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Buy this essay and others in Jim's new book Being Sovereign.

The Indomitus Report
Volume 2, #36

14 December 2005
"Freedom Summit"

Being Sovereign

Dr. David Friedman gave an excellent speech, followed by a rousing recital of Rudyard Kipling's poem "The Peace of Dives." His topic was market failure. He pointed out that market failure is a well known and understood economic phenomenon, and it happens quite often.

What are some examples of market failure? One example David gives: Suppose that you are in a line of pikemen about to be invested by heavy cavalry in a battle. If you look at your own self-interest, which is what happens in free market societies, your best course of action is to drop your weapon and flee from the battlefield as fast as possible. If you don't flee, but those around you do flee, you get killed; if you don't flee first, then those ahead of you may get away, but you'll probably be run down by the charging cavalry. The only way for you to stand and win the battle is if everyone else in the line stands as well, and then some of you are certainly going to get killed, but most would live. However, if only self-interest is motivating your actions - if you and the others are not also coerced - then the chances are the line won't hold and you'll all die, so your wisest course of action is not only to run, but to run first.

In another example, he cites two Arab tribesmen riding camels through the desert. Each man complains that the camel he is riding is the slowest. So, they form a wager to see whose camel reaches the oasis just ahead the last. This wager motivates each one to slow down, until they are both standing still on their camels under a blazing Sun. A wise man comes along and asks them what they are doing. After hearing about the wager, the wise man says, "Switch camels." Immediately, both men race their camels to the destination - because it was not a wager over which rider was slower, but which camel. David suggests that the wise man is wise because he's able to resolve an apparent market failure by adjusting the initial conditions so that it becomes soluble.

This idea is similar to the result that pertains when beekeepers and farmers get together. An economist named Mead, David mentioned, had suggested that the behavior of bees was such that there was no way for anyone to keep bees and pollinate crops profitably. However, when other economists actually looked at the industry, they found that it works because bees - while not respecting fences or other land boundaries - are lazy. They fly to the nearest flowers. So, at some times of year when collecting nectar is particularly profitable, beekeepers pay farmers to put their bees in the fields. At other times of year, when farmers can raise a more bountiful crop by having bees pollinate their plants, the beekeepers charge the farmers a fee to put their bees in the fields. These sort of relationships have been worked out over the years so that beekeepers can keep bees profitably, even when they are not themselves also farmers.

One of the economic problems David spoke about is the idea of a public good. A public good is a good or service the result of which benefits everyone, or a large number of people, rather than some particular one. The reason this sort of good is a problem is because the ordinary strategies of the free market don't work. The producer of any ordinary good, a private good, can say, "You want it, you pay for it," and may deny to those who don't or won't pay the fruit of his production. In the case of a public good, there's no telling who is going to get some or all the benefit, so there's no way to ensure a profit for the producer.

However, again, sometimes innovation comes into play and a public good is produced in a way that does make a profit. Radio stations, David noted, have their industry's public good problem worked out. The radio programs that everyone enjoys of music or news or talk are produced at some specific cost, and are a public good that anyone with a radio receiver may benefit from. The commercials that advertise products or services don't benefit the people listening, generally, but have a negative cost of production to the radio station. That is, someone is willing to pay the cost of production. If the radio station sells enough ads to pay for the cost of producing its radio programs (but not so many as to deter listeners) then it makes a profit. (David inquired who had come up with this idea; I found a page which notes, "December 1921 a memo written by two AT&T engineers, J. F. Bratney and H. C. Lauderback, outlined the establishment of a national radio network, financially supported by advertising." AT&T's efforts resulted in the formation of the National Broadcasting Company - NBC - in 1926.)

Not mentioned in his speech is the fascist approach in the United Kingdom, where the government demands a license fee from radio and television receiver owners. This fee is then allocated through corrupt relationships to various parties, including the British Broadcasting Corporation, a whorish agency dedicated to pro-British and pro-communist sentiments, judging by the results.

David also used the public good idea to analyze democracy, and why it fails. He points out that the work necessary for a voter to choose the politicians who are actually doing good is a considerable cost. The voter has to figure out the results of legislation and determine whether the politician was doing the right thing, or the best thing. Since the resulting benefit is a public good - everyone gains it even if they don't vote or don't do careful research before voting - there is no incentive to be the diligent voter. And lazy voters take bad choices.

Using a slightly more sophisticated view of representative democracy, that of the public interest group lobbyists, David showed how bad results still obtain. For example, agriculture subsidies invariably help enrich farmers at the expense of everyone else. The lobbyist argument is that if everyone organizes for their own benefit, then if the farmers are able to raise more money to bribe politicians to do their bidding, compared to everyone who consumes food (everyone, that is to say) then a sort of market for political bribery exists and the best results are gained. However, in fact, the losses to everyone are so widely distributed, and the extent to which anyone in particular has his oxen gored is so small, that everyone else doesn't organize. Indeed, within any given industry, only some producers participate in the lobbying effort, but all producers gain from the resulting special subsidies and corporate welfare. So, the best results aren't available because of the same innate laziness, combined with the fact that people won't organize to combat minor injustices.

