"Ed Freeman of Silver Snowball is way too modest! When Ed Freeman says his newletters are just a guess rather than a prediction, he is way too modest for your own good. His track record from Feb. of 2008 until now has been right on target, and because we have been paying attention, my wife and I are in better shape financially now than we have been in our whole lives. If you really want to stop guessing and you want information you can count on being truthful you need to read Ed's Silver Snowball News each and every month all the way through. This is some of the best long range information I have found. See all his recent letters right here. *************************************************************

SSB NEWS - MAY 1, 2009 From the Desk of Ed Freeman

US FINANCIAL MARKETS UPDATE

I hope this update doesn't put you to sleep as it gets a little technical, and speaks of a few markets, not just silver but I wanted you to be aware of some trends that will affect your life over the next few years, whether you understand them or not. And although I am writing about the US Markets, mainly because it's what I know more about, for our many international members it's likely that trends in the US Market will either affect, or be similar to other world wide trends.

INTEREST RATES - It appears that interest rates, which have been falling for a while - like 27 YEARS - have reached a bottom earlier this year and are now rising. Bond prices move in the opposite direction of interest rates. That's because as interest rates fall a long term bond would increase in value because it is paying more than new bonds being issued. Conversely, when interest rates rise bonds lose value because investors won't pay as much for an older bond at a lower interest rate when they can buy a newer bond that has a higher yield.

Check out the charts of the US 30 Year Treasury Bond yields at http://finance.yahoo.com/q/ta?s=%5ETYX&t=my&l=on&z=m&q=l&p=b&a=m26-12-9&c = Where it says "Range" click on Max to see the chart going back to the 1970s. I also like to add the MACD indicator. That stands for Moving Average Convergence Divergence. While I don't know exactly how that indicator works I do find it useful for seeing when trends have gotten to extremes i.e. when it's really low that's usually a bottom and when it's really high that's usually a top. I tend to simplify things when I try to recognize patterns.

Keep in mind this particular chart is showing the trend in interest rates, NOT the trend in bond prices which would flip the chart upside down if it were. Yea, I know it gets confusing but bear with me as I will get to a point here eventually.

Now that you are having fun with charts, click on 2 yr range and notice the big dip in January of this year and the corresponding big dip in the MACD indicator. You can look at some of the other time ranges too such as 1yr, 6 month etc. My point is that huge dip in interest rates earlier this year, which happened at the end of a 27 YEAR trend of falling interest rates, appears to have reached an EXTREME.

And lets just add a little common sense - does it seem like interest rates in general can go any lower? If you put money in a bank savings account you earn something like a quarter of a percent per year on your savings. Money market funds are also paying very little interest. You can lock your money into something long term, such as the 30 Year Treasury Bond where you are getting around 4% a year. You'd have to be pretty confident inflation will stay under 4% a year for the next 30 years to hope to make any money on that. The government has been printing and borrowing Trillions of dollars to get the economy moving. I've lost count of how many Trillions it is now but that sure seems like a lot of borrowing.

Just as you've recently lived through a stock market bubble and a real estate bubble and you've seen what happens after the bubbles burst, the biggest current bubble that looks to have peaked is US Treasury Bonds. Earlier this year investors loved Treasury Bonds as much as they loved real estate (at the top) and stocks (at the top). Do you sense a trend. When "everyone" is bullish that's a sign all the money that could come into a market already has. When everyone "hates" an investment they have already sold so that's a bottom. And a reminder that the Treasury yield chart I'm showing you is the opposite of Treasury Bond prices. So saying bond prices have peaked is the same as saying interest rates have bottomed. There are technical indicators that measure investor sentiment so when they reach an extreme, such as when 99% of floor traders were bearish on stocks at the recent March low, that's a sign the trend is about to reverse. Sentiment indicators reached an extreme, along with prices on Treasury Bonds at the January low in interest rates and since then rates have been rising (and bond prices falling).

