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The Indomitus Report
Volume 3, #4

29 May 2006
A Modest Proposal

Being Sovereign

Satire being rarely understood and even more thinly appreciated, it seems best to label up front any such work. Just as Jonathan Swift, by the evaluation of methods he dismissed as unworkable, promoted the cause of starving infants and impoverished adults through his satirical consideration of eating their offspring, so, too, I would hope to provide for some benefits in my own proposal.

The context for Dr. Swift's proposal was the year 1729, significantly after the collapse of the South Sea Bubble and the failure of John Law's Mississippi Money. Europe was in a shambles. The deliberate monetary inflation which caused the Bubble was the cause of the longest and deepest depression on record. From 1722 to 1782, the world suffered from a sixty year depression, during the depths of which the American Revolution took place. Also during this period, much of Scotland was cleared during the Highlands Clearances, and rather a lot of Davidsons were shipped off from the hills around Inverness to the shores of North America.

Swift complained of a surfeit of Papists, and proposed that his solution would rid the country of their excess. I complain of a surfeit of incumbents, and propose means for addressing this excess, or at least promoting higher calibers in certain respects.

Consider the method of voting in most places. A paper or electronic ballot is marked with the desires of the voter. Then this document is ignored and the incumbent is re-elected. Since voting is an act of aggression, it should be modeled after more aggressive behavior.

Voting for people is delegation of force. It may be that voting against bond initiatives, new taxes, and changes to the constitution would be defensive force, and thus tolerable. But there's really no way to be sure someone who proclaims their desire to only vote against taxes and assaults on their liberty isn't also secretly voting for one or two candidates. What's more, the votes against taxes would seem to be the first to be shredded by the vote counters and other guardians of the integrity of the election process. (Who shall guard us from the guards themselves?)

Anyone who advocates the use of force by government, votes for candidates in elections, and pays taxes is initiating force. Whether it is demands for militarizing the border or demands for invading Iran to prevent them from developing expensive nuclear weapons with purified uranium when they can develop cheap ones with unrefined uranium and heavy water yielding up plutonium - just like the Americans did in the Manhattan Project - or insisting on the arrest of tax protestors who won't "pay their fair share," there are endless demands for government force. Why, in Lawrence, Kansas the traffic commission is seriously proposing to ban all cell phone use in automobiles as part of their busy-body methods. Even hands free phones. You could look it up.

Since voting is an act of aggression, it ought to look more like an act of aggression. Sure, the stylus for many of the paper ballots is sharp enough to put an eye out, but the process isn't violent enough. So, I make a modest proposal which I pray "...will not be liable to the least objection."

Paper ballots are all very well for bond initiatives, referenda, and the occasional change to the state constitution. But for voting for candidates, something more vigorous is wanted.

I propose that each candidate be required to submit enough publicity photos of his or her own head and shoulders so that every voter in the district be able to have one for the vote process. It is a delightful bit of irony that such photos are called "head shots."

I propose that for each set of candidates for a given office, each voter be required to shoot, from a distance of 25 yards, the "head shot" of his preferred candidate with a rifle bullet. Only successful penetration of the head or upper chest (or we could require the bullet be within the sniper's triangle formed by the eyes and the point where the clavicles meet the sternum?) of the photo would count as a valid vote. Being "on paper" isn't good enough. The candidate with the most successful bullet penetrations would be elected.

"I think the advantages of the proposal which I have made are obvious and many, as well as of the highest importance." First, as regards voters, less timid and more determined voters should result. Second, as regards rifles, more weapons should be in the hands of ordinary civilians, as the only way to prevent tyranny. Third, as regards marksmanship, voters are likely to train with their rifles in order to make the all important head shots. Fourth, the motto "two in the chest, one in the head" should be more readily understood by voters and non-voters alike. Fifth, the candidates for public office are likely to consider carefully whether the feather-bedding, graft, corruption, and vice available to them in their prospective offices are worth the dangers attendant on having a nation of expert shooters elect them. Sixth, candidates who gain office and become tyrants are easily expunged, since every single person who voted for them would have the ability to do what is necessary to remove a tyrant. "Sic semper tyrannis," indeed. Seventh, office holders would promote the acquisition and use of higher caliber rifles, because nobody wants to take five rounds of .223 and still breathe.

"A very worthy person, a true lover of his country, and whose virtues I highly esteem, was lately pleased, in discoursing on this matter, to offer a refinement upon my scheme." He said that, having set up a series of targets for each elective office, the voter might be given the opportunity to dispense with her ammunition as it pleased her most.