So, in this way, David demonstrates that the political sector is inherently flawed as designed. We get far worse results from public good problems in the political arena than in the private sector. And, at least in the private sector, entrepreneurs sometimes come up with innovative solutions to public good problems (as with the radio stations and the advertisements) in which case the problem gets solved and someone pockets a profit. No such opportunity exists in the political arena.

It was a rousing speech, and really excellent. But, the best part was the recitation of "The Peace of Dives," an excerpt of which follows:

    Then answered cunning Dives: "Do not gold and hate abide
    At the heart of every Magic, yea, and senseless fear beside?
    With gold and fear and hate
    I have harnessed state to state
    And by hate and fear and gold their hates are tied.

    "For hate men seek a weapon, for fear they seek a shield -
    Keener blades and broader targes than their frantic neighbors wield -
    For gold I arm their hands,
    And for gold I buy their lands,
    And for gold I sell their enemies the yield.

    *   *   *  

    "Is not Carchemish like Calno? For the steeds of their desire
    They have sold me seven harvests that I sell to Crowning Tyre;
    And the Tyrian sweeps the plains
    With a thousand hired wains,
    And the Cities keep the peace and - share the hire.

    *   *   *  

    "So I make a jest of Wonder, and a mock of Time and Space,
    The roofless Seas an hostel, and the Earth a market-place
    Where the anxious traders know
    Each is surety for his foe,
    And none may thrive without his fellows' grace.

    "Now this is all my subtlety and this is all my wit,
    God give thee good enlightenment, My Master in the Pit.
    But behold all Earth is laid
    In the Peace which I have made,
    And behold I wait on thee to trouble it!"

    - Rudyard Kipling, "The Peace of Dives," 1903

David spoke very highly of this poem, as a work of literature in which sound economic ideas are found. He also spoke highly of one of the science fiction short stories of Poul Anderson's Polesotechnic League series.

David's speech was the highlight of the show, but not the first element of the Freedom Summit. Indeed, on Friday evening there was a debate sponsored by the Summit between George Smith and Eric Lounsbery. The debate considered the topic, "Is it Reasonable to Believe in God?"

Mr. Lounsbery took the affirmative, and presented a great deal of compelling evidence. George Smith took the negative and failed, utterly, to confront the evidence or even to comment in many cases on the claims made by Lounsbery. As such, it was extremely disappointing as a debate. For speaking style, arguments claimed and uncontested, and effective rebuttal, the debate was won by Lounsbery. However, in subsequent discussions with scientists and others who attended the Summit but missed Friday evening's debate, it seems that quite a bit of compelling evidence against Lounsbery's positions is available. Thus, the experience of watching an atheist get trounced in a debate over the reasonableness of a belief in God was unsatisfying. Smith seemed unwilling to debate, and preferred to approach the question from a philosophical viewpoint rather than speak with a technical debater's strategy to win the actual debate itself.

My friend Dennis Lee Wilson pointed out that the whole idea of such a debate as part of the freedom movement was divisive and counter-productive, or, at best, productive of nothing. I tend to agree. Dennis and I both adhere to the position that unanimous consent is required for any ethical "government" to exist. Or, put more naturally, any government which coerces anyone is not ethical. Since I agree with this view, I am content that Dennis won't ever impose a government on me that insists that everyone deny the existence of God; likewise I won't impose on Dennis any government that requires a profession of faith in God. (Indeed, my reading of the Bible suggests that God has no desire for such behavior, that those who don't come to a belief in Him willingly are not likely to be regarded as sincere in their profession of faith.)

Nevertheless, Marc Victor and Ernie Hancock were determined to host this debate as a prelude to the summit. I found the whole process tedious. Maybe next year they'll find effective debaters for both sides of any question. Or, perhaps, they'll agree that bringing elements of the freedom movement together for the purpose of having them engage in intellectual brawls is not useful.

There were positive elements of the Summit on both Saturday and Sunday. I particularly enjoyed speeches by Edward Stringham, Marshall Fritz, Brian Wowk, Karen Kwiatkowski, and Christopher Heward. Enough so that I bought DVDs of each speech. CDs and DVDs of 2003, 2004, and 2005 summits are available from and

Ed Stringham spoke on the issue of "affordable housing mandates," a particularly egregious form of property usurpation practiced in California. It turns out that the government intervention in the housing market is counter productive and results in much higher housing costs in California. This result should surprise no one. However, Dr. Stringham gave a very engaging presentation with numerous examples, graphics, and anecdotes. He is an excellent speaker, a brilliant economist, and someone whose career shows enormous promise.

Karen Kwiatkowski spoke on "our inscrutable Iraq policy," which follows up on a number of essays she's written which may be found at The content of her speech was excellent, and completely indicts the Bush Administration's entire Iraq policy from soup to nuts. Nuts is, indeed, the best term for that policy. The presentation of her speech was comparatively poor, since she simply read, at a furious pace, the entire content of her essay. She held her own in the question and answer session that followed. While possibly not a perfect adherent of free market ideals or anarcho-capitalist views (which is true of a vanishing minority of former military officers) she is an excellent political and military analyst.

Chris Heward spoke on whether government sponsorship of science is a good idea. Generally speaking, it seems clear that it is not. Our intermittent reviews of the insanity which reigns at NASA with respect to scientific and other endeavors needs no further elaboration here. Chris was an excellent and engaging speaker, with many fun things to say.