You can of course form your own conclusions. And I always have to add the disclaimer that I'm not giving investment advice and you should always check with a trained professional financial advisor. But I can't help but add that "trained professional financial advisor" to me means "trained stock and bond salesperson." They will tell you that no one can predict the markets and that stocks and bonds always go up in the long term and they don't earn any money advising you to buy silver or stay in cash equivalents. They aren't all clueless but how many of these trained salespeople, I mean advisors were saying, like this newsletter was in October of 2007 that the stock market would likely fall by 50% within 2 years? I'm not always right but I do feel I've been helpful and more accurate than most the past few years in recognizing trends that appear so obvious to me but not obvious to many "experts."

So assuming you can see what I do, that interest rates have formed a major long term bottom earlier this year, what does this mean to you? It could mean if you had been thinking of refinancing that chances are interest rates are going higher from here so now might be a good time. It could mean that if you have your retirement savings in a "conservative" mutual fund that is invested partly or mostly in bonds that you should expect it to go down in value. It could mean that if the long term trend has indeed reversed that there might be a long term trend toward higher interest rates and lower bond prices.

Are there any ways to profit if interest rates go higher for say the next 10 or 15 years? Yes. You can keep money in short term investments such as Treasury money market funds and as interest rates rise you will start earning more interest. There does happen to be a mutual fund that is an Inverse US Treasury fund i.e. it goes up in value as interest rates rise and Treasury Bond prices fall. You could look at Rydex Inverse Government Long Bond Strategy - Investor Class. To see a long term chart go to bigcharts.com and put in RYJUX for the symbol. As you'll see in the long term charts it's been going down in value for over a decade since interest rates have been falling. But it's in an uptrend since earlier in the year when, if my guess is correct, interest rates reached a 27 year low.

WHAT ABOUT SILVER?

I know, you are wondering why I'm writing so much about interest rates and bonds when we are in the silver business. Yes, I still think silver should keep being accumulated. Long term, for all the reasons I usually speak of such as the fact there is very little silver in the world, that it's an industrial metal, that we've seen evidence all last year of shortages and rationing by the US Mint of silver coins, that with everything going on in the world regarding printing paper money which could lead to a severe currency crisis in the future, etc. I do think that in the long term silver could be the single best choice of what to accumulate now before things really hit the fan in the future.

Over the near term or possibly the next 2 or 3 years, I believe deflation is the stronger trend which will work IN OUR FAVOR to keep silver prices reasonable. If we all had a mountain of silver already then we would probably want to see silver start it's significant rise in price now. But most people joining Silver Snowball are just beginning to accumulate silver. I think it's great that whatever is holding the price down, whether it's simply the major trend which is currently deflation, or it's manipulation of the precious metals markets ( http://www.thefinancialtube.com/video/3135/042509-Bill-Murphy-of-GATA--LeMetropoleCafe ) let's take this gift and build your silver business by continuing to buy and earn silver coins. Remember, as soon as you are earning a few coins a month you are getting silver at way below dealer cost, and of course building your collection for that time when like the real estate market was, like stocks were, like long term bonds are, and like silver will be - for that time when silver is a bubble and everyone loves it. We are many years away from that. I know many of our members are going through hard economic times. With the true unemployment rate around 17% in the US many are losing their jobs. I think for many of our members their silver coin accumulation program IS their retirement savings account. Helping people become aware of the benefits of acquiring Silver Eagles is a wonderful mission to be on. I feel we are truly helping others prepare for the future.

Here's a thought - in the early 1950s only 4% of the public had any money invested in the stock market. After all, a couple decades before that there had been a big stock market crash and a great depression. It took stocks 28 years after the 1929 - 1932 crash to get back up to the same level they were at the 1929 top. The public had learned that stocks were dangerous to your wealth and even in 1954 which was 22 years after the stock market bottomed people were still afraid of stocks. Of course THAT was the time to be buying stocks. Flash forward a generation to the 1990's and early 2000s. By then people had learned (from trained professional financial advisors) that stocks "always" go up in the long term and it's pointless to try to time the markets. So now, and for the past 20 years, 60% of the public has money invested in the stock market in one way or another. They may not even realize they do but if they have any 401Ks or other retirement plans, the little box they checked on their plan choices at work that said "balanced fund" or "aggressive fund" has their retirement savings in stocks and bonds. I pointed out in October of 2007 that it was time to get out of stocks but the public won't switch out until prices are a lot lower and the current corrective rally we are having now will sucker more people back into stocks.