Let's say that there were seven offices and three candidates for each office. The voter comes to the range equipped with thirty rounds in one or more magazines. Instead of one shot, one kill, and a valid vote from one voter for one candidate, perhaps the voter would choose to cluster her thirty rounds all in the photo of the candidate most important to her. Then, instead of counting photos with any valid hit made on target as one vote per photo, the election officials would count one vote for every successful hit. Some offices are more important than others, and some candidates deserve more than one shot to the face.

It is important to be able to shoot your own dog. Robert Heinlein wrote about this fact in some of his novels. Farming it out does not make it better, it makes it worse. It is worse not only for you, but for the dog. Being willing to shoot a tyrant is all very well and good, but marksmanship matters. Having voters choose their candidates by shooting their photos makes it clear that they are capable of cleaning up their own mess.

It may be said that this proposal would reduce the number of voters. I think that's an excellent result. Voting for candidates is delegating initiatory force, and it ought to be done by people who are in a serious frame of mind and have thought through the implications of their actions. It ought not to be regarded as a light or frivolous exercise. Casting votes which aren't counted is trivial. Aligning sights, getting a clear sight picture, pausing your breath, seeing the front sight, focusing on the front sight, squeezing the trigger, and holding position to follow through and see the bullet on target is never frivolous.

It is not trivial to consistently hit a face-sized target from 25 yards, but if further discouragement were needed, the target image could be made smaller or placed at a greater distance. Even with the limited range indicated, a rifle which has been properly zeroed would be needed. Not every pistol shooter is capable of consistent hits from that range, but dedicated pistol shooters should be allowed to use their weapon of choice. A pistol was good enough to rid the world of the tyrant Lincoln, after all.

It may be that more rifles would be sold as a result of this proposal. Good. More rifles in more hands is a great blessing for liberty, private property, and the prevention of crime. Those rifles used for voting would be in good condition, properly aligned, and well understood by their owners if they expect to get good results on election day. More ammunition would also be sold, which is also a great blessing. Ammunition through the muzzle is how money is turned into skill.

My proposal need not be implemented nationwide or worldwide in one go. It could be phased in. It might be proposed as an optional voting system for some counties where marksmen abound. It might be especially well suited to Free State projects like New Hampshire or Wyoming. It would be an excellent way to deter socialists and whiners from voting, by making them do for themselves something they find abhorrent - pick up a gun and learn to master it.

If nothing else, this proposal should give many voters and many politicians pause for reflection. It is one thing to talk obliviously about sending troops to Iraq, quite another to be on the ground, in battle armor (or without it) and firing a rifle. Let the voter see what he is demanding of others, and perhaps he would be less vocal about his demands. Let the elderly voter who is unwilling to pick up a rifle for fear of the recoil be denied a vote for candidates who have the power to send young men and women into battle. If you cannot shoulder a rifle, what business have you voting for offices which have the power to force others to shoulder their rifles and march toward a hailstorm of bullets?

If voting is mock combat, then let it at least have verisimilitude. Let the contest be waged with guns and ammo, with the noise of the gun range and the stench of smokeless powder. Let's not kid ourselves and pretend that voting is some pristine, elegant, sterile activity.

It isn't. Voting is a bloody, disgusting, awful mess. It is hateful and hurtful and horrid. People who vote should be required to attend every tax foreclosure in their district. They should be required to spend time in their local jail and in their regional prisons reviewing the conditions of prisoners and talking to them about their incarceration - often for non-violent crimes relating to the possession of contraband goods or the provision of contraband services. Voters should be forced to spend time directly experiencing the conditions that their votes place others in. But, such requirements would be dreadfully unpopular, and the voters would be sure to vote against such requirements.

When you consider the substantial effusion of blood that would result if taxpaying voters were required to suffer direct retaliatory force for every instance of force brought on by the conduct of politicians and bureau-rats and enforcers doing their delegated bidding, my proposal is indeed very modest.

Free Market Money

Clyde Harrison is a great guy. He's very smart, very folksy, very casual. He also knows his stuff. You cannot spend ten minutes with him without a sense that he really knows a great deal about commodities and money.

I first met Clyde at the 2002 Eris Society shindig in Aspen. This coming year, the Eris meeting is in Stowe, Vermont for the first time. I'm looking forward to another great year. At last year's Eris, Clyde was in attendance with his charming wife Kim. It was good to see them again.