Brian Wowk gave the same presentation at Freedom Summit that he had given at Eris. As we've reviewed that speech in our Eris-related issues, there's no need for a repeat here. Again, Brian speaks extremely well. His presentation on "Secrets of Suspended Animation" was well documented and enjoyable.

Marshall Fritz is a very amusing speaker. He's also a freedom movement mainstay, having co-founded the Advocates for Self-Government and more recently the Alliance for the Separation of School and State. Marshall gave a very Catholic presentation on "Origins of Liberty: What Mother Rand Never Told Us." I found it interesting that some of the earliest "rules of civilized warfare" against assaulting non-combatants and otherwise engaging in fair play on the battlefield arose from Catholic bishops conferences. It was also interesting to note that the Catholic church was an early opponent of blood sports - something the National Football League and the World Wrestling Federation seem to regard as their bread and butter. However, I did not feel that Marshall gave adequate play to the reasonable complaints against the Catholic Church, notably its tendency to burn brilliant men like Giordano Bruno ("il se muove") and libraries like those of the Aztecs and Mayans. While comparatively few men and women were tortured to death by the Inquisition as opposed to the tens of millions butchered by Stalin or Mao in the name of godless communism, the chilling effect on intellectual development and the superstitious nonsense promoted by the Church in the place of science certainly did nothing to forward the Enlightenment, and did much to hold back the full potential of the Italian Renaissance.

There were other speakers, as well. Jim Bovard gave a good speech on political issues. Since I am convinced that there is no political solution to any contemporary problems, I was unsurprised by Jim's revelations regarding Bush Administration cronyism, and unpersuaded that politics may ever be helpful. Dr. Steven Greer, MD, spoke about UFOs. I found his speaking style poor and his subject matter questionable, although I grant his hypothesis that the government persistently lies not only about UFO phenomena, not only about high technology aircraft and rocketry research, but about nearly everything else, as well. Jane Shaffer gave a very nice presentation about raising children who love logic, reason, and freedom. George Smith made another speech during the regular sessions. While he is erudite to a fare thee well, his speech was unmemorable. Sunni Maravillosa made a speech about freedom, which seemed both accurate and tedious. Stuart Krone spoke on radio frequency identification (RFID) technology, giving extremely short shrift to any possibility that freedom may survive the omnipresent surveillance state. I found his speech to be exceptionally irritating.

So, there you have it. Another freedom group with another sparsely attended freedom conference. If one were convinced that a political movement toward freedom were essential to individual liberty, one would be distressed and upset that not more than a few hundred people seem willing to congregate at these events. But, as I'm convinced that such a political movement is not necessary and may not even be desirable, I view such events as opportunities to engage with friends of freedom and to hear engaging ideas and presentations. It is worth attending Freedom Summit because one often has to go out of one's way to get the best ideas from the best minds.

Free Market Money

      "Unless we restore a situation in which governments (and other public authorities) find that if they overspend they will, like everybody else, be unable to meet their obligations, there will be no halt to this growth which, by substituting collective for private activity, threatens to suffocate individual initiative."

      - F.A. Hayek, Denationalisation of Money - The Argument
      Refined: An Analysis of the Theory and Practice
      of Concurrent Currencies
      , 3rd Edition, 1990

As 2005 comes to a close, so, too, does our review of Friedrich Hayek's seminal book on competing currencies. It seems very clear that the current inflation is going to accelerate into an uncontrolled hyperinflation, with the consequence that the vermin at the Federal Reserve squeak and squirm and attempt to conjure some means of avoiding the consequences of their actions.

Make no mistake. The limited government of the constitution, which replaced the even more limited government of the articles of confederation, ended on 15 April 1861 with the unlawful, unconstitutional, and tyrannical acts of Abraham Lincoln. His executive order, the first in a series of over fourteen thousand to date, declaring war against the Confederate States of America without an act of Congress was the final nail in the coffin of a constitutionally limited republic which had little functional restraint on the powers of the national government. Lincoln's ambition was a government of total central authority to steal property from any productive person and command obedience from everyone. In the words of professor Jeffrey Rogers Hummel, Lincoln's goal was to enslave free men, even by the artifice of seeming to emancipate slaves. Lincoln was a socialist, a tyrant, a criminal, and a whore, among whose other sins was a willingness to benefit personally from the corrupt allocation of transcontinental railroad contracts.

Lincoln was among the boldest of the scientific socialists, men of little imagination and less ability with the consuming desire to run the lives of others, steal their property, enslave their productive capacities, and, inevitably, murder, rape, and maim millions. Lincoln's government became the model for other socialistic, fascistic, and communistic governments around the globe. His imperial ambitions against the Southern Confederacy were the opening round in American imperialist adventures in Nicaragua, Cuba, Puerto Rico, the Philippines, Vietnam, Iraq, and elsewhere.

