2004 Issues #1 to #16
Seventeenth Issue 10 January 2005
B M GM FMM S LT N L P
Twenty-eighth Issue 11 April 2005
Buy this essay and others in Jim's new book Being Sovereign.
The Indomitus Report
30 May 2005
"Over himself, over his own body and mind, the individual is sovereign."
"Whatever crushes individuality is despotism, by whatever name it is called."
John Stuart Mill wrote that liberty consists in doing what one desires. I would go one step further, and say that self-sovereignty consists in doing what one believes is right. Self-governance, or self-control, consists in doing what one believes is the right thing to do, even if one desires to do otherwise. Your essential obligation to yourself is to do what you believe is right.
The individual is, in fact, sovereign over himself, over his mind, over his body, over his life. This self-sovereignty is inherent from the moment of conception. Some would say it is inherent in the nature of every human. Some would say it is God's gift to each of us. Self-sovereignty is our natural station, the separate and equal station to which each of us is entitled.
That self-sovereignty drives socialists nuts. Government functionaries seek to diminish self-sovereignty every chance they get. Do you own property? You must have permission from the state to use it. You must pay a property tax on your property, be it a car or a home. You must allow the state to assess the value of the property at their whim. Your body? As long as you don't have an unlicensed doctor, pharmacist, chiropractor, surgeon, or dentist work on your body, sure. Be careful not to put any illegal substances in it, or, in Oklahoma, get one of those forbidden tattoos.
Your mind is your own. But, don't try to broadcast your ideas without a government license. Don't try to access blocked web sites in the People's Republic of China. Feel free to practice your own religion according to your individual conscience, but don't practice polygamy - even though the Bible is filled with examples - or you'll run afoul of the state. Be a good Seventh Day Adventist, but don't be a Branch Davidian, as evidently the only good Branch Davidian is a dead, crispy burnt one (just ask Lon Horiuchi or the FBI "hostage rescue team").
Yes, your body is your own, but you may be required to provide samples of blood, cells from a cheek swab, urine, fingerprints, an image of your retina, or anything else the state craves. It is a singular criticism of the state that it obsesses on scatology. A free society would consider the content of a person's character more significant than the chemical composition of his urine. ("I have a dream!")
Your mind and your body are your own to the extent that you defend them. Your self-sovereignty is a gift from God, but not a gift from the state. Rather, to the contrary, the state seeks to enslave you, body and mind. If you mean to be sovereign over your mind, over your body, and over your destiny, then you must take charge of your life.
I can't provide you sovereignty. I can't provide you freedom. I can show you the door, but you have to be the one to choose whether or not to walk through it. I can show you that there is a door to your personal sovereignty, a path to your freedom, but I can't know your path. Even if I am able to show you the path, there is a difference between knowing it and walking it. (With appropriate deference to the brothers Wachowski.)
No one else can provide your sovereignty to you. I can't free you. The state cannot free you (were there even a shred of evidence it had any such inclination). Your friends cannot free you. Your family cannot free you. Your job cannot free you, nor your boss, nor your subordinates. If you mean to be free: you must free yourself.
That door in front of you? It may be locked. If it is locked against you, that's only because you've locked it. If you've decided you cannot be free, owing to some obligation you have, owing to some allegiance you've taken - then those are choices you've taken. It is your door. Your locks. Your keys.
Julian "Never Been Wrong" Robertson is apparently worried about the speculative bubble in housing. Refinancing has fueled up to one-fourth of all consumer spending in recent months. As many as twenty million Americans might lose their homes in the collapse of that speculative bubble. Some Americans have "hidden second" mortgages, or otherwise have borrowed up to 125% of their home's value. Robertson evidently anticipates Federal Reserve and central banker response to such a collapse to be (even further) efforts to inflate currencies to stimulate the economy, with an "inflationary spiral unheralded in the economic history of the planet."
He was asked where it would end. His response, "Utter global collapse." Economic collapse, infrastructure collapse, governments collapsing, and you know some of those governments are going out with a nuclear bang, not a whimper. More about this story here. In any event, it is interesting that Robertson is currently seeking approval for a lodge on his property in New Zealand where he owns some 2,000 contiguous hectares.
Suppose there were a global economic, political, and social catastrophe. Suppose that the paper debt inverted pyramid collapses to its long-term, dynamic-equilibrium shape: a mulch pile. Suppose the major governments of the world disintegrated in the next ten years, and you escaped.
Mind you, that would probably involve some planning. You may want to re-locate from certain major cities and, "Honey, move out to the country," as Billy Joel once sang. But, let's say you escape the worst effects of the collapse. Perhaps with some cleverness, you even survive with most of your wealth intact.