Clyde points out that if you look at the government's lies, they actually mention how they've changed the way they compute things. So, you can figure out the way the numbers would have been reported if they hadn't fiddled with everything. For examples, Clyde notes, "If we just go back 20 years and remove these changes, then unemployment today would be about 8%, the CPI would be about 7% and the GNP growth would be zero." It seems to me very likely that the government was also lying to us 20 years ago.

Indeed, the government was lying to us 40 years ago in reflecting on LBJ, as we were in the last issue. It was often noted that you could tell when President Johnson was lying. His lips would move. He lied about the war in Vietnam, he lied about the economy, he lied about the Great Society, and a lot of men and women died as a result. Earlier this year, I completed an essay noting that the government was lying to us 65 years ago about Pearl Harbor, which was orchestrated to maximize casualties throughout the Pacific Basin. FDR was a bloodthirsty maggot who loved to see other people suffer, bleed, and die, judging only by the results of his actions.

Lincoln lied, early and often. Millions shed their blood, some on the field of combat, others in towns and villages. Many died so Lincoln's vision of a socialist paradise could be brought about. "Honest Abe" bought land in Council Bluffs Iowa along with General Dodge, then had Congress set the eastern terminus of the transcontinental railroad in...Council Bluffs. Oddly, Lincoln's land ended up just across from Union Station. Lincoln died, and the world should rejoice.

But we still don't have a clear idea of how far back the deliberate government lies might go. Some years ago, I ran across the story of Aristarchus of Samos. He was doing a project around 280 BC to establish the size of the Earth. He came up with a number using really good trigonometry - his math was perfect - based on very sensible experiments. But he relied upon a government figure for the distance between two points along the Nile River Valley. It turns out the government had lied, for thousands of years, about the size of every piece of property in Egypt. Taxes were being collected based on the size of each property, and the government's surveyors had overstated each property by 10% in each direction, for 21% more taxes every year.

So, I believe the figures on unemployment are well over 10% by any real measure, and inflation is running upwards of 50% per annum. How to measure it is anyone's guess.

Gold Mining

Here's how the stocks we presently suggest in this area look of late (Wednesday morning 14 June 2006):

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




Things are not as rosy as they were last month, though our suggestions remain generally up even with the collapse in the gold price. Given the dead cat bounce of $542.10 per ounce back up to $563 at the time of this writing, it appears that gold has finally found strong support and is ending its series of down days. (The Dow Jones has also had a series of down days, suggesting general consternation and a lot of people going to cash to await the next Fed open market commissar meeting.)

It is never a bad time to have tight trailing stops, and if you had them in place two weeks ago, you were in a position to sell on the way down and buy back into the same number of shares or more at a much lower price. Good for you.

The latest word from Bolivia is that the president, Evo Morales, has finally come out openly for mining nationalisation. It seems very likely that he'll pursue this policy, but it is completely unclear how that is going to affect the long term for Apex, Luzon, and Vista. (Vista has only one small property in Bolivia, optioned to Luzon.) My own expectation is that the socialists won't be able to hold on, or Bolivia won't hold together. But, there is clearly a high political risk that the market is pricing in, and if you aren't comfortable speculating against political risk, you should reduce your position in Apex and Luzon. Vista is probably not dramatically affected by Bolivia's politics because most of their mining interests are elsewhere.

This week, I spent quite a bit of time with Osisko. It is a gold exploration company with properties in Quebec and Brazil. Stock symbol OSK.v on the Toronto venture exchange. It seems to be competently financed and managed. However, on their site, they assert a 43-101 compliant report on measured and indicated or inferred gold resources by "early 2006." This report has not been forthcoming. In April, Osisko hired Roscoe Postle associates to prepare the resource estimate on their Canadian Malartic deposit. They now estimate a Third Quarter 2006 release. So, given my model for estimating the future potential of a company, Osisko is an unknown. Its current high price of about $4/share represents confidence in management and financing of its exploration program, with the expectation that a high price of gold is going to do wonders for the company. I think that it may be appropriate to speculate on a few shares when the price of gold is low during the Summer doldrums, but there's no way to suggest this stock as a winner until a validated resource estimate is available.

Eagle Plains is much easier to discuss. They control 35 exploration projects and have 43-101 compliant resource estimates on four of them. Their stock symbol is EPL.v on the Toronto venture exchange. Using the figures from their 43-101 estimates on gold, silver, copper, zinc, lead, and molybdenum, we estimate $8.7 billion in resources - counting nothing but the four projects thus defined. With a bit over 53 million shares outstanding, that gives a total asset value of over $164 per share.