Make no mistakes, the central bankers love this sort of government. Central bankers are themselves men of little talent and no imagination who are unwilling to accept the value of free markets and are unable to design anything better. The Federal Reserve System was founded in 1913 by the same evil, vicious, vindictive, murdering thieves who organized the Federal income tax, imposed Prohibition, oversaw the rise of organized crime, demanded the disarming of the American people with the 1934 gun control act, seized all privately held gold in the country, banned ownership of gold, built the welfare state, and involved the United States in a global war for domination that lasted from 1914 to 1991. The memory of these evil men should be preserved in books and documents, but their faces and their statues should be torn down, the buildings and monuments they built destroyed, their works torn asunder, and the remains scattered to the four winds.

The only way mankind may ever be free is with an end to centralized governmental power. The only way central command and control may ever be eliminated is through the advent of free market money. Anyone who believes in individual liberty and private property must condemn centralized governmental power. Anyone who wishes to see an effective end to nationalist, socialist, murdering oppression by government must seek free market money. There is nothing more central to their power, no theft more insidious than inflation, and no way to end their tyranny without an end to their monopoly over the issue power of money.

The people in charge of the governments and the central banks of the world are criminals. They have organized the greatest criminal enterprise in the history of mankind. They intend to loot, pillage, murder, rape, and corruptly allocate contracts forever. Their intentions are evil, the fruit of their work is evil, and they must be stopped.

The coming hyperinflation will be global in its reach and terrifying in its impact. The subsequent depression may last more than the six decades which followed the bursting of the South Sea Bubble. The economic consequences of the folly of centralized command are enormous, and the disaster which is coming is going to be felt by billions of people all over the world. Famine, poverty, death, and disease are going to be rampant.

Those who cannot or will not see these consequences may excuse the central bankers for their errors, or attempt to compound the problem by eliminating national currencies and allowing the banking scum to inflate on a global basis. Most people are going to be unprepared for the coming inflation. Those who suffer most, as always, will be those most dependent on the government for assistance - just as we saw in New Orleans.

Yet, there is time to prepare, and there are people who see this coming collapse as an opportunity. As Doug Casey points out repeatedly in his books and newsletters a crisis is the combination of danger and opportunity - something the artists of Chinese ideograms realized thousands of years ago. You have time to prepare for the worst and to profit from the coming opportunities. One of the greatest opportunities in the history of the species is at your doorstep: making free market money available to your family, friends, neighbors, vendors, and customers. Choose now to be a part of this vital industry, and profit enormously.

We'll continue our focus on Denationalisation next week.

Gold Mining

Here's how the stocks we presently suggest in this area look of late (early morning 5 December 2005):

Company Symbol




Almaden AMM.TO




Luzon LZN.V




Pinnacle PNL.V




Western WNP.V




Lumina Resources



Northern Peru Copper



Regalito Copper RLO




Silver Standard SSRI




Vista VGZ.TO




Apex Silver SIL




Newmont Mining NEM




Northgate NXG




Tan Range TRE




Apex has not reacted well to the election in Bolivia, but the underlying value of the mine, and the fact that all political risk is temporary have kept the price above our first suggestion.

In the weeks since we last reported here, the lights have started to turn green on our mining stock board. Since the underlying metals, gold, silver, and copper (for the most part - as well as uranium in the case of Western Prospector) are all going up, better prices for these stocks are expected value.

The two red marks are Luzon - a Bolivia gold play with easily $5/share of measured and indicated gold at their Amayapampa property and promises at Liphichi - which seems to be awaiting further development as new management seeks capital to exploit their opportunities; and Lumina Resources - one of the set of companies into which Lumina Copper split. Lumina Resources has about $600/share measured and indicated gold and copper at current prices.

Keep in mind that when picking exploration companies and junior mining stocks, there is considerable risk. It is actually somewhat a shame that we have so few losers on the board, because it suggests that our strategy of targeting significant underlying value in measured and indicated resources is a very conservative approach. Juniors and explorers are speculative and risky, which is why we've suggested a strategy of diversifying beyond them.

Even so, Lumina Resources has got to be the sleeper stock of the 21st Century. It ought not to be possible to buy $600 per share of underlying value for 28 cents a share. Yet, there seems to be nothing wrong with this picture. Management is top notch, the mining claims are solid, there is good access to the resources, nothing seems to be in the way. Even without permits to mine, the resources are so large that there should at least be an enormous profit available if the company just becomes an acquisition target for a major in the ongoing copper bull.

Pinnacle is approaching double territory again. You'll recall that it doubled earlier in 2005, and you should have sold half your position on the double. (Great advice from Doug Casey, who is wise in the ways of mining stock speculation.) So, your current position is all gravy. If you've been letting it ride, or buying on the weakness, your strategy has been rewarded, and you should see even greater gains as the price of gold rises.

Don't panic. Mining stocks in a commodity bull market may shift dramatically, just as commodity prices do. Rely on a proven strategy and don't jump off the boat just because the tide fell. Tides rise and fall. We are approaching the mother of all spring tides, and if your boat isn't in the water, it won't get any lift.

The companies we've identified which find large deposits and hold those resources in anticipation of higher prices are all doing well, other than Lumina Resources. Not much needs be said here. Based on the underlying resource, all these stocks have much to gain as the commodity bull rages.