But the point I'm getting to is that right now only 3 or 4% at most of the public has any money in precious metals. Probably only 2 or 3% have any money specifically in silver investments. So the silver market is like where the stock market was in the year 1954 - i.e. way early in the trend. Precious metals had a 21 year bear market from 1980 to 2001. And even through precious metals have had excellent price appreciation since 2001, the general public is still clueless. We are still very early into the trend.

Want to see an interesting chart of silver prices that goes back 600 years? Go to silversnowball dot com/ssbnews.htm

Silver has been going down in price for over 500 years, but it has now started to rally. What an incredible opportunity to buy near the lowest prices of several generations. Remember, since the beginning of recorded time 40 billion ounces of silver have been mined and 39 billion ounces have been "used up". There is very little silver. There is 5 times as much gold as silver. The pubic won't understand this until silver prices skyrocket.

US STOCK MARKET

Last month's market guess is right on track so far. Here's what I wrote:

I'll guess that the US stock market will go UP for a few months, maybe for a year or so. Yea, I know it sounds crazy but we are due for a rally that will last long enough for most people to be convinced that the worst is over. When I think it's time I'll issue another "Sell" signal which hopefully will work out as well as my last one. And I don't expect the US Dollar to immediately collapse. In fact I'll guess the Dollar will rally for a while. And although there are tons of reasons why silver should go up, I allow for the possibility that silver and gold might finish the correction they started last year. I think that's actually GREAT as it gives us more time to accumulate silver while it's still around and affordable. I'd guess you should use the next couple years to accumulate all the silver you can for all the reasons outlined in Ted Butler's article I included with last month's (March) newsletter.

SALES 101

On a different topic, I tried a little 24 hour sale to help members earn more silver. If you are on the "prospect" list you would have received it. Bottom line is that the ends-at-midnight sale worked great and 15 new members came in - all at 2 or 4 coins a month. I'll run these specials from time to time to help you. Of course the way to benefit is to have lots and lots of people who have requested information at your site so they will be in the contact manager and will receive my follow up emails that send them back to your site to join.

SWINE FLU

It's normal that pandemics occur during public mood downtrends which cause the economic downtrends. I learned this from an advisory service I've been following for more than 25 years called Elliott Wave and subscribe to several of their newsletters at elliottwave.com which is where I get most of my "deflation" thinking from. They were clearly the first to forecast the entire Great Asset Mania and the current economic contraction and have been very accurate the past few years even in their short term timing in calling trend changes. They don't claim to by right all the time but do sometimes make stunningly accurate calls. Anyway, the current pandemic is certainly not a surprise. For some reason it seems that when people are depressed they tend to get sick. Here's a link to an article about it - http://www.elliottwave.com/freeupdates/archives/2009/04/30/Swine-Flu-and-Elliott-Wave-Analysis-Updated.aspx?code=cg So my advice is be happy and stay well.

FINAL THOUGHT

That's it for now. Hope you are still awake. The Silver Snowball business is doing great. We have a window of opportunity, perhaps for another year or two or three to help as many as we can to accumulate silver while it's still under $100 an ounce. I hope you continue to find value in my updates. I might be the only newsletter writer in the silver business that will tell you my real opinion and not always be calling for the same direction in trends.

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Silver Eagles - Get 'em while you can :-)


Thank you for all you are doing to help people own silver,

Ed

Admin, Silver Snowball - Keeping the Silver coming to You

Paul Stramer P.O. Box 116 Eureka Montana USA 800 889 2839 www.silverpatriot.com www.teapartysilver.com pstramer@eurekadsl.net Skype: pstramer www.paulstramer.com