Unfortunately, two thirds of that value has been allocated to the spinoff Copper Canyon Resources, Ltd., to shareholders of record 5 June 2006. Copper Canyon gets the Abo, Copper Canyon, and Severance properties from Eagle Plains, leaving about $46 per share of resources mostly at Blende and Sphinx properties. The net asset price, assuming some overestimate of inferred resource estimates and costs of production would be in excess of $25 per share, which is not bad for a stock selling for $1.75. We suggest you buy a few shares for the upside potential of the existing estimated resources and the wider potential of the thirty other properties.

Meanwhile, Copper Canyon Resources has applied to be listed. There is no listing yet, but with about $120/share of total asset value, it should do well. Keep an eye out for it. We suggest you buy shares immediately that they become available. The listing is to appear on the Toronto venture exchange, TSX.V. It should appear under CPY.v

Free Market Money

Gold found support at $542.10 and bounced off that value quite strongly, posting a series of higher days from Wednesday's low. A late afternoon Friday rally was cut off by the end of trading, but would likely have met overhead resistance at $580-584. The price closed at $578.40 per ounce on Friday 16 June 2006. That's $18.60 per gram.

Gold did not find a bottom anywhere near $650,as I suggested it would in the last report. It simply deleted everything back to mid-January and started over again. The good news is, in going over the same ground again, the gold market is defining additional levels of support and resistance. We now have a better idea of how the market plays through this price range.

Given that gold has taken thirty days to wander down and may be expected to take about as long to wander back up to its previous high on 12 May, we are clearly having a Summer doldrums this year. Last year, as Doug Casey pointed out, the Summer doldrums was early and short. That seems likely to be the case this year. Next year, we may have no doldrums at all, given my expectations of the timing for the peak in the current commodity bull.

The Dow also came down substantially from its May high. Having briefly topped 11,709 it is now at 11,014.55. That puts the present price of the Dow in ounces of gold at 19. While the Dow has recovered some real value, back to where it was in February 2006, it has not reached the reset value we anticipate (any number under 3 ounces of gold). Therefore, if you have not exited Dow stocks, at this point you have a final opportunity to do so.

Oil was $69.88/bbl in the spot market for West Texas Intermediate on Friday 16 June. It took 8.28 barrels to buy an ounce of gold.

Silver closed Friday at $10.130 per ounce. It has recovered very nicely off $9.46 early Wednesday morning. The gold to silver ratio is back to 57.1 ounces of silver to buy one of gold. Or, as our friend Venkat Manakkal at has pointed out in his new essay on the "Last Contango in Gold and Silver," there is now an historical buying opportunity where just one ounce of gold buys you 57 ounces of silver. Given that the rate of increase in silver should be much greater, with a potential high price of around $550/ounce and a gold/silver ratio of around 15 to be expected at peak gold and silver prices, it makes good sense to fill your warehouse with silver.

Gold obviously didn't go higher since my last report. It went lower. I now expect it to re-build support in the $570 range, which it seems to be doing now, re-build support around $585 (where it should meet some overhead resistance this week - 19-23 June), and then $642. There should be overhead resistance of note at $675, $700, and again at $715 to 720. Moving through these levels, barring any really idiotic events on the international scene such as a "terror" attack or a bombing run on Iran, should see the gold price challenging its May high by late July. It took a month to work its way down, it'll take about a month to work its way back up, I would expect. So, the really interesting prices should be this Autumn.

Copper did not form a valid double top in May, so it is unlikely that $3.90 is a long-term peak. I would anticipate further action to the upside in Autumn. Copper joined silver and gold in finding a near-term bottom on Wednesday 14 June around $2.94 per pound. It is presently $3.15 per pound. Gold has moved to $572.80 on early Monday trading 19 June and so the Au/Cu ratio is 181.84 pounds of copper to buy an ounce of gold.

Zinc made a somewhat convincing double top formation in May, but the two peaks were not symmetrical. It is somewhat more likely that $1.70 is a medium term peak for zinc. Zinc traded higher starting before gold and copper on 13 June, suggesting that it may be a slightly leading indicator. It currently trades at $1.40 per pound.

The premium on those pennies minted before 1982 remains above twice face. The metal in $100 face value of pre-1982 pennies is worth about $209.99.

Nickel metal was at $8.72/pound Monday morning 19 June. The nickel coin is a tiny bit more valuable as metal than its face value.