Would you still throw it all away? Would you still refuse to walk through the door, claim your sovereignty, and rule your own life? Or would you seize the opportunity to set up your own sovereignty, laying its foundation and designing its forms on principles as to you shall seem most likely to establish your future happiness?
If, given the right set of circumstances, you would choose self-sovereignty, why don't you seek those circumstances out? If one set of circumstances gives you permission to reach for self-sovereignty, there may be other sets of circumstances that would do the same. It is up to you to arrange the circumstances of your life to serve you best.
Free Market Money
"The truth is indeed that legal tender is simply a legal device to force people to accept in fulfilment of a contract something they never intended when they made the contract. It becomes thus, in certain circumstances, a factor that intensifies the uncertainty of dealings and consists, as Lord Farrer also remarked in the same context, 'in substituting for the free operation of voluntary contract, and a law which simply enforces the performance of such contracts, an artificial construction of contracts such as would never occur to the parties unless forced upon them by an arbitrary law.'"
Refined: An Analysis of the Theory and Practice
of Concurrent Currencies, 3rd Edition, 1990
We chanced upon a special offer from Laissez Faire Books on the Amazon.com marketplace in which the LFB folks were pleased to sell us a 3rd Edition of Hayek's famous treatise on the Denationalisation of Money. We'd read an earlier edition and lent it to some scoundrel book borrower who has seemingly not seen fit to return it.
So, for the next few weeks, excerpts from this important work should make up the free market money discussions for our newsletter. This week we begin with simply the first comment sufficiently noteworthy to dog-ear this paperback book. (After several weeks, it may be appropriate to hunt up the comments and context in which Herbert Spencer advocated throwing open the coinage of gold to competition, which Hayek mentions a few pages later.) One of the first ideas that comes up is to note that Hayek points out how any legal tender law would violate that provision of the constitution forbidding laws to impair the obligation of contracts - forbidden to the states, not specifically delegated to the national government, and therefore a power reserved to the people.
Now, the USA does have a sort of legal tender law, in that the government printing office is authorized to print on Feral Reserveless Nothings the text, "this note is legal tender for all debts public and private," but does not have anything like the legal tender laws of yore that, for example, placed the necks of many Paris merchants under the guillotine. Of course, passing such a law would be fairly trivial with a Congress that finds no way to avoid passing the RealID act, continued funding for further massacres in Iraq, and socialist wealth-redistribution aid to tsunami victims from victims of theft (taxes) all in the same omnibus bill. To be sure, there is no clear power to authorize Congress, even in emergencies, to make any money legal tender.
Indeed, the same article of the constitution which prevents the states from making any thing but gold and silver coin a tender in payment of debt is unmatched throughout by any delegation of a related power to the national government, which means that no power to make anything else a legal tender exists. We'd expect this provision to be as infrequently noticed in the 21st Century as it was in the 20th.
In the coming era of hyperinflation, economic collapse, real estate bubble bursting or lapsing, stock market frenzies (hyperinflation may make some prices rise dramatically as dollar-holders seek value; many stocks would likely collapse), and a collapsing dollar, what sort of reaction should we expect from the crud that oozes out of government offices? Capital controls, certainly. And what more thoroughly exemplifies capital controls of the worst sort than legal tender laws combined with wage and price controls?
Not from Republicans? Remember the 1970s? It was a Republican administration under Nixon that instituted wage and price controls most recently. It was a Republican administration under the elder Bush that unfroze government regulations so every rule changes three times a decade. It is a Republican administration under the younger Bush that has imposed tariff barriers on steel, lumber, and many other products.
Sure, there's a clever side show going on with Deep Throat being exposed. No doubt many Nixon apologists are lining up to explain why everything they did really made sense at the time, and still does. You know, like the secret wars in Laos and Cambodia, the vets exposed to Agent Orange, the POWs and MIAs left behind, the whole Pentagon Papers episode, the Watergate break-in, the stonewalling and cover-ups. Perjury. High crimes. Good old-fashioned dictatorship.
It is a sort of pretty idea to suppose we might expect better from Americans. Revolutionary France under the Directorate exposed some of the dark underside of humanity. Merchants and shopkeepers dragged from their homes, hauled to prison for daring to inquire whether sales might be consummated in specie or fiat money. A "Law of the Maximum" that set such idiotic prices for basic foods that no farmer could afford to sell food into the major cities. Army troops sent on expeditions from the cities into the provinces to round up any livestock, grain, or edibles - even the seed for the next season's planting. And the guillotine, again and again and again, chopping off heads, splattering the crowds with blood. Not just noble heads, royal heads, or bureau-rat heads, but merchant heads, tradesmen heads, the butcher, the baker, the candlestick maker. A reign of terror that truly sent that thrill of terror deep into the psyches of ordinary French people everywhere.
