world do I recommend selling options?

Because when you do it the right way, it works.

For example, since its launch in May 2012, we’ve closed 184 put and covered-call trades in DailyWealth Trader. Of those, 178 closed as winners for a 96.7% win rate. Our average return was 3.8% in about three months… or 15.7% annualized – an outstanding return.

Selling options the right way – what I call “trading for income” – means selling options ONLY on a very rare type of stock… a great business selling at a good price.

Great businesses have strong brand names, solid competitive advantages, and stable profit margins… They generate cash and grow in good times and bad. They’re the world’s best at rewarding shareholders with dividends and share buybacks.

Consider fast-food giant McDonald’s (MCD), for example. It has raised its dividend every year for 38 years running. It has survived war, recession, inflation, high interest rates, low interest rates, and multiple market crashes.

Stocks like McDonald’s are often favorites of skilled investors with deep pockets… and of conservative investors looking for dividend income. So when share prices get cheap enough, they draw in a lot of buying interest. This gives these stocks a natural “buoyancy.”

In other words, the chance of a crash in these stocks is much lower than the chance of a crash in a copper miner, a fad retailer, a social-media darling with no earnings, and just about any other kind of stock.

That’s how we make sure we’re trading with “low downside.” If prices fall, we end up owning shares of great companies bought at good prices. And compared with the small chance of stopping out at a loss, double-digit annual income is “high upside.”

But I know some readers are selling options the wrong way… and they’re going to lose a lot of money.

For example, one DailyWealth Trader reader wrote in to let me know he’s selling options on biotechs. Another is interested in selling options on emerging-market stocks. One asked about selling options on junior mining stocks. And another sold options on a cyclical commodity producer.

When these “boom and bust” stocks boom, they can rise hundreds of percent. When they bust, they can fall by half. Because these stocks are much more volatile than our “great businesses at good prices,” these readers can collect much larger option premiums. They can easily find instant payouts of 10% or more… which would add up to huge annualized returns.

But they’re still getting only PART of the upside… while exposing themselves to ALL of the downside.

And these types of stocks have a LOT of downside.

When a mine fails, a retail fad fades, the kids move on to the next website… or when the whole market corrects… these stocks get crushed. You might have collected a 10% payout… but the stock will lose 50% of its market value. And you’ll be left holding shares of a crappy company bought at a bad price.

That’s why Porter is worried. He doesn’t want to see readers hurt themselves by selling options the wrong way. I don’t, either… So, please, don’t start “trading for income” until you know how to do it the right way.

If you’re already selling options… and you’re “reaching for yield” with volatile, low-quality stocks… prepare yourself for some difficult times ahead. Selling options the wrong way is a great strategy for losing a lot of money quickly.

I don’t want to scare you away from “trading for income.” When you sell options the right way… when you stick with great businesses selling at good prices… you can generate lots of income with low risk.

That’s how we do it in DailyWealth Trader. I hope that’s how you do it, too.

Crux note: In DailyWealth Trader, you get all the tools you need to start generating big income right away, including an extensive “training center” with thousands of dollars’ worth of educational material… daily Q&A sessions… and a large video archive. You can get started with DailyWealth Trader immediately by clicking right here.

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Here’s the real story on America’s “infrastructure crisis”

From Jim Quinn at The Burning Platform: 

I rarely if ever watch 60 Minutes, as they have been kissing Obama’s ass since before he was elected in 2008. They are part of the left wing media and are now a joke when it comes to investigative journalism. Last night it came on after the football game I was watching, and the opening story was about the infrastructure crisis in this country. I thought I’d give it a chance.

After five minutes of propaganda, mistruths, false story lines and interviewing an ultimate insider hack lobbyist for corporate America, I turned on a more realistic truth telling show: The Simpsons.

Every time a politician or media pundit opens their mouth about infrastructure you know they are lying. Democrats and Republicans are equally guilty of misleading the public about this issue. They know the sheep aren’t paying attention and will believe their B.S.

The mantra is always the same. We’ve neglected our roads and bridges and now they are dangerous. The Federal government must do something about this crisis. They need more money. Somehow we managed to not spend any money on our highways for the last 30 years. The politicians and the media insist we need a trillion dollar infrastructure plan to save our highways and bridges. Amazingly, these politicians and media outlets are supported by contributions and advertising revenue from the corporations who would benefit from a massive infrastructure bill.

The reason our roads suck isn’t because there isn’t ENOUGH money. It’s because politicians chose other things to spend OUR money on. Here is the deal. The states spend in excess of $200 billion per year on their highways. The Feds spend another $50 billion of your money on roads. Most of these funds are extracted from your pocket through gasoline taxes and tolls at the state and federal level. How come $250 billion per year isn’t enough?