Newmont and Northgate haven't always been green, but our mining stocks are all doing well today. We've been careful to look at the value of the underlying resource. In the case of Newmont, we grabbed for the .206 ounces of gold per share, now valued at $106.42 - completely ignoring the copper and other resources; don't forget that Newmont actually pays a dividend. With Northgate, we were impressed with $58/share gold and $51/share copper at current prices, even when these values were much lower late last year. Finally, the market has responded.

But the real story is Tan Range. We hit a homer weeks ago and now we're just taking in bags of cash. If nothing else, the promotion for this company has been superb. Management is competent, the underlying resources are easily worth $100/share at the current price of gold, Tanzania seems to have limited market risk; and the exploration news has been good. (An 8 December press release announced enhanced gold potential at Luhala with "eleven kimberlite pipes discovered in a major diamond trend.") We were right, we were right early, and the results speak for themselves.

We plan to release another issue this weekend, while everyone else prepares to celebrate the new year. In that issue, we'll review the results you would have obtained if you'd acted on our suggestions since the November 2004 New Orleans Conference.

Free Market Money

Gold closed for the year at $516.60. It reached a high earlier this month of $536.50 on the London afternoon "fix" of 12 December. Intra-day trading saw the price over $540. Certainly not our gratuitous prediction of $555/ounce, but a nice high water mark even so. Where to from here?

One way to gauge the path up to the previous high ($895 intra-day on the April gold contract in January 1980) is to look at the path down from there. In early 1981, the price came below $500/ounce and then shot back up to $533.75. We seem to have covered that territory, this month, so the next bump is a hiccup at $571 (15 January 1981) followed by $602 (23 December 1980) and $635 (1 December 1980). I would not be surprised to see all this territory covered in the first two months of 2006. While a Summer doldrum (anywhere from March to August, but typically not more than four months) is likely, we could see $800/ounce gold in 2006.

If that happens (I've assigned 6/10 to the probability) then I would anticipate a peak in late 2008. My best guess is $7,000 gold and a 3:1 Dow to gold ratio, or 3 ounces of gold to buy the Dow (a 21,000 Dow - all inflation, no real growth in value, real loss of value as measured in gold).

Dow stocks lost ground to end the year at 10,717.50. In spite of dramatic inflation, the Dow lost ground for the year. The Dow:Au ratio is now down to 20.75. Be sure to understand any "gains" in the Dow which you may hear reported in the next two or three years. No such gains are happening. Inflation is simply spurring investors to get out of cash and into anything else of value. Watch the gold price of the Dow drop from 21 earlier this year to 3 sometime in late 2008 as gold peaks.

Oil was $61.04/bbl (West Texas Intermediate), and it takes 8.46 barrels to buy an ounce of gold. That ratio hasn't changed from 5 December when we last looked at it.

Silver closed for the year at $8.80/ounce. The Au/Ag ratio is down a bit to 58.70. Silver is still under priced at this level, and should continue higher. A peak target of 20 ounces of silver to buy an ounce of gold should be expected, which suggests a silver peak around $350/ounce. Silver is much more volatile than gold, so expect a very sharp spike in silver at the peak.

Copper peaked at $2.11 on 27 December and closed the year at $2.0619. Ag/Cu ratio stands at 4.27. The related Au/Cu ratio is 250.55.

Zinc was up again to $0.87/pound on the last day of trading and closed the year at $0.8599. The premium on pre-1982 pennies hit 40% on 28 December. The metal in $100 face value of pre-1982 pennies is worth about $137.25 at year's end.

Nickel metal was $6.38 earlier this month and closed for the year at $6/pound. It takes 86.1 pounds of nickel to buy an ounce of gold.

U3O8 was $36.25/pound as reported from 26 December. It takes 14.25 pounds of uranium to buy an ounce of gold.

Schlumberger closed the year at $97.15. It is up $14.93 (or 18%) since our suggestion.

The four free market money stocks we've suggested in this sector are PVH, GBH, CGB, and MCG. Prices from Friday 30 December 2005.

Company Symbol gAu
Cyber Gold Bank CGB 0.138


Gold Barter Holdings GBH 0.120

- 0.88

MicroCasino MCG 0.650

+ 0.137

Pecunix Venture Holdings PVH 0.020

- 0.03

Cyber Gold Bank split earlier this month. One of the projects which has delayed our work on this newsletter was funding the development of a stock split script for PVCSE. The stock price is still higher than our first suggestion, and if you bought then and sold half on the double, your position should have gone back up to the same number of shares on the 2:1 split.

The Gold Casino last sale was 105.01 grams of gold per share. These shares are over $1785 each at current gold prices.

Micro Casino Gold (MCG) which represents 1/200th of a TGC share (three TGC shares are held in the MCG trust account and 600 shares of MCG trade on is trading lower than it was earlier this month. A relative handful of shares are involved in the trading at lower prices. Even so, MCG is trading at a 23.8% premium to the underlying value. TGC paid 0.82 grams of gold per share for each of the last three months, and the dividend may increase next quarter. For 2005, TGC paid 9.48 grams of gold total, for a dividend yield of 9% at the current share price.