But we won't get better results with Americans running things. Look at the fiasco of the Continental. Look at the Confederate paper money. Look how close Lincoln's sycophants came to hyperinflation with the Greenbacks. Given the puppet nature of the government of South Vietnam, the disaster with the piastre was the responsibility of the USA government. Someone says it couldn't happen here? It has, several times. What is the Federal Reserve System but a system for inflating a paper currency?
Hayek's comments on the need for free market money to save civilization are a good topic for a future issue. There is yet time to save civilization, or build a better one. It is far too late to stop the paroxysms of economic strife, difficulty, and widespread collapse. There shall be blood in the streets, many days of reckoning, riots, wars (and rumors of war), rebellions, the brutal crushing of rebellions, and a great many travails. Free market money may save you, your family, much of your wealth, and perhaps enough knowledge to establish a better civilization based upon more rational principles.
The difficulties cannot be avoided. They may be planned against. Move upstream, and consider hip waders against the days when the tide of blood in the streets is exceptionally high.
Here's how the stocks we presently suggest in this area look of late (close Friday 3 June 2005):
Last week we erred in calculating the increase for shareholders of Lumina after the split. LCC.to is still listed, but does not trade since 18 May 2005. Therefore, I've noted "NLT" for "no longer trades" in the table above. We're still left with more than a double on this play.
We are officially suggesting Apex Silver (SIL). If you noticed our "New Country" section last week, we mentioned Apex and since then the price has sailed up $1.60. Since observant readers had an opportunity to participate at that price, we're using $12.55 as the basis for our calculations on this stock.
From finance.yahoo.com: "As of December 31, 2003, the company held control of approximately 100 silver and other mineral exploration holdings, divided into 34 property groups, located in Bolivia, Mexico, Peru, El Salvador, and Kyrgyzstan. The company owns San Cristobal Project located in Southern Bolivia. San Cristobal's proven and probable reserves total approximately 211 million tones of ore grading 65.81 grams per ton of silver, 1.63% zinc, and 0.61% lead. Apex Silver was formed under the laws of the Cayman Islands in 1996."
So, at least these are people with a clue about jurisdictional arbitrage. With 211 million tonnes of proven and probable ore, and a bit more than two ounces per tonne, the mine at San Cristobal is huge. In order of value to be recovered, it is a zinc-silver-lead mine. Just looking at the silver for a moment, I make it 2.116 ounces per tonne. Or, 446.4 million ounces of silver. At a wholesale-type price of $7/ounce (which may be high or low in three years, we can't know) I get $3.13 billion for a value of the silver. Figure the silver carries the full cost of the mine, which is reported at $600 million. I see $2.5 billion in profits, less a few hundred million for ongoing production costs through the life of the mine.
Given 47.68 million shares issued and outstanding (11.3% of which are sold short at the moment, or about 3 million shares looking to cover) and just going for $2 billion profit on the silver, I still get a net asset value of about $42 per share for a stock presently selling at $14.15.
Looking at the zinc, I see 3.4 million tonnes. Another 1.3 million tonnes of lead. Figure 2,204.6 pounds per tonne. Call it 7.5 billion pounds zinc, 2.8 billion pounds lead. So, that's rather a lot of zinc at about 57.4 cents/pound and lead at 45.7 cents/pound. I get $4.35 billion for the zinc and $1.3 billion for the lead.
Figure absurd numbers for cost of production and there's still another $5 billion or $104.87 per share net asset value on top of the aforementioned $41.95. Back to finance.yahoo.com to pick up the cash and debt. About $9.38/share cash, $7.14/share debt. I make it just over $160/share value being sold at a discount just over $14/share. Should run up over ten-fold as mining stocks appreciate in the coming bull and begin to carry a premium.
So, what about the political risk of Bolivia? Some discussion from last week carries over into the "New Country Developments" section below. It is a long, hot summer. So, there's shouting in the streets. Maybe a bit of rioting in La Paz. Maybe the "Burnt Palace" in La Paz gets burnt again? But who really cares? In three years when the mine is open, there's no way of knowing if Bolivia would even be the same country it is now. It might be three countries.