U3O8 was $45/pound as reported from 12 June 2006.

Schlumberger was $58.25 on the close Friday 16 June. But, it split 2:1 on 10 April 2006. So it is up 42% since our suggestion.

Here are the stocks we're following in the free market money sector. Exchanges are and Rumor has it that more new exchanges are under development.

Company Symbol gAu
Cyber Gold Bank CGB 0.225




Gold Barter Holdings GBH 0.020


MicroCasino MCG 0.700




Pecunix Venture Holdings PVH 0.027

- 0.023

The Gold Casino TGC 109


Space Frontier

It turns out that planets in the galaxy are fairly common. So far, the search has turned up 180 of them.

So far, the search for extrasolar planets has mostly turned up large planets similar to Jupiter. The closer these large planets orbit to their primary star, the more apparent the wobble in that star's motion across the sky. For stars within a few hundred light years, that's all it takes to establish that a planet exists. In many cases the existence of the star's planet is confirmed by subsequent direct observation.

There is another method of detection, which Dr. McCullough used to detect planet XO-1b around a star 600 light years away. By observing the light from the star dimming periodically, the passage of the planet in front of the star was established. For a planet to transit in front of its star fairly often, the star system's plane of the ecliptic has to be aligned with our view of the star.

Obviously, if we were looking down on the star system from directly above or below, the stars would appear to be orbiting in elliptical rings around the star. Their presence would still be detectable by following the wobble of the star's apparent motion across the sky, but we wouldn't be able to see any transits. On the other hand, if the plane of that planet's ecliptic is fairly close to our own, then every time a planet passes in front of its star from our perspective, we'll see a dimming of the light from that star.

According to Dr. McCullough, the star XO-1 is very similar to our Sun. The planet XO-1b is very similar to Jupiter. More exciting is the method of its discovery.

Dr. McCullough works for the Space Telescope Science Institute in Hawai'i. His team began with two commercially available camera lenses with 200 millimeter telephoto capability. Their prototype cost $60,000 - presumably funded from taxpayers or a private charitable foundation.

The team scanned thousands of bright stars over a two year period. They programmed a computer to sift the data for tiny changes in a star's apparent brightness. Any time a star's brightness would decrease slightly in at least one image, they would mark that star as a candidate. With several dozen candidate stars, the team assigned stars to amateur astronomers for further observation.

Eventually, astronomers at the McDonald Observatory in Texas confirmed the existence of a planet. But, the exciting opportunity here is for the number of extrasolar planets to increase dramatically through the efforts of amateur astronomers. Decentralized networks draw on the efforts of thousands of individuals to sift through all kinds of data. There is an ongoing effort to search for extraterrestrial intelligence using networks of personal computers linked by the Internet. A similar effort to find a cure for AIDS is also ongoing.

Given that dozens of good candidate stars with dimming light exist in the sky, it may be possible to use the transit method to identify dozens of new extrasolar planets. As a matter of pure science, this information is very exciting. It has a number of potential practical applications.

In understanding our planet and its weather patterns, evaluation of other planets has proven extremely useful. Theories of atmospheric physics which don't hold true in the case of other planets may be called into question. Observations of Venus, Mars, Jupiter, Saturn, Uranus, Neptune, Io, and Titan, to name some of the bodies in the Solar System which have atmospheres, helps to provide a broader collection of data for understanding the nature of planets and their atmospheres. Extrasolar planets add to the available information.

Another practical use for this information is to establish destinations for future space probes to explore. Some of those planets in the galaxy are going to prove to be habitable, either as they exist or as they may be terraformed. Some of those planets may be interesting to visit, either with robotic probes or by sending people. Individuals are already interested in space tourism, with new services to charge hundreds of thousands of dollars for suborbital trips into space, an existing service selling trips to orbit for millions, and a new service offering trips around the Moon for about a hundred million dollars.

Who would pay for a trip to a nearby star? We don't currently know. The market is poorly defined, but so are the planets around stars within a thousand light years.

What would such a trip be like? Presently, we don't have any idea how to travel faster than the speed of light. Of course, our experiments with particles traveling at or near the speed of light have all taken place within Earth's gravity, and deep within the influence of the Sun's gravity. But, assuming that limit holds true, we don't yet have any good way to reach speeds near lightspeed with large objects. Perhaps nuclear propulsion systems would provide enough thrust, and magnetic fields could be used to gather hydrogen from the interplanetary and interstellar medium to fuel them.