The Keynesian morons like Krugman and Larry Summers are sure a multi-trillion dollar infrastructure plan paid for with your money will stimulate the economy and save America. If I recall, the $800 billion Obama porkulus infrastructure program was about shovel-ready jobs. How did that work out?

The fact is the federal government is only responsible for 140 thousand miles of road or 3.4%, largely roads in national parks, military bases, and Indian reservations. Roads are a state and local issue. Local governments are responsible for maintaining and improving 3.17 million miles of road or 77.5% of the total. State highway agencies are responsible for 780 thousand miles of road, or 19.1%.

There are 4 million miles of roads in the U.S., with only 2.6 million miles that are paved. We are paying almost $100 per mile per year. The Federal Highway Administration tracks the state of repair on 892,163 miles of major highways that are eligible for federal aid. In 2012, the latest data available, the FHWA found that 182,872 miles, or 20.5%, were in poor or mediocre condition and needed repaving or even more substantive repairs. The nation’s Interstate Highways are in relatively good condition, with only 1.8% of rural miles and 5.0 percent of urban miles in poor or mediocre repair. Other highways, however, are in much worse shape, particularly in urban areas where more than one third of all arterial and collector miles are in poor or mediocre condition.

The Federal Highway Administration’s 2013 National Bridge Inventory shows that 146,598, or 24.2%, of the nation’s 605,471 bridges are either structurally deficient or functionally obsolete. This includes 63,207 structurally deficient bridges (10.4%), which are safe to use but need significant maintenance or repair to remain in service, and 83,391 functionally obsolete bridges (13.8%) which may be in good repair but fail to meet current design standards, such as lane width, shoulder width or overhead clearance and thus need to be upgraded when they are replaced. In recent years, state and local highway agencies have been investing heavily in bridge maintenance and repairs. As a result, bridge conditions have been improving. Between 1998 and 2012, the number of deficient bridges fell from 29.5% to 24.2%. The improvement was concentrated in structurally deficient bridges, which declined from 16.0% of all bridges to 10.4%.

The roads I travel every day have been under some form of construction for the last six years. There is no lack of activity on roads and bridges in the U.S. If $250 billion per year isn’t enough than politicians shouldn’t have p@#$ed their budget funds away on worthless education initiatives, free school lunches, outrageous government worker pension plans, free s@#$ for the masses, tax breaks for mega-corps, and a myriad of other wasteful corrupt spending.

Every state and local government in the country is required to have a balanced budget. As a homeowner, I know that as my house ages, things will break and need to be replaced or repaired. Everyone knows this will happen. It isn’t a shock. I’ve lived in my house for 19 years. I’ve had to replace my garage doors, windows, front door, back door, hot water heater, faucets, lighting, sump pump, washer, dryer, stove, dishwasher, TVs and many other household items. I have always anticipated these things in my budget and made sure I could pay for them.

Politicians who run our state and local governments know the expected life of highways, water pipes, sewer pipes, utilities, public buildings, and all the other infrastructure they are required to maintain on behalf of the citizens. They do a budget every year that must balance and be approved. It is they who have purposely chosen to not set aside enough money to maintain the infrastructure. They have chosen to spread the money to their benefactors in the corporate world or the union sector.

This is not a crisis for the country. This is a failure of government at every level. Instead of focusing on the terrible management of taxpayer funds, 60 Minutes interviews Roy LaHood (former Secretary of Transportation) who declares that Congress needs to dramatically increase spending and taxes for infrastructure. Everyone wants MOAR.

LaHood sells himself as a noble patriot co-chairman of Building America’s Future, a bipartisan coalition of current and former elected officials that is urgently pushing for more spending on infrastructure. The faux journalists at 60 Minutes fail to reveal that LaHood has two other jobs that deal with infrastructure. LaHood is Senior Advisor to Meridiam Infrastructure, a private equity underwriter (PEU) specializing in infrastructure and Senior Advisor to law firm DLA Piper, a lobbying firm for infrastructure companies. The guy is a whore for corporations that would benefit from your taxpayers being p@#$ed away on bloated construction projects

Here is the reality of our “infrastructure crisis”:

  • Gas taxes and tolls were supposed to pay for highway maintenance. Now general tax revenues are also being funneled to union contractors and no bid contracts which make every infrastructure project 30% or more over priced.
  • At least 25% of federal gas tax funds are diverted to non-highway uses including maintaining sidewalks, funding bike paths, and creating scenic trails. Congress allocates highway money to truck parking facilities, safety incentives to prevent operation of motor vehicles by intoxicated persons, grants for anti-racial profiling programs, magnetic levitation trains, and dozens of other non-road activities.
  • Money allocated to public transit in our urban “kill zones” has increased by 1,000% since 1978 and ridership is flat to down in most cities. The cities have the worst streets and the Democratic leadership has funneled their budgets to government and teacher’s unions, along with free s@#$ for their voting constituents. They could have spent their budgets on 100-year-old sewer pipes and water pipes that burst on a daily basis, but that wouldn’t get them votes.
  • There are dozens of PA Dept of Transportation executives sitting in prison today. It is the most corrupt agency in PA and probably in all the other states. Kickbacks for contracts is rampant. Every construction job is a union job. The union premium is 30%. But, at least they are slow. No bid contracts and payoffs add another 20% to every infrastructure project. Politicians do nothing about this. It’s the game. They need jobs when they leave office. Ask Roy LaHood.

60 Minutes is nothing but another propaganda outlet for the vested interests. They don’t want the system to change. They just want more of your money. The entire “infrastructure crisis” storyline is a scam.

It is a popular delusion that the government wastes vast amounts of money through inefficiency and sloth. Enormous effort and elaborate planning are required to waste this much money.” ? P.J. O’Rourke, Parliament of Whores: A Lone Humorist Attempts to Explain the Entire U.S. Government

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Ron Paul: One of the worst laws in U.S. history could soon expire

From Ron Paul at The Ron Paul Institute for Peace and Prosperity: 

It will not shock readers to hear that quite often legislation on Capitol Hill is not as advertised. When Congress wants to do something particularly objectionable, they tend give it a fine-sounding name. The PATRIOT Act is perhaps the best-known example.

The legislation had been drafted well before 9/11 but was going nowhere. Then the 9/11 attacks gave it a new lease on life. Politicians exploited the surge in patriotism following the attack to reintroduce the bill and call it the PATRIOT Act. To oppose it at that time was, by design, to seem unpatriotic.

At the time, 62 Democrats voted against the Act. On the Republican side there were only three no votes: former Rep. Bob Ney (R-OH), former Rep. Butch Otter (R-ID), and myself.

The abuses of the Constitution in the PATRIOT Act do not need to be fully recounted here, but Presidents Bush and Obama both claimed authority based on it to gut the Fourth Amendment. The PATRIOT Act ushered in the era of warrantless wiretapping, monitoring of our Internet behavior, watering down of probable cause, and much more. After the revelations by whistleblower Edward Snowden, we know how the NSA viewed constitutional restraints on surveillance of American people during the PATRIOT Act period.

After several re-authorizations of the PATRIOT Act, including some cosmetic reforms, Congress last October unveiled the USA FREEDOM Act. This was advertised as the first wholesale PATRIOT Act Reform bill. In fact, the House version was watered down to the point of meaninglessness and the Senate version was not much better. The final straw was the bill’s extension of key elements of the PATRIOT Act until 2017.

Fortunately, last week the USA FREEDOM Act was blocked from further consideration in the U.S. Senate. The procedural vote was significant and important, but it caused some confusion as well. While some well-meaning pro-privacy groups endorsed the FREEDOM Act as a first step to reform, some anti-liberty neoconservatives opposed the legislation because even its anemic reforms were unacceptable.

The truth is, Americans should not accept one more extension of the PATRIOT Act and should not endorse its continued dismemberment of our constitutional liberties. If that means some Senators vote with anti-liberty colleagues to kill the extension, we should still consider it a victory.

As the PATRIOT Act first faced a sunset in 2005, I had this to say in the debate over whether it should be re-authorized:

“When Congress passed the Patriot Act in the emotional aftermath of the September 11th terrorist attacks, a sunset provision was inserted in the bill that causes certain sections to expire at the end of 2005. But this begs the question: If these provisions are critical tools in the fight against terrorism, why revoke them after five years? Conversely, if these provisions violate civil liberties, why is it acceptable to suspend the Constitution for any amount of time?”

Reform is often meant to preserve, not repeal bad legislation. When the public is strongly opposed to a particular policy you will almost never hear politicians say “let’s repeal the law.” It is always a pledge to reform the policy or law. The USA FREEDOM Act was no different.

With the failure of the FREEDOM Act to move ahead in the Senate last week, several of the most egregious sections of the PATRIOT Act are set to sunset next June absent a new authorization. Congress will no doubt be under great pressure to extend these measures. We must do our very best to make sure they are unsuccessful!

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Most people are worried about the wrong crises. Here’s what you need to know.