Free Market Money
Gold was very weak early in the week of 30 May to 3 June and has recovered very nicely. The price hopped up from just over $414 on Wednesday to $424 on Friday, closing at $423.10. It seems very clear that gold has bounced off its lower channel marker and is continuing its long-term up trend.
Silver has triumphed very nicely this week, hopping back over $7.50 on Wednesday, closing at $7.51 on Thursday, and holding most of the gain to close at $7.49 on Friday.
Copper is $1.5521/pound. It has fully recovered from the drop earlier in May.
U3O8 is unchanged at $29.00.
The three stocks we've suggested in this sector are PVH, GBH, and MCG.
The PVCSE.com market has now implemented multiple currency support. You can buy into this private market with e-gold, 1MDC, and GoldMoney, according to a recent announcement, as well as Pecunix. As we anticipated, the wider range of available currencies means more buyers, so prices have adjusted upward.
We've also heard a rumor that a major exchange provider may be contemplating a new listing on PVCSE. We'll bring you that news as soon as we hear something official.
"According to Space Adventures, a study undertaken by the University of Tokyo Research Center for Advanced Science and Technology has pinged public attitudes towards space exploration. Among the findings of their 10-year study, they discovered 'an enormous unsatisfied desire among the general public to travel to space for themselves.' Some 80 percent of young people up to the age of 40 would like to trek into space, and 30 percent of people in their 60s and 70s also stated they would like to travel to space, the study found."
Space travel is widely popular. Space Adventures has already accepted two million dollars of deposits for suborbital space trips. Their current market price is $102,000 for a four-day training period and a 90-minute trip. Space Adventures may roll out its first flights in 2007.
Competitor Virgin Galactic is going for a premium price at around $200,000 a throw, with flights in 2008 - assuming the ITAR red tape snaggle can be resolved. If not, Virgin has the unpleasant option of designing its luxury-priced flights without input from its luxury-conscious senior management, including Sir Richard Branson.
Keep in mind that Space Adventures has already proven a market for $20 million orbital flights aboard cramped Russian Soyuz spacecraft. In 1990, Japanese journalist Toyohiro Akiyama described the trip on a Soyuz capsule as comparable to riding a dump truck over bad roads. He also mentioned that living in orbit made him dream of beer and cigarettes.
In other space news, Space Adventures reports that US millionaire Gregory Olsen (58, Princeton grad) is back in Star City, Russia to prepare for a future visit to the Internationalist Socialist Space Station. Olsen was pulled from a trip last year owing to health reasons. His health has improved, and he's back at the training center to prepare for a trip as early as this year. Space Adventures took over the responsibility for flying Dennis Tito to space after MirCorp faced the untimely demise of the Mir space station thanks to NASA and USA diplomatic pressure on Russia's government in 2000-2001. Space Adventures also flew South Africa's Mark Shuttleworth in 2002.
SpaceDev is at $1.61. It is up $0.11 since we first suggested it.
"The full launch wet dress rehearsal marks the completion of the largest milestone before launch. In a few months, we will receive Air Force clearance to fly, and Falcon I will make its maiden voyage."
Elon Musk made a small fortune with Zip technology. He then made a large fortune with PayPal. Now he seems to have followed in the footsteps of Orbital's David Thompson to become yet another defense contractor. If past experience is any guide, Musk has a great opportunity to make a small fortune - from a very large one.
The wet dress rehearsal included a main engine ignition and burn for SpaceX's Falcon. The vehicle is a two-stage liquid oxygen and kerosene propellant vehicle, with partly reusable components. It is priced at $5.9 million per launch for a 1,500 pound payload to orbit. At about $3,900, that's world class low cost. However, that price does not include payload-specific costs or range-related fees.
It is unclear how many flights the Air Force has paid for, but with $100 million in the contract to SpaceX and three flights within a year's time from the anticipated first launch in late Summer 2005 (following a scheduled Titan IV flight from Vandenberg) it may be that the cost to taxpayers is $33 million per flight. The maiden flight is to carry a Defense Department "TacSat-1" satellite.
New Country Developments
"El Movimiento Nación Camba de Liberación is a civil society organization that has among its fundamental objectives ratifying the fundamental principle of the Free Determination of Peoples, with the end of giving to the Camba Nation the power of decision to exercise full sovereignty over its economy, its territory, and its culture."
What does it mean, "camba?" The term is the lowlanders' word for themselves in Bolivia. This word is in contrast to "Kolla" which refers to someone from the highlands of Bolivia. Cambas appeal more to cultural identity whereas Kollas refer more often to ethnic identity.