One issue that we've dealt with in this report previously is the question of suspended animation. Experiments with lab animals have confirmed that scientists can freeze and revivify very complex organisms. Work on vitrification reported in last year's issues shows strong signs of establishing long term preservation of human organs. With a system of suspended animation, possibly using vitrification technology, it may be possible to greatly extend human lifespan. If nothing happens to your body for hundreds of years while you travel to a distant star, then you would awaken in another star system to never-before-seen views.

Of course, sending fully grown people to nearby stars is a far off possibility, at least several decades away as far as we know. It might be slightly easier to send a package with materials and robotic intelligence to a nearby stars to seed them with Earthly life. As with the terraforming of Mars, it may be that to create good quality homes beyond Earth, we'll need to rework existing planets. Dr. Gerard O'Neill even considered whether the surface of a planet is needed in some of his designs for space colonies.

NASA delenda est.

SpaceDev closed at $1.30 on Friday 16 June, down twenty cents from our suggestion.

Launch Technology

NASA has decided to go ahead and launch the space shuttle, even if that means another crew of astronauts gets killed. Managers from NASA's office of safety and mission assurance recommended against flying. So did the office of the chief engineer at NASA.

According to the current NASA administrator Michael Griffin, the concerns are mitigated because it is possible to inspect and repair some parts of the shuttle on orbit. Also, the space station may offer a safe haven, as it clearly would have done for the Columbia astronauts in 2003.

What NASA has failed to do thus far is get itself out of the way of the private sector companies that offer meaningful alternatives to shuttle launches. NASA continues to play turf battles over who gets to fly in space.

Meanwhile, NASA watcher Keith Cowing has raised a stink about Confederate flags being flown to the space station in 2004. The flags were recently for sale on eBay. Cowing seems to think that NASA should forcibly prevent Russian cosmonauts from flying symbols of American heritage, presumably because he's some sort of narrow-minded socialistic twit. An MSNBC article by Jim Oberg relates the story.

To me, the stink over the Confederate flag is silly. In many European countries, the Confederate flag is a symbol of secession or independence movements for various provinces. The ideal of sovereign self-determination is a valid one, and symbols mean different things to different people. For Cowing to assert that the symbol is wrong because some people associate it with slavery is idiotic, since the vessels which carried slaves to the United States from 1714 to 1860 only flew the British Union Jack or the USA Stars and Stripes, flags which a great many people around the world associate with military occupation of their countries, massacres of civilians, and the brutal torture of prisoners of war. Yet, every American astronaut is insensitive to the views of those folks in wearing one of those two symbols of authoritarianism gone berserk on his shoulder.

Of far greater interest to me were the comments by American astronaut Leroy Chiao. "I have no doubt that the individual cosmonauts do sell some of their items, but remember that is the norm over there. It is one of the accepted ways for them to make a little extra on top of their relatively small salaries. All of the items brought by US astronauts are for personal use only, and not for resale."

So, commercial activity in space is excluded by NASA. Individual astronauts are prevented from flying items in space for private sale, whereas Russian cosmonauts do it all the time. NASA is not only actively working to prevent the development of private sector space transportation systems, but is also determined to prevent individual astronauts from engaging in trade and commerce. It is highly amusing that Russian cosmonauts are excused for being capitalists, while NASA astronauts must maintain an aura of pure socialism.

NASA delenda est.

New Country Developments

It seems clear that Ukraine is at least two countries. To the north and West the population speaks mostly Ukrainian. They attend Roman Catholic or Eastern Rite Ukrainian Greek Catholic churches. Much of their territory wasn't occupied by the Soviets until after WW2. The strength of the "Orange Revolution" of Viktor Yuschenko was in the far West, and Yulia Tymoshenko's bloc dominates in the north and West. Tymoshenko was famously allied with Yuschenko as recently as 2004 when they won as prime minister and president respectively, but have since had a falling out culminating in September 2005 with Yuschenko firing her.

To the South and east, the population is more likely to speak Russian. (The official government policy is Ukrainization, similar in intent to the Polish policy of "Polonization" several hundred years ago in the region, the Russification policy of the tsars some two hundred years ago, and the more recent Soviet policy of Russification which famously led to nine million Ukrainians dying of starvation in the 1928-34 period. So, the taxpayer funded public schools in 70% of communities teach in Ukrainian, while the remainder teach in Russian.) The population is more likely to be Eastern Orthodox, and very likely to be politically aligned with party of the Regions led by Yuschenko's nemesis Viktor Yanukovych. It is also significant that the South and east are heavily industrialized.