Also during our hiatus a new stock was listed on - which was itself a bit of a chore to manage. The new stock is PRV, which represents the stock exchange itself. PRV opened trading at 0.55 grams of gold (gAu) per share, and now trades at 0.65 gAu. The exchange is well funded and we anticipate having a complete software and financial audit complete in January 2006. There's no real need to sell shares, so we plan to release a total of 1,000 shares on the market simply to establish a fair market price. (Some subscribers are also senior note holders and anticipate receiving 100 shares of PRV when their notes mature late in 2006.) So far, we've sold 100 shares at 0.55, 144 shares at 0.60, and 20 shares at 0.65 gAu. A further 28 shares traded at 0.645 when one of our investors bailed out. Assuming we stick with plan, the last share of the thousand to be released should sell at 1 gram of gold per share.

We'll track PRV in our chart from now on using 0.65 gAu as our suggestion price. It really isn't appropriate to suggest the stock, but it does seem to represent strong underlying value. Please contact me for more information on the stock if you wish.

Space Frontier

The vicious thugs at the FAA have releaed a bunch of nonsense related to their desire to deter private enterprise, license everything that is not forbidden, and prohibit nearly everything. The industry has barely gotten off the ground, as it were, and the FAA has already dumped 120 pages of proposed rules, certain to have a chilling effect on private development of space tourism.

The FAA exists for the purpose of controlling the market for commercial aviation. By issuing licenses for pilots, by licensing and regulating commercial operators, and by certifying aircraft, the FAA functions in restraint of trade. The purpose of the FAA is to promote a cartel operating in restraint of trade. The consolidation of the USA commercial airliner building industry into one company - Boeing - is an example of the sort of cartelization of the industry that the FAA has overseen ever since its inception.

Howard Hughes fought against the FAA and the Civil Aviation Board (CAB) and other restraint of trade, but was ultimately unsuccessful. The thugs in government, in violation of their oaths to uphold the constitution - which says nary a word about regulating aviation and absolutely nothing about regulating private space tourism activities - set their teeth in the aviation industry at about the same time they were controlling and cartelizing the radio and television industries.

On the FAA web site, they've recently placed a "fact sheet" which claims credit for the FAA for nearly everything related to private space tourism, although the FAA has done nothing but stand in the way. If it were not for the fact that the FAA licenses, and bars, pilots, I would expect a few of the FAA "commercial astronaut wings" handed out by self-important FAA bureau-rats at recent private space tourism milestones would have been thrown back in their faces.

The FAA regulations basically reserve the power to shut down the entire industry, issue crushing regulations at any time they see fit, and leave the bureau-rats in charge of guarding the henhouse. So, a lot of bureau-rats are going to get fatter, a lot of productive people are going to work around these regulations and try to make space tourism happen, and a lot of wealth is going to be seized by the government in the name of protecting the public from real or imagined "space disasters." Lies and subterfuge are going to be the typical fare, and the FAA will preen and strut and pretend it is responsible for the actions of individuals.

It is this sort of whorish spectacle which I find deeply revolting.

Perhaps some space tourism entrepreneurs are going to wise up and domicile their operations in Panama, or some other jurisdiction. Or, perhaps, even less likely, the American people are going to wake up, decide to be free, and throw down 144 years of tyranny and oppression. Gross indeed.

NASA delenda est.

SpaceDev closed for the year at $1.40. It was down ten cents from our first suggestion. The trouble seems to be with the new CEO of the company. Jim Benson, whose vision and leadership have formed the basis for the company's success is remaining as chairman and chief technology officer. But, with the acquisition of Starsys, Jim has desired to bring in a new CEO, Mark Sirangelo. Richard Slansky is staying on as president and CFO.

Sirangelo is new and basically unknown to me. He was involved with QuanStar Group, LLC, a consulting company that focuses on early-stage companies. I suspect that the drop in share price reflects shareholder ambivalence to this appointment, and uncertainty as to what to expect. In any event, more news from the company in the new year should firm up the share price.

Delta seems to have come back from the pits. We're seeing no clear weakness in airline companies. Scratch that short as a useful suggestion.

Launch Technology

Let's be clear: corporate welfare is evil. It is wrong to steal tax dollars from millions of people to provide a benefit to some football team, or some British billionaire, or some evil defense contractor. It is wrong, nothing good can come of it, and it should not be tolerated or endorsed, by anyone, ever.

A few years ago, I was a vocal opponent of the Toyota Center, at the time the "Downtown Basketball Arena." My friend Richard Braastad helped design and pay for yard signs opposing the issue at a city wide referendum. Similarly, I opposed city and county tax dollars being used for a huge new football stadium, what is now called Reliant Stadium in what was once the Astrodomain. We lost both issues, or the votes were forged anyway.

Several years later, in 2003, I attended a Rice University alumni function. The speaker was to be from Dynegy, but at the time they were advised by their legal team that their plans to merge with Enron were now a difficulty, and public speaking should be curtailed. So, instead, the speaker was some jerk from the Houston Texans football team. At the time, I knew, the city and county had just spent about $420 million on the football stadium. So, I was outraged to learn that the Texans had brought in $45 million in positive cash flow in their first year. If you consider that allocating half of that to a mortgage on their stadium would have provided $675 million over 30 years, you can see where these filthy, slimy, lying scumbags had no actual need to steal tax dollars from Houston's poorest taxpayers. They were quite able to pay for their own stadium. But, they didn't, not because they couldn't but because they were able to bilk the taxpayers.