What are the grievances of the Camba which "impel them to the separation"? The Camba site says, "In general, Bolivia is known as a fundamentally Andean country, surrounded by its mountains, a sort of South American Tibet, mostly inhabited by Aymara and Quechua people, backward and miserable, where prevails a culture of conflict, communalism, pre-republican, illiberal, collectivist, conservative, and whose bureaucratic center (La Paz) practices an execrable colonial centralized State that exploits its 'internal colonies,' that expropriates our economic surpluses, and imposes on us the culture of underdevelopment, its culture."
The Camba nation claims 30% of the population and 70% of the territory. Maps are available here They claim a literacy rate of 93%, the fifth largest production of soya in the world, and a city of Santa Cruz with 1.2 million souls.
Santa Cruz has rejected Bolivian president Mesa's decree, and is moving forward with a referendum on independence 12 August 2005. Evidently, this bid for independence is being taken seriously. A hard line Trotsky-style communist, Roberto de la Cruz "the leader of CONIOB and counselor of M17," has called the Camba people "the Nazis and Croatians of Santa Cruz." Typically, such claims would be assigned by a Trotskyite to any group that respects private property, individual liberty, or free market economics. De la Cruz wants nationalization of the country's hydrocarbon resources, presumably to be followed by general nationalization of everything else. He adds that he has been recruiting young military reservists from 18 to 30 years of age to go and raise the "whiphalas" - the flag of the highlanders - in Santa Cruz.
It is interesting that the Camba nation maps indicate a separate sovereignty where Tarija is located. Which leads inexorably to the question, where is the San Cristobal mine located?
San Cristobal is SouthWest from Uyuni on the road to Chile. It appears well served by rail lines into both Chile and Argentina, per this map. This area is well within what the Camba map identifies as "Alto Peru" and nowhere near either the Tarija autonomous region or the Camba region.
And what of our friends at Luzon Minerals? Their Liphichi site in Bolivia is located 110 kilometers northWest of La Paz, Bolivia in the Cordillera Real. Again, well within Alto Peru and nowhere near Camba nor Tarija.
"These observations...raise the possibility that glucoronidation of resveratrol may have a role in detoxification, disposition, and prolongation of the effectiveness of resveratrol in humans."
Many polyphenols are readily absorbed and pass through cell walls. The red wine molecule resveratrol enters the cell nucleus and activates DNA repair enzymes under the control of the Sirtuin 1 gene. Other molecules, such as quercetin and butein are also effective at activating Sirtuin 1, but resveratrol is best, according to a report in Nature 425: 191-6 from 2003.
One of the interesting features of resveratrol and quercetin is that they are efficiently attached to sulfur (by the process of sulfation) and sugars (by glucoronidation) as they pass through their liver, according to a recent article sent 'round by our sometimes correspondent Bill Sardi of Longevinex.com. The question then becomes, given these combinations, is quercetin or resveratrol available biologically if taken orally? Doesn't the process of sulfation and glucoronidation make them unavailable?
Bill goes on to suggest the review of three studies (sources from Xenobiotica in 2000) which indicate that quercetin and reseveratrol together inhibits sulfation in the liver and improves bioavailability. He then cites the fact that Longevinex does provide both quercetin and lecithin - which also helps absorption - in its capsules.
But, glucoronidation itself is not a bad thing. Beta glucoronidase is the enzyme which breaks down glucoronide, and this enzyme is very widely expressed in human tissues. This enzyme seems to release resveratrol locally or systemically from a resveratrol glucoronide. In fact, beta glucoronidase enzyme activity is elevated in certain diseased tissues, including cancer, liver diseases, and AIDS. Conceivably, the glucoronidation process helps target the resveratrol molecule where it is needed most.
The risk of adverse consequences from a daily red wine extract pill seems minor. The potential benefits seem enormous. Cancer chemo-prevention, cardiac support, normalization of blood pressure, elevation of high density lipo-proteins (HDL - "good" cholesterol), normalization of blood sugar, and nerve cell protection as well as generally increased longevity and health seem to be available with red wine extract supplements. And, if you don't like pills, try drinking a glass or two of a quality pinot noir - the red wine with the most resveratrol.
Elan Corp, PLC, was at $7.03 when we looked in on it Friday 3 June 2005.
Publication Note: Next week we were planning to attend the Cambridge House gold show in Vancouver. Our travel plans have modified owing to a conflict with a certain jamboree in the Black Hills. A full report follows in due course. Sorry to miss all our friends at the conference, and apologies for the unseemly delay in this issue.
Copyright © 2005 Free West Trust, All Rights Reserved.