From Dr. David Eifrig, MD, MBA, editor, Retirement Millionaire: 

“Let’s take a deep breath and look at the facts… ”

That’s what I told readers in 2009, in the midst of the swine flu hysteria. Remember when the government requested the quarantine of a plane of people coming back from Mexico when the kids were just hungover and sick? The same crazy hype is starting up again. The reason people are panicking? Ebola.

News channels have Ebola trackers, so you can see the spread of the disease. According to a Washington Post-ABC News poll, two-thirds of Americans are seriously concerned about Ebola.

The Centers for Disease Control and Prevention has spent nearly $3 million on protective gear. And earlier this month, President Obama asked Congress to approve $6.2 billion to fight the Ebola epidemic.

This an absurd waste of money. It represents roughly 20% of the National Institutes of Health’s total $30 billion annual budget, which is a much better use of the U.S. government’s dollars for improving health in the U.S. and around the world.

In 2014, fewer than 2,000 people have died in the latest Ebola outbreak. In the U.S., the odds of contracting Ebola are 1 in 13.3 million (and that assumes 12 cases get imported into the U.S. – which is unlikely to happen). The U.S. also has 200 times more doctors per person than the West African nations in the news – so you’d be unlikely to die.

This year, you’re more likely to die from:

  • A plane crash (1 in 11 million)
  • A shark attack (1 in 3.7 million)
  • Influenza (1 in 345,100)

This isn’t the first government overreaction. In 2009, the U.S. government spent more than $1 billion fighting the avian (H5N1) and swine (H1N1) flus. Few cases were ever documented with a lab test.

Don’t blindly follow the government-supported mania…

Sadly, the government ignores some real crises – either out of ignorance or to further its own goals. So these potential emergencies get little attention. But they represent real risks, and you should take steps to prepare and protect yourself.

One example is the risk of solar super storms.

A giant ball of “fluid”-looking gas, the sun is about 72% hydrogen and 26% helium. The other 2% is traces of various elements like oxygen and carbon. Occasionally, the sun spews out giant bursts of gases.

The thing is, these bursts can hurl massive waves of magnetized plasma – known as Coronal Mass Ejections (CMEs) – straight toward Earth. And when these CMEs collide with our planet, they have the power to fry our power grid by melting copper wires in hundreds of transformers.

In 1859, the Earth experienced its biggest CME to date – called the Carrington Event. During the Carrington Event, telegraph wires shorted, shocking technicians and causing fires in telegraph offices.

In 2012, we nearly missed another potentially devastating CME.

Some solar experts think the Earth has a 12% chance of being hit by a devastating solar flare by 2024. And the National Academy of Sciences (a body of serious scientists) stated that a solar super storm could cause up to $2 trillion in economic damage.

NASA reports that such an event could permanently damage more than 350 transformers and leave more than 130 million Americans without power… for a long time…

While a solar super storm wiping out the U.S. power gird seems far-fetched, living without power or water isn’t. In the past decades, we’ve seen hurricanes, snowstorms, and power grid brownouts in a hot summer.

The question I have for you is… Are you prepared to live without food, water, or power for several days? How about a month?

Hurricane Katrina wiped out power to 2.6 million people. More than 20,000 people were stranded in the Louisiana Superdome without power, basic sanitation, or water for almost two weeks.

In 2010, blizzards (often referred to as “Snowmageddon”) knocked out power to hundreds of thousands of homes and halted travel in the Northeastern U.S.

In 2012, Hurricane Sandy left 8 million people without power… for some, the power outages lasted for weeks.

My point is, these are real threats and you should prepare for them. The government isn’t going to be there for you…

But you can take some simple steps to prepare for a crisis.

Do what I do… keep enough distilled water to last for one week. You’ll need a liter per person per day. And when a storm is headed my way (or another crisis that can cause power outages), I fill up my freezer with water containers. A full freezer keeps frozen food cold for 48 hours, twice as long as a half-full freezer.

And always keep extra food in your house that doesn’t require refrigeration. I recently purchased a case of 32 freeze-dried meals. They just need a little water before they’re ready to eat. My only worry is what wine to pair with them. I also rotate approximately 50 cans of soup and beans in my cupboard.

If you want to be fully prepared for almost any crisis, I encourage you to read my book, The Doctor’s Protocol Field Manual. In it, I explain how to handle different crises from power outages to a currency crisis. I personally guarantee you’ll learn from it and love the tips it will give you.

Crux note: To claim your personal copy of The Doctor’s Protocol Field Manual, click here now.

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Wednesday, November 26th, 2014 Invest, News, Wealth Comments Off on Most people are worried about the wrong crises. Here’s what you need to know.