So, Richard Branson can grin as he hands a toy model of the Virgin Galactic spacecraft to Governor Bill Richardson. He can spew figures about economic development and plans for the future. He can be whatever sort of Fabian socialist he pleases. But, taking $100 million of New Mexico taxpayer dollars out of the mouths of its productive, entrepreneurial, working families to grease the skids for his space tourism business is evil. Another $125 million is to come from state funds previously approved and from federal taxpayers (already being soaked seven ways from Sunday by evil, vicious taxes, user fees, and regulatory requirements).

I admire Branson for committing himself to a vision of human space tourism. I am pleased by his support for Scaled Composites and his choices in suborbital rocketship design. He's a wealthy and productive individual, and, frankly, he ought to behave better. To suggest that the $225 million in taxpayer subsidies are really needed, when he has a perfectly workable spaceport in Mojave, California, and other options in Panama is just silly. Again, he'll have the cash flow from operations from his first year of flights to pay for his own space port. And, if he were ethical, rather than just a wealthier slimeball, that's what he'd do.

Look at Virgin's own cash flow projections. Three flights a day from the New Mexico space port. Nine passengers a flight, at $200K per trip into suborbital space, and 300 days of operations a year, you've got $1.6 billion a year in revenues. Even assuming an average ticket price of only $45,000, Virgin has 38,000 people ready to fly - for $1.7 billion in revenues. This fascist public-private "partnership" nonsense makes me want to puke.

NASA delenda est.

New Country Developments

      "Chinese authorities in Tibet had violated the following human rights....the right to life, liberty, and security of person was violated by acts of murder, rape, and arbitrary imprisonment. Torture and cruel, inhuman, and degrading treatment were inflicted on the Tibetans on a large scale. Arbitrary arrests and detention were carried out. Rights of privacy, of home and family life were persistently violated by the forcible transfer of members of the family and by indoctrination turning children against their parents. Children from infancy upwards were removed contrary to the wishes of the parents. Freedom of movement within, to, and from Tibet was denied by large-scale deportations. The voluntary nature of marriage was denied by forcing monks and lamas to marry. The right not to be arbitrarily deprived of private property was violated by the confiscation and compulsory acquisition of private property otherwise than on payment of just compensation and in accordance with the freely expressed wish of the Tibetan People. Freedom of thought, conscience and religion were denied by acts of genocide against Buddhists in Tibet and by other systematic acts designed to eradicate religious belief in Tibet. Freedom of expression and opinion was denied by the destruction of scriptures, the imprisonment of members of the Mimang group, and the cruel punishments inflicted on critics of the regime. The right of free assembly and association was violated by the suppression of the Mimang movement and the prohibition of meetings other than those called by the Chinese."

      - International Committee of Jurists Report on Tibet, Geneva, 1960.

From at least 1913 to 1950, Tibet functioned as an independent country. It was widely recognized and thoroughly peaceful in its relations to other countries. In 1951, the vicious thugs of the People's Republic of China, under emperor Mao, forced the government of Tibet to sign an agreement which China then utterly failed to uphold.

I was extremely disappointed to read in a recent issue of Doug Casey's "What We Now Know" newsletter the tired and asinine accusations that Tibet had been ruled by a religious dictatorship prior to the brilliant agrarian reformers of communist China coming to the rescue. Possibly, some of the writers at Casey Research are more determined atheists than anarcho-capitalists. In any event, it was a very dreary smear piece on Tibet, seeming to accept at face value Chinese communist propaganda against the Tibetan culture and history.

Tibet's culture and traditions value private property, individual liberty, freedom of conscience, and all the other things that the fascist government of the People's Republic of China denies. The fact that China is now a successful quasi-capitalist country and eager to exploit the gold, uranium, and other resources of Tibet does nothing to excuse its record of brutality, repression, plunder, rape, murder, and outrage in Tibet.

Tibet is a very high altitude country, with an average altitude of 14,000 feet and the highest mountain in the world, "Chomo Langma" or Mt. Everest. Tibet is very dry in the West, very wet in the east, with the headwaters of the Mekong, Yangste, Salween, Tsangpo, and Yellow rivers found in its borders.

It is sort of amusing to review Chinese communist central planners at the table drafting rules regarding Tibet being "given" the freedom to have a market economy. As recently as 2000, such innovations were regarded as possibly good for Shanghai but certainly nothing the Tibetan farmers subsisting on the equivalent of US$151 a year should enjoy.

The PRC, a vicious communist dictatorship which ran tanks over the bloody bodies of thousands in a protest in Peking quite recently (as such things go), asserts that Tibet has "always been" a part of China, much as Saddam Hussein used to assert that Kuwait had always been a part of Iraq. The argument they make is that the Mongol Empire conquered Tibet 700 years ago and made it "an indivisible part" of China. But, in fact, the Mongols also conquered Baghdad and sacked Damascus 700 years ago, and nobody suggests that those communities are a part of China. Put another way, China has about as much legitimate right of territory to conquered Tibet as the United States has to conquered territory in the Southern Confederacy, Cuba, or the Philippines.