So, economically, politically, culturally, linguistically, and ecclesiastically, Ukraine is two countries. It is interesting that the three leaders of the drama of 2004 when Yuschenko was poisoned and his election and Tymoshenko's were almost certainly prevented by fraud in favor of Yanukovych - who has the open support of Russia's Vladimir Putin - continue to be the prominent leaders today. Yuschenko and Tymoshenko were key participants in the Orange Revolution which was featured worldwide on the evening news broadcasts as protestors took over Kiev for many days of speeches against the fraudulent election. A re-run was held and the two won their offices.

Since then, Tymoshenko has accused the leadership of Yuschenko's bloc Our Ukraine of corruption. Of course, that's fairly typical of political reform movements. First they demand reform, and when they come to power, they become corrupt. Unfortunately, there seems to be a real prospect that Yuschenko may abandon the Orange Revolution and form a unity government with Regions, placing Ukraine into a much closer alliance with Russia.

Ukraine may still form a coalition government allying the two leaders of the Orange Revolution. However, it currently has no majority party in parliament. Moreover, the policy of 2015 admission to the EU and the intention to seek NATO membership since May 2002 are very doubtful in the context of strong political opposition. The Orange coalition has also been divided over corrupt allocation of land sales, corrupt allocation of privatisation grants, and now the issue of Russian as an official language.

The protest in Feodosiya involved 20 members of parliament affiliated with the Regions party, along with members of Russia's Duma. Ukraine's government barred deputy speaker of Russia's Duma, Vladimir Zhirinovsky from entering Ukraine, presumably to join the protest. After the protest, Britain postponed a joint military exercise ("Tight Knot") scheduled for 14 June. Russia has openly warned Ukraine not to join NATO.

Historically, Russia's Black Sea fleet has been based in Sevastopol. Crimea was united with the Ukrainian Soviet Socialist Republic in 1954, having previously been ethnically cleansed by both Nazi occupiers and Stalin. (Stalin accused the Crimean Tatars of collaborating with the Nazis, and had all of them sent to Siberia in 1944.) The Crimean peninsula is majority Russian speaking and also ethnically largely Russian. It seems very likely that Russia would threaten military intervention to prevent Ukraine from becoming part of NATO.

One obvious compromise might be to partition Ukraine into two countries. To some extent, the partition already exists. Crimea declared its independence from Ukraine on 5 May 1992, but subsequently agreed to remain within Ukraine as a semi-autonomous republic. The partition of the Black Sea fleet and commitments of friendship between Ukraine and Russia in 1997 were the previous political solution to these problems.

If you are interested in Ukraine, you are likely also interested in WebMoney. The WebMoney system offers variants for Russian rubles, Ukraine hryvnia, and USA dollars. We'll be profiling it in the 2005 status report on free market money, coming soon.

Is Ukraine going to split? There's no way to be sure. External and internal political pressures seem to stress Ukraine along existing cultural, economic, and religious alignments. Secession might be a consideration for Yanukovych, who would likely have Russian support.

On the other hand an end to the Orange revolution with a joint Yuschenko-Yanukovych government might prompt Tymoshenko to organize a Western Ukraine secession. She would very likely be able to organize support from NATO countries.

Keep in mind that Ukraine has a history which includes being part of many different countries. The first people in the region were chalcolithic people of the Trypillian culture, about 4500 BC. A lot has changed in the last 6500 years. Kievan Rus occupied some of the current territory of Ukraine in the 11th Century AD, Poland and Lithuania held sway there in the 14th through 16th Centuries, and Cossacks challenged Polish rule in the 17th. As recently as the 19th Century, much of Western Ukraine fell under the control of the Austrian Habsburg dynasty - which was brutally repressive toward the people of Galicia.

Ukraine is a recently organized collection of twenty-four regions, two semi-autonomous cities (Kiev and Sevastopol) and the autonomous republic of Crimea. It seems to have many forces pulling it apart, and few unifying themes. It evidently lacks a unifying language, culture, religion, history, or economic structure. So, odds are it won't last out the century.

Taiwan Semiconductor TSM is $9.02 up substantially on our suggestion. Auto.ob is not AU Optronics but, rather, AutoInfo, Inc. It is still a nice double. Evidently for reasons totally unrelated to why I thought I was following it. Meanwhile AU Optronics is AUO on the NYSE. It is also doing fairly well, witha split in mid-2005.