It is striking that the Tibet government in exile does not use coercive taxation. Rather, there are voluntary contributions from exiled Tibetans, various business revenues, and donations. Unlike many established countries with dozens of holidays interrupting business around the calendar, exile Tibet has four national holidays, including "Uprising Day" on 10 March.

The uprising is described at, the site of the exile government. "Despite the Dalai Lama's efforts to find a modus vivendi with the Chinese government, once it became evident that effective international response was not forthcoming, the cycle of resistance and violent repression was not to be prevented. As refugees were pouring into Lhasa from Eastern Tibet with accounts of Chinese atrocities there, and as the Chinese presence throughout the country became increasingly oppressive, the Tibetan people rose up against all ods, in desperation and hope, in March 1959. The uprising was brutally put down by the PLA, which claimed to have killed over 87,000 Tibetans between March 1959 and October 1960 in Central Tibet alone....The consequences of the confrontation which occurred were devastating: the Chinese troops massacred thousands of people; tens of thousands were taken to concentration camps or labour camps where most died; Tibetan cultural and religious institutions were destroyed, and the population was subjected to terror campaigns and massive 're-education' efforts which the Chinese in China experienced only years later during the Cultural Revolution." Mao was a bloody butcher who revelled in death, humiliation, torture, and human sacrifice. The whores who govern Peking still worship his image in sluttish abandon of all ethics.

The Dalai Lama has impressed me as a sensible leader. He's not a lazy, intemperate pest like many leaders, and he's not a parasite. His leadership has been benevolent and his offers of compromise with the Chinese government have been entirely ignored. Among other sensible things he has said, in May 2001 he commented, "If someone has a gun and is trying to kill you, it would be reasonable to shoot back with your own gun." This sort of recognition of individual initiative and self-sovereignty is entirely at odds with the Chinese cultural ideal of filial piety and the communist ideal of sacrificing the individual at the altar of the state.

The government of the PRC has recognized that there is a lot more loot to be had if people are encouraged to produce more. The failure of communism as an economic system has done nothing to reduce their determination to maintain power and control. Their propaganda claiming to be developing Tibet's economy is as tedious as Swedish propaganda about all the mentally retarded and misdiagnosed souls in need of eyeglasses who were forcibly sterilized in the 1930s, 1940s, 1950s, 1960s, and 1970s as part of eugenics campaign. People in the mining industry who support China's claims of ownership over Tibet are as tedious as those who support taxpayer funded mining databases and the use of eminent domain to seize land for mining companies.

China's government seeks to do in Taiwan to Christians and Buddhists what it does in Tibet. China's government may or may not have plans for expansion and the creation of greater buffer zones around the Middle Kingdom, but that's largely irrelevant. The Chinese government fundamentally denies individual liberty, private property, and self sovereignty, and is therefore disgusting.

Next issue, those odd international boundary circles in the Himalayas.


    "I am convinced that longevity will increase faster than people expect in this century."

    - Bruce Ames

Longevity research now being funded by, among others, the Methuselah Mouse Prize shows considerable promise. Twenty years ago, the shape of genes and the map of the human genome were not only unknown, but considered by many to be out of reach of then-understood research methods. Naturally, research improved, and we now have specific interventions for many genetic problems.

The rejuvenation prize for extending the life of an adult mouse was won in 2005 by Stephen Spindler at the University of California, Riverside. His research showed that putting elderly mice on a low-calorie diet resulted in increased lifespans by about six months - pretty good given that mice typically live for only two years. The longest lived mouse on record lived a total of five years.

Spindler comments, "Some people still consider extending life span as quackery, but like every other field of medicine, the more we know, the more we are able to reverse things and extend life span, not just the bad years - but by slowing down the aging process."

Aubrey de Grey told CNN in May 2005, "People born just 20 years apart, either side of the escape-velocity cusp, can thus expect life spans differing by many hundreds of years - and no one knows when that cusp will arrive."

It is, as people say, an exciting time to be alive. Indeed, one can hardly think of an exciting time to be dead.

FDA delenda est.

Legislatura delenda est.

Here's how our stock suggestions in the nanotechnology and life extension sector look at year's end.

Company Symbol US$ delta
CytRx CYTR 1.03 0.13
Accelrys ACCL 8.03 1.42
Dendreon DNDN 5.42 0.10
Elan Corp. ELN 13.93 6.70

Elan is very close to the double we've been anticipating.

Merck and Pfizer continue to be off slightly on our first suggestion to short them. Merck ended the year down about six tenths of one percent, Pfizer down almost 18%.

Publication Note: The second issue we've been working on for release this weekend won't be published until 3 January 2006 at the earliest. Happy New Year. Obviously, our plan for 2006 should be to issue 36 reports. Doing so has been just possible for 2005.

Gratuitous example of bizarre legislation: This issue, we dedicate our bizarre legislation department to the Bush Administration's views on constitutionally limited government: "Stop throwing the Constitution in my face. It's just a goddamned piece of paper," said Bush in a White House meeting on the USAPATRIOT act renewal.

While serving as White House counsel, Alberto Gonzales, now attroney general, said that the "Constitution is an outdated document." He also called the Geneva Convention on not torturing prisoners of war "rather quaint."

It goes without saying that both Bush and Gonzales are traitors.


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