Suppose you agree that there is going to be a gold rush in nanotechnology. Do you speculate on companies that are going to hunt for gold, or do you buy hardware and grocery stores? If you find the latter idea compelling, what would be the equivalent in the nanotech realm?

Well, how about imaging systems such as atomic force microscopes? Agilent Technologies recently acquired Molecular Imaging, which makes atomic force microscopes and scanning probe microscopes. These are ideal imaging instruments for nanometer scale measurements. Agilent's stock did very well in the tech boom of the 1990s, climbing to $153 per share in early March 2000. It has lately settled into a trading range from about $23 to around $40 per share. It might be well to wait for the price to earnings ratio to fall further from 17.40. I would suggest you consider it when its P/E drops below 12.

Another company with nanotech measuring systems is Keithley Instruments. Their stock is only slightly above its recent 52-week low of $11.57 per share. It is also one of those tech boom companies that previously topped (early 2000) in excess of a hundred bucks a share. It is paying quarterly dividends just under four cents a share, so it yields a bit over 1.2%. There seems to be quite a lot more to the downside for this company, which might trade near dividend yield next year. At a P/E of 23.9 it is still over priced. It would be a value at P/E around 10.

Another company with exciting tools for nanotech researchers is LunaNanoWorks. They provide a carbon fullerene sphere enclosing metal atoms in a nitride molecule. Their "trimetasphere" product provides unique physical, chemical, thermal, magnetic, biological, optical, and electronic properties. The metal atoms are any of the series scandium, yttrium, europium, gadolinium, terbium, dysprosium, holmium, or erbium. These nitrides exist only briefly in nature, then react quickly with other materials. The "trimetasphere" (trademark of LunaNanoWorks) carbon fullerene sphere keeps the evanescent molecule from reacting.

The elements used in the formation of the nitride molecules are in some cases associated with research into superconductor materials. It is interesting that the packed nitride cluster has a net charge of positive six, while the fullerene cage has a compensating charge of negative six. This charge distribution creates a potential dipole moment and affects the magnetic, chemical, electronic, and biological behavior of the spheres. It is, in a word, really weird, exciting stuff.

The corresponding speculation opportunity is in Luna Innovations, Inc. Stock symbol LUNA. The stock is presently trading at $6 per share, and has been stable since its IPO in early June in a range from $5.82 to $6.66. This newcomer was certainly over priced in its contemplated offering of eleven to thirteen dollars per share, but is likely a good bet at the current price. I am suggesting this stock on the strength of their molecular technology. In the next issue, I plan to closely evaluate their sensing technologies. No earnings to report, no dividend yield, but if you are speculating in nanotechnology stocks, this one seems to have made a good start.

FDA delenda est.

Legislatura delenda est.

Here's how our stock suggestions in the nanotechnology and life extension sector look right now (close Monday 19 June 2006).

Company Symbol US$ delta
CytRx CYTR 1.32 0.42
Accelrys ACCL 7.08 0.47
Dendreon DNDN 4.21 -1.11
Elan Corp. ELN 16.59 9.36

Dendreon has some really great news. Their Provenge active cellular immunotherapy for prostate cancer was evaluated in combination with Avastin by the National Cancer Institute in a phase two study. Results were published in the American Cancer Society's journal Cancer July issue. Patients who had relapsed after prior surgical and radiation therapy showed significantly increased prostate-specific antigen doubling time. Patients with androgen dependent prostate cancer had their antigen doubling time increase by 85% from 6.9 months to 12.7 months after treatment. About a third of patients had a 200% improvement. Increasing the doubling time for the antigen should mean decreasing the antigen itself, and indeed PSA tests showed reduction in nearly half the patients. The patient with the best response showed a PSA reduction of 72%, PSA stabilization lasting more than two years, and a 130-fold increase in immune response. As an alternative to androgen deprivation therapy, the combination of Provenge and Avastin avoids side effects of androgen deprivation (loss of libido, osteoporosis, fatigue, anemia, cognitive impairment) which make it a poor choice for many.

About a million men in the USA have prostate cancer, which is the third most common cancer worldwide. About 30,000 men die each year from this disease. So, an effective treatment with fewer side effects has substantial market opportunity.

Publication Note: We're still behind on the publication schedule, but speeding up a bit.

Gratuitous example of bizarre legislation: Canada's Minister of Public Safety says, "Counting and tracking every long-gun in Canada has been ineffective and costly, and has distressed law-abiding taxpayers who must complete endless amounts of paperwork."

Can you imagine how Americans facing some 20,000 gun laws must feel?


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